<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED : SEPTEMBER 30, 1996
------------------
COMMISSION FILE NUMBER: 0-16334
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ALLIANCE IMAGING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0239910
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
3111 NORTH TUSTIN AVENUE
SUITE 150
ORANGE, CA 92865
(Address of principal executive office)
(714) 921-5656
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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 (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 1996:
Common Stock, $.01 par value, 10,867,388.
1
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ALLIANCE IMAGING, INC.
FORM 10-Q
September 30, 1996
Index
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Condensed Financial Statements:
Condensed Consolidated Balance Sheets - 3
September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Income 4
Three and nine months ended September 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows 5
Nine months ended September 30, 1996 and 1995
Note to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis 8
of Financial Condition and Results of
Operations
PART II - OTHER INFORMATION 14
SIGNATURES 20
2
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 11,677,000 $ 11,128,000
Accounts receivable, net of allowance
for doubtful accounts 8,111,000 5,583,000
Prepaid expenses 953,000 369,000
Other receivables 49,000 109,000
------------- ---------------
Total current assets 20,790,000 17,189,000
Equipment, at cost 119,233,000 112,014,000
Less--Accumulated depreciation (46,543,000) (52,368,000)
------------- ---------------
72,690,000 59,646,000
Goodwill 28,511,000 23,971,000
Deferred charges 371,000 361,000
Deposits and other assets 3,466,000 2,160,000
------------- ---------------
Total assets $125,828,000 $ 103,327,000
------------- ---------------
------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,418,000 $ 692,000
Accrued compensation and related expenses 3,193,000 2,310,000
Other accrued liabilities 6,750,000 5,025,000
Current portion of long-term debt 13,842,000 9,948,000
------------- ---------------
Total current liabilities 26,203,000 17,975,000
Long-term debt, net of current portion 74,756,000 65,932,000
Other liabilities 1,035,000 596,000
Deferred income taxes 790,000 790,000
------------- ---------------
Total liabilities 102,784,000 85,293,000
Redeemable preferred stock 16,197,000 16,430,000
Convertible preferred stock 396,000 --
Common stock 120,000 108,000
Additional paid-in capital 32,398,000 31,908,000
Accumulated deficit (26,067,000) (30,412,000)
------------- ---------------
Total liabilities and stockholders' equity $125,828,000 $103,327,000
------------- ---------------
------------- ---------------
</TABLE>
See Note to Condensed Consolidated Financial Statements
3
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues $17,795,000 $15,058,000 $49,097,000 $44,305,000
Costs and expenses:
Operating expenses, excluding depreciation 8,530,000 7,121,000 23,549,000 21,438,000
Depreciation expense 3,122,000 3,074,000 9,170,000 9,090,000
Selling, general and administrative expenses 1,719,000 1,549,000 4,879,000 4,688,000
Amortization expense, primarily goodwill 564,000 340,000 1,309,000 1,003,000
Interest expense, net of interest income 1,501,000 1,273,000 4,184,000 3,876,000
------------ ------------ ------------ -----------
Total costs and expenses 15,436,000 13,357,000 43,091,000 40,095,000
------------ ------------ ------------ -----------
Income before income taxes 2,359,000 1,701,000 6,006,000 4,210,000
Provision for income taxes 410,000 254,000 955,000 630,000
------------ ------------ ------------ -----------
Net income 1,949,000 1,447,000 5,051,000 3,580,000
Preferred stock dividends 238,000 232,000 706,000 698,000
------------ ------------ ------------ -----------
Income applicable to common stock $ 1,711,000 $ 1,215,000 $ 4,345,000 $ 2,882,000
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Net income per common share $ 0.15 $ 0.11 $ 0.38 $ 0.26
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Weigted average common and common
equivalent shares outstanding 11,558,000 11,267,000 11,463,000 11,112,000
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
</TABLE>
See Note to Condensed Consolidated Financial Statements
4
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
-------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,051,000 $3,580,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,479,000 10,093,000
Amortization of deferred financing charges 325,000 60,000
Distributions in excess of (undistributed) equity
in income of investee (74,000) (241,000)
Gain on disposal of equipment -- (195,000)
Changes in operating assets and liabilities:
Accounts receivable, net (1,696,000) 553,000
Prepaid expenses (566,000) (278,000)
Other receivables 247,000 (77,000)
Other assets (31,000) (101,000)
Other liabilities 1,117,000 (31,000)
Accounts payable, accrued compensation and
other accrued liabilities 2,496,000 1,064,000
-------------- -----------
Net cash provided by operating activities 17,348,000 14,427,000
INVESTING ACTIVITIES:
Purchase of contracts and related assets of
Advanced Healthcare Diagnostic Service, Inc. -- (412,000)
Purchase of contracts and related assets of
Mobile M.R. Venture, Ltd. (455,000) --
Purchase of common stock of Royal Medical Health
Services, Inc., net of cash acquired (1,844,000) --
Purchase of common stock of Sun MRI Services, Inc.
net of cash acquired (269,000) --
Purchase of contracts and related assets of
West Coast Mobile Imaging (90,000) --
Equipment purchases (20,504,000) (7,308,000)
Decrease in deposits on equipment 1,297,000 514,000
Proceeds from disposal of equipment -- 1,997,000
-------------- -----------
Net cash used in investing activities (21,865,000) (5,209,000)
</TABLE>
5
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCING ACTIVITIES:
Principal payments on long-term debt (9,567,000) (6,098,000)
Proceeds from long-term debt 15,618,000 7,718,000
Payment of preferred stock dividend (930,000) --
Proceeds from exercise of employee stock options 21,000 55,000
Increase in deferred financing charges (76,000) --
------------- ----------
Net cash provided by (used in) financing activities 5,066,000 (1,018,000)
------------- ----------
NET INCREASE IN CASH AND SHORT-TERM
INVESTMENTS 549,000 8,200,000
CASH AND SHORT-TERM INVESTMENTS,
BEGINNING OF PERIOD 11,128,000 2,478,000
------------- ----------
CASH AND SHORT-TERM INVESTMENTS, END
OF PERIOD $11,677,000 $10,678,000
------------- ----------
------------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 4,176,000 $ 4,193,000
Income taxes paid 307,000 341,000
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
During the 1996 second quarter, the Company purchased all of the common stock
of Royal Medical Health Services, Inc. for cash consideration of
approximately $1,914,000. In conjunction with the acquisition, liabilities
were assumed as follows:
Fair value of assets acquired $ 8,601,000
Cash paid for common stock (1,914,000)
-----------
Liabilities assumed $ 6,687,000
-----------
-----------
As additional consideration for the above purchase, the Company issued
convertible preferred stock in the amount of $388,000 and common stock warrants
valued at $212,000. As a result of this transaction, the Company recorded
goodwill of approximately $3,945,000.
During the 1996 third quarter, the Company purchased all of the common stock of
Sun MRI Services, Inc. for cash consideration of approximately $391,000. In
connection with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired $ 1,602,000
Cash paid for common stock (391,000)
-----------
Liabilities assumed $ 1,211,000
-----------
-----------
See Note to Condensed Consolidated Financial Statements
6
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Alliance Imaging, Inc.
Note to Condensed Consolidated
Financial Statements
September 30, 1996
(Unaudited)
BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by Alliance Imaging, Inc. (the Company) in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X of
the Securities and Exchange Commission. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the nine month period ended September 30, 1996, are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
The earnings per common share calculations for the nine month periods
ended September 30, 1996 and 1995 are based upon average common and common
equivalent shares outstanding during the periods, and reflect preferred
dividend requirements totaling $706,000 and $698,000, respectively. Common
equivalent shares include vested stock options and warrants with an exercise
price lower than current market value.
The provisions for income taxes for the nine month periods ended
September 30, 1996 and 1995 are less than the statutory federal rate due to
utilization of certain net operating loss carryforwards during the periods.
7
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Alliance Imaging, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
GENERAL
The Company's financial performance depends substantially upon the
scan volume of its magnetic resonance imaging (MRI) systems. Revenues are
generally derived from one to eight year contracts with health care
providers. Since a majority of the Company's expenses are fixed, increased
revenues as a result of higher scan volumes significantly improve the
Company's profitability. Conversely, lower scan volumes result in lower
profitability.
Among other things, the Company is subject to the risk that customers
will cease using the Company's MRI services upon expiration of contracts to
purchase or lease their own MRI systems. In the past, when this has
occurred, the Company has generally been able to obtain replacement
customers. However, it is not always possible to immediately obtain
replacement customers, and some replacement customers have been smaller
facilities and have had lower scan volumes.
The health care industry is highly regulated and very competitive.
The current health care environment is characterized by increasing cost
containment pressures which management believes have resulted in decreasing
revenues per scan. Although scan prices have begun to stabilize, the Company
expects pricing levels to continue to decline moderately in the immediate
future. However, in many cases higher scan volumes associated with new
customer contracts justify lower scan prices and such contracts do not
adversely impact the Company's revenues and profitability. Although the
Company has experienced increased scan volumes in 1995 and 1996, it has also
had periods of declining volumes in prior years, and there can be no
assurance that the recent positive trends will continue.
The Company has implemented numerous cost containment and efficiency
measures to reduce operating, payroll and selling, general and administrative
costs. It has also refocused and expanded its sales and marketing efforts
and embarked on a major MRI fleet upgrade program. Additionally, the Company
continues to evaluate the profitability of certain existing customer
relationships with a view toward eliminating unprofitable accounts and
redeploying or otherwise disposing of certain equipment.
The Company intends to continue its ongoing equipment trade-in and
upgrade program which has substantially improved the marketability and
productivity of its MRI and computed axial tomography (CT) systems. The
Company intends to either trade in older, less marketable MRI systems in
connection with new system purchases, or to upgrade them with new computers,
software and coils to enable its MRI fleet to remain competitive in the
marketplace.
Beginning in late 1993, the Company commenced a continuing review of
the carrying value of certain older equipment and other assets, as well as
its capital structure, in view of then current operating conditions. As a
result, the Company recorded non-cash asset impairment charges in 1993 and
1994, and began an ongoing equipment trade-in and upgrade program to improve
the marketability and productivity of the Company's MRI and CT systems. In
addition, the Company completed a comprehensive financial restructuring with
the holders of its senior notes and senior subordinated
8
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debentures effective December 31, 1994. For further details concerning these
matters, please refer to the Company's 1995 Annual Report to Stockholders.
On April 26, 1996, the Company acquired all of the outstanding shares
of Royal Medical Health Services, Inc. (Royal) of Pittsburgh, Pennsylvania.
Like the Company, Royal is a provider of comprehensive MRI services. The
Company issued 3,876 shares of preferred stock valued at $388,000, common
stock warrants valued at $212,000 and paid $1,914,000 in cash as
consideration for the acquisition of Royal. The acquisition has been
accounted for as a purchase and, accordingly, the results of operations of
Royal have been included in the Company's consolidated financial statements
from the date of acquisition.
RESULTS OF OPERATIONS - COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO
NINE MONTHS ENDED SEPTEMBER 30, 1995
Revenues for the first nine months of 1996 were $49,097,000, an
increase of $4,792,000, or 10.8%, over 1995. Excluding the revenues of
$2,756,000 from operations which were sold in the second half of 1995, the
increase in revenues was $7,548,000, or 18.2%, with Royal accounting for
$2,884,000, or 6.9%, of the increase. This increase reflects a scan-based
MRI revenue increase of $6,006,000, or 16.0%, ($2,774,000, or 7.4%, as a
result of the Royal acquisition), resulting from a 20.9% increase in scan
volume partially offset by a 4.1% decrease in the average revenue realized
per MRI scan. Royal accounted for 4.8% of the scan volume increase and 0.5%
of the offsetting price per scan decrease. Management attributes the
non-Royal volume increase to the Company's continuing fleet upgrade program,
which has enabled the Company to obtain new long-term contracts from both
existing and new customers and to the effect of some smaller acquisitions.
Management believes the decrease in average revenues realized per scan is the
result of: continuing competitive pressure in the MRI service industry and
cost containment efforts by health care payers; obtaining contracts with
customers that have high scan volumes which justify lower scan prices; and
many customers achieving discount price levels by virtue of attaining higher
scan volumes. Revenue under fixed fee contracts increased $693,000, or
46.2%, resulting from an increased number of MRI systems under such
arrangements.
The Company's fleet included 87 MRI systems at September 30, 1996
compared to 74 MRI systems at September 30, 1995. The average number of MRI
systems operated by the Company was 84 during the first nine months of 1996,
compared to 73 during the first nine months of 1995.
Operating expenses, excluding depreciation, totaled $23,549,000 in the
first nine months of 1996, an increase of $2,111,000, or 9.8%, from the first
nine months of 1995. Excluding expenses of $1,008,000 related to operations
which were sold in the second half of 1995, the increase in operating
expenses was $3,119,000, or 15.3%, with Royal contributing $1,431,000, or
7.0%, of the increase. Payroll and related employee expenses increased
$1,424,000, or 17.3%, which was in line with the revenue increase. Equipment
rental expense increased $1,003,000, or 84.6% ($369,000 or 31.1%, was
attributable to Royal). The increase resulted from a higher number of rented
MRI systems in operation and the Company's leasing of 20 new tractors in
1996.
Depreciation expense during the first nine months of 1996 totaled
$9,170,000, an increase of $80,000, or 0.9%. Excluding depreciation expense
of $638,000 related to operations which were sold in
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the second half of 1995, depreciation expense increased $718,000, or 7.9%,
from the 1995 level principally due to a higher amount of depreciable assets
associated with equipment additions and the Royal acquisition. Amortization
expense in the first nine months of 1996 increased $306,000, or 30.5%, over
the 1995 period as a result of the Royal acquisition and three other smaller
acquisitions, one in the first quarter of 1996 and two in the third quarter
of 1996.
Selling, general and administrative expenses totaled $4,879,000 in the
first nine months of 1996, an increase of $191,000, or 4.1%, from the first
nine months of 1995. Excluding expenses of $369,000 related to operations
sold in the second half of 1995, selling, general and administrative expenses
increased $560,000, or 13.0%. Payroll and related expenses increased
$503,000, primarily as a result of increased staffing levels and employee
compensation.
Interest expense of $4,184,000 in the first nine months of 1996 was
$308,000, or 7.9%, higher than the same period in 1995, primarily as a result
of higher average outstanding debt balances during the first nine months of
1996 as compared to the first nine months of 1995. This increase was
principally due to debt assumed in connection with the Royal acquisition and
additional borrowings related to equipment additions.
An income tax provision of $955,000 was recorded in the first nine
months of 1996. The Company's pre-tax income in 1996 is substantially offset
by net operating loss carryforwards; however, certain federal alternative
minimum taxes and state tax liabilities apply to this income, giving rise to
the tax provision recorded. In the first nine months of 1995, an income tax
provision of $630,000 was recorded, also related to certain federal
alternative minimum taxes and state tax liabilities. The Company's 1996
effective tax rate of approximately 16% of pre-tax income was comparable with
the 1995 rate.
