SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 15)(1)
MEDICAL IMAGING CENTERS OF AMERICA, INC.
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(Name of issuer)
COMMON STOCK, $.01 PAR VALUE
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(Title of class of securities)
584578108
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(CUSIP number)
STEVEN WOLOSKY, ESQUIRE
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
March 19, 1996
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Check the following box if a fee is being paid with the statement / /.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7).
Note. six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
(Continued on following pages)
(Page 1 of 26 Pages)
Exhibit Index on Page 9
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(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 422,658
OWNED BY
EACH
REPORTING
PERSON WITH
------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
422,658
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
422,658
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.00%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS SERVICES, LTD.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 105,024
OWNED BY
EACH
REPORTING
PERSON WITH
------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
105,024
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
105,024
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.97%
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14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARREN LICHTENSTEIN
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 527,682(2)
OWNED BY
EACH
REPORTING
PERSON WITH
------------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
527,682(2)
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
527,682(2)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(2) Includes 422,658 Shares owned by Steel Partners II, L.P. and
105,024 Shares managed by Steel Partners Services, Ltd., an entity controlled by
Warren G. Lichtenstein and Lawrence Butler.
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
LAWRENCE BUTLER
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 527,682(3)
OWNED BY
EACH
REPORTING
PERSON WITH
------------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
527,682(3)
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
527,682(3)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(3) Includes 422,658 Shares owned by Steel Partners II, L.P. and
105,024 Shares managed by Steel Partners Services, Ltd., an entity controlled by
Warren G. Lichtenstein and Lawrence Butler.
<PAGE>
This constitutes Amendment No. 15 ("Amendment No. 15") to Schedule 13D
filed by the undersigned on March 18, 1995 (the "Schedule 13D"). Except as
specifically amended by this Amendment No. 15, the Schedule 13D, as amended,
remains in full force and effect. Defined terms herein shall have the meaning
specified in the Schedule 13D, except as otherwise provided herein.
Item 2 is amended to add the following paragraph:
Item 2. Identity & Background.
Pursuant to the terms of the Settlement Agreement (as defined in Item
4), the Steel Defendants have agreed to adjourn the February 26, 1996 Special
Meeting of Shareholders without receiving a final report from the Inspector of
Election and without acting upon the Steel Partners Committee's proposal to
remove the current directors of the Issuer and replace them with nominees
designated by the Steel Partners Committee. Accordingly, Jack L. Howard is no
longer a Reporting Person. On March 19, 1996, the Steel Partners Committee was
disbanded and therefore the Steel Partners Committee is no longer a Reporting
Person.
Item 4 is amended to add the following paragraphs:
Item 4. Purpose of Transaction.
On March 19, 1996, the Steel Defendants' entered into the Agreement of
Compromise and Settlement (the "Settlement Agreement") with the Issuer and
certain of its officers and directors, a copy of which is attached hereto as
Exhibit 7. Reference is made to Exhibit 7 for the complete terms of the
Settlement Agreement. The Settlement Agreement provides, among other things, (i)
for the Issuer to conduct an auction to sell the Issuer, (ii) for the Steel
Defendants to enter into certain standstill provisions, (iii) for the existing
Board of Directors of the Issuer to be replaced by designees of the Steel
Defendants if certain threshold events in the Auction Process (as defined in the
Settlement Agreement) do not occur on or prior to specific dates (as further
described in the Settlement Agreement), (iv) for the Issuer to redeem all
outstanding rights issued pursuant to its shareholder rights plan, (v) for the
parties to the Settlement Agreement to grant mutual releases, and (vi) for the
parties to the Settlement Agreement to enter into Stipulations of Dismissal to
dismiss all pending litigation with prejudice.
The Settlement Agreement provides that the Auction Process will be
conducted by the Issuer and its financial advisor, and the Steel Defendants are
permitted to participate as a bidder in the Auction Process on the same terms as
other bidders. Steel has not yet determined whether it will be a bidder in the
Auction Process. Steel anticipates, however, that it will ask to receive any
information
<PAGE>
provided to bidders in the Auction Process. The standstill provisions referred
to above, until the Auction Process is concluded, include, among other things,
(i) restrictions on the Steel Defendants acquiring, directly or indirectly, any
shares of the Issuer (except pursuant to the Auction Process), (ii) restrictions
on the Steel Defendants' ability to sell Shares, other than in open market
transactions, to a single person or group which owns more than 5% of the then
currently outstanding Common Stock, or as a result of such sale will own more
than 5% of the Common Stock, (iii) restrictions on the participation by the
Steel Defendants in certain proxy or consent solicitations relating to, among
other things, any matter to be submitted to a vote of stockholders of the Issuer
or for the purpose of calling a special meeting of the Issuer's stockholders,
(iv) restrictions on the Steel Defendants' ability to participate in any
business combination involving the Issuer (except pursuant to the Auction
Process) and (v) restrictions on the Steel Defendants right to publicly oppose
any duly authorized board action or recommendation, however, the Steel
Defendants retain the right to set forth their position in the Issuer's Proxy
Statement relating to any proposed transaction resulting from the Auction
Process.
