UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------
FORM 10-KA
Amendment No. 1
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended October 31, 1996 Commission File Number 0-19019
PRIMEDEX HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 13-33326724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1516 Cotner Avenue
Los Angeles, California 90025
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (310) 479-0390
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.01 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
Indicate by check mark if disclosure of delinquent files pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K. ___________
The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant was approximately $10,376,453 on June 6, 1997
based upon the mean between the closing bid and closing ask price for the common
stock in the over-the-counter market on said date.
The number of shares of the registrant's common stock outstanding on June 6,
1997 was 38,657,260 shares (excluding treasury shares).
Documents Incorporated by Reference
NONE
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)Financial Statements - The following financial statements are
filed herewith:
Page No.
Independent Auditors Report........................................ F-1
Consolidated Balance Sheets........................................ F-2...F-3
Consolidated Statements of Operations.............................. F-4...F-5
Consolidated Statements of Stockholders' Equity [Deficit].......... F-6
Consolidated Statements of Cash Flows.............................. F-7...F-9
Notes to Consolidated Financial Statements......................... F-10..F-27
Schedules - The Following financial statement schedules are filed
herewith:
Independent Auditor's Report on Supplemental Schedule.............. S-1
Schedule II - Valuation and Qualifying Accounts.................... S-2...S-4
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or
notes thereto.
(b)Exhibits - The following exhibits are filed herewith or incorporated by
reference herein:
Incorporated by
Exhibit No. Description of Exhibit Reference to
3.1.1 Certificate of Incorporation as amended (A)
3.1.2 November 17, 1992 amendment to the Certificate of Incorporation(A)
3.2 By-laws
4.1 Form of Common Stock Certificate (AA)
4.2 Form of Indenture between Registrant and American Stock Transfer
and Trust Company as Incorporated by Indenture Trustee with respect
to the 10% Series A Convertible Subordinated Debentures due 2003(B)
4.3 Form of 10% Series A Convertible Subordinated Debenture Due 2003
[Included in Exhibit 4.2] (B)
10.1 Agreement and Plan of Reorganization, dated as of April 30, 1992
by and among PHS, CCC Franchising Acquisition Corp. II
["New RadNet"],RadNet Management, Inc., Beverly Hills MRI,
Dr. Berger and Dr. Krane(C)
10.2 Partnership Purchase Agreement, dated as of April 30, 1992 by and
among PHS, New RadNet and Dr. Berger and Dr. Krane (C)
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10.3 Promissory Note dated June 12, 1992 ["Purchaser Note"] issued by
New RadNet in the principal amount of $10,000,000 payable to
Dr. Berger ["Purchaser Note"].
[An identical note payable to Dr. Krane was issued to him.] (c)
10.4 PHS Guarantee, dated as of June 12, 1992, of payment of the
Purchaser Notes (C)
10.5 Stock Pledge Agreement, dated as of June 12, 1992 pursuant to which
PHS as pledgor pledged the outstanding capital stock of New RadNet
to Drs. Berger and Krane to secure its guarantee (C)
10.6 Secured Promissory Note, dated June 12, 1992 ["Sellers' Note"]
issued by Drs. Berger and Krane, jointly in the principal
amount of $6,000,000 payable to New RadNet (C)
10.7 Stock Pledge Agreement dated as of June 12, 1992 pursuant to which
Drs. Berger and Krane as pledgors pledged the 5,000,000 shares of
PHS Common Stock issued to them in the acquisition, to PHS to
secure repayment of the Sellers' Note (C)
10.8 Employment Agreement dated as of June 12, 1992 between New
RadNet and Howard G. Berger. [Dr. Krane executed a substantially
identical employment agreement with New RadNet on said date.] (C)
10.10 Employment Agreement dated as of May 2, 1995 between PHS and Herman
Rosenman [to serve as chief executive officer of New RadNet](D)
10.11 Asset Purchase Agreement dated as of October 1, 1994 between the
Tower Group and RadNet Sub (D)
10.12 Management Agreement dated as of October 1, 1994 between the Tower
Group and RadNet Sub (D)
10.15 Stock Purchase Agreement dated as of November 9, 1993 for the
acquisition of Advantage Health Systems, Inc. ["AHS"] between PHS,
John T. Lincoln and Paul G. Shoffeitt (D)
10.16 Employment Services Agreement dated November 9, 1993 between
AHS and Paul G. Shoffeitt [John T. Lincoln executed a similar
employment services agreement with AHS on the same date] (D)
10.17 Deposit Agreement for stock dividend of CareAd common stock dated
October 31, 1994 and Midlantic bank, N.A., PHS and CareAd (D)
10.18 Separation Agreement dated January 31, 1995 between PHS and
CareAd (D)
10.19 Separation Agreement dated April 20, 1995 between PHS and CareAd(E)
10.20 Stock Purchase Agreement made as of June 2, 1995 among PHS,
CareAd, Howard G. Berger and Robert E. Brennan (E)
10.21 Medical Receivable Purchase and Sale Agreement made as of July 31,
1995 between Bristol A/R and Primedex Corporation [relating to the
sale of the Primedex Corporation portfolio of workers' compensation
receivables] (F)
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10.22 Employment Agreement dated as of September 14, 1995 between
PHS and Steven R. Hirschtick *
10.23 First Amendment dated September 14, 1995 between PHS and Herman
Rosenman [consented to by RadNet], to Employment Agreement dated as
of May 2, 1994 between PHS and Herman Rosenman *
10.24 Incentive Stock Option Agreement dated as of July 21, 1995
between PHS and Steven R. Hirschtick *
10.25 Stock Purchase Agreement dated as of November 14, 1995 among
PHS, RadNet Managed Imaging Services, Inc. ["RMIS"], Future
Diagnostics, Inc. ["FDI"] and the shareholders of FDI relating
to the purchase by RMIS of all of the outstanding stock of FDI *
10.26 Securities Purchase Agreement dated March 22, 1996, between the
Company and Diagnostic Imaging Services, Inc. *
10.27 Stockholders Agreement by and among the Company, Diagnostic
Imaging Services, Inc. and Norman Hames *
10.28 Securities Purchase Agreement dated June 18, 1996 between the
Company and Norman Hames *
- ------------------
(A) Incorporated by reference to exhibit filed with PHS' Registration
Statement on Form S-1 [File No. 33-51870].
(AA) Incorporated by reference to exhibit filed with PHS' Registration
Statement on Form S-3 [File 33- 73150].
(B) Incorporated by reference to exhibit filed with PHS' Registration
Statement on Form S-3 [File No. 33-59888].
(C) Incorporated by reference to exhibit filed in an amendment to Form 8-K
report for June 12, 1992. (D) Incorporated by reference to exhibit filed with
PHS' annual report on Form 10-K for the year ended
October 31, 1994.
(E) Incorporated by reference to exhibit filed with PHS' Form 8-K report for
June 5, 1995. (F) Incorporated by reference to exhibit filed with PHS' Form
8-K report for August 4, 1995.
(*) Filed herewith.
EMPLOYMENT AGREEMENT
EX- 10.22
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 14th day of September, 1995, by and between PRIMEDEX HEALTH SYSTEMS, INC.,
a New York corporation qualified to do business in California ("Employer"), with
its principal place of business at 1516 Cotner Avenue, Los Angeles, California
90025 and STEVEN R. HIRSCHTICK, an individual ("Employee") residing at 6301
Vista del Mar, Playa del Rey, California 90293.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. Employer hereby agrees to employ Employee as General Counsel
and Senior Vice President of Employer. In that capacity, Employee shall perform
such duties as are typical or appropriate in his capacities of employment,
subject to and under the direction of Employer's Board of Directors. In
addition, Employee shall perform such other duties for Employer as Employer may
reasonably request, or as may be necessary or desirable in performing or
carrying out the intention of this Agreement. Employee shall provide such
services for, and consult with and advise, without additional compensation,
corporations affiliated with Employer as Employer may from time-to-time
reasonably specify. Notwithstanding the foregoing, Employer may not require
Employee to relocate outside of Los Angeles County without Employee's prior
written consent, given in his sole discretion.
2. Employment Term. The term of this Agreement shall begin November 1, 1995
and end October 31, 2000 unless earlier terminated in accordance with Section 10
hereof (the "Employment Term").
3. Extent of Service. Employee shall use his best efforts to fulfill his
duties in the course of his employment and to further the business of Employer
while devoting his full professional time, attention and energy during regular
business hours to the business and affairs, and to prompting the interests and
welfare, of Employer and its affiliates (any person or entity now or hereafter
controlling, controlled by, or under common control with Employer being herein
referred to as an "affiliate"). Employee shall be subject to the direction aid
control of the Board of Directors of Employer. Employee shall not work for any
other business or enterprise during the Employment Term if such other work would
materially impair Employee's duties hereunder.
4. Compensation.
a. Base Salary. For the services rendered by Employee hereunder,
Employer shall pay Employee a base salary at the annual rate of Two Hundred
Seventy-Five Thousand Dollars ($275,000) less withholding required by law or
agreed to by Employer and Employee. Such rate shall be reviewed annually.
Employee understands and agrees that Employer is under no obligation to increase
Employee's annual base salary as a result of such review. Such salary shall be
payable in installments at such times as Employer customarily pays its other
employees holding comparable positions (but in any event not less often than
monthly). The annual amount payable to Employee pursuant to the provisions of
this Section 4(a) shall sometimes hereinafter be referred to as "Base Salary."
b. Bonus. Employee shall participate in any bonus plan or bonus pool
applicable to senior management of Employer and/or Employer's affiliates, and/or
may receive an individual bonus outside of any such plan in the sole discretion
of Employer's Chief Executive Officer, as authorized by the Employer's Board of
Directors.
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c. Fringe Benefits. In addition to the other benefits provided for
hereunder, Employee shall be entitled to the following benefits, such benefits
to be provided by Employer:
i. Four (4) weeks of paid vacation each year (prorated for any
portion thereof).
ii. Sick time, employee benefit plan participation and
hospitalization, medical and dental insurance coverage under such health plans
as may be maintained by Employer from time to time, if any, all in accordance
with Employer's standard policies and practice; provided, however, that
hospitalization, medical and dental coverage shall be funded by Employer on the
same basis as Employer funds health insurance coverage of other senior executive
employees of the Company; and
iii.Such other usual and customary fringe benefits as may be
allowed to similarly situated senior executive employees of Employer, including
but not limited to life insurance and use of a company car.
d. Stock Options. Employee has been granted options to purchase up to
400,000 shares of Common Stock, $.01 par value per share, of Employer, which
options shall be granted to Employee in accordance with the terms of a Stock
Option Agreement executed concurrently herewith and which options shall be
exercisable in accordance with the terms and conditions of that agreement.
e. Prior Stock Options. Under two Stock Option Agreements both dated as
of October 15, 1993, Employee had options to purchase 800,000 shares of
Employer's common stock. Said two Stock Option Agreements dated as of October
15, 1993 are hereby terminated.
f. Effect of Termination.
i. Upon Employee's voluntary termination or termination under
Section 10 (except pursuant to Section 10(d)) hereof, Employee's rights under
Section 4(a) shall immediately cease. This provision shall not apply to salary
or payments or benefits accrued prior to such termination.
ii. Upon Employee's voluntary termination or termination under
Section 10 (except pursuant, to Section 10(d)) hereof, Employee's right to any
and all fringe benefits described in Section 4(c) shall immediately cease. This
provision shall not apply to any accrued and vested vacation pay.
Notwithstanding the foregoing, Employer will fulfill all of its obligations
under law with respect to the continuation of health benefits.
5. Business Expenses. Employer will reimburse Employee for all ordinary and
reasonable out-of-pocket business expenses incurred by Employee in continuation
with his performance of services hereunder the Employment Term in accordance
with Employer's expenses approval procedures then in effect.
6. Inventions, Designs and Product Developments. All inventions,
innovations, designs, processes, programs, techniques, assemblies of
information, ideas and product developments developed or conceived by employee,
solely or jointly with others, whether or not patentable or copyrightable, at
any time during the Employment Term and that relate to the actual or planned
business activities of Employer or its affiliates or to similar business
activities (collectively, the "Developments") and all of Employee's right, title
and interest therein, shall be the exclusive property of Employer. Employee
hereby assigns, transfers and conveys to Employer all of his right, title and
interest in and to any and all such Developments. Employee shall disclose fully,
as soon as practicable and in writing, all Developments to the Board of
Directors of Employer. Employee agrees to preserve as confidential full
particulars of any matters referred to herein, and to maintain at all times
adequate current written records of all such matters which records shall be and
shall remain the property of Employer. At any time and from time to time, upon
the request of Employer, Employee shall execute and deliver to Employer any and
all instruments,
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documents and papers, give evidence and do any and all other acts that, in the
opinion of counsel for Employer, are or may be necessary or desirable to
document such transfer or to enable Employer to file and prosecute applications
for and to acquire, maintain and enforce any and all patents, trademark
registrations or copyrights under United Sates or foreign law with respect to
any Developments or to obtain any extension, validations, reissue, continuance
or renewal of any such patent, trademark or copyright. Employer will be
responsible for the preparation of any such instruments, documents and papers
and for the prosecution of any such proceedings and will reimburse Employee for
all reasonable expenses incurred by him in compliance with the provisions of
this Section 6. By his signature hereon, Employee acknowledges that he has been
notified and understands that this provision, shall not apply to any of the
foregoing for which no equipment, supplies, facility or trade secret information
of Employer was used and which was developed entirely on Employee's own time,
and (a) which does not relate to the business of Employer or to Employer's
actual or demonstrably anticipated research or development, or (b) which does
not result from any work performed by Employee or Employer.
7. Confidential Information. Employee acknowledges that, by reason of his
employment by and service to Employer, he will have access to confidential
information of Employer (and it affiliates) including, without limitation,
information and knowledge pertaining to products, present and future
developments, techniques, programs, trade secrets, services marketing
strategies, processes, patents, copyrights, trademarks, policies, contracts,
personnel information, improvements, methods of operation, sales and profits
figures, customer and client lists, relationships between Employer and those
persons, entities and affiliates with which Employer has contracted and others
who have business dealings with it and other confidential property and
information of Employer and its customers (collectively, the "Confidential
Information"). Employee acknowledges that the Confidential Information is a
valuable and unique asset of Employer and covenants that, both during and after
the Employment Term, he will not disclose any Confidential Information to any
person, firm or corporation (except as his duties as an employee of Employer may
require) without the prior written authorization of the Board of Directors of
Employer and that all such matters and properties shall be and shall remain the
property of Employer and/or its customers. The obligation of confidentiality
imposed by his Section 7 shall not apply to information that appears and in
issued patents that is required by governmental authorities to be disclosed or
that otherwise becomes generally known in the industry through no act of
Employee in breach of this Agreement.
8. Noncompetition.
a. Covenant of Employee. Employee acknowledges that he has specialized
knowledge and experience in Employer's business, that his reputation and
contracts within the industry are considered of great value to Employer and that
if his knowledge, experience, reputation or contacts are used to compete
accordingly agrees that for a period of one (1) year following the termination
of Employee's employment hereunder, Employee shall not (except as his duties as
an employee of Employer may require), without the prior written consent of the
Board of Directors of Employer, directly or indirectly:
i. Contract or solicit for the purpose of engaging in the business
of the same general character as then engaged in by Employer, or divulge to any
person, firm or corporation the name, address or requirements of, or perform
services of the same general character as those performed by Employer for, any
person, firm, corporation or other entity who is or at any time during the two
(2) years preceding the date of this Agreement had been, a customer of Employer;
ii. Solicit for employment any of the employees, agents or
representatives of Employer;
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iii.Own, manage, operate, finance, join, control or participate in
the ownership, management, operation, financing or control of, or be connected
as an officer, director, employee, partner, principal, agent, representative,
consultant or otherwise with any business or enterprise, whether in corporate,
proprietorship or partnership form or otherwise, engaged in the business of the
same character as that then engaged in by the Employer in those cities or
counties of the State of California (the "Prohibited Territory"), including the
carrying on of a business which may be located elsewhere but which involves
sales or any activity within the Prohibited Territory; or
iv. Use his name or permit his name to be used in connection with
any business or enterprises engaged in the business of the same character as
that then engaged in the business of the same character as that then engaged in
by Employer in the Prohibited Territory, including the carrying on of a business
which may be located elsewhere but which involves sales or any activity within
the stipulated city or county.
b. Exception. The provisions of this Section 8 shall not be construed
to prohibit the ownership by Employee of not more than 5% of any class of
securities of any corporation that has a class of securities registered pursuant
to the Securities and Exchange Act of 1934.
c. Practice of Law Exception. After termination of employment,
notwithstanding anything contained in this Agreement to the contrary, Employee
shall be entitled to engage in the unrestricted private practice of law either
in association with a law firm or as a sole practitioner.
d. Reformation. If the provisions of this Section 8 should ever be
adjudicated to exceed the time, geographic, service or product limitations
permitted by applicable law in any jurisdiction, then such provision shall be
deemed reformed in such jurisdiction to the maximum time, geographic, service or
product limitations permitted by applicable law.
e. Notice to Others. Employee agrees that until the expiration of the
covenants contained in this Section 8, he will provide, and that Employer may
similarly provide a copy of such covenants to any business or enterprise:
i. That he may directly or indirectly own, manage, operate,
finance, join, control or participate in the ownership, management, operation,
financing or control of; or
ii. With which he may be connected as an officer, director
employee, partner, principal, agent, representative, consultant or otherwise, or
in connection with which he may use his name or permit his name to be used.
9. Equitable Relief. Employee acknowledges that the restrictions contained
in Sections 6, 7 and 8 are, in view of the nature of the business of Employer,
reasonable and necessary to protect the legitimate interests of Employer, that
Employer would not have entered into this agreement in the absence of such
restrictions, and that any violation of any provisions of those Sections will
result in irreparable injury to Employer. Employee also acknowledges that the
remedy at law for any violation of these restrictions will be inadequate and
that Employer shall be entitled to temporary and permanent injunctive relief,
without the necessity of proving actual damages or the posting of a bond, and
that Employer shall be further entitled to an equitable accounting of all
earnings, profit; and other benefits arising from any such violation, which
rights shall be cumulative of and in addition to any other rights or remedies to
which Employer may be entitled. In the event of any such violation, Employer
shall be entitled to commence an action for temporary and-permanent injunctive
relief and other equitable relief in any court of Competent jurisdiction and
Employee further irrevocably submits to the jurisdiction of any court in the
jurisdiction of the United States District Court for the Central District of
California over any suit, action or proceeding arising out of or relating to
this Agreement. Employee hereby waives, to the fullest extent permitted by law,
any objection that he may now or hereafter have to such jurisdiction or to the
venue of any such suit, action or proceeding brought in such a court and any
claim that such suit, action or proceeding has been brought in an inconvenient
forum. Effective service of process may be made upon Employee by mail under the
notice provisions contained in Section 13.
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10. Termination.
a. Death. If Employee dies during the Employment Term, this Agreement
shall terminate and thereafter Employer shall have no liability or obligation to
Employee, his heirs, personal representatives, assigns or any other person
claiming under or through him except for unpaid salary and benefits accrued to
the date of his death.
b. Employer's Cause. Upon the occurrence of any of the following
events, this Agreement may be terminated for cause by Employer giving written
notice of termination to Employee, such termination to be effective upon the
date specified in such notice:
i. Employee's conviction of, or plea of nolo contendere or its
equivalent with respect to, a felony involving fraud or dishonesty or any other
crime for which a term of imprisonment in excess of one (1) year could be
imposed; or
ii. Employee's material breach of any of the terms or conditions
of this Agreement which is not cured within ninety (90) days after receipt of
written notice from Employer to Employee.
c. Voluntary Termination and Severance Pay. Either party to this
Agreement may terminate this agreement at any time for any reason by giving the
other party at least thirty (30) days prior written notice of the effective date
of termination. In the event of such termination of this Agreement by either
Employer or Employee, Employer shall pay to Employee, in addition to any and all
other compensation due under this Agreement, an additional Two Hundred Thousand
Dollars ($200, 000). This amount shall be paid as a lump sum no later than the
effective date of any such termination.
d. Employee's Cause. This Agreement may be terminated for "cause" by
Employee upon giving written notice of termination to Employer, such termination
to be effective upon the date specified in such notice. For the purposes of this
Section 10(d), "cause" shall mean Employer's material breach of any of the terms
or conditions of this Agreement and the failure to cure such breach within
thirty (30) days after written notice from Employee to Employer. The severance
pay of Two Hundred Thousand Dollars ($200,000) (as set forth in 10(c) above)
plus an additional six (6) months Base Salary shall be paid to Employee on or
before the effective date of termination under this subparagraph 10(d).
e. Attorney-Client Privileges. Employer recognizes that Employee has
for some time prior to this Agreement been actively engaged in the private
practice of law for numerous clients in the same industry and many of the same
markets as Employer. Employer also recognizes and accepts that there is an
attorney-client privilege of the utmost confidentiality that is required with
respect to any confidential information that Employee had Previously received in
his capacity as an attorney. Nothing in this Agreement shall be construed to
require Employee to divulge any such information or utilize any such information
for the benefit of Employer. Employee's refusal to divulge and/or utilize any
such information shall not constitute any breach of this Agreement.