The Company's net income was $5,051,000 in the first nine months of
1996 compared to net income of $3,580,000 in the first nine months of 1995,
an increase of $1,471,000, or 41.1%, primarily attributable to an increase in
revenues achieved without a proportionate increase in operating and selling,
general and administrative expenses. Earnings per common share totaled $.38
in the first nine months of 1996, compared to earnings per common share of
$.26 for the same period in 1995, an increase of 46.2%. The earnings per
common share calculations reflect preferred dividend requirements of $706,000
in the first nine months of 1996 and $698,000 for the same period in 1995.
RESULTS OF OPERATIONS - COMPARISON OF QUARTER ENDED SEPTEMBER 30, 1996 TO
QUARTER ENDED SEPTEMBER 30, 1995
Revenues for the third quarter of 1996 were $17,795,000, an increase
of $2,737,000, or 18.2%, over 1995. Excluding the revenues of $1,241,000
from operations which were sold in the second half of 1995, the increase in
revenues was $3,978,000, or 28.8%, with Royal accounting for $1,677,000, or
12.1%, of the increase. This increase reflects a scan-based MRI revenue
increase of $3,257,000, or 25.9% ($1,611,000, or 12.8%, as a result of the
Royal acquisition), resulting from a 31.3% increase in scan volume partially
offset by a 4.1% decrease in the average revenue realized per MRI scan.
Royal accounted for 14.2% of the scan volume increase and 0.7% of the
offsetting price per scan decrease. Management attributes the non-Royal
volume increase to the Company's continuing fleet upgrade
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program, which has enabled the Company to obtain new long-term contracts from
both existing and new customers. Management believes the decrease in average
revenues realized per scan is the result of: continuing competitive pressure
in the MRI service industry and cost containment efforts by health care
payers; obtaining contracts with customers that have high scan volumes which
justify lower scan prices; and many customers achieving discount price levels
by virtue of attaining higher scan volumes. Revenue under fixed fee
contracts increased $365,000, or 74.8%, resulting from an increased number of
MRI systems under such arrangements. Excluding items related to operations
sold in the second half of 1995, other revenue increased $359,000, primarily
as a result of the third quarter 1995 acquisition of a mobile CT business.
The average number of MRI systems operated by the Company was 88
during the third quarter of 1996, compared to 74 during the third quarter of
1995.
Operating expenses, excluding depreciation, totaled $8,530,000 in the
third quarter of 1996, an increase of $1,409,000, or 19.8%, from third
quarter 1995. Excluding expenses of $351,000 related to operations which were
sold in the second half of 1995, the increase in operating expenses was
$1,760,000, or 26.0%, with Royal contributing $907,000, or 13.4%, of the
increase. Payroll and related employee expenses increased $756,000, or
27.8%, which was in line with the revenue increase. Equipment rental expense
increased $594,000, or 182.2% ($244,000, or 74.8% was attributable to Royal.)
The increase resulted from a higher number of rented MRI systems in
operation and the Company's leasing of 20 new tractors in 1996.
Depreciation expense during the third quarter of 1996 totaled
$3,122,000, an increase of $48,000, or 1.6%. Excluding depreciation expense
of $186,000 related to operations which were sold in the second half of 1995,
depreciation expense increased $234,000, or 7.6%, from the 1995 level due to
a higher amount of depreciable assets associated with equipment additions and
the Royal acquisition. Amortization expense in the 1996 third quarter
increased $224,000, or 65.9%, over the 1995 period as a result of the Royal
acquisition and three other smaller acquisitions, one in the first quarter of
1996 and two in the third quarter of 1996.
Selling, general and administrative expenses totaled $1,719,000 in the
third quarter of 1996, an increase of $170,000, or 11.0%, from the third
quarter of 1995. Excluding expenses of $139,000 related to operations sold
in the second half of 1995, selling, general and administrative expenses
increased $309,000, or 21.9%. Payroll and related employee expenses
increased $204,000, primarily as a result of increased staffing levels and
employee compensation.
Interest expense of $1,501,000 in the third quarter of 1996 was
$228,000, or 17.9%, higher than the same period in 1995 primarily as a result
of the debt assumed related to the Royal acquisition and amortization of the
value assigned to common stock warrants issued in connection with certain
debt amendments in the second quarter of 1996.
An income tax provision of $410,000 was recorded in the third quarter
of 1996. The Company's pre-tax income in 1996 is substantially offset by net
operating loss carryforwards; however, certain federal alternative minimum
taxes and state tax liabilities apply to this income, giving rise to the tax
provision recorded. In the third quarter of 1995, an income tax provision of
$254,000 was recorded, also related to certain federal alternative minimum
taxes and state tax liabilities. The Company's 1996 third
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quarter effective tax rate of approximately 17.4% of pre-tax income increased
over the 1995 rate of 15% as a result of the non-deductibility of certain
goodwill associated with the Company's recent acquisitions.
The Company's net income was $1,949,000 in the third quarter of 1996
compared to net income of $1,447,000 in the third quarter of 1995, an
increase of $502,000, or 34.7%, primarily attributable to an increase in
revenues achieved without a proportionate increase in operating and selling,
general and administrative expenses. Earnings per common share totaled $.15
in the second quarter of 1996, compared to earnings per common share of $.11
for the same period in 1995, an increase of 36.4%. The earnings per common
share calculations reflect preferred dividend requirements of $238,000 in the
third quarter of 1996 and $232,000 in the third quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, cash and short-term investments were
$11,677,000 compared to $11,128,000 at December 31, 1995, and the aggregate
of the Company's long-term debt and senior subordinated debentures was
$74,756,000 compared to $65,932,000 at December 31, 1995. The Company
obtained a $3,000,000 revolving line of credit secured by accounts receivable
in December 1995. This line, which has not been utilized, is intended to act
as a temporary supplement to fund working capital needs.
The Company generated $17,347,000 in net cash from operating
activities during the first nine months of 1996, compared to $14,458,000
during 1995's first nine months, an increase of $2,889,000, or 20.0%. This
cash flow was sufficient to meet the Company's debt service obligations and
capital expenditures not financed. During the first nine months of 1996, the
Company financed $15,618,000 of capital expenditures and repaid $9,567,000 of
long-term debt. In addition, the Company assumed $5,532,000 of long-term
debt in connection with the Royal acquisition and $1,135,000 of long-term
debt in connection with the acquisition of Sun MRI Services, Inc. (see
Capital Expenditures section). The Company believes its continuing cash flow
from operations as well as its cash balances and other credit sources will be
adequate for anticipated operating, debt service, preferred dividend and
capital expenditure requirements.
Debt service requirements on the Company's senior notes, with a
balance of $25,400,000 at September 30, 1996, include payments of interest at
7.5%, plus aggregate principal payments of $400,000 in 1996 (gradually
increasing to $6,200,000 in 2003). The Company made an additional $1,000,000
principal payment in April 1996 in connection with the lender's agreement to
increase capital expenditure limitations (see below). The senior
subordinated debentures with a balance of $16,070,000 at September 30, 1996,
require quarterly payments of $187,500 through 2003 (increasing to
approximately $1,900,000 in 2004 and 2005) which, for financial statement
purposes, are recorded as principal reductions; no interest expense will be
recorded during the contractual term of the debentures, in accordance with
generally accepted accounting principles.
In early November, 1996, all of the Company's senior notes were sold
by the existing holders to new owners. The Company and the new owners
entered into an amendment of the terms of the senior notes, including to
provide for monthly rather than quarterly interest payments. In addition,
the Company prepaid $5,300,000 of the principal amount of the notes at a
substantial discount, leaving
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$20,100,000 in principal amount of the notes outstanding. As a result, the
Company will report an extraordinary gain in the fourth quarter of 1996 of
approximately $1,240,000, or $.11 per common share, from this early
extinguishment of debt. In connection with the sale of the notes, the new
holders and the Company agreed to the removal or modification of various
restrictive covenants contained in the note purchase agreement governing the
notes.
The Company's Series A preferred stock, with a balance of $16,197,000
(including accumulated dividends of $698,000) at September 30, 1996, bears a
dividend at 6% of its original liquidation value ($15,500,000) annually.
However, dividends may be paid in cash only if certain defined operating cash
flow levels are achieved or to the extent of proceeds from the sale of new
common equity. The Company's 1995 cash flow substantially exceeded the level
required to pay the 1995 Series A preferred stock dividend in cash and such
dividend was paid in April 1996 in the amount of $930,000. Although the
Company expects to be able to pay the Series A preferred stock dividends
attributable to 1996 and subsequent years in cash, there can be no assurance
that future cash flow levels will be sufficient to permit the payment of such
future dividends in cash. If annual cash dividends are not or cannot be
paid, dividends will be payable in Series B preferred stock, which has no
dividend requirement and is convertible into common stock at specified
prices. Consequently, substantial amounts of common stock equivalents may be
issued to the holders of the Series A preferred stock in the future, which
would cause significant dilution to present common stockholders. Both series
of preferred stock have mandatory redemption requirements (in the case of
Series B, if not previously converted to common stock) applicable after the
senior notes and senior subordinated debentures are fully repaid.
In connection with the Royal acquisition, the Company issued Series C
preferred stock which has a balance of $396,000 (including accumulated
dividends of $8,000) at September 30, 1996. The Series C preferred stock
bears a dividend, payable in cash only, of 5% of its original liquidation
value ($388,000) annually; it is redeemable at the Company's option, but does
not have mandatory redemption requirements. Holders of Series C preferred
stock may convert their stock into common stock at a specified price.
Management believes that the conversion of all of the Series C preferred
stock would not cause significant dilution to present common stockholders.
The senior notes, senior subordinated debentures and certain other
credit agreements contain various covenants related to financial ratios and
other matters. The Company was in compliance with these covenants at
September 30,1996.
CAPITAL EXPENDITURES
The Company purchased nine new high-field MRI systems and upgraded 13
other MRI systems at a total approximate cost of $20,500,000 during the first
nine months of 1996. The Company currently plans to purchase eight
additional high-field MRI systems in 1996 and to upgrade seven additional
systems. The Company's senior secured and subordinated lenders agreed in
April 1996 to increase the Company's allowable capital expenditures to a
total of $34 million in 1996 and 1997, an increase of $14 million from
previous levels. Consequently, the Company may purchase or upgrade several
more systems in 1996 as opportunities to place new equipment into service
arise when future contracts are signed and existing contracts are renewed.
13
<PAGE>
In addition, the Company expects to dispose of substantially all of
its remaining less technologically advanced systems in 1996 in exchange for
new MRI systems. The Company intends to use a combination of existing cash
reserves, cash flow from operations and long-term secured equipment financing
to finance its capital expenditures, although there can be no assurance that
such financing will be available to the Company. The Company intends to
continue focusing on acquiring state-of-the-art equipment while disposing of
older systems.
In connection with the Royal acquisition, the Company acquired six MRI
systems. In August, the Company acquired all of the outstanding shares of
Sun MRI Services, Inc., a northern California based MRI service provider. In
connection with this transaction, the Company obtained one MRI system and six
hospital contracts. These transactions were primarily funded from existing
cash reserves and debt assumed. In late September, 1996, the Company
acquired certain assets and associated contracts from West Coast Mobile
Imaging, a southern California based CT service provider. Although the
acquisition was comparatively small, it added sixteen new CT customers and
was funded from existing cash reserves. Additional investments of this
nature may be made in the future (subject to certain conditions contained in
the Company's long-term financing arrangements) from a combination of cash
reserves, cash flow from operations, common or preferred equity and long-term
secured or unsecured financing, if available.
If the Company adds MRI systems at a more rapid rate than is currently
planned, or if it acquires additional business entities, or if the net cash
generated by operations declines from current or anticipated levels, the
Company could be required to raise additional capital. However, there can be
no assurance that the Company would be able to raise such capital, or do so
on terms acceptable to the Company, or that consents from present lenders, if
required, could be obtained.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit No. Note Description
----------- ---- -----------
3.1 (1) Restated Certificate of Incorporation of Alliance
Imaging.
3.1.1 (1) Certificate of Amendment of Restated Certificate of
Incorporation of Alliance Imaging, Inc.
3.1.2 (1) Certificate of Correction of Certificate of Amendment
of Restated Certificate of Incorporation of Alliance
Imaging, Inc.
3.1.3 (8) Certificate of Amendment of Restated Certificate of
Incorporation of Alliance Imaging, Inc.
3.2 (1) By-Laws of Alliance Imaging, Inc., as amended.
14
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4.1 (1) Specimen of Common Stock Certificate.
4.2 (11) Amended and Restated Purchase Agreement dated as of
December 31, 1994 among the Registrant and the holders
of the Registrant's Senior Subordinated Debentures
due 2005.
4.2.1 (9) Amendment No. 1 to Amended and Restated Purchase
Agreement dated as of December 31, 1994 among the
Registrant and the holders of the Registrant's Senior
Subordinated Debentures due 2005.
4.2.2 (20) Amendment No. 2 to Amended and Restated Purchase
Agreement dated as of April 15, 1996 among the
Registrant and the holders of the Registrant's
Senior Subordinated Debentures due 2005.
4.3 (1) Note Purchase Agreement dated as of April 14, 1989
governing sale of Senior Notes by Alliance
Imaging, Inc.
4.4 (1) First Amendment to Note Purchase Agreement dated as of
September 20, 1990 among Alliance Imaging, Inc., CIGNA
Property and Casualty Insurance Company, Connecticut
General Life Insurance Company, Insurance Company of
America and Life Insurance Company of North America.
4.4.1 (1) Amendment No. 2 to Note Purchase Agreement dated as of
September 3, 1991.
4.4.2 (2) Amendment No. 3 to Note Purchase Agreement dated as of
December 1, 1991.
4.4.3 (3) Amendment No. 4 to Note Purchase Agreement dated as of
December 31, 1992.
4.4.4 (4) Amendment No. 5 to Note Purchase Agreement dated as of
September 30, 1993.
4.4.5 (6) Amendment No. 6 to Note Purchase Agreement dated as of
January 1, 1994.
4.4.9 (12) Amendment No. 7 to Note Purchase Agreement dated as of
December 31, 1994.
4.4.10 (9) Amendment No. 8 to Note Purchase Agreement dated as of
December 31, 1994.
4.4.11 (20) Amendment No. 9 to Note Purchase Agreement dated as of
April 15, 1996.
15
<PAGE>
4.4.12 (21) Amendment No. 10 to Note Purchase Agreement dated as of
November 6, 1996.
4.5 (1) Amended and Restated Shareholders Agreement dated as of
April 17, 1989.
4.6 (13) Security Agreement dated as of December 31, 1994 among
the Registrant, the holders of the Senior Notes and the
Collateral Agent for the Senior Noteholders.
4.7 (14) Guaranty dated as of December 31, 1994 of the
Registrant's obligations to the Senior Noteholders
and the Senior Subordinated Debentureholders executed
by the subsidiaries of the Registrant identified
therein.
4.8 (15) Registration Rights Agreement dated as of December 31,
1994 among the Registrant, the Senior Noteholders and
the Senior Subordinated Debentureholders.
