================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 31, 1995
----------------
ADVANCED NMR SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-11914 22-2457487
---------------- ------------ ----------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
47 Jonspin Road, Wilmington, MA 01887
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 657-8876
---------------
================================================================
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
------------------------------------
On August 31, 1995, Medical Diagnostics, Inc., a
Delaware corporation ("Old MDI"), merged (the "Merger"), with and
into Advanced NMR Acquisition Corp., a Delaware corporation
("Acquisition Corp." prior to the Merger and "MDI" after the
Merger) and wholly-owned subsidiary of the registrant Advanced
NMR Systems, Inc., a Delaware corporation ("Advanced NMR"),
pursuant to the terms and conditions of the Agreement and Plan of
Merger, dated as of May 2, 1995 (the "Merger Agreement"), among
Advanced NMR, Acquisition Corp. and Old MDI. Upon the Merger,
Acquisition Corp. as the surviving corporation changed its name
to "Medical Diagnostics, Inc."
In connection with the Merger, MDI entered into a Loan
and Security Agreement with Chemical Bank, dated as of August 31,
1995 (the "Loan Agreement"), in part to fund the cash
consideration portion of the Merger and to pay for Merger
expenses. MDI's obligations under the Loan Agreement are
guaranteed by (i) Advanced NMR pursuant to a Guaranty and
Security Agreement, dated as of August 31, 1995, with Chemical
Bank and (ii) certain MDI subsidiaries pursuant to a Guaranty and
Security Agreement, dated as of August 31, 1995, with Chemical
Bank (collectively, the "Guaranty Agreements").
Pursuant to the Merger Agreement, each share of common
stock, $.01 par value per share, of Old MDI (the "Old MDI Common
Stock") was exchangeable for (i) $8.00 in cash (the "Cash
Consideration"), or (ii) 2.861 shares of Advanced NMR Common Stock
plus one Advanced NMR Warrant (collectively, the "Share
Consideration"), or (iii) a combination of the Cash Consideration
and the Share Consideration (collectively, the Merger
Consideration"), provided that not more than 37.5% of the Old MDI
Common Stock could be exchanged for the Cash Consideration.
Based upon elections made by the Old MDI Stockholders,
the Cash Consideration was pro rated so each such holder who
elected the Cash Consideration is to receive $4.02 in cash, 1.423
shares of Advanced NMR Common Stock and .4975 of an Advanced NMR
Warrant for each Old MDI share exchanged. The Merger
Consideration comprised an aggregate of approximately
$11,196,102, 6,670,157 shares of Advanced NMR Common Stock and
2,331,722 warrants to purchase Advanced NMR Common Stock
(subject to rounding down for fractional shares and fractional
warrants).
Advanced NMR also assumed all rights and obligations of
Old MDI under options and warrants outstanding at the effective
date of the Merger for the purchase of shares of Old MDI Common
Stock. At the Advanced NMR Annual Meeting of Stockholders held
on August 31, 1995, the stockholders approved an amendment to the
Advanced NMR 1993 Employee Stock Option Plan increasing the
number of shares of Advanced NMR Common Stock available
thereunder for options to 2,250,000 shares.
Each Advanced NMR Warrant is exercisable for the
purchase of one share of Advanced NMR Common Stock at $3.75 per
share, subject to adjustment, for a period of five years subject
to redemption at $.05 per Warrant in the event the average market
price of Advanced NMR Common Stock for a period of any 20
consecutive trading days is at least $4.50 per share. The
Warrants are traded on the Nasdaq National Market System,
initially on a "when issued" basis under the symbol ANMWV.
The financing provided for under the Loan Agreement
consists of a $9 million five year term loan facility and a $6
million revolving credit facility. The Chemical loan facilities
are being used to fund the Cash Consideration in the Merger, to
pay certain expenses of the Merger, to repay MDI's current bank
facility and for working capital. The Chemical loan facilities,
including the respective Guaranty Agreements, are secured by a
first lien on specified assets of MDI, Advanced NMR and certain
designated subsidiaries of MDI and a pledge of Advanced NMR's
unescrowed shares in Advanced Mammography Systems, Inc. and the
shares or interests of MDI in designated MDI subsidiaries. The
Loan Agreement contains customary affirmative and negative
covenants, including specific financial ratios and requirements
and restrictions on incurring additional debt and paying cash
dividends, restrictions on upstreaming monies to Advanced NMR and
customary default provisions.
Upon the Merger the Advanced NMR Board of Directors was
increased to ten from seven and John A. Lynch, Edward J. Connors
and Milton L. Glass, former directors of Old MDI, were added to
fill the vacancies, and Mr. Lynch became Senior Vice President of
Advanced NMR and President and CEO of MDI, and his new Employment
Agreement became effective.
The basic terms of the Merger were described in the
Joint Proxy Statement/Prospectus of Advanced NMR and MDI, dated
August 4, 1995, which was included in Advanced NMR's Registration
Statement on Form S-4 (No. 33-95320) (the "Registration
Statement"). Further information with respect to the Merger, the
Merger Agreement, the Loan Agreement and the Guaranty Agreements
is contained in the Registration Statement, which is incorporated
herein by reference.
The summary contained herein of certain terms of the
Merger, the Merger Agreement, the Loan Agreement and the Guaranty
Agreements is qualified in its entirety by reference to such
agreements, all of which are either filed herewith or
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
-----------------------------------------
(a) Financial Statements of Businesses Acquired.
(1) The audited consolidated balance sheets of MDI and
subsidiaries as at September 30, 1994 and 1993 and the related
consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended September
30, 1994 are incorporated by reference herein to the financial
statements of MDI included in the Registration Statement.
(2) The unaudited consolidated balance sheets of MDI
and subsidiaries as at March 31, 1995 and September 30, 1994 and
the related unaudited consolidated statements of operations,
stockholder's equity and cash flows for the six months ended
March 31, 1995 and 1994 are incorporated by reference herein to
the financial statements of MDI included in the Registration
Statement.
(b) Pro Forma Financial Information.
The unaudited pro forma combined condensed balance
sheets at March 31, 1995 and the related unaudited pro forma
combined condensed statements of operations for the three months
ended March 31, 1995 and the twelve months ended December 31,
1994 are incorporated by reference herein to the pro forma
financial statements included in the Registration Statement.
(c) Exhibits
3.1 Certificate of Amendment to Certificate of
Incorporation of Advanced NMR, filed August
31, 1995.
3.2 Certificate of Merger of Old MDI into
Acquisition Corp., filed August 31, 1995.
4. Warrant Agreement, dated as of August 31,
1995, between Advanced NMR and American Stock
Transfer and Trust Company.
10.1 Agreement and Plan of Merger, dated May 2,
1995, among Advanced NMR, Old MDI and
Acquisition Corp. [incorporated by reference
to Exhibit 2 to the Advanced NMR Registration
Statement on Form S-4 (File No. 33-95320),
declared effective August 3, 1995].
10.2 Loan and Security Agreement, dated as of
August 31, 1995, between MDI and Chemical
Bank (without exhibits).
10.3 Guaranty and Security Agreement, dated as of
August 31, 1995, between Advanced NMR and
Chemical Bank (without exhibits).
10.4 Guaranty and Security Agreement, dated as of
August 31, 1995, between certain subsidiaries
of MDI and Chemical Bank (without exhibits).
10.5 Pledge Agreement, dated as of August 31,
1995, between Advanced NMR and Chemical Bank.
10.6 Pledge Agreement, dated as of August 31,
1995, between MDI and Chemical Bank.
ITEM 8. CHANGE IN FISCAL YEAR.
---------------------
On August 31, 1995, the Board of Directors of Advanced
NMR decided to change the fiscal year of Advanced NMR from the
year ending December 31 to the year ending September 30,
effective as of September 30, 1995. The report covering the
transitional period will be the Form 10-K for the year ending
September 30, 1995. The Board made its determination because the
fiscal year of Old MDI is a year ending on September 30 and it
was necessary to conform the fiscal periods of Advanced NMR and
MDI upon the Merger.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
ADVANCED NMR SYSTEMS, INC.
/s/ Jack Nelson
___________________________________
Name: Jack Nelson
Title: Chairman
Dated: September 8, 1995
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------- ----------------------
3.1 Certificate of Amendment to Certificate of
Incorporation of Advanced NMR, filed August 31,
1995.
3.2 Certificate of Merger of MDI into Acquisition
Corp., filed August 31, 1995.
4. Warrant Agreement, dated as of August 31, 1995,
between Advanced NMR and American Stock Transfer
and Trust Company.
10.2 Loan and Security Agreement, dated as of August
31, 1995, between MDI and Chemical Bank (without
exhibits).
10.3 Guaranty and Security Agreement, dated as of
August 31, 1995, between Advanced NMR and Chemical
Bank (without exhibits).
10.4 Guaranty and Security Agreement, dated as of
August 31, 1995, between certain MDI Subsidiaries
and Chemical Bank (without exhibits).
10.5 Pledge Agreement, dated as of August 31, 1995,
between Advanced NMR and Chemical Bank.
10.6 Pledge Agreement, dated as of August 31, 1995,
between MDI and Chemical Bank.
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ADVANCED NMR SYSTEMS, INC.
(Pursuant to Section 242 of the General
Corporation Law of the State of Delaware)
ADVANCED NMR SYSTEMS, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: The Board of Directors of the Corporation duly
-----
adopted resolutions setting forth a proposed amendment (the
"Amendment") to the Certificate of Incorporation of the Corporation,
declaring the Amendment to be advisable and calling for the submission
of the Amendment to the stockholders of the Corporation pursuant to
Section 242(b)(2) of the General Corporation Law of the State of
Delaware (the "DGCL"), and stating that the Amendment will be
effective only after approval thereof by the holders of a majority of
the outstanding shares of stock of the Corporation entitled to vote
thereon.
SECOND: Thereafter, pursuant to a resolution of the Board
------
of Directors of the Corporation, the Amendment was submitted to the
holders of all of the outstanding shares of Common Stock of the
Corporation at the 1995 Annual Meeting of Stockholders, and a majority
of such holders, adopted the following resolution to amend the
Certificate of Incorporation of the Corporation:
RESOLVED, that the Certificate of Incorporation be, and
it hereby is, amended by deleting in its entirety the present
Article FOURTH and substituting in lieu thereof the following new
Article FOURTH:
FOURTH: Capital Stock. The total number of shares of
------ -------------
stock which the Corporation shall have authority to issue is fifty
million (50,000,000) shares, of which fifty million (50,000,000)
shares shall be Common Stock of the par value of one cent ($.01)
per share (hereinafter called "Common Stock").
THIRD: The Amendment was duly adopted in accordance with the
-----
provisions of Section 242 of the DGCL.
IN WITNESS WHEREOF, said Advanced NMR Systems, INC. has caused
this certificate to be signed by Jack Nelson, its President, as of the
31st day of August, 1995.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
----------------------------
Jack Nelson,
Chairman of the Board
EXHIBIT 3.2
CERTIFICATE OF MERGER
OF
MEDICAL DIAGNOSTICS, INC.
(a Delaware corporation)
INTO
ANMR ACQUISITION CORP.
(a Delaware corporation)
(Pursuant to Section 251 of
the General Corporation Law of the State of Delaware)
The undersigned corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
1. The name and state of incorporation of each of the
constituent corporations (the "Constituent Corporations") to the merger
(the "Merger") is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
ANMR Acquisition Corp. Delaware
Medical Diagnostics, Inc. Delaware
2. An Agreement and Plan of Merger, dated May 2, 1995, among the
Constituent Corporations and other party thereto has been approved,
adopted, certified, executed and acknowledged by each of the Constituent
Corporations in accordance with the requirements of Section 251(c) of the
General Corporation Law of the State of Delaware.
3. The name of the surviving corporation of the Merger is ANMR
Acquisition Corp. (the "Surviving Corporation"). Upon the Merger the name
of the Surviving Corporation shall be changed to Medical Diagnostics, Inc.
4. The Certificate of Incorporation of the Surviving Corporation
shall be its Certificate of Incorporation except that Article FIRST thereof
shall be amended to read in its entirety as follows:
"FIRST: Name. The name of the corporation is Medical
----- ----
Diagnostics, Inc. (hereinafter referred to as the "Corporation")"
5. The executed Agreement and Plan of Merger is on file at the
principal place of business of the Surviving Corporation. The address of
the principal place of business of the Surviving Corporation is 46 Jonspin
Road, Wilmington, Massachusetts 01887.
6. A copy of the Agreement and Plan of Merger will be furnished
by the Surviving Corporation, on request and without cost to any
stockholder of either Constituent Corporation.
IN WITNESS WHEREOF, this Certificate of Merger has been executed
by Jack Nelson, President of ANMR Acquisition Corp. as of this 31st day of
August, 1995.
ANMR ACQUISITION CORP.
BY: /s/ Jack Nelson
--------------------------
Jack Nelson
Chairman of the Board
EXHIBIT 4
WARRANT AGREEMENT
-----------------
WARRANT AGREEMENT, dated as of August 31, 1995, by and between
ADVANCED NMR SYSTEMS, INC., a Delaware corporation ("Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, as Warrant Agent (the "Warrant
Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company, its wholly-owned subsidiary ANMR
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
Medical Diagnostics, Inc., a Delaware corporation ("MDI"), have entered
into an Agreement and Plan of Merger, dated as of May 2, 1995 (the "Merger
Agreement"), providing for the Merger (the "Merger") of MDI with and into
Acquisition Corp.;
WHEREAS, as partial consideration on the Merger in exchange for
outstanding shares of MDI common stock, $.01 par value ("MDI Common
Stock"), the Company is to issue one Warrant (the "Warrant" or
collectively, the "Warrants") to purchase one share of the Company's Common
Stock (as hereinafter defined) for each share of MDI Common Stock which is
converted in the Merger for Share Consideration (as defined in the Merger
Agreement) at an exercise price of $3.75 per share; and
WHEREAS, the Company desires the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer, exchange and redemption of the
Warrants, the issuance of certificates representing the Warrants, the
exercise of the Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms
and provisions of the Warrants and the certificates representing the
Warrants and the respective rights and obligations thereunder of the
Company, the holders of certificates representing the Warrants and the
Warrant Agent, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms
-----------
shall have the following meanings, unless the context shall otherwise
require:
1.01 "Common Stock" means common stock, $.01 par value, of the
Company, whether now or hereafter authorized.
1.02 "Corporate Office" means the office of the Warrant Agent
(or its successor) at which at any particular time its principal business
shall be administered, which office is located at the date hereof at 40
Wall Street, New York, New York 10005.
1.03 "Effective Date" means the date on which a Certificate of
Merger meeting the requirements of Section 251 of the Delaware General
Corporation Law shall be executed, verified and acknowledged and delivered
to the Secretary of State of the State of Delaware for filing in accordance
with the terms of the Merger Agreement.
1.04 "Exercise Date" means, as to any Warrant, the date on which
the Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by
the Registered Holder thereof or his attorney duly authorized in writing,
and (b) payment in cash, or by official bank or certified check made
payable to the Company, of an amount in lawful money of the United States
of America equal to the applicable Purchase Price.
1.05 "Exercise Price" means the purchase price per share to be
paid upon exercise of each Warrant in accordance with the terms hereof,
which price shall be $3.75 for each share of Common Stock, subject to
adjustment from time to time pursuant to the provisions of Section 9
hereof, and subject to the Company's right to reduce the Exercise Price
upon notice to all Registered Holders.
1.06 "Market Price" means the closing price of the Common Stock
as reported by the National Association of Securities Dealers, Inc.
("Nasdaq"), a national securities exchange or such other market where the
Common Stock is then listed or traded.
1.07 "Redemption Price" means the price at which the Company
may, at its option, redeem the Warrants, in accordance with the terms
hereof, which price shall be $.05 per Warrant.
1.08 "Registered Holder" means as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the
Warrant Agent pursuant to Section 6.
1.09 "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are not traded
on the National Association of Securities Dealers Automated Quotation
System or on the exchange which is the principal United States market for
the Common Stock of the Company, as determined by the Board of Directors of
the Company.
1.10 "Transfer Agent" means American Stock Transfer & Trust
Company, as the Company's transfer agent, or its authorized successor, as
such.
1.11 "Warrant Expiration Date" means 5:00 P.M. (New York time)
on the date five years from the Effective Date of the Merger contemplated
by the Merger Agreement or the Redemption Date as defined in Section 8,
whichever is earlier; provided that if such date shall in the State of New
York be a holiday or a day on which banks are authorized or required to
close, then 5:00 P.M. (New York time) on the next following day which in
the State of New York is not a holiday or a day on which banks are
authorized or required to close. Upon notice to all Registered Holders the
Company shall have the right to extend the Warrant Expiration Date.
1.12 "Warrant Shares" means the shares of Common Stock or other
securities pursuant to Section 9 hereof issuable upon exercise of the
Warrants.
SECTION 2. Warrants and Issuance of Warrant
--------------------------------
Certificates.
------------
2.01 A Warrant initially shall entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase one share of
Common Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section 9.
2.02 Upon the execution of this Agreement, Warrant Certificates
representing the number of Warrants to be exchanged in partial
consideration for MDI Common Stock upon the Merger to certain holders of
such MDI Common Stock or holders of securities exercisable for or
convertible into MDI Common Stock in accordance with the terms of the
Merger Agreement shall be executed by the Company and delivered to the
Warrant Agent.
2.03 From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates in required
whole number denominations.
2.04 From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this Agreement;
provided that no Warrant Certificates shall be issued except (i) those
initially issued hereunder, (ii) those issued on or after the Effective
Date, upon the exercise of fewer than all Warrants represented by any
Warrant Certificate, to evidence any unexercised Warrants held by the
exercising Registered Holder, (iii) those issued upon any transfer or
exchange pursuant to Section 6; (iv) those issued in replacement of lost,
stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7;
and (v) at the option of the Company, in such form as may be approved by
the Board of Directors, to reflect any adjustment or change in the Exercise
Price, the number of shares of Common Stock purchasable upon exercise of
the Warrants or the Redemption Price therefor made pursuant to Section 9
hereof. In addition, from time to time after the execution of this
Agreement and up to the Warrant Expiration Date, upon the written request
of the Company, the Warrant Agent shall countersign and deliver Warrant
Certificates as partial consideration upon exercise of MDI stock options or
warrants or upon conversion of an MDI convertible note assumed by the
Company upon the Merger.
SECTION 3. Form and Execution of Warrant Certificates.
------------------------------------------
3.01 The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby
---------
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange or national securities system on which the Warrants may be
listed. The Warrant Certificates shall be dated the date of issuance
thereof (whether upon initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen, or destroyed Warrant Certificates) and issued in
registered form. Warrant Certificates shall be numbered serially with the
letter W.
3.02 Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Vice Chairman, President or any Vice
President and by its Secretary or an Assistant Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have
imprinted thereon a facsimile of the Company's seal. Warrant Certificates
shall be manually countersigned by the Warrant Agent and shall not be valid
for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Warrant Certificates shall cease
to be an officer of the Company or to hold the particular office referenced
in the Warrant Certificate before the date of issuance of the Warrant
Certificates or before countersignature by the Warrant Agent, such Warrant
Certificates may nevertheless be countersigned by the Warrant Agent, issued
and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be an officer of the
Company or to hold such office. After countersignature by the Warrant
Agent, Warrant Certificates shall be delivered by the Warrant Agent to the
Registered Holder without further action by the Company, except as
otherwise provided by Section 6.01 hereof.
SECTION 4. Exercise. Each Warrant may be exercised by the
--------
Registered Holder thereof at any time after issuance thereof, but not after
the Warrant Expiration Date, upon the terms and subject to the conditions
set forth herein and in the applicable Warrant Certificate. A Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the Exercise Date and the person entitled to receive the
securities deliverable upon such exercise shall be treated for all purposes
as the holder of those securities upon the exercise of the Warrant as of
the close of business on the Exercise Date. As soon as practicable on or
after the Exercise Date the Warrant Agent shall deposit the proceeds
received from the exercise of a Warrant and shall notify the Company in
writing of the exercise of the Warrants. Promptly following, and in any
event within five days after the date of such notice from the Warrant
Agent, the Warrant Agent, on behalf of the Company, shall cause to be
issued and delivered by the Transfer Agent, to the person or persons
entitled to receive the same, a certificate or certificates for the
securities deliverable upon such exercise (plus a certificate for any
remaining unexercised Warrants of the Registered Holder), unless prior to
the date of issuance of such certificates the Company shall instruct the
Warrant Agent to refrain from causing such issuance of certificates pending
clearance of checks received in payment of the Exercise Price pursuant to
such Warrants. Upon the exercise of any Warrant and clearance of the funds
received, the Warrant Agent shall promptly remit the payment received for
the Warrant (the "Warrant Proceeds") to the Company or as the Company may
direct in writing.
SECTION 5. Reservation of Shares: Listing:
--------------------------------
Payment of Taxes; etc.
----------------------
5.01 The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of
Common Stock as shall then be issuable upon the exercise of all outstanding
Warrants. The Company covenants that all shares of Common Stock which
shall be issuable upon exercise of the Warrants shall, at the time of
delivery, be duly and validly issued, fully paid, nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof
(other than those which the Company shall promptly pay or discharge), and
that upon issuance such shares shall be listed on each national securities
exchange or eligible for inclusion in each automated quotation system, if
any, on which the other shares of outstanding Common Stock of the Company
are then listed or eligible for inclusion.
5.02 The Company covenants that if any securities to be reserved
for the purpose of exercise of Warrants hereunder require registration
with, or approval of, any governmental authority under any federal
securities law before such securities may be validly issued or delivered
upon such exercise, then the Company will in good faith and as
expeditiously as reasonably possible, endeavor to secure such registration
or approval. The Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities laws. With
respect to any such securities, however, Warrants may not be exercised by,
or shares of Common Stock issued to, any Registered Holder in any state in
which such exercise would be unlawful.
5.03 The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to
the issuance of the Warrants, or the issuance, or delivery of any shares
upon exercise of the Warrants; provided, however, that if the shares of
Common Stock are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any Warrant being
exercised, then no such delivery shall be made unless the person requesting
the same has paid to the Warrant Agent the amount of transfer taxes or
charges incident thereto, if any.
5.04 The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of the Warrants,
and the Company will authorize the Transfer Agent to comply with all such
proper requisitions. The Company will file with the Warrant Agent a
statement setting forth the name and address of the Transfer Agent of the
Company for shares of Common Stock issuable upon exercise of the Warrants.
SECTION 6. Exchange and Registration of Transfer.
-------------------------------------
6.01 Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to
be exchanged shall be surrendered to the Warrant Agent at its Corporate
Office, and upon satisfaction of the terms and provisions hereof, the
Company shall execute and the Warrant Agent shall countersign, issue and
deliver in exchange therefor the Warrant Certificate or Certificates which
the Registered Holder making the exchange shall be entitled to receive.
6.02 The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof in accordance with
its regular practice. Upon due presentment for registration of transfer of
any Warrant Certificate at such office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or transferees a
new Warrant Certificate or Certificates representing an equal aggregate
number of Warrants.
6.03 With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription
form on the reverse thereof shall be duly endorsed, or be accompanied by a
written instrument or instruments of transfer and subscription, in form
satisfactory to the Company and the Warrant Agent, duly executed by the
Registered Holder or his attorney-in-fact duly authorized in writing.
6.04 A service charge may be imposed by the Warrant Agent for
any exchange, registration or transfer of Warrant Certificates. In
addition, the Company may require payment by such holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
6.05 All Warrant Certificates surrendered for exercise or for
exchange in the case of mutilated Warrant Certificates shall be promptly
cancelled by the Warrant Agent and thereafter retained by the Warrant Agent
until termination of this Agreement or its resignation as Warrant Agent,
or, with the prior written consent of Company, disposed of or destroyed, at
the direction of the Company.
6.06 Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the
Registered Holder of any Warrant Certificate as the absolute owner thereof
and of each Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than a duly authorized
officer of the Company or the Warrant Agent) for all purposes and shall not
be affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and
------------------
the Warrant Agent of evidence satisfactory to them of the ownership of and
loss, theft, destruction or mutilation of any Warrant Certificate and (in
case of loss, theft or destruction) of indemnity satisfactory to them, and
(in the case of mutilation) upon surrender and cancellation thereof, the
Company shall execute and the Warrant Agent shall (in the absence of notice
to the Company and/or Warrant Agent that the Warrant Certificate has been
acquired by a bona fide purchaser) countersign and deliver to the
Registered Holder in lieu thereof a new Warrant Certificate of like tenor
representing an equal aggregate number of Warrants. Applicants for a
substitute Warrant Certificate shall comply with such other reasonable
regulations and pay such other reasonable charges as the Warrant Agent may
prescribe.
SECTION 8. Redemption.
----------
8.01 The Warrants may be redeemed, at the option of the Company,
at a redemption price of $.05 per Warrant, at any time after the average
Market Price for any twenty (20) consecutive Trading Days of the Warrant
Shares shall have been equal to or exceeded $4.50 per share (the "Target
Price"), subject to adjustment as set forth in Section 8.06 hereof. The
Company may exercise its option by giving irrevocable notice thereof to the
Warrant Agent not later than ten (10) Trading Days following the end of any
such twenty consecutive (20) Trading Day period. All outstanding Warrants
must be redeemed if any Warrants are to be redeemed.
8.02 If the conditions set forth in Section 8.01 hereof are met,
the Company shall mail, or cause to be mailed, as soon as possible (and in
no event more than five (5) Trading Days) following the delivery of the
notice to the Warrant Agent referred to in Section 8.01 hereof, a notice of
redemption to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not more than thirty (30) days nor
less than twenty (20) days before the date fixed for redemption, at their
last address as it shall appear on the records maintained pursuant to
Section 6.02 hereof. Any notice mailed in the manner provided herein shall
be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice. The Company shall also give notice
of election to redeem, within the period provided above, by issuing a
release to that effect to the Dow Jones News Service.
8.03 The notice of redemption shall specify (i) the redemption
price, (ii) the date fixed for redemption, (iii) the place where the
Warrant Certificates shall be delivered and the redemption price paid and
(iv) that the right to exercise the Warrant shall terminate at 5:00 P.M.
(New York time) on the business day immediately preceding the date fixed
for redemption. The date fixed for the redemption of the Warrants shall be
the Redemption Date. No failure to mail such notice nor any defect therein
or in the mailing thereof shall affect the validity of the proceedings for
such redemption except as to a Registered Holder (a) to whom notice was not
mailed or (b) whose notice was defective. An affidavit of the Warrant
Agent or of the Secretary or an Assistant Secretary of the Company that
notice of redemption has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
8.04 Any right to exercise a Warrant shall terminate at 5:00
P.M. (New York time) on the business day immediately preceding the
Redemption Date. On and after the Redemption Date, Holders of the Warrants
shall have no further rights except to receive, upon surrender of the
Warrant, the Redemption Price.
8.05 From and after the Redemption Date, the Company shall, at
the place specified in the notice of redemption, upon presentation and
surrender to the Company by or on behalf of the Registered Holder thereof
of one or more Warrant Certificates evidencing Warrants to be redeemed,
deliver or cause to be delivered to or upon the written order of such
Holder a sum in cash equal to the redemption price of each such Warrant.
From and after the Redemption Date and upon the deposit or setting aside by
the Company of a sum sufficient to redeem all of the Warrants called for
redemption, such Warrants shall expire and become void and all rights
hereunder and under the Warrant Certificates, except the right to receive
payment of the redemption price, shall cease.
8.06 If the shares of Common Stock are subdivided or combined
into a greater or smaller number of shares of Common Stock, the Target
Price shall be proportionally adjusted by the ratio which the total number
of shares of Common Stock outstanding immediately prior to such event bears
to the total number of shares of Common Stock to be outstanding immediately
after such event.
SECTION 9. Adjustment of Exercise Price and Number
---------------------------------------
of Shares of Common Stock or Warrants.
-------------------------------------
9.01 (a) The Exercise Price, the number of Warrant Shares
purchasable upon exercise of each Warrant and the number of Warrants
outstanding are subject to adjustment from time to time upon the occurrence
of the events enumerated in this Section 9. In the event the Company
shall, at any time or from time to time after the Effective Date, issue any
shares of Common Stock as a stock dividend to the holders of Common Stock,
or subdivide or combine the outstanding shares of Common Stock into a
greater or lesser number of shares (any such sale, issuance, subdivision or
combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Exercise Price in effect
immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent) determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares,
and the denominator of which shall be the sum of the number of shares of
Common Stock outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such an
issuance is made.
(b) Upon each adjustment of the Exercise Price pursuant
to this Section 9, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant shall (subject to the provisions
contained in Section 9.02 hereof) be such number of shares (calculated to
the nearest tenth) purchasable at the Exercise Price in effect immediately
prior to such adjustment multiplied by a fraction, the numerator of which
shall be the Exercise Price in effect immediately prior to such adjustment
and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment.
9.02 The Company may elect, upon any adjustment of the Exercise
Price hereunder, to adjust the number of Warrants outstanding, in lieu of
the adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant as hereinabove provided, so that each Warrant
outstanding after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to such
adjustment of the number of Warrants shall become that number of Warrants
(calculated to the nearest tenth) determined by multiplying the number one
by a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be
the Exercise Price in effect immediately after such adjustment. Upon each
adjustment of the number of Warrants pursuant to this Section 9, the
Company shall, as promptly as practicable, cause to be distributed to each
Registered Holder of Warrant Certificates on the date of such adjustment
Warrant Certificates evidencing, subject to Section 10 hereof, the number
of additional Warrants to which such Holder shall be entitled as a result
of such adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for the Warrant
Certificates held by him prior to the date of adjustment (and upon
surrender thereof, if required by the Company) new Warrant Certificates
evidencing the number of Warrants to which such Holder shall be entitled
after such adjustment.
9.03 In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common
Stock), or in case of any sale or conveyance to another corporation of the
property of the Company as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the Company shall
cause effective provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such Warrant, to
purchase the kind and number of shares of stock or other securities or
property (including cash) receivable upon such reclassification, capital
reorganization or other change, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock that might have been
purchased upon exercise of such Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation,
merger, sale or conveyance. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The Company shall not effect
any such consolidation, merger or sale unless prior to or simultaneously
with the consummation thereof the successor (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing
assets or other appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Warrant Agent, the obligation to
deliver to the holder of each Warrant such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations under this Agreement. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
9.04 If at any time after the Effective Date the Company shall
fix a record date for the making of a distribution to all holders of its
Common Stock of evidences of its indebtedness or assets (excluding cash
distributions made as a dividend payable out of earnings or out of surplus
legally available for dividends under the laws of the jurisdiction of the
Company), or securities convertible into Common Stock of the Company, then
in each case the Exercise Price in effect immediately prior to such record
date shall be decreased to an amount determined by multiplying such
Exercise Price by a fraction, the numerator of which is the Market Price on
such record date less the then fair market value per share of Common Stock
(as determined by the Board of Directors of the Company, whose
determination shall be conclusive and described in a statement filed with
the Warrant Agent) of the assets or evidences of indebtedness so
distributed, and the denominator of which is the Market Price on such date.
The number of shares of Common Stock purchasable on such record date shall
be increased to a number of shares equal to (i) the number of shares of
Common Stock purchasable on such record date multiplied by the Exercise
Price in effect immediately prior to the adjustment required by the
preceding sentence, divided by (ii) the adjusted Exercise Price computed
pursuant to the immediately preceding sentence. Such adjustments shall be
made successively whenever such a record date is fixed and, in the event
that such distribution is not so made, the Exercise Price and the number of
shares of Common Stock purchasable upon exercise of the Warrants shall be
adjusted to the Exercise Price and the number of shares which were in
effect prior to such record date.
9.05 Irrespective of any adjustments or changes in the Exercise
Price or the number of shares of Common Stock purchasable upon exercise of
the Warrants, the Warrant Certificates theretofore and thereafter issued
shall, unless the Company shall exercise its option to issue new Warrant
Certificates pursuant to Section 2.04 hereof, continue to express the
Exercise Price per share, the number of shares purchasable thereunder and
the Redemption Price therefor as the Exercise Price per share, and the
number of shares purchasable and the Redemption Price therefore were
expressed in the Warrant Certificates when the same were originally issued.
9.06 After each adjustment of the Exercise Price pursuant to
this Section 9, the Company will promptly prepare a certificate signed by
the Chairman or President, and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary, of the Company setting forth:
(i) the Exercise Price as so adjusted, (ii) the number of shares of Common
Stock purchasable upon exercise of each Warrant after such adjustment, and,
if the Company shall have elected to adjust the number of Warrants, the
number of Warrants to which the registered holder of each Warrant shall
then be entitled, and the adjustment in Redemption Price resulting
therefrom, and (iii) a brief statement of the facts as shall be necessary
to show the reason for and manner of computing such adjustment. The
Company will promptly file such certificate with the Warrant Agent and
cause a brief summary hereof to be sent by ordinary first class mail to
each Registered Holder of Warrants at his last address as it shall appear
on the registry books of the Warrant Agent. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the validity
thereof except as to a Registered Holder (a) to whom notice was not mailed
or (b) whose notice was defective. The affidavit of an officer of the
Warrant Agent or the Secretary or an Assistant Secretary of the Company
that such notice has been mailed shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
9.07 For purposes of Sections 9.01, 9.02 and 9.04 hereof, the
following shall also be applicable:
(a) The number of shares of Common Stock outstanding at any
given time shall not include shares of Common Stock owned or held by or for
the account of the Company, and the distribution of any such treasury
shares shall not be considered a Change of Shares for purposes of said
Sections.
(b) No adjustment of the Exercise Price shall be made
unless such adjustment would require an increase or decrease of at least
$.05 in such Price; provided that any adjustments which by reason of this
clause (b) are not required to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment
which, together with any adjustment(s) so carried forward, shall require an
increase or decrease of at least $.05 in the Exercise Price then in effect
hereunder.
9.08 As used in this Section 9, the term "Common Stock" means
and includes the Common Stock authorized on the Effective Date and shall
also include any capital stock of any class of the Company thereafter
authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends
and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the
shares issuable upon exercise of the Warrants shall include only shares of
such class designated in the Company's Certificate of Incorporation as
Common Stock on the Effective Date or (i), in the case of any
reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 9.03 hereof, the stock, securities or
property provided for in such section or (ii), in the case of any
reclassification or change in the outstanding shares of Common Stock
issuable upon exercise of the Warrants as a result of a subdivision or
combination or consisting of a change in par value, or from par value to no
par value, or from no par value to par value, such shares of Common Stock
as so reclassified or changed.
9.09 Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to Section 9, or as
to the amount of any such adjustment, if required, shall be binding and
conclusive upon the holders of the Warrants and the Company if made in good
faith by the Board of Directors of the Company (or the Board of Directors
of any corporation which is a successor as provided form Section 9.03
hereof). The Board of Directors shall have the power to resolve any
ambiguity or correct any error in this Section 9.
9.10 If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase,
or any options for the purchase of, Common Stock or securities convertible
into or exchangeable for or carrying a right, warrant or option to purchase
Common Stock, the Company shall concurrently therewith grant to each
Registered Holder as of the record date for such transaction of the
Warrants then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date used to
determine the stockholders entitled to the rights, warrants or options
being granted by the Company, the Registered Holder were the holder of
record of the number of whole shares of Common Stock then issuable upon
exercise of his Warrants. Such grant by the Company to the holders of the
Warrants shall be in lieu of any adjustment which otherwise might be called
for pursuant to this Section 9.
9.11 The Company may, at its option, at any time until the
Expiration Date, reduce the then current Exercise Price to any amount
deemed appropriate by the Board of Directors of the Company for any period
of at least twenty (20) consecutive Trading Days (as evidenced in a
resolution adopted by such Board of Directors). The Company shall mail, or
cause to be mailed, a notice of the reduction in the Exercise Price as
provided in this Section to each of the Registered Holders of the Warrants
first class, postage prepaid, not later than the twentieth day before the
commencement of such reduced Exercise Price, at their last address as it
shall appear on the records maintained pursuant to Section 6.02 hereof.
Any notice mailed in the manner provided herein shall be conclusively
presumed to have been duly given whether or not the Registered Holder
receives such notice. The Company shall also give notice of the reduction
in the Exercise Price, within the time provided above, by issuing a release
to that effect to the Dow Jones News Service.
SECTION 10. Fractional Warrants and Fractional Shares.
-----------------------------------------
10.01 If the number of shares of Common Stock purchasable upon
the exercise of each Warrant is adjusted pursuant to Section 9 hereof, the
Company nevertheless shall not be required to issue fractions of shares,
upon exercise of the Warrants or otherwise, or to distribute certificates
that evidence fractional shares. With respect to any fraction of a share
called for upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the current market
value of such fractional share, determined as follows:
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading on privileges on such
exchange or listed for trading on the Nasdaq System, the current
value shall be the Market Price of the Common Stock on such
exchange or System on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day,
the average of the closing bid and asked prices for such day on
such exchange or System; or
(ii) If the Common Stock is not listed or admitted to
unlisted trading privileges, the current value shall be the mean
of the last reported bid and asked prices reported by the
National Quotation Bureau, Inc. on the last business day prior to
the date of the exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current value shall be an amount determined in such
reasonable manner as may be prescribed by the Board of Directors
of the Company.
SECTION 11. Warrant Holders Not Deemed Stockholders. No
---------------------------------------
Registered Holder of Warrants shall, as such, be entitled to vote or to
receive dividends or be deemed the holder of Common Stock that may at any
time be issuable upon exercise of such Warrants for any purpose whatsoever,
nor shall anything contained herein be construed to confer upon the
Registered Holder of Warrants, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants
and been issued shares of Common Stock in accordance with the provisions
hereof.
SECTION 12. Notices to Warrant Holders. So long as this Warrant
--------------------------
shall be outstanding, (i) if the Company shall pay any dividend (other than
a cash dividend from earnings) or make any distribution upon the Common
Stock, (ii) if the Company shall offer to the holders of Common Stock for
subscription or purchase by them any share of any class, evidences of its
indebtedness or assets, convertible securities or any other rights or (iii)
if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or
winding up of the Company shall be effected, then in any such case, the
Company shall cause to be mailed by first class, postage prepaid to the
Holder, at least fifteen (15) days prior the date specified in (x) or (y)
below, as the case may be, a notice containing a brief description of the
proposed action and stating the date on which (x) a record is to be taken
for the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other
securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
SECTION 13. Registration Under The Securities Act Of 1933.
---------------------------------------------
The Company will use its best efforts to effect the registration of the
shares of Common Stock issuable upon the exercise of the Warrants (the
"Warrant Shares"), and in connection therewith, the Company will as
expeditiously as practicable prepare and file with the Securities and
Exchange Commission a registration statement (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Act"), and use its best
efforts to cause such Registration Statement to become effective. The
Company will use its best efforts to maintain such Registration Statement
current under the Act while any of the Warrants are outstanding, subject to
discontinuance of any exercises while the prospectus included in the
Registration Statement is in need of revision, provided that the Company
will use its best efforts to amend or supplement or to reinstate the
Registration Statement, as appropriate, as promptly as practicable. The
Company may include securities in addition to the Warrant Shares in the
Registration Statement or include the Warrant Shares in a registration
statement being filed by the Company with respect to other securities of
the Company. The Company shall bear the entire cost and expense of any
Registration Statement initiated by it under this Section 13. The Company
shall supply prospectuses and other documents as the Holder may request
and shall qualify the Warrant Shares for sale in such jurisdictions as
requested, provided, however, that the Company reserves the right, in its
sole discretion, not to qualify the Warrant Shares in any jurisdiction
where the Company would be required to qualify as a foreign corporation and
is not otherwise required to be qualified therein.
SECTION 14. Rights of Action. All rights of action with respect
----------------
to this Agreement are vested in the respective Registered Holders of the
Warrants. Any Registered Holder of a Warrant, without consent of the
Warrant Agent or of the Holder of any other Warrant, may, in his own behalf
and for his own benefit, enforce against the Company his right to exercise
his Warrants for the purchase of Warrant Shares in the manner provided in
the Warrant Certificate and this Agreement.
SECTION 15. Agreement of Warrant Holders. Every Holder of a
----------------------------
Warrant, by his acceptance thereof, consents and agrees with the Company,
the Warrant Agent and every other Holder of a Warrant that:
(a) The Warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in person or by
his attorney duly authorized in writing and only if the Warrant
Certificates representing such Warrants are surrendered at the office of
the Warrant Agent, duly endorsed or accompanied by a proper instrument of
transfer satisfactory to the Warrant Agent and the Company in their sole
discretion, together with payment of any applicable transfer taxes.
(b) The Company and the Warrant Agent may deem and treat
the person in whose name the Warrant Certificate is registered as the
Holder and as the absolute, true and lawful owner of the Warrants
represented thereby for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice or knowledge to the contrary,
except as otherwise expressly provided in Section 7 hereof.
SECTION 16. Cancellation of Warrant Certificates. If the
------------------------------------
Company shall purchase or acquire any Warrant or Warrants, the Warrant
Certificate or Warrant Certificates evidencing the same shall thereupon be
delivered to the Warrant Agent and cancelled by it and retired. The
Warrant Agent shall also cancel any Warrant Certificate following exercise
of any or all of the Warrants represented thereby or delivered to it for
transfer, split-up, combination or exchange.
SECTION 17. Concerning the Warrant Agent.
----------------------------
17.01 The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company, and its duties shall be determined
solely by the provisions hereof. The Warrant Agent shall not, by issuing
and delivering Warrant Certificates or by any other act hereunder be deemed
to make any representations as to the validity, value or authorization of
the Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or
whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
17.02 The Warrant Agent shall not at any time be under any duty
or responsibility to any holder of Warrant Certificates to make or cause to
be made any adjustment of the Exercise Price or the Redemption Price
provided in this Agreement, or to determine whether any fact exists which
may require any such adjustments, or with respect to the nature or extent
of any such adjustment, when made, or with respect to the method employed
in making the same. It shall not (i) be liable for any recital or
statement of facts contained herein or for any action taken, suffered or
omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants
and obligations contained in this Agreement or in any Warrant Certificate,
or (iii) be liable for any act or omission in connection with this
Agreement except for its own negligence or wilful misconduct.