Arrowhead Holdings Corporation ("Arrowhead"), a holder with its
affiliates of 130,680 shares of a Common Stock of the Issuer, entered into a
Standstill Agreement ("Standstill Agreement") with the Issuer and certain of its
officers and directors on March 19, 1996. The Standstill Agreement has similar
standstill provisions to those contained in the Settlement Agreement. Pursuant
to the terms of the Settlement Agreement and the Standstill Agreement, the Steel
Defendants and Arrowhead are permitted to make a joint bid to acquire the Issuer
in the Auction Process.
Item 6 is amended to read in its entirety as follows:
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
On March 19, 1996, the Steel Defendants entered into the Settlement
Agreement, a copy of which is attached hereto as Exhibit 7. See Item 4 for a
brief description of the Settlement Agreement. Other than as described herein,
there are no contracts, arrangements or understanding among the Reporting
Persons, or between the Reporting Persons and any other Person, with respect to
the securities of the Issuer.
Item 7 is amended to add the following exhibit:
Item 7. Material to be filed as Exhibits:
7. Agreement of Compromise and Settlement.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 22, 1996 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C., General
Partner
By:/s/ Warren G. Lichtenstein
--------------------------
Warren G. Lichtenstein,
Chairman of the Board
STEEL PARTNERS SERVICES, LTD.
By:/s/ Warren G. Lichtenstein
--------------------------
Warren G. Lichtenstein,
Chief Executive Officer
/s/ Warren G. Lichtenstein
----------------------------
WARREN G. LICHTENSTEIN
/s/ Lawrence Butler
----------------------------
LAWRENCE BUTLER
<PAGE>
EXHIBIT INDEX
Exhibit Page
1. Joint Filing Agreement (previously
filed)
2. Demand for Special Meeting
(previously filed)
3. Preliminary Proxy Statement
(previously filed)
4. Indemnity Agreement between Steel,
Steven Wolosky and David C. Flaugh
(previously filed)
5. Indemnity Agreement between Steel and
Jack L. Howard (previously filed)
6. Order Granting Plaintiff's Application
For Preliminary Injunction (previously
filed).
7. Agreement of Compromise and Settlement 10
EXHIBIT 7 EXECUTION COPY
AGREEMENT OF COMPROMISE AND SETTLEMENT
This AGREEMENT OF COMPROMISE AND SETTLEMENT dated as of March
19, 1996 (this "Settlement Agreement") is entered into by and among Medical
Imaging Centers of America, Inc., a California corporation ("MICA"), Keith R.
Burnett, Robert S. Muehlberg, Denise L. Sunseri and Robert G. Ricci, on the one
hand, and Warren G. Lichtenstein, Lawrence Butler, Jack L. Howard, Steel
Partners II, L.P., a Delaware limited partnership ("Steel"), Steel Partners,
L.L.C., a Delaware limited liability company, and Steel Partners Services, Ltd.,
a New York corporation (collectively, the "Steel Parties"), on the other hand.
MICA and the Steel Parties are sometimes collectively referred to herein as the
"Parties."
WHEREAS, the Parties understand that the results of the
election conducted at the February 26, 1996 Special Meeting of shareholders will
be subject to immediate challenge by the Party that did not prevail and might
never be accepted as valid by such Party;
WHEREAS, contemporaneously with the execution of this
Agreement, MICA is entering into a Standstill Agreement with Arrowhead; and
WHEREAS, MICA has determined that the agreements set forth
herein are in the best interests of MICA and its shareholders.
FOR AND IN CONSIDERATION of the mutual covenants contained
herein, the parties, intending to be legally bound hereby, agree as follows:
1. Certain Defined Terms. As used in this Settlement
Agreement, the following terms (whether or not capitalized) shall have the
following meanings:
"Action" means Medical Imaging Centers of America, Inc. v.
Lichtenstein, et al., Case No. 96-0039B (AJB) filed in the United States
District Court for the Southern District of California.