11. Survival. Notwithstanding the termination of this Agreement pursuant to
Section 10 or the expiration of the Employment Term, the obligations of Employee
under Sections 6, 7 and 8 shall survive and remain in full force and effect and
Employer shall be entitled to equitable relief against Employee pursuant to the
provisions of Section 9.
12. Indemnification. Employer shall indemnify and hold Employee harmless
from any and all expenses, including judgments, awards, and/or legal fees (with
an attorney of employee's choice) relating to any litigation or other legal
proceedings in which Employee is named as a party, provided that Employee is
named as a party in such litigation or other legal proceeding because of some
alleged act or activity alleged to have been conducted by Employee in any
capacity in which he is connected with Employer.
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13. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when delivered by hand, sent by
recognized overnight delivery services such as Federal Express, or mailed by
registered or certified mail, return receipt requested, and shall be deemed to
be effective on the date delivered by hand, sent by recognized overnight
delivery service such as Federal Express, or mailed, as follows (provided that
notice of change of address shall be deemed given only when received): If to
Employer, at Employer's address provided on the first page of this Agreement. If
to Employee, at Employee's address provided on the first page of this Agreement;
and to such other names or addresses as Employer or Employee, as the case may
be, shall designate by notice to the other party in the manner specified in this
Section.
14. Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the substantive laws of the State of California
without reference to the principles governing the conflicts of laws applicable
in that or any other jurisdiction.
15. Contents of Agreement: Amendment and Assignment. This Agreement sets
forth the entire understanding between the parties hereto with respect to the
subject matter hereof and cannot be changed, modified or terminated except upon
written amendment or supplement duly executed by the parties hereto. All of the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective heirs, personal representatives,
successors and assigns of the parties hereto, except that (a) the duties and
responsibilities of Employee hereunder are of a personal nature and shall not be
assignable in whole or in part by Employee and (b) the rights and interests of
Employee hereunder shall not be assignable in whole or in part by Employee.
16. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement that can be given
effect without the invalid or unenforceable provisions or application and shall
not invalidate or render unenforceable such provision in any other jurisdiction
or under any other circumstance.
17. Remedies Cumulative; No Waiver. No remedy conferred upon Employer by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by Employer in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by Employer from time to time and
as often as may be deemed expedient or necessary by Employer in its sole
discretion.
18. Arbitration. Except as provided in Section 9 hereof, any dispute or
controversy arising from or relating to this Agreement shall be decided by
arbitration in the County of Los Angeles, State of California, in accordance
with the commercial rules and regulations of the American Arbitration
Association and in accordance with the discovery procedures set forth in the
California Discovery Act. Such decision shall be final and binding upon the
parties. At the request of either Employer or Employee, arbitration proceedings
shall be conducted in the utmost secrecy, and, in such case, all documents,
testimony and records shall be received, heard and maintained by the arbitrator
in secrecy, available for inspection only by Employer or Employee and their
respective attorneys and experts who shall agree, in advance and in writing, to
receive all such information confidentially and to maintain the secrecy of such
information shall become generally known.
19. Attorneys' Fees. The prevailing party shall be entitled to recover its
reasonable attorneys' fees and, costs incurred in connection with any action or
proceeding under this Agreement.
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IN WITNESS WHEREOF, the undersigned have each duly executed this Agreement
as of the date first above written.
EMPLOYER:
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Herm Rosenman
Herm Rosenman
Its President and CEO
EMPLOYEE:
STEVEN R. HIRSCHTICK
/s/ Steven R. Hirschtick
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
EX- 10.23
THIS AMENDMENT is made on this 14th day of September, 1995, by and between
PRIMEDEX HEALTH SYSTEMS, INC., a New York corporation qualified to do business
in California ("Corporation"), and HERM ROSENMAN ("Employee"), and is consented
to by RADNET MANAGEMENT, INC. ("RADNET").
R E C I T A L S
WHEREAS, Corporation and Employee entered into an Employment Agreement
("AGREEMENT") as of May 2, 1994;
WHEREAS, RADNET and Employee entered into an Assumption Agreement as of
September 13, 1994, under which RADNET agreed to jointly assume with Corporation
all of Corporation's obligations to Employee under the AGREEMENT; and
All parties now wish to amend the AGREEMENT in certain respects as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, the parties agree as follows.
1. Section 2 of the AGREEMENT is hereby deleted, and the following shall be
inserted in its stead:
"The Term of Employee's employment under this Agreement (the "Term")
shall commence on May 2, 1994 and shall terminate on October 31, 2000,
unless sooner terminated pursuant to Section 8 of this Agreement."
2. Section 3 of the AGREEMENT is hereby deleted, and the following is
inserted in its stead:
"During the Term, as full compensation for all services to be rendered
pursuant to this Agreement, the Corporation agrees to pay Employee a
salary at the annual rate of Two Hundred Seventy-Five Thousand Dollars
($275,000) payable in equal monthly or more frequent installments, less
such deductions or amounts to be withheld as shall be required by
applicable laws and regulations. Such compensation shall be reviewed
annually. Employee understands and agrees that neither RadNet nor the
corporation is under any obligation to increase Employee's compensation
as a result of such review nor may Employee's compensation be reduced.
An annual bonus may be paid by the Corporation or RadNet to the
Employee based upon the performance of the Corporation and/or RadNet as
the Board of Directors shall from time-to-time determine, or in
accordance with a Senior Management Bonus Plan or Pool approved by the
Board of Directors."
3. Section 8.4 of the AGREEMENT is hereby deleted, and the following is
inserted in its stead:
"8.4 Termination for Cause. Upon the occurrence of any of the following
event, this Agreement may be terminated for cause by Corporation giving
written notice of termination to Employee, such termination to be
effective upon the date specified in such notice:
i. Employee's conviction of, or plea of nolo contendere or its
equivalent with respect to, a felony involving fraud or dishonesty or
any other crime for which a term of imprisonment in excess of one (1)
year could be imposed; or
ii. Employee's material breach of any of the terms or conditions
of this agreement which is not cured within ninety (90) days after
receipt of written notice from Corporation to Employee."
<PAGE>
4. Section 4 of the AGREEMENT is hereby amended by deleting the second
sentence thereof.
5. The parties to this Amendment hereby confirm each and every other (e.g.,
those not amended by this Amendment) term and condition of the AGREEMENT.
6. RadNet hereby confirms the Assumption Agreement.
7. The amendments set forth herein shall be effective upon this Amendment
being signed by all parties hereto.
Attest: PRIMEDEX HEALTH SYSTEMS, INC.
("Corporation")
/s/ Howard G. Berger, M.D. By: /s/ Herm Rosenman
Howard G. Berger, M.D., Herm Rosenman,
Its Secretary Its President and CEO
Dated: 9/29/95
RADNET MANAGEMENT, INC. HERM ROSENMAN
("Employee")
By: /s/ Steven R. Hirschtick
Steven R. Hirschtick, /s/ Herm Rosenman
Its Senior Vice President
Dated: 9/29/95
Dated: 9/29/95
INCENTIVE STOCK OPTION AGREEMENT, made as of the 21st day of July, 1995
between Primedex Health Systems, Inc. (the "Company") and Steven R. Hirschtick,
an employee of the Company (the "Optionee").
NOW, THEREFORE, the Company and the Optionee by his acceptance of the grant
of this Incentive Stock option ("ISO") agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee as a separate inducement and
agreement in connection with his employment by the Company and not in lieu of
any salary or other remuneration for services, an ISO to purchase on the terms
and conditions hereinafter set forth and subject to the provisions of the
Company's Incentive Stock Option Plan (the "Plan"), the provisions and
definitions of which are hereby incorporated by reference herein, all or any
part of an aggregate of 400,000 shares of Common Stock of the Company (either
unissued or treasury), $.01 par value (the "Shares" or the "Common Stock").
2. Term of Option.
The ISO granted hereunder shall, notwithstanding anything to the contrary
contained herein or in the Plan, expire no later than July 21, 2000 (the
"Termination Date").
3. Termination of Employment.
Upon termination of employment of the Optionee with the Company and all
subsidiary corporations and parent corporations, any ISO previously granted to
the Optionee shall, to the extent not theretofore exercised, terminate and
become null and void, except that:
(a) if the Optionee shall die, or become totally and permanently disabled
(as described in Section 105(d)(4) of the Internal Revenue Code of 1986, as
amended from time to time-the "Code"), while in the employ of the Company or any
such corporation at a time when the Optionee was entitled to exercise the ISO as
herein provided, in case of death the legal representative of the Optionee, or
such person who acquired the ISO by bequest or inheritance or by reason of death
of the Optionee, or in the case of total and permanent disability the Optionee,
may, not later than one (1) year from the date of death or total and permanent
disability, exercise the ISO in respect of any or all of the total number of
shares of Common Stock as shall have been subject to the ISO and as shall not
have been previously purchased by the Optionee; and
(b) if the employment of the Optionee to whom such ISO shall have been
granted shall terminate by reason of the Optionee's retirement (at such age or
upon such conditions as shall be specified by the Committee or by the Board of
Directors) or dismissal by the Company other than for cause (as defined below),
and while the Optionee is entitled to exercise the ISO as herein provided, the
Optionee shall have the right to exercise the ISO granted hereunder, to the
extent of the number of shares of Common Stock subject to the ISO which were
purchasable by him at the date of termination of his employment, at any time up
to and including three (3) months after the date of such termination of
employment.
If the Optionee voluntarily terminates his employment, or is discharged for
cause, the ISO granted hereunder shall forthwith terminate with respect to any
unexercised portion thereof.
If the ISO granted hereunder shall be exercised by the legal representative
of a deceased optionee or former Optionee, or by a person who acquired the ISO
granted hereunder by bequest or inheritance or by reason of the death of the
Optionee, written notice of such exercise shall be accompanied by a certified
copy of letters testamentary or equivalent proof of the right of such legal
representative or other person to exercise the ISO.
<PAGE>
For the purpose of this Agreement, "for cause" shall mean, as determined by
the Committee or the Board of Directors; (a) Optionee's conviction of, or a plea
of nolo contendere or its equivalent with respect to, a felony involving fraud
or dishonesty or any other crime for which a term of imprisonment in excess of
one (1) year could be imposed; or (b) Optionee's material breach of any of the
terms or conditions of an Employment Agreement in effect between the Optionee
and the Company or a subsidiary corporation or parent corporation of the Company
which material breach is not cured within ninety (90) days after receipt of
written notice from such employee corporation to the Optionee.
For the purpose of this Agreement, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on a leave of absence taken
with the consent of the corporation by which such individual was employed, or is
on active military service, and is determined to be an "employee" for purposes
of the exercise of the ISO, the Optionee shall not be entitled to exercise the
ISO during such period and while the employment relationship is treated as
continuing intact unless the Optionee shall have obtained the prior written
consent of such corporation, which consent shall be signed by the Chairman of
the Board, the President, a senior vice-president or other duly authorized
officer of such corporation.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of the Optionee from employment by the Company to employment by a
subsidiary corporation or a parent corporation of the Company or (ii) the
transfer of the Optionee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.
4. Term of ISO; Limitations on the Right of Exercise.
The Optionee may exercise the ISO in full for the aggregate number of
shares of Common Stock subject to the ISO, but only after he has been an
employee of the Company including any subsidiary corporation and parent
corporation of the Company (during the time such entity was a subsidiary or
parent of the Company) for a period of at least one (1) year (the "minimum
employment").
The ISO granted hereunder shall be exercisable during a period of five (5)
years from the date of grant of the ISO.
To the extent that the ISO is not exercised within the period of
exercisability specified above, it shall expire as to the then unexercised part.
If the ISO granted hereunder shall terminate prior to the Termination Date, the
Committee or the Board of Directors shall have the right to use the Common Stock
as to which such ISO shall not have been exercised to grant one or more
additional ISO's to any eligible employee under the Plan.
In no event shall the ISO granted hereunder be exercised for a fraction of
a share.
5. Nontransferability.
The ISO granted hereunder shall not be transferable otherwise than by will
or the laws of descent and distribution, arid shall be exercisable, during the
lifetime of the holder, only by such holder, or, if the holder is incompetent,
then by a committee of his person and property or by his other legal
representative who has been judicially appointed as such.
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<PAGE>
6. Purchase Price and Payment.
(a) The price for each share of Common Stock purchasable under the ISO
granted hereunder shall be $.125.
The Company shall cause stock certificates representing tie shares of
Common Stock purchased under the ISO granted hereby to be issued only when it
shall have received the full purchase price for the Common Stock in cash, by
certified check or bank draft.
Upon the exercise of the ISO granted hereunder and upon payment of the
purchase price therefor, a certificate or certificates for the shares of Common
Stock as to which the ISO has been exercised shall be issued by the Company in
the name of the person exercising the ISO and shall be delivered to or upon the
order of such person or persons.
The Company may endorse such legend or legends upon the certificates of
shares of Common Stock issued upon exercise of the ISO granted hereunder, and
the Committee or the Board of Directors may issue such "stop transfer"
instructions to its transfer agent in respect of such shares of Common Stock, as
the Committee or the Board of Directors, in its discretion, determines to be
necessary or appropriate (i) to prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, or (ii) to
implement the provisions of any agreement between the Company and the Optionee
with respect to such shares of Common Stock.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of the shares of Common Stock, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses which may be necessitated by the filing or
amending of a Registration Statement under the Securities Act of 1933, which
fees and expenses shall be borne by the recipient of the shares of Common Stock
unless such Registration Statement has been filed by the Company for its own
corporate purposes (and the Company so states) in which event the recipient of
the shares of Common Stock shall bear only such fees and expenses as are
attributable solely to the inclusion of such shares of Common Stock in the
Registration Statement.
Anything to the contrary herein contained notwithstanding, the Company
agrees on an annual basis commencing at such time as its audited financial
statements are available for the fiscal year ending October 31, 1995, at its
sole expense, to file a Registration Statement on Form S-8 under the Securities
Act of 1933 with the Securities and Exchange Commission and to file any
necessary amendments thereto through July 21, 2000 and while this ISO is
outstanding in whole or in part or any of the shares of Common Stock purchased
upon exercise thereof are beneficially owned by the Optionee and may not
otherwise be sold publicly (including sales pursuant to Rule 144), and to use
its best efforts to obtain effectiveness thereof so as to permit public offer
and sale of the shares of Common Stock underlying this ISO.
All shares of Common Stock issued as provided herein shall be fully paid
and non-assessable to the extent permitted by law.
(b) Anti-Dilution. The ISO granted pursuant to this agreement shall
continue notwithstanding any change or exchange of the shares of Common Stock
into or for a different number and/or kind of common shares of the Company or of
a corporation or other entity which succeeds to the business of the Company or
becomes its parent or subsidiary, whether or not such change or exchange results
from a recapitalization, stock split, split-up, split-off, combination of
shares, exchange of shares, issuance of rights to subscribe, change in capital
structure, reorganization, corporate merger, consolidation or separation, stock
dividends or liquidation, provided however, that the ISO, if still outstanding,
shall terminate if and when the business conducted by the Company (or any
successor to the Company) is substantially terminated or dissolved upon its
liquidation. In the event of such a change or exchange, an
3
<PAGE>
appropriate adjustment shall be made in the number and/or kind of shares subject
to option and/or in their per-share option price, and that in the event of a
transaction to which Section 424(a) of the Internal Revenue Code (or successor
provision of law) is applicable, the foregoing shall be accomplished thereunder
by assumption of the ISO or by the substitution of another incentive stock
option. In no case shall the making of any change, exchange, substitution or
assumption or related adjustment give the Optionee additional benefits which he
did not have under the old option, and the excess of the aggregate fair market
value of the shares subject to the Option immediately after any such change,
exchange, substitution and/or adjustment shall not be greater than such excess
of the fair market value of the Common Stock subject to the ISO immediately
before. Adjustment of the number of shares subject to the ISO shall not make the
ISO become exercisable as to a fractional share. Subject to the foregoing
limitations, the terms of any such adjustment shall be determined by the
Committee or the Board of Directors and such determination made in good faith
shall be final, provided that if pursuant to said Section 424(a) another
corporation or other successor assumes the ISO or substitutes another option,
its determination of the terms made in good faith shall be final.
7. Method of-Exercise.
The ISO shall be exercisable only by delivery of written notice to the
Secretary of the Company at the Company's offices in Los Angeles, California,
prior to the expiration of the ISO as specified in paragraphs 2 and 3 hereof.
Such notice shall state the election to exercise the ISO, and the number of
Shares in respect of which it is being exercised, and shall be signed by the
person or persons so exercising such ISO. The date the Company receives written
notice shall be the exercise date. In the event the ISO shall be exercised
pursuant to the provisions of paragraph 3 hereof by a person or persons other
than the Optionee, such notice shall be accompanied by proof satisfactory to the
Company of the right of such person or persons to exercise the ISO. The Company
shall issue and deliver, upon receipt of notice and payment in full of the
purchase price for the Shares as to which the ISO is being exercised, a
certificate or certificates representing such number of shares to which the
Optionee is entitled to receive under the Plan.
8. Miscellaneous.
(a) The Optionee shall not sell, assign, transfer, pledge, encumber or
otherwise dispose of this ISO. This ISO shall only be transferable pursuant to
the laws of descent and distribution and therefore may only be exercised by the
Optionee, or in the event of his death, by his executor, administrator, personal
representative, heirs or legatees.
(b) Any notice given pursuant to this Agreement by the Company or by the
Optionee shall be in writing and shall be deemed to have been duly given if
delivered by hand or by telecopy, or mailed by certified or registered mail,
return receipt requested:
If to the Company
Primedex Health Systems, Inc.
1516 Cotner Avenue
Los Angeles, California 90025
Attention: President
If to the Optionee
Steven R. Hirschtick
6301 Vista del Mar
Playa del Rey, California 90293
or to such other address as either party shall designate by written notice,
similarly given, to the other party.
4
<PAGE>
(c) Subject to the restrictions on transfer included herein, all the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Optionee shall bind and inure to the benefit of their respective
successors and assigns hereunder.
(d) The Company will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its property to, any other
corporation unless the successor, transferee or lessee corporation, as the case
may be (if not the Company), shall expressly assume the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
(e) All statements contained in any schedule, exhibit, certificate or other
instrument delivered by or on behalf of the parties hereto, or in connection
with the transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive, except that, if a party hereto has or, with the exercise
of due care would have, actual knowledge at the date hereof of facts which would
constitute a breach of the representations and warranties contained herein, such
breaches shall be deemed waived by such party if such party consummates the
transactions contemplated by this Agreement.
(f) This Agreement shall be deemed to be a contract made under the laws of
the State of New York and for all purposes shall be construed in accordance with
the internal laws of said State.
(g) Nothing contained in this Agreement shall be construed to give to any
person or corporation other than the Company and the Optionee any legal or
equitable right, remedy or claim under this Agreement, and this Agreement shall
be for the sole and exclusive benefit of the Company and the Optionee.
(h) Each of the parties acknowledges and agrees that in the event of any
breach of this Agreement by it, the other party would be irreparably harmed and
could not be made whole by monetary damages. Each party accordingly agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate and that the other party, in addition to any other remedy to
which it may be entitled at law or in equity, shall be entitled to compel
specific performance of this Agreement in any action instituted in the United
States District Court for the Central District of California, or, in the event
said Court would not have jurisdiction for such action, in any court of the
United States or any state thereof having subject matter jurisdiction for such
action. Each party consents to personal jurisdiction in any such action brought
in the United States District Court for the Central District of California to
service of process upon it in the manner set forth in Section 8(b) hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Howard Berger, M.D.
Howard Berger, M.D.,
Chief Financial Officer
/s/ Steven R. Hirschtick
Steven R. Hirschtick ("Optionee")
STOCK PURCHASE AGREEMENT
relating to the stock of
FUTURE DIAGNOSTICS, INC.
Among
RADNET MANAGED IMAGING SERVICES, INC.,
PRIMEDEX HEALTH SYSTEMS, INC.
and
The shareholders of Future Diagnostics, Inc.