17.03 The Warrant Agent may at any time consult with counsel
satisfactory to it and shall incur no liability or responsibility for any
action taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
17.04 Any notice, statement, instruction, request, direction,
order or demand of the Company shall be sufficiently evidenced by an
instrument signed by the Chairman of the Board, Vice Chairman, President,
any Vice President, its Secretary, or Assistant Secretary, (unless other
evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted
by it in accordance with such notice, statement, instruction, request,
direction, order or demand believed by it to be genuine.
17.05 The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; it further agrees to indemnify the Warrant
Agent and save it harmless against any and all losses, expenses and
liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses and liabilities arising as a result of
the Warrant Agent's negligence or wilful misconduct.
17.06 The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities
arising as a result of the Warrant Agent's own negligence or wilful
misconduct), after giving thirty (30) days' prior written notice to the
Company. At least fifteen (15) days prior to the date such resignation is
to become effective, the Warrant Agent shall cause a copy of such notice of
resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any
inability of the Warrant Agent to act as such hereunder, the Company shall
appoint a new Warrant Agent in writing. If the Company shall fail to make
such appointment within a period of fifteen (15) days after it has been
notified in writing of such resignation by the resigning Warrant Agent,
then the Registered Holder of any Warrant Certificate may apply to any
court of competent jurisdiction for the appointment of a new Warrant Agent.
Any new Warrant Agent, whether appointed by the Company or by such a court,
shall be a bank or trust company having a capital and surplus, as shown by
its last published report to its stockholders, of not less than $10,000,000
or a stock transfer company. After acceptance in writing of such
appointment by the new Warrant Agent is received by the Company, such new
Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant
Agent, without any further assurance, conveyance, act or deed; but if for
any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and
delivered by the resigning Warrant Agent. Not later than the effective
date of any such appointment the Company shall file notice thereof with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to
be mailed to the Registered Holder of each Warrant Certificate.
17.07 Any corporation into which the Warrant Agent or any new
Warrant Agent may be converted or merged or any corporation resulting from
any consolidation to which the Warrant Agent or any new Warrant Agent shall
be a party or any corporation succeeding to the trust business of the
Warrant Agent shall be a successor Warrant Agent under this Agreement
without any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the provisions of the
preceding paragraph. Any such successor Warrant Agent shall promptly cause
notice of its succession as Warrant Agent to be mailed to the Company and
to the Registered Holder of each Warrant Certificate.
17.08 The Warrant Agent, its subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell
Warrants or other securities of the Company and otherwise deal with the
Company in the same manner and to the same extent and with like effects as
though it were not Warrant Agent. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
SECTION 18. Modification of Agreement. The Warrant Agent and
-------------------------
the Company may by supplemental agreement make any changes or corrections
in this Agreement (i) that they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or manifest
mistake or error herein contained or (ii) that they may deem necessary or
desirable and which shall not adversely affect the interests of the
Registered Holders of Warrant Certificates; provided, however, that this
-------- -------
Agreement shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Registered Holders of
Warrant Certificates representing not less than 50% of the Warrants then
outstanding; and provided, further, that no change in the number or nature
-------- -------
of the securities purchasable upon the exercise of any Warrant, or the
Exercise Price therefor, or the acceleration of the Warrant Expiration
Date, and no change in the redemption provisions of Section 8 hereof or the
anti-dilution provisions of Section 9 hereof which would adversely affect
the interests of any Registered Holder of Warrant Certificates, shall be
made without the consent in writing of the Registered Holder of the Warrant
Certificate representing such Warrant, other than such changes as are
specifically prescribed by this Agreement as originally executed or are
made in compliance with applicable law.
SECTION 19. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be deemed to have
been made when delivered or mailed first class mail, postage prepaid as
follows: if to the Registered Holder of a Warrant Certificate, at the
address of such Holder as shown on the registry books maintained by the
Warrant Agent; if to the Company, at 46 Jonspin Road, Wilmington,
Massachusetts 01887, attention: Chairman, or at such other address as may
have been furnished to the Warrant Agent in writing by the Company.
SECTION 20. Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 21. Binding Effect. This Agreement shall be binding
--------------
upon and inure to the benefit of the Company and the Warrant Agent and
their respective successors and assigns, and the Registered Holders from
time to time of Warrant Certificates. Nothing in this Agreement is
intended or shall be construed to confer upon any other person any right,
remedy or claim, in equity or at law, or to impose upon any other person
any duty, liability or obligation.
SECTION 22. Termination. This Agreement shall terminate at the
-----------
close of business on the Expiration Date of all the Warrants or such
earlier date upon which all Warrants have been exercised, except that the
Warrant Agent shall account to the Company for cash held by it and the
provisions of Section 15 hereof shall survive such termination.
SECTION 23. Counterparts. This Agreement may be executed in
------------
several counterparts, which taken together shall constitute a single
document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
--------------------------
Jack Nelson, Chairman
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Geraldine Zarbo
--------------------------
Authorized Officer
<PAGE>
Warrants for
the Purchase of
_____ Shares
VOID AFTER August 30, 2000
STOCK PURCHASE Warrant Certificate FOR
PURCHASE OF COMMON STOCK
OF
ADVANCED NMR SYSTEMS, INC.
This certifies that FOR VALUE RECEIVED, _______________ or
registered assigns (the "Registered Holder") is the owner of the number of
Common Stock Purchase Warrants (the "Warrants") specified above. Each
Warrant initially entitles the Registered Holder to purchase, subject to
the terms and conditions set forth in this Certificate and the Warrant
Agreement (as hereinafter defined), one fully paid and nonassessable share
of Common Stock, $.01 par value, of Advanced NMR Systems, Inc., a Delaware
corporation (the "Company") at any time after August 31, 1995 and prior to
the Expiration Date (as hereinafter defined), upon the presentation and
surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of American Stock
Transfer & Trust Company as Warrant Agent, or its successor (the "Warrant
Agent") accompanied by the payment of $3.75 or as may be adjusted (the
"Exercise Price") in lawful money of the United States of America in cash
or by official bank or certified check made payable to the Company.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement"),
dated August 31, 1995, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price or the number of shares of Common Stock
subject to purchase upon the exercise of each Warrant represented hereby
are subject to modification or adjustment.
Each Warrant represented hereby is exercisable at the option of
the Registered Holder, but no fractional shares of Common Stock will be
issued. In the case of the exercise of less than all the Warrants
represented hereby, the Company shall cancel this Warrant Certificate upon
the surrender hereof and shall execute and deliver a new Warrant
Certificate or Warrant Certificates of like tenor, which the Warrant Agent
shall countersign, for the balance of such Warrants.
The term "Expiration Date" means 5:00 P.M. (New York time) on
August 30, 2000, or such earlier date as the Warrants shall be redeemed.
If such date shall in the State of New York be a holiday or a day on which
the banks are authorized to close, then the Expiration Date means 5:00 P.M.
(New York time) the next following day which in the State of New York is
not a holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities
pursuant to the exercise of this Warrant unless a registration statement
under the Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed that it
will file a registration statement and will use its best efforts to cause
the same to become effective and to keep such registration statement
current while any of the Warrants are outstanding. This Warrant shall not
be exercisable by a Registered Holder in any jurisdiction where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender
hereof by the Registered Holder at the corporate office of the Warrant
Agent, for a new Warrant Certificate or Warrant Certificates of like tenor
representing an equal aggregate number of Warrants, each of such new
Warrant Certificates to represent such number of Warrants as shall be
designated by such Registered Holder at the time of such surrender. Upon
due presentment with any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this Warrant
Certificate at such office, a new Warrant Certificate or Warrant
Certificates representing an equal aggregate number of Warrants will be
issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
This Warrant may be redeemed at the option of the Company, by
giving irrevocable notice thereof to the Warrant Agent as provided in the
Warrant Agreement, at a redemption price of $.05 per Warrant at any time
after the Market Price (as defined in the Warrant Agreement) for the
securities issuable upon exercise of such Warrant shall be equal to or
exceed $4.50 per share for a period of twenty consecutive trading days.
Notice of redemption shall be given not earlier than the thirtieth or later
than the twentieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to this
Warrant except to receive the $.05 per Warrant upon surrender of this
Certificate.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as
the absolute owner hereof and of each Warrant represented hereby
(notwithstanding any notations of ownership or writing hereon made by
anyone other than a duly authorized officer of the Company or the Warrant
Agent) for all purposes and shall not be affected by any notice to the
contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by two of its
officers thereunto duly authorized and a facsimile of its corporate seal to
be imprinted hereon.
ADVANCED NMR SYSTEMS, INC.
By:_____________________________________
Jack Nelson, Chairman
Attest: ______________________
Secretary
[seal]
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:___________________________________
Authorized Officer
<PAGE>
[FORM OF REVERSE OF Warrant Certificate]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise _____________ Warrants represented by this Warrant Certificate,
and to purchase the securities issuable upon the exercise of such Warrants,
and requests that certificates for such securities shall be issued in the
name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________________________________
__________________________________________
__________________________________________
__________________________________________
[please print or type name and address]
and be delivered to
__________________________________________
__________________________________________
__________________________________________
__________________________________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the balance of
such Warrants be registered in the name of, and delivered to, the
Registered Holder at the address stated below.
Dated: ___________________ X__________________________________________
__________________________________________
__________________________________________
Address
___________________________________________
Taxpayer Identification Number
___________________________________________
Signature Guaranteed
___________________________________________
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ____________________________________ hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________________________________
__________________________________________
__________________________________________
__________________________________________
[please print or type name and address]
______________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
_________________________________________________________________________
Attorney to transfer this Warrant Certificate on the books of the Company,
with full power of substitution in the premises.
Dated: __________________ X__________________________________________
Signature Guaranteed
__________________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND
MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM
OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK
EXCHANGE OR MIDWEST STOCK EXCHANGE.
EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
dated as of August 31, 1995
by and between
MEDICAL DIAGNOSTICS, INC.
and
CHEMICAL BANK
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS AND ACCOUNTING TERMS
----------------------------------------------------
Section 1.01. Defined Terms............................
Section 1.02. Use of Defined Terms.....................
Section 1.03. Accounting Terms.........................
ARTICLE II AMOUNTS AND TERMS OF THE LOANS
-------------------------------------------
Section 2.01. Revolving Loans..........................
Section 2.02. Request for Floating Rate Revolving
Loans....................................
Section 2.03. Repayment of Principal of Revolving
Loans....................................
Section 2.04. Interest Payments on Revolving
Loans....................................
Section 2.05. Term Loan................................
Section 2.06. Repayment of Principal of Term Loan......
Section 2.07. Interest Payment on Term Loan............
Section 2.08. LIBOR Loans..............................
Section 2.09. Commitment Fees..........................
Section 2.10. Rate Determination Protection............
Section 2.11. Prepayment of LIBOR Loans................
Section 2.12. Increased Costs; Capital Adequacy........
Section 2.13. Illegality or Impossibility..............
Section 2.14. Rate Adjustment..........................
Section 2.15. Letters of Credit........................
ARTICLE III LOAN PROCEEDS AND PAYMENTS
----------------------------------------
Section 3.01. Availability.............................
Section 3.02. Payment Notices..........................
Section 3.03. Use of Loan Proceeds.....................
Section 3.04. Payments.................................
Section 3.05. Payments on Non-Business Days............
Section 3.06. Net Payments.............................
ARTICLE IV CONDITIONS OF LENDING
----------------------------------
Section 4.01. Conditions Precedent to Initial Loan.....
Section 4.02. Conditions Precedent to All Loans........
ARTICLE V SECURITY
--------------------
Section 5.01. Grant of Security Interest...............
Section 5.02. Pledges; Further Grants
of Security..............................
ARTICLE VI REPRESENTATIONS AND WARRANTIES
-------------------------------------------
Section 6.01. Representations and Warranties...........
ARTICLE VII COVENANTS OF THE BORROWER
---------------------------------------
Section 7.01. Affirmative Covenants Other
Than Reporting Requirements..............
Section 7.02. Negative Covenants.......................
Section 7.03. Reporting Requirements...................
ARTICLE VIII DEFAULT AND REMEDIES
-----------------------------------
Section 8.01. Events of Default........................
Section 8.02. Rights and Remedies Upon Default.........
Section 8.03. Set-Off..................................
Section 8.04. Right to Cure............................
Section 8.05. Letters of Credit........................
ARTICLE IX FURTHER PROVISIONS AS TO RECEIVABLES
-------------------------------------------------
Section 9.01. Furnishing Information...................
Section 9.02. Disputes.................................
Section 9.03. Collections..............................
ARTICLE X FURTHER RIGHTS OF THE BANK
--------------------------------------
Section 10.01. Further Assurances......................
ARTICLE XI MISCELLANEOUS
--------------------------
Section 11.01. No Waiver; Cumulative Remedies..........
Section 11.02. Amendment, Waivers and Consents.........
Section 11.03. Addresses for Notices, etc..............
Section 11.04. Costs, Expenses and Taxes...............
Section 11 05. Reduction and Termination...............
Section 11.06. Representations and Warranties..........
Section 11.07. Binding Effect; Assignment..............
Section 11.08. Reproduction of Agreement...............
Section 11.09. Consent to Jurisdiction.................
Section 11.10. Governing Law...........................
Section 11.11. Severability............................
Section 11.12. Headings................................
Section 11.13. Waiver of Trial by Jury.................
<PAGE>
LOAN AND SECURITY AGREEMENT dated as of August 31, 1995 between
Medical Diagnostics, Inc., a Delaware corporation (the "Borrower") and
Chemical Bank (the "Bank").
The Borrower and the Bank, each party in consideration that the other
joins herein, hereby act and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement or in any
-------------
certificate or opinion delivered in connection with this Agreement, the
following terms shall have the meanings set out respectively after each:
"Acquisition" - Any purchase or other acquisition made by any Person
of all or substantially all of the capital stock or other equity interests
of any other Person or of all or substantially all of the assets of any
other Person or of any line of business of another Person.
"Adjusted LIBOR Rate" - For any Interest Period, an interest rate per
annum, expressed as a percentage, determined by the Bank pursuant to the
following formula:
* ALR = LIBOR + LRI
-----------
[1.00 - RR]
Where ALR = Adjusted LIBOR Rate
LIBOR = See definition of LIBOR
RR = Reserve Rate
LRI = the applicable LIBOR Rate Increment
* ALR and each component thereof to be rounded upwards
to the next higher 1/100 of 1%.
"Advanced NMR" Advanced NMR Systems, Inc., a Delaware corporation.
"Affiliate" - See Subsection 7.02(n).
"Affiliate Guaranties" - Collectively, (i) that certain Guaranty and
Security Agreement of even date herewith being given to the Bank by
Advanced NMR and (ii) that certain Guaranty and Security Agreement of even
date herewith being given to the Bank by the Guaranteeing Subsidiaries.
"Affiliate Guarantor Collateral" - All collateral as to which the Bank
has received, or is intended to receive, a security interest pursuant to
any Affiliate Guaranty or any pledge agreement delivered pursuant to any
Affiliate Guaranty.
"Aggregate Revolving Loans" - The aggregate principal amount of all
Revolving Loans outstanding at any one time.
"Agreement" (as in "this Agreement") - This Loan and Security
Agreement, as the same may be amended from time to time.
"AMS" Advanced Mammography Systems Inc., a Delaware corporation.
"Bank Certificate" - A certificate signed by an officer of the Bank
setting forth any additional amount required to be paid by the Borrower to
the Bank pursuant to Section 2.08, Section 2.11 or Section 2.12 of this
Agreement, which certificate shall be submitted by the Bank to the Borrower
in connection with each demand made at any time by the Bank upon the
Borrower with respect to such additional amounts, and each such certificate
shall, save for manifest error, constitute conclusive evidence of the
additional amount required to be paid by the Borrower to the Bank upon each
demand. A claim by the Bank for all or any part of any additional amount
required to be paid by the Borrower may be made before and/or after the end
of the Interest Period to which such claim relates or during which such
claim has arisen and before and/or after any payment hereunder to which
such claim relates. Each Bank Certificate shall set forth in reasonable
detail the basis for and calculation of the claim to which it relates.
"Base Rate" For any date, a rate per annum (rounded upward, if
necessary, to the next higher 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such date or (b) the sum of one-half of one (0.5%)
percent per annum plus the Federal Funds Effective Rate in effect on such
date. If for any reason the Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable
to ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Bank to obtain sufficient quotations in
accordance with the terms of the definition of "Federal Funds Effective
Rate" below, the Base Rate shall be determined without regard to clause (b)
of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist.
"Borrower Collateral" - All of the property, rights and interests of
the Borrower described in Subsections 5.01(a)-(g) or in any pledge
agreement delivered pursuant to this Agreement.
"Business Day - Any day which is not a Saturday, nor a Sunday, nor a
public holiday under the laws of the United States of America or the State
of New York applicable to a New York banking corporation or other day on
which banks in New York, New York are authorized or directed to close; and,
if the applicable provision relates to a LIBOR Loan, the term "Business
Day" shall also not include any day on which dealings are not carried on in
the London interbank market or on which banks are not open for business in
London.
"Capital Base" At any time, the sum of (i) the consolidated Tangible
Net Worth of the Borrower and its Subsidiaries then existing, plus (ii) the
----
principal amount of Subordinated Debt of the Borrower then outstanding
(nothing contained in this definition being deemed to authorize the
incurrence of any additional Subordinated Debt).
"Capital Expenditures" - All acquisitions of machinery, equipment,
land, leaseholds, buildings, leasehold improvements and all other
expenditures for purposes which are considered to be fixed assets under
generally accepted accounting principles consistently applied. When a
fixed asset is acquired by a lease which is required to be capitalized
pursuant to generally accepted accounting principles, the amount required
to be so capitalized shall be considered to be an expenditure in the year
such asset is first leased.
"Charter" - The Certificate of Incorporation or other organizational
document of a corporation referred to, in each case as amended to date.
"Collateral" - Collectively, the Affiliate Guarantor Collateral and
the Borrower Collateral.
"Commitment" - The agreement of the Bank to make Loans to the Borrower
pursuant to this Agreement.
"Covenanted Subsidiaries" All Subsidiaries of the Borrower, now
existing or hereafter acquired or created, other than Mass. Mobile Imaging
Venture, Greater Springfield MRI Limited Partnership, MVA Rehabilitation
Associates, Mobile MRI of Western Massachusetts Associates, Merrimack
Scanning Associates and Western Massachusetts Magnetic Resonance Services,
Inc..
"Current Assets" As to any Person, all assets of such Person which are
properly shown as current assets on a balance sheet of such Person prepared
in accordance with generally accepted accounting principles consistently
applied; excluding, however, any and all amounts due from affiliated
entities.
"Current Liabilities" As to any Person, all liabilities of such Person
which are properly shown as current liabilities on a balance sheet of such
Person prepared in accordance with generally accepted accounting principles
consistently applied, including, without limitation, all capitalized lease
payments and fixed prepayments of, and sinking fund payments with respect
to, Indebtedness required to be made within one year from the date of
determination. "Current Liabilities" shall also and in any event be deemed
to include the Revolving Loans.
"Current Maturities" As at any date as of which same is to be
determined, the total principal amount of Indebtedness of the Borrower then
due or coming due or required to be paid within the next following 12
months, including, without limitation, any Indebtedness payable on demand,
all current maturities of long-term debt and any sinking fund installments
in respect thereof and that current portion of any capitalized lease
payment which is attributable to principal.
"Debt Service Coverage Ratio" See Subsection 7.01(k).
"Default" - Any event or circumstance which, with the passage of time
or giving of notice or both, could become an Event of Default.
"Determination Date" See Subsection 7.01(k).
"EBIT" As determined for any period, the sum of: (1) the consolidated
Net Income (or consolidated Net Loss, expressed as a negative number) of
the Borrower and its consolidated Subsidiaries (determined in accordance
with generally accepted accounting principles) for such period, plus (2)
----
all federal and state income taxes (but not taxes in the nature of an ad
--
valorem property tax or a sales or excise tax) paid or accrued by the
-------
Borrower with respect to such period and actually deducted on the
consolidated books of the Borrower for the purposes of computation of
consolidated Net Income (or consolidated Net Loss, as the case may be) of
the Borrower and its Subsidiaries for such period, plus (3) all interest on
----
any Indebtedness paid by the Borrower or any Subsidiary of the Borrower
during such period or accrued by the Borrower or any such Subsidiary for
such period and in each case actually deducted on the consolidated books of
the Borrower for the purposes of computation of consolidated Net Income (or
consolidated Net Loss, as the case may be) of the Borrower and its
Subsidiaries for the period involved.
"EBITDA Available for Debt Service" - As determined for any period,
the result of: (1) the consolidated Net Income (or consolidated Net Loss,
expressed as a negative number) of the Borrower and its Subsidiaries for
such period (excluding from each item of revenue and expense derived from
any Subsidiary which is not wholly-owned a pro rata share thereof
--- ----
representing minority interests), plus (2) all federal and state income
----
taxes (but not taxes in the nature of an ad valorem property tax or a sales
-- -------
or excise tax) paid or accrued by the Borrower with respect to such period
and actually deducted on the consolidated books of the Borrower for the
purposes of computation of consolidated Net Income (or consolidated Net
Loss, as the case may be) of the Borrower and its Subsidiaries for such
period, plus (3) all interest on any Indebtedness paid by the Borrower or
----
any Subsidiary of the Borrower during such period or accrued by the
Borrower or any such Subsidiary for such period and in each case actually
deducted on the consolidated books of the Borrower for the purposes of
computation of consolidated Net Income (or consolidated Net Loss, as the
case may be) of the Borrower and its Subsidiaries for the period involved
(excluding, with respect to any interest paid by any of Mass. Mobile
Imaging Venture, Greater Springfield MRI Limited Partnership and MVA
Rehabilitation Associates, a pro rata share thereof representing minority
--- ----
interests), plus (4) the amount of the provision for depreciation and/or
----
amortization actually deducted on the consolidated books of the Borrower
for the purposes of computation of consolidated Net Income (or consolidated
Net Loss, as the case may be) of the Borrower and its Subsidiaries for such
period (excluding, with respect to any such depreciation and/or
amortization recorded by any of Mass. Mobile Imaging Venture, Greater
Springfield MRI Limited Partnership and MVA Rehabilitation Associates, a
pro rata share thereof representing minority interests), minus (5) the
--- ---- -----
amount of all Capital Expenditures made by the Borrower and/or any of its
Subsidiaries during the period involved and not financed as permitted under
Subsection 7.02(a) below (excluding, with respect to any such non-financed
Capital Expenditures which are made by any of Mass. Mobile Imaging Venture,
Greater Springfield MRI Limited Partnership and MVA Rehabilitation
Associates, a pro rata share thereof representing minority interests).
--- ----
"ERISA" - See Subsection 6.01(l).
"Eurocurrency Liabilities" - Has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as in effect from time to time, or in any successor
regulation relating to the liabilities described in said Regulation D.
"Event of Default" - Any of the events specified in Section 8.01
hereof.
"Federal Funds Effective Rate" As determined for any day, the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day for such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank in its discretion.
"Floating Rate Loan" - Any Loan which bears interest at a rate
calculated with reference to the Base Rate.
"Floating Rate Revolving Loan" - Any Revolving Loan which is a
Floating Rate Loan.
"Guaranteeing Subsidiaries" The Subsidiaries listed on Exhibit A
hereto, as well as any other Subsidiaries of the Borrower hereafter created
or acquired.
"Guarantors" Collectively, Advanced NMR and each of the Guaranteeing
Subsidiaries.
"Impositions" - All present and future taxes, levies, duties,
impositions, deductions, charges and withholdings applicable to the Bank
with respect to any LIBOR Loan, excluding, however, any taxes imposed
directly on the Bank's income and any franchise taxes imposed on it by the
jurisdiction under the laws of which the Bank is organized or any political
subdivision thereof.
"Indebtedness" - The total of all obligations of a Person, whether
current or long-term, senior or subordinated, which in accordance with
generally accepted accounting principles would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to
be determined, and shall also include such Person's liability in respect of
guaranties, endorsements (other than for collection in the ordinary course
of business) or other arrangements whereby responsibility is assumed for
the obligations of others, whether by agreement to purchase or otherwise
acquire the obligations of others, including any agreement, contingent or
otherwise, to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"Interest Payment Date" - As to any LIBOR Loan, the last day of the
Interest Period for such LIBOR Loan; provided, however, that if the
Interest Period for a LIBOR Loan is longer than three months, then there
will be two Interest Payment Dates for such LIBOR Loan, the first being at
the expiration of three months from the date of the making of such LIBOR
Loan and the second being the last day of such Interest Period.
"Interest Period" - As to each LIBOR Loan, the period commencing with
the date of the making of such LIBOR Loan and ending one, two, three or six
months thereafter, as the Borrower may select pursuant to Section 2.08
below; provided that (A) any such Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day occurs in a new calendar
month, in which case such Interest Period shall end on the immediately
preceding Business Day; (B) any such Interest Period which begins on a day
for which there is no numerically corresponding day in the calendar month
during which such Interest Period is to end shall end on the last Business
Day of such calendar month; (C) no Interest Period as to any Revolving Loan
may be selected which would end after the Revolving Expiration Date; and
(D) no Interest Period may be selected as to any portion of the Term Loan
which would end after the date when such portion of the Term Loan becomes
due and payable in accordance with the provisions of the Term Note.
"Inventory" All goods now owned or hereafter acquired by the Borrower
and intended for sale or lease, all raw materials, parts, work-in-process
and finished goods, and all materials and supplies which are used or which
may be used in manufacturing, selling, packing, shipping, advertising or
furnishing of goods, whether now owned or hereafter acquired or created and
wherever located, as well as all proceeds (including, without limitation,
insurance proceeds) and products of any of the foregoing.
"LIBOR" - With respect to each Interest Period, that rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1%) at which
deposits in United States Dollars are offered to the Bank in the London
interbank market by prime banks (as reasonably determined by the Bank), for
a period coterminous with the term of such Interest Period and in an amount
approximately equal to the principal amount of the LIBOR Loan to which such
Interest Period is to apply, as determined by the Bank on that date which
is two Business Days prior to the first day of the applicable Interest
Period.
"LIBOR Loan" - Any Loan which bears interest at an Adjusted LIBOR
Rate.
"LIBOR Rate Increment" Subject to Section 2.14 below, as to Revolving
Loans 2.5; and (subject to Section 2.14 below) as to all or any portion of
the Term Loan which becomes a LIBOR Loan 3.0.
"LIBOR Rate Revolving Loan" Any Revolving Loan which is a LIBOR Loan.
"Loan" - Any obligation (matured or unmatured) of the Borrower to the
Bank now or hereafter arising under or in respect of this Agreement
(including, without limitation, any Revolving Loan and the Term Loan).
"London" - The City of London in England.
"Material Adverse Effect" Any act, omission or circumstance which
could reasonably be expected to have a material adverse effect on (i) the
business, prospects, affairs, operations or condition of the Borrower and
the Guaranteeing Subsidiaries taken as a whole, or (ii) the ability of the
Borrower to carry out its obligations under this Agreement, the Notes
and/or any of the other documents delivered by the Borrower hereunder or
(iii) the validity or enforceability of this Agreement, the Notes and/or
any of such other documents.
"Measurement Period" See Subsection 7.01(k).
"Merger" The merger of Old MDI with and into ANMR Acquisition Corp.,
the resulting corporation being a wholly-owned Subsidiary of Advanced NMR
which is changing its name to "Medical Diagnostics, Inc.".
"Net Income" (or "Net Loss") - The book net income (or book net loss,
as the case may be) of a Person for any period, after all taxes actually
paid or accrued and all expenses and other charges determined in accordance
with generally accepted accounting principles consistently applied.
"Net Working Capital" The amount by which Current Assets exceed
Current Liabilities.
"Notes" - Collectively, the Revolving Note and the Term Note.
"Obligations" See Section 5.01.
"Officer's Certificate" - A certificate delivered in compliance with
Subsection 4.02(e).
"Old MDI" The former Medical Diagnostics, Inc., a Delaware
corporation, which has been merged into the Borrower pursuant to the
Merger.
"PBGC" - See Subsection 6.01(l).
"Person" - An individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Premises" - All locations now or hereafter owned, leased or operated
by the Borrower or by any Subsidiary of the Borrower.
"Prime Rate" - That rate of interest per annum announced by the Bank,
from time to time, at its Principal Office, as being its prime rate, it
being understood that such rate is merely a reference rate, not necessarily
the lowest, which serves as the basis upon which effective rates of
interest are calculated for obligations making reference thereto.
"Principal Office" - The principal place of business of the Bank, now
located at 270 Park Avenue, New York, NY.
"Receivables" - All of the Borrower's present and future accounts,
accounts receivable and notes, drafts, acceptances and other instruments
representing or evidencing a right to payment for goods sold or for
services rendered.
"Reserve Rate" - The aggregate rate, expressed as a decimal, at which
the Bank would be required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor or
similar regulation relating to such reserve requirements) against
Eurocurrency Liabilities, as well as any other reserve required of the Bank
with respect to the LIBOR Loans. The Adjusted LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Rate.
"Revolving Commitment Amount" - Subject to reduction as provided in
Section 11.05, as determined at any date, that amount by which (x)
$6,000,000 exceeds (y) the sum of (i) all then undrawn amounts of
outstanding letters of credit issued by the Bank for the account of the
Borrower or any Guaranteeing Subsidiary plus (ii) all amounts then drawn on
any such letter of credit which at said date shall not have been reimbursed
to the Bank by the Borrower or such Guaranteeing Subsidiary.
"Revolving Expiration Date" August 31, 1998.
"Revolving Loans" - Loans made by the Bank to the Borrower pursuant to
Section 2.01. Subject to the terms of this Agreement, Revolving Loans may
be Floating Rate Loans or LIBOR Loans.
"Revolving Note" - The $6,000,000 face amount promissory note of the
Borrower in the form of Exhibit B attached hereto.
"Subordinated Debt" - All Indebtedness hereafter incurred by the
Borrower which is fully subordinated to the Loans pursuant to a
subordination agreement in form and substance satisfactory to the Bank.
"Subsidiary" - As to any Person, any corporation or other entity as to
which such Person and/or any of its Subsidiaries, directly or indirectly,
owns, or has the right to control or direct the voting of, fifty (50%)
percent or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances), and
also any other corporation or other entity whose financial results may be
consolidated with those of said Person under generally accepted accounting
principles. The term "Subsidiary" will in any event be deemed to include
the Covenanted Subsidiaries.
"Tangible Net Worth" - An amount equal to the total assets of any
Person (excluding the total intangible assets of such Person) minus the
total liabilities of such Person. Total intangible assets shall be deemed
to include, but shall not be limited to, the excess of cost over book value
of acquired businesses accounted for by the purchase method, formulae,
trademarks, trade names, patents, patent rights and deferred expenses
(including, but not limited to, unamortized debt discount and expense,
organizational expense and experimental and development expenses).
Further, Tangible Net Worth shall expressly exclude (1) any write-up in the
book value of any asset resulting from a revaluation thereof after the date
of this Agreement, (2) earnings or losses attributable to equity interests
in Persons that are not Subsidiaries, unless actually received, (3) the
effect of any changes in the method of accounting and (4) minority
interests in any Subsidiaries which are not wholly-owned.
"Term Loan" The Loan made by the Bank to the Borrower pursuant to
Section 2.05.
"Term Note" The $9,000,000 original principal amount promissory note
of the Borrower in the form of Exhibit C attached hereto.
Section 1.02. Use of Defined Terms. Any defined term used in the
--------------------
plural preceded by the definite article shall be taken to encompass all
members of the relevant class. Any defined term used in the singular
preceded by "any" shall be taken to indicate any number of the members of
the relevant class.
Section 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with United
States generally accepted accounting principles consistently applied on the
basis used by the concerned entity (or its corporate predecessor) in prior
years.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
Section 2.01. Revolving Loans. Subject to the terms and conditions
---------------
hereinafter set forth, the Bank will make loans under this Section 2.01
("Revolving Loans") to the Borrower at the Principal Office of the Bank on
any Business Day prior to the first to occur of (i) the Expiration Date or
(ii) the earlier termination of the Commitment pursuant to Section 8.02 or
the earlier termination of this Agreement under Section 11.05, in such
amounts as the Borrower may request; provided, however, that the Aggregate
Revolving Loans shall at no time exceed the then-effective Revolving
Commitment Amount. Within such Revolving Commitment Amount, and subject to
the terms and conditions hereof, the Borrower may obtain Revolving Loans,
repay Revolving Loans and obtain Revolving Loans again on one or more
occasions. Each request for a Revolving Loan shall be in a principal
amount of $500,000 or an integral multiple of $100,000 in excess of
$500,000. The Revolving Loans shall be evidenced by the Revolving Note of
the Borrower, dated as of the date hereof, payable to the order of the
Bank. The Borrower hereby irrevocably authorizes the Bank to make or cause
to be made, on a schedule attached to the Revolving Note or on the books of
the Bank, at or following the time of making each Revolving Loan and of
receiving any payment of principal, an appropriate notation reflecting such
transaction and the then aggregate unpaid principal balance of the
Revolving Loans. The unpaid principal amount, as so noted, will constitute
presumptive evidence as to the amount owed by the Borrower with respect to
principal of the Revolving Loans. Failure of the Bank to make any such
notation shall not, however, affect any obligation of the Borrower or right
of the Bank hereunder or under the Revolving Note.
Section 2.02. Request for Floating Rate Revolving Loans. Except as
-----------------------------------------
otherwise provided below with respect to LIBOR Loans, the Borrower will
give the Bank, prior to 12:00 Noon on the Business Day on which a Revolving
Loan is to be made, written notice specifying the amount and date of each
Revolving Loan requested.
Section 2.03. Repayment of Principal of Revolving Loans. The
-----------------------------------------
Borrower will repay in full all Revolving Loans and all interest accrued
thereon to the date of payment upon the first to occur of: (i) the
Revolving Expiration Date or (ii) an acceleration under Subsection 8.02(a)
following an Event of Default. Except as provided below with respect to
LIBOR Loans, the Borrower may prepay at any time, without premium or
penalty, the whole or any portion of any Revolving Loan. Each such
prepayment, if less than the Aggregate Revolving Loans then outstanding,
shall be in a principal amount of at least $100,000.
Section 2.04. Interest Payments on Revolving Loans. The Borrower
------------------------------------
will pay interest on the principal amount of the Aggregate Revolving Loans
outstanding from time to time, from the date of the initial Revolving Loan
until payment of all Revolving Loans and the Revolving Note in full.
Interest on Floating Rate Revolving Loans will be payable monthly in
arrears on the first day of each month (commencing with the first such date
after the making of any Revolving Loan). Interest on any LIBOR Rate
Revolving Loan will be payable on the Interest Payment Date or Dates
applicable thereto. In any event, interest shall also be paid on the date
of payment of the Revolving Loans in full. Subject to Section 2.14 below,
interest on Floating Rate Revolving Loans shall be paid at a fluctuating
rate per annum which shall at all times be equal to the sum of (i) one-
quarter of one (0.25%) percent per annum plus (ii) the Base Rate as in
effect from time to time (but in no event in excess of the maximum rate
permitted by then applicable law), with a change in such rate of interest
to become effective on the same day on which any change in the Base Rate is
effective. The rate of interest payable on each LIBOR Rate Revolving Loan
shall be the Adjusted LIBOR Rate applicable thereto. Notwithstanding the
foregoing, after the occurrence and during the continuance of any Event of
Default, interest on all outstanding principal of the Revolving Loans (and,
to the extent permitted by law, on any overdue interest on the Revolving
Loans) shall be payable at a fluctuating rate per annum which at all times
shall be equal to the sum of (i) two (2%) percent per annum plus (ii) the
Base Rate as in effect from time to time (but in no event in excess of the
maximum rate from time to time permitted by then applicable law),
compounded monthly and payable on demand.
Section 2.05. Term Loan. Pursuant to this Agreement, the Bank is
---------
this day making a term loan (the "Term Loan") to the Borrower in the
original principal amount of $9,000,000. The Term Loan is evidenced by the
Term Note. The Borrower hereby irrevocably authorizes the Bank to make or
cause to be made, on a schedule attached to the Term Note or on the books
of the Bank, at or following the time of receiving each payment or
prepayment of principal of the Term Note, an appropriate notation
reflecting such transaction and the then aggregate unpaid principal balance
of the Term Loan. Failure of the Bank to make any such notation shall not,
however, affect any obligation of the Borrower hereunder or under the Term
Note. The aggregate unpaid principal amount of the Term Loan, as recorded
by the Bank from time to time on such schedule or on such books, shall
constitute presumptive evidence of such amount.
Section 2.06. Repayment of Principal of the Term Loan. The Borrower
---------------------------------------
will repay the principal amount of the Term Loan in eighteen consecutive
quarterly installments, each in the amount of $500,000, payable on the last
day of each calendar quarter commencing March 31, 1996 and continuing on
the last day of each calendar quarter thereafter through and including June
30, 2000 when there shall be due and payable an amount equal to all then
unpaid principal of the Term Loan and all accrued interest thereon. Except
as otherwise provided below with respect to so much of the Term Loan as is
then represented by a LIBOR Loan, the Borrower may at its option prepay at
any time, without premium or penalty, the whole or any portion of the Term
Loan; provided that (i) each such optional prepayment, if less than the
entire principal amount of the Term Loan then outstanding, shall be in an
amount of $500,000 or an integral multiple thereof and (ii) each such
prepayment shall be accompanied by payment of all interest on the Term Loan
accrued to the date of such prepayment. Any partial prepayment of
principal of the Term Loan shall be applied to installments of principal of
the Term Loan thereafter coming due in inverse order of normal maturity.
The Borrower shall give not less than 10 Business Days' prior written
notice of any prepayment of the Term Loan.
Section 2.07. Interest Payments on Term Loan. The Borrower will pay
------------------------------
interest on the principal amount of the Term Loan outstanding from time to
time, from the date hereof until payment of the Term Loan and the Term Note
in full. Except as provided below with respect to all or any portion of
the Term Loan which constitutes a LIBOR Loan, such interest will be payable
monthly in arrears on the first day of each month (commencing with
October 1, 1995) and on the date of payment in full of the Term Loan.
Interest on all or any portion of the Term Loan which constitutes a LIBOR
Loan will be payable on the Interest Payment Date or Dates applicable
thereto. Except as provided below with respect to all or any portion of
the Term Loan which constitutes a LIBOR Loan, the rate of interest on the
Term Loan shall, subject to Section 2.14 below, be a fluctuating rate per
annum which shall at all times be equal to the sum of (i) one-half of one
(0.5%) percent per annum plus (ii) the Base Rate as in effect from time to
time (but in no event in excess of the maximum rate permitted by then
applicable law), with a change in such rate of interest to become effective
on the same day on which any change in the Base Rate is effective. The
rate of interest payable on all or any portion of the Term Loan which
constitutes a LIBOR Loan will be the Adjusted LIBOR Rate applicable
thereto. Notwithstanding the foregoing, after the occurrence and during
the continuance of any Event of Default, interest on all outstanding
principal of the Term Loan (and, to the extent permitted by law, on any
overdue interest on the Term Loan) shall be payable at a fluctuating rate
per annum which at all times shall be equal to the sum of (i) two (2%)
percent per annum plus (ii) the Base Rate as in effect from time to time
(but in no event in excess of the maximum rate permitted by then applicable
law), compounded monthly and payable on demand.
Section 2.08. LIBOR Loans. (a) Any Revolving Loan made under this
-----------
Article II will, except as provided in this Section 2.08, be a Floating
Rate Loan. Subject to the conditions set forth in this Agreement, the
Borrower may elect that any Revolving Loan to be made under Section 2.01
will be made as a LIBOR Loan. Such election shall be made by the Borrower
giving to the Bank a written or facsimile notice (a "Fixed Rate Borrowing
Notice") containing the information described below, which Fixed Rate
Borrowing Notice must be received by the Bank not later than 12:00 noon
(New York time) three Business Days prior to the date of the proposed
borrowing. Each Fixed Rate Borrowing Notice must state that a LIBOR Loan
is being requested, specify the amount of the proposed LIBOR Loan requested
and specify the duration of the Interest Period selected for such Revolving
Loan. Any Fixed Rate Borrowing Notice shall, upon receipt by the Bank,
become irrevocable and binding on the Borrower. If the Borrower shall
submit a Fixed Rate Borrowing Notice and shall then fail for any reason to
borrow the LIBOR Loan described therein, the Borrower shall, upon
submission by the Bank of a Bank Certificate with respect thereto,
forthwith indemnify the Bank against any loss or expense incurred by the
Bank as a result of any such failure by the Borrower, including, without
limitation, any loss or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by the Bank to fund or
maintain the requested LIBOR Rate Revolving Loan. Each such LIBOR Rate
Revolving Loan will mature and be due and payable in full on the last day
of the Interest Period applicable thereto. The principal amount of any
such LIBOR Rate Revolving Loan so repaid may be reborrowed as a new LIBOR
Rate Revolving Loan to the extent and on the terms and conditions contained
in this Agreement by delivery to the Bank of a new Fixed Rate Borrowing
Notice conforming to the requirements set forth above in this Section 2.08
or, to the extent and on the terms and conditions contained in this
Agreement, may be reborrowed as a Floating Rate Revolving Loan (and any
LIBOR Rate Revolving Loan not so repaid and not so reborrowed as a new
LIBOR Rate Revolving Loan will be deemed to have been so reborrowed as a
Floating Rate Revolving Loan).