"Auction Period" means the period commencing with the date
hereof and ending with the earlier to occur of (i) in the event that MICA has
not made a public announcement stating that an agreement has been reached with
respect to an Auction Transaction prior to June 19, 1996 (the third monthly
anniversary of the date hereof), the close of business on such date, (the date
of such public announcement shall be referred to
<PAGE>
herein as the "Announcement Date"), (ii) in the event a definitive agreement
(the "Definitive Agreement") relating to an Auction Transaction is not entered
into prior to the earlier to occur of (A) 30 days after the Announcement Date
and (B) July 19, 1996 (the fourth monthly anniversary of the date hereof) (the
earlier of such dates, the "Definitive Agreement Date"), the close of business
on the Definitive Agreement Date, (iii) in the event an Auction Transaction is
not consummated prior to the close of business on the Consummation Date, the
close of business on the Consummation Date and (iv) the effective date, if any,
of the resignation of Mr. Robert S. Muehlberg from the Board or as an employee
or officer of MICA.
"Auction Process" means the auction process described in
Section 5 of this Settlement Agreement.
"Auction Transaction" means a Sale Transaction recommended by
the Board pursuant to the Auction Process.
"Arrowhead" means Arrowhead Holdings Corporation, a Delaware
corporation.
"Board" means the Board of Directors of MICA.
"Common Stock" means the common stock, no par value, of MICA.
"Consummation Date" means November 19, 1996 (the eighth
monthly anniversary of the date hereof), provided that if on such date, the
parties to an Auction Transaction are working in good faith to complete an
Auction Transaction but are unable to do so as a result of any undue delay
resulting from any governmental regulatory process which is required as a
condition to consummate the Auction Transaction, the Consummation Date shall be
extended until the ninth monthly anniversary of the date hereof.
"Effective Date" means March 19, 1996.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Advisor" means Batchelder & Partners, Inc.
"MICA Securities" means any securities issued by MICA or any
of its direct or indirect subsidiaries, including the Common Stock and any other
debt or equity securities of MICA or any of its direct or indirect subsidiaries
that are outstanding as of the date hereof or may hereafter be issued.
<PAGE>
"Person" means any individual, corporation, association,
general or limited partnership, limited liability company, limited liability
partnership, joint venture, trust, estate, other entity or organization or
group.
"Rights Plan Action" means Steel Partners II, L.P. v. Medical
Imaging Centers of America, Inc., Case No. 96-0274B (AJB), filed in the United
States District Court for the Southern District of California.
"Sale Transaction" means any transaction, whether by tender
offer, merger or otherwise, and whether for cash or securities of the other
party to the Sale Transaction, pursuant to which MICA will be sold, merged or
combined with another entity if as a result thereof the shareholders of MICA
immediately prior to such transaction would, after the consummation of the Sale
Transaction, own less than 50% of the equity of the merged or combined entity on
a fully diluted basis, or any comparable or similar type transaction which would
not constitute an "ownership change" with the meaning of Section 382 of the
Internal Revenue Code of 1986, as amended.
"Schedule 13D" means the Schedule 13D filed with the SEC on or
about March 18, 1995 by the Steel Parties, as amended through Amendment No. 14.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Solicitation Action" means any of the following: (i) giving
notice pursuant to MICA's By-Laws of an intention to nominate directors, or
cause the taking of any other action by MICA, at a meeting of shareholders or by
consent; (ii) filing with the SEC any proxy or consent solicitation materials
(whether preliminary, definitive or as described in Rule 14a-11 or 14a-12 under
the Exchange Act) with respect to such meeting or consent; (iii) mailing or
otherwise disseminating to shareholders any such solicitation materials; (iv)
otherwise engaging in a solicitation of proxies or consents with respect to such
meeting or consent; (v) nominating at such meeting candidates for election as
directors; (vi) engaging in or taking any of the other actions set forth in
Section 6(c) hereof; or (vii) casting votes or ballots at such meeting or by
consent pursuant to proxies or consents so solicited (but the term "Solicitation
Action" shall not include the casting of votes or ballots by the Steel Parties
with respect to shares of Common Stock beneficially owned by them so long as the
Steel Parties have not engaged in or taken any of the actions specified in
clauses (i) through (vi) above).
<PAGE>
"Standstill Period" means the period commencing with the date
hereof and ending with the later to occur of (i) the end of the Auction Period
and (ii) the date on which the current members of the Board resign from their
position as members of the Board pursuant to section 5(e) of this Settlement
Agreement and are replaced with designees of the Steel Parties.
"Transaction" means any business combination involving MICA,
including without limitation an acquisition, merger, spin-off, spin-out,
consolidation, tender offer, share exchange or exchange offer.
"Voting Securities" means any capital stock of MICA having the
right to vote in the election of directors, plus convertible securities,
options, warrants or rights that may be converted, exchanged or exercised to
acquire such stock; and excludes preferred stock having no voting rights in the
election of directors other than a normal and customary right to elect a
specified number of directors in the event of a default in the payment of
interest.