4.9 (16) Certificate of Designation concerning the Registrant's
Series A 6.0% Cumulative Preferred Stock.
4.10 (17) Certificate of Designation concerning the Registrant's
Series B Convertible Preferred Stock.
4.11 (20) Certificate of Designation concerning the Registrant's
Series C 5% Cumulative Convertible Redeemable Preferred
Stock.
9.1 (1) Amended and Restated Voting Trust Agreement between
Donaldson, Lufkin & Jenrette Capital Corporation and
Meridian Trust Company dated December 29, 1988.
10.4 (3) 1991 Stock Option Plan of Alliance Imaging, Inc.
adopted on May 10, 1991, amended on May 23, 1991,
amended on March 17, 1992, and amended on February 23,
1993.
10.5 (1) Form of Incentive Stock Option Agreement pursuant to
1991 Stock Option Plan of Alliance Imaging, Inc.
10.5.1 (1) Form of Non-Qualified Stock Option Agreement pursuant
to 1991 Stock Option Plan of Alliance Imaging, Inc.
10.5.2 (7) Form of Incentive Stock Option Agreement pursuant to
1991 Stock Option Plan of Alliance Imaging, Inc.,
utilized for certain option grants beginning in 1994.
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<PAGE>
10.5.3 (9) Form of letter to optionees dated February 21, 1995
amending terms of stock options granted March 10, 1994.
10.11 (1) Association Agreement by and between Alliance Imaging,
Inc. and Alliance Medical, Ltd., dated September 30,
1989.
10.16 (1) Form of Indemnification Agreement between Alliance
Imaging, Inc. and its directors and/or officers.
10.18 (2) Lease Agreement dated September 13, 1991, by and
between Alliance Imaging, Inc. and Crestview Partners.
10.20 (5) Georgia Magnetic Imaging Center, Ltd. Limited
Partnership Agreement dated as of March 22, 1985.
10.20.1 (5) Amendment to Georgia Magnetic Imaging Center, Ltd.
Limited Partnership Agreement dated as of July 1, 1993.
10.24 (8) Employment Agreement dated as of September 9, 1993,
between Alliance Imaging, Inc. and Richard N. Zehner.
10.25 (8) Employment Agreement dated as of September 9, 1993,
between Alliance Imaging, Inc. and Vincent S. Pino.
10.26 (8) Employment Agreement dated as of September 9, 1993,
between Alliance Imaging, Inc. and Terry A. Andrues.
10.27 (8) Employment Agreement dated as of September 9, 1993,
between Alliance Imaging, Inc. and Jay A. Mericle.
10.28 (8) Employment Agreement dated as of September 9, 1993,
between Alliance Imaging, Inc. and Terrence M. White.
10.29 (8) Employment Agreement dated as of September 6, 1994,
between Alliance Imaging, Inc. and Neil M. Cullinan.
10.30 (8) Employment Agreement dated as of September 6, 1994,
between Alliance Imaging, Inc. and Cheryl A. Ford.
10.31 (10) Standstill Agreement dated as of December 31, 1994
between the Registrant and Connecticut General Life
Insurance Company, CIGNA Property and Casualty
Insurance Company, Insurance Company of North
America and Life Insurance Company of North America.
10.32 (10) Standstill Agreement dated as of December 31, 1994
between the Registrant and Northwestern Mutual Life
Insurance Company.
17
<PAGE>
10.33 (10) Standstill Agreement dated as of December 31, 1994
between the Registrant and The Travelers Indemnity
Company, The Travelers Insurance Company and The
Travelers Life and Annuity Company.
10.34 (10) Standstill Agreement dated as of December 31, 1994
between the Registrant and The Lincoln National Life
Insurance Company.
10.35 (10) Standstill Agreement dated as of December 31, 1994
between the Registrant and The Equitable Life Assurance
Society of the United States.
10.36 (18) Employment Agreement dated July 7, 1995 between
Alliance Imaging, Inc. and Michael W. Grismer.
10.37 (19) Long-Term Executive Incentive Plan dated as of March
28, 1995, adopted in final form November 28, 1995.
10.38 (19) Loan and Security Agreement with Comerica Bank-
California, dated as of December 21, 1995.
10.39 (20) Royal Medical Health Services, Inc. Merger Agreement
dated as of April 16, 1996.
10.40 (20) A & M Trucking, Inc. Acquisition Agreement dated as of
April 16, 1996.
10.41 (20) Form of Warrant Agreement concerning 100,000 common
shares with an exercise price of $3.9375 per share
dated as of April 15, 1996.
10.42 (20) Form of Warrant Agreement concerning 100,000 common
shares with an exercise price of $5.00 per share dated
as of April 15, 1996.
10.43 (21) Form of Warrant Agreement concerning 125,000 common
shares with an exercise price of $5.00 per share dated
as of November 6, 1996.
______________________________
(1) Incorporated by reference herein to the indicated exhibits filed in
response to Item 16, "Exhibits" of the Company's Registration Statement
on Form S-1, No. 33-40805, initially filed on May 24, 1991.
(2) Incorporated by reference herein to the indicated exhibits filed in
response to Item 21, "Exhibits" of the Company's Registration Statement
on Form S-4, No. 33-46052, initially filed on February 28, 1992.
(3) Incorporated by reference herein to the indicated exhibits filed in
response to Item 14(a)(3), "Exhibits" of the Company's Annual Report on
Form 10-K for the year ended December 31, 1992.
18
<PAGE>
(4) Incorporated by reference herein to the indicated exhibits filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.
(5) Incorporated by reference herein to the indicated exhibits filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.
(6) Incorporated by reference herein to the indicated exhibits filed in
response to Item 14(a)(3), "Exhibits" of the Company's Annual Report on
Form 10-K for the year ended December 31, 1993.
(7) Incorporated by reference herein to the indicated exhibit filed in
response to item 6(a), "Exhibits" of the Company's Quarterly report on
Form 10-Q for the quarter ended March 31, 1994.
(8) Incorporated by reference herein to the indicated exhibit filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994.
(9) Incorporated by reference herein to the indicated exhibit filed in
response to Item 14(a)(3), "Exhibits" of the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
(10) Incorporated by reference herein to Exhibit 10 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(11) Incorporated by reference herein to Exhibit 4.4 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(12) Incorporated by reference herein to Exhibit 4.1 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(13) Incorporated by reference herein to Exhibit 4.2 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(14) Incorporated by reference herein to Exhibit 4.3 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(15) Incorporated by reference herein to Exhibit 4.5 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(16) Incorporated by reference herein to Exhibit 4.6 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(17) Incorporated by reference herein to Exhibit 4.7 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
19
<PAGE>
(18) Incorporated by reference herein to the indicated Exhibit filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995.
(19) Incorporated by reference herein to the indicated Exhibit in response to
Item 14(a)(3), "Exhibits" of the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
(20) Incorporated by reference herein to the indicated Exhibit filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996.
(21) Filed herewith.
(b) REPORTS ON FORM 8-K IN THE THIRD QUARTER OF 1996:
None filed for the quarter ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLIANCE IMAGING, INC.
November 8, 1996 By: /s/ Richard N. Zehner
----------------------
Richard N. Zehner
Chairman, President and
Chief Executive 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 indicated on November 8, 1996.
Signature Title
--------- -----
/s/ Richard N. Zehner Chairman of the Board of Directors,
--------------------- President and Chief Executive Officer
Richard N. Zehner (Principal Executive Officer)
/s/ Terrence M. White Senior Vice President, Chief
--------------------- Financial Officer and Secretary
Terrence M. White (Principal Financial Officer)
20
<PAGE>
EXHIBIT 4.4.12
ALLIANCE IMAGING, INC.
TENTH AMENDMENT
TO NOTE PURCHASE AGREEMENT
This TENTH AMENDMENT TO NOTE PURCHASE AGREEMENT (this "TENTH AMENDMENT")
is dated as of November 6, 1996 and entered into by and among Alliance
Imaging, Inc., a Delaware corporation (the "COMPANY"), and the holders listed
on the signature page hereto (each a "HOLDER" and together the "HOLDERS"),
and is made with reference to that certain Note Purchase Agreement dated as
of April 14, 1989, as amended by that certain First Amendment to Note
Purchase Agreement dated as of September 20, 1990, that certain Second
Amendment to Note Purchase Agreement dated as of June 3, 1991, that certain
Third Amendment to Note Purchase Agreement dated as of December 1, 1991, that
certain Fourth Amendment to Note Purchase Agreement dated as of December 31,
1992, that certain Fifth Amendment to Note Purchase Agreement dated as of
June 30, 1993, that certain Sixth Amendment to Note Purchase Agreement dated
as of March 18, 1994, that certain Seventh Amendment to Note Purchase
Agreement dated as of December 31, 1994, that certain Eighth Amendment to
Note Purchase Agreement dated as of December 31, 1994, that certain Ninth
Amendment ("NINTH AMENDMENT") to Note Purchase Agreement dated as of April
15, 1996, and those certain letter agreements dated April 25, 1995 concerning
Atlantic/Gulf Imaging, Inc. and dated June 28, 1996 concerning Sun MRI
Services, Inc. (as so amended, the "PURCHASE AGREEMENT"), by and among the
Company and previous holders of the Notes. Capitalized terms used herein
without definition shall have the same meanings herein as set forth in the
Purchase Agreement.
RECITALS
WHEREAS, the Holders have purchased, effective as of the same date as
this Tenth Amendment and conditioned upon the execution and delivery by the
Company of this Tenth Amendment, all of the right, title and interest of the
previous holders of the Notes in and to such Notes (the "PURCHASE
TRANSACTION"); and
WHEREAS, the Company and the Holders desire to (i) amend certain
covenants contained in the Purchase Agreement and to make certain other
amendments as set forth below, and (ii) set forth their agreement on certain
other matters specified below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as
follows:
<PAGE>
SECTION 1. AGREEMENTS CONCERNING VOLUNTARY
PREPAYMENTS
1.1 OPTIONAL PREPAYMENT AT CLOSING.
In the event that the Company makes a voluntary prepayment of principal
on the Notes as permitted by Section 6.01 of the Purchase Agreement effective
as of the closing of the Purchase Transaction (the "EFFECTIVE DATE"), Holders
agree that, notwithstanding anything to the contrary in said Section 6.01,
one dollar ($1.00) of principal amount of the Notes shall be retired for each
sixty-six and 6,315,911/10,000,000 cents ($.666315911) of cash prepayment,
without payment of accrued interest on the principal amount prepaid and
without payment of any other amount otherwise called for under said Section
6.01; PROVIDED, HOWEVER, that the maximum face amount of Notes that may be
prepaid pursuant to this provision is $5,308,355.42. Notwithstanding Section
6.04 of the Purchase Agreement, any prepayment pursuant to this provision
will be applied to the latest date(s) of mandatory prepayments pursuant to
Section 6.02 of the Purchase Agreement and of the Notes. The Company shall
be under no obligation to make a voluntary prepayment as described in this
Section 1.1.
1.2 DATE FOR INTEREST PAYMENTS; OTHER OPTIONAL PREPAYMENTS.
(a) As of the Effective Date, the Company shall issue or cause to be
issued to Holders new promissory note(s) evidencing the obligations of the
Company under the Purchase Agreement and the Notes, as amended hereby; among
other things, such promissory note(s) will provide for the monthly payment of
interest on the last day of each month, commencing October 31, 1996 (each, an
"INTEREST PAYMENT DATE"). Further, in addition to the provisions of Section
1.1 above, in the event that the Company at any time and from time to time
following the Effective Date timely makes a voluntary prepayment of principal
corresponding to an Interest Payment Date as indicated under column A on the
attached SCHEDULE A (each, a "VOLUNTARY MONTHLY PREPAYMENT"), then Holders
agree, notwithstanding anything to the contrary in the Purchase Agreement or
the Notes, that they shall credit to principal, in addition to the amount of
the Voluntary Monthly Prepayment, an aggregate amount of $16,726.90 for each
such Voluntary Monthly Prepayment timely made, as indicated under column D on
the attached SCHEDULE A. Further, notwithstanding anything to the contrary
in the Purchase Agreement or the Notes, each Voluntary Monthly Prepayment or
other voluntary prepayment of principal on the Notes (i) shall be deemed a
prepayment entirely of principal and (ii) shall be credited against the
earliest date(s) of mandatory prepayments pursuant to Section 6.02 of the
Purchase Agreement and the Notes (i.e., each such prepayment shall reduce the
amount of mandatory prepayment(s) otherwise required to be made pursuant to
Section 6.02 of the Purchase Agreement prior to giving effect to this Tenth
Amendment, applying voluntary
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<PAGE>
prepayments to the earliest date(s) of such mandatory prepayments otherwise
required). The provisions of the preceding sentence shall be deemed an
amendment of Section 6.04 of the Purchase Agreement.
(b) For purposes of paragraph (a) of this Section 1.2, a Voluntary
Monthly Prepayment shall be deemed timely made provided that it is received
by a Holder within five (5) Business Days of the first day of each month
immediately following the corresponding Interest Payment Date. The Company
shall not be obligated to make Voluntary Monthly Prepayments or any other
voluntary prepayments of principal pursuant to this Section 1.2.
(c) In addition to the provisions of Section 1.1 and Section 1.2(b)
above and provided that the Company has made the voluntary prepayment
referred to in Section 1.1 above in the maximum permitted amount, the Company
shall be entitled to prepay the principal of the Notes in whole by making a
payment equal to the LESSER of (I) the payment amount in accordance with
Section 6.01 of the Purchase Agreement as in effect prior to the
effectiveness of this Tenth Amendment, and (II) the Notional Payoff Amount
(such amount being the "FULL PAYOFF AMOUNT"). "NOTIONAL PAYOFF AMOUNT" means
the Applicable Percentage of the remaining unpaid principal amount of a note
(the "NOTIONAL OBLIGATION") in the initial notional principal amount of
$18,000,000 as of the Effective Date bearing an annual interest rate of
10.00%, compounded monthly, after applying thereto all payments actually made
under the Notes after the Effective Date (i.e., payments of both interest and
principal), applying such payments first to interest on the Notional
Obligation and then to principal of the Notional Obligation, with negative
amortization reflected, if applicable. "APPLICABLE PERCENTAGE" means 102%
for any prepayment made on or before October 31, 1997 and 101% for any
prepayment made thereafter. In addition, subject to the same provisos as
indicated in the first sentence of this Section 1.2(c), the Company shall be
entitled to prepay the principal of the Notes in part; in the case of partial
prepayment, the amount of the Notes retired shall equal the same proportion
of the remaining face amount of the Notes as the amount of prepayment bears
to the Full Payoff Amount, if the Notes were being fully prepaid at that
time. Notwithstanding the foregoing, in the event that any prepayment of the
Notes pursuant to this Section 1.2(c) is accomplished with funding, in whole
or in part, provided by one of the Holders or any Affiliate thereof, then the
Applicable Percentage with respect to such Holder shall be equal to 100%.