(b) In addition to the foregoing, the Borrower may elect that all or
any portion of the Term Loan (provided that such portion is in the
principal amount of $500,000 or an integral multiple of $100,000 in excess
of $500,000) be converted to a LIBOR Loan. Such election shall be made by
the Borrower giving to the Bank a written or facsimile notice (a "Fixed
Rate Conversion Notice") containing the information described below, which
Fixed Rate Conversion Notice must be received by the Bank not later than
12:00 noon (New York Time) three (3) Business Days prior to the date of the
proposed conversion. Each Fixed Rate Conversion Notice must state that a
conversion to a LIBOR Loan is requested, specify the amount of the relevant
LIBOR Loan and specify the duration of the Interest Period selected. At
the end of any Interest Period applicable to all or any portion of the Term
Loan, the Term Loan (or such portion) shall become a Floating Rate Loan,
subject to the Borrower's right to again convert same to a LIBOR Loan
pursuant to the provisions of this Subsection 2.08(b).
(c) Any request for a LIBOR Rate Revolving Loan and any election to
convert all or any portion of the Term Loan to a LIBOR Loan may be made on
behalf of the Borrower only by a duly authorized officer; provided,
however, that the Bank may conclusively rely upon any written or facsimile
communication received from any individual whom the Bank believes in good
faith to be such a duly authorized officer.
Section 2.09. Commitment Fees. The Borrower will pay to the Bank on
---------------
the last day of each calendar quarter, commencing on September 30, 1995,
and on the Revolving Expiration Date or the date of any earlier termination
of the Commitment, commitment fees ("Commitment Fees") computed in arrears
on the daily average unused portion of the Revolving Commitment Amount
during the calendar quarter then ending. Such Commitment Fees will be
payable, based on such daily average unused portion of the Revolving
Commitment Amount, at the rate of 0.375% per annum, appropriately prorated
for any period of less than a calendar quarter. As used herein, the
"unused portion" of the Revolving Commitment Amount shall mean such unused
portion of such Revolving Commitment Amount as results from the fact either
that the Bank has not for any reason made Revolving Loans up to the
Revolving Commitment Amount or from the fact that the Borrower has repaid
Revolving Loans so as to increase the amount of such unused portion. The
Bank will endeavor to invoice the Borrower for the estimated quarterly
Commitment Fees not less than 15 days prior to each due date.
The closing fee provided for in the Affiliate Guaranty from Advanced
NMR and the Commitment Fees provided for in this Section 2.09 are in
addition to any fees, balances or charges which may be applicable to other
services now or hereafter provided to the Borrower by the Bank or any of
its affiliates.
Section 2.10. Rate Determination Protection. In the event that:
-----------------------------
(i) the Bank shall determine that, by reason of circumstances
affecting the London interbank market or otherwise, adequate and
reasonable methods do not exist for ascertaining LIBOR for any
Interest Period, or
(ii) the Bank shall determine that:
(A) the making or continuation of any LIBOR Loan has been
made impracticable or unlawful by (1) the occurrence of a
contingency that materially and adversely effects the London
interbank market or (2) compliance by the Bank in good faith with
any applicable law or governmental regulation, guideline or order
or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with
any request or directive of any such governmental authority
(whether or not having the force of law); or
(B) LIBOR will not adequately and fairly reflect the cost
to the Bank of funding its LIBOR Loans for such Interest Period
then the Bank shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower) to the Borrower. In such
event the Borrower shall forthwith repay all outstanding LIBOR Loans and
the obligation of the Bank to make LIBOR Loans shall be suspended until the
Bank determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Bank shall notify the Borrower.
Section 2.11. Prepayment of LIBOR Loans. The following provisions
-------------------------
shall be effective as to any LIBOR Loan: If, due to acceleration of the
maturity of the Notes or due to optional prepayment or for any other
reason, the Bank receives payment of any installment of principal of any
LIBOR Loan on any date prior to the last day of the then-current Interest
Period applicable thereto, the Borrower shall, upon demand and receipt of a
Bank Certificate from the Bank with respect thereto, pay forthwith to the
Bank any amounts required to compensate the Bank for any losses, costs or
expenses which it may have incurred and may reasonably incur as a result of
such payment, including, without limitation, any loss or expense incurred
by reason of the liquidation or redeployment of funds acquired by the Bank
to fund or maintain such LIBOR Loan.
Section 2.12. Increased Costs; Capital Adequacy.
---------------------------------
(a) If the adoption or effectiveness, after the date hereof, of any
applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) shall subject the Bank to any Imposition or other charge with
respect to any LIBOR Loan or its obligation to make LIBOR Loans, or
shall change the basis of taxation of payments to the Bank of the
principal of or interest on any LIBOR Loan or any other amounts due
under this Agreement in respect of any LIBOR Loan or the Bank's
obligation to make LIBOR Loans (except for changes in the rate of
taxation on the overall net income of the Bank imposed by the
jurisdiction in which the Bank's Principal Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit, deposit insurance or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding any such requirement already
included in the applicable Reserve Rate) against assets of, deposits
with or for the account of, or credit extended by, the Bank or shall
impose on the Bank or on the London interbank market any other
condition affecting any LIBOR Loan or the Bank's obligation to make
LIBOR Loans
and the result of any of the foregoing is to increase the cost to the Bank
of making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by the Bank under this Agreement or under any Note
with respect thereto, by an amount deemed by the Bank to be material, then,
upon demand by the Bank and receipt of a Bank Certificate from the Bank
with respect thereto, the Borrower shall pay forthwith to the Bank such
additional amount or amounts as will compensate the Bank for such increased
cost or reduction in receipts.
(b) If the Bank shall have determined that the adoption,
effectiveness or phase-in after the date hereof of any applicable law, rule
or regulation regarding capital requirements for banks or bank holding
companies, or any change therein after the date hereof, or any change after
the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with
any request or directive of such entity regarding capital adequacy (whether
or not having the force of law) has or would have the effect of reducing
the return on the Bank's capital with respect to its Commitment or any
Loans (whether in respect of Floating Rate Loans or LIBOR Loans) to a level
below that which the Bank could have achieved (taking into consideration
the Bank's policies with respect to capital adequacy immediately before
such adoption, effectiveness, phase-in, change or compliance and assuming
that the Bank's capital was then fully utilized) by any amount deemed by
the Bank to be material: (i) the Bank shall promptly after its
determination of such occurrence give notice thereof to the Borrower; and
(ii) the Borrower shall pay to the Bank as an additional fee from time to
time on demand such amount as the Bank certifies to be the amount that will
compensate it for such reduction. A certificate of the Bank claiming
compensation under this Section shall be conclusive in the absence of
manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount or
amounts to be paid to it hereunder and the method by which such amounts
were determined. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
(c) No failure on the part of the Bank to demand compensation on any
one occasion shall constitute a waiver of its right to demand such
compensation on any other occasion and no failure on the part of the Bank
to deliver any Bank Certificate in a timely manner shall in any way reduce
any obligation of the Borrower to the Bank under this Section 2.12.
Section 2.13. Illegality or Impossibility. Notwithstanding any other
---------------------------
provision of this Agreement, if the introduction of or any change in or in
the interpretation or administration of any law or regulation applicable to
the Bank or the Bank's activities in the London interbank market shall make
it unlawful, or any central bank or other governmental authority having
jurisdiction over the Bank or the Bank's activities in the London interbank
market shall assert that it is unlawful, or otherwise make it impossible,
for the Bank to perform its obligations hereunder to make LIBOR Loans or to
continue to fund or maintain LIBOR Loans, then on notice thereof and demand
therefor by the Bank to the Borrower, (i) the obligation of the Bank to
fund LIBOR Loans shall terminate and (ii) the Borrower shall within five
(5) Business Days after the Bank gives such notice prepay in full all
affected LIBOR Loans.
Section 2.14. Rate Adjustment. If for any Measurement Period (as
---------------
defined in Subsection 7.01(k) below) ending December 31, 1995, March 31,
1996, June 30, 1996, September 30, 1996, December 31, 1996 or March 31,
1997, the Borrower fails to achieve a Debt Service Coverage Ratio of at
least 1.2 to 1 (the "Target Coverage Ratio"), the Borrower will pay to the
Bank, as additional interest, an amount equal to the difference between (x)
the interest which would have been payable on the Loans outstanding for
such fiscal quarter at the Increased Rate (hereinafter defined) and (y) the
interest actually paid on such outstanding Loans for such fiscal quarter.
Such additional interest will be paid within 45 days after the end of the
fiscal quarter to which it relates (or, in the case of the fiscal quarter
ending September 30, 1996, within 90 days after the end of such fiscal
quarter or, in the case of all fiscal quarters, within such longer period
as may be permitted by Subsections 7.03(b) and (c) with respect to the
furnishing of financial statements). If the Borrower fails to submit to
the Bank timely quarterly financial statements complying with the
provisions of Subsection 7.03(a) for any of the aforesaid fiscal quarters
(or, in the case of the fiscal quarter ending September 30, 1996, timely
consolidating financial statements complying with the provisions of
Subsection 7.03(c) for the fiscal year then ending, containing separate
information for said fiscal quarter ending September 30, 1996 in such
detail as is reasonably satisfactory to the Bank), the Borrower will be
deemed to have failed to achieve the Target Coverage Ratio for such fiscal
quarter. As used herein, (1) the Increased Rate for any Floating Rate
Revolving Loan will be deemed to be a fluctuating rate per annum equal to
the sum of (i) 0.65% per annum plus (ii) the Base Rate as in effect from
time to time; (2) the Increased Rate for all or any portion of the Term
Loan which constitutes a Floating Rate Loan will be deemed to be a
fluctuating rate per annum equal to the sum of (i) 0.90% per annum plus
(ii) the Base Rate in effect from time to time; and (3) the Increased Rate
for any LIBOR Loan will be determined by applying the formula for "Adjusted
LIBOR Rate" set forth in Section 1.01 above, except that for this purpose
the LIBOR Rate Increment for the purposes of Revolving Loans will be deemed
to be 2.9 and the LIBOR Rate Increment the purposes of the Term Loan will
be deemed to be 3.4.
Section 2.15. Letters of Credit. At the Borrower's request, the Bank
-----------------
may, from time to time, in its sole discretion issue one or more letters of
credit for the account of the Borrower or any Guaranteeing Subsidiary;
provided that at the time of each such issuance and after giving effect
thereto (x) the sum of (i) the Aggregate Revolving Loans, plus (ii) the
stated amount of such letter of credit to be so issued, plus (iii) the
undrawn amounts of all other letters of credit then outstanding issued by
the Bank for the account of the Borrower or any Guaranteeing Subsidiary,
plus (iv) all amounts then drawn on any such letter of credit which at that
date shall not have been reimbursed to the Bank by the Borrower will in no
event exceed (y) $6,000,000 (as such number may be reduced pursuant to
Section 11.05). Any such letter of credit will be issued for such fee and
upon such terms and conditions as may be agreed to by the Bank and the
Borrower at the time of issuance. If any such letter of credit is issued
for the account of a Guaranteeing Subsidiary, the Borrower will deliver to
the Bank a guaranty of such Subsidiary's liability to the Bank, such
Guaranty to be satisfactory in form and substance to the Bank. The
Borrower hereby authorizes the Bank, without further request from the
Borrower, to cause the Borrower's liability to the Bank for reimbursement
of funds drawn under any such letter of credit or in respect of any such
guaranty to be repaid from the proceeds of a Revolving Loan to be made
hereunder. The Borrower hereby irrevocably requests that such Revolving
Loans be made.
ARTICLE III
LOAN PROCEEDS AND PAYMENTS
Section 3.01. Availability. The proceeds of all Revolving Loans and
------------
the Term Loan shall be credited by the Bank to a general deposit account
maintained by the Borrower with the Bank or otherwise as the Borrower may
direct in writing.
Section 3.02. Payment Notices. Without limitation of the Bank's
---------------
rights under Section 8.03 in case of an Event of Default, the Bank will
endeavor to provide the Borrower with an appropriate invoice (which may be
estimated) not less than 15 days prior to the due date of any payment of
interest, principal and/or Commitment Fees under this Agreement and/or any
Note. The failure of the Bank to provide any such invoice shall not affect
the obligation of the Borrower to pay when due interest, principal and all
other sums as provided in this Agreement and/or in any Note.
Section 3.03. Use of Loan Proceeds. The proceeds of the Revolving
--------------------
Loans will be used solely for repayment of existing debt owed to Fleet Bank
of Massachusetts, N.A., for amounts due and expenses incurred in
conjunction with the Merger and for working capital purposes of the
Borrower and its Affiliates. The proceeds of the Term Loan will be used
for the corporate purposes of the Borrower and its Affiliates.
Section 3.04. Payments. Except as otherwise provided in Sections
--------
3.02 and 8.03, all payments of interest, principal and any other sum
payable hereunder and/or under any Note shall be made to the Bank at its
Principal Office in immediately available funds. All payments received by
the Bank after 2:00 p.m. on any day shall be deemed received as of the next
succeeding Business Day. All monies received by the Bank hereunder shall
be applied first to fees, charges, costs and expenses payable to the Bank
under this Agreement, next to interest then accrued on account of the Loans
and only thereafter to principal of the Loans (except that if no Event of
Default has occurred and is continuing, the Borrower may designate that
monies be applied in a different order; provided that in any event any
partial prepayments of principal of the Term Loan will be applied to
principal payments thereafter coming due in inverse order of normal
maturity). All interest and fees payable under this Agreement and/or any
Note shall be computed on the basis of a year of 360 days for the number of
days actually elapsed.
Section 3.05. Payment on Non-Business Days. Whenever any payment to
----------------------------
be made hereunder or under any of the Notes shall be stated to be due on a
day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and interest payable on each such date shall
include the amount thereof which shall accrue during the period of such
extension of time.
Section 3.06. Net Payments. All payments by the Borrower hereunder
------------
and/or in respect of any Note shall be made without deduction, set-off or
counterclaim, notwithstanding any claim which the Borrower may now or at
any time hereafter have against the Bank.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. Conditions Precedent to Initial Loan. Prior to the
------------------------------------
initial Loan hereunder, the Borrower shall deliver to the Bank duly
executed copies of this Agreement and the Notes, and shall also deliver to
the Bank the documents enumerated below in this Section 4.01, all of which,
as well as all legal matters incident to the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to the Bank
and its counsel:
(a) Certified copies of the resolutions of the Board of Directors
(and, if necessary, the stockholders) of the Borrower evidencing approval
of this Agreement, the Notes and the other matters contemplated hereby and
thereby and certified copies of all documents evidencing other necessary
corporate action or approvals, if any, with respect to this Agreement, the
Notes and such other matters, including, without limitation, any required
approvals of governmental authorities and other Persons.
(b) A certificate, signed by the Secretary of the Borrower, setting
forth the names and titles of the officers of the Borrower authorized to
sign this Agreement, the Notes and any and all other agreements,
certificates, notices and reports referred to herein; such certificate
shall contain the true signatures of such officers and shall state that the
Bank may conclusively rely on the statements made therein until the Bank
shall receive a further certificate of such Secretary cancelling or
amending the prior certificate and submitting signatures of the officers
named in such further certificate.
(c) A copy of the Charter of the Borrower and all amendments thereto
certified by the Secretary of State of Delaware; a copy of the by-laws of
the Borrower, as amended to date, as certified by its Secretary; a
certificate of legal existence and good standing (including franchise tax
good standing) for the Borrower in Delaware; and certificates of the
appropriate state officials and agencies in Massachusetts and in all other
jurisdictions in which the Borrower owns, leases or operates any real or
personal property and in each other jurisdiction in which the Borrower is
required to qualify to do business, in each case attesting as to the
Borrower's qualification and good standing (including tax good standing) in
each such jurisdiction.
(d) A favorable written opinion of counsel to the Borrower and each
Guarantor, in form and substance satisfactory to the Bank.
(e) An Affiliate Guaranty, executed by each Guarantor.
(f) Certified copies of the resolutions of the respective Board of
Directors (and, if necessary, the stockholders) of each Guarantor
evidencing approval of its respective Affiliate Guaranty and the other
matters contemplated hereby and thereby and certified copies of all
documents evidencing other necessary corporate action or approvals, if any,
with respect to such Affiliate Guaranty and such other matters, including,
without limitation, any required approvals of governmental authorities and
other Persons.
(g) A certificate, signed by the Clerk or Secretary of each
Guarantor, setting forth the names and titles of the officers of such
Guarantor authorized to sign its respective Affiliate Guaranty and any
certificates, notices and reports referred to herein or therein; such
certificate shall contain the true signatures of such officers and shall
state that the Bank may conclusively rely on the statements made therein
until the Bank shall receive a further certificate of such Clerk or
Secretary cancelling or amending the prior certificate and submitting
signatures of the officers named in such further certificate.
(h) A copy of the Charter of each Guarantor and all amendments
thereto, certified by the secretary of state of such Guarantor's
jurisdiction of incorporation; a copy of the by-laws of each Guarantor, as
amended to date, as certified by its Clerk or Secretary; certificates of
legal existence and good standing (including tax good standing) for each
Guarantor in its jurisdiction of incorporation, and certificates of
qualification and good standing for each Guarantor from the appropriate
state officials and agencies in all other jurisdictions where such
Guarantor owns, leases or operates any real or personal property and in
each other jurisdiction in which such Guarantor is required to qualify to
do business, in each case attesting as to such Guarantor's qualification
and good standing (including tax good standing) in each such jurisdiction.
(i) A pledge by Advanced NMR of the stock of AMS owned by Advanced
NMR (other than shares of AMS held in escrow; provided, however, that
shares of AMS released from escrow shall become subject to the pledge);
pledges by the Borrower of the stock of each of the Covenanted Subsidiaries
other than Western Massachusetts Magnetic Resonance Services, Inc., Mobile
MRI of Western Massachusetts, Inc. and Greater Springfield MRI, Inc.; and
pledges by the Borrower and/or the relevant Subsidiaries of the partnership
interests owned by the Borrower and/or any such Subsidiary in each of
Greater Boston MRI Limited Partnership and MVA Rehabilitation Associates.
Stock pledges will be accompanied by the relevant stock certificates and
appropriate stock powers endorsed in blank. The Borrower and or any
relevant Subsidiaries shall execute a pledge of the partnership interests
owned by the Borrower or any such Subsidiaries in Merrimack Scanning
Associates if Merrimack Scanning Associates does not wind up its businesses
prior to March 31, 1996.
(j) Uniform Commercial Code Financing Statements and all such other
documents as shall be necessary or desirable to vest in the Bank a first
priority interest in and to all of the Collateral, and evidence of all
filings, recordations (including, without limitation, recordations with the
United States Patent and Trademark Office, the United States Copyright
Office and the Massachusetts Department of Motor Vehicles, if necessary)
and other actions necessary or desirable to perfect fully the Bank's
security interests.
(k) Such documents which, in the opinion of the Bank, are required to
be obtained in connection with the Loans by reason of the provisions of any
law or regulation applicable to the Bank, and the statements made in such
documents shall be such as, in the opinion of the Bank, will permit such
Loans from the Bank in accordance with such laws and regulations.
(l) Financial statements of Advanced NMR as at December 31, 1994 and
for the fiscal year then ended, certified by the independent certified
public accountants of Advanced NMR, together with financial statements of
Old MDI as at September 30, 1994 and for the fiscal year then ended,
certified by the independent certified public accountants of Old MDI.
(m) Interim financial statements for each of Old MDI and Advanced NMR
as at June 30, 1995, together with the opening balance sheets of the
Borrower giving effect to the Merger, all of same to be satisfactory to the
Bank in presentation and as to the financial results presented.
(n) Certificates of the insurance (including, without limitation,
professional liability insurance) required by this Agreement and/or the
Affiliate Guaranties.
(o) An Officer's Certificate dated the date of such initial Loan,
affirming compliance with the conditions of Subsections 4.02(a)-(d).
(p) A certificate executed by the chief financial officer of the
Borrower, dated the date of such initial Loan, demonstrating compliance
with each of Subsections 7.01(m), 7.01(n), 7.01(p), 7.01(q) and 7.01(r).
(q) All such releases and terminations which may be necessary so that
the Bank receives a first priority lien on all of the Collateral.
(r) Evidence reasonably satisfactory to the Bank that the Borrower,
Advanced NMR and the other Guarantors are in compliance with all material
federal, state and local laws, rules and regulations (including, without
limitation, ERISA).
(s) Evidence of consummation of the Merger.
(t) Copies of all capitalized leases to which the Borrower, any
Subsidiary of the Borrower or Advanced NMR is a party.
(u) Copies of all partnership agreements to which the Borrower or any
of its Subsidiaries is a party.
(v) Copies of all employment and compensation agreements with
executive officers to which the Borrower is a party.
(w) Evidence satisfactory to the Bank that the Borrower has obtained
the rate protection required by Subsection 7.01(t).
(x) Such other documents, instruments, records, assignments,
consents, certificates, opinions, assurances and authorizations as the Bank
may shall reasonably require.
Section 4.02. Conditions Precedent to All Loans. The obligation of
---------------------------------
the Bank to make any Loan (including the initial Loan) or to issue any
letter of credit hereunder is subject to the further conditions precedent
that on the date on which such Loan is made or such letter of credit is
issued (and after giving effect thereto):
(a) The statements, representations and warranties of the Borrower
made in this Agreement and the statements, representations and warranties
of each Guarantor made in its respective Affiliate Guaranty shall continue
to be correct in all material respects as of the date of such Loan or such
letter of credit issuance, as the case may be.
(b) The covenants and agreements of the Borrower contained herein and
the covenants and agreements of each Guarantor contained in its respective
Affiliate Guaranty shall have been complied with in all material respects
on and as of the date of such Loan or such letter of credit issuance, as
the case may be.
(c) No Default or Event of Default shall have occurred and be
continuing.
(d) No material adverse change shall have occurred in the financial
condition of the Borrower or any Guarantor from that disclosed in the
financial statements for such entity most recently furnished to the Bank.
Each request for a Loan or for the issuance of any letter of credit
and each acceptance by the Borrower of the proceeds of any Loan shall be
deemed to constitute the representation of the Borrower that all of the
foregoing conditions of this Section 4.02 are true and correct as of the
date of such Loan or such letter of credit issuance, as the case may be.
ARTICLE V
SECURITY
Section 5.01. Grant of Security Interest. As security for the
--------------------------
repayment of the principal amount of the Loans and the interest thereon,
and also for the prompt and full payment and performance of any and every
other liability and obligation of the Borrower to the Bank, whether arising
out of this Agreement or otherwise (including, without limitation, all
reimbursement obligations with respect to any letters of credit issued
hereunder), whether otherwise secured or unsecured, direct or indirect,
absolute or contingent, primary or secondary, due or to become due, and all
whether now or hereafter existing or arising (all of the foregoing being
collectively referred to as the "Obligations"), the Borrower does hereby
pledge, grant, assign and transfer to the Bank, and grant to the Bank a
security interest in and to, all of the following property of the Borrower,
all whether now owned or existing or hereafter acquired or arising:
(a) all equipment, fixtures, furnishings, furniture, motor vehicles
and machinery of the Borrower (but excepting (i) any personal automobiles,
(ii) all items of computer equipment leased at the date hereof from Fleet
Bank of Massachusetts, N.A. and listed on Exhibit D hereto and (iii) those
items of equipment which are described on Exhibit D hereto), wherever
located, whether now owned or hereafter acquired, whether affixed or
moveable, and all replacements of, substitutions for and accessions to any
of same and all products and proceeds (including, without limitation,
insurance proceeds) of any of the foregoing;
(b) all Receivables of the Borrower;
(c) all contract rights of the Borrower, including, without
limitation, licenses, employment agreements, any non-competition agreements
for the benefit of the Borrower, and all leases and occupancy agreements;
all obligations owing to the Borrower of every kind and nature; and all tax
refunds of every kind and nature, including, without limitation, loss
carryback refunds; and all of the foregoing whether now existing or
hereafter acquired or arising;
(d) all of the Borrower's Inventory;
(e) all of the Borrower's general intangibles, choses in action,
chattel paper, insurance policies, deposits, deposit accounts, money, cash,
documents and instruments (whether negotiable or non-negotiable and
regardless of attachment to chattel paper), whether arising out of,
relating to or evidencing all or any of the foregoing Collateral or
otherwise, and all whether now existing or hereafter acquired or arising;
(f) all goodwill, trade secrets, formulae, customer lists, trade
names, trademarks, copyrights, patents and licenses (including, without
limitation, the trademarks, copyrights, patents and licenses listed on
Exhibit E hereto) and all files, records (including, without limitation,
computer programs, tapes and related electronic data processing software)
and writings, whether now owned or hereafter acquired; and
(g) all liens, guaranties, securities, rights, remedies and
privileges pertaining to, and all products and proceeds (including, without
limitation, insurance proceeds) of, and all accessions to, any of the
foregoing.
Section 5.02. Pledges; Further Grants of Security. The pledges
-----------------------------------
described in Subsection 4.01(i) are being delivered this date to the Bank
by the Borrower and the Guaranteeing Subsidiaries as further security for
the Obligations. The Borrower represents that at the date hereof, due to
various contractual relationships with unrelated third parties, (i) the
Borrower is not able to pledge to the Bank the stock of Western
Massachusetts Magnetic Resonance Services, Inc. ("WMMRSI"), (ii) WMMRSI is
not able to pledge to the Bank its partnership interests in Greater
Springfield MRI Limited Partnership ("GSMRI"), (iii) the Borrower is not
able to pledge to the Bank its partnership interests in Mass. Mobile
Imaging Venture ("MMIV"), (iv) the Borrower is not able to cause MMIV to
grant a security interest in its assets to the Bank, (v) the Borrower is
not able to cause GSMRI to grant a security interest in its assets to the
Bank, (vi) the Borrower is not able to cause MVA Rehabilitation Associates
to grant a security interest in its assets to the Bank, (vii) the Borrower
is not able to cause Merrimack Scanning Associates to grant a security
interest in its assets to the Bank, [(viii) Greater Springfield MRI, Inc.
is not able to grant a security interest in its assets (including, without
limitation, its partnership interest in Mobile MRI of Western Massachusetts
Associates) to the Bank, (ix) Mobile MRI of Western Mass., Inc. is not able
to grant a security interest in its assets (including, without limitation,
its partnership interest in Mobile MRI of Western Massachusetts Associates)
to the Bank and (x) the Borrower is not able to cause Mobile MRI of Western
Massachusetts Associates to grant a security interest in its assets to the
Bank]. The Borrower contemplates that in the future some or all of the
foregoing restrictions may lapse. Promptly (and in any event within 30
days) after any such restriction lapses, the Borrower will execute and
deliver pledges to the Bank (or cause each relevant Subsidiary entity to
pledge and/or grant a security to the Bank) so that to the maximum extent
legally permissible at any time the Bank will hold a fully perfected pledge
of and security interest in all assets of the Borrower and each such
Subsidiary entity.
The Borrower is presently not able to grant to the Bank a security
interest in those items of equipment which are listed on Exhibit D hereto,
due to prohibitions on junior liens contained in the financing arrangements
for said units in effect at the date hereof. If the presently existing
financing for any such items of equipment is paid or prepaid and the
Borrower retains any such items of equipment, the Borrower will grant to
the Bank (and will deliver to Bank all documentation necessary to provide)
a fully perfected first priority security interest in each such item.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01. Representations and Warranties. As an inducement to
------------------------------
the Bank to execute this Agreement and to make Loans hereunder to the
Borrower and/or issue letters of credit for the account of the Borrower,
the Borrower hereby represents and warrants to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has the corporate power
and authority to enter into and perform this Agreement, to execute and
deliver the Notes, to grant the security interests described in Article V,
to enter into and perform all obligations required of the Borrower by all
other instruments and other documents referred to herein to which it is a
party, to fulfill its obligations set forth herein and therein and to carry
out the transactions contemplated hereby and thereby. The Borrower has all
requisite corporate power to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted and is duly
qualified to do business and in good standing in Massachusetts and in each
other jurisdiction where the Borrower owns, leases or operates any real or
personal property and in each other jurisdiction where the failure so to be
qualified could (singly or in the aggregate with all such other failures to
be qualified) have a Material Adverse Effect. At the date of this
Agreement, except as set forth on Exhibit F hereto, the Borrower has no
Subsidiaries and is not a member of any partnership or joint venture. The
names and respective jurisdictions of incorporation of all of the
Borrower's Subsidiaries and the respective stock ownership (or ownership of
partnership interests, as the case may be) in each of them is set forth on
Exhibit F hereto, together with a description of each such partnership and
joint venture.
(b) All of the issued and outstanding shares of capital stock of the
Borrower are being acquired at this date, of record and beneficially, by
Advanced NMR. There are no outstanding rights, options, warrants,
conversion rights or agreements or commitments of any kind relating to the
aforesaid shares or to the authorized and unissued or treasury stock of the
Borrower.
(c) The execution, delivery and performance of this Agreement, the
Notes and the other documents required to be executed by the Borrower
pursuant hereto have been duly authorized by all necessary corporate
action, will not require the consent of any third party, and will not
conflict with, violate the provisions of, or cause a default or constitute
an event which, with the passage of time or the giving of notice or both,
could constitute a default on the part of the Borrower under any contract,
agreement, law, rule, order, ordinance, franchise, instrument or other
document or under any provision of the Charter or by-laws of the Borrower,
or result in the imposition of any lien or encumbrance on any property or
assets of the Borrower, other than in favor of the Bank. This Agreement
and the other documents delivered to the Bank by the Borrower pursuant
hereto (including, without limitation, the Notes) are the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, in each case except as such enforceability may be limited
by: (i) the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights and remedies of creditors generally
or (ii) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law.
(d) Except as disclosed on Exhibit G hereto, there are no actions,
suits, proceedings or investigations pending or, to the knowledge of the
Borrower, threatened (nor, to the knowledge of the Borrower, is there any
basis therefor) against or affecting the Borrower or any of its
Subsidiaries by or before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which could
prevent or hinder the consummation of the transactions contemplated hereby
or call into question the validity of this Agreement, any Note or any other
instrument provided for or contemplated by this Agreement or any action
taken or to be taken in connection with the transactions contemplated
hereby or thereby, nor are there any such actions, suits, proceedings or
investigations pending or, to the knowledge of the Borrower, threatened,
anticipated or contemplated which, if determined adversely to the Borrower
or any of its Subsidiaries, in any single case or in the aggregate, could
have a Material Adverse Effect.
(e) Except as otherwise disclosed on Exhibit H hereto, neither the
Borrower nor any of its Subsidiaries is in violation of any term of its
Charter or by-laws, as now in effect, nor in violation of any term of any
mortgage, indenture, judgment, decree or order, any other instrument,
contract or agreement or of any term of any administrative determination,
failure to comply with which, singly or in the aggregate with all such
other failures, could have a Material Adverse Effect.
(f) The Borrower and each of its Subsidiaries has filed proper and
accurate federal, foreign, state and local tax returns, reports and
estimates for all years and periods for which any such returns, reports or
estimates were required to be filed and has paid all taxes, assessments,
impositions, fees and other governmental charges required to be paid in
respect of the periods covered by any such returns, reports or estimates,
other than any such taxes, assessments, impositions, fees and charges which
the Borrower is contesting in good faith by appropriate proceedings which
serve as a matter of law to stay the enforcement of any remedy of the
relevant taxing authority and as to which adequate reserves have been
established. Neither the Borrower nor any of its Subsidiaries is
delinquent in the payment of any tax, assessment or governmental charge,
and no deficiencies for any tax, assessment or governmental charge have
been asserted or assessed, and the Borrower knows of no material
governmental liability or basis therefor for which adequate reserves have
not been established.
(g) The Borrower and each of its Subsidiaries is in compliance with
all requirements of law, federal, state and local, and all requirements of
all governmental bodies or agencies having jurisdiction over any such
Person, the conduct of its business, the use of its properties and assets
and all Premises occupied by it, failure to comply with which could, singly
or in the aggregate with all other such failures, have a Material Adverse
Effect. Without limiting the foregoing, the Borrower and each of its
Subsidiaries has all the required franchises, licenses, permits,
certificates and authorizations needed for the conduct of its business and
the use of its properties and all premises occupied by it, as now
conducted, owned and used or as proposed to be conducted, owned and used,
including, without limitation, all of the determinations of need and
"physician notices of intent" needed for the operation of the MRI units
currently operated by the Borrower or any such Subsidiary (all such
Determinations of Need and physician notices of intent being listed on
Exhibit I hereto); provided that no representation is made herein as to any
such franchise, license, permit, certificate or authorization if the
failure to have same could not, singly or in the aggregate with all other
such failures, have a Material Adverse Effect. Neither the Borrower nor
any such Subsidiary has received any notice not heretofore complied with
from any federal, state or local authority or any insurance or inspection
body that any of its properties, facilities, equipment or business
procedures or practices fails to comply in any material respect with any
applicable law, ordinance, regulation, building or zoning law or any other
requirement of any such authority or body. No authorization, consent,
approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to the valid
execution or delivery of, or for the performance by the Borrower of any of
its obligations under, this Agreement, any Note or any other instrument
provided for or contemplated by this Agreement.
(h) Neither the Borrower nor any of its Subsidiaries is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of any Loan
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or in any
other manner which would involve a violation of any of the regulations of
the Board of Governors of the Federal Reserve System. The Borrower and
each of its Subsidiaries is primarily engaged in the business of the
management, ownership, operation, lease and sale of medical equipment and
mobile medical equipment; the provision of management services within the
healthcare industry including, but not limited to, business advisory
services, billing and collection services, scheduling, transcription,
legal, finance, personal consulting, personnel consulting and placement
services; and the ownership and operation of medical service businesses.
The Borrower is not an "investment company" nor the "affiliate" of an
"investment company", as such terms are defined in the Investment Company
Act of 1940.
(i) The Borrower and each Subsidiary of the Borrower has good and
marketable title to all assets now carried on its books, including those
reflected in its financial statements referred to in Subsection 6.01(j) or
acquired since the date of such statements, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except as
permitted under Subsection 7.02(b). The Borrower and each Subsidiary of
the Borrower enjoys peaceful and undisturbed possession under all material
leases under which it is operating, and all of such leases are valid and
subsisting and in full force and effect.
(j) The financial statements of Old MDI for its fiscal year ended
September 30, 1994 and for the fiscal quarters ended December 31, 1994,
March 31, 1995 and June 30, 1995, each heretofore delivered to the Bank,
fairly present the consolidated financial condition of Old MDI as at the
dates thereof and for the periods covered thereby, subject, as to interim
statements, to normal year-end audit adjustment (which is not expected to
be material) and to the absence of footnotes. Said financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the relevant periods, subject,
as to interim statements, to normal year-end audit adjustment (which is not
expected to be material) and to the absence of footnotes. The pro forma
--- -----
opening balance sheet giving effect to the Merger, heretofore delivered to
the Bank, fairly presents the pro forma financial condition of the Borrower
--- -----
at the date hereof. Neither the Borrower nor any of its Subsidiaries has
any liability, contingent or otherwise, not disclosed in the aforesaid
financial statements or in any notes thereto that could materially
adversely affect the financial condition of the Borrower. The following
representations are true at the date hereof and shall be true at the date
of each Loan, in each case since the date of the most recently delivered
financial statements: (i) except as otherwise previously disclosed to the
Bank in writing, there has been no material adverse change in the business,
assets or condition, financial or otherwise, of the Borrower or of any of
its Subsidiaries or of any Guarantor; (ii) except as otherwise previously
disclosed to the Bank in writing, neither the business, condition or
operations of the Borrower or of any of its Subsidiaries or of any
Guarantor nor any of their respective properties or assets have been
materially adversely affected as the result of any legislative or
regulatory change, any revocation or change in any franchise, license or
right to do business, or any other event or occurrence, whether or not
insured against; (iii) except as otherwise previously disclosed in writing
to the Bank, neither the Borrower nor any of its Subsidiaries nor any
Guarantor has experienced any material controversy or problem with its
employees or with any labor organization; and (iv) except as otherwise
previously disclosed in writing to the Bank (including disclosure as to the
Merger), neither the Borrower nor any of its Subsidiaries nor any Guarantor
has entered into any material transaction other than in the ordinary course
of its business.
(k) The Borrower and each of its Subsidiaries owns or has a valid
right to use all of the patents, licenses, copyrights, trademarks, service
marks, trade names and franchises ("Intellectual Property") now being used
or necessary to conduct its business, all of which are described on
Exhibit D hereto (including, in each case, the owner of such Intellectual
Property). None of the Intellectual Property owned by the Borrower or any
Subsidiary of the Borrower is represented by a registered patent,
copyright, trademark or other federal or state registration, except as set
forth on Exhibit E hereto. The conduct of the respective businesses of the
Borrower and its Subsidiaries, as now operated, does not conflict with
valid patents, licenses, copyrights, trademarks, service marks, trade names
or franchises of others in any manner that could have a Material Adverse
Effect.
(l) No employee pension benefit plan maintained by the Borrower or
any Subsidiary of the Borrower or in which employees of the Borrower or any
Subsidiary of the Borrower participate has any accumulated funding
deficiency within the meaning of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), nor does the Borrower or any Subsidiary
of the Borrower have any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under ERISA (or any successor thereto) in
connection with any employee pension benefit plan (or other class of
benefit which the PBGC has elected to insure), and there have been no
"reportable events" or "prohibited transactions" with respect to any such
plan, as those terms are defined in Section 4043 of ERISA and Section 4975
of the Internal Revenue Code of 1986, as amended, respectively. Except as
listed on Exhibit J hereto, neither the Borrower nor any Subsidiary of the
Borrower maintains any profit-sharing, retirement, deferred compensation,
ESOT, stock bonus, stock option or similar benefit plan for any officers or
employees. Said Exhibit J also sets forth all employment agreements,
management contracts and other written agreements with any managers and/or
executive officers to which the Borrower or any Subsidiary of the Borrower
is a party.
(m) The chief executive offices and principal place of business of
the Borrower are located at 6 New England Executive Park, Burlington, MA
01803. The Borrower conducts business under no trade name other than its
corporate name and "MDI."
(n) All offices, warehouses, sales offices and other business
locations maintained at the date hereof by the Borrower or any of its
Subsidiaries are listed on Exhibit K hereto. The Borrower and its
Subsidiaries maintain books and records relating to Receivables and other
intangible Collateral only at the Borrower's chief executive offices
described in Subsection 6.01(m) above. At the date hereof, the Borrower
and each Subsidiary of the Borrower maintains Inventory, machinery and/or
equipment only at the locations shown on Exhibit K hereto. As to any items
of the Collateral which are or are to become fixtures, the premises
described on Exhibit K constitute the real estate concerned. Said
Exhibit K discloses the record owners of each such premises. Said Exhibit
K also describes all titled motor vehicles owned by the Borrower and/or any
Guaranteeing Subsidiary and the jurisdiction in which each such vehicle is
titled and principally located, as well as the principal locations of all
other mobile goods.
(o) To the best knowledge of the Borrower, none of the executive
officers of the Borrower or of any Subsidiary of the Borrower is subject to
any agreement in favor of anyone other than the Borrower or such Subsidiary
which limits or restricts that person's right to engage in the type of
business activity conducted or proposed to be conducted by the Borrower or
such Subsidiary or to use therein any property or confidential information
or which grants to anyone other than the Borrower or such Subsidiary any
rights in any inventions or other ideas susceptible to legal protection
developed or conceived by any such officer.
(p) Neither the Borrower nor any Subsidiary of the Borrower is now a
party to any contract or agreement, the terms of which now have or, as far
as can be reasonably foreseen, may have a Material Adverse Effect.
(q) Neither this Agreement, nor the financial statements referred to
herein, nor any Officer's Certificate delivered pursuant to this Agreement,
nor any other agreement, document, certificate or written statement
furnished to the Bank by or on behalf of the Borrower or any Guarantor in
connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact within the special knowledge of any of the
executive officers of the Borrower which has not been disclosed herein or
in writing by them to the Bank and which materially adversely affects, or
in the future in their opinion may, insofar as they can now foresee,
materially adversely affect the business, properties, assets or condition,
financial or other, of the Borrower or any Guarantor.
(r) The Merger has been duly consummated in accordance with the
Merger Agreement dated May 2, 1995 (a copy of which has heretofore been
provided by the Borrower to the Bank) and in compliance with all applicable
laws.
(s) After giving effect to the Merger and the transactions
contemplated thereby and to the extension of financial accommodations
contemplated by this Agreement, the Borrower (A) is and will be able to pay
its debts as they become due, (B) has and will have funds and capital
sufficient to carry on its business as now conducted or as contemplated to
be conducted, (C) owns property having a value both at fair valuation and
at present fair saleable value greater than the amount required to pay its
debts as they become due, and (D) is not insolvent and will not be rendered
insolvent as determined by applicable law.
ARTICLE VII
COVENANTS OF THE BORROWER
Section 7.01. Affirmative Covenants Other Than Reporting
------------------------------------------
Requirements. Without limiting any other covenants and provisions hereof,
------------
the Borrower covenants and agrees that so long as the Commitment is in
effect or any Loan is outstanding or any letter of credit issued hereunder
is outstanding or any other Obligation of the Borrower to the Bank remains
unpaid:
(a) The Borrower will pay the principal of and interest on the Notes
at the times and place and in the manner provided for in the Notes and
herein, and will promptly pay when due any and all other amounts owing to
the Bank, in respect of fees or otherwise.