The terms "participant," "proxy" and "solicitation" shall be
used as defined in Regulation 14A under the Exchange Act (whether or not the
pertinent securities are subject to Regulation 14A). The terms "beneficial
ownership" and "group" shall be used as defined in Regulation 13D-G under the
Exchange Act. The terms "affiliate" and "associate" shall be used as defined in
Rule 12b-2 under the Exchange Act.
2. Representations and Warranties of the Steel Parties. Each
Steel Party severally and not jointly, represents and warrants to MICA as
follows:
(a) Such Steel Party has the requisite legal power and
authority to execute, deliver and carry out this Settlement Agreement and has
taken all necessary legal action to authorize the execution, delivery and
performance of this Settlement Agreement and the transactions contemplated
hereby.
(b) This Settlement Agreement has been duly and validly
authorized, executed and delivered by such Steel Party and constitutes its valid
and binding obligation, enforceable against such Steel Party in accordance with
its terms.
(c) Neither such Steel Party nor any of its affiliates
beneficially owns, or has any direct, indirect or contingent pecuniary interest
in, any MICA Securities other than as disclosed in the Schedule 13D.
<PAGE>
(d) Neither such Steel Party nor any of its affiliates is a
member of any group with respect to MICA Securities and there are no other
persons who are part of such a group with it or any of its affiliates except (i)
as disclosed in the Schedule 13D, (ii) MICA has alleged in the Action (that the
Steel Parties and certain other persons and entities are part of such a group,
which allegations are denied by the Steel Parties) and (iii) to the extent the
Steel Parties may be a group with Arrowhead.
3. Representations and Warranties of MICA. MICA represents and
warrants to the Steel Parties as follows:
(a) MICA is duly organized and validly existing and in good
standing under the laws of the State of California, has the requisite corporate
power and authority to execute, deliver and carry out this Settlement Agreement
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Settlement Agreement and the transactions
contemplated hereby.
(b) This Settlement Agreement has been duly and validly
authorized, executed and delivered by MICA and constitutes its valid and binding
obligation, enforceable against MICA in accordance with its terms.
(c) Except with respect to the issuance and/or exercise of
stock options pursuant to existing stock option plans and/or outstanding options
and an amendment to the By-laws of MICA in the form attached hereto as Exhibit
E, neither the employment agreement of each of Robert Muehlberg and Denise
Sunseri, the By-laws of the Company, the number or terms of the options or
shares granted to the employees of the Company or the members of the Board, nor
the number of outstanding shares of Common Stock, have in any material way been
amended, altered or increased, as the case may be, since the last public
disclosure of such terms, provisions or number of outstanding options or shares
of Common Stock.
(d) MICA is not, and will not be, required pursuant to its
agreement with the Financial Advisor to utilize the services of the Financial
Advisor after the replacement of the Board pursuant to Section 5(e) and, to pay
any fees to the Financial Advisor with respect to transactions entered into
subsequent to the replacement of the Board pursuant to Section 5(e).
4. Treatment of the Election. The Parties agree that the
February 26, 1996 Special Meeting of Shareholders will be adjourned without
MICA's receiving a final report from the Inspector of Election certifying the
results of voting by shareholders on proposals by
<PAGE>
the Steel Parties to remove the current directors of MICA and replace them with
nominees designated by the Steel Parties and without any further actions at such
meeting.
5. Auction Process and Procedures; Board Transition. (a) Each
of the parties hereto agree that, as soon as practicable after the date hereof,
MICA will announce the initiation of, and initiate, an auction process (the
"Auction Process") for the purpose of engaging in an Auction Transaction with
the goal of obtaining maximum value for the shareholders of MICA, as determined
in good faith by the Board after receiving a customary fairness opinion from the
Financial Advisor. MICA will keep the Steel Parties fully informed as to the
status of the Auction Process and will consider in good faith any suggestions of
the Steel Parties in connection with the Auction Process; provided, however,
that MICA shall not be required to disclose information to the Steel Parties
regarding the Auction Process to the extent, in the reasonable opinion of legal
counsel to the Board, the disclosure of such information to the Steel Parties
would compromise the integrity of the Auction Process. The Steel Parties will be
invited to participate as a bidder in the Auction Process, including as part of
a group with Arrowhead, on the same terms and conditions, including, terms and
conditions relating to due diligence and discussions and contacts with financing
sources, permitted for other bidders, and, except as specified in paragraph (d)
of this Section 5, the Steel Parties shall not, and shall cause their affiliates
and associates not to, interfere with the Auction Process.