November 14, 1995
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase and Sale of Shares............................................1
2. Purchase Price and Payment.............................................1
3. The Closing, the Closing Date and the Effective Date...................4
4. Representations and Warranties by Sellers..............................4
5. Representations and Warranties by Buyer...............................17
6. Pre-Closing Covenants.................................................19
7. Conditions Precedent to Obligations of Buyer..........................22
8. Conditions Precedent to Obligations of Sellers........................25
9. Indemnification...................................................... 26
10. Post-Closing Covenants................................................29
11. Termination...........................................................33
12. Confidentiality.......................................................33
13. Publicity.............................................................33
14. Notices...............................................................34
15. Governing Law; Interpretation; Section Headings.......................35
16. General...............................................................35
17. Further Assurances....................................................36
18. Counterparts..........................................................36
19. Attorneys' Fees.......................................................36
20. Interpretation of Agreement...........................................36
EXHIBITS
Exhibit A-1 License Agreement (FDR to FDI) Exhibit A-2 License Agreement (FDI to
FDR)
Exhibit B Matters to be Covered by Legal Opinion of Sellers' Counsel
Exhibit C Newco Shareholders Agreement
Exhibit D Employment Agreement
Exhibit E California Counties and Other States Where the Corporation is
Doing Business
Exhibit F Guaranty and Security Agreement
Exhibit G Assignment
SCHEDULES
Schedule 1 Shareholders Interests in the Corporation
Schedule 2 Exceptions to Representations and Warranties
Schedule 3 Balance Sheet
Schedule 4 Material Contracts
Schedule 5 Bank Accounts
Schedule 6 Litigation and Proceedings
Schedule 7 Compensation and Benefits of Employees
Schedule 8 Required Consents and Notices
Schedule 9 Permits
Schedule 10 Insurance Policies
Schedule 11 Exceptions to Dr. Brant-Zawadzki's Noncompete Agreement
Schedule 12 Exceptions to Dr. Crues' Noncompete Agreement
- i -
STOCK PURCHASE AGREEMENT
EX- 10.25
This Stock Purchase Agreement is entered into as of the 14th day of
November, 1995, by and among Radnet Managed Imaging Services, Inc., a California
corporation ("Buyer"), Primedex Health Systems, Inc., a New York corporation
("Primedex"), Future Diagnostics, Inc., a California corporation (the
"Corporation"), and Michael Brant-Zawadzki, M.D., Jaana Cohan ("Cohan"), John V.
Crues, M.D., Arnold S. Tesh and William S. Wood (individually, a "Seller" or a
"Shareholder" and, collectively the "Sellers" or the "Shareholders"), with
reference to the following facts:
R E C I T A L S
A. Each Shareholder owns the number of shares of common stock
(collectively, the "Shares") in the Corporation as set forth in Schedule 1
attached hereto.
B. Buyer has agreed to purchase, and the Shareholders have agreed to sell,
all of Shares upon the terms and conditions set forth herein.
THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, Buyer has agreed to purchase and each Shareholder agrees to sell,
transfer and deliver the number of Shares set forth opposite such Shareholder's
name on Schedule I attached hereto at the Closing on the Closing Date (as those
terms are defined in Section 3 hereof).
2. Purchase Price and Payment.
(a) Calculation of Purchase Price. Subject to the terms and condition
of this Agreement, and in full consideration for the assignment, transfer and
delivery to Buyer of the Shares, Buyer shall (i) pay to Sellers, at the times
specified in Section 2(b), a cash purchase price per Share determined by
dividing $2,405,000 (adjusted as indicated below) by the total number of
outstanding Shares as indicated in Schedule 1 attached hereto and (ii) cause to
be issued to Sellers a number of shares of capital stock of RadNetWork, Inc., a
California corporation recently organized by Primedex ("Newco"), which
represents an aggregate 20% interest in the outstanding capital stock of Newco,
which shares of Newco shall be issued to each of Sellers on a pro rata basis in
the same manner as the cash portion of the aggregate purchase price is allocated
among the Sellers as set forth herein; provided, however, that if the proposed
acquisition of MedLink of Texas is not completed by June 30, 1996, Sellers shall
be issued or transferred additional shares in Newco so that Sellers shall own an
aggregate of 40% of the outstanding capital stock of Newco. The parties
acknowledge and agree that, after the Closing, Buyer will cause the Corporation
to transfer to Newco all of the business and assets of the Corporation that is
outside of the State of California.
(b) Payment of Purchase Price. Buyer shall pay to Sellers at the
Closing an aggregate amount of $105,000 by Buyer's checks or, if any Seller
provides the necessary written instructions at least three business days prior
to the Closing Date, by wire transfer to such Seller's bank account. Such
payments shall be paid on a pro rata basis to the Sellers according to the
number of Shares owned by each Seller as compared to the total number of
outstanding Shares. The balance of the purchase price shall (subject to
adjustment as set forth in Section 2(c) below) be payable in installments as
follows:
(i) One payment of $900,000, payable on January 2, 1996;
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<PAGE>
(ii)Four quarterly payments of $50,000 each, payable on February
29, 1996, May 31, 1996, August 31, 1996 and November 30, 1996;
(iiiEight quarterly payments of $75,000 each, payable on February
28, May 31, August 31 and November 30, in 1997 and 1998;
(iv)Four quarterly payments of $100,000 each, payable on February
28, 1999, May 31, 1999, August 31, 1999 and November 30, 1999; and
(v) one final installment of $200,000, payable on December 31,
1999.
(c) Adjustment of Purchase Price. The parties hereto acknowledge and
agree that the purchase price for the Shares is based upon the assumption that,
as of the Closing Date, the accounts receivable of the Corporation will result
in collections of at least $904,270 during the eight month period beginning on
the Effective Date and that the total liabilities of the Corporation as of the
Effective Date (including all Excluded Liabilities, as defined in Section 4(g)
below) to which the Corporation is subject as of the Effective Date or which are
based upon the business or activities of the Corporation on or before the
Effective Date (and which are not otherwise satisfied by the Shareholders) will
be not more than $2,172,095. In the event that either (i) $904,270 is in excess
of the total collections on the Corporation's Effective Date accounts receivable
during the eight month period following the Effective Date or (ii) the amount of
the Corporation's Effective Date liabilities attributable to business conducted
by the Corporation on or before the Closing Date (including any Excluded
Liabilities that are not satisfied by the Shareholders, but not including any
operating expenses based upon the contracts listed in Schedule 4 that accrue
after the Closing Date, e.g., lease payments under the Lease that are due after
the Closing Date) to which the Corporation is subject or otherwise is required
to pay is in excess of $2,172,095, then in either event the amount of such
excess shall reduce the purchase price. Any such reduction shall first be offset
against the next quarterly installment payments of the purchase price coming due
pursuant to Section 2(b) above and, thereafter, shall be payable by the Sellers
to Buyer on a pro rata basis according to the number of Shares held by each
Seller as compared to the total number of Shares acquired by Buyer; provided,
however, that the aggregate amount of all adjustments pursuant to this Section
2(c) shall not exceed $2,400,000. During the eight month period referred to in
clause (i) above, each Seller shall have the right to monitor the collection of
the accounts receivable referred to in this Section 2(c) and to take all
reasonable actions as they deem necessary to assist the Corporation in tie
collection of such receivables. In order to facilitate such monitoring and
collection, the Corporation shall prepare and provide Sellers with a monthly
report of the collection of such receivables and shall provide access to Sellers
to pertinent account information. As soon as is reasonably practicable after the
end of the eight month period referred to in clause (i) above, Buyer shall cause
the Corporation to prepare and provide to Sellers a report showing the collected
and uncollected Effective Date accounts receivable and the Effective Date
liabilities paid as of the end of such eight month period.
3. The Closing, the Closing Date and the Effective Date. The closing
referred to in Section 1 hereof (the "Closing") will take place at Buyer's
offices at 2:30 p.m., local time, on November 14, 1995, or at such other place
or at such other date and time as Buyer and Cohan shall agree. Such time and
date are referred to herein as the "Closing Date." Regardless of when the
Closing occurs, it shall be effective as of 12:01 a.m. on November 1, 1995 (the
"Effective Date"), and Buyer and Seller agree to acknowledge and use said
Effective Date for all purposes, including for accounting and federal and state
tax reporting purposes. Except as provided in Section 11 hereof, failure to
consummate the Closing on the date and time and at the place selected pursuant
to this Section 3 shall not result in any termination of this Agreement and
shall not relieve any party to this Agreement of any obligation hereunder.
2
<PAGE>
4. Representations and Warranties by Sellers. Except as specifically set
forth in Schedule 2 attached hereto, each Seller hereby represents and warrants
to Buyer as follows:
(a) Organization, Standing, etc. The information relating to the
Corporation and the Shareholders set forth in Schedule 1 is accurate and
complete with respect to the matters purported to be covered thereby. The
Corporation and Future Data Resources, Inc., a Delaware corporation that is
owned by one or more of the Shareholders ("Data"), are duly and validly
organized and existing corporations in good standing under the laws of the
States of California and Delaware, respectively, with full power and authority
to carry on its business as presently conducted, and the Corporation is duly
qualified and in good standing as a foreign corporation in the State of
Illinois. The Corporation does not have any direct or indirect interest of any
kind in any other corporation, partnership, association or business. Data is a
newly organized corporation and, prior to the Closing Date, has not conducted
any business. Except for an office in Illinois, the Corporation does not have
any facilities or employees outside of the State of California and, although the
Corporation has conducted certain business outside the State of California, such
activities do not require the Corporation to qualify to do business under the
laws of any state other than Illinois.
(b) Compliance with Instruments and Agreements. The execution of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, (i) the articles of incorporation or bylaws of the
Corporation, (ii) any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over any Seller or the
Corporation or (iii) assuming that the required consents referred to in Schedule
8 attached hereto are obtained at or prior to the Closing Date, any agreement,
instrument or commitment to which any Seller or the Corporation is a party, by
which any of them is bound or to which any of their property is subject.
(c) Capitalization and Indebtedness for Borrowed Moneys.
(i) Capitalization and Dividends. The Shares constitute all of the
issued and outstanding equity interests in the Corporation. Sellers have caused
the Corporation to deliver to Buyer true and complete copies of the articles of
incorporation and bylaws of the Corporation. Since January 1, 1995, the
Corporation has not (A) paid any dividend to any Shareholder, (B) made any other
distribution on or with respect to, or redeemed or otherwise acquired, any
Shares or any other equity interest in the Corporation or (C) made or permitted
any change in the authorized, issued or treasury shares of its equity
securities.
(ii)Indebtedness for Borrowed Moneys. The Corporation does not
have any outstanding indebtedness for borrowed moneys except as reflected in the
Balance Sheet included in Schedule 3 pursuant to subsection (f) below. True and
complete copies of every instrument, agreement and other document relating to
any such indebtedness have been delivered to Buyer. The receipt by Buyer of a
duly executed Assignment in the form of Exhibit G attached hereto shall be
sufficient to transfer to Buyer all right, title and interest in the
indebtedness of the Corporation referred to in the Balance Sheet as "2250-00 -
Notes Payable Image America - $202,696.67" and all related and incidental
contract rights held by the holder of such indebtedness. Except for the "accrued
officers salaries" as reflected in Schedule 3, immediately following the
Closing, the Corporation will not be indebted to or have any obligation to any
Shareholder, any of their respective relatives or any corporation, partnership,
trust or other entity in which any Shareholder or any relative of any
Shareholder (collectively, "Sellers, Affiliates") has any interest.
(iiiOptions or Rights. There are no outstanding agreements,
rights, subscriptions, options, warrants, convertible securities, commitments,
arrangements or understandings of any character under which the Corporation is
or may be obligated to issue or purchase any interest in the Corporation or
under which any Shareholder is or may be obligated to sell or transfer any
Shares or other interest in the Corporation.
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(d) Title to Shares. Each Shareholder has good and marketable title to
all of the Shares set forth opposite such Shareholder's name in Schedule 1, free
and clear of all liens, claims, encumbrances and restrictions, legal or
equitable, of every kind, except for restrictions on transfer imposed by federal
or state securities laws or as provided for on the Shareholder's respective
stock certificates evidencing their Shares. Each Shareholder has full and
unrestricted legal right, power and authority to sell, assign and transfer such
Shareholder's Shares without obtaining the consent or approval of any other
person, entity or governmental authority (other than the consents described in
Schedule 8), and the delivery of the Shares to Buyer pursuant to this Agreement
will transfer valid title thereto, free and clear of all liens, encumbrances,
claims and restrictions of every kind, except for restrictions on
transferability imposed by federal and state securities laws.
(e) Assets of the Corporation. The Corporation has good and marketable
title to all of the properties and assets used in its business (including
leasehold interests as to such assets that are leased), subject to no mortgage,
pledge, lien, security interest, encumbrance or other charge, other than (i) the
interests of equipment lessors with respect to leased equipment and (ii) liens
for taxes not yet due. The assets owned or leased by the Corporation constitute
all of the assets currently in existence which are being used in connection with
the Corporation's business. The Corporation has, and will transfer to Data, good
title to all of the Corporation's computer software and patents, as provided in
Section 6(j), and no such computer software or patent conflicts with or
infringes on, and no third party has asserted to the Corporation or any Seller
that such computer software or patent conflicts with or infringes upon, any
proprietary rights owned or used by any third party.
(f) Financial Statements. Attached hereto as Schedule 3 is a true and
complete copy of the unaudited balance sheet (the "Balance Sheet") of the
Corporation as of September 30, 1995 (the "Balance Sheet Date"). Sellers have
also caused the Corporation to provide to Buyer unaudited statements of
operations of the Corporation for the fiscal years ended March 31, 1994 and 1995
and for the six months ended on the Balance Sheet Date. The Balance Sheet and
such statements of operations (i) are in accordance with the books and records
of the Corporation, (ii) fairly present the financial condition of the
Corporation at the Balance Sheet Date and the results of its operations for the
periods therein specified and (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied (except that such
financial statements are not audited and do not include footnotes and, as to the
interim financial statements, are subject to normal year end adjustments).
(g) Liabilities of the Corporation. Except for the liabilities
reflected in the Balance Sheet or the documents described in Schedule 4, and all
other obligations incurred in the ordinary course of business since the Balance
Sheet Date, the Corporation does not have and is not subject to any liability of
any nature, whether accrued, absolute, contingent or otherwise. Any other
liabilities or obligations of the Corporation are hereinafter collectively
referred to as the "Excluded Liabilities." Sellers shall assume and hold the
Corporation and Buyer harmless from and against any and all Excluded Liabilities
as provided in Section 9 The Excluded Liabilities include, without limitation,
the following:
(i) Any liability for any taxes, including without limitation any
state or federal gross receipts or income tax imposed on or payable by the
Corporation and any sales tax, transfer or other similar tax or governmental
charge associated with or arising from the business of the Corporation on or
before the Effective Date (all of which shall be the sole responsibility of
Sellers), except for any real estate taxes that are payable by the Corporation
pursuant to the Lease and any non-delinquent personal property taxes on the
other assets of the Corporation that are properly accounted for on the Balance
Sheet;
(ii)Any liability under any pending, threatened or contemplated
litigation or administrative proceeding, including without limitation workers'
compensation claims, EEOC claims, sexual harassment allegations and other
similar claims or allegations by employees or former employees of any
Corporation based upon acts or events prior to the Closing Date;
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(iiiAny liability for personal injury, medical malpractice or
property damage which relates to the period prior to the Closing Date;
(iv)Any liability under products liability, strict liability or
implied warranty claims relating to services rendered or products sold by the
Corporation or its independent contractors prior to the Closing Date;
(v) Any debt or obligation owed by the Corporation to any
Shareholder or any Sellers' Affiliate, except for the accrued officers salaries
reflected in the Balance Sheet;
(vi)Any liability related to any automobiles;
(viiAny obligation or liability under or relating to any pension
or profit sharing plan or any bonus or incentive compensation obligation to any
employee or independent contractor that is not reflected on the Balance Sheet;
(viii) Any Medicare or Medicaid contract, or any other possible
governmental liabilities, of the Corporation or any affiliate of any
Corporation;
(ix)Any liability or obligation associated with the computer
software or patents that are to be transferred to Data as described in Section
6(j);
(x) Any refund liability or other obligation resulting from
duplicate payments for services rendered prior to the Effective Date; and
(xi)The costs and expenses associated with this Agreement, as
described in Section 6(e).
(h) Noncompetition Covenants. The Corporation is not subject to any
noncompetition covenant or other similar agreement restricting its ability to
engage in competitive businesses and, following the Closing, Buyer, Primedex and
their affiliates will not be subject to any such noncompetition covenant or
restrictive agreement by virtue of Buyer's acquisition of the Shares.
(i) Account Receivable. A true and complete list of all outstanding
accounts receivable of the Corporation as of the Balance Sheet Date has been
delivered to Buyer. To Sellers' knowledge, all of the accounts receivable held
by the Corporation are valid and enforceable claims and are not subject to any
defenses, offsets, claims or counterclaims. The allowances for doubtful accounts
and contractual adjustments reflected in the Balance Skeet are based upon
historic collection activities of the Corporation and have been determined in
accordance with generally accepted accounting principles. Although no Seller
knows of any reason why such accounts will not be collected on a timely basis,
no representation is made hereby that such accounts will be collected and,
notwithstanding any of the provisions of this Agreement, Buyer's only remedy
with respect to the collection of any such accounts receivable shall be as
provided in Section 2(c).
(j) Real Property Lease. Sellers have caused the Corporation to provide
to Buyer, true and complete copies of those certain Lease Agreements, each dated
as of May 23, 1995 (collectively the "Lease") between the Corporation and
GreatWest Life Annuity & Insurance Company (the "Landlord") pursuant to which
the Corporation leases the office space and related leasehold improvements
located at 6380 Wilshire Boulevard, Suites 900 and 908A, Los Angeles, California
(the "Real Property"). The Corporation has not assigned, subleased or conveyed
any interest in the Lease or any of the premises covered thereby. The lease of
Suite 900 expires on November 30, 2000 and the lease on Suite 908A expires on
June 30, 1998 and there is no current extension option. Neither the Corporation
nor (to the best of each Seller's knowledge) Landlord is in default under the
Lease and no event or condition has occurred or exists which, with the passage
of time, the giving of notice or both, would cause either the
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Corporation or (to the best of each Seller's knowledge) Landlord to be in
default thereunder, including without limitation any deferred maintenance or
repairs for which either Landlord or the Corporation is responsible. The
Corporation does not have any interest, whether as lessee, owner, licensee or
otherwise, in any other real property.
(k) Material Contracts. Sellers have caused the Corporation to deliver
to Buyer an accurate list (attached hereto as Schedule 4) of all material
contracts, leases and instruments to which the Corporation is a party or by
which it or any of its assets are bound as of the date hereof. For purposes
hereof, the term "material contracts" shall mean the following: (i) all
equipment leases where the aggregate rent required to be paid on or after the
Effective Date under the terms of such lease is at least $5,000; (ii) all
executory purchase agreements relating to the purchase of equipment, supplies or
other goods where the amount that is payable after the Effective Date is at
least $5,000; (iii) all agreements with any Shareholder or any of Sellers,
Affiliates, and Schedule 4 sets forth the relationship (if any) of any party to
any agreement, lease or other document listed in Schedule 4 with any Shareholder
or Sellers' Affiliate; (iv) all agreements with any physician, owner of imaging
equipment or other provider of radiology services; (v) all employment,
consulting and retainer agreements; (vi) all agreements with hospitals,
employers, health maintenance organizations, workers' compensation health care
organizations, insurance companies, preferred provider organizations and other
managed care entities, or other contracts whereunder the Corporation is
committed to provide professional, technical or medical facility services; (vii)
all agreements with sales or marketing representatives; (viii) all documents and
instruments relating to any indebtedness reflected on the Balance Sheet (except
any such indebtedness that pursuant to the terms of this Agreement is to be
discharged at or prior to the Closing); (ix) all powers of attorney and agency
agreements with third parties; and (x) all other agreements and commitments in
which the financial obligation of the Corporation as of the Effective Date is at
least $5,000. Sellers have caused the Corporation to deliver to Buyer or its
counsel true and complete copies of the documents and instruments described in
Schedule 4.
(l) Bank Accounts. Set forth on Schedule 5 attached hereto is an
accurate and complete list showing the name and address of each bank in which
the Corporation has an account or safe deposit box, the number of any such
account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto.