(b) The Borrower will pay and discharge (and will cause each of the
Covenanted Subsidiaries to pay and discharge) all taxes, assessments and
governmental charges or levies imposed upon it or them, or upon its or
their income or profits, or upon any properties belonging to it or them,
prior to the date on which penalties or interest would attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon any
properties of the Borrower or any of the Covenanted Subsidiaries; provided
that neither the Borrower nor any such Covenanted Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings which serve as a
matter of law to stay the enforcement of any remedy of the taxing authority
or claimant and as to which the Borrower or the Covenanted Subsidiary
concerned, as the case may be, shall have set aside on its books adequate
reserves (or, if such enforcement is not so stayed as a matter of law, a
surety bond, satisfactory to the Bank as to amount, terms and the identity
of the surety, shall have been delivered to the Bank). The Borrower will
pay (and will cause each of the Covenanted Subsidiaries to pay) in a timely
manner, all material lease obligations, trade debt and purchase money
obligations, other than any such lease obligations, trade debt and purchase
money obligations which the Borrower or the relevant Covenanted Subsidiary
(as the case may be) is contesting in good faith, with adequate reserves
having been established, under circumstances in which no material asset or
interest of the Borrower or such Covenanted Subsidiary would be
jeopardized. The Borrower will fully, faithfully and punctually perform
and fulfill (and will cause each of the Covenanted Subsidiaries fully,
faithfully and punctually to perform and fulfill) all material covenants
and agreements under any leases of real estate, agreements relating to
purchase money debt, equipment leases and other material contracts, other
than any such covenants and agreements which the Borrower or the relevant
Covenanted Subsidiary (as the case may be) is contesting in good faith,
with adequate reserves having been established, under circumstances in
which no material asset or interest of the Borrower or such Covenanted
Subsidiary would be jeopardized.
(c) The Borrower will maintain (and will cause each of the Covenanted
Subsidiaries to maintain), with responsible and reputable insurance
companies or associations reasonably satisfactory to the Bank, insurance in
such amounts and covering such risks as are typically insured by similar
businesses (and any such other insurance as the Bank may reasonably request
from time to time), but in any event in amounts sufficient to prevent the
Borrower or any such Covenanted Subsidiary from becoming a coinsurer.
Without limiting the foregoing, the Borrower will keep the Collateral fully
insured against fire, lightning and extended coverage perils and against
such other risks as the Bank may from time to time reasonably require, in
an amount at least equal to the full insurable value of the Collateral and
in any event not less than the amount necessary to avoid co-insurance.
Insurance at any one location may be "blanket" with insurance at other
locations and insurance of the Borrower and the Covenanted Subsidiaries may
be "blanket" with insurance of other Affiliates of the Borrower. In
addition, the Borrower shall procure and maintain general liability
insurance with minimum limits of not less than $5,000,000. The Borrower
shall also procure and maintain workmen's compensation insurance, employer
liability and other insurance as required by law. The Borrower will also
maintain comprehensive automobile liability insurance covering all motor
vehicles owned or leased by it, with combined limits of not less than
$1,000,000 for bodily injury and $500,000 for property damage. The
Borrower will also maintain (and will cause each of the Covenanted
Subsidiaries to maintain) (i) business interruption insurance in amounts
satisfactory to the Bank covering all material business operations of the
Borrower and each such Covenanted Subsidiary and (ii) professional
malpractice insurance covering all employees of the Borrower or any such
Covenanted Subsidiary engaged in patient care. All insurance herein
provided for shall be in such form and written by such companies as may
from time to time be reasonably approved by the Bank. The Borrower will
assign and deliver to the Bank duplicate original copies or certificates
for all policies of casualty insurance, as collateral and further security
for the obligations of the Borrower herein contained, with the Bank named
as first loss payee with respect to all property in which it holds a
security interest (except that the Bank may be named as second loss payee
with respect to any property as to which the Bank holds a security interest
subject to another Person's prior security interest which is permitted
under this Agreement). All policies of insurance shall contain a provision
forbidding cancellation of such insurance either by the carrier or by the
insured until at least 30 days after written notice of the proposed
cancellation is given to the Bank; and whenever any insurance is to expire
for any reason, the Borrower will deliver to the Bank, at least 30 days
prior to such expiration, a renewal or replacement policy, complying with
all of the conditions of this Subsection. In addition, the Borrower will
obtain an endorsement with respect to all such policies indicating that,
solely as to the Bank, the insurance shall not be impaired or invalidated
by reason of any act or neglect of the named insured or any subsequent
owner of any of the property insured. Any insurance proceeds received by
the Bank may, at the option of the Bank, either (i) be applied to the
payment or prepayment of any obligations of the Borrower to the Bank or
(ii) be transmitted in whole or in part to the owner of the property
damaged or destroyed for the purpose of repairing or replacing the same;
provided that insurance proceeds so received as proceeds of business
interruption insurance or with respect to damage to or destruction of any
equipment will (provided that no Event of Default has then occurred and is
then continuing) be released to the Borrower. Any insurance proceeds
received by the Bank with respect to damage to or destruction of any
equipment on which it holds a security interest that are released to the
Borrower shall be used by the Borrower to repay any outstanding capital
financing of such damaged or destroyed equipment and to repair or replace
the damaged or destroyed equipment, with the Bank to receive its same
priority security interest in the repaired and/or replacement equipment.
(d) The Borrower will preserve and maintain (and, subject to the last
sentence of this Subsection, will cause each of the Covenanted Subsidiaries
to preserve and maintain) its corporate existence, rights, franchises and
privileges and remain in good standing in the jurisdiction of its
incorporation. The Borrower will remain qualified and in good standing in
Massachusetts and will qualify and remain qualified (and will cause each of
the Covenanted Subsidiaries to qualify and remain qualified and in good
standing) in each other jurisdiction in which it maintains a plant,
warehouse or office and in each other jurisdiction in which the failure so
to qualify could have a Material Adverse Effect. Notwithstanding the
foregoing, the Borrower may wind up the business of any Covenanted
Subsidiary in the ordinary course of the Borrower's business and, in
connection with such winding up, may merge such Covenanted Subsidiary into
the Borrower or may dissolve any such Covenanted Subsidiary and transfer
the assets of such Covenanted Subsidiary pro rata to its stockholders (or
--- ----
its partners, in the case of any Covenanted Subsidiary which is a
partnership).
(e) The Borrower will comply (and will cause each of the Covenanted
Subsidiaries to comply) with the requirements of all applicable laws
(including, without limitation, laws relating to environmental protection),
rules, regulations and the orders of any court or other tribunal or
governmental or administrative authority or agency applicable to it or to
its business, property or assets, all to the extent that failure to comply
with any such laws, rules, regulations or orders could, singly or in the
aggregate with all other such failures, have a Material Adverse Effect.
The Borrower will obtain and maintain (and will cause each of its
Subsidiaries to obtain and maintain) all licenses, permits and permissions
relating to its properties or business, failure to obtain or maintain which
could, singly or in the aggregate with all other such failures, have a
Material Adverse Effect. Without limitation of the foregoing, the Borrower
will maintain in effect (and will cause to be maintained in effect) all
determinations of need and "physician notices of intent" necessary or
desirable in connection with MRI units owned and/or operated by the
Borrower or by any Covenanted Subsidiary.
(f) At any reasonable time and from time to time (and at any time and
as frequently as the Bank requests following the occurrence and during the
continuance of an Event of Default), the Borrower will permit (and will
cause each of the Covenanted Subsidiaries to permit) the Bank, and any
agents or representatives thereof, to inspect and examine Collateral,
wherever located, and to examine and make copies of and take abstracts from
the records and books of account of, and visit the properties of the
Borrower and each of the Covenanted Subsidiaries, and to discuss the
affairs, finances and accounts of the Borrower and any such Covenanted
Subsidiary with any of their respective managers, officers or directors and
independent accountants, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this Subsection
7.01(f). The Borrower will, upon request, arrange for the Bank to have
access to (and facilities for obtaining copies of) all electronically
stored data and all papers and files of any kind relating to Receivables of
the Borrower or any Covenanted Subsidiary.
(g) The Borrower will keep proper and complete records and books of
account in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied reflecting all
financial transactions of the Borrower and its Subsidiaries. All financial
statements submitted to the Bank under this Agreement will be prepared in
accordance with generally accepted accounting principles consistently
applied, except that interim statements will be subject to normal year-end
audit adjustment (not to be material) and to the absence of footnotes.
(h) The Borrower will maintain and preserve (and will cause each of
the Covenanted Subsidiaries to maintain and preserve) all of their
respective properties necessary or useful in the proper conduct of their
respective businesses in good working order and condition (subject to
ordinary wear and tear), making all necessary repairs thereto and
replacements thereof; provided that neither the Borrower nor any Covenanted
Subsidiary will be deemed to be in default under this Subsection 7.01(h) by
reason of any damage by fire or other casualty so long as the Borrower (or
such Covenanted Subsidiary, as the case may be) repairs and/or replaces the
damaged property as promptly as reasonably practicable.
(i) The Borrower will maintain experienced and competent professional
senior management with respect to its business and properties and with
respect to the Covenanted Subsidiaries. Without limitation of the
foregoing, if any of John Lynch, David Gaynor and/or Steven James shall for
any reason cease to serve as an executive officer of the Borrower actively
involved in the Borrower's management, he shall be replaced, as promptly as
reasonably practicable, as such executive officer by another individual of
comparable experience and ability reasonably acceptable to the Bank; and
this covenant shall become applicable to each such replacement officer.
(j) Subject to the provisions of the next following sentence, the
Borrower will continue to conduct (and will cause each of the Covenanted
Subsidiaries to continue to conduct) in the ordinary course, the business
in which each of them is presently engaged. Notwithstanding the
immediately preceding sentence, the Borrower may wind up the business of
any Covenanted Subsidiary in the ordinary course of the Borrower's
business; provided that, upon such winding up, the assets of such
Covenanted Subsidiary are transferred pro rata to the stockholders (or the
--- ----
partners, in the case of any Covenanted Subsidiary which is a partnership)
of the relevant Covenanted Subsidiary. Neither the Borrower nor any of
such Covenanted Subsidiaries will, without the prior written consent of the
Bank, directly or indirectly enter into any lines of business, businesses
or ventures outside of the lines of business conducted by Old MDI
immediately prior to the date hereof.
(k) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(l) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(m) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(n) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(o) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(p) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(q) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(r) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
(s) If the Borrower forms or acquires any Subsidiary after the date
hereof, the Borrower will cause such Subsidiary to execute and deliver an
Affiliate Guaranty (and, to the extent relevant, appropriate pledge
agreements), to grant to the Bank a fully perfected first security interest
in all of its assets (except for those assets encumbered by purchase money
Indebtedness and capital lease financing within the limitations set forth
in Section 7.02(a)(iv) hereof) and to observe and perform all of the
agreements and obligations contained herein and therein.
(t) The Borrower will maintain at all times after the date of this
Agreement through the first anniversary of such date an interest cap or
rate swap or other interest rate protection satisfactory to the Bank
relating to not less than 40% of the outstanding principal amount of the
Term Loan; and the Borrower will maintain at all times after the first
anniversary of the date of this Agreement through the second such
anniversary an interest cap or rate swap or other interest rate protection
satisfactory to the Bank relating to not less than 25% of the outstanding
principal amount of the Term Loan.
(u) Within 60 days after the date hereof, the Borrower will establish
with the Bank, and will thereafter maintain with the Bank, the principal
operating and deposit accounts of the Borrower and the Covenanted
Subsidiaries.
Section 7.02. Negative Covenants. Without limiting any other
------------------
covenants and provisions hereof, the Borrower covenants and agrees that, so
long as the Commitment is in effect or any Loan is outstanding or any
letter of credit issued hereunder is outstanding or any other Obligation of
the Borrower to the Bank has not been fully performed:
(a) The Borrower will not create, incur, assume or suffer to exist
(nor permit any of the Covenanted Subsidiaries to create, incur, assume or
suffer to exist) any Indebtedness, except for:
(i) Indebtedness owed to the Bank, including, without limitation,
the Indebtedness represented by the Notes;
(ii) Indebtedness of the Borrower or any such Covenanted
Subsidiary for taxes, assessments and governmental charges or levies,
to the extent payment thereof shall not at the time be required under
Subsection 7.01(b) above;
(iii) unsecured current liabilities of the Borrower or any such
Covenanted Subsidiary (other than for money borrowed or for the
deferred purchase price of property) incurred upon customary terms in
the ordinary course of business and unsecured advances or progress
payments under contracts incurred on customary terms in the ordinary
course of business;
(iv) purchase money Indebtedness and capital lease financing owed
to vendors or lessors of equipment used in the business of the
Borrower or any of the Covenanted Subsidiaries, such purchase money
Indebtedness and capital lease financing not to exceed the CapEx Limit
(as defined in Subsection 7.02(t) hereof) in aggregate principal
amount incurred per fiscal year of the Borrower;
(v) Subordinated Debt (including, without limitation, seller
financing of any future Acquisition) hereafter incurred by the
Borrower; but only if the Bank has given its prior written consent to
the financial terms and the subordination provisions of such
Subordinated Debt;
(vi) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.];
(vii) other Indebtedness existing at the date hereof, but only to
the extent set forth on Exhibit L hereto; and
(viii) and guaranties expressly permitted pursuant to Subsection
7.02(c) below.
In the event the Borrower creates, incurs, assumes or suffers to exist
any Indebtedness pursuant to Subsection 7.02(a)(iv) above, the Bank agrees
upon request of the Borrower to execute a partial release of its security
interest to the extent necessary to permit such indebtedness.
(b) The Borrower will not create, incur, assume or suffer to exist
(nor permit any of the Covenanted Subsidiaries to create, incur, assume or
suffer to exist) any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or retained
security title of a conditional vendor) of any nature (collectively,
"liens"), upon or with respect to any of its property or assets, now owned
or hereafter acquired, except that the foregoing restrictions shall not
apply to:
(i) liens for taxes, assessments or governmental charges
or levies on property of the Borrower or any of the Covenanted
Subsidiaries if the same shall not at the time be delinquent or
thereafter can be paid without interest or penalty or are being
contested in good faith and by appropriate proceedings which serve as
a matter of law to stay the enforcement of any remedies of the taxing
authorities and as to which adequate reserves have been made (or, if
such enforcement is not stayed as a matter of law, a surety bond
satisfactory to the Bank as to amount, terms and the identity of the
surety has been delivered to the Bank);
(ii) liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business for sums not yet due or which are being contested
in good faith and by appropriate proceedings which serve as a matter
of law to stay the enforcement thereof and as to which adequate
reserves have been made (or, if such enforcement is not stayed as a
matter of law, a surety bond satisfactory to the Bank as to amount,
terms and the identity of the surety has been delivered to the Bank);
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or
similar legislation;
(iv) liens existing on the date hereof to the extent listed on
Exhibit L hereto;
(v) liens securing the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations and surety bonds arising in the ordinary course of
business;
(vi) zoning restrictions, easements and rights or restrictions of
record on the use of real property which do not materially detract
from its value or impair its use;
(vii) capital leases and liens securing the purchase price of
property (to the extent such capital leases and purchases are
permitted by clause (iv) of Subsection 7.02(a) above), provided that
--------
each such lien is given solely to secure the purchase price of such
property, does not extend to any other property and is given at the
time of the acquisition of such property; and
(viii) liens in favor of the Bank.
(c) The Borrower will not assume, guarantee, endorse or otherwise
become directly or contingently liable (nor permit any of its Covenanted
Subsidiaries to assume, guarantee, endorse or otherwise become directly or
contingently liable), including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in any debtor or otherwise
to assure any creditor against loss, in connection with any Indebtedness of
any other Person, except (i) guaranties by endorsement for deposit or
collection in the ordinary course of business, (ii) any guaranty in favor
of the Bank, (iii) existing guaranties described on Exhibit M hereto,
including existing liability incurred by the Borrower or any Covenanted
Subsidiary by virtue of being the general partner of any partnership, (iv)
any guaranty given by the Borrower with respect to any purchase money
Indebtedness or capital lease financing hereafter incurred by any
Covenanted Subsidiary, so long as the incurrence of such purchase money
Indebtedness or capital lease financing is expressly permitted pursuant to
clause (iv) of Subsection 7.02(a), and (v) any further liabilities arising
after the date hereof for which the Borrower or any such Covenanted
Subsidiary becomes liable by virtue of being the general partner of any
partnership, so long as the incurrence of each such liability would have
been permitted under any of clauses (i), (ii), (iii), (iv) or (v) of
Subsection 7.02(a) if the Borrower or the Covenanted Subsidiary in question
had incurred such liability directly (rather than merely becoming liable in
its capacity as a general partner of the partnership which has incurred
such liability).
(d) Except as otherwise provided in the second sentence of this
Subsection, the Borrower will not liquidate or dissolve, or merge or
consolidate with any other Person, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
item or items material to its business (whether now owned or hereafter
acquired) included in the assets of the Borrower (nor will the Borrower
permit any of the Covenanted Subsidiaries to do any of the foregoing),
except that the Borrower and the Covenanted Subsidiaries may sell or
dispose of property through (i) sales of Inventory in the ordinary course
of business, (ii) disposal of worn out or obsolete equipment in the
ordinary course of business, (iii) sale or disposal in any one fiscal year
of items aggregating not more than five (5%) percent of the consolidated
Tangible Net Worth of the Borrower measured as at the beginning of such
year, and (iv) the winding up of the business of any Covenanted Subsidiary
in the ordinary course of the Borrower's business under the circumstances
provided for in Subsection 7.01(j) above. Notwithstanding the foregoing,
(i) any Subsidiary of the Borrower may be merged into the Borrower provided
that no Event of Default has occurred and is then continuing and (ii) any
such Subsidiary may be merged into any other Subsidiary of the Borrower.
Neither the Borrower nor any of the Covenanted Subsidiaries will make any
Acquisition without the prior written consent of the Bank.
(e) The Borrower will not sell, assign, factor or dispose in any way
of any of its Receivables or other rights to payment, with or without
recourse, except for assignment for collection in the ordinary course of
business, nor will the Borrower permit any of the Covenanted Subsidiaries
to do any of the foregoing.
(f) The Borrower will not make or maintain, nor permit any of the
Covenanted Subsidiaries to make or maintain, any loan or advance to any
Person, or purchase or otherwise acquire, or permit any of its Subsidiaries
to purchase or otherwise acquire, the capital stock, assets comprising the
business of, or obligations of, or any interest in, any Person, except the
following investments by the Borrower or any such Covenanted Subsidiary:
(i) [This paragraph contains confidential information which
has been omitted, but filed separately with the Securities and
Exchange Commission.];
(ii) investments consistent with the Borrower's Investment Policy
Guidelines attached hereto as Exhibit N (except that the minimum
capital base for acceptable commercial banks will be deemed increased
for this purpose from $750,000,000 to $1,000,000,000);
(iii) travel advances and similar advances to employees in the
ordinary course of the Borrower's business;
(iv) existing investments by the Borrower and/or any Covenanted
Subsidiary in, and loans and advances by the Borrower to, any
Subsidiary or joint venture to the extent disclosed on Exhibit O
hereto; and
(v) future investments by the Borrower and/or any Covenanted
Subsidiary in any entity which satisfies all of the following
criteria: (1) such entity is or becomes a Covenanted Subsidiary, (2)
such entity is or becomes party to the Affiliate Guaranty of even date
herewith from the Guaranteeing Subsidiaries to the Bank, and (3) such
entity grants (or has granted and thereupon confirms) to the Bank a
fully perfected first priority security interest in all of its assets
(except for those assets encumbered by purchase money Indebtedness and
capital lease financing within the limitations set forth in Section
7.02(a)(iv) hereof).
Nothing contained in this Subsection 7.02(f) shall permit the Borrower
to use, directly or indirectly, proceeds of any Loan for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any
"margin stock" within the meaning of Regulation U. As used herein,
"Relevant Fiscal Period" means (i) the six-month period ending
September 30, 1995, (ii) the nine-month period ending December 31, 1995,
(iii) the twelve-month period ending March 31, 1996, and (iv) the twelve-
month period ending at each fiscal quarter-end thereafter.
(g) The Borrower will not establish (nor permit any of its
Subsidiaries to establish) any new pension or defined benefit plan or
modify any such existing plan for employees subject to ERISA, which plan
provides any benefits based on past service, without the advance consent of
the Bank to the amount of the aggregate past service liability thereby
created.
(h) The Borrower will not waive (nor permit any of the Covenanted
Subsidiaries to waive) any debt or claim, except in the ordinary course of
its business.
(i) The Borrower will not make, directly or indirectly, any optional
or voluntary prepayment or purchase of Subordinated Debt, nor make any
payment of any Subordinated Debt except to the extent expressly permitted
in the Subordination Agreement relating thereto. The Borrower will not at
any time make any payment on account of principal of and/or interest on any
Subordinated Debt unless at the time of such payment (and after giving
effect to any such payment of principal and/or interest) no Default nor any
Event of Default shall have occurred and be continuing.
(j) The Borrower will not remove (nor permit to be removed) from the
Premises listed on Exhibit K any books or records relating to Receivables
or other intangible Collateral of the Borrower nor remove therefrom any
tangible Collateral (other than Inventory sold to customers in the ordinary
course of the Borrower's business and other than mobile goods, which may
travel to other locations on a temporary basis but will not be removed from
the state described in Exhibit K as the principal location thereof without
prior written notice to the Bank), until after receipt of a certificate
from the Bank, signed by an officer thereof, stating that the Bank has, to
its satisfaction, obtained all documentation that it deems necessary or
desirable to obtain, maintain, perfect and confirm the first priority
security interests granted or intended to be granted herein.
(k) The Borrower will not move its chief executive offices or
principal place of business from the address described in
Subsection 6.01(m) nor change its name or identity nor use any trade name
or trade style other than its corporate name nor make or suffer to be made
any change in its corporate structure until, in each case, after receipt of
a certificate from the Bank, signed by an officer thereof, stating that the
Bank has, to its satisfaction, obtained all documentation that it deems
necessary or desirable to obtain, maintain, perfect and confirm the first
priority security interests granted or intended to be granted herein.
(l) The Borrower will not, without the prior written consent of the
Bank, declare or pay any dividends, purchase, redeem, retire, or otherwise
acquire for value any of its capital stock (or rights, options or warrants
to purchase such shares) now or hereafter outstanding, return any capital
to its stockholders or make any distribution of assets to its stockholders;
provided that (i) at the date hereof, in connection with the Merger, the
Borrower may dividend to Advanced NMR an amount not in excess of
$12,000,000 and (ii) the Borrower may pay a dividend to Advanced NMR in an
aggregate amount not to exceed $100,000 per fiscal year of the Borrower so
long as at the time of any such dividend payment and after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing and (iii) the Borrower may make payments to Advanced NMR in
accordance with the terms of that certain Tax Sharing Agreement dated
August 31, 1995 by and between Advanced NMR and the Borrower.
(m) Neither the Borrower nor any of the Covenanted Subsidiaries will
become a member of any partnership or joint venture in which another entity
has the ability to incur any Indebtedness on behalf of the Borrower or such
Covenanted Subsidiary or to commit any assets of the Borrower or such
Covenanted Subsidiary without the consent of the Borrower or such
Covenanted Subsidiary, as the case may be.
(n) The Borrower will not enter into (nor permit any of the
Covenanted Subsidiaries to enter into) any transaction, including, without
limitation, the purchase, sale or exchange of any property or the rendering
of any service, with any present or former Affiliate, except in the
ordinary course of business and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms no less favorable to the
Borrower or such Covenanted Subsidiary, as the case may be, than would be
obtained in a comparable arms'-length transaction with any Person not an
Affiliate. As used herein, "Affiliate" of any entity means any officer or
director of such entity or any Person which, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is
under common control with such entity, or any Person which beneficially
owns or holds five (5%) percent or more of any class of equity securities
of such entity. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of any Person, whether through the ownership of voting
securities, by contract or otherwise. Without limitation of the foregoing,
the "Affiliates" of the Borrower include Advanced NMR and each Subsidiary
of Advanced NMR.
(o) The Borrower will not dispose of (nor permit any of its
Subsidiaries to dispose of) any hazardous material or oil on any Premises
of the Borrower or any such Subsidiary; nor shall the Borrower store or
suffer or permit to exist on any Premises of the Borrower or any such
Subsidiary any hazardous material or oil, nor transport or arrange the
transport of (nor permit any such Subsidiary to transport or arrangement
the transport of) any hazardous material or oil, except under valid permits
and licenses and otherwise in compliance with all applicable laws and
regulations. The Borrower shall provide the Bank with prompt written
notice of (i) any release or threat of release of any hazardous material or
oil at or from any site or vessel owned, occupied or operated by the
Borrower or any such Subsidiary and (ii) any incurrence of any expense or
loss by any governmental authority in connection with the assessment,
containment or removal of any hazardous material or oil for which expense
or loss the Borrower or any such Subsidiary may be liable. As used herein,
the terms "hazardous material" and "oil" have the respective meanings
ascribed to such terms in Mass. Gen. Laws, Ch. 21E and shall also be deemed
to include any similar terms in any comparable statute in any other
relevant jurisdiction.
(p) The Borrower will not suffer or permit to exist any circumstance
in which the Borrower is not a wholly-owned Subsidiary of Advanced NMR or
in which the percentage equity ownership of the Borrower in any entity
which is a Subsidiary of the Borrower at the date hereof decreases from
that shown on Exhibit F hereto.
(q) Neither the Borrower nor any of the Covenanted Subsidiaries will
make any material change in the nature of its business as carried on the
date hereof. The Borrower will not change its fiscal year or accounting
principles or methods of applying same (it being contemplated that Advanced
NMR will change its fiscal year to a year ending September 30). If any
accounting treatment or classification is for any reason changed as to the
accounts of the Borrower and/or any of its Subsidiaries, the Borrower will
forthwith notify the Bank of same in writing and will execute and deliver
any amendment to this Agreement which the Bank may reasonably deem
necessary or desirable in order to preserve unimpaired the rights of the
Bank and the obligations of the Borrower under this Agreement.
(r) The Borrower will not write up (by creating an appraisal surplus
or otherwise), nor permit any of its Subsidiaries to write up, the value of
any assets of the Borrower or such Subsidiary above their cost to the
Borrower or such Subsidiary, as the case may be, less the depreciation
regularly allowable thereon.
(s) The Borrower will not enter into (nor permit any Subsidiary of
the Borrower to enter into) any new or replacement operating leases, except
that Borrower may enter into (i) replacement leases for the items of
equipment listed on Exhibit D hereto and (ii) three new operating leases,
provided that each time the Borrower is able to demonstrate to the Bank
that the equipment leased under a new operating lease pursuant to this
Subsection 7.02(s)(ii) is profitable based upon reports compiled by the
Borrower (profitability to be calculated consistently with historical
reports of such information), the Borrower shall be permitted to enter into
one additional new operating lease.
(t) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]
Section 7.03. Reporting Requirements. So long as any Loan shall
----------------------
be outstanding or any letter of credit issued hereunder is outstanding or
any other Obligation of the Borrower to the Bank shall remain unpaid or the
Commitment is in effect, the Borrower shall furnish to the Bank:
(a) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters in each fiscal year of the
Borrower, consolidated and consolidating balance sheets of the Borrower and
Subsidiaries as at the end of such fiscal quarter and consolidated and
consolidating statements of income and cash flow for the Borrower and
Subsidiaries for such fiscal quarter and for the period commencing at the
end of the previous fiscal year and ending with the end of such fiscal
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified by the chief financial officer of the
Borrower as having been prepared in accordance with generally accepted
accounting principles consistently applied, subject to normal year-end
audit adjustment and the absence of footnotes.
(b) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters in each fiscal year of
Advanced NMR (or within such longer period, not to exceed in any event 50
days after the end of the relevant fiscal quarter, as the Securities and
Exchange Commission may allow for filing of Advanced NMR's Quarterly Report
on Form 10-Q for the fiscal quarter in question), consolidated and
consolidating balance sheets of Advanced NMR and Subsidiaries (including
the Borrower) as at the end of such fiscal quarter and consolidated and
consolidating statements of income and cash flow for Advanced NMR and
Subsidiaries (including the Borrower) for such fiscal quarter and for the
period commencing at the end of the previous fiscal year and ending with
the end of such fiscal quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the
preceding fiscal year, all in reasonable detail and duly certified by the
chief financial officer of Advanced NMR as having been prepared in
accordance with generally accepted accounting principles consistently
applied, subject to normal year-end audit adjustment and the absence of
footnotes.
(c) As soon as available and in any event within 90 days after the
end of each fiscal year of Advanced NMR (or within such longer period, not
to exceed in any event 120 days after the end of the relevant fiscal year,
as the Securities and Exchange Commission may allow for the filing of
Advanced NMR's Annual Report on Form 10-K for the fiscal year in question),
a copy of Advanced NMR's annual audit report for such fiscal year,
including therein consolidated and consolidating balance sheets of Advanced
NMR and Subsidiaries (including the Borrower) as at the end of such fiscal
year and consolidated and consolidating statements of income and retained
earnings and consolidated and consolidating statements of cash flow for
Advanced NMR and Subsidiaries (including the Borrower) for such fiscal year
(and including statements showing the results of Advanced NMR and the
Borrower for the fourth quarter of such fiscal year of Advanced NMR). The
annual consolidated statements shall be certified by independent certified
public accountants selected by Advanced NMR and reasonably acceptable to
the Bank in such form as is generally recognized as "unqualified". Each of
the annual financial statements submitted under this Subsection shall be
accompanied by a statement of the independent certified public accountants
stating whether in the course of their examination (which shall include a
review of this Agreement) they became aware of the existence as at the end
of the fiscal year covered by such financial statements of any event,
transaction, occurrence or state of affairs which would contravene or
violate any of the covenants or agreements contained in this Agreement and,
if their examination has disclosed any such event, transaction, occurrence
or state of affairs, specifying the nature and period of the existence
thereof. Said accountants shall also state that they have examined the
certificate of the chief financial officer submitted with the annual
statements of the Borrower and referred to in Subsection 7.03(d) and that
their examination has not disclosed the existence of anything contrary to
the matters set forth in such certificate. Such accountants' statement
shall also include a schedule setting forth the computations necessary to
determine compliance, as at the relevant fiscal year-end, with each of
Subsections 7.01(k), 7.01(l), 7.01(m), 7.01(n), 7.01(o), 7.01(p), 7.01(q),
7.01(r), 7.02(s) and 7.02(t).
(d) At the time of delivery of each annual statement of the Borrower
and/or Advanced NMR and at the time of delivery of the quarterly statement
for the first, second and third fiscal quarters of each fiscal year for the
Borrower and/or Advanced NMR, a certificate executed by the chief financial
officer of the Borrower stating that he has reviewed this Agreement and has
no knowledge of any default by the Borrower or any of the Guarantors in the
performance or observance of any of the provisions of this Agreement or, if
he has such knowledge, specifying each such default and the nature thereof,
which certificate shall be accompanied by a statement of such chief
financial officer setting forth in detail the computations necessary to
determine compliance with the covenants contained in Subsections 7.01(k),
(l), (m), (n), (o), (p), (q) and (r). In addition, the certificate
delivered in connection with the annual statements will also set forth in
detail the computations necessary to determine compliance with each of
Subsection 7.02(s) and Subsection 7.02(t).
(e) Together with the quarterly financial statements described in
Subsections 7.03(a) and 7.03(b) above, schedules of Inventory and
Receivables (including agings) of the Borrower and Advanced NMR in such
detail as shall be reasonably satisfactory to the Bank, such schedules to
be certified as accurate by the chief financial officer of the Borrower or
Advanced NMR, as the case may be.
(f) Prior to the end of each fiscal year of the Borrower and/or
Advanced NMR, a forecast for the next following fiscal year for each of the
Borrower and Advanced NMR, setting forth on a quarterly basis projections
as to balance sheets, income statements and cash flow statements, all in
such detail as will be reasonably satisfactory to the Bank.
(g) As soon as possible and in any event within five (5) Business
Days after the occurrence of each Default or Event of Default, the
statement of the Borrower setting forth details of such Default or Event of
Default and the action which the Borrower proposes to take with respect
thereto.
(h) As soon as possible and in any event within five (5) Business
Days after the commencement thereof, notice of all actions, suits,
proceedings and investigations by or before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, affecting the Borrower or any of its Subsidiaries or any
Guarantor, excluding, however, any such action, suit, proceeding or
investigation in which an adverse determination could not have a material
adverse effect on the business, prospects or financial condition of the
Borrower, any of its Subsidiaries or any Guarantor.
(i) Promptly after receipt, a copy of all audits or reports submitted
to the Borrower by independent public accountants in connection with any
annual, special or interim audits of the books of the Borrower and any
letter of comments directed by such accountants to the management of the
Borrower.
(j) As soon as possible and in any event within 30 days after the
Borrower knows or has reason to know that any event has occurred which
would constitute a reportable event under Section 4043(b) of Title IV of
ERISA with respect to any employee pension or other benefit plan in which
employees of the Borrower or of any Subsidiary of the Borrower participate,
or that the PBGC or the Borrower or any Subsidiary of the Borrower has
instituted or will institute proceedings under such Title to terminate such
plan, a certificate of the chief financial officer of the Borrower setting
forth details as to such termination or other reportable event and the
action which the Borrower proposes to take with respect thereto, together
with a copy of any notice of such reportable event which may be required to
be filed with the PBGC, or any notice delivered by the PBGC evidencing its
intent to institute such proceedings, or any notice to the PBGC that the
plan is to be terminated, as the case may be.
(k) A copy of each registration statement and each periodic or
current report filed by Advanced NMR with the Securities and Exchange
Commission (the "SEC") or any successor agency (other than routine updating
filings relating to employee benefit plans) and each annual report, proxy
statement and other communication sent to shareholders or other
securityholders generally, such copy to be provided to the Bank promptly
upon such filing with the SEC or such communication with shareholders or
securityholders, as the case may be.
(l) Promptly upon applying for, or being granted, a federal or state
registration for any copyright, trademark or patent or purchasing any
registered copyright, trademark or patent, written notice to the Bank
describing same, together with all such documents as the Bank may prepare
and reasonably request the Borrower to execute in order to give the Bank a
fully perfected first priority security interest in each such copyright,
trademark or patent.
(m) Promptly after the Borrower has knowledge thereof, written notice
of:
(i) termination or potential termination of any consent,
license, permit or franchise material to the conduct of the business
of the Borrower or of any of its Subsidiaries or of any Guarantor or
the ownership of its or their property and assets;
(ii) any material loss, damage or destruction to or of any
property or assets of the Borrower or of any of its Subsidiaries or of
any Guarantor (regardless of whether the same is covered by
insurance);
(iii) any material controversy with employees of the Borrower or
of any of its Subsidiaries or of any Guarantor or with any labor
organization; and
(iv) any other material development adversely affecting the
Borrower, any of its Subsidiaries or any Guarantor or their respective
businesses, properties, assets or conditions, financial or otherwise.
(n) Promptly upon the occurrence of any change in any of the present
executive officers or directors of the Borrower or of any of its
Subsidiaries or of any Guarantor, all of whom are listed on Exhibit P
hereto, a notice of such change.
(o) Such other information respecting the financial condition,
operations, Inventory and Receivables of the Borrower and/or any of its
Subsidiaries and/or any of the Guarantors as the Bank may from time to time
reasonably request.
ARTICLE VIII
DEFAULT AND REMEDIES
Section 8.01. Events of Default. The occurrence of any of the
-----------------
following events shall constitute an Event of Default under this Agreement:
(a) The Borrower shall fail to make any payment of principal of any
Note or any Loan on the date when due; or
(b) The Borrower shall fail to make any payment of interest on any
Note or any Loan or in respect of any Commitment Fee on the date when due
and such failure shall continue uncured for five (5) days after the date
when due; or
(c) Any representation or warranty of the Borrower contained herein
shall at any time prove to have been incorrect in any material respect when
made; or any representation or warranty made by the Borrower or any
Guarantor in connection with the execution and delivery of this Agreement
or in connection with any Loan shall at any time prove to have been
incorrect in any material respect when made; or
(d) The Borrower shall default in the performance or observance of
any agreement or obligation under any of Subsections 7.01(b)(first sentence
only), (c), (d)(as applies to corporate existence only), (e), (k), (l),
(m), (n), (o), (p), (q) or (r) or Section 7.02 or Section 7.03; or
(e) The Borrower shall default in the performance of any other term,
covenant or agreement contained in this Agreement and such default shall
continue unremedied for 30 days after notice thereof shall have been given
to the Borrower; or
(f) Any default on the part of the Borrower or any of its
Subsidiaries or any Guarantor shall exist, and shall remain unwaived or
uncured beyond the expiration of any applicable notice and/or grace period,
under any contract, agreement or undertaking now existing or hereafter
entered into with or for the benefit of the Bank; or
(g) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]; or
(h) The Borrower or any Guarantor shall be dissolved; or the Borrower
or any of its Subsidiaries or any Guarantor shall become bankrupt or shall
cease paying its debts as they mature or shall make an assignment for the
benefit of creditors, or a trustee, receiver or liquidator shall be
appointed for the Borrower or any of its Subsidiaries or any Guarantor or
for a substantial part of the property of any of the foregoing, or
bankruptcy, reorganization, arrangement, insolvency or similar proceedings
shall be instituted by or against the Borrower or any of its Subsidiaries
or any Guarantor under the laws of any jurisdiction (other than any
involuntary proceedings which are commenced against the Borrower, any of
its Subsidiaries or any Guarantor without the consent or acquiescence of
the Borrower, any such Subsidiary or such Guarantor and are dismissed
within 60 days after the commencement thereof); or
(i) [This paragraph contains confidential information which has
been omitted, but filed separately with the Securities and Exchange
Commission.]; or
(j) The Borrower or any Subsidiary of the Borrower or any Guarantor
shall fail to meet its minimum funding requirements under ERISA with
respect to any employee benefit plan (or other class of benefit which the
PBGC has elected to insure) or any such plan shall be the subject of
termination proceedings (whether voluntary or involuntary) and there shall
result from such termination proceedings a liability of the Borrower or any
such Subsidiary or any Guarantor to the PBGC which, in the reasonable
opinion of the Bank, may have a material adverse effect upon the business,
operations or financial condition of the Borrower or any such Subsidiary or
any Guarantor; or
(k) The security interest and lien of the Bank in and on any of the
Collateral shall not be in full force and effect as a fully perfected first
priority lien for any reason (except due to any failure by the Bank to make
or maintain appropriate Uniform Commercial Code filings or other required
filings) and said circumstance shall continue uncured for 15 days after the
Borrower has knowledge or notice thereof; or
(l) For any reason any Affiliate Guaranty shall not be in full force
and effect as to each Guarantor or any failure or default of any Guarantor
shall exist thereunder; or
(m) There shall occur any other material adverse change in the
condition (financial or otherwise), operations, properties, assets,
liabilities or earnings of the Borrower or any Guarantor.
Section 8.02. Rights and Remedies Upon Default. Upon the occurrence
--------------------------------
of any Event of Default and at any time thereafter during the continuance
thereof, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the
following rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Notes and Loans
then outstanding, all interest accrued and unpaid with respect to any and
all of the foregoing, and all other amounts payable under or with respect
to this Agreement to be forthwith due and payable, whereupon the same shall
become forthwith due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of any Event of
Default under Subsection 8.01(h), the Notes, all Loans and all other
amounts payable under this Agreement will automatically become due and
payable without any such notice or any such declaration.
(b) Declare the Commitment to be terminated, whereupon the same and
all obligations of the Bank to make Loans shall be terminated forthwith and
without further notice; provided, however that upon the occurrence of any
Event of Default under Subsection 8.01(h), the Commitment will
automatically terminate without any notice and without any such
declaration.
(c) Exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code. The Bank may enter upon the Premises or any
of same and may take physical possession of the Collateral or render the
Collateral unusable by process of law or peaceably without process of law.
The Bank may, with only such demand, advertising or notice as may be
required by law, sell and deliver any and all Collateral held by it for its
account at any time or times in one or more private or public sales, for
cash or credit or otherwise, at such price and upon such terms as the Bank
deems advisable in its sole discretion; provided that such terms are
commercially reasonable. Notice of any public sale shall be sufficient if
it describes the Collateral to be sold in general terms, stating the
amounts thereof and the location and nature of the properties covered by
the security interests and the prior liens thereon, and is published, at
least once, not less than seven (7) days prior to the sale in any newspaper
which the Bank may select which newspaper has a general circulation in the
municipality where the Collateral is located or deemed located. All
requirements of reasonable notice shall be met if such notice is sent to
the Borrower, in the manner provided in Section 11.03 below, at least seven
(7) days before the time of such sale or disposition. The Bank may be the
purchaser at any such sale, if it is public, free from any right of
redemption. The proceeds of sale shall be applied first to the costs of
retaking, refurbishing, storing and selling any Collateral hereunder and to
other costs of collection and other costs incurred by the Bank, and then to
the payment of obligations of the Borrower to the Bank.
(d) Enforce the provisions of this Agreement by legal proceedings for
the specific performance of any covenant or agreement contained herein or
for the enforcement of any other appropriate legal or equitable remedy, and
the Bank may recover damages caused by any breach by the Borrower of the
provisions of this Agreement, including court costs, reasonable attorneys'
fees and other costs and expenses incurred in the enforcement of the
obligations of the Borrower hereunder.
(e) Exercise all rights and remedies hereunder, under the Notes, the
Affiliate Guaranties and under any other agreement with the Bank, and
exercise all other rights and remedies which the Bank may have under
applicable law.