(b) MICA agrees, that except with respect to conducting the
Auction Process, the consummation of an Auction Transaction pursuant to the
Auction Process and actions directly in furtherance of the Auction Process and
the consummation of an Auction Transaction, during the Standstill Period, the
business and operations of MICA will be run in the ordinary course of business
consistent with past practice and, without the prior written consent of Steel,
MICA will not:
(i) amend its Articles of Incorporation or By-Laws;
(ii) other than pursuant to the terms of presently
outstanding options, rights, warrants or convertible securities in
accordance with their respective terms and pursuant to any existing
option plans, in accordance with past practice, issue, pledge or sell,
or authorize the issuance, pledge or sale of additional shares of
capital stock or other securities of any class or series, including,
without limitation, securities exchangeable for or convertible into
capital stock of any class or series, or any calls, commitments,
rights, warrants or options to acquire any securities or capital stock;
<PAGE>
(iii) split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, directly and indirectly, any shares of its capital
stock, or any of its other securities or declare and pay any dividends
on its capital stock;
(iv) except as specified in Section 7(b), increase the
compensation or benefits payable or to become payable to its directors,
officers or employees, or pay any benefit not required by any existing
plan or arrangement or grant any severance or termination pay to
(except pursuant to existing agreements or policies), or enter into or
amend any employment, consulting or severance or other agreement with,
any director, officer or other employee of MICA's;
(v) acquire, sell, lease or dispose of any assets
which are material to MICA, or enter into any commitment to do any of
the foregoing or enter into any material commitment or transaction;
(vi) except with respect to the purchase of the
general partnership interest in the Long Beach imaging center, acquire
or agree to acquire by merging or consolidating with, or by purchasing
a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof;
(vii) appoint any new director to the Board, unless
such director agrees to be bound by the terms of this Settlement
Agreement; and
(viii) authorize or agree in writing or otherwise to
take any of the foregoing actions.
(c) Other than an Auction Transaction in the form of a tender
offer for 100% of all outstanding Common Stock, the consummation of any Auction
Transaction will be subject to the Auction Transaction being duly approved by
the shareholders of MICA at a special meeting called for the purpose of
submitting the proposed Auction Transaction to a vote of the shareholders of
MICA (the "Shareholder Vote").
(d) The provisions of Section 6 of this Settlement Agreement,
including, without limitation, Section 6(c), shall be applicable to the
Shareholder Vote; provided, however; that this Agreement shall not limit the
manner in which the Steel Parties may vote with respect to the Shareholder Vote
and if requested by Steel, Steel shall be entitled to include in the proxy
distributed by MICA to its shareholders in connection with the
<PAGE>
Shareholder Vote, a statement of reasonable length specifying its opinion on the
merits of the Auction Transaction;
(e) In the event an Auction Transaction is not consummated on
or prior to the end of the Auction Period, then, in the event that on the last
day of the Auction Period the Steel Parties are the beneficial owner of at least
263,841 shares of Common Stock, (i) subject to the satisfaction of the
requirements under Rule 14f-1 of the Exchange Act, which MICA and the Steel
Parties will use all reasonable efforts to satisfy as soon as practicable, the
Persons who are members of the Board at such time will resign and will cause
such members to be replaced with designees of the Steel Parties (resulting in
the Board being composed solely of designees of the Steel Parties) and (ii) if
requested by the Steel Parties, MICA will promptly call the annual meeting of
shareholders, to be scheduled as soon as practicable but in no case later than
45 days after the end of the Auction Period, for the purpose of electing the
Board of Directors of MICA.
(f) The Steel Parties will support and take all reasonable
efforts in good faith to cooperate with MICA and the Board in connection with
the Auction Process, and the Steel Parties acknowledge their respective intent
to vote in favor of an Auction Transaction, provided such Auction Transaction,
in the sole judgment of the Steel Parties, maximizes shareholder value. In
addition, if during the Auction Period any Steel Party is contacted by any
person concerning the Auction Process, the applicable Steel Party will promptly
inform the Board of such contact and, unless otherwise instructed by the Board,
refer any such person to the Board.