(m) Tax Returns and Audits. The Corporation has accurately prepared and
filed all federal, state and local income, employment and property tax returns
and all information statements required to he filed prior to the date of this
Agreement. The Corporation has withheld proper and accurate amounts from its
employees' compensation in full and complete compliance with all withholding and
similar provisions of all state and federal tax laws, including without
limitation employee withholding and social security taxes. True and complete
copies of each of the most recent of any such material return or statement have
been provided to Buyer. Any federal, state and local taxes required to be paid
or withheld with respect to the periods covered by such returns and statements
have been paid or withheld. The liability for unpaid taxes shown on the Balance
Sheet is and will be sufficient to pay all taxes not reported on and paid with
returns filed by the Corporation prior to' the Closing Date. No tax liability
will be incurred by the Corporation as a result of the transactions contemplated
by this Agreement. The Corporation is not delinquent in the payment of any tax,
assessment or governmental charge or in the filing of any tax return or
information statement. The Corporation does not have any tax deficiency proposed
or assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax which is currently
effective. Neither the federal income tax returns nor the state income or
franchise tax returns (if any) of the Corporation have ever been audited by any
governmental authority.
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(n) Litigation and Proceedings. Except as described in Schedule 6,
there are no legal claims, actions, suits, disputes with payors or providers,
arbitrations or other legal, administrative or governmental proceedings pending
or, to the knowledge of each Seller, threatened against the Corporation or any
properties, assets or business of the Corporation and, to the knowledge of each
Seller, no facts exist which have been or should be reported under any
professional liability insurance policy covering the Corporation. Neither the
Corporation nor Seller is in default with respect to any judgment, order or
decree of any court, governmental agency or instrumentality. Schedule 6 contains
a complete and accurate description of the status of any matter covered thereby
and the Corporation carries adequate insurance to cover the costs, expenses and
damages of each of the matters described therein that include allegations of
medical malpractice. Except for normal collection efforts relating to accounts
receivable, the Corporation is not engaged in any legal action to recover money
due to or damages sustained by the Corporation.
(o) Compensation and Benefits. Attached hereto as Schedule 7 is an
accurate and complete list setting forth the names, dates of hire, salaries or
other remuneration, bonuses and employee benefits of all current employees and
consultants of the Corporation (including but not limited to vacation time and
pay, severance pay, incentive compensation programs, sick time and pay and group
insurance and other benefit plans, policies and arrangements), whether such
benefits are provided pursuant to contract, policy, custom or informal
understanding. Sellers have caused the Corporation to deliver to Buyer copies of
the Corporation's written employee policies and practices (including, for
example, any employee handbook). The Corporation does not have any collective
bargaining agreement with any labor union and is not currently negotiating with
a labor union. No employee of the Corporation has ever petitioned for a
representation election. No employee of the Corporation has ever filed with any
governmental authority any claim asserting sexual harassment, age or racial
discrimination or violation of OSHA by the Corporation, any Shareholder or any
other officer, director, employee or agent of the Corporation.
(p) Compliance with Law and Instruments. The business and operations of
the Corporation have been and are being conducted in material compliance with
all applicable laws, ordinances, codes, rules, regulations and licensing
requirements of all authorities (collectively, "Laws") including but not limited
to Laws relating to occupational safety, health care, zoning or environmental
matters. No Seller or the Corporation has received notice from any governmental
unit or administrative or regulatory agency claiming any violation of any. Law.
The Corporation has complied in all material respects with all applicable
federal and state securities Laws in connection with the sale or resale of the
Shares and any other equity interest in the Corporation. The Corporation meets
in all material respects the conditions for participation in the Medicare and
Medicaid programs. No governmental consent, review or other process is required
in connection with the sale of the Shares provided for herein or in order for
the Corporation to continue its business following the consummation of the
transactions contemplated hereby. The Corporation has never received payments
for procedures covered by the Medicare and Medicaid programs. No Seller knows of
any reason why the Corporation will not or may not be able to continue its
business, as presently conducted, following the Closing.
(q) No Consent Required. Except for the consents and notice
requirements described in Schedule 8, the execution and delivery of this
Agreement and the consummation of the transactions provided herein will not
require any governmental consent, review or other process or the consent of any
party to any lease (including the Lease), contract, agreement or instrument to
which the Corporation is a party or by which any of its assets is subject.
(r) Permits. Schedule 9 attached hereto lists all of the material
permits, approvals and authorizations that the Corporation holds in connection
with its business. No other permit, approval or authorization of any
governmental unit or administrative or regulatory agency is necessary for the
lawful conduct of the Corporation's businesses, except where the failure to
obtain any such permit would not have a material adverse affect on the
Corporation. Sellers have caused the Corporation to deliver to Buyer copies of
all permits, approvals and authorizations listed on Schedule 9.
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(s) Absence of Specified Changes. Except for the transactions and
agreement provided for or referred to herein, since the Balance Sheet Date there
has not been: (i) any transaction by the Corporation except in the ordinary
course of business; (ii) any capital expenditure by the Corporation exceeding
$5,000; (iii) any material adverse change in the working capital, financial
condition, business, markets, properties, assets, results of operation or
prospects of the Corporation; (iv) any event which has materially affected or
may materially and adversely affect the Corporation, including without
limitation any material reduction in the Corporation's charge or fee schedule;
(v) any material destruction, damage to or loss of any material asset of the
Corporation, whether or not covered by insurance; (vi) any indebtedness for
borrowed money incurred or the creation or imposition of any mortgage, pledge or
other encumbrance on any asset of the Corporation; (vii) any increase in
salaries or benefits to employees or independent contractors of the Corporation,
other than annual increases implemented in accordance with the past practices of
the Corporation; (viii) any material amendment to the Lease or any other
material contract or lease listed in Schedule 4, other than in the ordinary
course of business of the Corporation; (ix) any sale, transfer or disposition of
any equipment that is material to the Corporation, other than dispositions in
the ordinary course of business where the equipment disposed of is replaced by
equipment of at least equal value and utility; or (x) any agreement by the
Corporation to do any of the things described in this subsection (s).
(t) Insurance Policies. Sellers have caused the Corporation to provide
to Buyer complete and accurate copies of all insurance policies or certificates
of insurance under which the Corporation is insured, including the coverage
limits and deductibles applicable thereto. The Corporation's medical malpractice
insurance coverage has and will have coverage limits of at least $1,000,000 per
occurrence and $1,000,000 in the aggregate. Attached hereto as Schedule 10 is a
listing of all of the insurance policies covering the Corporation or its assets,
which Schedule 10 reflects the policy numbers, terms, identity of insurers and
amounts of coverage. All of such policies are now and will be until Closing in
full force and effect on an occurrences basis with no premium arrearages. The
Corporation is not in default with respect to any provision contained in any
such policy and has not failed to give any notice or present any claim under any
such policy in a due and timely fashion.
(u) Retirement Plans. The Corporation has never maintained any pension,
profit sharing or other retirement plan, nor does it participate in, nor has it
ever participated in, any multi-employer plan as defined in Section 400(a) (3)
of the Employee Retirement Income Security Act of 1974, as amended. Neither
Buyer nor the Corporation will incur any obligation or liability under or
relating to any such plan as a result of the transactions contemplated by this
Agreement, or otherwise.
(v) No Brokers or Finders. As a result of any act or failure to act by
any Shareholders, Sellers' Affiliate or the Corporation, no person or entity
has, or as a result of the transactions contemplated hereby will have, any
right, interest or valid claim against or upon Buyer, Primedex or the
Corporation for any commission, fee or other compensation as a broker, finder or
any similar capacity.
(w) Use of Names. The only names under which the Corporation currently
conducts business are "Future Diagnostics, Inc." and "FDI". The Corporation owns
the entire right, title and interest in and to such names, together with any
derivatives thereof, and no third party has ever notified the Corporation or any
Seller that the use of any such name is in violation of the rights of such third
party.
(x) Equipment. Each material item of equipment will be in good
operating condition, normal wear and tear excepted, as of the Closing Date.
(y) Environmental Matters.
(i) The Corporation is currently in compliance with all
Environmental Laws (as defined below), which compliance includes, without
limitation, the possession by the Corporation of all permits and other
governmental authorizations required under applicable Environmental Laws to
operate its business, and the Corporal ion is in compliance in all material
respects with the terms and conditions thereof;
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(ii)No Hazardous Substances (as defined below) have been generated
or stored on, at or adjacent to the Real Property by the Corporation, except in
compliance with applicable Environmental Laws;
(iiiNo Hazardous Substances have been disposed of or released on,
from or adjacent to the Real Property by the Corporation, except in compliance
with applicable Environmental Laws;
(iv)The Corporation has not received any written communication,
whether from a governmental authority, citizen's group, employee, consultant or
otherwise, that alleges that the Corporation or the Real Property is not in full
compliance with Environmental Laws, and there is no Environmental Claim (as
defined below) pending or, to the best of each Seller's knowledge, threatened
against the Corporation or any owner or lessor of the Real Property; and
(v) To the best of each Seller's knowledge, the Real Property does
not contain asbestos in any form.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including without limitation potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (A) the presence, or release on or from the Real Property or the
Corporation, of Hazardous Substances or (B) circumstances forming the basis of
any violation, or alleged violation, of any environmental law.
"Environmental Laws" means the federal, state, regional, county or
local environmental, 'health or safety laws (including the Medical Waste
Tracking Act of 1988, 42 U.S.C. ss.6992, et seq.), regulations, ordinances,
rules and policies and common law in effect on the date hereof and the Closing
Date relating to the use, refinement, handling, treatment, removal, storage,
production, manufacture, transportation or disposal, emissions, discharges,
releases or threatened releases of Hazardous Substances, or otherwise relating
to protection of human health or the environment (including without limitation
ambient air, surface water, ground water, land surface or subsurface strata), as
the same may be amended or modified to the date hereof and the Closing Date.
"Hazardous Substances" means any toxic or hazardous waste, pollutants
or substances, including without limitation medical wastes, asbestos containing
materials or substances, any substance defined or listed as a "hazardous
substance," "toxic substance," "toxic pollutant" or similarly identified
substances or mixture, in or pursuant to any Environmental Law and medical or
infectious wastes.
(z) Payments. The Corporation has not, directly or indirectly,
paid or delivered or agreed to pay or deliver any fee, commission or other sum
of money, item of property or other consideration, however characterized, to any
person, governmental official or other party which is illegal under any federal,
state or local Law.
(aa)Corporate Records. The minute books, stock certificate books
and stock transfer ledgers of the Corporation are in the Corporation's
possession, are complete and accurate in all material respects and reflect all
those transactions and corporate acts which properly should have been set forth
therein.
(bb)Investment Intent. Each Seller acknowledges that the shares of
Newco to be acquired pursuant hereto have been offered and will be transferred
to such Seller pursuant to an exemption from registration under the federal
Securities Act of 1933, as amended, and all applicable state securities laws.
Seller is acquiring such Shares of Newco for investment purposes only and has no
present intent to distribute, resell, pledge or otherwise dispose of any such
Newco shares.
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(cc) Full Disclosure. None of the representations, warranties or
disclosures made to Buyer by the Corporation or Sellers herein, or in any
exhibit, schedule, list, certificate or memorandum furnished or to be furnished
to Buyer by the Corporation or any Seller in connection herewith, contains or
will contain any untrue statement of a material fact or omits or will omit any
material fact, the omission of which would tend to make the statements made
herein or therein misleading in any material respect.
5. Representations and Warranties by Buyer. Buyer and Primedex hereby
jointly and severally hereby represent and warrants to Sellers as follows:
(a) Organization and Good Standing. Buyer and Newco each is a duly
organized and validly existing corporation in good standing under the laws of
the State of California, with full power and authority to carry on its
businesses as presently conducted. Primedex is a duly organized and validly
existing corporation under the laws of the State of New York and is duly
qualified and in good standing as a foreign corporation in the State of
California, with full power and authority to carry on its business as presently
conducted. Each of Buyer and Newco are newly organized corporations and, prior
to the Closing Date, have not conducted any business or incurred any liabilities
(other than organizational expenses).
(b) Due Authorization. The execution, delivery and performance of this
Agreement by Buyer and Primedex have been duly authorized by all requisite
action of the boards of directors of Buyer and Primedex and no further action is
necessary to make this Agreement valid and binding upon Buyer and Primedex in
accordance with its terms.
(c) Compliance with Instruments and Agreements. The execution of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or bylaws of either
Buyer or Primedex, any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over Buyer or Primedex, or any
agreement, instrument or commitment to which Buyer or Primedex is a party or by
which either Buyer -or Primedex is bound or to which any of their respective
property is subject.
(d) No Constant Required. Except for the consents and approvals listed
in Schedule 8, no authorization or consent of any federal or state
administrative or regulatory agency or other third party is required for the
execution, delivery and performance of this Agreement by Buyer and Primedex or
for the performance by Buyer and Primedex of the transactions contemplated by
this Agreement.
(e) No Finders or Brokers. As a result of any act or failure to act by
Buyer, Primedex or any of their affiliates, no person, firm or corporation has,
or as a result of the transactions contemplated hereby will have, any right,
interest or valid claim upon the Corporation or any Seller for any commission,
fee or other compensation as a finder, broker or in any similar capacity.
(f) Investment Intent. Buyer acknowledges that the Shares have been
offered and will be sold to Buyer pursuant to an exemption from registration
under the federal Securities Act of 1933, as amended, and all applicable state
securities laws. Buyer is purchasing the Shares for investment purposes only and
has no present intent to distribute, resell, pledge or otherwise dispose of any
of the Shares.
(g) Full Disclosure. None of the representations, warranties or
disclosures made to Sellers by Buyer or Primedex herein, or in any exhibit,
schedule, list, certificate or memorandum furnished or to be furnished to
Sellers by Buyer or Primedex in connection herewith, contains or will contain
any untrue statement of a material fact or omits or will omit any material fact,
the omission of which would tend to make the statements made herein or therein
misleading in any material respect.
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6. Pre-Closing Covenants. The parties agree that from the date hereof until
the Closing Date or the termination of this Agreement:
(a) Due Diligence. The Corporation and Sellers will afford officers and
authorized representatives of Buyer and Primedex with reasonable access to the
financial, legal, operational and statistical books and records of the
Corporation and shall permit Buyer and Primedex to conduct physical inspections
of the Real Property at such time or times as will not disrupt the Corporation's
business.
(b) Continuation of Business. Sellers shall cause the Corporation to:
(i) except as required or permitted by this Agreement, conduct its business only
in the usual and ordinary course as it has previously been conducted, including
without limitation its policies and practices relating to the collection of
accounts receivable and the payment of trade payables and other liabilities, and
not introduce any new methods of management, operations or accounting, without
Buyer's prior written consent (which shall not be unreasonably withheld); (ii)
use its best efforts to maintain its working capital at or above the working
capital shown on the Balance Sheet; (iii) maintain the assets of the Corporation
in as good working order and condition as at present, ordinary wear and tear
excepted; (iv) perform all material obligations under material agreements and
leases; (v) keep in full force and effect present insurance policies; and (vi)
maintain and preserve the business organization of the Corporation intact,
retain its present employees and maintain its relationships with, employees,
providers, patients, payors and others having business relations with the
Corporation.
(c) Actions Requiring Consent. From the date hereof until the Closing
Date, without Buyer's prior written consent (which shall not be unreasonably
withheld), except as required or permitted by this Agreement, Sellers shall not
permit the Corporation to: (i) prepay any debt in excess of $5,000 prior to its
stated maturity (except pursuant to an existing amortization payment schedule)
or enter into any contract or commitment or incur or agree to incur any debt or
make any capital expenditure requiring the payment of amounts in excess of
$5,000; (ii) create or assume any mortgage, pledge or other lien or encumbrance
upon any of its assets, whether now owned or hereafter acquired; (iii) make any
loan; (iv) incur any debt or other monetary obligation, other than normal trade
payables; (v) amend the Lease or any material contract listed in Schedule 4,
except changes made in the ordinary course of business, enter into any new
material contract or change any employee compensation (except normal annual
salary increases implemented in accordance with past practices) (vi) make any
commitment to reduce, fix or otherwise limit professional or technical fees or
rates or to purchase supplies, equipment or services, unless such commitment is
cancellable upon no more than 60 days notice; (vii) fail to pay any obligation
in a timely manner prior to delinquency; or (viii) declare, set aside or pay any
dividend or distribution to its shareholders, or directly or indirectly
purchase, redeem or otherwise acquire any outstanding equity interest in the
Corporation.
(d) Performance Covenant. Each of the parties hereto covenants and
agrees that it will take all action reasonably within its power and authority to
duly and timely carry out all of its obligations hereunder, to perform and
comply with all of the covenants, agreements, representations and warranties
hereunder applicable to it and, as and to the extent such party has the power
and authority to do so, to cause all conditions to the obligations of the other
parties to close the purchase and sale of the Shares pursuant hereto to be
satisfied as promptly as possible. Anything in any agreement, or any restriction
set forth on any stock certificate, to the contrary notwithstanding, each Seller
hereby consents to the sale of the Shares to Buyer pursuant hereto without such
Shares being first offered to the Corporation or any Shareholder.
(e) Costs of Agreement. Buyer and Sellers agree to bear all of their
own expenses incurred in preparing or complying with this Agreement, including
without limitation all legal and accounting expenses and fees. None of such
expenses shall be charged to or paid by the Corporation or Newco, whether before
or after the Closing Date.
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(f) Governmental Approvals. The Corporation and Sellers shall assist
and cooperate with Buyer and Buyer's representatives and counsel in obtaining
all governmental consents, approvals and licenses which Buyer deems necessary or
appropriate, and in the preparation of any document or other materials which may
be required by any governmental agency, in connection with the transactions
contemplated herein.
(g) No-Shop Clause. Neither the Corporation nor any Shareholder will,
without the prior written consent of Buyer (which may be withheld by Buyer in
its sole discretion) (a) offer for sale any of the Shares or any equity interest
or assets of the Corporation (or any material portion thereof), (b) solicit
offers to buy any of the Shares or any equity interest or assets of the
Corporation (or any material portion thereof), (c) hold discussions with any
party (other than Buyer) looking toward such an offer or solicitation or looking
toward a merger or consolidation of the Corporation, or (d) enter into any
letter of intent or agreement with any party (other than Buyer) with respect to
the sale or other disposition of any of the Shares or any equity interest or
assets of the Corporation (or any material portion thereof) or with respect to
any merger, consolidation or similar transaction involving any Seller or the
Corporation.
(h) Transfer of Software. At or prior to the Closing, the Corporation
shall transfer to Data certain computer software assets and patents owned by the
Corporation in exchange for the execution and delivery by Data of a License
Agreement substantially in the form of Exhibit A-1 attached hereto. The computer
software to be transferred is described in Annex 1 to said License Agreement.
All other computer software assets owned by the Corporation shall be retained by
the Corporation and shall be subject to a separate License Agreement to be
entered into between the Corporation and Data, which separate license agreement
shall be substantially in the form of Exhibit A-2 attached hereto.
(i) Interim Operating Reporting. During the period from the date of
this Agreement to the Closing, Sellers shall cause the officers of the
Corporation and other management personnel of the Corporation (a) to confer on a
regular and frequent basis with one or more representatives of Buyer to report
material operational matters relating to the Corporation and to report the
general status of on-going operations, (b) to notify Buyer in writing of any
material adverse change in the financial position or earnings of the Corporation
after the Balance Sheet Date, any unexpected emergency or other unanticipated
change in the business of the Corporation, any governmental complaints,
investigations or hearings or adjudicatory proceedings (or communications
indicating that the same may be contemplated) or any litigation, arbitration or
other such matter that has been filed or threatened against the Corporation and
(c) to keep Buyer fully informed of such events and permit its representatives
to participate in all discussions relating thereto. Within 10 business days
following any month-end which occurs on or after the date of execution of this
Agreement, Sellers shall cause the Corporation to provide Buyer with an
unaudited balance sheet and income statement of the Corporation which reflects
the operations of the Corporation for such month, which interim financial
statements shall be prepared in a manner consistent with the policies and
practices used in the preparation of the Balance Sheet.
(j) Insurance Ratings. Sellers shall cause the Corporation to take all
action reasonably requested by Buyer to enable Buyer to succeed to the workers,
compensation and unemployment insurance ratings, deposits and other interests of
the Corporation for insurance purposes. Buyer shall not be obligated to succeed
to any such rating, insurance policy, deposit or other interest, except as it
may elect to do so.
7. Conditions Precedent to Obligations of Buyer. The obligations of Buyer
and Primedex hereunder are subject to the satisfaction, on or prior to the
Closing Date, of the following conditions (unless waived by Buyer):
(a) Accuracy of Representations and Warranties of Sellers. The
representations and warranties of Sellers contained in this Agreement shall be
true in all material respects on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date. All of the agreements of Sellers and the Corporation to be performed on or
before the Closing Date pursuant to the terms hereof shall have been performed
in all material respects.
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(b) Action Restraining or Affecting Transaction. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of any of the
Shares, or which in the reasonable opinion of Buyer may otherwise materially and
adversely affect the Corporation, and no third party or governmental agency or
body shall have taken or threatened any action with respect this Agreement as a
result of which Buyer deems it inadvisable to proceed with the transactions
contemplated herein.