(d) The voluntary prepayment provisions of Sections 1.1, 1.2(b) and 1.2(c)
above fully replace and restate Section 6.01 of the Purchase Agreement as in
effect prior to the Effective Date. Further, Section 6.03 of the Purchase
Agreement as in effect prior to the Effective Date is hereby restated in its
entirety as follows:
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<PAGE>
"The Company may prepay the Notes in whole or in part in accordance with
the provisions of Section 6.01 hereof (in the case of any such prepayment
pursuant to Section 1.2(c) of the Tenth Amendment dated as of November 6,
1996 to Note Purchase Agreement between the Company and Holder (the "TENTH
AMENDMENT"), PROVIDED that the Company provides at least five (5) Business
Days notice of its intention to make such prepayment, which notice shall
specifically indicate that such prepayment is being made under that
provision)."
(e) Notwithstanding anything to the contrary in Section 6.07 of the
Purchase Agreement, any prepayment of Notes pursuant to Section 6.07 shall be
treated as a voluntary prepayment under Section 1.2(c) hereof.
SECTION 2. ADDITIONAL AMENDMENTS TO THE PURCHASE AGREEMENT
2.1 MANDATORY PREPAYMENTS.
The requirement to make mandatory prepayments on the Notes described in
clauses (i) and (ii) in Section 6.02 of the Purchase Agreement (such clauses
having been added to the Purchase Agreement pursuant to, and as further
described in, Sections 1.1, 1.4 and 1.6 of the Ninth Amendment) is hereby
eliminated.
2.2 COLLATERAL POOL.
The requirement in the Purchase Agreement, including, without
limitation, in the second sentence of Section 9.04(a)(i) thereof, that any
and all leases and use contracts relating to the Eligible First Lien
Equipment or other collateral contained in the Collateral Pool (the "EXCLUDED
COLLATERAL") be included therein is hereby eliminated. Holders shall, from
time to time, execute such instruments and take such further actions as may
be reasonably requested by the Company to cause and evidence the removal from
the Collateral Pool, as it exists on the Effective Date and from time to time
thereafter, of the Excluded Collateral. Holders further agree that, to the
extent that they or any of their respective Affiliates have an interest in
collateral owned by the Company or any Affiliate thereof pursuant to separate
collateral agreements or instruments (e.g., pursuant to separate equipment
financing arrangements), and to the extent that such separate agreements or
instruments prohibit or restrict additional liens on the applicable
collateral, then, notwithstanding the provisions of such collateral
agreements or instruments, the Company shall be entitled to include the
property constituting such collateral in the Collateral Pool as Eligible
Second Lien Equipment or otherwise; and Holders further agree to execute such
instruments and take such actions, and to cause their respective Affiliates
to execute such instruments and take such actions, from time to
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<PAGE>
time, as may be reasonably requested by the Company to effect and evidence
the provisions of this sentence.
2.3 ASSIGNMENT TO CERTAIN ENTITIES.
The following text is hereby added to Section 15.05 of the Purchase
Agreement:
"Notwithstanding anything in this Note Purchase Agreement or the Notes to
the contrary, each holder of the Notes agrees that it shall not sell to,
transfer or assign, in any form of transaction, any of the Notes or any
interest therein (A) prior to January 31, 1997 (except for any transfer or
assignment to an Affiliate of the holder), or (B) following January 31,
1997, to any holder (whether as of the Effective Date or any date
thereafter) of the Company's 7.50% Senior Subordinated Debentures due 2005,
or the Company's Series A Cumulative Preferred Stock, including in each
case any Affiliate thereof; PROVIDED, HOWEVER, that for the avoidance of
doubt, the restriction referred to in clause (B) shall not be deemed to
apply to any transaction wherein the Notes are included in a securitization
vehicle in the ordinary course of a holder's business, and securities
representing an interest in the securitized pool are sold to investors.
Prior to selling, transferring or assigning, in any form of transaction,
any of the Notes or any interest therein, each holder of the Notes agrees
to provide at least three (3) Business Days' prior written notice to the
Company, to enable the Company to determine whether such proposed
transaction would violate the provisions of this Section 15.05."
2.4 SUBORDINATION PROVISIONS.
Each holder of the Notes agrees that it will not amend, modify or waive, or
agree to amend, modify or waive, any provision of Section 11 of the Subordinated
Debentures Purchase Agreement, without, in each instance, first obtaining the
written consent of the Company to the same.
2.5 NEGATIVE AND MAINTENANCE COVENANTS.
(a) Clause (i) of Section 10.02 of the Purchase Agreement is hereby
amended and restated as follows:
"(i) Subject to the limitations set forth in Section
10.03(d) hereof, any Lien created to secure any Indebtedness
incurred or assumed after the Seventh Amendment Effective
Date to pay all or any part of the purchase price of an
improvement to or upgrade
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<PAGE>
of a Unit owned by the Company or a Subsidiary,
PROVIDED that (i) any such Lien shall be confined
solely to the improved or upgraded Unit subject to
such Lien; PROVIDED, HOWEVER, that in the case of a
Unit owned by the Company or a Subsidiary that is,
at the time of acquisition of an improvement or
upgrade to a Unit, already subject to a Lien in
favor of the same secured party financing the
purchase price of such improvement or upgrade, such
Lien securing the Indebtedness relating to the
newly-improved or upgraded Unit may extend to the
Unit already owned and such Lien securing the
Indebtedness relating to the Unit already owned may
extend to the newly-improved Unit; PROVIDED,
FURTHER, that notwithstanding the immediately
preceding proviso no such Lien shall extend to any
Unit as to which (A) the purchase price thereof (and
of any improvement thereto or upgrade thereof) is
paid in full and (B) there is outstanding no
Indebtedness incurred to finance such purchase
price, it being understood that the
cross-collateralization permitted by the immediately
preceding proviso shall immediately cease and
terminate upon payment of the purchase price (or
related purchase money Indebtedness) of each Unit
and any improvement to or upgrade thereof, and (ii)
any such Lien shall be created within six months
after the completion or installation of such
improvement or upgrade;".
(b) Clause (d) of Section 10.03 of the Purchase Agreement is hereby
amended and restated as follows:
"(d) Subject to the limitations on incurrence of Capital
Expenditures set forth in Section 10.08 hereof, the Company
or any Subsidiary may become and remain liable with respect
to Indebtedness incurred to acquire equipment (including CT
Scanners and MRI Units and related additions, parts and
improvements) secured by Liens permitted under Sections
10.02(e), 10.02(i) or 10.02(j) hereof;".
(c) Clause (f) of Section 10.03 of the Purchase Agreement is hereby
amended and restated as follows:
"(f) Any Subsidiary (provided that such Subsidiary has duly
executed a Guaranty in accordance with the
-6-
<PAGE>
terms of this Note Purchase Agreement) may become and
remain liable with respect for Debt for Money Borrowed
of such Subsidiary owing to the Company or to a
Wholly-Owned Subsidiary consisting of (i) Indebtedness
arising out of an Investment by the Company or such
Wholly-Owned Subsidiary as permitted by Section
10.04(a) through (c) or (ii) short-term intercompany
operating advances which are settled promptly (and not
less than monthly) to the extent the applicable debtor
has available cash to settle such balances;".
(d) Clause (g) of Section 10.03 of the Purchase Agreement is hereby
amended and restated as follows:
"(g) In addition to (a) through (f) above, the Company or
any Subsidiary may incur and remain liable with respect to
other Indebtedness not to exceed an aggregate amount of
$5,000,000 at any time outstanding;".
(e) The text of Section 10.08 of the Purchase Agreement is hereby amended
and restated as follows:
"The Company will not, and will not permit any of its
Subsidiaries to, make Capital Expenditures, unless, after
including such Capital Expenditures in the aggregate amount
of Capital Expenditures incurred by the Company and its
Subsidiaries during the current Fiscal Year, the aggregate
Capital Expenditures for such Fiscal Year, in the case of
the Fiscal Year ending December 31, 1996, do not exceed
$30,000,000, or in the case of any other Fiscal Year, do not
exceed $25,000,000; PROVIDED, HOWEVER, that the Company or
any of its Subsidiaries may dispose of equipment and within
180 days purchase replacement equipment with only the net
incremental amount being deemed to be a Capital Expenditure;
PROVIDED, FURTHER, that to the extent the Company receives
credit against the purchase price of newly-acquired
equipment as a result of a trade-in of currently-owned
equipment, the amount of such credit shall not be included
in determining the amount of Capital Expenditures permitted
to be incurred hereunder; and PROVIDED, FURTHER, that if the
amount of permitted Capital Expenditures for any Fiscal Year
is not fully
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<PAGE>
utilized, then the unutilized portion (up to
50% of the permitted amount for such Fiscal Year) may be
carried forward and made in the following Fiscal Year, in
addition to the amount otherwise permitted for such
following Fiscal Year.
For purposes of this Section 10.08 the incurrence of a
Capital Expenditure shall be deemed to have occurred when
the Company (or any of its Subsidiaries) enters into a
binding commitment to purchase the applicable equipment as
evidenced by a written agreement or accepted purchase order
between the Company and the manufacturer or seller of such
equipment."
(f) The reference to "ninety (90) days" in Section 10.12 of the Purchase
Agreement is hereby changed to "one hundred eighty (180) days". Further, the
phrase "after the Closing Date" in clause (i) of said Section is hereby amended
to read "after the Effective Date of the Tenth Amendment". Further, in the
event of any prepayment or redemption of Notes as provided in Section 10.12,
such prepayment or redemption shall be treated as a voluntary prepayment and
subject to the provisions of Section 1.2(c) of this Tenth Amendment.
(g) The text of Section 10.17 of the Purchase Agreement is hereby amended
and restated as follows:
"The Company will not, and will not permit any Subsidiary
to, create or otherwise acquire any Subsidiary, unless such
newly created or acquired Subsidiary shall have executed a
counterpart to the Guaranty."
(h) Section 10.04 of the Purchase Agreement is hereby amended by striking
the word "and" before clause (g) and adding thereto a new clause (h) reading as
follows: "; and (h) Investments where the consideration paid by the Company
consists of equity securities of the Company, to the extent that consideration
was or is paid in that form." In addition, Section 10.04 of the Purchase
Agreement is hereby amended by adding a new final sentence thereto reading as
follows: "For purposes of computing the amount subject to the $5,000,000
limitation in clause (a) above, (I) there shall be excluded Investments where
the consideration paid by the Company consists of equity securities of the
Company, to the extent that consideration was or is paid in that form, and (II)
there shall be included Investments made only from and after the Effective Date
of the Tenth Amendment, and not Investments made prior thereto."
-8-
<PAGE>
(i) The text of Section 10.14 of the Purchase Agreement is hereby amended
by adding thereto as a new last sentence the following: "Notwithstanding the
foregoing, for the purposes of this Section 10.14, there shall be excluded from
the coverage of "Long-Term Leases" and "Consolidated Rental Obligations" any
lease or other contract or commitment, and payments required thereunder, with
respect to MRI, CT or other medical diagnostic equipment."
(j) The Company and Holders hereby agree that Sections 10.05, 10.06,
10.07, 10.09 and 10.11 are deleted from the Purchase Agreement.
2.6 REPORTING REQUIREMENTS.
Section 7(a) of the Purchase Agreement is hereby amended by striking the
entire text beginning with "(i)" and through the end of that Section and
inserting in substitution therefor the following: "the Company's Quarterly
Report on Form 10-Q as filed with the Securities and Exchange Commission".
Section 7(b) of the Purchase Agreement is hereby amended by striking the entire
text beginning with "(i)" and through the end of that Section and inserting in
substitution therefor the following: "the Company's Annual Report on Form 10-K
and related Annual Report to Shareholders as filed with the Securities and
Exchange Commission". Section 7(c) and Section 7(d) of the Purchase Agreement
are hereby deleted. The heading of Section 7(e) of the Purchase Agreement is
hereby amended to read "SEC REPORTS; MAILINGS TO SHAREHOLDERS", and there is
hereby added at the end of existing Section 7(e) the following: "In addition,
(i) at the same time that the Company makes a mailing to its shareholders
generally and (ii) promptly after the Company issues a press release, the
Company shall provide a copy of the same to each registered holder of the
Notes." Section 7(g), Section 7(h), Section 7(j), Section 7(l), Section 7(m),
Section 7(o) and 7(p) of the Purchase Agreement are hereby deleted. The
penultimate paragraph of Section 7, immediately following Section 7(p), is
hereby amended and restated in its entirety as follows: "The Company will
furnish to each Eligible Holder, at the time it furnishes each set of financial
statements pursuant to paragraph (a) or (b) above, an Officers' Certificate to
the effect that no Event of Default has occurred and is continuing (or, if any
Event of Default has occurred and is continuing, describing the same in
reasonable detail, the period of existence thereof and describing the action
that the Company has taken and proposes to take with respect thereto)."
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 FULL NOTE ISSUE.
The Company hereby represents and warrants that the Notes being purchased
by the Holders as of the Effective Date are all of the Notes issued as
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<PAGE>
of December 31, 1994 in the aggregate initial principal amount of $27
million, and that such Notes constitute all of the Notes outstanding as of
the Effective Date. The Company further represents and warrants that, except
for the amendments referred to in the first paragraph of this Tenth
Amendment, the Company is not a party to, and does not otherwise have
knowledge of, any amendment, modification or waiver of or affecting the Note
Purchase Agreement dated as of April 14, 1989 pursuant to which the Notes
were originally issued.
3.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES.
The Company represents, covenants and warrants as follows, as of the
Effective Date of this Tenth Amendment:
(a) The Company is a corporation duly organized and validly existing under
the laws of the State of Delaware. Each of the Company and its Subsidiaries has
all requisite corporate power and authority necessary to own its assets and
carry on its business as now being and as proposed to be conducted, and is
qualified to do business in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect.
(b) The financial statements included in the Company's Quarterly Report on
Form 10-Q for the period ending June 30, 1996 and Annual Report on Form 10-K for
the period ending December 31, 1995 are complete and correct and fairly present
the consolidated financial condition of the Company and its consolidated
Subsidiaries as at the respective dates thereof, and the consolidated results of
their operations for the fiscal periods ended on said dates (subject, in the
case of interim financial statements, to year-end audit adjustments), all in
accordance with GAAP (except, in the case of interim financial statements, as to
footnotes).
(c) Since June 30, 1996, the Company's authorized share capitalization has
not changed in any respect, and there have been no issuances, redemptions or
repurchases of any outstanding common or preferred shares of the Company, except
for sales of common shares pursuant to the exercise of stock options issued
pursuant to compensatory option plans of the Company disclosed in the Company's
proxy statement relating to its 1996 annual meeting of shareholders.
(d) The Company hereby reiterates in its entirety Section 3.05 of the
Purchase Agreement, such representation and warranty being deemed made as of the
Effective Date, except that the reference to Exhibit C therein is hereby changed
to SCHEDULE 3.2(d) attached hereto.
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<PAGE>
(e) The Company hereby reiterates in its entirety Section 3.06 of the
Purchase Agreement, such representation and warranty being deemed made as of the
Effective Date, except that the last sentence thereof is hereby deleted.
(f) Attached hereto as SCHEDULE 3.2(f) is a true and complete list of the
outstanding debt for money borrowed of the Company and its Subsidiaries as of
September 30, 1996.
(g) The Company hereby reiterates in its entirety Section 3.08 of the
Purchase Agreement, such representation and warranty being deemed made as of the
Effective Date, except that the reference to 1993 therein is hereby changed to
1995.
(h) The Company hereby reiterates in its entirety Section 3.09 of the
Purchase Agreement, such representation and warranty being deemed made as of the
Effective Date, except that the reference therein to the exception for Exhibit H
is hereby deleted.
(i) The Company hereby reiterates in its entirety Section 3.11 of the
Purchase Agreement, such representation and warranty being deemed made as of the
Effective Date, except that the reference therein to the Confidential Memorandum
is hereby deleted.
(j) The Company hereby reiterates in its entirety Section 3.13 of the
Purchase Agreement, such representation and warranty being deemed made as of the
Effective Date, except that the reference therein to the exception for
Donaldson, Lufkin & Jenrette Securities Corporation is hereby deleted.
(k) The Company hereby reiterates in their entirety Sections 3.02, 3.10,
3.15, 3.16, 3.17, 3.19 and 3.20 of the Purchase Agreement, such representations
and warranties being deemed made as of the Effective Date.
SECTION 4. CONSIDERATION FOR AMENDMENT
As partial consideration for their activities in structuring the Purchase
Transaction and entering into this Tenth Amendment, the Company will issue to
DVI Financial Services Inc. ("DVI") and General Electric Company, a New York
corporation acting through GE Medical Systems ("GE"), effective as of the
Effective Date, warrants to purchase an aggregate of 125,000 shares of the
Company's common stock (75,000 to DVI and 50,000 to GE). The warrants will have
a term of three (3) years and an exercise price per share equal to $5.00, and
will be evidenced by a warrant certificate substantially in the form attached
hereto as EXHIBIT 1.
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<PAGE>
SECTION 5. MISCELLANEOUS
5.1 REFERENCE TO AND EFFECT ON THE PURCHASE AGREEMENT.
(i) On and after the date of this Tenth Amendment, each reference in
the Purchase Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import referring to the Purchase Agreement, and each
reference in any other related documents to the "Purchase Agreement",
"thereunder", "thereof" or words of like import referring to the Purchase
Agreement shall mean and be a reference to the Agreement as amended to give
effect to the Tenth Amendment.
(ii) Except as specifically amended by this Tenth Amendment, the
Purchase Agreement shall remain in full force and effect and is hereby
ratified and confirmed.
(iii) The execution, delivery and performance of this Tenth Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Holders under, the Purchase Agreement.
5.2 HEADINGS. Section and subsection headings in this Tenth Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Tenth Amendment for any other purpose or be given any substantive
effect.
5.3 APPLICABLE LAW. THIS TENTH AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.4 COUNTERPARTS; EFFECTIVENESS. This Tenth Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
5.5 NO DEFAULTS. By its execution hereof, the Company represents and
warrants that, after giving effect to the amendments contained in this Tenth
Amendment, no Default or Event of Default exists under the Purchase Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Tenth Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
"COMPANY" ALLIANCE IMAGING, INC.
By: ______________________________
Title: ______________________________
"HOLDERS" DVI FINANCIAL SERVICES INC.
By: ______________________________
Title: ______________________________
GENERAL ELECTRIC COMPANY, A NEW YORK CORPORATION
ACTING THROUGH GE MEDICAL SYSTEMS
By: ______________________________
Title: ______________________________
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<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
COLUMN: A B C D E
Voluntary
Monthly Interest at Total Additional Remaining
Payment Principal 7.50% Monthly Credit to Principal
Date Prepayments Per Annum Payment Principal Balance
---- ----------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
09/30/96 $20,091,644.58
11/30/96 0.00 251,145.56 251,145.56 0.00 20,091,644.58
12/31/96 208,965.22 125,572.78 334,538.00 16,726.90 19,865,952.46
01/31/97 210,375.80 124,162.20 334,538.00 16,726.90 19,638,849.76
02/28/97 211,795.19 122,742.81 334,538.00 16,726.90 19,410,327.68
03/31/97 213,223.45 121,314.55 334,538.00 16,726.90 19,180,377.32
04/30/97 214,660.64 119,877.36 334,538.00 16,726.90 18,948,989.78
05/31/97 216,106.81 118,431.19 334,538.00 16,726.90 18,716,156.07
06/30/97 217,562.02 116,975.98 334,538.00 16,726.90 18,481,867.14
07/31/97 219,026.33 115,511.67 334,538.00 16,726.90 18,246,113.91
08/31/97 220,499.79 114,038.21 334,538.00 16,726.90 18,008,887.22
09/30/97 221,982.45 112,555.55 334,538.00 16,726.90 17,770,177.87
10/31/97 223,474.39 111,063.61 334,538.00 16,726.90 17,529,976.58
11/30/97 224,975.65 109,562.35 334,538.00 16,726.90 17,288,274.04
12/31/97 226,486.29 108,051.71 334,538.00 16,726.90 17,045,060.85
01/31/98 228,006.37 106,531.63 334,538.00 16,726.90 16,800,327.58
02/28/98 229,535.95 105,002.05 334,538.00 16,726.90 16,554,064.73
03/31/98 231,075.10 103,462.90 334,538.00 16,726.90 16,306,262.73
04/30/98 232,623.86 101,914.14 334,538.00 16,726.90 16,056,911.97
05/31/98 234,182.30 100,355.70 334,538.00 16,726.90 15,806,002.77
06/30/98 235,750.48 98,787.52 334,538.00 16,726.90 15,553,525.39
07/31/98 237,328.47 97,209.53 334,538.00 16,726.90 15,299,470.02
08/31/98 238,916.31 95,621.69 334,538.00 16,726.90 15,043,826.81
09/30/98 240,514.08 94,023.92 334,538.00 16,726.90 14,786,585.83
10/31/98 242,121.84 92,416.16 334,538.00 16,726.90 14,527,737.09
11/30/98 243,739.64 90,798.36 334,538.00 16,726.90 14,267,270.55
12/31/98 245,367.56 89,170.44 334,538.00 16,726.90 14,005,176.09
01/31/99 247,005.65 87,532.35 334,538.00 16,726.90 13,741,443.54
02/28/99 248,653.98 85,884.02 334,538.00 16,726.90 13,476,062.66
03/31/99 250,312.61 84,225.39 334,538.00 16,726.90 13,209,023.15
04/30/99 251,981.61 82,556.39 334,538.00 16,726.90 12,940,314.65
05/31/99 253,661.03 80,876.97 334,538.00 16,726.90 12,669,926.71
06/30/99 255,350.96 79,187.04 334,538.00 16,726.90 12,397,848.86
07/31/99 257,051.44 77,486.56 334,538.00 16,726.90 12,124,070.51
08/31/99 258,762.56 75,775.44 334,538.00 16,726.90 11,848,581.05
09/30/99 260,484.37 74,053.63 334,538.00 16,726.90 11,571,369.78
10/31/99 262,216.94 72,321.06 334,538.00 16,726.90 11,292,425.94
11/30/99 263,960.34 70,577.66 334,538.00 16,726.90 11,011,738.71
12/31/99 265,714.63 68,823.37 334,538.00 16,726.90 10,729,297.17
01/31/00 267,479.89 67,058.11 334,538.00 16,726.90 10,445,090.38
02/29/00 269,256.19 65,281.81 334,538.00 16,726.90 10,159,107.30
03/31/00 271,043.58 63,494.42 334,538.00 16,726.90 9,871,336.82
04/30/00 272,842.14 61,695.86 334,538.00 16,726.90 9,581,767.77
05/31/00 274,651.95 59,886.05 334,538.00 16,726.90 9,290,388.92
06/30/00 276,473.07 58,064.93 334,538.00 16,726.90 8,997,188.95
07/31/00 278,305.57 56,232.43 334,538.00 16,726.90 8,702,156.48
</TABLE>
-14-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
COLUMN: A B C D E
Voluntary
Monthly Interest at Total Additional Remaining
Payment Principal 7.50% Monthly Credit to Principal
Date Prepayments Per Annum Payment Principal Balance
---- ----------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
08/31/00 280,149.52 54,388.48 334,538.00 16,726.90 8,405,280.06
09/30/00 282,005.00 52,533.00 334,538.00 16,726.90 8,106,548.16
10/31/00 283,872.07 50,665.93 334,538.00 16,726.90 7,805,949.19
11/30/00 285,750.82 48,787.18 334,538.00 16,726.90 7,503,471.47
12/31/00 287,641.30 46,896.70 334,538.00 16,726.90 7,199,103.26
01/31/01 289,543.60 44,994.40 334,538.00 16,726.90 6,892,832.76
02/28/01 291,457.80 43,080.20 334,538.00 16,726.90 6,584,648.06
03/31/01 293,383.95 41,154.05 334,538.00 16,726.90 6,274,537.22
04/30/01 295,322.14 39,215.86 334,538.00 16,726.90 5,962,488.17
05/31/01 297,272.45 37,265.55 334,538.00 16,726.90 5,648,488.82
06/30/01 299,234.94 35,303.06 334,538.00 16,726.90 5,332,526.98
07/31/01 301,209.71 33,328.29 334,538.00 16,726.90 5,014,590.37
08/31/01 303,196.81 31,341.19 334,538.00 16,726.90 4,694,666.66
09/30/01 305,196.33 29,341.67 334,538.00 16,726.90 4,372,743.43
10/31/01 307,208.35 27,329.65 334,538.00 16,726.90 4,048,808.18
11/30/01 309,232.95 25,305.05 334,538.00 16,726.90 3,722,848.33
12/31/01 311,270.20 23,267.80 334,538.00 16,726.90 3,394,851.23
01/31/02 313,320.18 21,217.82 334,538.00 16,726.90 3,064,804.15
02/28/02 315,382.97 19,155.03 334,538.00 16,726.90 2,732,694.27
03/31/02 317,458.66 17,079.34 334,538.00 16,726.90 2,398,508.71
04/30/02 319,547.32 14,990.68 334,538.00 16,726.90 2,062,234.49
05/31/02 321,649.03 12,888.97 334,538.00 16,726.90 1,723,858.56
06/30/02 323,763.88 10,774.12 334,538.00 16,726.90 1,383,367.77
07/31/02 325,891.95 8,646.05 334,538.00 16,726.90 1,040,748.92
08/31/02 328,033.32 6,504.68 334,538.00 16,726.90 695,988.70
09/30/02 330,188.07 4,349.93 334,538.00 16,726.90 349,073.73
10/31/02 332,347.27 2,181.73 334,529.00 16,726.46 0.00
</TABLE>
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<PAGE>
THESE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON THEIR EXERCISE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, SHALL HAVE BECOME EFFECTIVE WITH
RESPECT THERETO AND ALL APPLICABLE QUALIFICATIONS UNDER STATE SECURITIES LAWS
SHALL HAVE BEEN OBTAINED WITH RESPECT THERETO; OR (ii) EXEMPTIONS FROM SUCH
REGISTRATION AND ALL SUCH APPLICABLE QUALIFICATION REQUIREMENTS ARE AVAILABLE.
No. C-2 50,000 Warrants
Date of Issuance:
November 6, 1996
WARRANTS TO PURCHASE COMMON STOCK
OF ALLIANCE IMAGING, INC.
Warrant Certificate
THIS CERTIFIES THAT GENERAL ELECTRIC COMPANY, a New York
corporation acting through GE Medical Systems ("Original Warrant Holder") or
registered assigns is the registered owner of the number of warrants set forth
above (the "Warrants"), each of which entitles the owner thereof to purchase,
subject to the terms and conditions hereof, at any time prior to 5:00 P.M. (Los
Angeles time) on the Expiration Date (as hereinafter defined) at the principal
office of Alliance Imaging, Inc., a Delaware corporation (the "Company"), one
fully paid and non-assessable share of the Common Stock, $.01 par value ("Common
Stock"), of the Company, at a cash purchase price which shall initially be $5.00
per share (as such purchase price may be adjusted pursuant to the terms hereof,
the "Purchase Price") upon presentation and surrender of this Warrant
Certificate with the Form of Election to Purchase duly executed and accompanied
by payment of the Purchase Price in the manner specified herein. As provided
herein, the Purchase Price and the number of shares of Common Stock which may be
purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment. The holder or holders of these Warrants, whether the Original
Warrant Holder or registered assigns, shall be collectively referred to herein
as the "Holder."
1. FORM OF WARRANT CERTIFICATES. All certificates
representing the Warrants ("Warrant Certificates"), if any in addition to
this Warrant Certificate, which may hereinafter be issued and the forms of
election to purchase shares and of assignment that accompany such Warrant
Certificates shall be substantially in the form of this Warrant Certificate
and
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<PAGE>
may have such letters, numbers or other marks of identification or
designation and such legends (including, without limitation, a legend
referring to restrictions on resale by statutory underwriters), summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Warrant Certificate, or as may
be required to comply with any law or with any rule or regulation made
pursuant thereto. All Warrant Certificates shall be executed on behalf of
the Company by its President or a senior or executive vice president.
2. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF WARRANT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES.
Subject to the provisions of Section 11 hereof, this Warrant Certificate may be
transferred, split up, combined or exchanged for another Warrant Certificate or
Warrant Certificates, entitling the Holder to purchase a like number of shares
of Common Stock as the Warrant Certificate or Warrant Certificates surrendered
then entitled him to purchase; provided, however, that (i) any Warrant
Certificate with which this Warrant Certificate is combined shall have the same
terms as this Warrant Certificate, and (ii) notwithstanding anything in this
Warrant Certificate to the contrary, the Holder may transfer all or a portion of
its right, title and interest in and to the Warrants to another person or
entity. If the Holder desires to transfer, split up, combine or exchange any
Warrant Certificate, he or she shall make such request in writing delivered to
the Company, and shall surrender the Warrant Certificate or Warrant Certificates
to be transferred, split up, combined or exchanged at the principal office of
the Company. Thereupon, the Company shall have such new Warrant Certificate or
Warrant Certificates, as the case may be, signed as provided in Section 1 and
delivered to the person entitled thereto, as so requested. The Company may
require payment by the Holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Warrant Certificates.
Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (including with respect to the amount of such indemnity or
security), and reimbursement by the Holder to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Holder in lieu of the Warrant Certificate so
lost, stolen, destroyed or mutilated. Notwithstanding anything in the foregoing
to the contrary, so long as the Holder is the Original Warrant Holder, the
Company will not require security (other than its own indemnification referred
to above) in connection with any such issuance of replacement Warrant
Certificates.
3. SUBSEQUENT ISSUE OF WARRANT CERTIFICATES. Subsequent to
the issuance of this Warrant Certificate, additional Warrant Certificates shall
be issued, as necessary, in connection with (a) any transfer, combination, split
up or exchange of Warrants pursuant to Section 2 hereof, (b) the replacement of
mutilated, destroyed, lost or stolen Warrant Certificates pursuant to Section 2
hereof, (c) the partial exercise of any Warrant Certificate to evidence the
unexercised portion of such Warrant Certificate, pursuant to Section 4 hereof,
and (d) the exercise of the Company's election set forth in Section 8(e) hereof.