Section 8.03. Set-off. In addition to any rights now or hereafter
-------
granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default and during the
continuance thereof, the Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind
to the Borrower or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits (other
than designated payroll accounts) and any other Indebtedness at any time
held or owing by the Bank or any affiliate of the Bank to or for the credit
or the account of the Borrower against and on account of the obligations
and liabilities of the Borrower to the Bank under this Agreement or
otherwise, irrespective of whether or not the Bank shall have made any
demand for payment and although said obligations, liabilities or claims, or
any of them, may then be contingent or unmatured and without regard for the
availability or adequacy of other collateral. The Borrower also grants to
the Bank a security interest with respect to all its deposits and all
securities or other property in the possession of the Bank or any affiliate
of the Bank from time to time in order to secure the Loans, the Notes and
all other amounts now or hereafter due under this Agreement, and, upon the
occurrence of any Event of Default, the Bank may exercise all rights and
remedies of a secured party under the Uniform Commercial Code.
Section 8.04. Right to Cure. In the event that the Borrower shall
-------------
fail to pay any tax, assessment, governmental charge or levy, except as the
same may be otherwise permitted hereunder, or in the event that any lien,
encumbrance or security interest prohibited hereby shall not be paid in
full or discharged, or in the event that the Borrower shall fail to pay or
comply with any other obligation hereunder, the Bank may, but shall not be
required to, pay, satisfy, perform, discharge or bond the same for the
account of the Borrower, and all moneys so paid by the Bank shall be
reimbursed by the Borrower to the Bank on demand and shall bear interest
from the date of demand until paid at the lesser of (i) a fluctuating rate
per annum which shall at all times be equal to the sum of two and one-half
(2-1/2%) percent per annum plus the Base Rate as in effect from time to
time, or (ii) the maximum rate permitted by then applicable law. The Bank
will give the Borrower not less than 30 days' prior notice before acting
under this Section, except that the Bank may act with less notice (or
without any notice) in the case of emergency, as reasonably determined by
the Bank.
Section 8.05. Letters of Credit. Without limitation of any other
-----------------
right or remedy of the Bank, (i) if an Event of Default shall have occurred
and the Bank shall have accelerated the Revolving Loans or (ii) if this
Agreement and/or the revolving financing arrangements described herein
shall have expired or shall have been earlier terminated by either the Bank
or the Borrower for any reason, the Borrower will forthwith deposit with
the Bank in cash a sum equal to the total of all then undrawn amounts of
all outstanding letters of credit issued by the Bank for the account of the
Borrower or any Guaranteeing Subsidiary.
ARTICLE IX
FURTHER PROVISIONS AS TO RECEIVABLES
Section 9.01. Furnishing Information. The Borrower will, at the
----------------------
Bank's request, deliver confirmatory written assignments of Receivables,
but the failure to execute or deliver any such assignment shall not affect
or limit the security interest of the Bank in any Receivable. Together
with each such assignment, if the Bank so requests, the Borrower will
furnish to the Bank copies of invoices to customers or the equivalent and
original shipping or delivery receipts for merchandise sold. The Borrower
shall promptly make, stamp or record such entries or legends on the
Borrower's books and records or on any of the Collateral as the Bank shall
reasonably request from time to time to indicate that the Bank has a
security interest in such Collateral.
Section 9.02. Returns; Disputes. Upon the occurrence and during the
-----------------
continuance of any Event of Default, the Bank may settle or adjust disputes
or claims directly with customers or account debtors for amounts and upon
terms which it considers advisable. In all cases, the Borrower's account
will be credited only with amounts actually received by the Bank. Whenever
the Borrower has received collateral of any kind or nature by reason of
transactions between itself and its customers or account debtors, it will
hold the same on the Bank's behalf, subject to the Bank's instructions, and
as property forming part of the Receivables.
Section 9.03. Collections. After the occurrence and during the
-----------
continuance of any Event of Default, the Bank or its designee may at any
time notify customers or account debtors of the Bank's security interest in
Receivables, collect the same directly, and charge the reasonable
collection costs and expenses to the Borrower's account. Whenever the Bank
deems it desirable that any legal or other action be instituted in order to
effectuate collection of any Receivable, the Bank may at its option
reassign any such Receivable to the Borrower (and any such reassignment
shall be deemed to be without recourse to the Bank in any event) and
require the Borrower to proceed with such legal or other action at the
Borrower's sole liability, cost and expense, in which event all amounts
collected by the Borrower on such Receivable shall nevertheless be subject
to this Agreement.
ARTICLE X
FURTHER RIGHTS OF THE BANK
Section 10.01. Further Assurances. The Borrower shall do all things
------------------
and deliver all instruments reasonably requested by the Bank to protect or
perfect any security interest granted or intended to be granted hereunder.
If the Borrower fails promptly to comply with any such request, or if any
Event of Default shall have occurred and be continuing hereunder, the
Borrower authorizes the Bank to execute, in the name or on behalf of the
Borrower, any financing statement or other document or instrument that the
Bank may require to perfect, protect or establish any security interest or
lien interest to which the Bank may be then entitled hereunder and further
authorizes the Bank to sign the Borrower's name on the same. The Borrower
appoints (but only for the purposes of protecting the Bank's interests)
such Person or Persons as the Bank may designate as the attorney-in-fact of
the Borrower with the power (after the occurrence and during the
continuance of any Event of Default) to endorse the name of the Borrower on
any checks, notes, drafts or other forms of payment or security relating to
any Collateral that may come into the possession of the Bank; to sign the
name of the Borrower on invoices or bills of lading, drafts against
customers, notices of assignment, verifications and schedules; to demand,
collect, receive payment of, receipt for, settle, compromise or adjust and
give discharges and releases in respect of the Receivables or any of them;
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Receivables or
any of them and to enforce any other rights in respect thereof or in
respect of the goods which have given rise thereto; to defend any suit,
action or proceeding brought against the Borrower in respect of any
Receivables or the goods which have given rise thereto; to settle,
compromise or adjust any suit, action or proceeding hereinbefore described
and, in connection therewith, to give such discharges or releases as the
Bank may deem appropriate; to notify the U.S. Postal Service authorities to
change the address for delivery of mail to an address designated by the
Bank and to open and dispose of mail addressed to the Borrower and,
generally, to do all things necessary to carry out the intent of this
Agreement. This power, being coupled with an interest, is irrevocable, and
the Borrower approves all acts of such attorney-in-fact. The powers
conferred on the Bank by this Section are solely to protect the interests
of the Bank and shall not impose any duty upon the Bank to exercise any
such power, and neither the Bank nor any such attorney-in-fact shall be
liable for any act or omission, error in judgment or mistake of law, except
for its actual wilful misconduct or bad faith. The Bank shall have no duty
as to the collection or protection of any Collateral and shall have no duty
as to the preservation of rights pertaining thereto, except as provided by
applicable law.
ARTICLE XI
MISCELLANEOUS
Section 11.01. No Waiver; Cumulative Remedies. No failure or delay on
------------------------------
the part of any party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or otherwise available to the Bank. Such remedies may be
exercised without resort or regard to any other source of satisfaction of
any liabilities of the Borrower to the Bank. The provisions of this
Agreement are not limited by nor in limitation of any additional or
inconsistent provisions contained in any Affiliate Guaranty or elsewhere.
Section 11.02. Amendments, Waivers and Consents. Neither this
--------------------------------
Agreement nor any provision hereof may be amended, waived, discharged or
terminated orally, but only by a writing signed by the party against whom
enforcement of the amendment, waiver, discharge or termination is sought.
Any waiver or consent may be given subject to satisfaction of conditions
stated therein and any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 11.03. Addresses for Notices, etc. Except as otherwise
---------------------------
expressly provided in this Agreement, all notices, requests, demands and
other communications provided for hereunder shall be in writing and shall
be mailed or delivered to the applicable party at the address indicated
below:
If to the Borrower:
Medical Diagnostics, Inc.
6 New England Executive Park
Burlington, MA 01803
Attention: President
with a copy to:
Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, MA 01887
Attention: Chairman
and
Gerald J. Billow, Esquire
Posternak, Blankstein & Lund
100 Charles River Plaza
Boston, MA 02114
and
Bruce Rich, Esquire
Reid & Priest LLP
40 West 57th Street
New York, NY 10019-4097
If to the Bank:
Chemical Bank
c/o Chemical Connecticut Corporation
3 Landmark Square
Stamford, CT 06901
Attention: David M. Nackley, Senior Vice President
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the other party complying
as to delivery with the terms of this Section. Except as otherwise
provided herein, all such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date
received or (ii) the date of delivery, refusal or non-delivery indicated on
the return receipt if deposited in the United States mails, sent postage
prepaid, registered or certified mail, return receipt requested, postage
and registration or certification charges prepaid, addressed as aforesaid.
Section 11.04. Costs, Expenses and Taxes. The Borrower agrees to pay
-------------------------
on demand all costs and expenses (including, without limitation, reasonable
legal fees) of the Bank in connection with the preparation, execution and
delivery of this Agreement, the Notes and all other instruments and
documents to be delivered hereunder and any amendments or modifications of
any of the foregoing, or in connection with the examination, review or
administration of any of the foregoing, as well as the costs and expenses
(including, without limitation, the reasonable fees and out-of-pocket
expenses of legal counsel) incurred by the Bank in connection with
preserving, enforcing or exercising any rights or remedies under this
Agreement, the Notes and all other instruments and documents to be
delivered hereunder, all whether or not legal action is instituted. In
addition, the Borrower shall be obligated to pay any and all stamp and
other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Notes and all other
instruments and documents to be delivered hereunder, and agrees to save the
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes. Any
fees, expenses or other charges which the Bank is entitled to receive from
the Borrower hereunder shall bear interest from the date of demand for
payment until paid at the lesser of (i) a fluctuating rate per annum which
shall at all times be equal to the sum of two and one-half (2-1/2%) percent
per annum plus the Base Rate as in effect from time to time or (ii) the
maximum rate permitted by then applicable law. In addition, the Borrower
shall indemnify and hold harmless the Bank from and against any claim for
brokerage commissions or other fees arising from the Loans contemplated by
this Agreement.
Section 11.05. Reduction and Termination. This Agreement may be
-------------------------
terminated by the Borrower at any time upon written notice of such
termination to the Bank; provided, however, that, unless and until all
Loans made by the Bank hereunder and all other Indebtedness hereunder of
the Borrower to the Bank existing (whether or not due) as of the time of
the receipt of such notice by the Bank shall have been paid in full, such
termination shall in no way affect the rights and powers granted to the
Bank in connection with this Agreement, and until such payment in full all
rights and powers hereby granted to the Bank hereunder shall be and remain
in full force and effect.
The Borrower may at any time, by written notice to the Bank, reduce
the Revolving Commitment Amount; provided that said notice to the Bank
shall be accompanied by such prepayment of principal as shall be necessary
to ensure that the Aggregate Revolving Loans do not exceed the Revolving
Commitment Amount, as same may be so reduced. Any such reduction notice
will be irrevocable and any such reduction will be permanent. Any such
reduction in the Revolving Commitment Amount will be deemed to cause a like
reduction in the $6,000,000 amount appearing in Section 2.15.
Section 11.06. Representations and Warranties. All covenants,
------------------------------
agreements, representations and warranties made herein or in any other
document delivered by or on behalf of the Borrower or any Guarantor
pursuant to or in connection with this Agreement are material and shall be
deemed to have been relied upon by the Bank, notwithstanding any
investigation heretofore or hereafter made by the Bank and shall survive
the making of the Loans as herein contemplated, and shall continue in full
force and effect so long as the Loans or other amount due under this
Agreement remains outstanding and unpaid. All statements contained in any
certificate or other paper delivered to the Bank at any time by or on
behalf of the Borrower or any Guarantor pursuant hereto shall constitute
representations and warranties by the Borrower hereunder.
Section 11.07. Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon the Borrower and its successors and assigns and shall inure to
the benefit of the Borrower and the Bank and their respective permitted
successors and assigns. The Borrower may not assign this Agreement or any
rights hereunder without the express written consent of the Bank. The Bank
may, in accordance with applicable law, assign and/or grant participations
in this Agreement, any of the Loans and/or the Notes. The Bank will notify
the Borrower promptly following any such assignment.
Section 11.08. Reproduction of Agreement. This Agreement and all
-------------------------
other instruments, documents and papers which relate thereto which have
been or may be hereafter furnished to the Bank may be reproduced by the
Bank by any photographic, photostatic, micro-card, miniature photographic,
xerographic or similar process, and the Bank may destroy the original from
which any document was so reproduced. Any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of
business).
Section 11.09. Consent to Jurisdiction. The Borrower irrevocably
-----------------------
submits to the non-exclusive jurisdiction of any New York court or any
federal court sitting within the Southern District of New York over any
suit, action or proceeding arising out of or relating to this Agreement.
The Borrower irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in such a court and any claim
that any such suit, action or proceeding has been brought in an
inconvenient forum. The Borrower agrees that final judgment in any such
suit, action or proceeding brought in such a court shall be enforced in any
court of proper jurisdiction by a suit upon such judgment, provided that
service of process in such action, suit or proceeding shall have been
effected upon the Borrower in one of the manners specified in the following
paragraph of this Section 11.09 or as otherwise permitted by law.
The Borrower hereby consents to process being served in any suit,
action or proceeding of the nature referred to in the preceding paragraph
of this Section 11.09 either (i) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to it at its
address set forth in Section 11.03 or (ii) by serving a copy thereof upon
it at its address set forth in Section 11.03. The Borrower irrevocably
waives, to the fullest extent permitted by law, all claims of error by
reason of any service as contemplated herein and agrees that such service
shall (x) be deemed in every respect effective service upon the Borrower in
any such suit, action or proceeding and (y) to the fullest extent permitted
by law, be taken and held to be valid personal service upon and personal
delivery to the Borrower.
Section 11.10. Governing Law. This Agreement and the Notes shall be
-------------
governed by, and construed in accordance with, the laws of the State of New
York.
Section 11.11. Severability. In the event that any provision of this
------------
Agreement or the application thereof to any Person, property or
circumstances shall be held to any extent to be invalid or unenforceable,
the remainder of this Agreement and the application of such provision to
Persons, properties or circumstances other than those as to which it has
been held invalid or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
Section 11.12. Headings. Article and Section headings in this
--------
Agreement and any table of contents are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any
other purpose.
Section 11.13. WAIVER OF TRIAL BY JURY. THE BORROWER HEREBY
-----------------------
EXPRESSLY KNOWINGLY AND VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY
RIGHT TO TRIAL BY JURY, AND AGREES THAT IT WILL NOT AT ANY TIME INSIST
UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF, A TRIAL BY JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS
AGREEMENT, ANY OF THE NOTES OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their respective officers thereunto duly
authorized as of the date first above written.
MEDICAL DIAGNOSTICS, INC.
By: /s/ John A. Lynch
----------------------
Its President
CHEMICAL BANK
By: /s/ Joseph Sacks
----------------------
Its Vice President
Exhibit 10.3
GUARANTY AND SECURITY AGREEMENT
dated as of August 31, 1995
from
ADVANCED NMR SYSTEMS, INC.
to
CHEMICAL BANK
GUARANTY AND SECURITY AGREEMENT dated as of August 31, 1995 from
Advanced NMR Systems, Inc., a Delaware corporation (the "Guarantor") to
Chemical Bank (the "Bank").
WITNESSETH:
WHEREAS, pursuant to that certain Loan and Security Agreement of even
date herewith (the "Loan Agreement") between Medical Diagnostics, Inc., a
Delaware corporation (the "Borrower") and the Bank, the Bank has agreed to
make loans to the Borrower on the terms and conditions set forth therein;
and
WHEREAS, it is a condition precedent to the making of loans by the
Bank pursuant to the Loan Agreement that the Guarantor shall have executed
and delivered to the Bank this Agreement and shall have granted to the
Bank, a security interest in the assets of the Guarantor; and
WHEREAS, the making of loans to the Borrower pursuant to the Loan
Agreement will be beneficial to the Guarantor inasmuch as the Guarantor
owns 100% of the outstanding capital stock of the Borrower; and the
respective Boards of Directors of the Borrower and of the Guarantor have
determined the execution, delivery and performance of this Agreement to be
necessary and convenient to the conduct, promotion and attainment of the
business of the Guarantor and the Borrower;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor agrees as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement,
-------------
the following terms shall have the meanings set out respectively after
each:
"Acquisition" - As defined in the Loan Agreement.
"Agreement" - This Guaranty and Security Agreement, as same may be
from time to time amended.
"AMS" - Advanced Mammography Systems Inc., a Delaware corporation.
"Base Rate" - As defined in the Loan Agreement.
"Business Day" - As defined in the Loan Agreement.
"Charter" - As defined in the Loan Agreement.
"Collateral" - All of the property, rights and interests of the
Guarantor described in Section 3.01 below.
"Current Assets" - As defined in the Loan Agreement.
"Current Liabilities" - As defined in the Loan Agreement.
"Default" - Any event or circumstance which, with the passage of time
or the giving of notice or both, could become an Event of Default.
"ERISA" - As defined in Subsection 4.01(l) below.
"Event of Default" - As defined in Section 7.01 below.
"Guaranteed Obligations" - Any and all indebtedness, liabilities or
obligations of the Borrower to the Bank, whether joint or several, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including, without limitation, those now or hereafter
arising under any Loan Document and/or with respect to any letter of credit
now or hereafter issued by the Bank for the account of the Borrower.
"Guaranty" - The guaranty of the Guarantor set forth in Article II.
"Indebtedness" - As defined in the Loan Agreement.
"Inventory" - All goods now owned or hereafter acquired by the
Guarantor and intended for sale or lease, all raw materials, parts, work-
in-process and finished goods, and all material and supplies which are used
or which may be used in manufacturing, selling, packing, shipping,
advertising or furnishing of goods, whether now owned or hereafter acquired
or created and wherever located, as well as all proceeds (including,
without limitation, insurance proceeds) and products of any of the
foregoing.
"Loan" - As defined in the Loan Agreement.
"Loan Documents" - The Loan Agreement, the Notes and any other
instrument or document or loan, credit, letter of credit, reimbursement
agreement, guaranty, interest rate swap or other agreement relating to
extension of financial accommodations or other banking services between the
Borrower and the Bank or made by the Borrower in favor of the Bank, all
whether now existing or hereafter entered into or delivered.
"Material Adverse Effect" - Any act, omission or circumstance which
could reasonably be expected to have a material adverse effect on (i) the
business, prospects, affairs, operations or condition of the Guarantor and
the Restricted Subsidiaries taken as a whole, or (ii) the ability of the
Guarantor to carry out its obligations under this Agreement, or (iii) the
validity or enforceability of this Agreement.
"Merger" - As defined in the Loan Agreement.
"Net Income" - As defined in the Loan Agreement.
"Notes" - As defined in the Loan Agreement.
"PGBC" - As defined in Subsection 4.01(l) below.
"Person" - As defined in the Loan Agreement.
"Premises" - All locations now or hereafter owned, leased or operated
by the Guarantor or by any Subsidiary of the Guarantor.
"Receivables" - All of the Guarantor's present and future accounts,
accounts receivable and notes, drafts, acceptances and other instruments
representing or evidencing a right to payment for goods sold or for
services rendered.
"Restricted Subsidiaries" - All present and future Subsidiaries of the
Guarantor, other than (i) AMS, (ii) the Borrower and (iii) any Person which
is deemed to be a Subsidiary of the Guarantor solely by virtue of the
Borrower's ownership, directly or indirectly, of the stock or other equity
interests of such Person.
"Subordinated Debt" - All Indebtedness hereafter incurred by the
Guarantor which is fully subordinated to the Guarantor's obligations to the
Bank under this Agreement, such subordination being evidenced by
instruments in form and substance satisfactory to the Bank.
"Subsidiary" - As defined in the Loan Agreement.
"Tangible Net Worth" - As defined in the Loan Agreement.
Section 1.02. Use of Defined Terms. Any defined term used in the
--------------------
plural preceded by the definite article shall be taken to encompass all
members of the relevant class. Any defined term used in the singular
preceded by "any" shall be taken to indicate any number of the members of
the relevant class.
Section 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with United
States generally accepted accounting principles consistently applied on the
basis used by the concerned entity in prior years.
ARTICLE II
GUARANTY
Section 2.01. Guaranty. In consideration of the Bank making loans to
--------
the Borrower pursuant to the Loan Agreement, the Guarantor hereby
guaranties to the Bank the due and punctual payment and performance of all
of the Guaranteed Obligations, as and when the same shall become due and
payable, whether on demand or at maturity, by declaration or otherwise,
according to the terms thereof, and all losses, costs, expenses and
reasonable attorneys' fees and disbursements incurred by reason of a
default under any of said Guaranteed Obligations continuing beyond the
expiration of any applicable notice and/or grace period. In case of
failure by the Borrower punctually to pay any of the Guaranteed
Obligations, the Guarantor hereby unconditionally agrees to cause such
payment to be made punctually as and when the same shall become due and
payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower. This Guaranty is an absolute,
unconditional, unlimited and continuing guaranty of the full and punctual
payment and performance by the Borrower of the Guaranteed Obligations and
not merely of their collectibility and is in no way conditioned upon any
requirement that the Bank first collect or attempt to collect the
Guaranteed Obligations or any portion thereof from the Borrower or from any
other guarantor of any of same or resort to any security or other means of
obtaining payment of any of the Guaranteed Obligations which the Bank now
has or may acquire after the date hereof, or upon any other contingency
whatsoever. Upon and during the continuance of any Event of Default (as
defined herein), all liabilities and obligations of the Guarantor to the
Bank, hereunder or otherwise, shall, at the option of the Bank, become
forthwith due and payable to the Bank without further demand or notice of
any nature, all of which are expressly waived by the Guarantor. Payments
by the Guarantor hereunder may be required by the Bank on any number of
occasions.
Section 2.02. Guarantor's Further Agreements to Pay. The Guarantor
-------------------------------------
further agrees, as a principal obligor and not as a guarantor, to pay to
the Bank forthwith upon demand, in funds immediately available to the Bank,
all costs and expenses (including court costs and reasonable attorneys'
fees and disbursements) incurred or expended by the Bank in connection with
this Guaranty and the enforcement hereof, together with interest on any sum
now or hereafter payable by the Guarantor under this Agreement, such
interest to accrue from the date of any demand for payment of such sum to
the date of payment. Such interest will be payable at the rate set forth
in Section 8.04 below.
Section 2.03. Bank's Freedom to Deal with Borrower and Other Parties.
------------------------------------------------------
The Bank shall be at liberty, without giving notice to or obtaining the
assent of the Guarantor and without relieving the Guarantor of any
liability hereunder, to deal with the Borrower and with each other party
who now is or after the date hereof becomes liable in any manner for any of
the Guaranteed Obligations in such manner as the Bank in its sole
discretion deems fit. The Bank has full authority in its sole discretion
to do any or all of the following things, none of which shall discharge or
affect the Guarantor's liability hereunder: (i) extend credit, make loans
and afford other financial accommodations to the Borrower at such times, in
such amounts and on such terms as the Bank may approve; (ii) modify, amend,
vary the terms and grant extensions or renewals of any present or future
indebtedness or of all or any of the Guaranteed Obligations or any
instrument relating to or securing same, and, without limitation, this
Guaranty shall survive payment of the Notes; (iii) grant time, waivers and
other indulgences in respect thereto; (iv) vary, exchange, release or
discharge, wholly or partially, or delay or abstain from perfecting and
enforcing any security or guaranty or other means of obtaining payment of
any of the Guaranteed Obligations which the Bank now has or acquires after
the date hereof; (v) take or omit to take any of the actions referred to in
any Loan Document or other instrument evidencing, securing or relating to
any of the Guaranteed Obligations or any actions under this Guaranty; (vi)
fail, omit or delay to enforce, assert or exercise any right, power or
remedy conferred on the Bank in this Guaranty or in any other Loan Document
or other instrument evidencing, securing or relating to any of the
Guaranteed Obligations or take or refrain from taking any other action;
(vii) accept partial payments from the Borrower or any other party; (viii)
release or discharge, wholly or partially, the Borrower, any endorser or
any guarantor, or accept additional collateral for the payment of any
Guaranteed Obligations; (ix) compromise or make any settlement or other
arrangement with the Borrower or any such other party; and (x) consent to
and participate in the proceeds of any assignment, trust or mortgage for
the benefit of creditors.
Section 2.04. Unenforceability of Guaranteed Obligations; Invalidity
------------------------------------------------------
of Security or Other Guaranties. If for any reason now or hereafter the
-------------------------------
Borrower has no legal existence or is under no legal obligation to
discharge any of the Guaranteed Obligations undertaken or purported to be
undertaken by it or on its behalf, or if any of the moneys included in the
Guaranteed Obligations have become irrecoverable from the Borrower by
operation of law or for any other reason, this Guaranty shall nevertheless
be binding on the Guarantor to the same extent as if the Guarantor at all
times had been the principal debtor on all such Guaranteed Obligations.
This Guaranty shall be in addition to any other guaranty or other security
for the Guaranteed Obligations, and it shall not be prejudiced or rendered
unenforceable by the invalidity of any such other guaranty or security.
The liability of the Guarantor under this Guaranty shall remain in full
force and effect until payment and performance in full of all of the
Guaranteed Obligations. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be restored or
returned by the Bank, upon the insolvency, bankruptcy or reorganization of
the Borrower or otherwise, all as though such payment had not been made.
Section 2.05. Waivers by Guarantor. The Guarantor waives: notice of
--------------------
acceptance hereof and reliance hereon, notice of any action taken or
omitted by the Bank in reliance hereon, any requirement that the Bank be
diligent or prompt in making demands hereunder, any requirement as to any
presentment, demand, protest, giving notice of any default by the Borrower
or asserting any other right of the Bank hereunder and all demands, notices
and suretyship defenses generally. The Guarantor also irrevocably waives,
to the fullest extent permitted by law, all defenses which at any time may
be available in respect of the Guarantor's obligations hereunder by virtue
of any statute of limitations, valuation, stay or moratorium law or other
similar law now or hereafter in effect.
Without limiting the generality of the foregoing provisions of this
Guaranty, the liability of the Guarantor shall not be released, discharged
or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other
guarantor;
(ii) any change in the time, manner, amount or place of payment of
any Guaranteed Obligation or any modification or amendment of or
supplement to any Loan Document or this Agreement;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Borrower, the Guarantor or
any other guarantor;
(iv) any change in the corporate existence, structure, record or
beneficial ownership or control of the Borrower, the Guarantor or any
other guarantor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting any such Person or its assets;
(v) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Borrower, the Bank, any
other guarantor or any other Person, whether or not arising in
connection with this Agreement;
(vi) any invalidity or unenforceability relating to or against the
Borrower or the Guarantor for any reason under any Loan Document or
under this Agreement; or any provision of applicable law or regulation
purporting to prohibit the payment by any Person of the principal of
or interest on any of the Notes or any other amount payable under any
Loan Document or this Agreement; or
(vii) any other act or omission to act or delay of any kind by the
Borrower, the Bank or any other Person or any other circumstances
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the Guarantor's
obligations hereunder.
Section 2.06. Subrogation. The Guarantor hereby irrevocably and
-----------
unconditionally waives (unless and until all Guaranteed Obligations have
been indefeasibly paid in full and all commitments of the Bank to the
Borrower have been terminated and no loan facilities now or hereafter
established by the Bank for the Borrower remain in effect) any and all
rights of subrogation, contribution or similar rights which, but for this
Section 2.06, it might otherwise have in relation to the Borrower or any
other guarantor as a result of this Agreement.
Section 2.07. No Contest with Bank. No set-off, counterclaim,
--------------------
reduction or diminution of any obligation, or any claim or defense of any
kind or nature which the Guarantor has or may have against the Borrower,
any other guarantor or the Bank shall be available hereunder to the
Guarantor. The Guarantor will not, in any proceedings under the Bankruptcy
Code or insolvency proceedings of any nature, prove in competition with the
Bank in respect of any payment hereunder or be entitled to have the benefit
of any counterclaim or proof of claim or dividend or payment by or on
behalf of the Borrower or the benefit of any other security for any
Guaranteed Obligation which, now or hereafter, the Guarantor may hold in
competition with the Bank.
Section 2.08. Stay of Acceleration. If acceleration of the time for
--------------------
payment of any amount payable by the Borrower under any Loan Document is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower,
all such amounts otherwise subject to acceleration under the terms of this
Guaranty shall nonetheless be payable by the Guarantor hereunder forthwith
on demand by the Bank.
ARTICLE III
SECURITY
Section 3.01. Security. As security for the payment and performance
--------
of all of the Guaranteed Obligations and also for the prompt and full
payment and performance of any and every other liability and obligation of
the Guarantor to the Bank, whether arising out of this Agreement or
otherwise, whether otherwise secured or unsecured, direct or indirect,
absolute or contingent, primary or secondary, due or to become due, and all
whether now or hereafter existing or arising, the Guarantor hereby pledges,
grants, assigns and transfers to the Bank, and grants to the Bank a
security interest in and to, all of the following property of the
Guarantor, all whether now owned or existing or hereafter acquired or
arising:
(a) All equipment, fixtures, furnishings, furniture, motor vehicles
and machinery of the Guarantor, wherever located, whether now owned or
hereafter acquired, whether affixed or moveable, and all replacements of,
substitutions for and accessions to any of same and all products and
proceeds (including, without limitation, insurance proceeds) of any of the
foregoing;
(b) All Receivables of the Guarantor;
(c) All contract rights of the Guarantor, including, without
limitation, licenses, employment agreements, any non-competition agreements
for the benefit of the Guarantor, and all leases and occupancy agreements;
all obligations owing to the Guarantor of every kind and nature; and all
tax refunds of every kind and nature, including, without limitation, loss
carryback refunds; and all of the foregoing whether now existing or
hereafter acquired or arising;
(d) All of the Guarantor's Inventory;
(e) All of the Guarantor's general intangibles, choses in action,
chattel paper, insurance policies, deposits, deposit accounts, money, cash,
documents and instruments (whether negotiable or non-negotiable and
regardless of attachment to chattel paper), whether arising out of,
relating to or evidencing all or any of the foregoing Collateral or
otherwise, and all whether now existing or hereafter acquired or arising;
(f) All goodwill, trade secrets, formulae, customer lists, trade
names, trademarks, copyrights, patents and licenses (including, without
limitation, the trademarks, copyrights, patents and licenses listed on
Exhibit A hereto) and all files, records (including, without limitation,
computer programs, tapes and related electronic data processing software)
and writings, whether now owned or hereafter acquired; and
(g) All liens, guaranties, securities, rights, remedies and
privileges pertaining to, and all products and proceeds (including, without
limitation, insurance proceeds) of, and all accessions to, any of the
foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties. As an inducement to
------------------------------
the Bank to execute the Loan Agreement and to make Loans thereunder to the
Borrower, the Guarantor hereby represents and warrants to the Bank as
follows:
(a) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has the corporate power
and authority to enter into and perform this Agreement, to grant the
security interests described in Section 3.01 above, to enter into and
perform all obligations required of the Guarantor by any other instruments
and other documents referred to herein to which it is a party, to fulfill
its obligations set forth herein and therein and to carry out the
transactions contemplated hereby and thereby. The Guarantor has all
requisite corporate power to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted and is duly
qualified to do business and in good standing in Massachusetts and in each
other jurisdiction where the Guarantor owns, leases or operates any real or
personal property and in each other jurisdiction where the failure so to be
qualified could (singly or in the aggregate with all such other failures to
be qualified) have a Material Adverse Effect. At the date of this
Agreement, except as set forth on Exhibit B hereto, the Guarantor has no
Subsidiaries and is not a member of any partnership or joint venture. The
names and respective jurisdictions of incorporation of all of the
Guarantor's Subsidiaries and the respective stock ownership in each of them
is set forth on Exhibit B hereto, together with a description of each such
partnership and joint venture.
(b) Exhibit C hereto sets forth, as of July 28, 1995, each Person who
owns, of record and/or beneficially, 5% or more of any class of capital
stock of the Guarantor. Except as set forth on said Exhibit C, there are
no outstanding rights, options, warrants, conversion rights or agreements
or commitments of any kind relating to the aforesaid shares or to the
authorized and unissued or treasury stock of the Guarantor.
(c) The execution, delivery and performance of this Agreement and the
other documents required to be executed by the Guarantor pursuant hereto
have been duly authorized by all necessary corporate action, will not
require the consent of any third party, and will not conflict with, violate
the provisions of, or cause a default or constitute an event which, with
the passage of time or the giving of notice or both, could constitute a
default on the part of the Guarantor under any contract, agreement, law,
rule, order, ordinance, franchise, instrument or other document or under
any provision of the Charter or by-laws of the Guarantor, or result in the
imposition of any lien or encumbrance on any property or assets of the
Guarantor, other than in favor of the Bank. This Agreement and the other
documents delivered to the Bank by the Guarantor pursuant hereto are the
legal, valid and binding obligations of the Guarantor, enforceable in
accordance with their respective terms, in each case except as such
enforceability may be limited by: (i) the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights and
remedies of creditors generally or (ii) the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or at
law.
(d) Except as disclosed on Exhibit D hereto, there are no actions,
suits, proceedings or investigations pending or, to the knowledge of the
Guarantor, threatened (nor, to the knowledge of the Guarantor, is there any
basis therefor) against or affecting the Guarantor or any of the Restricted
Subsidiaries by or before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which could
prevent or hinder the consummation of the transactions contemplated hereby
or call into question the validity of this Agreement or any other
instrument provided for or contemplated by this Agreement or any action
taken or to be taken in connection with the transactions contemplated
hereby or thereby, nor are there any such actions, suits, proceedings or
investigations pending or, to the knowledge of the Guarantor, threatened,
anticipated or contemplated which, if determined adversely to the Guarantor
or any of the Restricted Subsidiaries, in any single case or in the
aggregate, could have a Material Adverse Effect.
(e) Neither the Guarantor nor any of the Restricted Subsidiaries is
in violation of any term of its Charter or by-laws, as now in effect, nor
in violation of any term of any mortgage, indenture, judgment, decree or
order, any other instrument, contract or agreement or of any term of any
administrative determination, failure to comply with which, singly or in
the aggregate with all such other failures, could have a Material Adverse
Effect.
(f) The Guarantor and each of the Restricted Subsidiaries has filed
proper and accurate federal, foreign, state and local tax returns, reports
and estimates for all years and periods for which any such returns, reports
or estimates were required to be filed and has paid all taxes, assessments,
impositions, fees and other governmental charges required to be paid in
respect of the periods covered by any such returns, reports or estimates,
other than any such taxes, assessments, impositions, fees and charges which
the Guarantor or the Restricted Subsidiary concerned is contesting in good
faith by appropriate proceedings which serve as a matter of law to stay the
enforcement of any remedy of the relevant taxing authority and as to which
adequate reserves have been established. Neither the Guarantor nor any of
the Restricted Subsidiaries is delinquent in the payment of any tax,
assessment or governmental charge, and no deficiencies for any tax,
assessment or governmental charge have been asserted or assessed, and the
Guarantor knows of no material governmental liability or basis therefor for
which adequate reserves have not been established.
(g) The Guarantor and each of the Restricted Subsidiaries is in
compliance with all requirements of law, federal, state and local, and all
requirements of all governmental bodies or agencies having jurisdiction
over any such Person, the conduct of its business, the use of its
properties and assets and all Premises occupied by it, failure to comply
with which could, singly or in the aggregate with all other such failures,
have a Material Adverse Effect. Without limiting the foregoing, the
Guarantor and each of the Restricted Subsidiaries has all the required
franchises, licenses, permits, certificates and authorizations needed for
the conduct of its business and the use of its properties and all premises
occupied by it, as now conducted, owned and used or as proposed to be
conducted, owned and used; provided that no representation is made herein
as to any such franchise, license, permit, certificate or authorization if
the failure to have same could not, singly or in the aggregate with all
other such failures, have a Material Adverse Effect. Neither the Guarantor
nor any such Restricted Subsidiary has received any notice not heretofore
complied with from any federal, state or local authority or any insurance
or inspection body that any of its properties, facilities, equipment or
business procedures or practices fails to comply in any material respect
with any applicable law, ordinance, regulation, building or zoning law or
any other requirement of any such authority or body. No authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to the valid
execution or delivery of, or for the performance by the Guarantor of any of
its obligations under, this Agreement or any other instrument provided for
or contemplated by this Agreement.
(h) Neither the Guarantor nor any of its Subsidiaries is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of any Loan
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or in any
other manner which would involve a violation of any of the regulations of
the Board of Governors of the Federal Reserve System. The Guarantor is
primarily engaged in the business of manufacture and sale of MRI components
and systems and providing servicing of equipment for the MRI industry. The
Guarantor is not an "investment company" nor the "affiliate" of an
"investment company", as such terms are defined in the Investment Company
Act of 1940.
(i) The Guarantor and each Subsidiary of the Guarantor has good and
marketable title to all assets now carried on its books, including those
reflected in its financial statements referred to in Subsection 4.01(j) or
acquired since the date of such statements, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except as
permitted under Subsection 5.02(b). The Guarantor and each Subsidiary of
the Guarantor enjoys peaceful and undisturbed possession under all material
leases under which it is operating, and all of such leases are valid and
subsisting and in full force and effect.
(j) The financial statements of the Guarantor for its fiscal year
ended December 31, 1994 and for the fiscal quarters ended March 31, 1995
and June 30, 1995, each heretofore delivered to the Bank, fairly present
the financial condition of the Guarantor as at the dates thereof and for
the periods covered thereby, subject, as to interim statements, to normal
year-end audit adjustment (which is not expected to be material) and to the
absence of footnotes. Said financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the relevant periods, subject, as to interim statements,
to normal year-end audit adjustment (which is not expected to be material)
and to the absence of footnotes. Neither the Guarantor nor any of the
Restricted Subsidiaries has any liability, contingent or otherwise, not
disclosed in the aforesaid financial statements or in any notes thereto
that could materially adversely affect the financial condition of the
Guarantor.
(k) The Guarantor and each of the Restricted Subsidiaries owns or has
a valid right to use all of the patents, licenses, copyrights, trademarks,
service marks, trade names and franchises ("Intellectual Property") now
being used or necessary to conduct its business, all of which are described
on Exhibit A hereto (including, in each case, the owner of such
Intellectual Property). None of the Intellectual Property owned by the
Guarantor or any Restricted Subsidiary is represented by a registered
patent, copyright, trademark or other federal or state registration, except
as set forth on Exhibit A hereto. The conduct of the respective businesses
of the Guarantor and the Restricted Subsidiaries, as now operated, does not
conflict with valid patents, licenses, copyrights, trademarks, service
marks, trade names or franchises of others in any manner that could have a
Material Adverse Effect.
(l) No employee pension benefit plan maintained by the Guarantor or
any Subsidiary of the Guarantor or in which employees of the Guarantor or
any Subsidiary of the Guarantor participate has any accumulated funding
deficiency within the meaning of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), nor does the Guarantor or any Subsidiary
of the Guarantor have any material liability to the Pension Benefit
Guaranty Corporation ("PBGC") established under ERISA (or any successor
thereto) in connection with any employee pension benefit plan (or other
class of benefit which the PBGC has elected to insure), and there have been
no "reportable events" or "prohibited transactions" with respect to any
such plan, as those terms are defined in Section 4043 of ERISA and
Section 4975 of the Internal Revenue Code of 1986, as amended,
respectively. Except as listed on Exhibit E hereto, neither the Guarantor
nor any Restricted Subsidiary maintains any profit-sharing, retirement,
deferred compensation, ESOT, stock bonus, stock option or similar benefit
plan for any officers or employees. Said Exhibit E also sets forth all
employment agreements, management contracts and other written agreements
with any managers and/or executive officers to which the Guarantor or any
Restricted Subsidiary is a party.
(m) The chief executive offices of the Guarantor are located at One
Executive Park, Fort Lee, NJ 07024 and the principal place of business of
the Guarantor is located at 46 Jonspin Road, Wilmington, MA 01887. The
Guarantor conducts business under no trade name other than its corporate
name.
(n) All offices, warehouses, sales offices and other business
locations maintained at the date hereof by the Guarantor are listed on
Exhibit F hereto. The Guarantor maintains books and records relating to
Receivables and other intangible Collateral only at the Guarantor's chief
executive offices described in Subsection 4.01(m) above, except that
certain records may be located at the Guarantor's office at One Executive
Park, Fort Lee, NJ 07024. At the date hereof, the Guarantor maintains
Inventory, machinery and/or equipment only at the locations shown on
Exhibit F hereto. As to any items of the Collateral which are or are to
become fixtures, the premises described on Exhibit F constitute the real
estate concerned. Said Exhibit F discloses the record owners of each such
premises.
(o) To the best knowledge of the Guarantor, none of the executive
officers of the Guarantor or of any Restricted Subsidiary is subject to any
agreement in favor of anyone other than the Guarantor or such Restricted
Subsidiary which limits or restricts that person's right to engage in the
type of business activity conducted or proposed to be conducted by the
Guarantor or such Restricted Subsidiary or to use therein any property or
confidential information or which grants to anyone other than the Guarantor
or such Restricted Subsidiary any rights in any inventions or other ideas
susceptible to legal protection developed or conceived by any such officer.
(p) Neither the Guarantor nor any Restricted Subsidiary is now a
party to any contract or agreement, the terms of which now have or, as far
as can be reasonably foreseen, may have a Material Adverse Effect.
(q) Neither this Agreement, nor the financial statements referred to
herein, nor any certificate delivered pursuant to this Agreement, nor any
other agreement, document, certificate or written statement furnished to
the Bank by or on behalf of the Guarantor in connection with the
transactions contemplated by this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained herein or therein not misleading. There is
no fact within the special knowledge of any of the executive officers of
the Guarantor which has not been disclosed herein or in writing by them to
the Bank and which materially adversely affects, or in the future in their
opinion may, insofar as they can now foresee, have a Material Adverse
Effect.
(r) The Merger has been duly consummated in accordance with the
Merger Agreement dated May 2, 1995 (a copy of which has heretofore been
provided by the Guarantor to the Bank) and in compliance with all
applicable laws.