(c) Material Changes. The Corporation shall not have suffered any
change, loss or damage since the Balance Sheet Date which materially and
adversely affects or impairs the financial condition (including without
limitation the working capital) of the Corporation or the operations or
prospects of the Corporation.
(d) Governmental Permits. Buyer shall have obtained all licenses,
certificates, permits and rulings of, and made all notices to, all governmental
authorities that may be required in connection with the acquisition of the
Shares and the continuation of the operation of the business of the Corporation
following the Closing.
(e) Consents, Approvals and Authorizations. Sellers shall have obtained
all consents, approvals and authorizations and given all notices required in
connection with the transactions provided for herein, including the consents and
notices described in Schedule 8.
(f) Legal Opinion. Sellers shall have delivered to Buyer an opinion of
Parker, Milliken, Clark, O'Hara & Samuelian, P.C., counsel to Sellers and to the
Corporation, dated the Closing Date, covering the matters set forth in Exhibit B
attached hereto and, otherwise, in form and substance satisfactory to Buyer and
its counsel. In rendering such opinion, such counsel may rely as to factual
matters upon certificates of public officials and upon certificates of officers
of the Corporation.
(g) Resignation of Officers and Directors. Each of the elected and
acting directors and officers of the Corporation shall have submitted his or her
resignation, effective as of the Closing Date.
(h) Transfer of Shares. Sellers shall have delivered to Buyer
certificates representing the Shares, duly endorsed in blank or accompanied by a
Stock Assignment Separate From Certificate from that is duly endorsed in blank.
(i) Delivery of Corporate Records. All of the books and records of the
Corporation, including but not limited to the shareholder register, stock
certificate book, corporate seal and minute books containing the minutes or
written consents of all meetings of the shareholders and directors (and all
committees thereof) of the Corporation shall have been delivered to Buyer.
(j) Certificate. If the Closing Date is other than the date of this
Agreement, Buyer shall have received a certificate, signed by each of the
Shareholders and dated as of the Closing Date, certifying that (i) the
representations and warranties of Sellers set forth herein are true and correct
as of the Closing Date and (ii) the Corporation and each Seller has performed
all of their respective obligations under this Agreement that were required to
be performed prior to or at the Closing (except as performance may have been
waived by Buyer prior to or at the Closing).
(k) License Agreements. Data shall have executed and delivered to Buyer
License Agreements in the form attached hereto as Exhibits A-1 and A-2.
(1) Newco Shareholders Agreements. Each Seller shall have executed and
delivered a Shareholders Agreement substantially in the form of Exhibit C
attached hereto, relating to the shares of Newco stock to be issued to Sellers
pursuant to Section 2 (a) (ii).
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(m) Legal Matters. All actions, proceedings, instruments and documents
required or incidental to carrying out this Agreement and all other related
legal matters shall have been approved by counsel for Buyer, which approval
shall not be unreasonably withheld.
(n) Employment Agreement. Cohan shall have executed and delivered an
Employment Agreement in the form attached hereto as Exhibit D.
(o) Assignment. Buyer shall have received an Assignment substantially
in the form of Exhibit G attached hereto duly executed by MedAlliance, Inc.
8. Conditions Precedent to Obligations of Sellers. The obligations of
Sellers hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions (unless waived by Cohan, who is designated as
the duly authorized representative of Sellers for this purpose):
(a) Accuracy of Representations and Warranties of Buyer; Officer's
Certificates. The representations and warranties of Buyer and Primedex contained
in this Agreement shall be true in all material respects as of the Closing Date
as though such representations and warranties had been made at and as of that
time. All of the agreements of Buyer and Primedex to be performed by Buyer and
Primedex on or before the Closing Date shall have been duly performed in all
material respects. Buyer shall deliver to Seller's counsel certified copies of
all resolutions of the boards of directors of Buyer and Primedex approving or
otherwise relating to this Agreement and the transactions contemplated hereby.
If the Closing date is other than the date of this Agreement, Buyer shall have
delivered to Sellers' counsel an officer's certificate attesting to compliance
with this Section 8(a).
(b) Action Restraining or Affecting Transaction. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of any of the
Shares, or which in the reasonable opinion of Sellers may otherwise materially
and adversely affect Sellers, and no third party or governmental agency or body
shall have taken or threatened any action with respect to this Agreement as a
result of which Sellers deem it inadvisable to proceed with the transactions
contemplated herein.
(c) Receipt of Consideration. Buyer shall have delivered to Sellers the
portion of the purchase price for the Shares payable at the Closing in
accordance with Section 2(a).
(d) Legal Matters. All actions, proceedings, instruments and documents
required or incidental to carrying out this Agreement and all other related
legal matters shall have been approved by counsel for Sellers, which approval
shall not be unreasonably withheld.
(e) Guaranty. Primedex and its subsidiary, RadNet Management, Inc.,
shall have executed and delivered to Sellers a Guaranty and Security Agreement
in the form attached hereto as Exhibit F.
(f) License Agreements. Primedex and Buyer shall have executed and
delivered to Data License Agreements substantially in the form of Exhibits A-1
and A-2 attached hereto, respectively.
9. Indemnification.
(a) Indemnification by Buyer. Buyer and Primedex jointly and severally
covenant and agree to indemnify and hold Sellers and their successors and
assigns at all times harmless from and against any loss, liability, damage and
expense (including reasonable attorneys, fees and other costs of defense) caused
by or arising out of any misrepresentation, breach of warranty or nonfulfillment
of any agreement on the part of Buyer or Primedex under this Agreement.
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(b) Indemnification by Sellers. Subject to the limitations set forth in
Section 9(c), each Seller covenants and agrees that such Seller will indemnify
and hold Buyer and the Corporation and their successors and assigns and their
respective officers, directors, employees, stockholders and agents at all times
harmless from and against any loss, liability, damage or expense (including
reasonable attorneys, fees and other costs of defense) caused by or arising out
of or in connection with any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of such Seller under this Agreement
or any Excluded Liability (as defined in Section 4(g) above).
(c) Limitations. Any claim asserted against any Seller pursuant to
Section 9(h) ("Claim") shall be subject to the following limitations:
(i) The liability of each Seller under Section 9(b) or for any
breach of such Seller's representations and warranties made in or pursuant to
this Agreement (other than the representations and warranties set forth in
Section 4(d) made by such Seller) shall be limited to such Seller's pro rata
share of such liability (based upon the amount such Seller receives for his or
her Shares as compared to the total consideration paid by Buyer for all of the
Shares) and, in any event, each Seller's total liability shall not exceed the
consideration received (or which would otherwise have been received) for such
Seller's Shares pursuant to this Agreement, with the Newco shares received by
Sellers being valued for purposes of this subsection (i) at the same price per
share paid (in cash and as an equity contribution) by Primedex for its Newco
shares that it retains as of December 31, 1995; provided, however, that Sellers
shall have the option to deliver Newco shares, valued at such per share value,
in satisfaction of any liability under Section 9(b) in excess of the cash
consideration received (or which otherwise would have been received) pursuant to
this Agreement;
(ii)Neither Buyer nor the Corporation shall be entitled to make
any Claim against any Seller with respect to any breach of such Sellers
representations and warranties set forth herein at any time after May 31, 1997,
except for (A) Claims asserted in writing pursuant to Section 9(b) on or before
May 31, 1997, (B) Claims made with respect to an Excluded Liability and (C)
Claims made with respect to any breach of Section 4(a), (b), (c)(i), (c)(iii),
(d), (e), (v), (y) or (z);
(iiiNeither Buyer nor the Corporation shall be entitled to make
any Claim against any Seller with respect to any Excluded Liability or with
respect to any breach of any of the representations and warranties referred to
in subsection (ii) (C) above it any time after December 31, 1999, except for
such Claims asserted in writing pursuant to Section 9(b) on or before December
31, 1999; and
(iv)All Claims against Sellers shall be satisfied first as an
offset against (or, if applicable, as an adjustment pursuant to Section 2 (c)
of) the payment obligations to Sellers set forth in Section 2(b), but Sellers
acknowledge and agree that to the extent their obligations under Section 9 (b)
exceed the amount that remains due under Section 2(b), they shall be obligated
to pay such excess Claims, subject to the other limitations set forth in this
Section 9(c).
(d) Undisputed Claims. A party (the "Indemnified Party") may assert a
Claim that it is entitled to, or may become entitled to, indemnification under
this Agreement by giving notice of its Claim to the party or parties that are,
or may become, required to indemnify the Indemnified Party (the "Indemnifying
Party," whether one or more), providing reasonable details of the facts giving
rise to the Claim and a statement of the Indemnified Party's loss, damage or
expense (including attorneys' fees and costs) incurred, suffered or paid
(collectively, the "Loss") in connection with the Claim or an estimate of the
amount of the Loss that it reasonably anticipates that it will incur or suffer.
If the Indemnifying Party does not object to the Claim during the 20 day period
following the date of delivery of the Indemnified Party's notice of its Claim
(the "Objection Period"), the Claim shall be considered undisputed and the
Indemnified Party shall be entitled to recover the amount of its Loss. The fact
that a Claim is not disputed by the Indemnifying Party shall not constitute an
admission or create any inference that the asserted Claim is valid for any
purpose other than the indemnity obligation of the Indemnifying Party as to such
Claim pursuant to this Section 9.
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(e) Disputed Claims. If the Indemnifying Party gives notice to the
Indemnified Party within the Objection Period that the Indemnifying Party
objects to the Claim, then (i) the parties shall attempt in good faith to
resolve their differences during the 30 day period following the date of
delivery of the Indemnifying Party's notice of its objection (the "Resolution
Period") and (ii) if the parties fail to resolve their disagreement during the
Resolution Period, either party may unilaterally submit the disputed Claim for
binding arbitration in Los Angeles, California in accordance with the American
Arbitration Association's rules for commercial arbitration in effect at the
time. The award of the arbitrator or panel of arbitrators shall include
reasonable attorneys' fees to the prevailing party and may be entered in any
appropriate court.
(f) Third Party Suits. In the case of any Claim relating to a claim by
a third party (a "Third Party Suit"), the Indemnified Party shall control the
defense of the Third Party Suit and the Indemnifying Party may, at its own
expense, participate in (but not control) the defense and employ counsel
separate from the counsel employed by the Indemnified Party; provided, however,
that the Indemnifying Party may assume control of the defense of the Third Party
Suit at any time during the course of the suit if the Indemnifying Party
confirms in writing to the Indemnified Party that the Indemnified Party is
entitled to indemnification under this Agreement with respect to the Claim and
for Losses arising out of the Third Party Suit. If the Indemnifying Party
assumes control of the defense of a Third Party Suits, (i) the Indemnifying
Party shall consult with the Indemnified Party with respect to the Third Party
Suit upon the Indemnified Party's reasonable request for consultation and (ii)
the Indemnified Party may, at its expense, participate in (but not control) the
defense and employ counsel separate from the counsel employed by the
Indemnifying Party. Regardless of whether the Indemnifying Party assumes the
defense of the Third Party Suit, all parties shall cooperate in its defense.
(g) Settlement or Compromise. Any settlement or compromise of any Third
Party Suit by the Indemnified Party shall also be binding on the Indemnifying
Party in the same manner as if a final judgment or decree had been entered by a
court of competent jurisdiction in the amount of the settlement or compromise.
The Indemnified Party shall give the Indemnifying Party at least 15 days prior
written notice of any proposed settlement or compromise, during which time the
Indemnifying Party may assume the defense of the Third Party Suit and, if it
does so (or if the Indemnifying Party has already assumed control of such Third
Party Suit), the proposed settlement or compromise may not be made without the
Indemnifying Party's consent, which shall not be unreasonably withheld.
(h) Failure to Act by Indemnified Party. Any failure by the Indemnified
Party to defend a Third Party Suit shall not relieve the Indemnifying Party of
its indemnification obligations if the Indemnified Party gives the Indemnifying
Party at least 30 days prior written notice of the Indemnified Party's intention
not to defend and affords the Indemnifying Party the opportunity to assume the
defense.
(i) Insured Claims. In case any event shall occur which would otherwise
entitle either party to assert a Claim for indemnification hereunder, no Loss
shall be deemed to have been sustained by the Indemnified Party to the extent of
any proceeds received by the Indemnified Party from any insurance policies with
respect thereto.
10. Post-Closing Covenants.
(a) Adoption of Newco Shareholders Agreement. Primedex and each
Shareholder hereby adopts, approves and agrees to be bound by the Shareholders
Agreement in the form attached to this Agreement as Exhibit C.
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(b) Release by Sellers and Sellers' Affiliates. Except for liabilities
and obligations to any Shareholder or Sellers' Affiliates expressly described in
Schedule 4, each Seller, on behalf of itself and all Sellers' Affiliates, as of
the Closing Date, hereby releases, discharges and acquits the Corporation of and
from any and all debts, liabilities and obligations of the Corporation to Seller
or any Sellers, Affiliate, including without limitation all management or
consulting fees, cost reimbursement obligations and any guarantee of any
obligation of or to such Seller or Sellers' Affiliate; provided, however, that
this Section 10(b) shall not apply to any obligation of Buyer or the Corporation
expressly provided for in this Agreement, including without limitation the
"accrued officers salaries" as reflected on Schedule 3. Each Seller hereby
agrees that the matters released hereby are not limited to matters which are
known or disclosed, and hereby waives any and all rights and benefits that
Seller or any Sellers' Affiliate now has or in the future may have conferred
upon Seller or any Sellers' Affiliate.
(c) Noncompetition Covenant. Each Seller, for himself or herself,
agrees that, within five years of the Closing Date and so long thereafter as
such Seller owns any interest in Newco (the "Non- Compete Period"), such Seller
will not directly or indirectly (including without limitation through any
directly or indirectly owned or controlled affiliated entity, any entity that
directly or indirectly controls or is under common control with such Seller or
through any financial interest held by immediate family members of such Seller
or in trust for the benefit of such Seller's immediate family members) engage
in, or have any interest in any business, facility or entity or in any person,
firm, corporation or other business (whether as a management employee, officer,
director, agent, security holder (except for the ownership of shares of a
publicly held corporation purchased through a broker on a national stock
exchange or the Nasdaq System at an initial purchase price of not more than
$25,000), creditor, consultant or otherwise) that engages in, any activity
within any of the counties in the State of California or any of the other states
listed in Exhibit E attached hereto (which Sellers acknowledge and represent is
a full and complete list of all California counties and states where the
Corporation is currently conducting business) that is the same as, similar to or
competitive with any activity engaged in by the Corporation; provided, however,
that this Section 10(c) is not intended to prevent any such person from (i)
performing professional services at or for any hospital or other facility or
otherwise practicing medicine in a private practice which may utilize such
competing facilities from time to time, (ii) participating on any hospital
medical staff, committee, office or board so long as no compensation (other than
customary fees for membership on general oversight or quality assurance
committees) is paid to such person for services directly related to any such
hospital's diagnostic imaging facility or program or (iii) participating in the
activities listed in Schedules 11 and 12 attached hereto (as to the Sellers
referred to in said Schedules). In addition, during the Non-Compete Period, no
Seller shall recruit, solicit or otherwise seek to induce any employee of the
Corporation, to terminate his or her employment or independent contractor
relationship with the Corporation. If, in any judicial proceeding, this covenant
not to compete is declared unenforceable for being of too long a duration or
covering too large an area, then this covenant not to compete shall still be
enforceable for such maximum period of time and within the largest geographic
area as will make the covenant enforceable. Sellers acknowledge that he rights
and privileges granted to Buyer herein are of special and unique character,
which gives them a peculiar value, the loss of which may not be reasonably or
adequately compensated for by damages in an action at law, and that the breach
by any Seller of this Agreement will cause Buyer great and irreparable injury
and damage. Accordingly, each Seller agrees that Buyer, together with its
affiliates or any of them, shall be entitled to seek the remedies of injunction,
specific performance or other equitable relief to prevent a breach of this
Agreement, without limiting the availability of any other remedy (including
monetary damages).
(d) Books and Records; Personnel. For a period of five years after the
Closing Date:
(i) Buyer shall not dispose of or destroy any of the material
books and records of the Corporation relating to periods prior to the Closing
Date ("Books and Records") without first offering to turn over possession
thereof to Cohan by written notice to Cohan it least 30 days prior to the
proposed date of such disposition or destruction.
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(ii)Buyer shall allow Sellers and their agents access to all Books
and Records during normal working hours at Buyer's principal place of business
or at any location where any Books and Records are stored, and Sellers shall
have the right, at their expense, to make copies of any Books and Records;
provided, however, that any such access or copying shall be had or done in such
a manner so as not to unreasonably interfere with the normal conduct of Buyer's
and the Corporation's businesses.
(iiiBuyer shall make available to Sellers upon written notice (A)
copies of any Books and Records, (B) the Corporation's personnel to assist
Sellers in locating and obtaining any Books and Records, and (C) any of the
Corporation's personnel whose assistance or participation is reasonably required
by Sellers or any of their affiliates in anticipation of, or preparation for,
any litigation, tax or other matters in which any Seller is involved; provided,
however, that any such copying or assistance shall be had or done in such a
manner so as not to unreasonably interfere with the normal conduct of the
Corporation's business. Sellers shall reimburse the Corporation for the
reasonable direct out-of-pocket expenses incurred by Buyer or the Corporation in
performing the covenants contained in this subsection (d).
(e) Primedex Funding of Buyer. Primedex hereby agrees to provide to
Buyer the funds necessary for Buyer to pay the purchase price for the Shares
pursuant to Section 2 hereof. Primedex reserves the right to provide such funds,
or to cause one or more of its affiliates to provide such funds, pursuant to
capital contributions, loins or in any other manner deemed appropriate by
Primedex, hut the form in which such funds are provided to Buyer shall not
affect the absolute and unconditional obligation of Primedex to cause all
payments required by Section 2 to be made.
(f) Audit of Corporation's Financial Statements. Sellers acknowledge
and agree that Primedex, through its independent accountants, may conduct an
audit of the Corporation's financial statements for years 1992-1995, or some
portion thereof, for purposes of Primedex complying with its public reporting
obligations under the federal securities laws. Sellers agree to cooperate and
assist, and to cause the Corporation and its employees to cooperate and assist,
in such audit in all respects reasonably requested by Primedex and its
independent accountants, including without limitation making themselves
available to provide any information necessary or appropriate for such audits
and signing standard management representation letters to such independent
accountants.
11. Termination.
(a) By Mutual Consent. This Agreement may be terminated without further
obligation of the parties at any time prior to Closing by mutual consent of the
parties hereto.
(b) Damages. No party shall be liable in damages to any other party as
a result of the failure to consummate the transactions contemplated by this
Agreement unless such failure is caused by the material breach of such party of
any of the terms of this Agreement.
(c) Unilateral Termination. If, through no fault of or breach by a
party hereto, the Closing is not consummated on or before November 30, 1995,
this Agreement may be unilaterally terminated by written notice given by such
party to the other party.
12. Confidentiality. Subject to Section 13, prior to the Closing, the
parties hereto shall keep confidential all information relating to the others
that it obtains pursuant to this Agreement and shall use such information only
for the purposes contemplated by this Agreement. In the event that this
Agreement is terminated pursuant to Section 11, or otherwise, or the Closing
does not occur by reason of failure of one of the conditions to the Closing, the
parties hereto agree (a) to return to the transmitting party all documents,
financial statements and other information furnished or copied in connection
with the transactions contemplated by this Agreement and (b) not to disclose
without the prior written consent of the transmitting party any information
obtained with respect to the business or operations of the transmitting party or
any affiliate of such party.
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13. Publicity. Prior to Closing, no public announcement or other publicity
regarding the transactions contemplated by this Agreement shall be made by any
party without the prior written approval of Primedex and the Corporation as to
form, timing and manner of distribution or publication. Primedex and the
Corporation shall agree on the form and content of any joint press release or
other public announcement (including, for example, letters to the Corporation's
employees, providers and payors) which is to be released at or immediately
following Closing. Nothing in this Section 13 or in Section 12 shall be
considered to prohibit any party from making any disclosure required by any Law
or any court order.
14. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall he
deemed to have been duly given when received if delivered personally, given by
prepaid telegram, mailed first class, postage prepaid, registered or certified
mail, delivered by Federal, Express or other courier service, or sent by
facsimile or other online transmission system, as follows:
If to Buyer:
RadNet Managed Imaging Services, Inc.