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<PAGE>
4. EXERCISE OF WARRANTS; PURCHASE PRICE.
(a) Subject to the final sentence of this paragraph (a), the
Holder of this Warrant Certificate may exercise the Warrants evidenced hereby in
whole or in part at any time upon surrender of the Warrant Certificate with the
form of election to purchase attached hereto duly executed and accompanied by
payment of the Purchase Price for each share of Common Stock as to which the
Warrants are exercised, at or prior to 5:00 p.m. (Los Angeles time) on the
Expiration Date. The "Expiration Date" shall be the date that is three (3)
years from the date of the issuance of these Warrants. The Purchase Price shall
initially be $5.00 but shall be subject to adjustment as provided in Section 8
hereof, and shall be payable only in the consideration specified in
paragraph (b) immediately below.
(b) Upon receipt of this Warrant Certificate, with the form
of election to purchase duly executed, accompanied by payment, in cash, or by
certified check or bank draft payable to the order of the Company, or by
surrender of a debt instrument of the Company held by the Holder (valued at the
outstanding principal amount thereof plus, at the option of the Holder, any
accrued and unpaid interest thereon) or a preferred stock instrument of the
Company held by the Holder (valued at the liquidation preference thereof,
including, without duplication, at the option of the Holder, any accumulated and
unpaid dividends thereon), of the Purchase Price for the shares to be purchased
and an amount equal to any applicable transfer tax, if any, the Company shall
thereupon promptly deliver to or upon the order of the Holder of a Warrant
Certificate (i) certificates for the number of whole shares of Common Stock to
be purchased, registered in such name or names as may be designated by the
Holder and (ii) when appropriate, the amount of cash to be paid in lieu of
issuance of fractional shares.
(c) In case the Holder of this Warrant Certificate shall
exercise less than all the Warrants evidenced hereby, a new Warrant Certificate
evidencing Warrants equivalent to the Warrants remaining unexercised shall be
issued by the Company to the Holder or to his duly authorized assigns, subject
to the provisions of Section 11 hereof. In addition, if the Holder exercises
Warrants using debt or preferred stock instruments of the Company as hereinabove
provided, the Company shall return balance certificates representing such
instruments to the Holder unless the full amount of such instruments is tendered
as payment of the Purchase Price.
(d) All shares of Common Stock issued upon the exercise of
Warrants shall be deemed to be Registrable Securities within the meaning of that
certain Registration Rights Agreement dated as of December 31, 1994 among the
Company and the Noteholders and Debentureholders named therein, with the same
registration and other rights afforded to other Registrable Securities covered
thereby.
5. CANCELLATION AND DESTRUCTION OF WARRANT CERTIFICATE.
Upon surrender of this Warrant Certificate for the purpose of exercise (in whole
or in part), exchange, substitution or transfer, this Warrant Certificate shall
be cancelled, and no Warrant Certificates shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this Warrant Certificate. If
the Company purchases or acquires Warrants, the Company shall cancel and retire
the Warrant Certificates evidencing such Warrants.
-18-
<PAGE>
6. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock, the number
of shares of Common Stock that will be sufficient to permit the exercise in full
of all outstanding Warrants.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon the exercise of Warrants shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price and compliance with
all other provisions of this Warrant Certificate), be duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of Warrant Certificates or
of any shares of Common Stock upon the exercise of Warrants. The Company shall
not, however, be required (i) to pay any tax or taxes based upon the income of
the Holder or any tax or taxes which may be payable in respect of any transfer
involved in the transfer or delivery of Warrant Certificates or the issuance or
delivery of certificates for Common Stock in a name other than that of the
Holder or (ii) to issue or deliver any certificates for shares of Common Stock
upon the exercise of any Warrants until any such tax shall have been paid (any
such tax being payable by the Holder of the Warrant Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
7. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock is issued upon the exercise of the
Warrants shall for all purposes be deemed to have become the holder of record of
the Common Stock represented thereby, and such certificate shall be dated on the
exercise date, which is the date upon which the Warrant Certificate evidencing
such Warrants was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if such exercise
date is a date upon which the Common Stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding business day
on which the Common Stock transfer books of the Company are open.
The Holder, as such, shall not be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common Stock or of any
other securities of the Company which may at any time be issuable on the
exercise of the Warrants, nor shall anything contained in this Warrant
Certificate be construed to confer upon the Holder, as such, any of the rights
of a shareholder of the Company or any right to vote upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrants shall have
been exercised as provided in this Warrant Certificate.
8. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF WARRANTS. The Purchase Price and the number of shares covered by this
Warrant Certificate
-19-
<PAGE>
are subject to adjustment from time to time upon the occurrence of the events
enumerated in this Section 8.
(a) In case the Company shall at any time after the date of
the issuance of this Warrant Certificate (i) declare a dividend on the Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock into a greater number of shares, (iii) combine the outstanding Common
Stock into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger), the Purchase
Price in effect at the time of the record date for such dividend, or such
issuance, or of the effective date of such subdivision, combination,
distribution or reclassification, and the number and kind of shares of capital
stock issuable on such date shall be proportionately adjusted so that upon the
exercise after such time of any Warrant, the Holder shall be entitled to receive
the aggregate number and kind of shares of capital stock which, if such Warrant
had been exercised immediately prior to such date and at a time when the Common
Stock transfer books of the Company were open, the Holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination, distribution or reclassification, subject to the
provisions of Section 8(b) hereof. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Notwithstanding anything in this Section 8 to the
contrary, no adjustment in the Purchase Price shall be required unless such
adjustment, together with any amount being carried forward as hereinafter
provided, would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 8(b) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment and shall not, in any event, be lost by passage of time or
otherwise. All calculations under this Section 8 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
Notwithstanding the first sentence of this Section 8(b), any adjustment required
by this Section 8 shall be made no later than the earlier of one year from the
date of the transaction which mandates such adjustment or the expiration of the
right to exercise any Warrant.
(c) In the event that at any time, as a result of an
adjustment made pursuant to Section 8(a) hereof, the Holder shall become
entitled to receive any shares or units of capital stock of the Company other
than shares of Common Stock upon the exercise or conversion of Warrants,
thereafter the number of such other shares or units so receivable upon exercise
of the Warrants shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Section 8(a) hereof, and the provisions of this
Warrant Certificate with respect to the shares of Common Stock shall apply on
like terms to any such other shares or units.
(d) Irrespective of any adjustments in the Purchase Price or
the number of shares of Common Stock issuable upon the exercise of Warrants,
this Warrant Certificate or Warrant Certificates thereafter issued may continue
to express the Purchase Price and the number of shares stated in this Warrant
Certificate and the Purchase Price and such number of shares specified thereon
shall be deemed to have been so adjusted.
-20-
<PAGE>
(e) The Company may elect to adjust the number of Warrants,
in substitution for any adjustment in the number of shares of Common Stock
purchasable upon the exercise of the Warrants as provided in Section 8(a)
hereof, such that the total number of shares of Common Stock issuable upon
exercise of the Warrants is the same as if such adjustment had been made but
such that each of the Warrants outstanding after such adjustment of the number
of Warrants is exercisable for one share of Common Stock. The Company shall
notify the Holder in writing of such election. Upon each adjustment of the
number of Warrants pursuant to this subsection (e), the Company shall as
promptly as practicable cause to be distributed to the Holder Warrant
Certificates evidencing, subject to Section 11, the additional or substitute
Warrants to which the Holder shall be entitled as a result of such adjustment;
or, at the option of the Company, shall cause to be distributed to the Holder in
substitution and replacement for the Warrant Certificates held by the Holder
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Warrant Certificates evidencing all the Warrants to which the
Holder shall be entitled after such adjustment. Warrant Certificates so to be
distributed shall be issued in the manner provided for herein (and shall bear
the adjusted Purchase Price, if applicable) and shall be registered in the name
of the Holder.
(f) In any case in which this Section 8 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the Holder of any Warrant exercised after such record date
the shares of Common Stock and other capital stock of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment; PROVIDED, HOWEVER,
that the Company shall deliver to the Holder a due bill or other appropriate
instrument evidencing the Holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
9. CERTIFICATION OF ADJUSTED PURCHASE PRICE AND NUMBER OF
SHARES ISSUABLE. Whenever the Purchase Price and the number of shares of Common
Stock issuable upon the exercise of each Warrant are adjusted as provided in
Section 8 above, the Company shall provide notice to the Holder in writing
setting forth the Purchase Price as so adjusted, the number of shares of Common
Stock issuable upon the exercise of each Warrant as so adjusted, and a brief
statement of the facts accounting for such adjustment to the Holder. Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of any action referred to in Section 8 hereof.
10. CONSOLIDATION, MERGER OR SALE OF ASSETS; CERTAIN
DISTRIBUTIONS. If (i) the Company shall at any time consolidate with or merge
with or into another corporation and (ii) the Common Stock is exchanged,
cancelled or reclassified in connection with such transaction, the Holder will
thereafter receive, upon the exercise hereof in accordance with the terms of
this Agreement, the securities, property or cash to which the holder of the
number of shares of Common Stock deliverable upon the exercise of the Warrants
immediately prior to such transaction would have been entitled upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities or property
-21-
<PAGE>
thereafter deliverable upon the exercise of the Warrants. A sale or lease of
all or substantially all the assets of the Company for a consideration (apart
from the assumption of obligations) consisting primarily of securities shall
be deemed a consolidation or merger for the purposes of clause (i) of the
first sentence of this Section 10. The provisions of this Section 10 shall
similarly apply to successive mergers or consolidations or sales or other
transfers. Further, in the event that the Company proposes to make a
distribution of assets or properties of the Company to the holders of its
Common Stock (excluding non-liquidating cash dividends being made out of
earnings for the current or immediately preceding fiscal year, and excluding
any distribution for which there is an antidilution adjustment pursuant to
Section 8(a) above), the Company shall provide the holders of the Warrants
with written notice at least twenty (20) days prior to the earlier of the
date for such distribution or the record date therefor, in order to enable
the holders of the Warrants to exercise the Warrants prior to the making of
the distribution or the record date therefor.
11. FRACTIONAL WARRANTS AND FRACTIONAL SHARES.
(a) Notwithstanding an adjustment pursuant to Section 8(e)
hereof in the number of Warrants, the Company shall not be required to issue
Warrant Certificates which evidence fractional Warrants. If the Company so
elects, in lieu of such fractional Warrants, there shall be paid to the Holder
to whom such fractional Warrants would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Warrant (as
determined in good faith by the Board of Directors of the Company).
(b) Notwithstanding an adjustment pursuant to Section 8(a)
hereof in the number of shares covered by a Warrant, the Company shall not be
required to issue fractions of shares upon exercise of the Warrants or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, at the Company's election, there shall be paid to the Holder at the time
Warrants are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share of Common Stock (as determined
in good faith by the Board of Directors of the Company).
(c) The Holder, by the acceptance of the Warrant, expressly
waives his right to receive any fractional Warrant or any fractional share upon
exercise of a Warrant.
12. RIGHT OF ACTION. All rights of action in respect of this
Warrant Certificate are vested in the Holder.
13. AGREEMENT OF WARRANT CERTIFICATE HOLDERS. The Holder of
this Warrant Certificate by accepting the same consents and agrees with the
Company and with every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable only on the
registry books of the Company if surrendered at the principal office of the
Company; and
(b) the Company may deem and treat the person in whose name
each Warrant Certificate is registered as the absolute owner thereof and of the
Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company) for
all purposes whatsoever, and the
-22-
<PAGE>
Company shall not be affected by any notice to the contrary.
14. NOTICES. Notices or demands authorized by this Warrant
Certificate to be given or made by the Holder to the Company shall be
sufficiently given or made if made in writing and shall be delivered by personal
service or telegram, telecopier or registered or certified mail (if such service
is not available, then by first class mail), postage prepaid, to such address as
may be designated to the Holders from time to time by the Company and which
shall initially be:
Alliance Imaging, Inc.
3111 No. Tustin Avenue, Suite 150
Orange, California 92665
Attention: Chief Financial Officer
Telecopier No. (714) 921-5678
Notices or demands authorized by this Warrant Certificate to be given or made by
the Company to the Holder shall be sufficiently given or made if made in writing
and shall be delivered by personal service or telegram, telecopier or registered
or certified mail (if such service is not available, then by first-class mail),
postage prepaid, addressed to the Holder at the address of the Holder as shown
on the registry books of the Company. Any notice hereunder sent by registered
or certified mail shall be deemed to have been given three (3) days after the
date on which it is mailed. All other notices shall be deemed given when
received. No objection may be made to the manner of delivery of any notice
actually received in writing by an authorized agent of a party.
15. SUPPLEMENTS AND AMENDMENTS. This Warrant Certificate,
together with other agreements being executed and delivered simultaneously
herewith, constitutes the Company's and the Holder's entire agreement with
respect to the subject matter hereof and supersedes all agreements,
representations, warranties, statements, promises and understandings, whether
oral or written, with respect to the subject matter hereof. This Warrant
Certificate may be amended, altered or modified only by a writing signed by the
Company and the Holder.
16. SUCCESSORS AND ASSIGNS. All the covenants and provisions
of this Warrant Certificate by or for the benefit of the Company or the Holder
shall bind and inure to the benefit of their respective successors and assigns.
This Warrant Certificate and the Warrants represented hereby are assignable, in
whole or in part, at the option of the Holder.
17. BENEFITS OF THIS AGREEMENT. Nothing in this Warrant
Certificate shall be construed to give to any person or entity other than the
Company and the Holder any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company and the Holder.
18. GOVERNING LAW. This Warrant Certificate has been
negotiated and issued in the State of California, concerns a California issuer,
and all questions with respect to the Warrant Certificate and the rights and
liabilities of the Company and the Holder shall be governed by the laws of that
state, regardless of the choice of laws provisions of California or any other
jurisdiction. Any and all disputes between the Company and the Holder
-23-
<PAGE>
which may arise pursuant to this Warrant Certificate shall be heard and
determined before the appropriate federal or state court located in Orange
County, California. The Company and the Holder acknowledge that each such
court has the jurisdiction to interpret and enforce the provisions of this
Warrant Certificate and the parties waive any and all objections that they
may have as to venue in any of the above courts.
19. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Warrant Certificate are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Warrant Certificate as of the date first set forth above.
ALLIANCE IMAGING, INC.
By:
---------------------------------
Its:
--------------------------------
WARRANT HOLDER
------------------------------------
By:
---------------------------------
Its:
--------------------------------
-24-
<PAGE>
ASSIGNMENT
(To be executed by the Holder if such
Holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
__________________________ attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated ______________
Signature ___________________________________
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
-25-
<PAGE>
ELECTION TO PURCHASE
(To be executed if the Holder desires
to exercise the Warrant Certificate)
To: ALLIANCE IMAGING, INC.
The undersigned hereby irrevocably elects to exercise
______________________ Warrants represented by this Warrant Certificate to
purchase the shares of Common Stock issuable upon the exercise of such Warrants
and requests that certificates for such shares be issued in the name of:
(Please print name and address and insert
social security or other identifying number)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
(Please print name and address and insert
social security or other identifying number)
Dated: ____________________
______________________________________
Signature
(Signature must conform in all respects
to name of the Holder as specified on
the face of this Warrant Certificate)
-26-
<PAGE>
SCHEDULE 3.2(d)
ALLIANCE IMAGING, INC.
SUBSIDIARIES
AS OF 9-30-96
SUBSIDIARY INCORPORATION OWNERSHIP
---------- ------------- ---------
Alliance Imaging Centers, Inc. (AIC) California 100%
Alliance Imaging of Central Georgia, Inc. (AICG) Georgia 100%
Epic/Alliance of Texas, Inc. (EPIC) Texas 100%
Alliance Imaging Management, Inc. (AIM) California 100%
Alliance Resonancia Magnetica S.A. de C.V. (ARM) Mexico, D.F. 100%
Royal Medical Health Services, Inc. (RMHS) Pennsylvania 100%
Sun MRI Services, Inc. (SUN) California 100%
-27-
<PAGE>
SCHEDULE 3.2(f)
SCHEDULE OF DEBT FOR MONEY BORROWED
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY BALANCE
PAYEE UNIT/COLLATERAL RATE DATE 09/30/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALLIANCE IMAGING, INC.
GENERAL ELECTRIC MR # 53 (BS-1) 9.50 12/99 608,274.26
MEDICAL SYSTEMS MR # 54 (BS-2) 9.50 12/99 710,796.35
MR # 55 (BS-3) 9.50 12/99 644,059.30
MR # 58 (SIGNA 4) 8.58 5/2000 1,328,028.06
MR # 59 (SIGNA 5) 8.75 6/99 995,556.27
MR # 60 (BS-4) 9.50 12/99 353,084.92
MR # 60 (BS-4) - STEP UP 9.50 12/99 196,292.78
MR # 63 (MAX-13) 8.07 12/96 44,020.56
MR # 64 (MAX-14) 8.07 1/97 58,498.55
MR # 66 (BS-5) 9.50 12/99 867,376.85
MR # 67 (MS-1) 9.95 6/99 769,027.12
MR # 69 (MS-3) 10.40 8/99 795,425.01
MR # 79 (MAX-21) 9.50 12/99 373,115.51
MR # 86 (MAX-24) 10.90 12/97 80,974.32
MR # 87 (MAX-25) 10.90 12/97 77,017.48
MR # 88 (MAX-26) 10.90 3/98 95,000.17
MR # 77 (MAX-19) 10.90 12/97 79,843.77
MR # 100 (MAX-28) 10.91 2/98 91,387.62
MR # 101 (MAX-29) 10.90 5/98 104,139.43
MR # 102 (VECTRA 1) 10.63 12/99 303,194.22
MR # 105 (MAX-31) 10.54 05/98 105,381.56
MR # 106 (MAX-32) 9.83 06/98 106,718.62
MR # 104 (MAX-30) 10.54 05/98 106,116.74
MR # 107 (MS 7) 10.25 06/2000 934,836.66
MR # 108 (MS 8) 9.90 08/2000 1,001,778.44
MR # 112 (C 1) 9.64 12/2000 701,189.24
MR # 113 (MS 13) 9.47 12/2000 1,059,371.32
CT # 14 8.50 4/97 45,835.61
CT # 17 9.64 10/31/98 151,212.20
MR # 114 (C 2) 9.47 02/2001 509,167.04
MR # 113 (C 3) 9.47 06/2001 501,509.37
MR # 117 (C 4) 9.44 06/2001 674,060.01
MR # 120 (MS 11) 9.03 03/2001 1,202,826.01
MR # 128 (MS 14) 9.91 05/2001 1,315,574.09
MR # 137 (C 7) 10.00 06/2001 684,838.60
MR # 118 (C 5) 10.24 10/2001 697,395.64
MR # 135 (MS 15) 10.24 08/2001 1,340,059.84
MR # 141 (MS 16) 10.384 09/2001 1,285,445.00
MR # 119 (C 6) 10.30 10/2001 549,997.50
-------------
SUBTOTAL 21,548,426.04
-------------
U.S. CONCORD MR # 47 & 49 (HPQ 5 & 6) 8.00 6/98 1,312,442.17
MR # 51 (HPQ 8) 8.00 12/98 772,884.89
MR # 56 (HPQ 9) 8.00 12/98 781,998.82
MR # 57 (SIGNA 6) 8.00 3/99 488,469.12
CT # 13 8.00 8/99 218,354.11
-------------
SUBTOTAL 3,574,149.11
-------------
DVI FINANCIAL SERVICES MR # 21 (T 7) 9.99 12/98 44,373.15
MR # 61 (HPQ 10) 9.99 12/98 705,066.97
MR # 65 (EDGE 2) 10.79 9/00 1,317,955.31
MR # 70 (MS 4) 11.36 3/00 1,009,339.89
MR # 110 (S 6) 11.36 3/00 593,663.77
MR # 84 (MS 5) 11.36 3/00 992,011.51
MR # 85 (MS 6) 11.36 3/00 956,169.61
MR # 127 (MS 12) 9.873 05/2001 1,862,141.78
MR # 123 (MAX 33) 10.25 5/99 175,746.38
MR # 126 (HPQ 11) 10.25 05/2001 792,669.61
-------------
SUBTOTAL 8,449,137.98
-------------
</TABLE>
-28-
<PAGE>
SCHEDULE 3.2(f)
SCHEDULE OF DEBT FOR MONEY BORROWED
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY BALANCE
PAYEE UNIT/COLLATERAL RATE DATE 09/30/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SIEMENS CREDIT CORPORATION MR # 81 (S-3) 10.25 9/99 678,181.93
MR # 81 (S-3) 10.69 9/99 18,285.91
MR # 82 (S-4) 10.25 9/99 674,999.27
MR # 103 (S-5) 10.70 1/2000 893,199.18
MR # 115 (S-7) 9.50 1/2002 1,267,115.35
MR # 138 (S-8) 10.251 6/2001 1,357,753.02
MR # 136 (S-9) 10.745 8/2001 1,277,596.00
-------------
SUBTOTAL 6,167,130.66
-------------
LYON CREDIT CORPORATION MR # 50 (HPQ 7) 9.522 10/2001 921,223.16
-------------
NATIONSBANC LEASING MR # 45 (HPQ 4) 7.30 9/97 437,220.85
-------------
COMERICA BANK MR # 98 (MAX 8) 10.25 03/97 136,058.00
-------------
PNC TRACTOR # 895 9.00 10/98 28,909.51
TRACTOR # 896 8.50 2/99 36,250.10
-------------
65,159.61
-------------
TOTAL ACCT 2710 41,298,505.41
-------------
AVB (A & M) TRACTOR # 894 9.321 11/97 18,039.74
TRACTOR # 879 9.321 04/97 8,565.81
-------------
SUBTOTAL 26,605.55
-------------
CIGNA SENIOR SECURED DEBT 7.50 12/2003 25,400,000.00
SENIOR SUB. DEBT 7.50 6/2005 16,070,312.50
-------------
41,470,312.50
-------------
82,795,423.46
-------------
-------------
TOTAL ALLIANCE IMAGING
ALLIANCE IMAGING CENTERS
DVI CT # 10 (IQ) 9.99 12/98 207,744.86
-------------
-------------
ROYAL MEDICAL HEALTH SERVICES
NOTES PAYABLE
DVI MR #129 (H 1) 8.6 5/99 541,641.56
DVI OLD # 7 8.6 5/99 138,428.92
PNC 9.25 07/97 27,777.42
PNC 9.25 07/97 24,388.83
INTEGRA 9.25 04/97 5,993.00
AVB COMPUTER LEASE 9.30 11/97 6,358.42
-------------
SUBTOTAL 744,588.15
-------------
NOTES PAYABLE-OTHER
MRI # 8 UNSECURED 9.50 10/98 150,000.00
MRI # 9 UNSECURED 9.50 10/98 77,000.00
MRI # 11 UNSECURED 9.50 10/98 101,868.00
-------------
SUBTOTAL 328,868.00
-------------
-------------
</TABLE>
-29-
<PAGE>
SCHEDULE 3.2(f)
SCHEDULE OF DEBT FOR MONEY BORROWED
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY BALANCE
PAYEE UNIT/COLLATERAL RATE DATE 09/30/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNFAVORABLE LEASE OBLIGATIONS
DVI MR # 130 (H 2) 8.60 01/98 240,955.09
Siemens MR # 131 (S 11) 8.60 06/98 278,564.19
Siemens MR # 132 (S 12) 8.60 07/99 278,303.22
-------------
SUBTOTAL 797,822.50
-------------
CAPITAL LEASE OBLIGATIONS
Siemens MR # 133 (S 14) 8.988 03/2000 1,168,893.42
Siemens MR # 134 (S 15) 10.075 01/2001 1,478,610.20
-------------
SUBTOTAL 2,647,503.62
-------------
TOTAL ROYAL MEDICAL 4,518,782.27
-------------
-------------
SUN MRI
PICKER MR # 140 (HPQ 13) 11.165 11/98 1,025,213.54
DVI TRACTOR 899 14.603 11/98 50,882.48
-------------
TOTAL SUN MRI 1,076,096.02
-------------
-------------
CONSOLIDATED TOTALS 88,598,046.61
-------------
-------------
</TABLE>
-30-
<PAGE>
EXHIBIT 10.43
THESE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON THEIR EXERCISE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, SHALL HAVE BECOME EFFECTIVE WITH
RESPECT THERETO AND ALL APPLICABLE QUALIFICATIONS UNDER STATE SECURITIES LAWS
SHALL HAVE BEEN OBTAINED WITH RESPECT THERETO; OR (ii) EXEMPTIONS FROM SUCH
REGISTRATION AND ALL SUCH APPLICABLE QUALIFICATION REQUIREMENTS ARE AVAILABLE.
No. C-2 50,000 Warrants
Date of Issuance:
November 6, 1996
WARRANTS TO PURCHASE COMMON STOCK
OF ALLIANCE IMAGING, INC.
Warrant Certificate
THIS CERTIFIES THAT GENERAL ELECTRIC COMPANY, a New York
corporation acting through GE Medical Systems ("Original Warrant Holder") or
registered assigns is the registered owner of the number of warrants set forth
above (the "Warrants"), each of which entitles the owner thereof to purchase,
subject to the terms and conditions hereof, at any time prior to 5:00 P.M. (Los
Angeles time) on the Expiration Date (as hereinafter defined) at the principal
office of Alliance Imaging, Inc., a Delaware corporation (the "Company"), one
fully paid and non-assessable share of the Common Stock, $.01 par value ("Common
Stock"), of the Company, at a cash purchase price which shall initially be $5.00
per share (as such purchase price may be adjusted pursuant to the terms hereof,
the "Purchase Price") upon presentation and surrender of this Warrant
Certificate with the Form of Election to Purchase duly executed and accompanied
by payment of the Purchase Price in the manner specified herein. As provided
herein, the Purchase Price and the number of shares of Common Stock which may be
purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment. The holder or holders of these Warrants, whether the Original
Warrant Holder or registered assigns, shall be collectively referred to herein
as the "Holder."
1. FORM OF WARRANT CERTIFICATES. All certificates
representing the Warrants ("Warrant Certificates"), if any in addition to
this Warrant Certificate, which may hereinafter be issued and the forms of
election to purchase shares and of assignment that accompany such Warrant
Certificates shall be substantially in the form of this Warrant Certificate
and
1
<PAGE>
may have such letters, numbers or other marks of identification or
designation and such legends (including, without limitation, a legend
referring to restrictions on resale by statutory underwriters), summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Warrant Certificate, or as may
be required to comply with any law or with any rule or regulation made
pursuant thereto. All Warrant Certificates shall be executed on behalf of
the Company by its President or a senior or executive vice president.
2. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF WARRANT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES.
Subject to the provisions of Section 11 hereof, this Warrant Certificate may be
transferred, split up, combined or exchanged for another Warrant Certificate or
Warrant Certificates, entitling the Holder to purchase a like number of shares
of Common Stock as the Warrant Certificate or Warrant Certificates surrendered
then entitled him to purchase; provided, however, that (i) any Warrant
Certificate with which this Warrant Certificate is combined shall have the same
terms as this Warrant Certificate, and (ii) notwithstanding anything in this
Warrant Certificate to the contrary, the Holder may transfer all or a portion of
its right, title and interest in and to the Warrants to another person or
entity. If the Holder desires to transfer, split up, combine or exchange any
Warrant Certificate, he or she shall make such request in writing delivered to
the Company, and shall surrender the Warrant Certificate or Warrant Certificates
to be transferred, split up, combined or exchanged at the principal office of
the Company. Thereupon, the Company shall have such new Warrant Certificate or
Warrant Certificates, as the case may be, signed as provided in Section 1 and
delivered to the person entitled thereto, as so requested. The Company may
require payment by the Holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Warrant Certificates.
Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (including with respect to the amount of such indemnity or
security), and reimbursement by the Holder to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Holder in lieu of the Warrant Certificate so
lost, stolen, destroyed or mutilated. Notwithstanding anything in the foregoing
to the contrary, so long as the Holder is the Original Warrant Holder, the
Company will not require security (other than its own indemnification referred
to above) in connection with any such issuance of replacement Warrant
Certificates.
3. SUBSEQUENT ISSUE OF WARRANT CERTIFICATES. Subsequent to
the issuance of this Warrant Certificate, additional Warrant Certificates shall
be issued, as necessary, in connection with (a) any transfer, combination, split
up or exchange of Warrants pursuant to Section 2 hereof, (b) the replacement of
mutilated, destroyed, lost or stolen Warrant Certificates pursuant to Section 2
hereof, (c) the partial exercise of any Warrant Certificate to evidence the
unexercised portion of such Warrant Certificate, pursuant to Section 4 hereof,
and (d) the exercise of the Company's election set forth in Section 8(e) hereof.
2
<PAGE>
4. EXERCISE OF WARRANTS; PURCHASE PRICE.
(a) Subject to the final sentence of this paragraph (a), the
Holder of this Warrant Certificate may exercise the Warrants evidenced hereby in
whole or in part at any time upon surrender of the Warrant Certificate with the
form of election to purchase attached hereto duly executed and accompanied by
payment of the Purchase Price for each share of Common Stock as to which the
Warrants are exercised, at or prior to 5:00 p.m. (Los Angeles time) on the
Expiration Date. The "Expiration Date" shall be the date that is three (3)
years from the date of the issuance of these Warrants. The Purchase Price shall
initially be $5.00 but shall be subject to adjustment as provided in Section 8
hereof, and shall be payable only in the consideration specified in
paragraph (b) immediately below.