(s) After giving effect to the Merger and the transactions
contemplated thereby and to the extension of financial accommodations
contemplated by this Agreement, the Guarantor (A) is and will be able to
pay its debts as they become due, (B) has and will have funds and capital
sufficient to carry on its business as now conducted or as contemplated to
be conducted, (C) owns property having a value both at fair valuation and
at present fair saleable value greater than the amount required to pay its
debts as they become due, and (D) is not insolvent and will not be rendered
insolvent as determined by applicable law.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants Other Than Reporting
------------------------------------------
Requirements. Without limiting any other covenants and provisions hereof,
------------
the Guarantor covenants and agrees that so long as any Guaranteed
Obligation is outstanding or any obligation of the Guarantor to the Bank,
under this Agreement or otherwise, remains unpaid:
(a) The Guarantor will pay and discharge (and will cause each of the
Restricted Subsidiaries to pay and discharge) all taxes, assessments and
governmental charges or levies imposed upon it or them, or upon its or
their income or profits, or upon any properties belonging to it or them,
prior to the date on which penalties or interest would attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon any
properties of the Guarantor or any of the Restricted Subsidiaries; provided
that neither the Guarantor nor any such Restricted Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings which serve as a
matter of law to stay the enforcement of any remedy of the taxing authority
or claimant and as to which the Guarantor or the Restricted Subsidiary
concerned, as the case may be, shall have set aside on its books adequate
reserves (or, if such enforcement is not so stayed as a matter of law, a
surety bond, satisfactory to the Bank as to amount, terms and the identity
of the surety, shall have been delivered to the Bank). The Guarantor will
pay (and will cause each of its Restricted Subsidiaries to pay) in a timely
manner, all material lease obligations, trade debt and purchase money
obligations, other than any such lease obligations, trade debt and purchase
money obligations which the Guarantor or the relevant Restricted Subsidiary
(as the case may be) is contesting in good faith, with adequate reserves
having been established, under circumstances in which no material asset or
interest of the Guarantor or such Restricted Subsidiary would be
jeopardized. The Guarantor will fully, faithfully and punctually perform
and fulfill (and will cause each of its Restricted Subsidiaries fully,
faithfully and punctually to perform and fulfill) all material covenants
and agreements under any leases of real estate, agreements relating to
purchase money debt, equipment leases and other material contracts, other
than any such covenants and agreements which the Guarantor or the relevant
Restricted Subsidiary (as the case may be) is contesting in good faith,
with adequate reserves having been established, under circumstances in
which no material asset or interest of the Guarantor or such Restricted
Subsidiary would be jeopardized.
(b) The Guarantor will maintain (and will cause each of the
Restricted Subsidiaries to maintain), with responsible and reputable
insurance companies or associations reasonably satisfactory to the Bank,
insurance in such amounts and covering such risks as are typically insured
by similar businesses (and any such other insurance as the Bank may
reasonably request from time to time), but in any event in amounts
sufficient to prevent the Guarantor or any such Restricted Subsidiary from
becoming a coinsurer. Without limiting the foregoing, the Guarantor will
keep the Collateral fully insured against fire, lightning and extended
coverage perils and against such other risks as the Bank may from time to
time reasonably require, in an amount at least equal to the full insurable
value of the Collateral and in any event not less than the amount necessary
to avoid co-insurance. Insurance at any one location may be "blanket" with
insurance at other locations and insurance of the Guarantor and any
Restricted Subsidiary may be blanket with insurance of other Restricted
Subsidiaries. In addition, the Guarantor shall procure and maintain
general liability insurance with minimum limits of not less than
$5,000,000. The Guarantor shall also procure and maintain workmen's
compensation insurance, employer liability and other insurance as required
by law. The Guarantor will also maintain comprehensive automobile
liability insurance covering all motor vehicles owned or leased by it, with
combined limits of not less than $1,000,000 for bodily injury and $500,000
for property damage. The Guarantor will also maintain (and will cause each
of the Restricted Subsidiaries to maintain) (i) business interruption
insurance in amounts satisfactory to the Bank covering all material
business operations of the Guarantor and each such Restricted Subsidiary
and (ii) product liability insurance to the extent reasonably requested by
the Bank. All insurance herein provided for shall be in such form and
written by such companies as may from time to time be reasonably approved
by the Bank. The Guarantor will assign and deliver to the Bank duplicate
original copies or certificates for all policies of casualty insurance, as
collateral and further security for the obligations of the Guarantor herein
contained, with the Bank named as first loss payee with respect to all
property in which it holds a security interest (except that the Bank may be
named as second loss payee with respect to any property as to which the
Bank holds a security interest subject to another Person's prior security
interest which is permitted under this Agreement). All policies of
insurance shall contain a provision forbidding cancellation of such
insurance either by the carrier or by the insured until at least 30 days
after written notice of the proposed cancellation is given to the Bank; and
whenever any insurance is to expire for any reason, the Guarantor will
deliver to the Bank, at least 30 days prior to such expiration, a renewal
or replacement policy, complying with all of the conditions of this
Subsection. In addition, the Guarantor will obtain an endorsement with
respect to all such policies indicating that, solely as to the Bank, the
insurance shall not be impaired or invalidated by reason of any act or
neglect of the named insured or any subsequent owner of any of the property
insured. Any insurance proceeds received by the Bank may, at the option of
the Bank, either (i) be applied to the payment or prepayment of any
obligations of the Guarantor and/or the Borrower to the Bank or (ii) be
transmitted in whole or in part to the owner of the property damaged or
destroyed for the purpose of repairing or replacing the same; provided that
insurance proceeds so received as proceeds of business interruption
insurance or with respect to damage to or destruction of any equipment will
(provided that no Event of Default has then occurred and is then
continuing) be released to the Guarantor. Any insurance proceeds received
by the Bank with respect to damage to or destruction of any equipment on
which it holds a security interest that are released to the Guarantor by
the Bank shall be used by the Guarantor to repay any outstanding capital
financing of such damaged or destroyed equipment and to repair or replace
the damaged or destroyed equipment, with the Bank to receive its same
priority security interest in the repaired and/or replacement equipment.
(c) The Guarantor will preserve and maintain (and will cause each of
the Restricted Subsidiaries to preserve and maintain) its corporate
existence, rights, franchises and privileges and remain in good standing in
the jurisdiction of its incorporation. The Guarantor will remain qualified
and in good standing in Massachusetts and will qualify and remain qualified
(and will cause each of the Restricted Subsidiaries to qualify and remain
qualified and in good standing) in each other jurisdiction in which it
maintains a plant, warehouse or office and in each other jurisdiction in
which the failure so to qualify could have a Material Adverse Effect.
(d) The Guarantor will comply (and will cause each of the Restricted
Subsidiaries to comply) with the requirements of all applicable laws
(including, without limitation, laws relating to environmental protection),
rules, regulations and the orders of any court or other tribunal or
governmental or administrative authority or agency applicable to it or to
its business, property or assets, all to the extent that failure to comply
with any such laws, rules, regulations or orders could, singly or in the
aggregate with all other such failures, have a Material Adverse Effect.
The Guarantor will obtain and maintain (and will cause each of the
Restricted Subsidiaries to obtain and maintain) all licenses, permits and
permissions relating to its properties or business, failure to obtain or
maintain which could, singly or in the aggregate with all other such
failures, have a Material Adverse Effect.
(e) At any reasonable time and from time to time (and at any time and
as frequently as the Bank requests following the occurrence and during the
continuance of an Event of Default), the Guarantor will permit (and will
cause each of the Restricted Subsidiaries to permit) the Bank and any
agents or representatives thereof to inspect and examine Collateral,
wherever located, and to examine and make copies of and take abstracts from
the records and books of account of, and visit the properties of the
Guarantor and each of the Restricted Subsidiaries, and to discuss the
affairs, finances and accounts of the Guarantor and any such Restricted
Subsidiary with any of their respective managers, officers or directors and
independent accountants, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this Subsection
5.01(e). The Guarantor will, upon request, arrange for the Bank to have
access to (and facilities for obtaining copies of) all electronically
stored data and all papers and files of any kind relating to Receivables of
the Guarantor.
(f) The Guarantor will keep proper and complete records and books of
account in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied reflecting all
financial transactions of the Guarantor and its Subsidiaries. All
financial statements submitted to the Bank under this Agreement will be
prepared in accordance with generally accepted accounting principles
consistently applied, except that interim statements will be subject to
normal year-end audit adjustment (not to be material) and to the absence of
footnotes.
(g) The Guarantor will maintain and preserve (and will cause each of
the Restricted Subsidiaries to maintain and preserve) all of their
respective properties necessary or useful in the proper conduct of their
respective businesses in good working order and condition (subject to
ordinary wear and tear), making all necessary repairs thereto and
replacements thereof; provided that neither the Guarantor nor any
Restricted Subsidiary will be deemed to be in default under this Subsection
5.01(g) by reason of any damage by fire or other casualty so long as the
Guarantor (or such Restricted Subsidiary, as the case may be) repairs
and/or replaces the damaged property as promptly as reasonably practicable.
(h) The Guarantor will maintain experienced and competent
professional senior management with respect to its business and properties
and with respect to the Restricted Subsidiaries.
(i) The Guarantor will continue to conduct (and will cause each of
the Restricted Subsidiaries to continue to conduct) in the ordinary course,
the business in which each of them is presently engaged. Neither the
Guarantor nor any of such Restricted Subsidiaries will, without the prior
written consent of the Bank, directly or indirectly enter into any lines of
business, businesses or ventures outside of the lines of business conducted
by the Guarantor at the date hereof.
(j) For each fiscal year, the Guarantor and its Subsidiaries will
achieve an annual consolidated Adjusted Net Income of at least $1.00. As
used herein, "Adjusted Net Income" of the Guarantor for any period means
the sum of: (1) the consolidated Net Income (or consolidated Net Loss,
expressed as a negative number) of the Guarantor for such period, plus
----
(2) the amount, if any, representing amortization of goodwill arising from
the Merger which was actually deducted on the consolidated books of the
Guarantor in computing the Guarantor's consolidated Net Income (or
consolidated Net Loss, as the case may be) for such period, plus (3) as to
----
the computation of Adjusted Net Income for fiscal 1995 only, that amount
which represents legal, accounting, printing and other actual expenses of
the Merger (not to exceed $1,500,000 in the aggregate) which were incurred
by the Borrower and actually deducted on the consolidated books of the
Guarantor in computing the Guarantor's consolidated Net Income (or
consolidated Net Loss, as the case may be) for the relevant period.
(k) The Guarantor will maintain at all times consolidated Tangible
Net Worth of the Guarantor and Subsidiaries which will never be less than
the following: on September 30, 1995 and at all times thereafter through
and including September 29, 1996 - not less than $4,000,000; on
September 30, 1996 and at all times thereafter through and including
September 29, 1997 - not less than $6,000,000; on September 30, 1997 and at
all times thereafter through and including September 29, 1998 - not less
than $8,000,000; and on September 30, 1998 and at all times thereafter -
not less than $10,000,000.
(l) The Guarantor will maintain at all times a ratio of
(x) consolidated Current Assets of the Guarantor and Subsidiaries to
(y) consolidated Current Liabilities of the Guarantor and Subsidiaries,
which ratio will never be less than 1.2 to 1.
(m) At all times from the date hereof to March 1, 1996, the Guarantor
and the Borrower will maintain aggregate cash and cash-equivalents held in
the name and under the control of the Borrower or the Guarantor totalling
not less than $6,000,000.
(n) Within 60 days after the date hereof, the Guarantor will
establish with the Bank, and will thereafter maintain with the Bank (and
cause each of its Restricted Subsidiaries to maintain), its principal
operating and deposit accounts.
(o) In order to induce the Bank to enter into the Loan Agreement and
to make Loans thereunder to the Borrower, the Guarantor is paying to the
Bank, as a non-refundable closing fee, the amount of $225,000, of which
$100,000 has been paid previously and $125,000 is being paid at the date
hereof.
Section 5.02. Negative Covenants. Without limiting any other
------------------
covenants and provisions hereof, the Guarantor covenants and agrees that,
so long as any Guaranteed Obligation is outstanding or any obligation of
the Guarantor to the Bank, under this Agreement or otherwise, has not been
fully performed:
(a) The Guarantor will not create, incur, assume or suffer to exist
(nor permit any of the Restricted Subsidiaries to create, incur, assume or
suffer to exist) any Indebtedness, except for:
(i) Indebtedness owed to the Bank, including, without limitation,
Indebtedness arising out of this Agreement;
(ii) Indebtedness of the Guarantor or any such Restricted
Subsidiary for taxes, assessments and governmental charges or levies,
to the extent payment thereof shall not at the time be required under
Subsection 5.01(a) above;
(iii) unsecured current liabilities of the Guarantor or any such
Restricted Subsidiary (other than for money borrowed or for the
deferred purchase price of property) incurred upon customary terms in
the ordinary course of business and unsecured advances or progress
payments under contracts incurred on customary terms in the ordinary
course of business;
(iv) purchase money Indebtedness and capital lease financing owed
to vendors or lessors of equipment used in the business of the
Guarantor or any of the Restricted Subsidiaries, such purchase money
Indebtedness not to exceed $500,000 in aggregate principal amount
incurred per fiscal year of the Guarantor;
(v) Subordinated Debt hereafter incurred by the Guarantor; but
only if the Bank has given its prior written consent to the financial
terms and the subordination provisions of such Subordinated Debt;
(vi) other Indebtedness existing at the date hereof, but only to
the extent set forth on Exhibit G hereto; and
(vii) and guaranties expressly permitted pursuant to Subsection
5.02(c) below.
(b) The Guarantor will not create, incur, assume or suffer to exist
(nor permit any of the Restricted Subsidiaries to create, incur, assume or
suffer to exist) any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or retained
security title of a conditional vendor) of any nature (collectively,
"liens"), upon or with respect to any of its property or assets, now owned
or hereafter acquired, except that the foregoing restrictions shall not
apply to:
(i) liens for taxes, assessments or governmental charges
or levies on property of the Guarantor or any of the Restricted
Subsidiaries if the same shall not at the time be delinquent or
thereafter can be paid without interest or penalty or are being
contested in good faith and by appropriate proceedings which serve as
a matter of law to stay the enforcement of any remedies of the taxing
authorities and as to which adequate reserves have been made (or, if
such enforcement is not stayed as a matter of law, a surety bond
satisfactory to the Bank as to amount, terms and the identity of the
surety has been delivered to the Bank);
(ii) liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business for sums not yet due or which are being contested
in good faith and by appropriate proceedings which serve as a matter
of law to stay the enforcement thereof and as to which adequate
reserves have been made (or, if such enforcement is not stayed as a
matter of law, a surety bond satisfactory to the Bank as to amount,
terms and the identity of the surety has been delivered to the Bank);
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or
similar legislation;
(iv) liens existing on the date hereof to the extent listed on
Exhibit G hereto;
(v) liens securing the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations and surety bonds arising in the ordinary course of
business;
(vi) zoning restrictions, easements and rights or restrictions of
record on the use of real property which do not materially detract
from its value or impair its use;
(vii) capital leases and liens securing the purchase price of
property (to the extent such capital leases and purchases are
permitted by clause (iv) of Subsection 5.02(a) above), provided that
--------
each such lien is given solely to secure the purchase price of such
property, does not extend to any other property and is given at the
time of the acquisition of such property; and
(viii) liens in favor of the Bank.
(c) The Guarantor will not assume, guarantee, endorse or otherwise
become directly or contingently liable (nor permit any of the Restricted
Subsidiaries to assume, guarantee, endorse or otherwise become directly or
contingently liable), including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in any debtor or otherwise
to assure any creditor against loss, in connection with any Indebtedness of
any other Person, except (i) guaranties by endorsement for deposit or
collection in the ordinary course of business, (ii) any guaranty in favor
of the Bank and (iii) any guaranty given by the Guarantor with respect to
any purchase money Indebtedness or capital lease financing hereafter
incurred by the Borrower or any Subsidiary, so long as the incurrence of
such purchase money Indebtedness or capital lease financing is expressly
permitted pursuant to clause (iv) of Subsection 5.02(a) above or by clause
(iv) and (vii) of Subsection 7.02(a) of the Loan Agreement and provided
that the Guarantor shall provide notice to the Bank of any guaranty given
pursuant to this Subsection 5.02(c)(iii).
(d) Except as otherwise provided in the second sentence of this
Subsection, the Guarantor will not liquidate or dissolve, or merge or
consolidate with any other Person, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
item or items material to its business (whether now owned or hereafter
acquired) included in the assets of the Guarantor (nor will the Guarantor
permit any of the Restricted Subsidiaries to do any of the foregoing),
except that the Guarantor and the Restricted Subsidiaries may sell or
dispose of property through (i) sales of Inventory in the ordinary course
of business, (ii) disposal of worn out or obsolete equipment in the
ordinary course of business, (iii) sale or disposal in any one fiscal year
of items aggregating not more than five (5%) percent of the consolidated
Tangible Net Worth of the Guarantor measured as at the beginning of such
year and (iv) permitted sales of common stock of AMS, if any, under the
Pledge Agreement between the Guarantor and the Bank of even date herewith.
Notwithstanding the foregoing, (i) any Restricted Subsidiary may be merged
into the Guarantor provided that no Event of Default has occurred and is
then continuing, (ii) any Restricted Subsidiary may be merged into any
other Restricted Subsidiary and (iii) the Guarantor's percentage ownership
of AMS may be reduced due to the forfeiture of certain shares of common
stock of AMS presently held in escrow. Neither the Guarantor nor any of
the Restricted Subsidiaries will make any Acquisition without the prior
written consent of the Bank.
(e) The Guarantor will not sell, assign, factor or dispose in any way
of any of its Receivables or other rights to payment, with or without
recourse, except for assignment for collection in the ordinary course of
business, nor will the Guarantor permit any of the Restricted Subsidiaries
to do any of the foregoing.
(f) The Guarantor will not make or maintain, nor permit any of the
Restricted Subsidiaries to make or maintain, any loan or advance to any
Person, or purchase or otherwise acquire, or permit any of the Restricted
Subsidiaries to purchase or otherwise acquire, the capital stock, assets
comprising the business of, or obligations of, or any interest in, any
Person, except the following investments by the Guarantor or any such
Restricted Subsidiary:
(i) readily marketable evidences of indebtedness issued or
guaranteed by the United States of America which have a maturity of
not more than one year from the date of acquisition;
(ii) dollar-denominated certificates of deposit, notes,
acceptances and repurchase agreements having a maturity of not more
than one year from the date of acquisition issued by the Bank or by
any other commercial bank organized in the United States, provided in
the case of such other bank that such other bank has capital and
surplus of at least $1,000,000,000 and has long-term debt with a
rating of investment grade or better by Standard & Poor's Corporation
and/or Moody's Investors Service, Inc.; and interest-bearing accounts
in the Bank or in any such other bank;
(iii) commercial paper rated A-1/P-1 or better;
(iv) travel advances, advances for moving and relocation expenses
and similar advances to employees in the ordinary course of the
Guarantor's business; and
(v) investments by the Guarantor or any Restricted Subsidiaries
in, and loans and advances by the Guarantor to, any Subsidiary or
joint venture to the extent disclosed on Exhibit H hereto;
Nothing contained in this Subsection 5.02(f) shall permit the Borrower
or any other Person to use, directly or indirectly, proceeds of any Loan
for the purpose, whether immediate, incidental or ultimate, of purchasing
or carrying any "margin stock" within the meaning of Regulation U.
(g) The Guarantor will not establish (nor permit any of its
Subsidiaries to establish) any new pension or defined benefit plan or
modify any such existing plan for employees subject to ERISA, which plan
provides any benefits based on past service, without the advance consent of
the Bank to the amount of the aggregate past service liability thereby
created.
(h) The Guarantor will not waive (nor permit any of the Restricted
Subsidiaries to waive) any debt or claim, except in the ordinary course of
its business.
(i) The Guarantor will not make, directly or indirectly, any optional
or voluntary prepayment or purchase of Subordinated Debt, nor make any
payment of any Subordinated Debt except to the extent expressly permitted
in the Subordination Agreement relating thereto. The Guarantor will not at
any time make any payment on account of principal of and/or interest on any
Subordinated Debt unless at the time of such payment (and after giving
effect to any such payment of principal and/or interest) no Default nor any
Event of Default shall have occurred and be continuing.
(j) The Guarantor will not remove (nor permit to be removed) from the
Premises listed on Exhibit F any books or records relating to Receivables
or other intangible Collateral of the Guarantor nor remove therefrom any
tangible Collateral (other than Inventory sold to customers in the ordinary
course of the Guarantor's business) until after receipt of a certificate
from the Bank, signed by an officer thereof, stating that the Bank has, to
its satisfaction, obtained all documentation that it deems necessary or
desirable to obtain, maintain, perfect and confirm the first priority
security interests granted or intended to be granted herein.
(k) The Guarantor will not move its chief executive offices or
principal place of business from the address described in
Subsection 4.01(m) nor change its name or identity nor use any trade name
or trade style other than its corporate name nor make or suffer to be made
any change in its corporate structure until, in each case, after receipt of
a certificate from the Bank, signed by an officer thereof, stating that the
Bank has, to its satisfaction, obtained all documentation that it deems
necessary or desirable to obtain, maintain, perfect and confirm the first
priority security interests granted or intended to be granted herein.
(l) The Guarantor will not, without the prior written consent of the
Bank, declare or pay any dividends, purchase, redeem, retire, or otherwise
acquire for value any of its capital stock (or rights, options or warrants
to purchase such shares) now or hereafter outstanding, return any capital
to its stockholders or make any distribution of assets to its stockholders;
provided that the Guarantor may redeem shares of its common stock and
repurchase warrants which had been issued by the Guarantor in connection
with the Merger so long as (i) at the time of any such redemption or
repurchase (and after giving effect thereto) no Default nor any Event of
Default shall have occurred and be continuing, and (ii) the aggregate
amount expended for all such redemptions and repurchases shall not exceed
$100,000 per fiscal year of the Guarantor.
(m) Neither the Guarantor nor any of the Restricted Subsidiaries will
become a member of any partnership or joint venture in which another entity
has the ability to incur any Indebtedness on behalf of the Guarantor or
such Restricted Subsidiary or to commit any assets of the Guarantor or such
Restricted Subsidiary without the consent of the Guarantor or such
Restricted Subsidiary, as the case may be.
(n) The Guarantor will not enter into (nor permit any of the
Restricted Subsidiaries to enter into) any transaction, including, without
limitation, the purchase, sale or exchange of any property or the rendering
of any service, with any present or former Affiliate, except in the
ordinary course of business and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms no less favorable to the
Guarantor or such Restricted Subsidiary, as the case may be, than would be
obtained in a comparable arms'-length transaction with any Person not an
Affiliate. As used herein, "Affiliate" of any entity means any officer or
director of such entity or any Person which, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is
under common control with such entity, or any Person which beneficially
owns or holds five (5%) percent or more of any class of equity securities
of such entity. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of any Person, whether through the ownership of voting
securities, by contract or otherwise.
(o) The Guarantor will not dispose of (nor permit any of its
Subsidiaries to dispose of) any hazardous material or oil on any Premises
of the Guarantor or any such Subsidiary; nor shall the Guarantor store or
suffer or permit to exist on any Premises of the Guarantor or any such
Subsidiary any hazardous material or oil, nor transport or arrange the
transport of (nor permit any such Subsidiary to transport or arrangement
the transport of) any hazardous material or oil, except under valid permits
and licenses and otherwise in compliance with all applicable laws and
regulations. The Guarantor shall provide the Bank with prompt written
notice of (i) any release or threat of release of any hazardous material or
oil at or from any site or vessel owned, occupied or operated by the
Guarantor or any such Subsidiary and (ii) any incurrence of any expense or
loss by any governmental authority in connection with the assessment,
containment or removal of any hazardous material or oil for which expense
or loss the Guarantor or any such Subsidiary may be liable. As used
herein, the terms "hazardous material" and "oil" have the respective
meanings ascribed to such terms in Mass. Gen. Laws, Ch. 21E and shall also
be deemed to include any similar terms in any comparable statute in any
other relevant jurisdiction.
(p) The Guarantor will not suffer or permit to exist any circumstance
in which the Borrower is not a wholly-owned Subsidiary of the Guarantor or
in which equity ownership in any entity which is a Subsidiary of the
Guarantor at the date hereof changes from that shown on Exhibit B hereto,
except as the Guarantor's ownership of AMS may be decreased by the
forfeiture of certain shares presently held in escrow.
(q) Neither the Guarantor nor any of the Restricted Subsidiaries will
make any material change in the nature of its business as carried on the
date hereof. The Guarantor will not change its fiscal year or accounting
principles or methods of applying same except as hereinafter provided in
this Subsection 5.02(q). The Guarantor is presently considering a change
in its fiscal year from a year ending December 31 to a year ending
September 30. Prior to effecting any such change in fiscal year or any
change in accounting treatment or classification as to any accounts of the
Guarantor and/or any of its Subsidiaries, the Guarantor will notify the
Bank of same in writing and will execute and deliver any amendment to this
Agreement which the Bank may reasonably deem necessary or desirable in
order to preserve unimpaired the rights of the Bank and the obligations of
the Guarantor under this Agreement.
(r) The Guarantor will not write up (by creating an appraisal surplus
or otherwise), nor permit any of its Subsidiaries to write up, the value of
any assets of the Guarantor or such Subsidiary above their cost to the
Guarantor or such Subsidiary, as the case may be, less the depreciation
regularly allowable thereon.
Section 5.03. Reporting Requirements. So long as any Guaranteed
----------------------
Obligation shall be outstanding or any other obligation of the Guarantor to
the Bank, under this Agreement or otherwise, shall remain unpaid, the
Guarantor shall furnish to the Bank:
(a) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters in each fiscal year of the
Guarantor (or within such longer period, not to exceed in any event 50 days
after the end of the relevant fiscal quarter, as the Securities and
Exchange Commission may allow for filing of the Guarantor's Quarterly
Report on Form 10-Q for the fiscal quarter in question), consolidated and
consolidating balance sheets of Guarantor and Subsidiaries (including the
Borrower) as at the end of such fiscal quarter and consolidated and
consolidating statements of income and cash flow for the Guarantor and
Subsidiaries (including the Borrower) for such fiscal quarter and for the
period commencing at the end of the previous fiscal year and ending with
the end of such fiscal quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the
preceding fiscal year, all in reasonable detail and duly certified by the
chief financial officer of the Guarantor as having been prepared in
accordance with generally accepted accounting principles consistently
applied, subject to normal year-end audit adjustment and the absence of
footnotes.
(b) As soon as available and in any event within 90 days after the
end of each fiscal year of the Guarantor (or within such longer period, not
to exceed in any event 120 days after the end of the relevant fiscal year,
as the Securities and Exchange Commission may allow for the filing of the
Guarantor's Annual Report on Form 10-K for the fiscal year in question), a
copy of the Guarantor's annual audit report for such fiscal year, including
therein consolidated and consolidating balance sheets of the Guarantor and
Subsidiaries (including the Borrower) as at the end of such fiscal year and
consolidated and consolidating statements of income and retained earnings
and consolidated and consolidating statements of cash flow for the
Guarantor and Subsidiaries (including the Borrower) for such fiscal year
(and including statements showing the results of the Guarantor and the
Borrower for the fourth quarter of such fiscal year of the Guarantor). The
annual consolidated statements shall be certified by independent certified
public accountants selected by the Guarantor and reasonably acceptable to
the Bank in such form as is generally recognized as "unqualified". Each of
the annual financial statements submitted under this Subsection shall be
accompanied by a statement of the independent certified public accountants
stating whether in the course of their examination (which shall include a
review of this Agreement) they became aware of the existence as at the end
of the fiscal year covered by such financial statements of any event,
transaction, occurrence or state of affairs which would contravene or
violate any of the covenants or agreements contained in this Agreement and,
if their examination has disclosed any such event, transaction, occurrence
or state of affairs, specifying the nature and period of the existence
thereof. Said accountants shall also state that they have examined the
certificate of the chief financial officer submitted with the annual
statements of the Guarantor and referred to in Subsection 5.03(c) below and
that their examination has not disclosed the existence of anything contrary
to the matters set forth in such certificate. Such accountants' statement
shall also include a schedule setting forth the computations necessary to
determine compliance, as at the relevant fiscal year-end, with each of
Subsections 5.01(j), 5.01(k), 5.01(l) and 5.01(m) of this Agreement.
(c) At the time of delivery of each annual statement of the Guarantor
and at the time of delivery of the quarterly statement for the first,
second and third fiscal quarters of each fiscal year for the Guarantor, a
certificate executed by the chief financial officer of the Guarantor
stating that he has reviewed this Agreement and has no knowledge of any
default by the Guarantor in the performance or observance of any of the
provisions of this Agreement or, if he has such knowledge, specifying each
such default and the nature thereof, which certificate shall be accompanied
by a statement of such chief financial officer setting forth in detail the
computations necessary to determine compliance with the covenants contained
in Subsections 5.01(j), 5.01(k), 5.01(l) and 5.01(m).
(d) Together with the quarterly financial statements described in
Subsection 5.03(a) above, schedules of Inventory and Receivables (including
agings) of the Guarantor in such detail as shall be reasonably satisfactory
to the Bank, such schedules to be certified as accurate by the chief
financial officer of the Guarantor.
(e) Prior to the end of each fiscal year of the Guarantor, a forecast
for the next following fiscal year for the Guarantor, setting forth on a
quarterly basis projections as to balance sheets, income statements and
cash flow statements, all in such detail as will be reasonably satisfactory
to the Bank.
(f) As soon as possible and in any event within five (5) Business
Days after the occurrence of each Default or Event of Default, the
statement of the Guarantor setting forth details of such Default or Event
of Default and the action which the Guarantor proposes to take with respect
thereto.
(g) As soon as possible and in any event within five (5) Business
Days after the commencement thereof, notice of all actions, suits,
proceedings and investigations by or before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, affecting the Guarantor or any of its Subsidiaries, excluding,
however, any such action, suit, proceeding or investigation in which an
adverse determination could not have a Material Adverse Effect.
(h) Promptly after receipt, a copy of all audits or reports submitted
to the Guarantor by independent public accountants in connection with any
annual, special or interim audits of the books of the Guarantor and any
letter of comments directed by such accountants to the management of the
Guarantor.
(i) As soon as possible and in any event within 30 days after the
Guarantor knows or has reason to know that any event has occurred which
would constitute a reportable event under Section 4043(b) of Title IV of
ERISA with respect to any employee pension or other benefit plan in which
employees of the Guarantor or of any Subsidiary of the Guarantor
participate, or that the PBGC or the Guarantor or any Subsidiary of the
Guarantor has instituted or will institute proceedings under such Title to
terminate such plan, a certificate of the chief financial officer of the
Guarantor setting forth details as to such termination or other reportable
event and the action which the Guarantor proposes to take with respect
thereto, together with a copy of any notice of such reportable event which
may be required to be filed with the PBGC, or any notice delivered by the
PBGC evidencing its intent to institute such proceedings, or any notice to
the PBGC that the plan is to be terminated, as the case may be.
(j) A copy of each registration statement and each periodic or
current report filed by the Guarantor with the Securities and Exchange
Commission (the "SEC") or any successor agency (other than routine updating
filings relating to employee benefit plans) and each annual report, proxy
statement and other communication sent to shareholders or other
securityholders generally, such copy to be provided to the Bank promptly
upon such filing with the SEC or such communication with shareholders or
securityholders, as the case may be.
(k) Promptly upon applying for, or being granted, a federal or state
registration for any copyright, trademark or patent or purchasing any
registered copyright, trademark or patent, written notice to the Bank
describing same, together with all such documents as the Bank may prepare
and reasonably request the Guarantor to execute in order to give the Bank a
fully perfected first priority security interest in each such copyright,
trademark or patent.
(l) Promptly after the Guarantor has knowledge thereof, written
notice of:
(i) termination or potential termination of any consent, license,
permit or franchise material to the conduct of the business of the
Guarantor or of any of its Subsidiaries or the ownership of its or
their property and assets;
(ii) any material loss, damage or destruction to or of any
property or assets of the Guarantor or of any of its Subsidiaries
(regardless of whether the same is covered by insurance);
(iii) any material controversy with employees of the Guarantor or
of any of its Subsidiaries or with any labor organization; and
(iv) any other material development adversely affecting the
Guarantor, any of its Subsidiaries or their respective businesses,
properties, assets or conditions, financial or otherwise.
(m) Promptly upon the occurrence of any change in any of the present
executive officers or directors of the Guarantor, all of whom are listed on
Exhibit I hereto, a notice of such change.
(n) Such other information respecting the financial condition,
operations, Inventory and Receivables of the Guarantor and/or any of its
Subsidiaries as the Bank may from time to time reasonably request.
ARTICLE VI
FURTHER RIGHTS OF THE BANK
Section 6.01. Furnishing Information. The Guarantor will, at the
----------------------
Bank's request, deliver confirmatory written assignments of Receivables,
but the failure to execute or deliver any such assignment shall not affect
or limit the security interest of the Bank in any Receivable. Together
with each such assignment, if the Bank so requests, the Guarantor will
furnish to the Bank copies of invoices to customers or the equivalent and
original shipping or delivery receipts for merchandise sold. The Guarantor
shall promptly make, stamp or record such entries or legends on the
Guarantor's books and records or on any of the Collateral as the Bank shall
reasonably request from time to time to indicate that the Bank has a
security interest in such Collateral.
Section 6.02. Returns; Disputes. Upon the occurrence and during the
-----------------
continuance of any Event of Default, the Bank may settle or adjust disputes
or claims directly with customers or account debtors for amounts and upon
terms which it considers advisable. In all cases, the Guarantor's account
will be credited only with amounts actually received by the Bank. Whenever
the Guarantor has received collateral of any kind or nature by reason of
transactions between itself and its customers or account debtors, it will
hold the same on the Bank's behalf, subject to the Bank's instructions, and
as property forming part of the Receivables.
Section 6.03. Collections. After the occurrence and during the
-----------
continuance of any Event of Default, the Bank or its designee may at any
time notify customers or account debtors of the Bank's security interest in
Receivables, collect the same directly, and charge the reasonable
collection costs and expenses to the Guarantor's account. Whenever the
Bank deems it desirable that any legal or other action be instituted in
order to effectuate collection of any Receivable, the Bank may at its
option reassign any such Receivable to the Guarantor (and any such
reassignment shall be deemed to be without recourse to the Bank in any
event) and require the Guarantor to proceed with such legal or other action
at the Guarantor's sole liability, cost and expense, in which event all
amounts collected by the Guarantor on such Receivable shall nevertheless be
subject to the this Agreement.
Section 6.04. Further Assurances. The Guarantor shall do all things
------------------
and deliver all instruments reasonably requested by the Bank to protect or
perfect any security interest granted or intended to be granted hereunder.
If the Guarantor fails promptly to comply with any such request, or if any
Event of Default shall have occurred and be continuing, the Guarantor
hereby authorizes the Bank to execute, in the name or on behalf of the
Guarantor, any financing statements or other document or instrument that
the Bank may require to perfect, protect or establish any security interest
or lien interest to which the Bank may be then entitled hereunder and
further authorizes the Bank to sign the Guarantor's name on the same. The
Guarantor appoints (but only for the purposes of protecting the Bank's
interests) such Person or Persons as the Bank may designate as the
attorney-in-fact of the Guarantor with the power (after the occurrence and
during the continuance of an Event of Default) to endorse the name of the
Guarantor on any checks, notes, drafts or other forms of payment or
security relating to any Collateral that may come into the possession of
the Bank; to sign the name of the Guarantor on invoices or bills of lading,
drafts against customers, notices of assignment, verifications and
schedules; to demand, collect, receive payment of, receipt for, settle,
compromise or adjust and give discharges and releases in respect of the
Receivables or any of them; to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Receivables or any of them and to enforce any other rights in
respect thereof or in respect of the goods which have given rise thereto;
to defend any suit, action or proceeding brought against the Guarantor in
respect of any Receivables or the goods which have given rise thereto; to
settle, compromise or adjust any suit, action or proceeding hereinbefore
described and, in connection therewith, to give such discharges or releases
as the Bank may deem appropriate; to notify the U.S. Postal Service
authorities to change the address for delivery of mail to an address
designated by the Bank and to open and dispose of mail addressed to the
Guarantor and, generally, to do all things necessary to carry out the
intent of this Agreement. This power, being coupled with an interest, is
irrevocable, and the Guarantor approves all acts of such attorney-in-fact.
The powers conferred on the Bank by this Section are solely to protect the
interests of the Bank and shall not impose any duty upon the Bank to
exercise any such power, and neither the Bank nor any such attorney-in-fact
shall be liable for any act or omission, error in judgment or mistake of
law, except for its actual wilful misconduct or bad faith. The Bank shall
have no duty as to the collection or protection of any Collateral and shall
have no duty as to the preservation of rights pertaining thereto, except as
provided by applicable law.
ARTICLE VII
DEFAULT AND REMEDIES
--------------------
Section 7.01. Events of Default. An Event of Default will be deemed
-----------------
to have occurred under this Agreement upon the occurrence of any one or
more of the following:
(i) The Guarantor shall fail to make any monetary payment due
the Bank hereunder when due; or
(ii) Any representation or warranty of the Guarantor contained
herein shall at any time prove to have been incorrect in any material
respect when made; or
(iii) The Guarantor shall fail to perform or observe any
obligation or agreement contained in any of Subsections 5.01(a) (first
sentence only), (b), (c)(as applies to corporate existence only), (d), (j),
(k), (l) or (m) or Section 5.02 or Section 5.03; or
(iv) The Guarantor shall fail to perform or observe any other
obligation or agreement contained herein and such failure shall continue
unremedied for 30 days after notice thereof shall have been given to the
Guarantor; or
(v) Any "Event of Default" (as defined in the Loan Agreement)
shall occur and shall continue uncured beyond the expiration of any
applicable notice and/or grace period.
Section 7.02. Rights and Remedies Upon Default. Upon the occurrence
--------------------------------
of any Event of Default and at any time thereafter during the continuance
thereof, in addition to any other rights and remedies available to the
Bank, hereunder or otherwise, the Bank may exercise any one or more of the
following rights and remedies (all of which shall be cumulative):
(a) Exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code. The Bank may enter upon the Premises or any
of same and may take physical possession of the Collateral or render the
Collateral unusable by process of law or peaceably without process of law.
The Bank may, with only such demand, advertising or notice as may be
required by law, sell and deliver any and all Collateral held by it for its
account at any time or times in one or more private or public sales, for
cash or credit or otherwise, at such price and upon such terms as the Bank
deems advisable in its sole discretion; provided that such terms are
commercially reasonable. Notice of any public sale shall be sufficient if
it describes the Collateral to be sold in general terms, stating the
amounts thereof and the location and nature of the properties covered by
the security interests and the prior liens thereon, and is published, at
least once, not less than seven (7) days prior to the sale in any newspaper
which the Bank may select which newspaper has a general circulation in the
municipality where the Collateral is located or deemed located. All
requirements of reasonable notice shall be met if such notice is sent to
the Guarantor, in the manner provided in Section 8.03 below, at least seven
(7) days before the time of such sale or disposition. The Bank may be the
purchaser at any such sale, if it is public, free from any right of
redemption. The proceeds of sale shall be applied first to the costs of
retaking, refurbishing, storing and selling any Collateral hereunder and to
other costs of collection and other costs incurred by the Bank, and then to
the payment of the Guaranteed Obligations and the other obligations secured
hereby.
(b) Enforce the provisions of this Agreement by legal proceedings for
the specific performance of any covenant or agreement contained herein or
for the enforcement of any other appropriate legal or equitable remedy, and
the Bank may recover damages caused by any breach by the Guarantor of the
provisions of this Agreement, including court costs, reasonable attorneys'
fees and other costs and expenses incurred in the enforcement of the
obligations of the Guarantor hereunder.
(c) Exercise all rights and remedies hereunder, under the Loan
Documents, and under any other agreement with the Bank, and exercise all
other rights and remedies which the Bank may have under applicable law.
Section 7.03. Set-off. In addition to any rights now or hereafter
-------
granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default and during the
continuance thereof, the Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind
to the Guarantor or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits (other
than designated payroll accounts) and any other Indebtedness at any time
held or owing by the Bank or any affiliate of the Bank to or for the credit
or the account of the Guarantor against and on account of the obligations
and liabilities of the Guarantor to the Bank under this Agreement,
irrespective of whether or not the Bank shall have made any demand for
payment and although said obligations, liabilities or claims, or any of
them, may then be contingent or unmatured and without regard for the
availability or adequacy of other collateral. The Guarantor also grants to
the Bank a security interest with respect to all its deposits and all
securities or other property in the possession of the Bank or any affiliate
of the Bank from time to time, and, upon the occurrence of any Event of
Default, the Bank may exercise all rights and remedies of a secured party
under the Uniform Commercial Code.
Section 7.04. Right to Cure. In the event that the Guarantor shall
-------------
fail to pay any tax, assessment, governmental charge or levy, except as the
same may be otherwise permitted hereunder, or in the event that any lien,
encumbrance or security interest prohibited hereby shall not be paid in
full or discharged, or in the event that the Guarantor shall fail to pay or
comply with any other obligation hereunder, the Bank may, but shall not be
required to, pay, satisfy, perform, discharge or bond the same for the
account of the Guarantor, and all moneys so paid by the Bank shall be
reimbursed by the Guarantor to the Bank on demand and shall bear interest
from the date of demand until paid at the lesser of (i) a fluctuating rate
per annum which shall at all times be equal to the sum of two and one-half
(2-1/2%) percent per annum plus the Base Rate as in effect from time to
time, or (ii) the maximum rate permitted by then applicable law. The Bank
will give the Guarantor not less than 30 days' prior notice before acting
under this Section, except that the Bank may act with less notice (or
without notice) in case of emergency, as reasonably determined by the Bank.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. No Waiver; Cumulative Remedies. No failure or delay on
------------------------------
the part of any party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or otherwise available to the Bank. Such remedies may be
exercised without resort or regard to the other source of satisfaction of
any liabilities of the Guarantor to the Bank. The provisions of this
Agreement are not limited by nor in the limitation of any additional or
inconsistent provisions contained in the Loan Agreement or elsewhere.