1516 Cotner Avenue
Los Angeles, California 90025-3303
AttentionSteven R. Hirschtick,Senior Vice President and General Counsel
FAX No. (310) 478-5810
With a copy to:
Robert D. Mosher
Nossaman, Guthner, Knox & Elliott
445 South Figueroa Street, 31st Floor
Los Angeles, California 90071-1602
FAX No. (213) 612-7801
If to the Corporation or any Seller:
c/o Jaana Cohan
6380 Wilshire Boulevard, Suite 900
Los Angeles, California 90048
FAX No. (800) 517-7774
With a copy to:
Joseph G. Martinez
Parker, Milliken, Clark, O'Hara Samuelian
333 So. Hope Street, 27th Floor
Los Angeles, California 90071
FAX No. (213) 683-6669
15. Governing Law; Interpretation; Section Headings. This Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of California. The section headings contained herein are for
purposes of convenience only and shall not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
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16. General. This Agreement (including the Schedules and Exhibits referred
to herein) sets forth the entire agreement and understanding of the parties with
respect to the transactions contemplate hereby and supersedes all prior
agreements, arrangements and understandings related to the subject matter
hereof, including without limitation the letter of intent, dated as of October
24, 1995, among Buyer, Primedex and the Corporation. No representation, promise,
inducement or statement of intention has been made by any party hereto which is
not embodied in this Agreement, or in the Exhibits hereto or the written
statements, certificates or other documents delivered pursuant hereto. Subject
to Section 9(c) hereof, all the terms, provisions, covenants, representations,
warranties and conditions of this Agreement shall survive the Closing and shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns. This Agreement may be
amended, modified, superseded or canceled, and any of the terms, provisions,
covenants, representations, warranties or conditions hereof may be waived, only
by a written instrument executed by all parties hereto, or, in the case of a
waiver, by the party waiving compliance. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right to enforce the same. No waiver by any party of any condition, or of
the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach or a waiver of any other condition or of the
breach of any other term, provision, covenant, representation or warranty. In
the event that any one or more of the provisions of this Agreement shall he held
or otherwise found to be invalid, illegal or unenforceable, all other provisions
hereof shall be given effect separately therefrom and shall not be affected
thereby. None of the parties hereto shall assign any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto; provided, however, and notwithstanding the foregoing, Buyer may (a)
prior to or at the Closing assign all or any portion of Buyer's rights and
obligations pursuant to this Agreement to any wholly owned subsidiary or
affiliate of Buyer, and (b) after the Closing, assign any or all of its rights
hereunder without any consent or approval of any other party to this Agreement.
This Agreement is for the sole benefit of the undersigned parties hereto and is
not for the benefit of any third party.
17. Further Assurances. Sellers shall execute and deliver such other
documents and instruments, and take such other actions, as Buyer may reasonably
request in order more fully to vest and perfect in Buyer all right, title and
interest in and to the Shares.
18. Counterparts. Separate copies of this Agreement may be signed by the
parties hereto, with the same effect as though all of the parties had signed one
copy of this Agreement. Signatures transmitted by facsimile shall be accepted as
original signatures.
19. Attorneys' Fees. In any action at law or equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in any final judgment or decree, shall
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such party or parties (including without
limitation such costs, expenses and fees on any appeal or in connection with any
bankruptcy proceeding), and if the successful party recovers judgment in any
such action or proceeding, such costs, expenses and attorneys' fees shall be
included in and as a part of such judgment.
20. Interpretation of Agreement. The parties hereto acknowledge and agree
that this Agreement has been negotiated at arm's length and between parties
equally sophisticated and knowledgeable in the matters dealt with in this
Agreement. Accordingly, any rule of law or legal decision that would require
interpretation of any ambiguities in this Agreement against the party that has
drafted it is not applicable and is waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of the parties
as set forth in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
BUYER: RADNET MANAGED IMAGING SERVICES, INC.
By /s/ Howard G. Berger, M.D.
Howard G. Berger, M.D.
President and Chief Executive Officer
THE CORPORATION: FUTURE DIAGNOSTICS, INC.
By /s/ Jaana Cohan
Jaana Cohan, President
SHAREHOLDERS: /s/ Michael Brant-Zawadzki, M.D.
Michael Brant-Zawadzki, M.D.
/s/ Jaana Cohan
Jaana Cohan
/s/ John V. Crues, M.D.
John V. Crues, M.D.
/s/ Arnold S. Tesh
Arnold S. Tesh
/s/ William S. Wood
William S. Wood
SECURITIES PURCHASE AGREEMENT
EX- 10.26
THIS SECURITIES PURCHASE AGREEMENT (hereinafter this "Agreement") is made
and entered into as of this 22nd day of March, 1996, by and between PRIMEDEX
HEALTH SYSTEMS, INC., a New York corporation (hereinafter "PHS"), and DIAGNOSTIC
IMAGING SERVICES, INC., a Delaware corporation (hereinafter "DIS").
W I T N E S S E T H:
WHEREAS, PHS desires to purchase from DIS, and DIS desires to sell to PHS
shares of its common stock, $.01 par value and a warrant to purchase shares of
its common stock, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and agreements hereinafter
set forth, and other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as follows:
1. Sale and Purchase of the Shares.
(a) Sale of Shares. Upon the terms and subject to the conditions,
representations, warranties and agreements of this Agreement, Purchaser hereby
purchases 2,747,493 shares of DIS common stock, $.01 par value (the "Shares")
and a five year warrant to purchase an additional 1,521,739 Shares (the
"Warrant") from DIS, and DIS hereby sells the Shares and Warrant to PHS free and
clear of all liens, charges, encumbrances, equities, claims and options of any
nature whatsoever. The Warrant shall be in the form of Exhibit 1 attached.
(b) Purchase Price. As full payment for the Shares and Warrant PHS
shall pay DIS a purchase price of Three Million Dollars ($3,000,000)
(hereinafter the "Purchase Price") at the Closing.
2. Conditions to Closing.
(a) DIS, PHS and Norman Hames shall have entered into a Stockholders
Agreement in the form of Exhibit 2(a) attached.
(b) DIS and PHS shall have entered into a Management Services Agreement
in the form of Exhibit 2(b) attached.
(c) DIS and PHS shall have entered into a loan agreement in the form of
Exhibit 2(c) attached whereby PHS shall make available to DIS up to $1,000,000,
all of which shall be advanced to DIS at the Closing.
(d) DVI Financial Services, Inc., or its affiliate shall have loaned
PHS $5,000,000.
3. Closing. The Closing shall be held at 1516 Cotner Avenue, Los Angeles,
California, at 11:00 A.M. on March 22, 1996, or at such other time or at such
other place as may be mutually approved by the parties in writing ("Closing").
At the Closing the consideration required by Section 1 together with the
documents required by Section 2 shall be delivered whereupon the Shares and
Warrant shall be delivered together with the other certificates and materials
required by this Agreement to be exchanged at the Closing.
4. DIS Representations. As an inducement to PHS to enter into this
Agreement and consummate the transactions contemplated hereby, DIS hereby
represents and warrants to PHS and agrees as follows:
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(a) Due Organization. DIS is a duly organized and validly existing
corporation under the laws of the Slate of Delaware and has the corporate power
and lawful authority to own its properties and to transact the business in which
it is currently engaged. DIS is not, and is not required to be, qualified to
transact business as a foreign corporation in any jurisdiction. DIS is the sole
shareholder of Diagnostic Imaging Services, Inc., a California corporation
("DIS-CA"). DIS-CA is duly organized and validly existing under laws of the
State of California and has the corporate power and lawful authority to own its
properties and to transact the business in which it is currently engaged. DIS-CA
is not and is not required to be, qualified to transact business as a foreign
corporation in any other jurisdiction.
(b) Power and Authority. DIS has full corporate power to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been authorized by the DIS Board of Directors. No other corporate
acts or proceedings on the part of DIS will be necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement constitutes a
valid and legally binding obligation of DIS and is enforceable against DIS in
accordance with its terms.
(c) Ownership of Shares. The authorized capital of DIS consists of
20,000,000 shares of common stock, $.01 par value of which 8,562,617 shares are
issued and outstanding, together with 2,482,000 shares of Series F Preferred
Stock and 2,000,000 shares of Series G Preferred Stock which are outstanding out
of an authorized 5,000,000 shares of Preferred Stock. All of the Shares of
capital stock of DIS are validly issued, fully paid and nonassessable. There are
no agreements, arrangements, options, warrants, calls, rights or commitments of
any character relating to the issuance, sale, purchase, retirement or redemption
of any Shares, except as set forth in the Form 10-K for DIS for the year ended
December 31, 1994, a copy which is attached hereto and marked as Exhibit 4(c)-1,
or except as may be issued pursuant to a proposed Series H Preferred Stock to be
issued in connection with the retirement of certain debt the presently
contemplated particulars of which are attached hereto as Exhibit 4(c)-2.
(d) Validity of Shares and Warrant. The Shares and Warrant, when issued
in accordance with the terms of this Agreement will be duly and validly issued.
The issuance of the Shares and Warrant and any subsequent issuance of the shares
underlying the Warrant are not and will not be subject to any preemptive rights
or rights of first refusal and, when issued, sold, and delivered in compliance
with the provisions of this Agreement and the terms of tile Warrant and in
accordance with the DIS Certificate of Incorporation, the Shares, Warrant and
shares underlying the Warrant will be validly issued, fully paid and
nonassessable, and will be free of any liens with the shares of DIS common stock
issuable on exercise of the Warrant having been duly reserved for issuance upon
exercise; provided, however, that the Shares, Warrant and shares underlying the
Warrant will be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
(e) Offering. Assuming the accuracy of the representations contained in
Section 5 hereof, the offer, issue and sale of the Shares and Warrant are and
will be exempt from the registration requirements of the 1933 Securities Act,
and have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
federal and California law.
(f) No Breach. This execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Certificate of Incorporation or By-Laws of DIS;
(ii)violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon DIS, or upon the properties or business of DIS; or
(iii)violate any statute, law or regulation of any jurisdiction applicable
to the transactions contemplated herein; or
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(iv)conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination, or cancellation under, the Certificate of
Incorporation or Bylaws of DIS, or any note, instrument, agreement, mortgage,
lease, license, permit, judgment, order, award, decree or other authorization,
right, restriction or obligation to which DIS is a party or any of its
properties is subject or by which any of them is bound or any statute, other law
or regulatory provision affecting any of them; or
(v) requiring the approval, consent or authorization of, or the
making of any declaration, filing or registration with, any third party or any
foreign, federal, state or local court, governmental authority or regulatory
body, except for such filings as are required pursuant to the Rules and
Regulations of the Securities and Exchange Commission.
(g) Financial Statements and Other Financial Information. Exhibit 4(c)
hereto contains: (i) the audited balance sheet and statements of operations of
DIS as of December 3 1, 1994 (herein sometimes called the "Balance Sheet") and
the related statements of operations and retained earnings for the year then
ended, together with appropriate notes to such financial statements. Exhibit
4(g) attached hereto is the DIS Form 10-Q for the nine months ended September
30, 1995 and contains the unaudited balance sheet and statement of operations
for the nine month period then ended. (the "Interim Statement"). The Balance
Sheet and Interim Statement are hereinafter collectively referred to as the
"Financial Statements." The financial statements present fairly the financial
condition, results of operations and charges in financial position of DIS as at
the dates or for the periods indicated therein in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise indicated in such Financial Statements or the notes thereto), subject,
in the case of unaudited interim consolidated financial statements, to year-end
adjustments consisting only of normal recurring accruals.
(h) Operations Since Interim Statement Date.
(i) Since September 30, 1995, there has been, except as otherwise
described in this Agreement: (i) no material adverse change (either in any one
case or in the aggregate) in the assets, properties, liabilities, business,
prospects or in the condition, financial or otherwise, of DIS and no fact or
condition exists which might cause such a change in the future; (ii) no damage,
destruction, loss or claim, to assets, whether or not covered by insurance, or
condemnation or other taking of assets, affecting the properties, assets,
business or prospects of DIS; and (iii) no other occurrence, event or condition
(either in one case or in the aggregate) which adversely affects the properties,
assets, business or prospects of DIS.
(ii)Since September 30, 1995, DIS has not: (A) issued, delivered,
agreed (actually or contingently) to issue or deliver, or granted any option,
warrant or right to purchase, any capital stock, or security convertible into
capital stock, or any bonds, notes, or other securities, or borrowed or agreed
to borrow any funds; (B) paid any obligation or liability (absolute or
contingent) other than current liabilities reflected in the Financial Statements
and current liabilities reasonably incurred since September 30, 1995, in the
ordinary course of business; (C) declared or made, or agreed to declare or make,
any payment of dividends or distributions to shareholders or purchased, retired,
redeemed or otherwise acquired, or agreed to purchase, redeem or otherwise
acquire any, of its capital stock; (D) except in the ordinary course of
business, mortgaged, pledged or encumbered any assets; (E) except for its sale
of its mobile MRI in San Diego, sold, leased, abandoned or otherwise disposed of
any real property or interest therein or any machinery equipment or other
operating property or sold, licensed, assigned, transferred or otherwise
disposed of any patent, or application therefor or any invention, process,
know-how, formula, pattern, design, trade secret or other intangible asset or,
except for fair value in the ordinary course of business, sold or transferred or
agreed to sell or transfer any other assets; (F) otherwise than in the ordinary
course of business canceled or agreed to cancel any debts or claims, waived or
agreed to waive any rights of value, or allowed to lapse or failed to keep in
force any franchise, permit or other authorization or right; (G) made or
permitted any amendment or termination of any material contract, license or
other agreement; (H) otherwise than in the ordinary course of business
undertaken or committed to capital expenditures exceeding $10,000 in the
aggregate; (I) other than in
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the ordinary course of business instituted, or made any material increase in,
any salary, profit sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare or other employee
benefit plan; (J) other than in the ordinary course of business made any accrual
or arrangement for or payment of any bonus or special compensation of any kind
or any severance or termination pay to any present or former officer or employee
during the past year; (K) made any change in the accounting policies, methods or
practices followed by DIS or made any material change in depreciation,
amortization or inventory valuation policies or rates or methods theretofore
used or adopted except as reflected in the Financial Statements; (L) amended its
Certificate of Incorporation or Bylaws; or (M) entered into or become committed
to enter into any other material transaction except in the ordinary course of
business.
(i) No Undisclosed Liabilities. DIS is not aware of any material
liability, absolute or contingent, accrued or unaccrued, which is not shown or
which is in excess of amounts shown or reserved for in the Financial Statements
or referred to in the notes thereto, other than liabilities of the same nature
as those set forth in the Financial Statements and notes thereto and reasonably
incurred in the ordinary course of its business after September 30, 1995.
(j) Taxes. DIS has filed all federal, state, county, local and foreign
income, excise, property, sales and other tax returns which are required, by
statute, other law, regulation or otherwise, to be filed up to and including the
date hereof and have paid all taxes (and any other governmental charges, duties,
penalties, interest or fines) which have become due pursuant to such returns or
otherwise, or pursuant to any assessment which has become payable, and no
extension of the time for filing any tax return is presently in effect. All such
returns and the returns to be filed by DIS with respect to any interim period
thereafter are or will be true and correct to the extent filed prior to the date
of this Agreement. To the extent that any tax liability or assessment had
accrued but had not yet become payable at September 30, 1995, or has been
proposed for assessment or determined but remains unpaid, the same has been
reflected as a liability on the books and records of DIS and in the Financial
Statements or referred to in the notes thereto. Tax reserves are adequate for
contingent liabilities which may arise after the date of this Agreement due to
events prior to the execution of this Agreement. No waiver or extension of the
statute of limitations relating to the assessment of any federal income tax
against DIS is presently in effect and DIS has not been notified of any audit.
All payments for withholding taxes, unemployment insurance and other amounts
required to be paid to any governmental authority in respect of employees of DIS
have been paid or duly provided for on their respective books and records,
except for approximately $400,000 presently due on unpaid withholding taxes,
which is in the process of being incrementally paid and should be paid within
the next 24 months.
The tax returns for DIS have never been examined by any governmental
authority.
(k) Availability and Ownership of Assets and Legality of Use. The
assets owned or leased by DIS constitute all of the assets used and needed for
its business as it has historically been conducted by it, are in good and
serviceable condition, ordinary wear and tear excepted, and suitable for the
uses for which intended; and such assets and their use conform in all material
respects to all applicable laws, regulations, rules, ordinances, codes, licenses
and permits (including without limitation, building, business use, environmental
and occupational safety and health requirements), and no notice of any material
violation of any applicable law, regulation, rule, ordinance, code, license or
permit relating to such assets and their use has been received by Seller.
(l) Accounts Receivable; Inventories. All accounts receivable of DIS
have arisen from a bona fide transactions by it in the ordinary course of
business and DIS has received no notice that such accounts receivable are
subject to defense, counterclaim or setoff or are in dispute except as otherwise
stated in this Agreement. All of such accounts are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserve for
contractuals and doubtful accounts which reserves (i) with respect to accounts
receivable shown in the Financial Statements are reflected thereon, and (ii)
with respect to accounts receivable acquired since September 30, 1995, are
reflected on the books and records and are not in excess of an amount bearing
the same proportion to such accounts receivable as the applicable reserves in
the Financial Statements bear to the aggregate recorded amount of the accounts
receivable shown on such Financial Statements.
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(m) No Violation or Litigation. (i) DIS has received no notice of any
facts which would lead it to believe DIS is in material violation of, or has
violated, any law, regulation, rule, writ, injunction, decree or order of any
court or any foreign, federal, state, municipal or other government,
governmental department, commission, board, bureau, agency or instrumentality
which will result in expense or interfere with the business of DIS; (ii) there
are no material lawsuits, claims, suits, proceedings or investigations pending
or to the best of its knowledge threatened against or affecting DIS, its
officers or directors or its properties, operations, or business; and (iii)
there is no action, suit or proceeding by any governmental agency pending or to
the best of its knowledge threatened which questions the legality or propriety
of this Agreement or the transactions contemplated hereby. DIS is in material
compliance with all laws, regulations, rules, writs, injunctions, decrees or
orders of any court or any foreign, federal, state, municipal or other
government, governmental department, commission, board, bureau, agency or
instrumentality which govern its business.
(n) Insurance. DIS keeps insurance of a type and in amounts standard
for its industry in full force and effect. DIS is not in default or breach under
any of such insurance policies or has not failed to give any notice or present
any claim thereunder in a due and timely manner.
(o) Real Property. DIS owns no real property.
(p) Real Property; Leases. (i) a description of each lease or other
agreement (showing the annual rental, the expiration date, option periods, if
any, a street address of the real property covered and a brief description of
the improvements thereon) under which DIS is lessee of, or holds or operates any
real property, (ii) a description of all other interests in real property of
DIS, and (iii) a description of any other contract, agreement, lease,
concession, or commitment relating to or affecting real property or any interest
therein to which DIS is a party or by which DIS is bound has been provided to
PHS. All of said leases are valid and in full force and there does not exist any
default or event that with notice or lapse of time or both would constitute a
default under any of those leases. None of the rights of DIS under any such
leasehold or other interest in such real property will be impaired by
consummation of the transactions contemplated by this Agreement.
(q) Easement; Ingress; Condemnation. DIS has all easements and rights
for ingress and egress and for utilities and services necessary for the
operations presently conducted by it. Neither the whole or any part of any real
property or interest therein owned, leased, used or occupied by DIS is
threatened by condemnation.
(r) Personal Property. DIS owns or leases all the personal property
used to conduct its business. DIS has good, indefeasible and marketable title to
all personal property that it purports to own, free and clear of all security
interests, liens, encumbrances, pledges, defects in title, restrictions and
other burdens, except as has previously been disclosed to PHS.
(s) Personal Property; Leases. A list of all leased machinery,
equipment, vehicles and other leased tangible personal property and a
description of all other interests, of DIS in tangible personal property has
been delivered to PHS. None of the rights of DIS under any such leasehold or
other interest in tangible personal property will be impaired by the
consummation of the transactions contemplated by this Agreement.
(t) Governmental and Other Authorizations. DIS has all governmental and
other licenses, permits, orders, certificates and other authorizations necessary
to own or lease its properties, to operate its respective properties and assets
and to carry on its business as now conducted ("Permits"). All of the permits
are in full force and effect and constitute legal, valid and binding obligations
of the respective parties hereto, and will not be materially affected as a
result of the execution of this Agreement. No proceeding or other action is
pending or threatened to revoke or limit any of the Permits, and there is no
basis for any such revocation or limitation. DIS has not breached or defaulted
under, nor is it in breach or default under, nor is it alleged to have breached
or defaulted under, any of the Permits and no event has occurred which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach.