6. Restrictions on Purchase and Sale of MICA Securities and
Certain Other Actions. Each of the Steel Parties agrees that it will not, and it
will cause its respective affiliates not to, except as expressly permitted by
this Settlement Agreement, including, without limitation, as specified in
Section 5 of this Settlement Agreement, without the prior written consent of
MICA, for a period commencing on the date hereof and ending at the close of
business of the last day of the Auction Period:
(a) (i) acquire, offer to acquire, directly or indirectly, by
purchase or otherwise, beneficial ownership of MICA Securities (or any direct or
indirect rights, options or warrants for any MICA Securities) or (ii) encourage
any Person to acquire, or advise any Person with respect to the acquisition or
proposed acquisition of MICA Securities; provided, however; that this clause
(ii) shall not prohibit Jack Howard from acting in his capacity as a broker and
executing transactions initiated by current or future customers with respect to
MICA Securities so long as Jack Howard does not solicit or otherwise advise the
applicable customer with respect to such trade;
<PAGE>
(b) knowingly sell or otherwise convey in a transaction other
than an open market transaction (either singly or collectively) MICA Securities
to a single Person or group which owns more than 5% of the then currently
outstanding MICA Securities or, as a result of such sale will own more than 5%
of MICA's then currently outstanding Securities;
(c) solicit, or encourage any other Person to solicit, or
advise any Person with respect to the solicitation of, proxies or consents with
respect to any MICA Securities, or become a participant or otherwise engage in
any solicitation of proxies or consents (A) with respect to any matter submitted
or to be submitted to the vote of the holders of any MICA Securities at any
annual or special meeting or by written consent, including, without limitation,
with respect to the election of directors of MICA in opposition to the nominees
recommended by the Board or otherwise for the purpose of acquiring control of
the Board or management of MICA, or (B) for the purpose of calling a special
meeting of MICA's shareholders or the holders of any MICA Securities; or advise
or seek to advise any Person with respect to the voting of any MICA Securities;
or submit, or encourage any other Person to submit, or advise or assist any
Person with respect to the submission of, any nominations or proposals to MICA
or to the holders of MICA Securities for consideration by its shareholders or
the holders of any MICA Securities at any annual or special meeting of such
holders or in any action to be taken by written consent pursuant to MICA's
articles of incorporation or bylaws, Rule 14a-8 under the Exchange Act, the
provisions of any document governing the terms of any such MICA Securities or
governing the rights of the holders thereof, or otherwise; engage in any
Solicitation Action; or otherwise take any action to request a special meeting
of the holders of any MICA Securities;
(d) deposit any MICA Securities in a voting trust or subject
them to a voting agreement or other agreement or arrangement of similar effect
or otherwise join or form a partnership, limited partnership, syndicate or other
group (except insofar as a group consisting solely of Steel Parties and
Arrowhead is alleged to exist by MICA at the date hereof) for the purpose of
acquiring, holding, voting or disposing of any MICA Securities;
(e) engage in, or offer, agree or propose to engage in, any
Transaction; or arrange, or in any way participate, directly or indirectly, in
any financing for any Transaction or for the purchase by any person of any MICA
Securities or any assets of MICA;
(f) otherwise act alone or in concert with others to seek
representation on the Board or to acquire control of MICA or any of its
securities or assets;
<PAGE>
(g) request any amendment of any of the terms of this
Settlement Agreement (other than a request to discuss its position with
participants in the Auction Process);
(h) institute, prosecute or pursue against MICA (or any of its
officers, directors, representatives, trustees, employees, attorneys, advisors,
agents, affiliates or associates) (a) any claim with respect to any action
hereafter duly approved by the Board or (b) any claim on behalf of a class of
holders of MICA's Securities;
(i) publicly oppose any duly authorized Board action or
recommendation; and
(j) assist or advise, or enter into any agreement or
arrangement to assist or advise any other person in taking any action referenced
in any of paragraphs (a) through (i) above.
7. Redemption of Rights; Amendments to Certain Severance
Packages.
(a) Effective as of the Effective Date, MICA shall redeem all
outstanding rights issued pursuant to the Rights Agreement dated as of October
2, 1991, between MICA and Harris Trust Company of California, as amended (with
the record date for such redemption on the close of business on the date ten
days after the public announcement of such redemption) and, until the end of the
Standstill Period, shall not adopt a new shareholder rights plan without the
prior written consent of Steel.
(b) MICA shall promptly amend the severance packages of Mr.
Robert S. Muehlberg and Ms. Denise L. Sunseri to provide that the termination of
the Auction Period without the consummation of an Auction Transaction shall
constitute an "involuntary termination" for the purpose of their respective
severance packages.
8. Reimbursement of Expenses. Simultaneously with the
execution of this Settlement Agreement, MICA shall reimburse the Steel Parties,
by wire transfer to an account specified by the Steel Parties in writing to
MICA, for the expenses incurred by the Steel Parties in connection with their
solicitation of proxies for the February 26, 1996 Special Meeting of
Shareholders of MICA, for which invoices have been provided to MICA, up to the
amount of $425,000.
9. Press Release. Upon the effectiveness of this Agreement,
MICA shall issue a press release in the form of Exhibit A hereto. No Party to
this Settlement Agreement
<PAGE>
nor any of their respective affiliates, associates or representatives shall
issue any other press release or other publicly available document concerning
this Settlement Agreement that is inconsistent with, or is otherwise contrary
to, the statements in such press release. None of the Parties shall publicly
make any negative statements regarding any other Party, the Board or the Auction
Process.
10. Mutual Releases. For and in consideration of the
agreements contained herein, the Parties hereto release one another as follows:
(a) Steel Parties. Each of the Steel Parties, on behalf of
itself and of all its affiliates, successors and assigns ("related parties"),
hereby releases, acquits and forever discharges Dr. Burnett, Dr. Ricci, Mr.