(b) Upon receipt of this Warrant Certificate, with the form
of election to purchase duly executed, accompanied by payment, in cash, or by
certified check or bank draft payable to the order of the Company, or by
surrender of a debt instrument of the Company held by the Holder (valued at the
outstanding principal amount thereof plus, at the option of the Holder, any
accrued and unpaid interest thereon) or a preferred stock instrument of the
Company held by the Holder (valued at the liquidation preference thereof,
including, without duplication, at the option of the Holder, any accumulated and
unpaid dividends thereon), of the Purchase Price for the shares to be purchased
and an amount equal to any applicable transfer tax, if any, the Company shall
thereupon promptly deliver to or upon the order of the Holder of a Warrant
Certificate (i) certificates for the number of whole shares of Common Stock to
be purchased, registered in such name or names as may be designated by the
Holder and (ii) when appropriate, the amount of cash to be paid in lieu of
issuance of fractional shares.
(c) In case the Holder of this Warrant Certificate shall
exercise less than all the Warrants evidenced hereby, a new Warrant Certificate
evidencing Warrants equivalent to the Warrants remaining unexercised shall be
issued by the Company to the Holder or to his duly authorized assigns, subject
to the provisions of Section 11 hereof. In addition, if the Holder exercises
Warrants using debt or preferred stock instruments of the Company as hereinabove
provided, the Company shall return balance certificates representing such
instruments to the Holder unless the full amount of such instruments is tendered
as payment of the Purchase Price.
(d) All shares of Common Stock issued upon the exercise of
Warrants shall be deemed to be Registrable Securities within the meaning of that
certain Registration Rights Agreement dated as of December 31, 1994 among the
Company and the Noteholders and Debentureholders named therein, with the same
registration and other rights afforded to other Registrable Securities covered
thereby.
5. CANCELLATION AND DESTRUCTION OF WARRANT CERTIFICATE.
Upon surrender of this Warrant Certificate for the purpose of exercise (in whole
or in part), exchange, substitution or transfer, this Warrant Certificate shall
be cancelled, and no Warrant Certificates shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this Warrant Certificate. If
the Company purchases or acquires Warrants, the Company shall cancel and retire
the Warrant Certificates evidencing such Warrants.
3
<PAGE>
6. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock, the number
of shares of Common Stock that will be sufficient to permit the exercise in full
of all outstanding Warrants.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon the exercise of Warrants shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price and compliance with
all other provisions of this Warrant Certificate), be duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of Warrant Certificates or
of any shares of Common Stock upon the exercise of Warrants. The Company shall
not, however, be required (i) to pay any tax or taxes based upon the income of
the Holder or any tax or taxes which may be payable in respect of any transfer
involved in the transfer or delivery of Warrant Certificates or the issuance or
delivery of certificates for Common Stock in a name other than that of the
Holder or (ii) to issue or deliver any certificates for shares of Common Stock
upon the exercise of any Warrants until any such tax shall have been paid (any
such tax being payable by the Holder of the Warrant Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
7. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock is issued upon the exercise of the
Warrants shall for all purposes be deemed to have become the holder of record of
the Common Stock represented thereby, and such certificate shall be dated on the
exercise date, which is the date upon which the Warrant Certificate evidencing
such Warrants was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if such exercise
date is a date upon which the Common Stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding business day
on which the Common Stock transfer books of the Company are open.
The Holder, as such, shall not be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common Stock or of any
other securities of the Company which may at any time be issuable on the
exercise of the Warrants, nor shall anything contained in this Warrant
Certificate be construed to confer upon the Holder, as such, any of the rights
of a shareholder of the Company or any right to vote upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrants shall have
been exercised as provided in this Warrant Certificate.
8. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF WARRANTS. The Purchase Price and the number of shares covered by this
Warrant Certificate
4
<PAGE>
are subject to adjustment from time to time upon the occurrence of the events
enumerated in this Section 8.
(a) In case the Company shall at any time after the date of
the issuance of this Warrant Certificate (i) declare a dividend on the Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock into a greater number of shares, (iii) combine the outstanding Common
Stock into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger), the Purchase
Price in effect at the time of the record date for such dividend, or such
issuance, or of the effective date of such subdivision, combination,
distribution or reclassification, and the number and kind of shares of capital
stock issuable on such date shall be proportionately adjusted so that upon the
exercise after such time of any Warrant, the Holder shall be entitled to receive
the aggregate number and kind of shares of capital stock which, if such Warrant
had been exercised immediately prior to such date and at a time when the Common
Stock transfer books of the Company were open, the Holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination, distribution or reclassification, subject to the
provisions of Section 8(b) hereof. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Notwithstanding anything in this Section 8 to the
contrary, no adjustment in the Purchase Price shall be required unless such
adjustment, together with any amount being carried forward as hereinafter
provided, would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 8(b) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment and shall not, in any event, be lost by passage of time or
otherwise. All calculations under this Section 8 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
Notwithstanding the first sentence of this Section 8(b), any adjustment required
by this Section 8 shall be made no later than the earlier of one year from the
date of the transaction which mandates such adjustment or the expiration of the
right to exercise any Warrant.
(c) In the event that at any time, as a result of an
adjustment made pursuant to Section 8(a) hereof, the Holder shall become
entitled to receive any shares or units of capital stock of the Company other
than shares of Common Stock upon the exercise or conversion of Warrants,
thereafter the number of such other shares or units so receivable upon exercise
of the Warrants shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Section 8(a) hereof, and the provisions of this
Warrant Certificate with respect to the shares of Common Stock shall apply on
like terms to any such other shares or units.
(d) Irrespective of any adjustments in the Purchase Price or
the number of shares of Common Stock issuable upon the exercise of Warrants,
this Warrant Certificate or Warrant Certificates thereafter issued may continue
to express the Purchase Price and the number of shares stated in this Warrant
Certificate and the Purchase Price and such number of shares specified thereon
shall be deemed to have been so adjusted.
5
<PAGE>
(e) The Company may elect to adjust the number of Warrants,
in substitution for any adjustment in the number of shares of Common Stock
purchasable upon the exercise of the Warrants as provided in Section 8(a)
hereof, such that the total number of shares of Common Stock issuable upon
exercise of the Warrants is the same as if such adjustment had been made but
such that each of the Warrants outstanding after such adjustment of the number
of Warrants is exercisable for one share of Common Stock. The Company shall
notify the Holder in writing of such election. Upon each adjustment of the
number of Warrants pursuant to this subsection (e), the Company shall as
promptly as practicable cause to be distributed to the Holder Warrant
Certificates evidencing, subject to Section 11, the additional or substitute
Warrants to which the Holder shall be entitled as a result of such adjustment;
or, at the option of the Company, shall cause to be distributed to the Holder in
substitution and replacement for the Warrant Certificates held by the Holder
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Warrant Certificates evidencing all the Warrants to which the
Holder shall be entitled after such adjustment. Warrant Certificates so to be
distributed shall be issued in the manner provided for herein (and shall bear
the adjusted Purchase Price, if applicable) and shall be registered in the name
of the Holder.
(f) In any case in which this Section 8 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the Holder of any Warrant exercised after such record date
the shares of Common Stock and other capital stock of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment; PROVIDED, HOWEVER,
that the Company shall deliver to the Holder a due bill or other appropriate
instrument evidencing the Holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
9. CERTIFICATION OF ADJUSTED PURCHASE PRICE AND NUMBER OF
SHARES ISSUABLE. Whenever the Purchase Price and the number of shares of Common
Stock issuable upon the exercise of each Warrant are adjusted as provided in
Section 8 above, the Company shall provide notice to the Holder in writing
setting forth the Purchase Price as so adjusted, the number of shares of Common
Stock issuable upon the exercise of each Warrant as so adjusted, and a brief
statement of the facts accounting for such adjustment to the Holder. Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of any action referred to in Section 8 hereof.
10. CONSOLIDATION, MERGER OR SALE OF ASSETS; CERTAIN
DISTRIBUTIONS. If (i) the Company shall at any time consolidate with or merge
with or into another corporation and (ii) the Common Stock is exchanged,
cancelled or reclassified in connection with such transaction, the Holder will
thereafter receive, upon the exercise hereof in accordance with the terms of
this Agreement, the securities, property or cash to which the holder of the
number of shares of Common Stock deliverable upon the exercise of the Warrants
immediately prior to such transaction would have been entitled upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities or property
6
<PAGE>
thereafter deliverable upon the exercise of the Warrants. A sale or lease of
all or substantially all the assets of the Company for a consideration (apart
from the assumption of obligations) consisting primarily of securities shall
be deemed a consolidation or merger for the purposes of clause (i) of the
first sentence of this Section 10. The provisions of this Section 10 shall
similarly apply to successive mergers or consolidations or sales or other
transfers. Further, in the event that the Company proposes to make a
distribution of assets or properties of the Company to the holders of its
Common Stock (excluding non-liquidating cash dividends being made out of
earnings for the current or immediately preceding fiscal year, and excluding
any distribution for which there is an antidilution adjustment pursuant to
Section 8(a) above), the Company shall provide the holders of the Warrants
with written notice at least twenty (20) days prior to the earlier of the
date for such distribution or the record date therefor, in order to enable
the holders of the Warrants to exercise the Warrants prior to the making of
the distribution or the record date therefor.
11. FRACTIONAL WARRANTS AND FRACTIONAL SHARES.
(a) Notwithstanding an adjustment pursuant to Section 8(e)
hereof in the number of Warrants, the Company shall not be required to issue
Warrant Certificates which evidence fractional Warrants. If the Company so
elects, in lieu of such fractional Warrants, there shall be paid to the Holder
to whom such fractional Warrants would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Warrant (as
determined in good faith by the Board of Directors of the Company).
(b) Notwithstanding an adjustment pursuant to Section 8(a)
hereof in the number of shares covered by a Warrant, the Company shall not be
required to issue fractions of shares upon exercise of the Warrants or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, at the Company's election, there shall be paid to the Holder at the time
Warrants are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share of Common Stock (as determined
in good faith by the Board of Directors of the Company).
(c) The Holder, by the acceptance of the Warrant, expressly
waives his right to receive any fractional Warrant or any fractional share upon
exercise of a Warrant.
12. RIGHT OF ACTION. All rights of action in respect of this
Warrant Certificate are vested in the Holder.
13. AGREEMENT OF WARRANT CERTIFICATE HOLDERS. The Holder of
this Warrant Certificate by accepting the same consents and agrees with the
Company and with every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable only on the
registry books of the Company if surrendered at the principal office of the
Company; and
(b) the Company may deem and treat the person in whose name
each Warrant Certificate is registered as the absolute owner thereof and of the
Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company) for
all purposes whatsoever, and the
7
<PAGE>
Company shall not be affected by any notice to the contrary.
14. NOTICES. Notices or demands authorized by this Warrant
Certificate to be given or made by the Holder to the Company shall be
sufficiently given or made if made in writing and shall be delivered by personal
service or telegram, telecopier or registered or certified mail (if such service
is not available, then by first class mail), postage prepaid, to such address as
may be designated to the Holders from time to time by the Company and which
shall initially be:
Alliance Imaging, Inc.
3111 No. Tustin Avenue, Suite 150
Orange, California 92665
Attention: Chief Financial Officer
Telecopier No. (714) 921-5678
Notices or demands authorized by this Warrant Certificate to be given or made by
the Company to the Holder shall be sufficiently given or made if made in writing
and shall be delivered by personal service or telegram, telecopier or registered
or certified mail (if such service is not available, then by first-class mail),
postage prepaid, addressed to the Holder at the address of the Holder as shown
on the registry books of the Company. Any notice hereunder sent by registered
or certified mail shall be deemed to have been given three (3) days after the
date on which it is mailed. All other notices shall be deemed given when
received. No objection may be made to the manner of delivery of any notice
actually received in writing by an authorized agent of a party.
15. SUPPLEMENTS AND AMENDMENTS. This Warrant Certificate,
together with other agreements being executed and delivered simultaneously
herewith, constitutes the Company's and the Holder's entire agreement with
respect to the subject matter hereof and supersedes all agreements,
representations, warranties, statements, promises and understandings, whether
oral or written, with respect to the subject matter hereof. This Warrant
Certificate may be amended, altered or modified only by a writing signed by the
Company and the Holder.
16. SUCCESSORS AND ASSIGNS. All the covenants and provisions
of this Warrant Certificate by or for the benefit of the Company or the Holder
shall bind and inure to the benefit of their respective successors and assigns.
This Warrant Certificate and the Warrants represented hereby are assignable, in
whole or in part, at the option of the Holder.
17. BENEFITS OF THIS AGREEMENT. Nothing in this Warrant
Certificate shall be construed to give to any person or entity other than the
Company and the Holder any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company and the Holder.
18. GOVERNING LAW. This Warrant Certificate has been
negotiated and issued in the State of California, concerns a California issuer,
and all questions with respect to the Warrant Certificate and the rights and
liabilities of the Company and the Holder shall be governed by the laws of that
state, regardless of the choice of laws provisions of California or any other
jurisdiction. Any and all disputes between the Company and the Holder
8
<PAGE>
which may arise pursuant to this Warrant Certificate shall be heard and
determined before the appropriate federal or state court located in Orange
County, California. The Company and the Holder acknowledge that each such
court has the jurisdiction to interpret and enforce the provisions of this
Warrant Certificate and the parties waive any and all objections that they
may have as to venue in any of the above courts.
19. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Warrant Certificate are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Warrant Certificate as of the date first set forth above.
ALLIANCE IMAGING, INC.
By:
---------------------------------
Its:
--------------------------------
WARRANT HOLDER
------------------------------------
By:
---------------------------------
Its:
--------------------------------
9
<PAGE>
ASSIGNMENT
(To be executed by the Holder if such
Holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
__________________________ attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated ______________
Signature ___________________________________
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
10
<PAGE>
ELECTION TO PURCHASE
(To be executed if the Holder desires
to exercise the Warrant Certificate)
To: ALLIANCE IMAGING, INC.
The undersigned hereby irrevocably elects to exercise
______________________ Warrants represented by this Warrant Certificate to
purchase the shares of Common Stock issuable upon the exercise of such Warrants
and requests that certificates for such shares be issued in the name of:
(Please print name and address and insert
social security or other identifying number)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
(Please print name and address and insert
social security or other identifying number)
Dated: ____________________
______________________________________
Signature
(Signature must conform in all respects
to name of the Holder as specified on
the face of this Warrant Certificate)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 11677
<SECURITIES> 0
<RECEIVABLES> 8111
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20790
<PP&E> 119233
<DEPRECIATION> 46543
<TOTAL-ASSETS> 125828
<CURRENT-LIABILITIES> 26203
<BONDS> 74756
16197
396
<COMMON> 120
<OTHER-SE> 6331
<TOTAL-LIABILITY-AND-EQUITY> 125828
<SALES> 0
<TOTAL-REVENUES> 49097
<CGS> 0
<TOTAL-COSTS> 23549
<OTHER-EXPENSES> 15358
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4184
<INCOME-PRETAX> 6006
<INCOME-TAX> 955
<INCOME-CONTINUING> 5051
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5051
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