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(u) Patents, Trade Names, Trademarks and Other Rights. DIS owns or has
the perpetual royalty free right to use all patents, trademarks, servicemarks,
copyrights, trade names, inventions, improvements, processes, formulae, trade
secrets, know-how and proprietary or confidential information used in conducting
its business or which are necessary to continue such business hereafter. DIS has
no knowledge or notice that any infringement of any patent, patent right,
trademark, servicemark, trade name, brand name or copyright or registration
thereof has occurred or results in any way from the operations or business of
DIS. DIS has had no notice of, or knowledge of any basis for, a claim against it
that any of its operations, activities, products, equipment, machinery or
processes infringes the patents, trademarks, servicemarks, trade names,
copyright or other property rights of others.
(v) Employees and Agents and Related Agreements.
(i) DIS is not a party to or bound by any (A) employee collective
bargaining agreement, employment agreement, consulting agreement, deferred
compensation agreement, or covenant not to compete except for those agreements
with Norman Hames and Daniel Steinell; (B) contract or agreement with any
officer, director shareholder or employee, agent or attorney-in-fact; or (C)
employees' pension, profit sharing, stock option, bonus, incentive, stock
purchase, welfare, life insurance, hospital or medical benefit plan (DIS does
have a medical benefit plan, the provisions of which have been provided to PHS)
or any other employee benefit agreement or plan. DIS's relations with its
employees is satisfactory.
(ii)No shareholder, director or officer of DIS, (A) owns, directly
or indirectly, any interest in, or is a director, officer or employee of, or
consultant to, any entity which is a competitor, supplier or customer of DIS;
(B) owns directly or indirectly, in whole or in part, any property, asset or
right, tangible or intangible (including, but not limited to, any patent,
trademark, serviceman, trade name, brand name, copyright, pending application
for any patent, trademark, serviceman, or copyright, invention, process,
know-how, formula, design or trade secret) which is associated with any
property, asset or right owned by DIS or which DIS is presently operating or
using or the use of which is necessary for its business; (C) is, subject to any
agreement with any person or entity requiring such shareholder, director,
officer or employee to assign any interest in any inventions or trade secrets or
to keep confidential any information or containing any prohibitions or
restriction of competition or solicitation of customers.
(w) Status of Contracts. Each of DIS' material contracts is a valid and
binding obligation of the parties thereto. DIS has not breached or defaulted
under, nor is it in breach or default under, or has notice of any breach or
default under, any of the contracts and, no other party to any of the contracts
has breached or defaulted under any of the contracts, and no event has occurred
which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by DIS or, by any such otter party. In late
1995, DIS received a notice of default under a financing arrangement with Sanwa
Bank. The financing is current and has been for sometimes however, Sanwa has
never withdrawn the default notice.
(x) Use of Proceeds. DIS will utilize the Purchase Price and PHS loan
proceeds totalling$4,000,000 as payment against what is referred to as its "Loan
B" from DVI Financial Services, Inc.
(y) Disclosure. None of the information or documents furnished to PHS
or any of its representatives and none of the representations or warranties
contained herein is false or misleading or omits to state a material fact
required to be stated therein or herein in order to make the statements therein
or herein not misleading.
(z) Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving DIS. There is no material action, suit
or claim or legal, administrative or arbitral proceeding or any investigation
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending or, to the best knowledge of Seller, threatened
against or involving DIS or any of its properties or assets.
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(aa) Brokers or Finders. No broker's or finder's fee will be payable by
DIS in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by D IS.
5. PHS Representations. As an inducement for DIS to enter into this
Agreement and consummate the transactions contemplated hereby, PHS hereby
represents and warrants to DIS and agrees as follows:
(a) PHS acknowledges that the Shares and Warrant, and shares underlying
the Warrant, are being acquired solely by and for PHS for investment and not as
nominees or agents for the benefit of any other person, and PHS has no current
intention of distributing, reselling or assigning the Shares, Warrant, and hares
underlying the Warrant, other than in accordance with the provisions of the
Securities Act of 1933, as amended (the "1933 Act"), rules under the 1933 Act
and any other applicable laws.
(b) PHS understands that neither the Shares, Warrant, or the shares
underlying the Warrant, have been registered under the 1933 Act, or under the
laws of any jurisdiction, and that DIS is under no obligation to register or
assist PHS in registering the Shares, Warrant, or the shares underlying the
Warrant. PHS understands and agrees further that (i) the Shares, Warrant, or the
shares underlying the Warrant, must be held indefinitely unless subsequently
registered under the 1933 Act or an exemption from registration under the 1933
Act covering the sale of the Shares, Warrant, or he shares underlying the
Warrant, is available. PHS understands that legends stating that the Shares have
not been registered under the 1933 Act and setting out or referring to the
restrictions on transferability and sale of the Shares and Warrant, or the
shares underlying the Warrant, will be placed on the certificates, evidencing
the Shares, and Warrant, or the shares underlying the Warrant.
(c) PHS is aware that (i) investment in the Shares, Warrant, or the
shares underlying the Warrant, involves a possible degree of risk, lack of
liquidity and substantial restrictions on transferability of interest, and (ii)
no federal or state agency has made any finding or determination as to the
fairness for investment in, nor has made any recommendation or endorsement of,
the Shares, Warrant, or the shares underlying the Warrant.
(d) PHS has sufficient financial resources available to support the
loss of all or a portion of PHS's investment in the Shares and Warrant, has no
need for liquidity in the investment in the Shares and Warrant and is able to
bear the economic risk of the investment.
(e) PHS is sophisticated and experienced in financial, business and
investment matters, is in the same business as DIS, is aware of DIS' financial
condition and business affairs, and, as a result, PHS is in a position to
evaluate the merits-and risks of an investment in the Shares and Warrant, the
restrictions on transferability and the tax consequences of the investment.
(f) PHS has been furnished any and all materials PHS has requested
relating to DIS, the Shares, Warrant, or the shares underlying the Warrant, or
the purchase and sale of the Shares and Warrant hereby and PHS has been afforded
the opportunity to ask questions of DIS concerning the terms and conditions of
the purchase and sale hereby and to obtain any additional information necessary
to verify the accuracy of any representations or information appearing in this
Agreement. PHS, either alone or with PHS's professional advisors, has the
capacity to protect PHS's interests in connection with this transaction.
(g) PHS has relied solely upon the advice of its advisors (if any),
advice of its tax experts and independent investigations made by PHS and/or its
representative(s) in deciding to invest in the Shares and Warrant, and no oral
or other representations other than those explicitly in this Agreement have been
made to PHS regarding the Shares and Warrant.
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(h) PHS is a duly organized and validly existing corporation under the
laws of the State of New York and has the power and lawful authority to own its
properties and to transact the business in which it is currently engaged. PHS is
not, and is not required to be, qualified to transact business as a foreign
corporation in any jurisdiction where it is not so qualified.
(i) PHS has full power to enter into this Agreement and the related
agreements which are exhibits to this Agreement and to carry out its respective
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the related agreements and the consummation of the transactions
contemplated hereby and thereby have been or will be duly and validly authorized
by PHS's board of directors. No other acts or proceedings on the part Of PHS
will be necessary to authorize this Agreement or the related agreements or the
transactions contemplated hereby and thereby. This Agreement constitutes a valid
and legally binding obligation of PHS and is enforceable against PHS in
accordance with its terms.
(j) No Breach. The execution, delivery and performance of this
Agreement and the related agreements which are exhibits to this Agreement and
the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the articles of incorporation of PHS;
(ii)violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon PHS, or upon the properties or business of PHS;
(iii) violate any statute,law or regulation of any jurisdiction applicable
to the transactions contemplated herein;
(iv)conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination, or cancellation under, any note,
instrument, agreement, mortgage, lease, license, permit, judgment, order, award,
decree or other authorization, right, restriction or obligation to which the PHS
is a par y or any of its properties is subject or by which any of them are bound
or any statute, other law or regulatory provision affecting any of them; or
(v) requiring the approval, consent or authorization of, or the
making of any declaration, filing or registration with, any third party or any
foreign, federal, state or local court, governmental authority or regulatory
body.
(k) No Violation or Litigation. PHS has received no notice of any facts
which would lead it to believe (i) PHS is in material violation of, or has
violated, any law, regulation, rule, writ, injunction, decree or order of any
court or any foreign, federal, state, municipal or other government,
governmental department, commission, board, bureau, agency or instrumentality
which will result in expense or interfere with the business of PHS; and (ii)
there is any action, suit or proceeding by any governmental agency pending or to
the best of its knowledge threatened which question; the legality or propriety
of this Agreement or the transactions contemplated hereby. PHS is in compliance
with all laws, regulations, rules, writs, injunctions, decrees or orders of any
court or any foreign, federal, state, municipal or other government,
governmental department commission, board, bureau, agency or instrumentality
which govern its business.
(l) Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving PHS.
(m) Hames Guaranty. PHS will use its best efforts to promptly remove
Norman Hames from all personal guarantees which he has given in behalf of DIS
obligations.
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(n) Brokers or Finders. No broker's or finder's fee will be payable by
PHS in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by PHS.
(o) Disclosure. None of the information or documents furnished to DIS
or any of its representatives and none of the representations or warranties
contained herein is false or misleading or omits to state a material fact
required to be stated therein or herein in order to make the statements therein
or herein not misleading.
6. Post Execution Obligations.
(a) Further Assurances. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. PHS shall be bound by and shall implement the related agreements.
(b) Survival of Representations and Warranties of Parties. All
representations and warranties of DIS and PHS made herein shall survive the
execution and delivery hereof for one (1) year following the date hereof.
(c) Registration Rights.
(i) "Piggyback Registration". If DIS at any time proposes to
register any of its common stock, $.01 par value under the 1933 Act (other than
in connection with a merger or pursuant to Form S-8 or other comparable form),
DIS shall request that the managing underwriter (if any) of such underwritten
offering include up to 1,000,000 shares of the Shares (the "Registrable
Securities") in such registration and DIS shall use its best efforts to cause
such managing underwriter to grant such request so long as it doesn't diminish
the proceeds to be received by DIS from such offering. If such managing
underwriter agrees to include the Registrable Securities in the underwritten
offering, DIS shall at such time give prompt written notice to PHS of its
intention to effect such registration and of PHS' right under such proposed
registration, and upon the request of 'HS delivered to DIS within twenty (20)
days after giving such notice (which request shall specify the Registrable
Securities intended to be disposed of by PHS and the intended method of
Disposition thereof), DIS shall include such Registrable Securities held by PHS
requested to be included in such registration; provided, however, that:
A. If, at any time after giving such written notice of DIS'
intention to register any of the Registrable Securities and prior to the
effective date of the registration statement filed in connection with such
registration, DIS shall determine for any reason not to register or to delay the
registration of such Registrable Securities, at its sole election, DIS may give
written notice of such determination to PHS and thereupon shall be relieved of
its obligation to register any Registrable Securities issued or issuable in
connection with such registration (but not from its obligation to pay
registration expenses in connection therewith or to register the Registrable
Securities in a subsequent registration); and in the case of a determination to
delay a registration shall thereupon be permitted to delay registering any
Registrable Securities for the same period as the delay in respect of securities
being registered for DIS' own account.
B. If the managing underwriter in such underwritten offering
shall advise DIS that it declines to include a portion or all of the Registrable
Securities requested by PHS to be included in the registration statement, then
distribution of all or a specified portion of the Registrable Securities shall
be excluded from such registration statement. In such event DIS shall give PHS
prompt notice of the number of Registrable Securities excluded from such
registration at the request of the managing underwriter. No such exclusion shall
reduce the securities being offered by the Company for its own account to be
included in such registration statement.
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(ii)Option to Include Registrable Securities in Offering. PHS,
subject to the provisions of Section 6(c), shall have the option to include the
Registrable Securities in DIS' underwritten offering. DIS shall not be required
to include any of the Registrable Securities in an underwritten offering of DIS'
securities unless PHS accepts the terms of the underwriting as agreed upon
between DIS and the underwriters selected by it (provided such terms are usual
and customary for selling stockholders) and PHS agrees to execute and/or deliver
such documents in connection with stock registration as DIS or the managing
underwriter may reasonably request.
(iiiCooperation with DIS. PHS will cooperate with DIS in all
respects in connection with the registration rights, including, timely supplying
all information reasonably requested by DIS and executing and returning all
documents reasonably requested in connection with the registration and sale of
the Registrable Securities.
(d) Registration Procedures. If and whenever DIS is required by any of
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Securities under the 1933 Act, DIS shall
(except as otherwise provided in this Agreement), as expeditiously as possible:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement and shall use its best efforts to
cause such registration statement to become effective and remain effective until
all the Registrable Securities are sold or become capable of being publicly sold
without registration under the 1933 Act.
(ii)prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the 1933 Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
DIS shall desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to sales of securities from time to time in connection
with a registration statement pursuant to Rule 415 of the Commission);
(iiifurnish to PHS such numbers of copies of a summary prospectus
or other prospectus, including a preliminary prospectus or any amendment or
supplement to any prospectus, in conformity with the requirements of the 1933
Act, and such other documents, as PHS may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities;
(iv)use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the underwriter shall reasonably request, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable PHS to consummate the public sale or other disposition in such
jurisdictions of the securities owned by PHS, except that DIS shall not for any
such purpose be required to qualify to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(v) use its best efforts to list such securities on (x) any
securities exchange on which any securities of DIS is then listed, if the
listing of such securities is then permitted under the rules of such exchange
and/or (y) Nasdaq, if the securities are then traded or quoted thereon, subject
to applicable Nasdaq rules;
(vi)enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
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(viinotify PHS at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(viitake such other actions as shall be reasonably requested by
PHS to facilitate the registration and sale of the Registrable Securities;
provided, however, that DIS shall not be obligated to take any actions not
specifically required elsewhere herein which in the aggregate would cost in
excess of $5,000.
(e) Expenses. All expenses incurred in any registration of the
Registrable Securities under this Agreement shall be paid by DIS, including,
without limitation, printing expenses, fees and disbursements of counsel for
DIS, expenses of any audits to which DIS shall agree or which shall be necessary
to comply with governmental I requirements in connection with any such
registration, all registration and filing fees for the Registrable Securities
under federal and State securities laws, and expenses of complying with the
securities or blue sky laws of any jurisdictions pursuant to Section 6(d)(iv);
provided, however, DIS shall not be liable for (i) any discounts or commissions
to any underwriter; (ii) any stock transfer taxes incurred with respect to
Registrable Securities sold in the Offering or (iii) the fees and expenses of
counsel for PHS, provided that DIS will pay the costs and expenses of DIS
counsel when the DIS counsel is representing any or all selling security
holders.
(f) Indemnification. In the event any Registrable Securities are
included in a registration statement pursuant to this Agreement:
(i) Indemnity. Without limitation of any other indemnity provided
to PHS, either in connection with the Offering or otherwise, to the extent
permitted by law, DIS shall indemnify and hold harmless PHS, the affiliates,
officers, directors and partners of PHS, any underwriter (as defined in the 1933
Act) for PHS, and each person, if any, who controls PHS or underwriter (within
the meaning of the 1933 Act or the Securities Exchange Act of 1934 (the
"Exchange Act"), against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the 1933 Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (1) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (2) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (3) any violation or alleged violation by DIS of the 1933 Act, the
Exchange Act, or any state securities law or any rule or regulation promulgated
under the 1933 Act, the Exchange Act or any state securities law, and in each
case, the Company shall reimburse PHS, and each such affiliate, officer or
director or partner, underwriter or controlling person for any legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that DIS shall not
be liable to PHS or any other party in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
PHS or any underwriter or any other officer, director or controlling person
thereof.
(ii)Indemnity. PHS shall indemnify and hold harmless DIS, its
affiliates, its counsel, officers, directors, shareholders and representatives,
any underwriter (as defined in the 1933 Act) and each person, if any, who
controls DIS or the underwriter (within the meaning of the 1933 Act or the
Exchange Act), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act, the Exchange Act
or any state securities law, and PHS shall reimburse DIS and each such
affiliate, counsel, Officer, director, shareholder, partner, or representative,
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underwriter or controlling person for any legal or other expenses incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages or liabilities (or
actions and respect thereof) arise out of or are based upon any statements or
information provided in writing by PHS to DIS in connection with the offer or
sale of Registrable Securities. Notwithstanding the above, the PHS
indemnification shall be limited to an amount equal to the proceeds to PHS of
the Registrable Securities sold for the account of PHS.
(iii Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 6(f) of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 6(f), deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in and if the indemnifying party agrees in writing that it will be
responsible for any costs or expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Agreement only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Agreement.
(iv)Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified f arty as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
consideration. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount PHS shall be obligated to contribute
pursuant to the Agreement shall be limited to an amount equal to the proceeds to
PHS Of the Registrable Securities sold pursuant to the registration statement
which gives rise to such obligation to contribute (less the aggregate amount of
any damages which PHS has otherwise been required to pay in respect of such
loss, claim, damage, liability or action or any substantially similar loss,
claim, damage, liability or action arising from the sale of such Registrable
Securities).
(v) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
(g) Assignment of Registration Rights. The registration rights of PHS
under this Agreement may not be assigned without the written prior consent of
DIS.
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7. Miscellaneous.
(a) Entire Agreement. This Agreement (including the Exhibits hereto)
represent the entire understanding and agreement among the parties with respect
to the subject matter hereof, and supersedes all other negotiations,
understandings and representations (if any) made by and among such parties.
(b) Amendments. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
(c) Binding Effect. All of the terms and provisions of this Agreement,
whether so expressed or not, shall be binding upon, inure, to the benefit of,
and be enforceable by the parties and their respective administrators,
executors, legal representatives, heirs, successors and permitted assigns.
(d) Headings. The headings contained in this Agreement are for
convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect in any way the meaning or interpretation of this
Agreement.
(e) Notices. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telefax communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To PHS:
Primedex Health Systems, Inc.
1516 Cotner Avenue
Los Angeles, California 90025
Attention: Steven Hirschtick, Senior Vice President
Fax No.: (310) 478-5310
To DIS:
Diagnostic Imaging Services, Inc.
5730 Uplander Way, Suite 101
Culver City, CA 90230
AttentionNorman Hames, President
Fax No.: (310) 670-5644
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by telex or telefax; and (c) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
(f) Severability. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
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(g) Waivers. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder. Any waiver by any
party of any breach of any provision of this Agreement should not be construed
as a waiver of any continuing or succeeding breach of such provision, a waiver
of the provision itself, or a waiver of any right, power or remedy under this
Agreement. No notice to or demand or any party in any case shall, of itself,
entitle such party to any other or further notice or demand in similar or other
circumstances.
(h) Governing Law. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the internal laws of the State of California without regard to principles
of conflicts of laws.
(i) Preparation of Agreement. This Agreement shall not be construed
more strongly against any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and is equally responsible
for its preparation.
(j) Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original agreement but all
of which shall be considered one and the same instrument, and shall become a
binding agreement when one or more counterparts have been signed by each of the
parties.
(k) Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any right, or remedies under or by reason of this
Agreement on any persons other than the parties to t and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any Party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
IN WITNESS WHEREOF, the parties of this Agreement have duly executed it on
the 22nd day of March, 1996.
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Herm Rosenman
Herm Rosenman, President
DIAGNOSTIC IMAGING SERVICES, INC.
By: /s/ Norman Hames
Norman Hames, President
STOCKHOLDERS AGREEMENT
EX- 10.27
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as March 22, 1996 by
and among Diagnostic Imaging Services, Inc., a Delaware corporation (the
"Company "), Primedex Health Systems, Inc., a New York corporation (" PHS ") and
Norman Hames, an individual ("NH") (collectively, the "Shareholders").
WHEREAS, PHS and NH are holders of shares of common stock ("Common Stock")
of the Company;
WHEREAS, PHS and NH desire to secure the election of the nominees of PHS
and NH to the Board of Directors of the Company as well as assure the Company
that its transactions will always be in the best interest of the Company; and
WHEREAS, PHS has entered into a Securities Purchase Agreement
("Agreement"), dated as of March 22, 1996, with tie Company, and PHS, under
which PHS will invest a substantial amount in the Company; and a condition of
closing the Securities Purchase Agreement is the execution and delivery by the
Shareholders and the Company of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants contained herein, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. VOTING AGREEMENT REGARDING SHARES.
1.1 Agreement to Vote. Each Shareholder agrees on behalf of himself or
itself and any of the following persons to whom the Shareholder may transfer
shares of Common Stock owned or controlled by such Shareholder ("Shares"): (a) a
member of his or her immediate family; (b) a trust established by the
Shareholder for the benefit of the Shareholder or his or her immediate family by
gift or inheritance; or (c) a person that directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Shareholder (individually, an "Affiliated Transferee") to hold all of
the Shares now held or subsequently acquired registered in his or its name
subject to, and to vote the Shares in accordance with, the provisions of this
Agreement.
1.2 Board of Directors. Each Shareholder shall vote his or its Shares
(or shall consent pursuant to an action by written consent of the Company's
shareholders) so as to elect a four person board of which two nominees shall be
designated by NH and two nominees by PHS, their respective successors,
affiliates, or assigns shall also be so bound; and, in the event that any
designated director shall not complete his term of office as a director and a
successor director is to be elected, each Shareholder shall vote his or its
Shares to elect as such successor director a nominee designated by the party
whose appointed director's term is uncompleted, its successors, affiliates or
assigns.
1.3 Removal. On all matters relating to the removal of directors of the
Company, each Shareholder shall vote his or its Shares (or shall consent
pursuant to an action by written consent of the Company's shareholders) to
ensure that no director of the Company may be removed from the Board, with or
without cause, except upon the prior written authorization or request of the
appropriate appointing Shareholder.
1.4 Conflicting Charter or By-Law Provisions. Each Shareholder shall
vote his or her Shares (or shall consent pursuant to an action by written
consent of the Company's shareholders), and shall take all other action
necessary, to ensure that the Certificate of incorporation and By-Laws of the
Company facilitate and do not at any time conflict with the provisions of this
Agreement.
<PAGE>
1.5 Approval of Transactions. Each Shareholder shall vote his or its
Shares (or shall consent pursuant to an action by written consent of the
Company's shareholders) on any issue put to the vote of the Company's
shareholders in the manner which the Board of Directors of the Company
recommends.
1.6 Rights Assignable. NH and PHS may assign their respective rights
and benefits under this Agreement to any person that acquires shares of Common
Stock from them.
1.7 Certain Types of Issue. So long as NH and Howard Berger, M.D. shall
serve as directors of the Company, neither shall take nor recommend any material
action involving the Company which is not approved by the other.
2. CONDITION PRECEDENT; TERMINATION.
2.1 Condition Precedent to Obligations. The obligation of each party to
this Agreement to perform its obligations under this Agreement shall be subject
to the consummation and performance of the transactions contemplated by the
Agreement.
2.2 Termination of Rights regarding the Company. The rights of the
Shareholders under this Agreement shall terminate upon the earliest to occur of
(i) with respect any individual Shareholder, the date on which such Shareholder
or any Affiliated Transferee no longer owns more than five percent (5%) of the
outstanding Shares, or (ii) the occurrence of the merger or consolidation of the
Company into, or the sale of all or substantially all of the Company's assets to
another entity.
3. LEGEND.
3.1 Legend. Each certificate representing Shares owned by any
Shareholder or transferred to any Affiliated Transferee shall be endorsed with
the following legend:
"THE VOTING OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT BY AND
AMONG CERTAIN HOLDERS OF COMMON STOCK OF THE CORPORATION. BY ACCEPTING
ANY INTEREST IN SUCH SECURITIES THE PERSON ACCEPTING SUCH INTEREST
SHALL BE DEEMED TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH
STOCKHOLDERS' AGREEMENT. COPIES OF SUCH STOCKHOLDERS' AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST OF THE SECRETARY OF THE CORPORATION."
3.2 Legend Removal. The legend referred to in Section 3.1 shall be
removed (i) from every certificate upon termination of this Agreement in
accordance with the provisions of Section 2 above or (ii) from any certificate
representing Shares owned by any Shareholder or transferred to any Affiliated
Transferee that are transferred to a person other than a signatory to this
Agreement.
3.3 Cooperation with Filings. Each Shareholder shall cooperate fully
with the Company with regard to any filings required under the Securities and
Exchange Act of 1934, as amended, or any other federal or state securities law,
rule or regulation, relative to such Shareholder's participation in this
Agreement, which cooperation shall include, without limitation, the prompt
response to written requests for information. Each Shareholder hereby agrees to
indemnify and hold harmless the Company and their respective officers,
directors, employees, shareholders and agents from and against any and all
losses, damages, costs and expenses (including attorney's fees and other costs)
and liabilities due or arising out of information such Shareholder shall provide
to the Company pursuant to this Section 3.3 but only if such information
included an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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4. MISCELLANEOUS.
4.1 Representations. Each of the parties hereto represents that this
Agreement has been duly authorized, executed and delivered by such party and
constitutes a legal, valid and binding obligation of such party, enforceable
against it in accordance with the terms of this Agreement.
4.2 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof, that money damages shall be
inadequate for such breach, and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or in
equity.
4.3 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the parties hereto.
4.4 Notices. All notice and other communications provided for herein
shall be in writing and shall be delivered by hand, telecopied or sent by
overnight, certified or registered mail, return receipt requested, postage
prepaid, addressed in the manner set forth on the signature pages of this
Agreement (or to such other address for a party as shall be specified in a
notice given in accordance with this Section 4.4). All such notices shall be
conclusively deemed to be received and shall be effective, if sent by hand
delivery or telecopied, upon receipt, or if sent by registered or certified
mail, on the fifth day after the day on which such notice is mailed.
4.5 Benefit; Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement either express or implied is intended to confer on any
person other than the parties thereto and their respective successors and
permitted assigns, any rights, remedies or obligations under or by reason of
this Agreement.
4.6 Miscellaneous. This Agreement sets forth the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof. All representations and
warranties contained herein shall survive the execution and delivery of this
Agreement, regardless of any investigation made by any party hereto or on such
party's behalf. The headings in this Agreement are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one instrument.
4.7 Severability. If any provisions of this Agreement shall be deemed
invalid or unenforceable pursuant to a final determination of any court of
competent jurisdiction, or as a result of future legislative action, such
determination or action shall be construed so as not to affect the validity,
enforceability or effect the other provisions of this Agreement, and this
Agreement shall be construed as if the invalid or unenforceable provision were
not contained herein, and the rights and obligations of the parties shall be
construed and enforced accordingly.
4.8 Amendments and Waivers. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the Shareholders.
4.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one instrument, and each of
which may be executed by less than all of the parties to this Agreement.
4.10 Governing Law. The agreement shall be governed by an construed in
accordance with the laws of the state of California without regard to the choice
of law provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have cause this Stockholders
Agreement to be executed and delivered as of the date first above written.
DIAGNOSTIC IMAGING SERVICES, INC.
By: /s/ Norman Hames
Norman Hames, President
Address: 5730 Uplander Way
Suite 101
Culver City, CA 90230
SHAREHOLDERS
By: /s/ Norman Hames
Norman Hames
Address: 5730 Uplander Way, Suite 100
Culver City, CA 90230
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Herman Rosenman
Herman Rosenman, President
Norman Hames
Address: 1516 Cotner Avenue
Los Angeles, CA 90025
14380GAZ.JGM
4
SECURITIES PURCHASE AGREEMENT
EX- 10.28
This Securities Purchase Agreement ("Agreement") is entered into as of the
18th day of June, 1996, by and between Primedex Health Systems, Inc., a New York
corporation ("Buyer"), and Norman R.
Hames ("Seller"), with reference to the following facts:
R E C I T A L S
A. Pursuant to the terms of that certain Securities Purchase Agreement,
dated as of March 22, 1996, between Buyer and Diagnostic Imaging Services, Inc.,
a Delaware corporation ("DIS"), Buyer owns certain shares of the issued and
outstanding common stock, par value $.01 per share (the "DIS Common Stock"), of
DIS and a warrant to purchase additional shares of DIS Common Stock.
B. Seller owns a total of 2,448,862 shares of DIS Common Stock (the
"Shares") and warrants to purchase an additional 507,737 shares of DIS Common
Stock (the "Warrants"). The Warrants ire evidenced by the Warrant Agreements
identified in Exhibit A attached hereto (the "Warrant Agreements"). The Shares,
the Warrants and the shares of DIS Common Stock issuable upon exercise of the
'Warrants are sometimes hereinafter collectively referred to as the
"Securities."
C. Buyer desires to purchase 'and Seller desires to shall all of the Shares
and Warrants on the terms and conditions set forth herein.
THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth herein, Buyer and Seller hereby agree as follows:
1. Sale of Shares and Warrants.
(a) Sale and Purchase. On the terms and subject to the conditions set
forth herein, Buyer hereby agrees to purchase, and Seller hereby agrees to sell,
all of the Shares and the Warrants free and clear of all liens, charges,
encumbrances and claims of any nature.
(b) Purchase Price. As full payment for the transfer and sale of the
Shares and the Warrants to Buyer pursuant hereto, at the Closing (as hereinafter
defined) Buyer shall issue to Seller (i) Buyer's Promissory Note in the original
principal amount of $2,304,292, which Promissory Note shall be in the form
attached hereto as Exhibit B-1 (the "Promissory Note"), (ii) Buyer
Non-Negotiable Note in the original principal amount of $144,570, which note
shall be in the form attached hereto as Exhibit B-2 (the "Non-Negotiable Note"),
and (iii) an option to purchase 3,000,000 shares of the common stock of Buyer at
an option price of $.60 per share, which option shall De granted pursuant to a
Warrant to Purchase Agreement in the form attached hereto a Exhibit C (the "PHS
Option Agreement").
2. Representations by Seller. Seller hereby represents and warrants to
Buyer as follows:
(a) Seller has good and marketable title to the Shares, free and clear
of all liens, claims, encumbrances and restrictions, legal or equitable, of
every kind, other than: (i) restrictions on transferability imposed by
applicable state and federal securities laws; (H) the warrants to purchase up to
104,300 of the Shares granted by Seller to Joseph Berman, the Berman IRA, Roy
Doumani, Carol Doumani, the Doumani ERA, Genesis Investors, Arthur Hill &
Company, LLP, Oppenheimer as Trustee for the Linden IRA pursuant to the Warrant
Agreements dated as of September 2, 1994 (the "Hames Warrants"), a true and
complete copy of which has been provided to Buyer; (iii) obligations to deliver
2,000 shares per month to Berman and his IRA and 2,000 shares per month to
Oppenheimer for the Linden IRA for each month that the outstanding $125,000
obligations owed to each remains unpaid. Seller has full and unrestricted legal
right, power and authority to sell, assign and transfer the Shares to Buyer in
accordance with this Agreement and, except as described in clauses (i), (ii),
and (iii) above, the delivery of stock certificates to Buyer in accordance with
Section 4 hereof will transfer valid title to the Shares, free and clear of all
liens, encumbrances, claims and restrictions of every kind.
<PAGE>
(b) The Warrants were duly and validly granted and issued to Seller,
and the Warrant Agreements constitute valid and binding agreements, enforceable
against DIS in accordance with their respective terms. Seller has good and
marketable title to the Warrants, free and clear of all liens, claims,
encumbrances and restrictions, legal or equitable, of every kind, other than
restrictions on transferability set forth in the Warrant Agreements or imposed
by applicable state and federal securities laws. Subject to obtaining the
consent of DIS to the transfer of the Warrants to Buyer, the assignment of the
Warrant Agreement to Buyer as described in Section 4 will transfer valid title
to the Warrants and the Warrant Agreements to Buyer, free and clear of all
liens, encumbrances, claims and restrictions of every kind, other than
restrictions on transferability set forth in the Warrant Agreements or imposed
by applicable state and federal securities laws. Seller has provided true and
complete copies of each of the Warrant Agreements to Buyer.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate any
order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body that is binding upon Seller, (ii) violate any
statute, law or regulation applicable to Seller with respect to the transactions
contemplated herein or (iii) conflict with, result in their breach of the terms,
conditions or provisions of or constitute a default, an event of default or
event creating rights of acceleration, termination or cancellation under any
note, instrument, agreement, mortgage, lease or other obligation to which Seller
is a party or to which any of the Shares or the Warrants, or any of Seller's
other properties, is subject.
(d) Seller is not aware of any material adverse change in the business,
assets, financial condition or prospects of DIS that is not disclosed in the
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed
by DIS with the Securities and Exchange Commission ("SEC"), or in the Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1995, as filed by
DIS with the SEC. Seller will provide true and complete copies of said 10-K and
10-Q Reports to Buyer.
(e) Except for the contingent right of Seller to acquire a portion of
the outstanding preferred shares held by DVI Health Services, Inc. under certain
circumstances, the Shares and the Warrants represent all equity interests in DIS
or any of its affiliates held by Seller, including without limitations all
rights to acquire any such equity interest.
(f) As a result of any act or failure to act by Seller, no person or
entity has, or as a result of the transactions contemplated hereby will have,
any right, interest or valid claim against or upon Buyer or DIS for any
commission, fee or compensation as a finder, broker or in any similar capacity.
3. Representations by Buyer. Buyer represents and warrants to Seller as
follows:
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and has the power and lawful
authority to enter into this Agreement and to consummate the transactions
provided for herein.
(b) The execution and delivery of this Agreement and the related
agreements (including without limitation the Promissory Note, the Non-Negotiable
Note, and the PHS Option Agreement) referred to herein, and the consummation of
the transactions contemplated hereby and thereby, have been or will prior to the
Closing Date be duly and validly authorized by the board of directors of Buyer,
and no other acts or proceedings on the part of Buyer will be necessary to
authorize this Agreement or the related agreements or the transactions
contemplated hereby and thereby.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of the Articles of Incorporation of Buyer, (ii) violate any order,
judgment, injunction, award or decree of any court, arbitrator or governmental
or regulatory body that is binding under Buyer, (iii) violate any statute, law
or regulation applicable to Buyer with respect to the transactions contemplated
herein or (iv) conflict with, result in a breach of the terms, conditions or
provisions of or constitute a default, an event of default or event creating
rights or acceleration, termination or cancellation under, any note, instrument,
agreement, mortgage, lease or other obligations to which Buyer is a party or to
which any of its properties is subject.
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<PAGE>
(d) As a result of any act or failure to act by Buyer, no person or
entity has, or as a result of the transactions contemplated hereby will have,
any right, interest or valid claim against or upon Seller for any commission,
fee or other compensation as a finder, broker or in any similar capacity.
(e) There have not been any material adverse changes in the business,
assets, financial condition or prospects of Buyer that are not disclosed in the
Annual Report on Form 10-K for the fiscal year ended October 31, 1995, as filed
by Buyer with the Securities and Exchange Commission ("SEC"), or in the
Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 1996, as
filed by Buyer with the SEC. Buyer has provided true and complete copies of said
10-K and 10-Q Reports to Seller.
4. Closing. The closing of the transactions provided for herein (the
"Closing") shall take place at the offices of Buyer at 1516 Cotner Avenue, Los
Angeles, California 90025, at 1:00 p.m. or June 25, 1996, or such other date
agreed to by the parties (the "Closing Date"). At the Closing, (a) Seller shall
deliver to Buyer (i) shares certificates representing the Shares, duly endorsed
in blank or accompanied by executed stock assignment forms (in either event,
with signatures guaranteed), and (ii) the executed originals of the Warrant
Agreements, together with an Assignment of the Warrant Agreements, substantially
in the form of Exhibit D attached hereto, duly executed by Seller and DIS, and
(b) Buyer shall deliver to Seller (i) a duly executed Promissory Note, (ii) a
duly executed Non-Negotiable Note, and (iii) a duly executed PHS Option
Agreement.
5. Additional Matters and Covenants.
(a) Buyer understands and acknowledges that Arthur Hill & Co. LLP
currently holds 16,500 of the Shares as security for its ability to exercise a
five (5) year warrant granted by Seller on 16,500 of the Shares. Additionally
128,070 of the Shares are held in pledge to secure guarantees given by Seller
for payment of DIS debt aggregating $250,000 plus interest. None of those Shares
can be delivered unless and until the underlying obligations are satisfied or
the warrant not exercised. Additionally, the 128,070 Shares may be reduced by
4,000 Shares for each month the $250,000 obligation is not discharged,
commencing July 1, 1996.
(b) Each of the parties hereto acknowledges that the execution of this
Agreement and the consummation of the transactions provided for herein will
result in certain filing obligations under applicable SEC rules and regulations,
and Buyer and Seller each agrees to make all such filings on a timely basis in
accordance with such SEC rules and regulations.
(c) Upon the transfer of the Shares to Buyer pursuant hereto, Buyer
agrees to be bound by the provisions of the Hames Warrants.
6. Securities Representations. In addition to the other representations
made in Section 3 hereof, Buyer hereby represents and warrants to Seller as
follows:
(a) Buyer acknowledges that the Securities are and will be acquired
solely by and for the Buyer for investment and not as a nominee or agent for the
benefit of any other person or entity, and Buyer has no current intention of
distributing, reselling or assigning any of the Securities, other than in
accordance with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), and the rules and regulations adopted by the SEC under the 1933 Act
and any other applicable laws.
(b) Buyer understands that none of the Securities have been registered
under the 1933 Act and that DIS is under no obligation to register or assist
Buyer in registering any of the Securities. Buyer further understands and agrees
that the Securities must be held indefinitely unless subsequently registered
under the 1933 Act or an exemption from registration under the 1933 Act covering
any sale or any of the Securities is available. Buyer understands that legends
reflecting these restrictions on transferability will be set forth on any
certificates evidencing the Shares or any shares of DIS Common Stock issued as a
result of the exercise of any Warrant.
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<PAGE>
(c) Buyer is aware that (i) its investment in the Securities involves a
possible degree of risk, lack of liquidity and substantial restriction on
transferability and (ii) no federal or state agency has made any finding or
determination as to the fairness for investment in, or any recommendation or
endorsement of, any of the Securities.
(d) Buyer has sufficient financial resources available to support the
loss of all or a position of Buyer's investment in the Securities, has no need
for liquidity with respect to its investment in the Securities and is able to
bear the economic risk of the investment.
(e) Buyer is sophisticated and experienced in financial, business and
investment matters, is in the same business as DIS and is aware of DIS'
financial condition and business affairs and, as a result, Buyer is in a
position to evaluate the merits and risks of an investment in the Securities.
(f) Buyer has relied solely upon the advice of its management personnel
and advisors and independent investigators made by Buyer in deciding to invest
in the Securities, and no oral or other representations other than those
explicitly set forth in this Agreement have been made to Buyer regarding DIS or
the Securities.
7. Further Assurances. At the Closing, and from time to time thereafter,
Seller shall execute and deliver to Buyer such other documents and instruments,
and take such other actions, as Buyer may reasonably request in order to more
fully vest in Buyer and to perfect its title to the Securities.
8. Miscellaneous.
(a) Notices. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
communications transmitted by facsimile) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service, transmitted
by facsimile or mailed by registered or certified mail (postage prepaid), return
receipt requested, addressed as follows:
If to Buyer: Primedex Health Systems, Inc.
1516 Cotner Avenue
Los, Angeles, CA 90025
Attention: Steven R. Hirschtick, Senior Vice President
Fax No. (310)478-5810
If to Seller:Norman R. Hames
1516 Cotner Avenue
Los Angeles, CA 90025
Fax No. (310) 478-5810
or to such other address or facsimile number as any party may designate by
notice complying with the terms of this Section 8(a). Each such notice shall be
deemed delivered (a) on the date delivered by personal delivery, (b) on the date
of transmission with confirmation of transmission if by facsimile and (c) on the
date upon which the return receipt as signed or delivery is refused or the
notice is designated by the postal authorities as not deliverable, as the case
may be, if mailed.
(b) Specific Performance. The parties hereto acknowledge that they have
bargained for the performance of the specific duties and obligations of each of
the parties contained in this Agreement and that, in the event of a default by
any party hereunder, money damages will not adequately compensate the injured
party. Accordingly, each party hereto agrees and consents to the specific
performance of such party's duties and obligations hereunder by the valid
judgment or decree of a court of competent jurisdiction in the event of such
party's failure to perform such duties and obligations in accordance with their
terms.
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<PAGE>
(c) Successors in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the successors, assigns, personal representatives,
heirs and legatees of the respective parties hereto.
(d) Choice of Law. It is the intention of the parties that the
substantive laws of California shall govern the validity of the Agreement, the
Construction of its terms and the interpretation of the rights and duties of the
parties hereunder.
(e) Severability. In the event any provision hereof shall be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
(f) Integrated Agreement. The foregoing constitutes the entire
agreement of the parties on the subject hereof, and there are no agreements or
understandings between the parties relating to the sale of the Securities by
Seller to Buyer other than those set forth herein.
(g) Counter Execution. Separate copies of this Agreement may be signed
by the parties hereto, with the same effect as though all of the parties had
signed one copy of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first above written.
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Herm Rosenman
Herm Rosenman, President
/s/ Norman R. Hames
Norman R. Hames
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
[Registrant] PRIMEDEX HEALTH SYSTEMS, INC.
Date: August 13, 1997 /s/ Howard G. Berger, M.D., President
-------------------------------------
Howard G. Berger, M.D., President,
Treasurer and Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
By /s/ Howard G. Berger, M.D.
Howard G. Berger, M.D.
Date: August 13, 1997
By /s/ Jaana Shellock
Jaana Shellock
Date: August 13, 1997
By /s/ Norman Hames
Norman Hames
Date: August 13, 1997