Muehlberg, Ms. Sunseri and MICA, together with its present and former
affiliates, officers, directors, employees, agents, advisors, attorneys,
successors and assigns, of and from any and all claims, causes of action
(whether at law or equity), demands, expenses and damages which such Steel Party
or its related parties may have had, or may now have, or may hereafter have
(whether through operation of law, assignment or subrogation), from the
beginning of time to the Effective Date, real or suspected, know or unknown,
actual or contingent, direct or derivative, including, but not limited to, any
such claims, causes of action, demands, expenses and damages relating to or
arising out of the Action or the Rights Plan Action or any of the matters
claimed, asserted or alleged, or that could have been claimed, asserted or
alleged, in the Action or the Rights Plan Action, excepting only any action,
cause of action or suit arising by virtue of the breach of this Settlement
Agreement.
(b) MICA. MICA, on behalf of itself and all of its affiliates,
successors and assigns ("related parties"), hereby releases, acquits and forever
discharges the Steel Parties, together with their respective present and former
affiliates, officers, directors, employees, agents, attorneys, successors and
assigns, of and from any and all claims, causes of action (whether at law or
equity), demands, expenses and damages which MICA may have had, or may now have,
or may hereafter have (whether through operation of law, assignment or
subrogation), from the beginning of time to the Effective Date, real or
suspected, known or unknown, actual or contingent, direct or derivative,
including but not limited to (i) any such claims, causes of action, demands,
expenses and damages relating to or arising out of the Action or the Rights Plan
Action, (ii) any claim that the Steel Parties have, as of the date hereof,
violated, or are in violation of, the federal securities laws based upon any
alleged non- disclosure concerning the Steel Parties' relationship with a
foreign investment fund or alleged relationship with any existing customer(s) of
Jack L. Howard or Cowles Sabol & Co. or (iii) or any of the matters claimed,
asserted or alleged, or that could have been claimed, asserted
<PAGE>
or alleged, in the Action or the Rights Plan Action, excepting only any action,
cause of action or suit arising by virtue of the breach of this Settlement
Agreement.
With respect to each of the releases set forth above, each person or entity
granting or receiving such a release (i) agrees that such releases do not
preclude any Party hereto from seeking to enforce any undertaking or promise
contained in this Settlement Agreement or from seeking redress for the breach of
any representation or warranty contained in this Settlement Agreement; (ii)
agrees not to challenge, and shall use its best efforts to cause each of its
affiliates, associates and representatives not to challenge, the validity of any
provisions of this Settlement Agreement; and (iii) expressly waives all rights
and benefits each may have under and by virtue of the terms of Section 1542 of
the California Civil Code, which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
Except as may be otherwise required by law, the Steel Parties will not encourage
or cooperate with plaintiffs in any derivative, class action or shareholder
litigation related to MICA or its directors with respect to any claim released
hereunder. Except as may be otherwise required by law, MICA will not encourage
or cooperate with plaintiffs in any pending or subsequently initiated
derivative, class action or shareholder litigation related to MICA to which any
of the Steel Parties is a party, with respect to any claims released hereunder.
In the event that any part of this Settlement Agreement is temporarily,
preliminarily or permanently enjoined or restrained by a court of competent
jurisdiction, the Parties hereto shall use their reasonable best efforts to
cause any such injunction or restraining order to be vacated or dissolved or
otherwise declared or determined to be of no further force or effect.
11. Dismissal. Promptly following the execution of this
Settlement Agreement, a stipulation of dismissal of the Action with prejudice as
to all parties to the Action, in the form attached hereto as Exhibit B, and a
stipulation of dismissal of the Rights Plan Action with prejudice as to all
parties to the Rights Plan Action, in the form attached hereto as Exhibit C,
shall be executed and filed with the United States District Court for the
Southern District of California.
<PAGE>
12. Miscellaneous.
(a) No Admission of Liability or Wrongdoing. This Settlement
Agreement and any proceedings taken hereunder are not and shall not in any way
be construed as or deemed to be evidence of (i) any admission or concession on
the part of any Party of the merits or lack of merits of any claim or
counterclaim asserted in the Action or the Rights Plan Action, or (ii) any
admission or concession on the part of any Party of any liability or wrongdoing
whatsoever, which liability and wrongdoing are hereby expressly denied and
disclaimed by each of the Parties.
(b) No Duress, Etc. The Parties agree that this Settlement
Agreement is entered into without duress, in good faith and for sufficient
consideration, and that it is fair, just and reasonable to all Parties.