Section 8.02. Amendments, Waivers and Consents. Neither this
--------------------------------
Agreement nor any provision hereof may be amended, waived discharged or
terminated orally. Any such amendment, waiver, discharge or termination
must be in writing signed by the party against whom enforcement of the
amendment, waiver, discharge or termination is sought. Any waiver or
consent may be given subject to satisfaction of conditions stated therein
and any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 8.03. Addresses for Notices, etc. Except as otherwise
---------------------------
expressly provided in this Agreement, all notices, requests, demands and
other communications provided for hereunder shall be in writing and shall
be mailed or delivered to the applicable party at the address indicated
below:
If to the Guarantor:
Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, MA 01887
Attention: Chairman
with a copy to:
Gerald J. Billow, Esquire
Posternak, Blankstein & Lund
100 Charles River Plaza
Boston, MA 02114
and
Bruce Rich, Esquire
Reid & Priest LLP
40 West 57th Street
New York, NY 10019-4097
If to the Bank:
Chemical Bank
c/o Chemical Connecticut Corporation
3 Landmark Square
Stamford, CT 06901
Attention: David M. Nackley, Senior Vice President
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the other party complying
as to delivery with the terms of this Section. Except as otherwise
provided herein, all such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date
received or (ii) the date of delivery, refusal or non-delivery indicated on
the return receipt if deposited in the United States mails, sent postage
prepaid, registered or certified mail, return receipt requested, postage
and registration or certification charges prepaid, addressed as aforesaid.
Section 8.04. Costs, Expenses and Taxes. The Guarantor agrees to pay
-------------------------
on demand all costs and expenses (including, without limitation, reasonable
legal fees) of the Bank in connection with the preparation, execution and
delivery of this Agreement and all other instruments and documents to be
delivered hereunder and any amendments or modifications of any of the
foregoing, or in connection with the examination, review or administration
of any of the foregoing, as well as the costs and expenses (including,
without limitation, the reasonable fees and out-of-pocket expenses of legal
counsel) incurred by the Bank in connection with preserving, enforcing or
exercising any rights or remedies under this Agreement and all other
instruments and documents to be delivered hereunder, all whether or not
legal action is instituted. In addition, the Guarantor shall be obligated
to pay any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement and
all other instruments and documents to be delivered hereunder, and agrees
to save the Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes. Any fees, expenses or other charges which the Bank is entitled to
receive from the Guarantor hereunder shall bear interest from the date of
demand for payment until paid at the lesser of (i) a fluctuating rate per
annum which shall at all times be equal to the sum of two and one-half
(2-1/2%) percent per annum plus the Base Rate as in effect from time to
time or (ii) the maximum rate permitted by then applicable law.
Section 8.05. Representations and Warranties. All covenants,
------------------------------
agreements, representations and warranties made herein or in any other
document delivered by or on behalf of the Guarantor pursuant to or in
connection with this Agreement are material and shall be deemed to have
been relied upon by the Bank, notwithstanding any investigation heretofore
or hereafter made by the Bank and shall survive the making of the Loans as
contemplated in the Loan Agreement, and shall continue in full force and
effect so long as any of the Guaranteed Obligations or other obligations
secured hereby remain outstanding and unpaid. All statements contained in
any certificate or other paper delivered to the Bank at any time by or on
behalf of the Guarantor pursuant hereto shall constitute representations
and warranties by the Guarantor hereunder.
Section 8.06. Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon the Guarantor and its successors and assigns and shall inure
to the benefit of the Bank and its successors and assigns. The Guarantor
may not assign this Agreement or any rights hereunder without the express
written consent of the Bank. The Bank may assign its rights hereunder and
will give written notice to the Guarantor of any such assignment.
Section 8.07. Reproduction of Agreement. This Agreement and all
-------------------------
other instruments, documents and papers which relate thereto which have
been or may be hereafter furnished to the Bank may be reproduced by the
Bank by any photographic, photostatic, micro-card, miniature photographic,
xerographic or similar process, and the Bank may destroy the original from
which any document was so reproduced. Any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of
business).
Section 8.08. Consent to Jurisdiction. The Guarantor irrevocably
-----------------------
submits to the jurisdiction of any New York court or any federal court
sitting within the Southern District of New York over any suit, action or
proceeding arising out of or relating to this Agreement. The Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in such a court and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. The
Guarantor agrees that final judgment in any such suit, action or proceeding
brought in such a court shall be enforced in any court of proper
jurisdiction by a suit upon such judgment, provided that service of process
in such action, suit or proceeding shall have been effected upon the
Guarantor in one of the manners specified in the following paragraph of
this Section 8.08 or as otherwise permitted by law.
The Guarantor hereby consents to process being served in any suit,
action or proceeding of the nature referred to in the preceding paragraph
of this Section 8.08 either (i) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to it at its
address set forth in Section 8.03 or (ii) by serving a copy thereof upon it
at its address set forth in Section 8.03. The Guarantor irrevocably
waives, to the fullest extent permitted by law, all claims of error by
reason of any service as contemplated herein and agrees that such service
shall (x) be deemed in every respect effective service upon the Guarantor
in any such suit, action or proceeding and (y) to the fullest extent
permitted by law, be taken and held to be valid personal service upon and
personal delivery to the Guarantor.
Section 8.09. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York.
Section 8.10. Severability. In the event that any provision of this
------------
Agreement or the application thereof to any Person, property or
circumstances shall be held to any extent to be invalid or unenforceable,
the remainder of this Agreement and the application of such provision to
Persons, properties or circumstances other than those as to which it has
been held invalid or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
Section 8.11. Headings. Article and Section headings in this
--------
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 8.12. WAIVER OF TRIAL BY JURY. THE GUARANTOR HEREBY
-----------------------
EXPRESSLY KNOWINGLY AND VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY
RIGHT TO TRIAL BY JURY, AND AGREES THAT IT WILL NOT AT ANY TIME INSIST
UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF, A TRIAL BY JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
____________________________
Name: Jack Nelson
Title: Chairman
Accepted:
CHEMICAL BANK
By: /s/ Joseph Sacks
______________________________
Name: Joseph Sacks
Title: Vice President
EXHIBIT 10.4
GUARANTY AND SECURITY AGREEMENT
dated as of August 31, 1995
from
MRI ASSOCIATES, INC., MDI INVESTMENTS, INC.,
GREATER SPRINGFIELD MRI, INC., GREATER BOSTON
MRI SERVICES, INC., MOBILE MRI OF WESTERN MASS., INC.,
CENTRAL MASSACHUSETTS MRI SERVICES, INC., CASCO BAY
MR SERVICES, INC., MDI FINANCE AND LEASING, INC.,
MERRIMACK SCANNING, INC., MIDDLESEX MRI CENTER, INC.,
MDI-NEW YORK, INC., MDI REHAB, INC., MERITUS HEALTH
SYSTEMS, INC., TECHNICIAN SERVICES, INC.,
MERITUS-SOUTHWESTERN VIRGINIA, INC.,
MERITUS-IOWA, INC., MERITUS WEST VIRGINIA, INC.,
MERITUS MRI, INC., MERITUS PLS, INC.
AND GREATER BOSTON MRI LIMITED PARTNERSHIP
to
CHEMICAL BANK
<PAGE>
GUARANTY AND SECURITY AGREEMENT dated as of August 31, 1995 from MRI
Associates, Inc., a Massachusetts corporation, MDI Investments, Inc., a
Massachusetts corporation, Greater Springfield MRI, Inc., a Massachusetts
corporation, Greater Boston MRI Services, Inc., a Massachusetts
corporation, Mobile MRI of Western Mass., Inc., a Massachusetts
corporation, Central Massachusetts MRI Services, Inc., a Massachusetts
corporation, Casco Bay MR Services, Inc., a Maine corporation, MDI Finance
and Leasing, Inc., a Massachusetts corporation, Merrimack Scanning, Inc., a
New Hampshire corporation, Middlesex MRI Center, Inc., a Massachusetts
corporation, MDI-New York, Inc., a New York corporation, MDI Rehab, Inc., a
Massachusetts corporation, Meritus Health Systems, Inc., a Virginia
corporation, Technician Services, Inc., a Virginia corporation, Meritus-
Southwestern Virginia, Inc., a Virginia corporation, Meritus-Iowa, Inc., a
Virginia corporation, Meritus West Virginia, Inc., a Virginia corporation,
Meritus MRI, Inc., a Virginia corporation, Meritus PLS, Inc., a Virginia
corporation, and Greater Boston MRI Limited Partnership, a Massachusetts
limited partnership ("Boston LP") (each of the foregoing, a "Guarantor" and
all of the foregoing, collectively, the "Guarantors") to Chemical Bank (the
"Bank").
WITNESSETH:
WHEREAS, pursuant to that certain Loan and Security Agreement of even
date herewith (the "Loan Agreement") between Medical Diagnostics, Inc., a
Delaware corporation (the "Borrower") and the Bank, the Bank has agreed to
make loans to the Borrower on the terms and conditions set forth therein;
and
WHEREAS, it is a condition precedent to the making of loans by the
Bank pursuant to the Loan Agreement that the Guarantors shall have executed
and delivered to the Bank this Agreement and that the Guarantors (other
than Greater Springfield MRI, Inc. and Mobile MRI of Western Mass., Inc.)
shall have granted to the Bank a security interest in the assets of such
Guarantors; and
WHEREAS, the making of loans to the Borrower pursuant to the Loan
Agreement will be beneficial to the Guarantors inasmuch as the Borrower has
performed in the past and will perform in the future valuable
administrative, management and accounting services for each of the
Guarantors and, further, has made and may in the future make available
financing for certain of the business operations and ventures of the
Guarantors; and the respective Boards of Directors of the Borrower and of
each Guarantor have determined the execution, delivery and performance of
this Agreement to be necessary and convenient to the conduct, promotion and
attainment of the business of each such Guarantor and the Borrower;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantors hereby jointly
and severally agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the
-------------
following terms shall have the meanings set out respectively after each:
"Agreement" - This Guaranty and Security Agreement, as same may be
from time to time amended.
"Base Rate" - As defined in the Loan Agreement.
"Business Day" - As defined in the Loan Agreement.
"Collateral" - All of the property, rights and interests of any of the
Guarantors (other than Greater Springfield MRI, Inc. and Mobile MRI of
Western Mass., Inc.) described in Section 3.01 below.
"Default" - Any event or circumstance which, with the passage of time
or the giving of notice or both, could become an Event of Default.
"Event of Default" - As defined in Section 7.01 below.
"Guaranteed Obligations" - Any and all indebtedness, liabilities or
obligations of the Borrower to the Bank, whether joint or several, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including, without limitation, those now or hereafter
arising under any Loan Document and/or with respect to any letter of credit
now or hereafter issued by the Bank for the account of the Borrower.
"Guaranty" - The guaranty of the Guarantors set forth in Article II.
"Indebtedness" - As defined in the Loan Agreement.
"Inventory" - All goods now owned or hereafter acquired by any
Guarantor (other than Greater Springfield MRI, Inc. or Mobile MRI of
Western Mass., Inc.) and intended for sale or lease, all raw materials,
parts, work-in-process and finished goods, and all material and supplies
which are used or which may be used in manufacturing, selling, packing,
shipping, advertising or furnishing of goods, whether now owned or
hereafter acquired or created and wherever located, as well as all proceeds
(including, without limitation, insurance proceeds) and products of any of
the foregoing.
"Loan" - As defined in the Loan Agreement.
"Loan Documents" - The Loan Agreement, the Notes and any other
instrument or document or loan, credit, letter of credit, reimbursement
agreement, guaranty, interest rate swap or other agreement relating to
extension of financial accommodations or other banking services between the
Borrower and the Bank or made by the Borrower in favor of the Bank, all
whether now existing or hereafter entered into or delivered.
"Notes" - As defined in the Loan Agreement.
"Person" - As defined in the Loan Agreement.
"Receivables" - All of any Guarantor's (other than Greater Springfield
MRI, Inc.'s and Mobile MRI of Western Mass., Inc.'s) present and future
accounts, accounts receivable and notes, drafts, acceptances and other
instruments representing or evidencing a right to payment for goods sold or
for services rendered.
"Subsidiary" - As defined in the Loan Agreement.
Section 1.02. Use of Defined Terms. Any defined term used in the
--------------------
plural preceded by the definite article shall be taken to encompass all
members of the relevant class. Any defined term used in the singular
preceded by "any" shall be taken to indicate any number of the members of
the relevant class.
Section 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with United
States generally accepted accounting principles consistently applied on the
basis used by the concerned entity in prior years.
ARTICLE II
GUARANTY
Section 2.01. Guaranty. In consideration of the Bank making loans to
--------
the Borrower pursuant to the Loan Agreement, the Guarantors hereby jointly
and severally guaranty to the Bank the due and punctual payment and
performance of all of the Guaranteed Obligations, as and when the same
shall become due and payable, whether on demand or at maturity, by
declaration or otherwise, according to the terms thereof, and all losses,
costs, expenses and reasonable attorneys' fees and disbursements incurred
by reason of a default under any of said Guaranteed Obligations continuing
beyond the expiration of any applicable notice and/or grace period. In
case of failure by the Borrower punctually to pay any of the Guaranteed
Obligations, the Guarantors and each of them hereby jointly and severally
unconditionally agrees to cause such payment to be made punctually as and
when the same shall become due and payable, whether at maturity or by
declaration or otherwise, and as if such payment were made by the Borrower.
This Guaranty is an absolute, unconditional, unlimited and continuing
guaranty of the full and punctual payment and performance by the Borrower
of the Guaranteed Obligations and not merely of their collectibility and is
in no way conditioned upon any requirement that the Bank first collect or
attempt to collect the Guaranteed Obligations or any portion thereof from
the Borrower (or, as to any Guarantor, from any other Guarantor) or from
any other guarantor of any of same or resort to any security or other means
of obtaining payment of any of the Guaranteed Obligations which the Bank
now has or may acquire after the date hereof, or upon any other contingency
whatsoever. Upon and during the continuance of any Event of Default (as
defined herein), all liabilities and obligations of the Guarantors to the
Bank, hereunder or otherwise, shall, at the option of the Bank, become
forthwith due and payable to the Bank without further demand or notice of
any nature, all of which are expressly waived by the Guarantors. Payments
by the Guarantors hereunder may be required by the Bank on any number of
occasions.
Section 2.02. Guarantors' Further Agreements to Pay. The Guarantors
-------------------------------------
further jointly and severally agree, as principal obligors and not as
guarantors, to pay to the Bank forthwith upon demand, in funds immediately
available to the Bank, all costs and expenses (including court costs and
reasonable attorneys' fees and disbursements) incurred or expended by the
Bank in connection with this Guaranty and the enforcement hereof, together
with interest on any sum now or hereafter payable by the Guarantors under
this Agreement, such interest to accrue from the date of any demand for
payment of such sum to the date of payment. Such interest will be payable
at the rate set forth in Section 8.04 below.
Section 2.03. Bank's Freedom to Deal with Borrower and Other Parties.
------------------------------------------------------
The Bank shall be at liberty, without giving notice to or obtaining the
assent of the Guarantors and without relieving the Guarantors of any
liability hereunder, to deal with the Borrower and with each other party
who now is or after the date hereof becomes liable in any manner for any of
the Guaranteed Obligations in such manner as the Bank in its sole
discretion deems fit. The Bank has full authority in its sole discretion
to do any or all of the following things, none of which shall discharge or
affect the Guarantors' liability hereunder: (i) extend credit, make loans
and afford other financial accommodations to the Borrower at such times, in
such amounts and on such terms as the Bank may approve; (ii) modify, amend,
vary the terms and grant extensions or renewals of any present or future
indebtedness or of all or any of the Guaranteed Obligations or any
instrument relating to or securing same, and, without limitation, this
Guaranty shall survive payment of the Notes; (iii) grant time, waivers and
other indulgences in respect thereto; (iv) vary, exchange, release or
discharge, wholly or partially, or delay or abstain from perfecting and
enforcing any security or guaranty or other means of obtaining payment of
any of the Guaranteed Obligations which the Bank now has or acquires after
the date hereof; (v) take or omit to take any of the actions referred to in
any Loan Document or other instrument evidencing, securing or relating to
any of the Guaranteed Obligations or any actions under this Guaranty; (vi)
fail, omit or delay to enforce, assert or exercise any right, power or
remedy conferred on the Bank in this Guaranty or in any other Loan Document
or other instrument evidencing, securing or relating to any of the
Guaranteed Obligations or take or refrain from taking any other action;
(vii) accept partial payments from the Borrower or any other party; (viii)
release or discharge, wholly or partially, the Borrower, any endorser or
any guarantor, or accept additional collateral for the payment of any
Guaranteed Obligations; (ix) compromise or make any settlement or other
arrangement with the Borrower or any such other party; and (x) consent to
and participate in the proceeds of any assignment, trust or mortgage for
the benefit of creditors.
Section 2.04. Unenforceability of Guaranteed Obligations; Invalidity
------------------------------------------------------
of Security or Other Guaranties. If for any reason now or hereafter the
-------------------------------
Borrower has no legal existence or is under no legal obligation to
discharge any of the Guaranteed Obligations undertaken or purported to be
undertaken by it or on its behalf, or if any of the moneys included in the
Guaranteed Obligations have become irrecoverable from the Borrower by
operation of law or for any other reason, this Guaranty shall nevertheless
be binding jointly and severally on each of the Guarantors to the same
extent as if each of the Guarantors at all times had been the principal
debtor on all such Guaranteed Obligations. This Guaranty shall be in
addition to any other guaranty or other security for the Guaranteed
Obligations, and it shall not be prejudiced or rendered unenforceable by
the invalidity of any such other guaranty or security, nor shall the
invalidity or unenforceability of this Guaranty as against any one or more
of the Guarantors prejudice the enforceability of this Guaranty against any
other Guarantor. The liability of each Guarantor under this Guaranty shall
remain in full force and effect until payment and performance in full of
all of the Guaranteed Obligations. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment
of any of the Guaranteed Obligations is rescinded or must otherwise be
restored or returned by the Bank, upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, all as though such payment had
not been made.
Section 2.05. Waivers by Guarantors. Each Guarantor waives: notice
---------------------
of acceptance hereof and reliance hereon, notice of any action taken or
omitted by the Bank in reliance hereon, any requirement that the Bank be
diligent or prompt in making demands hereunder, any requirement as to any
presentment, demand, protest, giving notice of any default by the Borrower
or asserting any other right of the Bank hereunder and all demands, notices
and suretyship defenses generally. Each Guarantor also irrevocably waives,
to the fullest extent permitted by law, all defenses which at any time may
be available in respect of such Guarantor's obligations hereunder by virtue
of any statute of limitations, valuation, stay, homestead or moratorium law
or other similar law now or hereafter in effect.
Without limiting the generality of the foregoing provisions of this
Guaranty, the liability of each Guarantor shall not be released, discharged
or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other
Guarantor or any other guarantor of any of the obligations secured
hereby;
(ii) any change in the time, manner, amount or place of payment of
any Guaranteed Obligation or any modification or amendment of or
supplement to any Loan Document or this Agreement;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Borrower, the Guarantor,
any other Guarantor or any other guarantor of any of the obligations
secured hereby;
(iv) any change in the corporate existence, structure, record or
beneficial ownership or control of the Borrower, the Guarantor, any
other Guarantor or any other guarantor of any of the obligations
secured hereby, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any such Person or its assets;
(v) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Borrower, the Bank, any
other Guarantor or any other guarantor of any of the obligations
secured hereby or any other Person, whether or not arising in
connection with this Agreement;
(vi) any invalidity or unenforceability relating to or against the
Borrower or such Guarantor for any reason under any Loan Document or
under this Agreement; or any provision of applicable law or regulation
purporting to prohibit the payment by any Person of the principal of
or interest on any of the Notes or any other amount payable under any
Loan Document or this Agreement; or
(vii) any other act or omission to act or delay of any kind by the
Borrower, the Bank or any other Person or any other circumstances
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of such Guarantor's
obligations hereunder.
Section 2.06. Subrogation. Each Guarantor hereby irrevocably and
-----------
unconditionally waives (unless and until all Guaranteed Obligations have
been indefeasibly paid in full and all commitments of the Bank to the
Borrower have been terminated and no loan facilities now or hereafter
established by the Bank for the Borrower remain in effect) any and all
rights of subrogation, contribution or similar rights which, but for this
Section 2.06, it might otherwise have in relation to the Borrower or any
other Guarantor as a result of this Agreement.
Section 2.07. No Contest with Bank. No set-off, counterclaim,
--------------------
reduction or diminution of any obligation, or any claim or defense of any
kind or nature which any Guarantor has or may have against the Borrower,
any other Guarantor or the Bank shall be available hereunder to any
Guarantor. No Guarantor will, in any proceedings under the Bankruptcy Code
or insolvency proceedings of any nature, prove in competition with the Bank
in respect of any payment hereunder or be entitled to have the benefit of
any counterclaim or proof of claim or dividend or payment by or on behalf
of the Borrower or the benefit of any other security for any Guaranteed
Obligation which, now or hereafter, any Guarantor may hold in competition
with the Bank.
Section 2.08. Stay of Acceleration. If acceleration of the time for
--------------------
payment of any amount payable by the Borrower under any Loan Document is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower,
all such amounts otherwise subject to acceleration under the terms of this
Guaranty shall nonetheless be payable by the Guarantors hereunder forthwith
on demand by the Bank.
ARTICLE III
SECURITY
Section 3.01. Security. As security for the payment and performance
--------
of all of the Guaranteed Obligations and also for the prompt and full
payment and performance of any and every other liability and obligation of
any one or more of the Guarantors to the Bank, whether arising out of this
Agreement or otherwise, whether otherwise secured or unsecured, direct or
indirect, absolute or contingent, primary or secondary, due or to become
due, and all whether now or hereafter existing or arising, each Guarantor
(other than Greater Springfield MRI, Inc. and Mobile MRI of Western Mass.,
Inc.) hereby pledges, grants, assigns and transfers to the Bank, and grants
to the Bank a security interest in and to, all of the following property of
such Guarantor, all whether now owned or existing or hereafter acquired or
arising:
(a) All equipment, fixtures, furnishings, furniture, motor vehicles
and machinery of each Guarantor (other than Greater Springfield MRI, Inc.
and Mobile MRI of Western Mass., Inc.) (but excepting (i) any personal
automobiles, (ii) all items of computer equipment financed at the date
hereof by Fleet Bank of Massachusetts, N.A. and listed on Exhibit A hereto
and (iii) those items of equipment which are described on Exhibit A
hereto), wherever located, whether now owned or hereafter acquired, whether
affixed or moveable, and all replacements of, substitutions for and
accessions to any of same and all products and proceeds (including, without
limitation, insurance proceeds) of any of the foregoing;
(b) All Receivables of each Guarantor (other than Greater Springfield
MRI, Inc. and Mobile MRI of Western Mass., Inc.);
(c) All contract rights of each Guarantor (other than Greater
Springfield MRI, Inc. and Mobile MRI of Western Mass., Inc.), including,
without limitation, licenses, employment agreements, any non-competition
agreements for the benefit of any Guarantor (other than Greater Springfield
MRI, Inc. or Mobile MRI of Western Mass., Inc.), and all leases and
occupancy agreements; all obligations owing to any Guarantor (other than
Greater Springfield MRI, Inc. or Mobile MRI of Western Mass., Inc.) of
every kind and nature; and all tax refunds of every kind and nature,
including, without limitation, loss carryback refunds; and all of the
foregoing whether now existing or hereafter acquired or arising;
(d) All of each Guarantor's (other than Greater Springfield MRI,
Inc.'s and Mobile MRI of Western Mass., Inc.'s) Inventory;
(e) All of each Guarantor's (other than Greater Springfield MRI,
Inc.'s and Mobile MRI of Western Mass., Inc.'s) general intangibles, choses
in action, chattel paper, insurance policies, deposits, deposit accounts,
money, cash, documents and instruments (whether negotiable or non-
negotiable and regardless of attachment to chattel paper), whether arising
out of, relating to or evidencing all or any of the foregoing Collateral or
otherwise, and all whether now existing or hereafter acquired or arising;
(f) All goodwill, trade secrets, formulae, customer lists, trade
names, trademarks, copyrights, patents and licenses (including, without
limitation, the trademarks, copyrights, patents and licenses listed on
Exhibit B hereto) and all files, records (including, without limitation,
computer programs, tapes and related electronic data processing software)
and writings, whether now owned or hereafter acquired; and
(g) All liens, guaranties, securities, rights, remedies and
privileges pertaining to, and all products and proceeds (including, without
limitation, insurance proceeds) of, and all accessions to, any of the
foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. General Representations and Warranties. Each Guarantor
--------------------------------------
hereby represents and warrants that:
(a) Each Guarantor (i) is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation as set forth in the introductory paragraph to this Agreement
(except that Boston LP is a validly existing Massachusetts limited
partnership), (ii) has the legal power and authority to own its assets and
to transact the business in which it is now engaged and to enter into and
perform this Agreement, and (iii) is duly qualified as a foreign
corporation (or partnership, as the case may be) and in good standing under
the laws of each jurisdiction in which failure to be so qualified could
have a material adverse effect on the business, prospects or condition of
such Guarantor.
(b) The execution, delivery and performance by each Guarantor of this
Agreement, including the granting of the security interests herein granted,
have been duly authorized by all necessary corporate (and/or partnership)
action and do not and will not:
(i) require any consent or approval of such Guarantor's
stockholders or equity holders (except any such consents as have been
heretofore obtained);
(ii) contravene its charter or by-laws;
(iii) violate any provision of, or require any filing (other than
the filing of the financing statements with respect to the security
interests herein granted), registration, consent or approval under,
any law, rule, regulation (including, without limitation, Regulation
U), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to any Guarantor;
(iv) result in a breach of or constitute a default or require any
consent under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which any Guarantor is a party or by
which any of the Guarantors or any of their respective properties may
be bound or affected; or
(v) result in, or require, the creation or imposition of any
lien, security interest or other encumbrance (other than in favor of
the Bank) upon or with respect to any of the properties now owned or
hereafter acquired by any Guarantor.
(c) The Borrower provides valuable administrative, management and
accounting services to each Guarantor and may make loans to each Guarantor
to the extent permitted by the Loan Agreement. The continued financial
strength of the Borrower and, in particular, its financing arrangements
with the Bank are thus of direct and substantial benefit to each Guarantor
and the execution and delivery of this Agreement is a substantial
inducement for the Bank to enter into and continue said financing
arrangements. The Board of Directors of each Guarantor (or the Board of
Directors of each general partner thereof in the case of a Guarantor which
is a partnership) has determined the execution, delivery and performance of
this Agreement to be necessary and convenient to the conduct, promotion and
attainment of the business of such Guarantor and the Borrower.
(d) This Agreement has been duly executed and delivered on behalf of
each Guarantor and is a legal, valid and binding obligation of each
Guarantor, enforceable against each Guarantor in accordance with its terms,
except as such enforceability may be limited by: (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights and remedies of creditors generally or (ii) the effect
of general principles of equity, whether enforcement is considered in a
proceeding in equity or at law.
(e) Each Guarantor ratifies, with respect to itself, each
representation and warranty made in the Loan Agreement with respect to a
"Subsidiary", and each Guarantor confirms that each such representation and
warranty is true and correct at the date hereof.
(f) After giving effect to this Agreement and the transactions
contemplated hereby, each Guarantor (A) is and will be able to pay its
debts as they become due, (B) has and will have funds and capital
sufficient to carry on its business as now conducted or as contemplated to
be conducted, (C) owns property having a value both at fair valuation and
at present fair saleable value greater than the amount required to pay its
debts as they become due, and (D) is not insolvent and will not be rendered
insolvent as determined by applicable law, after taking into account (i)
the reasonable likelihood of payments being required hereunder and (ii) the
availability of contribution and indemnification from other parties, to the
extent permitted under this Agreement.
Section 4.02. Representations and Warranties as to Security. Each
---------------------------------------------
Guarantor further represents and warrants that:
(a) The chief executive offices and principal place of business of
each Guarantor is located at the address shown on Exhibit C attached
hereto.
(b) Each Guarantor (other than Greater Springfield MRI, Inc. and
Mobile MRI of Western Mass., Inc.) maintains books and records relating to
Receivables and other intangible Collateral only at the locations described
on Exhibit D attached hereto. All tangible Collateral is located at the
premises shown on Exhibit D attached hereto. Said Exhibit D also sets
forth the names of the record owners of each of such premises, as well as
any other Persons with a record interest in any of said premises. Said
Exhibit D also describes all titled motor vehicles owned by any Guarantor
(other than Greater Springfield MRI, Inc. or Mobile MRI of Western Mass.,
Inc.) and the jurisdiction in which each such vehicle is titled and
principally located, as well as the principal locations of all other mobile
goods.
(c) No Guarantor (other than Greater Springfield MRI, Inc. and Mobile
MRI of Western Mass., Inc.) uses any trade name or style other than its
corporate name, except as set forth on Exhibit E hereto.
(d) Each Guarantor owns all of its Collateral free and clear of all
liens, security interests, charges and other encumbrances, except liens
expressly permitted under Subsection 7.02(b) of the Loan Agreement.
(e) Each Guarantor owns or has a valid right to use all of the
patents, licenses, copyrights, trademarks, service marks, trade names and
franchises ("Intellectual Property") now being used or necessary to conduct
its business, all of which are described on Exhibit B hereto (including, in
each case, the owner of such Intellectual Property). None of the
Intellectual Property owned by any Guarantor is represented by a registered
patent, copyright, trademark or other federal or state registration, except
as set forth on Exhibit B hereto. The conduct of the business of each
Guarantor, as now operated, does not conflict with valid patents, licenses,
copyrights, trademarks, service marks, trade names or franchises of others
in any manner that could materially adversely affect the business,
prospects, assets or condition, financial or otherwise, of any Guarantor.
ARTICLE V
COVENANTS
Section 5.01. Incorporation by Reference. (a) Without limiting or
--------------------------
being limited by any other provision of this Agreement:
(i) each Guarantor shall, and shall cause each of its
Subsidiaries to, perform, observe and be bound by, for the benefit of
the Bank, all of the agreements, covenants and obligations (to the
extent applicable to such Guarantor) set forth in any of Subsections
7.01(a)-7.01(j), inclusive, and Section 7.03 of the Loan Agreement;
and
(ii) no Guarantor shall perform any act or permit any circumstance
to exist in contravention of any of the provisions of Section 7.02 of
the Loan Agreement;
in each case as each of such provisions is in effect from time to time and
as if each reference in any of such provisions to a "Subsidiary" or
"Subsidiaries" referred to each such Guarantor, provided that compliance by
--------
the Borrower with Section 7.03 of the Loan Agreement shall, to the extent
of such compliance as it relates to any Guarantor, be deemed compliance by
such Guarantor.
(b) The above-described provisions of the Loan Agreement, together
with related definitions and ancillary provisions, are hereby incorporated
herein by reference, mutatis mutandis, with the same force and effect as if
------- --------
set forth in full herein.
Section 5.02. Removal of Collateral. None of the Guarantors (other
---------------------
than Greater Springfield MRI, Inc. and Mobile MRI of Western Mass., Inc.)
will remove (or permit to be removed) from the premises listed on Exhibit D
hereto any books or records relating to Receivables or remove therefrom any
Collateral (other than Inventory sold to customers in the ordinary course
and other than mobile goods, which may travel to other locations on a
temporary basis but will not be removed from the state described in
Exhibit D as the principal location thereof without prior written notice to
the Bank) until after receipt of a certificate from the Bank, signed by an
officer thereof, stating that the Bank has, to its satisfaction, obtained
all documentation that it deems necessary or desirable to obtain, maintain,
perfect and confirm the first priority security interests granted or
intended to be granted herein.
Section 5.03. Chief Executive Office. None of the Guarantors (other
----------------------
than Greater Springfield MRI, Inc. and Mobile MRI of Western Mass., Inc.)
will move its chief executive offices or principal place of business from
the address shown on Exhibit C hereto nor change its name or identity nor
use any trade name or trade style other than its corporate name nor make or
suffer to be made any change in its corporate structure until, in each
case, after receipt of a certificate from the Bank, signed by an officer
thereof, stating that the Bank has, to its satisfaction, obtained all
documentation that it deems necessary or desirable to obtain, maintain,
perfect and confirm the first priority security interests granted or
intended to be granted herein.
Section 5.04. Insurance. Each Guarantor will maintain, with
---------
responsible and reputable insurance companies or associations reasonably
satisfactory to the Bank, insurance in such amounts and covering such risks
as are typically insured by similar businesses (and any such other
insurance as the Bank may reasonably request from time to time), but in any
event in amounts sufficient to prevent any such Guarantor from becoming a
coinsurer. Without limiting the foregoing, each Guarantor will keep the
Collateral fully insured against fire, lightning and extended coverage
perils and against such other risks as the Bank may from time to time
reasonably require, in an amount at least equal to the full insurable value
of the Collateral and in any event not less than the amount necessary to
avoid co-insurance. Insurance at any one location may be "blanket" with
insurance at other locations and insurance taken out by any Guarantor may
be "blanket" with insurance of other affiliates of the Borrower. In
addition, each Guarantor shall procure and maintain general liability
insurance with minimum limits of not less than $5,000,000. Each Guarantor
shall also procure and maintain workmen's compensation insurance, employer
liability and other insurance as required by law. Each Guarantor will also
maintain comprehensive automobile liability insurance covering all motor
vehicles owned or leased by it, with combined limits of not less than
$1,000,000 for bodily injury and $500,000 for property damage. Each
Guarantor will also maintain (i) business interruption insurance in amounts
satisfactory to the Bank covering all material business operations of the
Guarantor and (ii) professional liability insurance relating to patient
care, to the extent relevant. All insurance herein provided for shall be
in such form and written by such companies as may from time to time be
reasonably approved by the Bank. Each Guarantor will assign and deliver to
the Bank duplicate original copies or certificates for all policies of
casualty insurance, as collateral and further security for the obligations
of such Guarantor herein contained, with the Bank named as first loss payee
with respect to all property in which it holds a security interest (except
that the Bank may be named as second loss payee with respect to any
property as to which the Bank holds a security interest subject to another
Person's prior security interest which is permitted under the Loan
Agreement). All policies of insurance shall contain a provision forbidding
cancellation of such insurance either by the carrier or by the insured
until at least 30 days after written notice of the proposed cancellation is
given to the Bank; and whenever any insurance is to expire for any reason,
the relevant Guarantor will deliver to the Bank, at least 30 days prior to
such expiration, a renewal or replacement policy, complying with all of the
conditions of this Section. In addition, each Guarantor will obtain an
endorsement with respect to all such policies indicating that, solely as to
the Bank, the insurance shall not be impaired or invalidated by reason of
any act or neglect of the named insured or any subsequent owner of any of
the property insured. Any insurance proceeds received by the Bank may, at
the option of the Bank, either (i) be applied to the payment or prepayment
of any obligations of any Guarantor and/or the Borrower to the Bank or (ii)
be transmitted in whole or in part to the owner of the property damaged or
destroyed for the purpose of repairing or replacing the same; provided that
insurance proceeds so received as proceeds of business interruption
insurance or with respect to damage to or destruction of any equipment will
(provided that no Event of Default has then occurred and is continuing) be
released to the relevant Guarantor. Any insurance proceeds received by the
Bank with respect to damage to or destruction of equipment on which it
holds a security interest that are released to the Guarantor by the Bank
shall be used by such Guarantor to repay any outstanding capital financing
of such damaged or destroyed equipment and to repair or replace the damaged
or destroyed equipment, with the Bank to receive its same priority security
interest in the repaired and/or replacement equipment.
Section 5.05. Additional Intellectual Property. If any Guarantor
--------------------------------
(other than Greater Springfield MRI, Inc. or Mobile MRI of Western Mass.,
Inc.) applies for, or is granted, a federal or state registration for any
copyright, trademark or patent or purchases any registered copyright,
trademark or patent, such Guarantor will give prompt written notice to the
Bank describing same, together with all such documents as the Bank may
prepare and reasonably request such Guarantor to execute in order to give
the Bank a fully perfected first priority security interest in each such
copyright, trademark or patent.
Section 5.06. Additional Information. Each Guarantor will promptly
----------------------
give to the Bank all such information respecting the financial condition,
operations, Inventory and Receivables of such Guarantor and/or any of its
Subsidiaries as the Bank may from time to time reasonably request.
ARTICLE VI
FURTHER RIGHTS OF THE BANK
Section 6.01. Furnishing Information. Each Guarantor (other than
----------------------
Greater Springfield MRI, Inc. and Mobile MRI of Western Mass., Inc.) will,
at the Bank's request, deliver confirmatory written assignments of
Receivables, but the failure to execute or deliver any such assignment
shall not affect or limit the security interest of the Bank in any
Receivable. Together with each such assignment, if the Bank so requests,
each Guarantor (other than Greater Springfield MRI, Inc. and Mobile MRI of
Western Mass., Inc.) will furnish to the Bank copies of invoices to
customers or the equivalent and original shipping or delivery receipts for
merchandise sold. Each Guarantor (other than Greater Springfield MRI, Inc.
and Mobile MRI of Western Mass., Inc.) shall promptly make, stamp or record
such entries or legends on such Guarantor's books and records or on any of
the Collateral as the Bank shall reasonably request from time to time to
indicate that the Bank has a security interest in such Collateral.
Section 6.02. Returns; Disputes. Upon the occurrence and during the
-----------------
continuance of any Event of Default, the Bank may settle or adjust disputes
or claims directly with customers or account debtors for amounts and upon
terms which it considers advisable. In all cases, the Guarantors' account
will be credited only with amounts actually received by the Bank. Whenever
any Guarantor (other than Greater Springfield MRI, Inc. or Mobile MRI of
Western Mass., Inc.) has received collateral of any kind or nature by
reason of transactions between itself and its customers or account debtors,
it will hold the same on the Bank's behalf, subject to the Bank's
instructions, and as property forming part of the Receivables.
Section 6.03. Collections. After the occurrence and during the
-----------
continuance of any Event of Default, the Bank or its designee may at any
time notify customers or account debtors of the Bank's security interest in
Receivables, collect the same directly, and charge the reasonable
collection costs and expenses to the Guarantors' account. Whenever the
Bank deems it desirable that any legal or other action be instituted in
order to effectuate collection of any Receivable, the Bank may at its
option reassign any such Receivable to a Guarantor (and any such
reassignment shall be deemed to be without recourse to the Bank in any
event) and require such Guarantor to proceed with such legal or other
action at such Guarantor's sole liability, cost and expense, in which event
all amounts collected by such Guarantor on such Receivable shall
nevertheless be subject to this Agreement.
Section 6.04. Further Assurances. The Guarantors (other than Greater
------------------
Springfield MRI, Inc. and Mobile MRI of Western Mass., Inc.) shall do all
things and deliver all instruments reasonably requested by the Bank to
protect or perfect any security interest granted or intended to be granted
hereunder. If any Guarantor (other than Greater Springfield MRI, Inc. or
Mobile MRI of Western Mass., Inc.) fails promptly to comply with any such
request, or if any Event of Default shall have occurred and be continuing,
each of such Guarantors authorizes the Bank to execute, in the name or on
behalf of each such Guarantor, any financing statements or other document
or instrument that the Bank may require to perfect, protect or establish
any security interest or lien interest to which the Bank may be then
entitled hereunder and further authorizes the Bank to sign such Guarantor's
name on the same. Each Guarantor (other than Greater Springfield MRI, Inc.
and Mobile MRI of Western Mass., Inc.) appoints (but only for the purposes
of protecting the Bank's interests) such Person or Persons as the Bank may
designate as the attorney-in-fact of each such Guarantor with the power
(after the occurrence and during the continuance of any Event of Default)
to endorse the name of such Guarantor on any checks, notes, drafts or other
forms of payment or security relating to any Collateral that may come into
the possession of the Bank; to sign the name of any such Guarantor on
invoices or bills of lading, drafts against customers, notices of
assignment, verifications and schedules; to demand, collect, receive
payment of, receipt for, settle, compromise or adjust and give discharges
and releases in respect of the Receivables or any of them; to commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Receivables or any of them
and to enforce any other rights in respect thereof or in respect of the
goods which have given rise thereto; to defend any suit, action or
proceeding brought against any such Guarantor in respect of any Receivables
or the goods which have given rise thereto; to settle, compromise or adjust
any suit, action or proceeding hereinbefore described and, in connection
therewith, to give such discharges or releases as the Bank may deem
appropriate; to notify the U.S. Postal Service authorities to change the
address for delivery of mail to an address designated by the Bank and to
open and dispose of mail addressed to any such Guarantor and, generally, to
do all things necessary to carry out the intent of this Agreement. This
power, being coupled with an interest, is irrevocable, and the Guarantors
approve all acts of such attorney-in-fact. The powers conferred on the
Bank by this Section are solely to protect the interests of the Bank and
shall not impose any duty upon the Bank to exercise any such power, and
neither the Bank nor any such attorney-in-fact shall be liable for any act
or omission, error in judgment or mistake of law, except for its actual
wilful misconduct or bad faith. The Bank shall have no duty as to the
collection or protection of any Collateral and shall have no duty as to the
preservation of rights pertaining thereto, except as provided by applicable
law.
ARTICLE VII
DEFAULT AND REMEDIES
--------------------
Section 7.01. Events of Default. An Event of Default will be deemed
-----------------
to have occurred under this Agreement upon the occurrence of any one or
more of the following:
(i) The Guarantors shall fail to make any monetary payment
hereunder when due; or
(ii) Any representation or warranty of any Guarantor contained
herein shall at any time prove to have been incorrect in any material
respect when made; or
(iii) Any Guarantor shall fail to perform or observe any
obligation or agreement contained herein (provided that, with respect to
those covenants which have been incorporated herein by reference to the
Loan Agreement, the Guarantors shall have the benefit of such notice and/or
grace periods as are provided for in the Loan Agreement); or
(iv) Any "Event of Default" (as defined in the Loan Agreement)
shall occur and shall continue uncured beyond the expiration of any
applicable notice and/or grace period.
Section 7.02. Rights and Remedies Upon Default. Upon the occurrence
--------------------------------
of any Event of Default and at any time thereafter during the continuance
thereof, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the
following rights and remedies (all of which shall be cumulative):
(a) Exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code. The Bank may enter upon any of the premises
of any Guarantor and may take physical possession of the Collateral or
render the Collateral unusable by process of law or peaceably without
process of law. The Bank may, with only such demand, advertising or notice
as may be required by law, sell and deliver any and all Collateral held by
it for its account at any time or times in one or more private or public
sales, for cash or credit or otherwise, at such price and upon such terms
as the Bank deems advisable in its sole discretion; provided that such
terms are commercially reasonable. Notice of any public sale shall be
sufficient if it describes the Collateral to be sold in general terms,
stating the amounts thereof and the location and nature of the properties
covered by the security interests and the prior liens thereon, and is
published, at least once, not less than seven (7) days prior to the sale in
any newspaper which the Bank may select which newspaper has a general
circulation in the municipality where the Collateral is located or deemed
located. All requirements of reasonable notice shall be met if such notice
is sent to the Guarantors, in the manner provided in Section 8.03 below, at
least seven (7) days before the time of such sale or disposition. The Bank
may be the purchaser at any such sale, if it is public, free from any right
of redemption. The proceeds of sale shall be applied first to the costs of
retaking, refurbishing, storing and selling any Collateral hereunder and to
other costs of collection and other costs incurred by the Bank, and then to
the payment of the Guaranteed Obligations and the other obligations secured
hereby.
(b) Enforce the provisions of this Agreement by legal proceedings for
the specific performance of any covenant or agreement contained herein or
for the enforcement of any other appropriate legal or equitable remedy, and
the Bank may recover damages caused by any breach by any Guarantor of the
provisions of this Agreement, including court costs, reasonable attorneys'
fees and other costs and expenses incurred in the enforcement of the
obligations of the Guarantors hereunder.
(c) Exercise all rights and remedies hereunder, under the Loan
Documents, and under any other agreement with the Bank, and exercise all
other rights and remedies which the Bank may have under applicable law.
Section 7.03. Set-off. In addition to any rights now or hereafter
-------
granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default and during the
continuance thereof, the Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind
to any Guarantor or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits (other
than designated payroll accounts) and any other Indebtedness at any time
held or owing by the Bank or any affiliate of the Bank to or for the credit
or the account of any Guarantor against and on account of the obligations
and liabilities of such Guarantor to the Bank under this Agreement,
irrespective of whether or not the Bank shall have made any demand for
payment and although said obligations, liabilities or claims, or any of
them, may then be contingent or unmatured and without regard for the
availability or adequacy of other collateral. Each Guarantor also grants
to the Bank a security interest with respect to all its deposits and all
securities or other property in the possession of the Bank or any affiliate
of the Bank from time to time, and, upon the occurrence of any Event of
Default, the Bank may exercise all rights and remedies of a secured party
under the Uniform Commercial Code.
Section 7.04. Right to Cure. In the event that any Guarantor shall
-------------
fail to pay any tax, assessment, governmental charge or levy, except as the
same may be otherwise permitted hereunder, or in the event that any lien,
encumbrance or security interest prohibited hereby shall not be paid in
full or discharged, or in the event that any Guarantor shall fail to pay or
comply with any other obligation hereunder, the Bank may, but shall not be
required to, pay, satisfy, perform, discharge or bond the same for the
account of the defaulting Guarantor, and all moneys so paid by the Bank
shall be reimbursed by the Guarantors to the Bank on demand and shall bear
interest from the date of demand until paid at the lesser of (i) a
fluctuating rate per annum which shall at all times be equal to the sum of
two and one-half (2-1/2%) percent per annum plus the Base Rate as in effect
from time to time, or (ii) the maximum rate permitted by then applicable
law. The Bank will give each relevant Guarantor not less than 30 days'
notice before acting under this Section, except that the Bank may act with
less notice (or with no notice) in the case of emergency, as reasonably
determined by the Bank.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. No Waiver; Cumulative Remedies. No failure or delay on
------------------------------
the part of any party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or otherwise available to the Bank. Such remedies may be
exercised without resort or regard to the other source of satisfaction of
any liabilities of any Guarantor to the Bank. The provisions of this
Agreement are not limited by nor in the limitation of any additional or
inconsistent provisions contained in the Loan Agreement or elsewhere.
Section 8.02. Amendments, Waivers and Consents. Neither this
--------------------------------
Agreement nor any provision hereof may be amended, waived discharged or
terminated orally. Any such amendment, waiver, discharge or termination
must be in writing signed by the party against whom enforcement of the
amendment, waiver, discharge or termination is sought. Any waiver or
consent may be given subject to satisfaction of conditions stated therein
and any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 8.03. Addresses for Notices, etc. Except as otherwise
---------------------------
expressly provided in this Agreement, all notices, requests, demands and
other communications provided for hereunder shall be in writing and shall
be mailed or delivered to the applicable party at the address indicated
below:
If to any Guarantor:
c/o Medical Diagnostics, Inc.
6 New England Executive Park
Burlington, MA 01803
Attention: President
with a copy to:
Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, MA 01887
Attention: Chairman
and
Gerald J. Billow, Esq.
Posternak, Blankstein & Lund
100 Charles River Plaza
Boston, MA 02114
If to the Bank:
Chemical Bank
c/o Chemical Connecticut Corporation
3 Landmark Square
Stamford, CT 06901
Attention: David M. Nackley, Senior Vice President
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the other party complying
as to delivery with the terms of this Section. Except as otherwise
provided herein, all such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date
received or (ii) the date of delivery, refusal or non-delivery indicated on
the return receipt if deposited in the United States mails, sent postage
prepaid, registered or certified mail, return receipt requested, postage
and registration or certification charges prepaid, addressed as aforesaid.
Section 8.04. Costs, Expenses and Taxes. The Guarantors jointly and
-------------------------
severally agree to pay on demand all costs and expenses (including, without
limitation, reasonable legal fees) of the Bank in connection with the
preparation, execution and delivery of this Agreement and all other
instruments and documents to be delivered hereunder and any amendments or
modifications of any of the foregoing, or in connection with the
examination, review or administration of any of the foregoing, as well as
the costs and expenses (including, without limitation, the reasonable fees
and out-of-pocket expenses of legal counsel) incurred by the Bank in
connection with preserving, enforcing or exercising any rights or remedies
under this Agreement and all other instruments and documents to be
delivered hereunder, all whether or not legal action is instituted. In
addition, the Guarantors shall be jointly and severally obligated to pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement and all other
instruments and documents to be delivered hereunder, and the Guarantors
jointly and severally agree to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying
or omission to pay such taxes. Any fees, expenses or other charges which
the Bank is entitled to receive from the Guarantors hereunder shall bear
interest from the date of demand for payment until paid at the lesser of
(i) a fluctuating rate per annum which shall at all times be equal to the
sum of two and one-half (2-1/2%) percent per annum plus the Base Rate as in
effect from time to time or (ii) the maximum rate permitted by then
applicable law.
Section 8.05. Representations and Warranties. All covenants,
------------------------------
agreements, representations and warranties made herein or in any other
document delivered by or on behalf of any Guarantor pursuant to or in
connection with this Agreement are material and shall be deemed to have
been relied upon by the Bank, notwithstanding any investigation heretofore
or hereafter made by the Bank and shall survive the making of the Loans as
contemplated in the Loan Agreement, and shall continue in full force and
effect so long as any of the Guaranteed Obligations or other obligations
secured hereby remain outstanding and unpaid. All statements contained in
any certificate or other paper delivered to the Bank at any time by or on
behalf of any Guarantor pursuant hereto shall constitute representations
and warranties by the Guarantors hereunder.
Section 8.06. Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon the Guarantors and their respective successors and assigns and
shall inure to the benefit of the Bank and its successors and assigns. No
Guarantor may assign this Agreement or any rights hereunder without the
express written consent of the Bank.
Section 8.07. Reproduction of Agreement. This Agreement and all
-------------------------
other instruments, documents and papers which relate thereto which have
been or may be hereafter furnished to the Bank may be reproduced by the
Bank by any photographic, photostatic, micro-card, miniature photographic,
xerographic or similar process, and the Bank may destroy the original from
which any document was so reproduced. Any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of
business).
Section 8.08. Consent to Jurisdiction. Each Guarantor irrevocably
-----------------------
submits to the jurisdiction of any New York court or any federal court
sitting within the Southern District of New York over any suit, action or
proceeding arising out of or relating to this Agreement. Each Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in such a court and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. Each
Guarantor agrees that final judgment in any such suit, action or proceeding
brought in such a court shall be enforced in any court of proper
jurisdiction by a suit upon such judgment, provided that service of process
in such action, suit or proceeding shall have been effected upon such
Guarantor in one of the manners specified in the following paragraph of
this Section 8.08 or as otherwise permitted by law.
Each Guarantor hereby consents to process being served in any suit,
action or proceeding of the nature referred to in the preceding paragraph
of this Section 8.08 either (i) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to it at its
address set forth in Section 8.03 or (ii) by serving a copy thereof upon it
at its address set forth in Section 8.03. Each Guarantor irrevocably
waives, to the fullest extent permitted by law, all claims of error by
reason of any service as contemplated herein and agrees that such service
shall (x) be deemed in every respect effective service upon such Guarantor
in any such suit, action or proceeding and (y) to the fullest extent
permitted by law, be taken and held to be valid personal service upon and
personal delivery to such Guarantor.
Section 8.09. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York.
Section 8.10. Severability. In the event that any provision of this
------------
Agreement or the application thereof to any Person, property or
circumstances shall be held to any extent to be invalid or unenforceable,
the remainder of this Agreement and the application of such provision to
Persons, properties or circumstances other than those as to which it has
been held invalid or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
Section 8.11. Headings. Article and Section headings in this
--------
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 8.12. WAIVER OF TRAIL BY JURY. EACH GUARANTOR HEREBY
-----------------------
EXPRESSLY KNOWINGLY AND VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY
RIGHT TO TRIAL BY JURY, AND AGREES THAT IT WILL NOT AT ANY TIME INSIST
UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF, A TRIAL BY JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, each Guarantor has caused this Agreement to
be executed by its duly authorized officer as of the day and year first
above written.
MRI ASSOCIATES, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MDI INVESTMENTS, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
GREATER SPRINGFIELD MRI, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
GREATER BOSTON MRI SERVICES, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MOBILE MRI OF WESTERN MASS., INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
CENTRAL MASSACHUSETTS MRI SERVICES,
INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
CASCO BAY MR SERVICES, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MDI FINANCE AND LEASING, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERRIMACK SCANNING, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MIDDLESEX MRI CENTER, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MDI-NEW YORK, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MDI REHAB, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERITUS HEALTH SYSTEMS, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
TECHNICIAN SERVICES, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERITUS-SOUTHWESTERN VIRGINIA, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERITUS-IOWA, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERITUS WEST VIRGINIA, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERITUS MRI, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
MERITUS PLS, INC.
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
GREATER BOSTON MRI LIMITED
PARTNERSHIP
By MRI Associates, Inc., General Partner
duly authorized
By: /s/ John A. Lynch
--------------------------
Name: John A. Lynch
Title: President
Accepted:
CHEMICAL BANK
By: /s/ Joseph Sacks
--------------------------
Name: Joseph Sacks
Title: Vice President
EXHIBIT 10.5
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT dated as of August 31, 1995 from Advanced NMR
Systems, Inc., a Delaware corporation (the "Pledgor") to Chemical Bank (the
"Pledgee").
1. PLEDGE. The Pledgor hereby pledges and assigns to the Pledgee,
and hereby grants a security interest to the Pledgee in, 1,250,000 shares
of Common Stock, $0.01 par value, of Advanced Mammography Systems, Inc., a
Delaware corporation (the "Company"), such shares (together with any other
shares or property which hereafter is required to be pledged to the
Pledgee) being herein called the "Collateral". The Pledgor is
simultaneously herewith delivering to the Pledgee certificates representing
the initial Collateral, together with duly executed blank stock powers
transferring same.
2. SECURITY. This Agreement is made by the Pledgor with the Pledgee
to secure the following (collectively, the "Secured Obligations"): (i) the
obligations of the Pledgor under that certain Guaranty and Security
Agreement of even date herewith (the "Guaranty Agreement") between the
Pledgor and the Pledgee, and (ii) all of the other Guaranteed Obligations
(as defined in the Guaranty Agreement), all of the foregoing whether now
existing or hereafter arising. Pursuant to the Guaranty Agreement, the
Pledgor has guarantied to the Pledgee the payment and performance of the
obligations of Medical Diagnostics, Inc. (the "Borrower") under the Loan
and Security Agreement of even date herewith (the "Loan Agreement") between
the Borrower and the Pledgee and the Notes issued thereunder.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents, warrants and covenants that: (a) the Collateral is validly
issued, fully paid and non-assessable, and the Pledgor has good and valid
title to the same, free and clear of any liens, charges or encumbrances
thereon or affecting the title thereto, (b) the Pledgor has good right and
lawful authority to pledge, assign, transfer, deliver, deposit, set over
and confirm unto the Pledgee the Collateral as provided herein and will
warrant and defend the title thereto and the lien thereon conveyed to the
Pledgee by this Agreement against all claims of all persons and will
maintain and preserve such lien, subject to the provisions of the
Securities Act of 1933, as amended, (c) the execution, delivery and
performance of this Agreement and the delivery of the Collateral to the
Pledgee do not and will not contravene the charter documents or by-laws of
the Pledgor or the Company or any agreement, commitment, indenture,
contract or other obligation or restriction affecting the Company or the
Pledgor or any of their respective properties, (d) this Agreement and the
delivery of the Collateral to the Pledgee create in the Pledgee a fully
perfected first security interest in the Collateral, and (e) this Agreement
is the legal, valid and binding obligation of the Pledgor, enforceable in
accordance with its terms. The Pledgor covenants that the Pledgor will
have the like title to and right to pledge any other property of the
Pledgor at any time hereafter required to be pledged to the Pledgee
hereunder, that the Pledgee will have a like security interest in such
other property and that the Pledgor will likewise defend the Pledgee's
rights and security interest therein.
The Pledgor represents that at the date hereof 2,750,000 shares of the
Common Stock of the Company (the "Escrowed Shares") are held by American
Stock Transfer & Trust Company ("Escrow Agent") pursuant to an Escrow
Agreement dated as of January 25, 1993 (the "Escrow Agreement") among the
Escrow Agent, the Pledgor and the Company. Pursuant to the Escrow
Agreement, some or all of the Escrowed Shares may be released to the
Pledgor from escrow from time to time upon the occurrence of certain events
described in the Escrow Agreement. The Pledgor agrees that within five
days after any of the Escrowed Shares are so released to the Pledgor, the
Pledgor will deliver to the Pledgee the certificates representing such
released Escrowed Shares, together with appropriate stock transfer powers
signed in blank, and all such released Escrowed Shares will be deemed
included in the Collateral.
4. EVENTS OF DEFAULT. As used herein, an "Event of Default" shall
be deemed to have occurred upon the occurrence of any one or more of the
following: (a) any representation or warranty of the Pledgor made herein
or made by the Pledgor and/or the Borrower in connection with any of the
transactions contemplated by the Loan Agreement shall at any time prove to
have been incorrect in any material respect when made; or (b) the Pledgor
shall fail to perform any of its obligations under the last grammatical
paragraph of Section 3 within the time period set forth therein; or (c) the
Pledgor shall fail to perform, fulfill or observe any other covenant or
agreement contained herein and such failure shall continue unremedied for
ten (10) days after written notice thereof to the Pledgor; or (d) any
material "Event of Default" (as defined in the Guaranty Agreement) (the
Pledgor agreeing that "material Events of Default" include, without
limitation, any monetary Events of Default) shall exist and be continuing;
or (e) any other failure or default shall exist, beyond the expiration of
any applicable notice and/or grace period, under any other Secured
Obligation or any other agreement, understanding or undertaking, now
existing or hereafter arising or entered into, which is given or made by
the Pledgor and/or the Borrower to, with or for the benefit of the Pledgee.
Unless and until an Event of Default shall have occurred and be continuing,
the Pledgor shall be entitled to vote any and all shares of the Collateral
and give consents, waivers and ratifications in respect thereof; PROVIDED,
HOWEVER, that no vote shall be cast or consent, waiver or ratification
given or action taken which would be inconsistent with any of the
provisions hereof or of the Guaranty Agreement or which would involve any
violation of any of such provisions. All such rights of the Pledgor to
vote and give consents, waivers and ratifications shall cease in case an
Event of Default shall occur and be continuing and the Pledgee shall give
the notice referred to in the following sentence. At any time after the
occurrence and continuance of an Event of Default, and upon written notice
by the Pledgee of its intention to do so, the Pledgee may vote any or all
shares of the Collateral (whether or not transferred as hereinafter
provided) and give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though it were the
outright owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of the Pledgor, with
full power of substitution, so to do), and at any such time the Pledgee may
transfer into the Pledgee's name, or into the name of the Pledgee's
nominee, any or all shares of the Collateral. The Pledgor hereby
irrevocably constitutes and appoints the Pledgee the Pledgor's agent and
attorney-in-fact, with full power of substitution, to execute (in the name
and on behalf of the Pledgor) and deliver all stock transfer powers and
other documents which the Pledgee may reasonably require in order to carry
out the intent of this Section 4. The Pledgee being a secured party with
respect to the Collateral, the rights and powers conferred by this Section
are expressly agreed to be coupled with an interest and, therefore,
irrevocable.
5. DIVIDENDS. Unless and until an Event of Default shall have
occurred and be continuing, all cash dividends paid in respect of the
Collateral may be received by the Pledgor; otherwise all dividends shall be
paid to the Pledgee.
6. REMEDIES IN CASE OF AN EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall have the
right to exercise in respect of the Collateral all the rights and remedies
available to a secured party under the Uniform Commercial Code in effect at
the time in the State of New York. The Pledgee may, upon ten (10) days'
notice in writing to the Pledgor (the Pledgor agreeing that such notice
shall be deemed to meet any requirement for reasonable notice), sell,
assign and deliver the whole or, from time to time, any part of the
Collateral, or any interest in any part thereof, at any private sale or at
public auction, for cash, on credit or for other property, for immediate or
future delivery, and for such price or prices and on such terms as the
Pledgee in its uncontrolled discretion may determine, the Pledgor hereby
waiving and releasing any and all right or equity of redemption whether
before or after sale hereunder; at any such public auction the Pledgee may
bid for and purchase the whole or any portion of the Collateral and may
make payment therefor by any means. The Pledgee shall apply the cash
proceeds received by it from any sale or other disposition, together with
any other moneys at the time held by it hereunder, to the reasonable
expenses of retaking, holding, preparing for sale, selling and the like, to
reasonable attorneys' fees, and all legal expenses, travel and other
expenses which may be incurred by the Pledgee in collecting or attempting
to collect any of the Secured Obligations or to enforce this Agreement or
in the prosecution or defense of any action or proceeding related to the
subject matter of this Agreement; and then to such sums in such order as to
principal or interest remaining unpaid as the Pledgee in its sole
discretion may reasonably determine, and any surplus shall be paid to the
Pledgor. The Pledgee shall not be required to resort to or marshall any
present or future security for, or guaranties of, the Secured Obligations
(including, but not limited to, this Agreement and the Collateral pledged
hereunder), or to resort to any such security or guaranties in any
particular order. The Pledgee's remedies shall be cumulative with all
other rights, however existing or arising, and may be exercised
concurrently or separately. Neither failure nor delay on the Pledgee's
part to exercise any right, remedy, power or privilege provided for herein
or by statute or at law or in equity shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other further exercise thereof or the exercise of
any other right, remedy, power or privilege.
The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of the Collateral by reason of certain prohibitions contained
in the Securities Act of 1933, as amended (the "Act"), but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire
such securities for their own account, for investment and not with a view
to the distribution or resale thereof. The Pledgor agrees that any such
private sales may be at prices and on other terms less favorable to the
seller than if sold at public sales and that such private sales shall not
be deemed to have been made in a commercially unreasonable manner because
they were private sales. The Pledgee shall be under no obligation to delay
a sale for the period of time necessary to permit the issuer of the
securities to register such securities for public sale under the Act, even
if the issuer would agree to do so.
7. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the
Pledgor under this Agreement shall remain in full force and effect without
regard to, and shall not be impaired or affected by: (a) any amendment or
modification of or addition or supplement to the Guaranty Agreement, the
Loan Agreement or any other instrument referred to therein or delivered in
connection with any of the Loans (as defined in the Loan Agreement), or any
assignment or transfer of any thereof; (b) any exercise or non-exercise by
the Pledgee of any right, remedy, power or privilege under or in respect of
this Agreement, the Guaranty Agreement, the Loan Agreement or any such
other instrument or any Secured Obligation; (c) any waiver, consent,
extension, indulgence or other action or inaction in respect of this
Agreement, the Guaranty Agreement, the Loan Agreement or any such other
instrument or any Secured Obligation; or (d) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation, or the
like, of the Pledgor, the Borrower and/or the Company; all whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
8. TRANSFER BY THE PLEDGOR. Without the prior written consent of
the Pledgee, the Pledgor will not sell, assign, transfer or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of, the Collateral or any interest therein, other
than the pledge contained in this Agreement.
9. TERMINATION. Upon the payment and performance of all of the
Secured Obligations and the Loans and the termination of any and all
commitments and credit facilities now or hereafter made available by the
Pledgee to or for the benefit of the Pledgor and/or the Borrower, this
Agreement shall terminate and such of the Collateral as has not theretofore
been sold or otherwise applied pursuant to the provisions of this Agreement
shall be delivered to the Pledgor.
10. NOTICE. All notices and other communications hereunder shall be
in writing and shall be given in the manner and to the addresses provided
for in the Guaranty Agreement. All such notices and communications shall
be deemed delivered on the earlier of (i) the date received or (ii) the
date of delivery refusal or non-delivery indicated on the return receipt if
deposited in the United States mails, sent registered or certified mail,
return receipt requested, postage and registration or certification charges
prepaid, addressed as aforesaid.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
furnish to the Pledgee all such financing statements, certificates,
opinions and other documents, and will do or cause to be done all such
other things, as the Pledgee may reasonably request from time to time in
order to give full effect to this Agreement and to secure the rights of the
Pledgee hereunder.
12. PLEDGEE'S EXONERATION. Under no circumstances shall the Pledgee
be deemed to assume any responsibility for or obligation or duty with
respect to any part or all of the Collateral beyond the safe custody
thereof, and the same shall be at the Pledgor's sole risk at all times
except as aforesaid. The Pledgee shall not be required to take any action
of any kind to collect, preserve or protect its or the Pledgor's rights in
the Collateral or against any other parties. The Pledgor hereby releases
the Pledgee from any claims, causes of action and demands at any time
arising out of or with respect to this Agreement, the use of the Collateral
and/or any actions reasonably taken or omitted to be taken by the Pledgee
with respect thereto, and the Pledgor hereby agrees to hold the Pledgee
harmless from and with respect to any and all such claims, causes of action
and demands. The Pledgee's prior recourse to any part or all of the
Collateral or to any other collateral or obligor shall not constitute a
condition of any demand, suit or proceeding for payment or collection with
respect to any of the Secured Obligations.
13. REORGANIZATIONS. In the event of any one or more
reclassifications, changes, exchanges, stock splits, stock dividends, stock
consolidations or other subdivisions or combinations of the shares of the
capital stock of the Company or any immediate or remote successor to
substantially all of the business or assets of the Company pursuant to any
one or more of the events described in this sentence, or consolidations of
the Company or any such successor into other corporations, or other
recapitalizations or reorganizations affecting the Company or any such
successor, or any one or more sales or conveyances to another corporation
of the property of the Company or any such successor as an entirety or
substantially as an entirety (each, a "Reorganization"), the Pledgor will
deliver to the Pledgee, in readily transferable form, all securities and
property which come to the Pledgor with respect to the Collateral as a
result of that and any subsequent Reorganization, except for securities and
property surrendered or cancelled pursuant to any of same, and such
securities and property shall thereupon become and constitute all or part
of the Collateral, as the case may be. All sums of money and property paid
or distributed in respect of the Collateral which are received by the
Pledgor pursuant to a Reorganization shall, until paid or delivered to the
Pledgee, be held in trust for the Pledgee to secure the payment and the due
performance of and compliance with the Secured Obligations.
14. MISCELLANEOUS. Neither this Agreement nor any provisions hereof
may be amended, modified, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom enforcement of
the amendment, modification, waiver, discharge or termination is sought.
The provisions of this Agreement shall inure to the benefit of the
successors and assigns of the Pledgee, and shall be binding upon the
successors and assigns of the Pledgor. The captions in this Agreement are
for convenience of reference only and shall not define or limit the
provisions hereof. This Agreement shall be construed and enforced in
accordance with the laws of New York. This Agreement may be executed
simultaneously in several counterparts, each of which will be deemed an
original, but all of which together shall constitute one instrument. If
any term or provision of this Agreement or the application thereof to any
person, property or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement and the application of such
term or provision to persons, properties and circumstances other than those
as to which it is invalid or unenforceable shall not be affected thereby,
and each term and provision of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be duly executed, as an instrument under seal, as of the day
and year first above written.
PLEDGOR:
ADVANCED NMR SYSTEMS, INC.
By /s/ Jack Nelson
-----------------------------
Its Chairman
PLEDGEE:
CHEMICAL BANK
By /s/ Joseph Sacks
----------------------------
Its Vice President
EXHIBIT 10.6
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT dated as of August 31, 1995 from
Medical Diagnostics, Inc., a Delaware corporation (the "Pledgor")
to Chemical Bank (the "Pledgee").
1. PLEDGE. The Pledgor hereby pledges and assigns to the
Pledgee, and hereby grants a security interest to the Pledgee in
the shares of Pledgor's subsidiaries (the "Subsidiaries") listed
on Schedule A hereto, such shares (together with any other shares
or property which hereafter is required to be pledged to the
Pledgee) being herein called the "Collateral". The Pledgor is
simultaneously herewith delivering to the Pledgee certificates
representing the Collateral, together with duly executed blank
stock powers transferring same.
2. SECURITY. This Agreement is made by the Pledgor with
the Pledgee to secure the following (collectively, the "Secured
Obligations"): (i) the obligations of the Pledgor under that
certain Loan and Security Agreement of even date herewith (the
"Loan Agreement") between the Pledgor and the Pledgee, (ii) the
$9,000,000 promissory note of even date herewith (the "Term
Note") made by the Pledgor and payable to the order of the
Pledgee, (iii) the $6,000,000 promissory note of even date
herewith (the "Revolving Note") made by the Pledgor and payable
to the order of the Pledgee, and (iv) all of the other
Obligations (as defined in the Loan Agreement), all of the
foregoing whether now existing or hereafter arising.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
represents, warrants and covenants that: (a) the Collateral is
validly issued, fully paid and non-assessable, and the Pledgor
has good and valid title to the same, free and clear of any
liens, charges or encumbrances thereon or affecting the title
thereto, (b) the Pledgor has good right and lawful authority to
pledge, assign, transfer, deliver, deposit, set over and confirm
unto the Pledgee the Collateral as provided herein and will
warrant and defend the title thereto and the lien thereon
conveyed to the Pledgee by this Agreement against all claims of
all persons and will maintain and preserve such lien, (c) the
execution, delivery and performance of this Agreement and the
delivery of the Collateral to the Pledgee do not and will not
contravene the charter documents or by-laws of the Pledgor or any
of the Subsidiaries or any agreement, commitment, indenture,
contract or other obligation or restriction affecting any of the
Subsidiaries or the Pledgor or any of their respective
properties, (d) this Agreement and the delivery of the Collateral
to the Pledgee create in the Pledgee a fully perfected first
security interest in the Collateral, (e) the Pledgor owns and
will at all times own 100% of each class of outstanding equity
securities of each of the Subsidiaries and the Collateral
constitutes and will at all times continue to constitute 100% of
each class of outstanding equity securities of each of the
Subsidiaries, and (f) this Agreement is the legal, valid and
binding obligation of the Pledgor, enforceable in accordance with
its terms. The Pledgor covenants that the Pledgor will have the
like title to and right to pledge any other property of the
Pledgor at any time hereafter required to be pledged to the
Pledgee hereunder, that the Pledgee will have a like security
interest in such other property and that the Pledgor will
likewise defend the Pledgee's rights and security interest
therein.
4. EVENTS OF DEFAULT. As used herein, an "Event of
Default" shall be deemed to have occurred upon the occurrence of
any one or more of the following: (a) any representation or
warranty of the Pledgor made herein or made by the Pledgor and/or
any of the Subsidiaries in connection with any of the
transactions contemplated by the Loan Agreement shall at any time
prove to have been incorrect in any material respect when made;
or (b) the Pledgor shall fail to perform, fulfill or observe any
covenant or agreement contained herein and such failure shall
continue unremedied for ten (10) days after written notice
thereof to the Pledgor; or (c) any material "Event of Default"
(as defined in the Loan Agreement) (the Pledgor agreeing that
"material Events of Default" include, without limitation, any
monetary Events of Default) shall exist; or (d) any other failure
or default shall exist and be continuing, beyond the expiration
of any applicable notice and/or grace period, under any other
Secured Obligation or any other agreement, understanding or
undertaking, now existing or hereafter arising or entered into,
which is given or made by the Pledgor and/or the Company to, with
or for the benefit of the Pledgee; or (e) the Collateral pledged
hereunder in which the Pledgee has a fully perfected first
priority security interest shall for any reason not constitute
100% of each of the outstanding shares of each class of equity
securities of the Subsidiaries. Unless and until an Event of
Default shall have occurred and be continuing, the Pledgor shall
be entitled to vote any and all shares of the Collateral and give
consents, waivers and ratifications in respect thereof; PROVIDED,
HOWEVER, that no vote shall be cast or consent, waiver or
ratification given or action taken which would be inconsistent
with any of the provisions hereof or of the Loan Agreement or
which would involve any violation of any of such provisions. All
such rights of the Pledgor to vote and give consents, waivers and
ratifications shall cease in case an Event of Default shall occur
and be continuing and the Pledgee shall give the notice referred
to in the following sentence. At any time after the occurrence
and continuance of an Event of Default, and upon written notice
by the Pledgee of its intention to do so, the Pledgee may vote
any or all shares of the Collateral (whether or not transferred
as hereinafter provided) and give all consents, waivers and
ratifications in respect thereof and otherwise act with respect
thereto as though it were the outright owner thereof (the Pledgor
hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of the Pledgor, with full power of
substitution, so to do), and at any such time the Pledgee may
transfer into the Pledgee's name, or into the name of the
Pledgee's nominee, any or all shares of the Collateral. The
Pledgor hereby irrevocably constitutes and appoints the Pledgee
the Pledgor's agent and attorney-in-fact, with full power of
substitution, to execute (in the name and on behalf of the
Pledgor) and deliver all stock transfer powers and other
documents which the Pledgee may reasonably require in order to
carry out the intent of this Section 4. The Pledgee being a
secured party with respect to the Collateral, the rights and
powers conferred by this Section are expressly agreed to be
coupled with an interest and, therefore, irrevocable.
5. DIVIDENDS. Unless and until an Event of Default shall
have occurred and be continuing, all cash dividends paid in
respect of the Collateral may be received by the Pledgor;
otherwise all dividends shall be paid to the Pledgee. Nothing
contained herein, however, will be deemed to authorize the
payment of any dividends except to such extent (if any) as may be
expressly authorized and permitted under the Loan Agreement.
6. REMEDIES IN CASE OF AN EVENT OF DEFAULT. In case an
Event of Default shall have occurred and be continuing, the
Pledgee shall have the right to exercise in respect of the
Collateral all the rights and remedies available to a secured
party under the Uniform Commercial Code in effect at the time in
the State of New York. The Pledgee may, upon ten (10) days'
notice in writing to the Pledgor (the Pledgor agreeing that such
notice shall be deemed to meet any requirement for reasonable
notice), sell, assign and deliver the whole or, from time to
time, any part of the Collateral, or any interest in any part
thereof, at any private sale or at public auction, for cash, on
credit or for other property, for immediate or future delivery,
and for such price or prices and on such terms as the Pledgee in
its uncontrolled discretion may determine, the Pledgor hereby
waiving and releasing any and all right or equity of redemption
whether before or after sale hereunder; at any such public
auction the Pledgee may bid for and purchase the whole or any
portion of the Collateral and may make payment therefor by any
means. The Pledgee shall apply the cash proceeds received by it
from any sale or other disposition, together with any other
moneys at the time held by it hereunder, to the reasonable
expenses of retaking, holding, preparing for sale, selling and
the like, to reasonable attorneys' fees, and all legal expenses,
travel expenses and other expenses which may be incurred by the
Pledgee in collecting or attempting to collect any of the Secured
Obligations or to enforce this Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter
of this Agreement; and then to such sums in such order as to
principal or interest remaining unpaid as the Pledgee in its sole
discretion may reasonably determine, and any surplus shall be
paid to the Pledgor. The Pledgee shall not be required to resort
to or marshall any present or future security for, or guaranties
of, the Secured Obligations (including, but not limited to, this
Agreement and the Collateral pledged hereunder), or to resort to
any such security or guaranties in any particular order. The
Pledgee's remedies shall be cumulative with all other rights,
however existing or arising, and may be exercised concurrently or
separately. Neither failure nor delay on the Pledgee's part to
exercise any right, remedy, power or privilege provided for
herein or by statute or at law or in equity shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other further
exercise thereof or the exercise of any other right, remedy,
power or privilege.
The Pledgor recognizes that the Pledgee may be unable to
effect a public sale of the Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended
(the "Act"), but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a
view to the distribution or resale thereof. The Pledgor agrees
that any such private sales may be at prices and on other terms
less favorable to the seller than if sold at public sales and
that such private sales shall not be deemed to have been made in
a commercially unreasonable manner because they were private
sales. The Pledgee shall be under no obligation to delay a sale
for the period of time necessary to permit the issuer of the
securities to register such securities for public sale under the
Act, even if the issuer would agree to do so.
7. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of
the Pledgor under this Agreement shall remain in full force and
effect without regard to, and shall not be impaired or affected
by: (a) any amendment or modification of or addition or
supplement to the Loan Agreement, the Term Note, the Revolving
Note or any other instrument referred to therein or delivered in
connection with any of the Loans (as defined in the Loan
Agreement), or any assignment or transfer of any thereof; (b) any
exercise or non-exercise by the Pledgee of any right, remedy,
power or privilege under or in respect of this Agreement, the
Loan Agreement, the Term Note, the Revolving Note or any such
other instrument or any Secured Obligation; (c) any waiver,
consent, extension, indulgence or other action or inaction in
respect of this Agreement, the Loan Agreement, the Term Note, the
Revolving Note or any such other instrument or any Secured
Obligation; or (d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation, or the like,
of the Pledgor and/or the Company; all whether or not the Pledgor
shall have notice or knowledge of any of the foregoing.
8. TRANSFER BY THE PLEDGOR. Without the prior written
consent of the Pledgee, the Pledgor will not sell, assign,
transfer or otherwise dispose of, grant any option with respect
to, or mortgage, pledge or otherwise encumber any of, the
Collateral or any interest therein, other than the pledge
contained in this Agreement.
9. TERMINATION. Upon the payment and performance of all
Secured Obligations and the termination of any and all
commitments and credit facilities now or hereafter made available
by the Pledgee to or for the benefit of the Pledgor, this
Agreement shall terminate and such of the Collateral as has not
theretofore been sold or otherwise applied pursuant to the
provisions of this Agreement shall be delivered to the Pledgor.
10. NOTICE. All notices and other communications hereunder
shall be in writing and shall be given in the manner and to the
addresses provided for in the Loan Agreement. All such notices
and communications shall be deemed sufficiently given when
delivered on the earlier of (i) the date received or (ii) the
date of delivery refusal or non-delivery indicated on the return
receipt if deposited in the United States mails, sent registered
or certified mail, return receipt requested, postage and
registration or certification charges prepaid, addressed as
aforesaid.
11. FURTHER ASSURANCES. The Pledgor will do all such acts,
and will furnish to the Pledgee all such financing statements,
certificates, opinions and other documents, and will do or cause
to be done all such other things, as the Pledgee may reasonably
request from time to time in order to give full effect to this
Agreement and to secure the rights of the Pledgee hereunder.
12. PLEDGEE'S EXONERATION. Under no circumstances shall
the Pledgee be deemed to assume any responsibility for or
obligation or duty with respect to any part or all of the
Collateral beyond the safe custody thereof, and the same shall be
at the Pledgor's sole risk at all times except as aforesaid. The
Pledgee shall not be required to take any action of any kind to
collect, preserve or protect its or the Pledgor's rights in the
Collateral or against any other parties. The Pledgor hereby
releases the Pledgee from any claims, causes of action and
demands at any time arising out of or with respect to this
Agreement, the use of the Collateral and/or any actions
reasonably taken or omitted to be taken by the Pledgee with
respect thereto, and the Pledgor hereby agrees to hold the
Pledgee harmless from and with respect to any and all such
claims, causes of action and demands. The Pledgee's prior
recourse to any part or all of the Collateral or to any other
collateral or obligor shall not constitute a condition of any
demand, suit or proceeding for payment or collection with respect
to any of the Secured Obligations.
13. REORGANIZATIONS. In the event of any one or more
reclassifications, changes, exchanges, stock splits, stock
dividends, stock consolidations or other subdivisions or
combinations of the shares of the capital stock of any of the
Subsidiaries or any immediate or remote successor to
substantially all of the business or assets of any of the
Subsidiaries pursuant to any one or more of the events described
in this sentence, or consolidations of any of the Subsidiaries or
any such successor of any of the Subsidiaries into other
corporations, or other recapitalizations or reorganizations
affecting any of the Subsidiaries or any such successor of any of
the Subsidiaries, or any one or more sales or conveyances to
another corporation of the property of any of the Subsidiaries or
any such successor of any of the Subsidiaries as an entirety or
substantially as an entirety (each, a "Reorganization"), the
Pledgor will deliver to the Pledgee, in readily transferable
form, all securities and property which come to the Pledgor with
respect to the Collateral as a result of that and any subsequent
Reorganization, except for securities and property surrendered or
cancelled pursuant to any of same, and such securities and
property shall thereupon become and constitute all or part of the
Collateral, as the case may be. All sums of money and property
paid or distributed in respect of the Collateral which are
received by the Pledgor pursuant to a Reorganization shall, until
paid or delivered to the Pledgee, be held in trust for the
Pledgee to secure the payment and the due performance of and
compliance with the Secured Obligations. Any and all shares of
any class of equity securities of any of the Subsidiaries which
may be issued or sold after the date hereof shall be deemed
further Collateral hereunder and the certificates representing
same shall be delivered to the Pledgee in readily transferable
form to be held and dealt with pursuant to this Agreement.
14. MISCELLANEOUS. Neither this Agreement nor any
provisions hereof may be amended, modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the amendment,
modification, waiver, discharge or termination is sought. The
provisions of this Agreement shall inure to the benefit of the
successors and assigns of the Pledgee, and shall be binding upon
the successors and assigns of the Pledgor. The captions in this
Agreement are for convenience of reference only and shall not
define or limit the provisions hereof. This Agreement shall be
construed and enforced in accordance with the laws of New York.
This Agreement may be executed simultaneously in several
counterparts, each of which will be deemed an original, but all
of which together shall constitute one instrument. If any term
or provision of this Agreement or the application thereof to any
person, property or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement and the
application of such term or provision to persons, properties and
circumstances other than those as to which it is invalid or
unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused
this Agreement to be duly executed, as an instrument under seal,
as of the day and year first above written.
PLEDGOR:
MEDICAL DIAGNOSTICS, INC.
By /s/ John A. Lynch
------------------------
Its President
PLEDGEE:
CHEMICAL BANK
By /s/ Joseph Sacks
------------------------
Its Vice President
<PAGE>
SCHEDULE A
----------
COLLATERAL
Number of Class of Par Value
Entity Shares Shares of Shares
------ -------- -------- ----------
MRI Associates, Inc. 100 Common Zero
MDI Investments, Inc. 100 Common Zero
Greater Boston MRI Services, 100 Common Zero
Inc.
Central Massachusetts MRI 100 Common Zero
Services, Inc.
Casco Bay MR Services, Inc. 100 Common Zero
MDI Finance and Leasing, Inc. 100 Common Zero
Merrimack Scanning, Inc. 100 Common Zero
Middlesex MRI Center, Inc. 100 Common Zero
MDI-New York, Inc. 100 Common Zero
MDI Rehab, Inc. 100 Common Zero
Meritus Health Systems, Inc. 730 Common Zero
Technician Services, Inc. 7,300 Common $1.00
Meritus-Southwestern 730 Common Zero
Virginia, Inc.
Meritus-Iowa, Inc. 730 Common Zero
Meritus West Virginia, Inc. 730 Common Zero
Meritus MRI, Inc. 730 Common Zero
Meritus PLS, Inc. 730 Common Zero