(c) Full Knowledge, Independent Advice, Etc. This Settlement
Agreement is entered into with full knowledge of any and all rights which the
Parties may have by reason of the pending litigation. All Parties have received
or have had made available to them all financial and other information they or
their counsel considered necessary to make an informed judgment concerning the
Settlement Agreement. Each Party has received independent legal advice, has
conducted such investigation as he or his counsel thought appropriate, and has
consulted with such other independent advisors as each of them and their counsel
deemed appropriate, regarding the Action and the Rights Plan Action, this
Settlement Agreement and their rights and asserted rights in connection
therewith. None of the Parties is relying upon any representations or statements
made by any other Party, or such other Party's employees, agents,
representatives or attorneys, regarding this Settlement Agreement or its
preparation except to the extent such representations are expressly set forth
herein.
(d) Reasonable Efforts. All Parties hereto agree to exercise
all reasonable efforts and to take all reasonable steps necessary to effectuate
the settlement set forth in this Settlement Agreement, including, without
limitation, the provisions herein relating to the adjournment of the February
26, 1996 Special Meeting without any final action to remove the current members
of the Board being taken.
(e) Successors. This Settlement Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective heirs,
successors and assigns, and upon any corporation or other entity into or with
which any Party hereto may merge, combine or consolidate (provided that the
Party is the survivor in such merger, combination or consolidation).
<PAGE>
(f) Governing Law. This Settlement Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of
California, without reference to the conflict of laws principles thereof.
(g) Amendment and Waiver. No waiver or amendment of any other
provision hereof shall be effective as against any Party unless such Party
agrees to such amendment or waiver in writing.
(h) Authority. Each person executing this Settlement Agreement
represents that he or it has read and fully understands this Settlement
Agreement and that he or it has the authority to execute this Settlement
Agreement in his individual capacity or in the capacity identified on the
signature page below.
(i) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
addresses set forth on Exhibit D (or at such other address for a party as shall
be specified in a notice given in accordance with this paragraph). Each such
notice, request, claim, demand or other communication shall be effective (i) if
given by telecopy transmission, when such transmission to the telecopy number
specified in Exhibit D has been made and the appropriate electronic confirmation
that the entire communication has been received by the recipient equipment has
been received by the sender or (ii) if given by any other means, when actually
received at the address specified in this paragraph; provided, in each case,
that a notice given other than during normal business hours or on a day other
than on a business day at the place of receipt shall not be effective until the
opening of business on the next business day at the place of receipt.
(j) Specific Performance. Each of the Parties acknowledges and
agrees that irreparable harm would occur if any provision of this Settlement
Agreement were not performed in accordance with the terms thereof, or were
otherwise breached, and that such harm could not be remedied by an award of
money damages. Accordingly, the Parties hereto agree that any non-breaching
party shall be entitled to an injunction to prevent breaches of this Settlement
Agreement and to enforce specifically the terms and provisions hereof. More
specifically, each of the Parties hereto hereby agrees that any action or
proceeding brought under or to enforce any provision of this Settlement
Agreement shall be commenced exclusively in the United States District Court for
the Southern District of California and each Party hereto hereby consents to the
personal jurisdiction of and venue in such United States District Court.
<PAGE>
(k) Counterparts. This Settlement Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
(l) Effectiveness. This Settlement Agreement shall become
effective on the Effective Date.
(m) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(n) Construction. The headings used herein are for reference
only and shall not affect the construction of this Settlement Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this
Settlement Agreement to be executed as of the date first above written.
Medical Imaging Centers of America, Inc.
By:/s/ Robert S. Muehlberg
-----------------------
Name: Robert S. Muehlberg
Its: Chairman, Chief Executive Officer
and President
Keith R. Burnett, M.D.
/s/ Keith R. Burnett
--------------------
Keith R. Burnett, M.D.
Robert S. Muehlberg
/s/ Robert S. Muehlberg
-----------------------
Robert S. Muehlberg
Denise L. Sunseri
/s/ Denise L. Sunseri
---------------------
Denise L. Sunseri
Robert G. Ricci, D.O.
/s/ Robert G. Ricci
-------------------
Robert G. Ricci, D.O.
<PAGE>
Warren G. Lichtenstein
/s/ Warren G. Lichtenstein
--------------------------
Warren G. Lichtenstein
Lawrence Butler
/s/ Lawrence Butler
-------------------
Lawrence Butler
Jack L. Howard
/s/ Jack L. Howard
------------------
Jack L. Howard
Steel Partners II, L.P.
By:/s/ Warren G. Lichtenstein
---------------------------
Name:
Its:
Steel Partners, L.L.C.
By:/s/ Warren G. Lichtenstein
---------------------------
Name:
Its:
Steel Partners Services, Ltd.
By:/s/ Warren G. Lichtenstein
---------------------------
Name:
Its:
