<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities
----- Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
or
Transition report pursuant to Section 13 or 15(d) of the
------ Securities Exchange Act of 1934
For the transition period from to
--------- ---------
Commission File No.: 0-19897
SMT HEALTH SERVICES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1672183
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10521 PERRY HIGHWAY, WEXFORD, PENNSYLVANIA 15090
(Address of principal executive offices)
412-933-3300
(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 the latest practicable date:
At October 31, 1996, 3,460,661 shares of Common Stock, $0.01 par value, of the
registrant were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SMT Health Services Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents - unrestricted $ 4,349,569 $ 2,341,519
Cash and cash equivalents - restricted (Note 4) 670,000 1,600,000
Accounts receivable - no allowance for doubtful
accounts 1,531,685 1,059,567
Notes receivable - current portion 51,082 47,760
Receivable from the sale of leases secured by equipment
- current portion (Note 4) 376,916 342,789
Other current assets 661,345 249,961
----------- -----------
Total current assets 7,640,597 5,641,596
----------- -----------
PROPERTY AND EQUIPMENT:
Equipment 208,720 174,556
Furniture and fixtures 60,874 59,712
Vehicles 166,425 125,103
Leasehold improvements 28,495 27,915
Leased medical equipment 33,830,009 22,167,551
----------- -----------
Total property and equipment 34,294,523 22,554,837
Less accumulated depreciation and amortization (6,373,022) (6,613,759)
----------- -----------
Property and equipment, net 27,921,501 15,941,078
----------- -----------
OTHER ASSETS:
Notes receivable - noncurrent 13,502 52,240
Receivable from the sale of leases secured by equipment
- noncurrent (Note 4) 591,480 878,590
Contract and license acquisition costs, net of
accumulated amortization of $868,000 and
$788,000, respectively 652,723 109,260
Deposits and other assets 568,698 506,041
Deferred income taxes, net of valuation allowance
of $103,000 at December 31, 1995 (Note 5) 821,000 219,000
----------- -----------
Total other assets 2,647,403 1,765,131
----------- -----------
TOTAL ASSETS $38,209,501 $23,347,805
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited) (continued)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 357,897 $ 270,277
Accrued wages and related taxes 20,510 57,823
Current portion of long-term debt and capital
lease obligations 6,198,196 4,380,930
Other current liabilities 727,655 527,217
----------- ------------
Total current liabilities 7,304,258 5,236,247
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS -
less current portion 20,466,683 12,709,905
----------- ------------
Total liabilities 27,770,941 17,946,152
----------- ------------
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value; authorized
10,000,000 shares; issued and outstanding 3,357,000
and 2,654,400, respectively 33,570 26,544
Cumulative Convertible Preferred Stock; $0.01 par value;
authorized 994,600 shares; no shares issued and
Outstanding -- --
Additional paid-in capital (Note 5) 9,729,745 6,636,070
Retained earnings/accumulated deficit 675,245 (1,260,961)
----------- ------------
Total Stockholders' equity 10,438,560 5,401,653
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $38,209,501 $ 23,347,805
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Earnings (unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, 1996 September 30, 1995
------------------- ------------------
<S> <C> <C>
REVENUES:
Service revenue $4,754,324 $3,821,904
Interest income 43,267 39,546
---------- ----------
Total revenues 4,797,591 3,861,450
---------- ----------
COSTS AND EXPENSES:
Operating expenses - third parties 1,586,903 1,327,119
Depreciation and amortization 1,198,155 869,543
Selling, general and administrative 629,144 652,536
Interest - third parties 500,659 429,071
Other (Note 11) (300,000) --
---------- ----------
Total costs and expenses 3,614,861 3,278,269
---------- ----------
Income before income taxes 1,182,730 583,181
---------- ----------
Income taxes (Note 5) 267,000 152,000
---------- ----------
Net income $ 915,730 $ 431,181
========== ==========
Earnings per Common Share $.21 $.14
========== ==========
Weighted Average Shares outstanding (Note 2) 3,179,000 2,648,400
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Earnings (unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1996 September 30, 1995
------------------- -------------------
<S> <C> <C>
REVENUES:
Service revenue $13,478,930 $11,318,453
Interest income 127,537 86,451
----------- -----------
Total revenues 13,606,467 11,404,904
----------- -----------
COSTS AND EXPENSES:
Operating expenses - third parties 4,477,630 4,026,381
Operating expenses - lease expenses - related parties -- 154,849
Depreciation and amortization 3,307,152 2,725,950
Selling, general and administrative 2,002,377 1,815,330
Interest - third parties 1,447,102 1,231,884
Interest - related parties -- 86,538
Other (Note 11) (300,000) --
----------- -----------
Total costs and expenses 10,934,261 10,040,932
----------- -----------
Income from continuing operations before income taxes,
minority interests and gain on sale 2,672,206 1,363,972
Minority interests in earnings of subsidiaries (Note 7) -- 49,906
----------- -----------
Income from continuing operations before income taxes
and gain on sale 2,672,206 1,314,066
Gain on sale of partnership interests -- 48,219
----------- -----------
Income from continuing operations before income taxes 2,672,206 1,362,285
Income taxes (Note 5) 736,000 360,000
----------- -----------
Net income from continuing operations 1,936,206 1,002,285
----------- -----------
Discontinued operations:
Loss on disposal of discontinued operations, net of
tax benefit of $102,000 in 1995 -- (198,000)
Extraordinary item, debt forgiveness, net of income
tax expense of $102,000 -- 198,000
----------- -----------
Net Income $ 1,936,206 $ 1,002,285
=========== ===========
Earnings per Common Share:
Continuing operations $.50 $.36
Discontinued operations -- --
----------- -----------
Earnings Per Common Share $.50 $.36
=========== ===========
Weighted Average Shares outstanding (Note 2) 2,879,000 2,568,400
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES:
Net income $1,936,206 $1,002,285
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,307,152 2,725,950
Minority interests in subsidiaries -- 49,906
Negative amortization on capital lease obligations -- 5,521
Deferred income taxes 623,000 255,000
Gain on sale of partnership interests -- (48,219)
Other -- 10,467
Changes in assets and liabilities of continuing operations:
Accounts and notes receivable (362,247) (245,861)
Other current assets (485,839) 23,176
Accounts payable and other 288,058 166,552
Accrued wages and related taxes (37,313) 52,864
--------- ---------
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES 5,269,017 3,997,641
--------- ---------
NET CASH USED IN DISCONTINUED OPERATING ACTIVITIES -- (64,264)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,269,017 3,933,377
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,936,255) (220,404)
Payment for purchase of acquired entity (642,840) --
Net change in cash restricted for equipment financing purposes 930,000 --
Net cash received for sale of partnership interests -- 122,854
Net cash received for sale of discontinued entities -- 110,000
Other (99,938) (52,409)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (1,749,033) (39,959)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under loan agreements and capital leases:
Continuing operations:
Related parties -- (329,627)
Third parties (3,387,635) (2,326,303)
Discontinued operations -- (27,807)
Issuance of Common Stock from exercise of stock options and warrants 1,875,701 --
Other -- (1,649)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (1,511,934) (2,685,386)
--------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited) (continued)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
NET INCREASE IN CASH AND CASH
EQUIVALENTS - (unrestricted) 2,008,050 1,208,032
CASH AND CASH EQUIVALENTS - (unrestricted) -
Beginning of period 2,341,519 717,004
------------------ ------------------
CASH AND CASH EQUIVALENTS - (unrestricted) -
End of period $4,349,569 $1,925,036
================== ==================
</TABLE>
See Notes to Consolidated Financial Statements.
-7-
<PAGE>
SMT Health Services Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
For The Nine Month Period Ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Retained
Common Stock Preferred Stock Additional Earnings/ Total
----------------------------- --------------------- Paid-In (Accumulated Stockholders'
Shares Amount Shares Amount Capital Deficit) Equity
------------ --------------- ------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES - December 31, 1995 2,654,400 $26,544 -- $ -- $6,636,070 ($1,260,961) $5,401,653
Exercise of Stock Options and
Warrants (Note 10) 702,600 7,026 -- -- 1,868,675 -- 1,875,701
Tax Adjustment Regarding Stock
Option and Warrant Exercises
(Note 5) -- -- -- -- 1,225,000 -- 1,225,000
Net Income -- -- -- -- -- 1,936,206 1,936,206
------------ --------------- ------- ------------ ------------- ----------- -----------
BALANCES - September 30, 1996 3,357,000 $33,570 -- $ -- $9,729,745 $ 675,245 $10,438,560
============ =============== ======= ============ ============= =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1 - BASIS OF PRESENTATION
SMT Health Services Inc. and its wholly owned subsidiaries (the "Company") are
engaged primarily in providing medical diagnostic imaging services to
hospitals, physicians and patients. The Company, through its subsidiaries,
currently operates seventeen mobile Magnetic Resonance Imaging (MRI) Units
("MRI Units") in Pennsylvania, West Virginia, North Carolina, South Carolina,
Virginia, Kentucky and Ohio.
The Company's Common Stock and Warrants currently trade on the National
Association of Securities Dealers, Inc. Automated Quotations Systems (NASDAQ)
National Market System under the symbols "SHED" and "SHEDW", respectively.
The unaudited consolidated financial statements as of and for the three and
nine month periods ended September 30, 1996 and 1995 include the accounts of
the Company and its majority and wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The unaudited consolidated financial statements included herein have been
prepared by management in accordance with the rules and regulations of the
Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures which are normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted in accordance with SEC informational requirements.
The financial statements reflect normal recurring accounting adjustments
which, in the opinion of management, are necessary for a fair presentation of
the financial position and results of operations for the interim period. The
results of operations for the three and nine month periods ended September 30,
1996 are not necessarily indicative of the results for the entire current
fiscal year ending December 31, 1996. The consolidated financial statements
included herein should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Form 10-K/A (Amendment
No. 1) for the year ended December 31, 1995 which is on file at the Securities
and Exchange Commission.
Certain amounts in the September 30, 1995 Statements of Earnings and Cash
Flows have been reclassified to conform with the September 30, 1996
presentation.
-9-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 2 - NET EARNINGS PER COMMON AND COMMON SHARE EQUIVALENT
The net earnings per common and common share equivalent are calculated using
the weighted average common and common share equivalents outstanding during
the year, except where anti-dilutive. Common share equivalents include shares
issuable upon the exercise of stock options, rights and warrants less the
number of shares assumed purchased with the proceeds available from the
assumed exercise of the options, rights and warrants.
The Treasury Stock Method of reflecting use of proceeds from options and
warrants may not adequately reflect potential dilution if options and warrants
to acquire a substantial number of Common Shares (greater than 20% of the
number of Common Shares outstanding for the period for which the computation
is being made) are outstanding. In such instances, the Modified Treasury
Stock Method must be utilized.
The Company's options and warrants to acquire Common Shares exceed 20% and
accordingly, the Treasury Stock Method has been modified in determining the
dilutive effect of the options and warrants on earnings per share data.
Fully diluted earnings per common share are anti-dilutive and, accordingly,
are not presented.
NOTE 3 - CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
The Company is engaged primarily in providing mobile MRI services to small-to-
medium-sized hospitals in Pennsylvania, West Virginia, North Carolina, South
Carolina, Virginia, Kentucky and Ohio.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain Significant Estimates: The Company operates mobile MRI Units which
are capital intensive and subject to changes in technology. The Company
primarily leases such equipment over a 48 to 60 month period and depreciates
the equipment over the respective lease period to an estimated residual value
which typically approximates 20% of the original cost of the
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<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 3 - CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES (Continued)
equipment. The useful lives and residual values estimated by management are
considered significant estimates. Management does not currently anticipate
significant technological advances which could significantly affect its
estimates.
The Company is not dependent on any one customer or geographic region as a
source of its revenues. However, the Company utilizes the services of Hospital
Shared Services to process approximately 30% of its billings and collections.
NOTE 4 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Capital lease and loan obligations $26,664,879 $17,090,835
Less current portion 6,198,196 4,380,930
----------- ------------
$20,466,683 $12,709,905
=========== ============
</TABLE>
The total cost and accumulated amortization of property securing capital lease
and loan obligations at September 30, 1996 were approximately $33,833,000 and
$6,132,000, respectively. Interest rates under the capital leases and loan
obligations range from 8.5% to 13.5%.
The long-term debt and capital lease obligations balance includes
approximately $970,000 of capital lease obligations due to third parties
related to the equipment at the Auburn Regional Center for Cancer Care and
Airport Regional Imaging Center, which the Company had treated as discontinued
operations and sold in October 1994 and June 1995, respectively. Accordingly,
the Company has recorded an offsetting receivable for the lease receivables
due from the purchasers of the centers. Such lease receivables are secured by
the equipment and accounts receivable of the centers.
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<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 4 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Continued)
In November 1992, the Company issued a letter-of-credit in the amount of
$198,500 pursuant to a lease transaction related to the Airport Regional
Imaging Center. In exchange for restructuring the terms of the debt of this
Center, the Company increased the outstanding letter-of-credit to an aggregate
$400,000.
In November 1994, the Company issued a letter-of-credit in the amount of
$270,000 related to the purchase and financing of a new Mobile Unit. The
lessor holding this letter-of-credit allowed the letter-of-credit to terminate
on October 31, 1996.
In relation to a refinancing of Mobile Units in February and March 1995, the
Company issued two letters-of-credit in the aggregate amount of $930,000. In
February 1996, the lessor holding one of the letters-of-credit totaling
$330,000 allowed the letter-of-credit to expire.
On July 31, 1996, the Company refinanced two MRI units which had previously
been refinanced in March 1995 to more favorable lease terms. The new leases
totaled approximately $2.3 million (net of a $150,000 down payment) in the
aggregate and are being financed over a thirty-six month period at an interest
rate of 9.25%. The refinancing resulted in annual cash flow savings to the
Company of approximately $200,000. As a result of this refinancing, the
$600,000 letter-of-credit which had been issued in March 1995 was terminated.
The Company must maintain a cash balance on deposit with the bank which issued
the letters-of-credit equal to the outstanding letters-of-credit. At
September 30, 1996, the cash balance required to be on deposit totaled
$670,000.
In February 1995, the Company purchased an eighteen-month-old Siemens 1.0
Tesla Impact Mobile Unit for approximately $1.2 million. The Company financed
the purchase of this unit under a 48 month dollar-out lease requiring monthly
payments of approximately $31,000.
In June 1995, the Company upgraded one of its .5 Tesla General Electric Signas
to a 1.0 Tesla Signa for approximately $1.9 million. The Company financed the
purchase of this unit with a 60 month dollar-out capital lease requiring
monthly payments of approximately $41,000.
In September 1995, the Company purchased a new unit for approximately $1.9
million. The Company financed the purchase of this new unit with a 60 month
loan requiring monthly payments of approximately $40,000.
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<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 4 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Continued)
The Company upgraded one of its .5 Tesla Signas to a 1.0 Tesla Horizon unit.
The new unit was financed at a net total cost of approximately $2.0 million
and was delivered in late February 1996. The Company financed the purchase of
this new unit with a 60 month dollar-out lease requiring monthly payments of
approximately $44,000.
The Company contracted with several new hospital clients and purchased a new
Siemens 1.0 Tesla Impact unit which began service in mid-February 1996. The
cost of this new unit approximated $1.9 million which was financed with a 60
month loan requiring monthly payments of approximately $41,000.
In April 1996, the Company upgraded one of the units purchased from another
mobile provider (Note 9) to a Siemens 1.0 Tesla Impact unit. The new unit was
financed at a net total cost of approximately $1.9 million. The Company
financed this new unit with a 60 month dollar-out lease requiring monthly
payments of approximately $43,000.
In June 1996, the Company upgraded one of its .5 Tesla Signas to a Siemens 1.0
Tesla Impact unit. The new unit was financed at a net total cost of
approximately $2.0 million with a 60 month dollar-out lease requiring monthly
payments of approximately $43,000.
The Company in May 1996 signed an agreement with Siemens Medical Systems to
upgrade the second unit purchased from another mobile provider (Note 9) and to
purchase a new unit during the fourth quarter of 1996. Delivery of the
upgraded unit occurred in July 1996 and the new unit was delivered and began
operation on October 1, 1996. The upgrade's net cost approximated $1.9
million and the Company financed approximately $1.7 million with a 60 month
finance agreement requiring monthly payments of approximately $36,000. The
Company's new unit cost approximately $1.9 million and the Company financed
approximately $1.7 million requiring a monthly payment of approximately
$37,000.
The Company purchased and took delivery of two new GE 1.0 Tesla Horizon units
in September 1996. These units were purchased at a cost of approximately $1.8
million each and the Company financed approximately $1.6 million and $1.5
million with 60 month finance agreements requiring monthly payments of
approximately $34,000 and $32,000, respectively.
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<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 4 - LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Continued)
The Company completed a previously negotiated upgrade of a .5 Tesla system to
a 1.0 Tesla Horizon on November 2, 1996. The new unit was financed at a net
cost of approximately $1.5 million with a 60 month finance agreement requiring
monthly payments of approximately $32,000.
On November 1, 1996, the Company purchased a mobile MRI unit from Palmetto
Community Health Network (the "Network") for approximately $390,000 and signed
new service contracts with six South Carolina hospitals which are members of
the Network. The Company began servicing the new hospitals immediately with
the MRI unit purchased from the Network and plans to trade-in and upgrade the
purchased unit to a new 1.0 Tesla Horizon in mid-December 1996. This new unit
represents the Company's eighteenth mobile MRI unit and is the seventh new
unit acquired this year.
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109). Deferred income taxes are
provided to account for temporary differences between financial statement
accounting and income tax reporting and relate principally to differences in
reporting for diagnostic medical equipment, depreciation, accrued expenses and
net operating loss carryforwards.
As a result of the exercise of stock options pursuant to the Company's 1991
Employer Stock Option Plan, 1991 Director Stock Option Plan and warrants
granted to a former director and outside consultant, the Company is entitled
to a tax deduction of approximately $3.6 million. The deduction relates to
the difference between the option exercise prices and the fair market value of
the Common Stock at the time of such exercises. In accordance with SFAS 109,
the Company recorded a deferred tax asset of approximately $1.2 million
related to this deduction and in accordance with Accounting Principles Board
Opinion #25 (APB #25) a corresponding credit was made to additional paid-in
capital. Management believes no deferred tax asset valuation allowance is
necessary as of September 30, 1996.
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<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 5 - INCOME TAXES (Continued)
Income tax expense for the three and nine month periods ended September 30,
1996 reflects a $200,000 deferred tax benefit resulting from an adjustment to
the Company's Federal net operating loss carryforward.
At September 30, 1996, the Company had net operating loss carryforwards of
approximately $8.0 million which are available to offset future Federal
taxable income through 2010.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
The total amount of interest payments during the nine months ended September
30, 1996 and 1995 were approximately $1,435,000 and $1,295,000, respectively.
In addition, income tax payments for the nine month periods ended September
30, 1996 and 1995 were approximately $215,000 and $31,000, respectively.
NOTE 7 - SALE OF PARTNERSHIP INTERESTS
On June 30, 1995, in conjunction with the sale of the Airport Center which had
been treated as a discontinued operation, the Company sold its majority
ownership and general partner rights in four cardiac care partnerships for a
total sale price of $300,000 comprised of $200,000 in cash and a $100,000,
thirty-month note. The Company recognized a pre-tax gain on this sale of
$48,219. The partnerships, which constituted approximately seven percent of
the Company's revenues, had total assets of approximately $1.4 million,
comprised primarily of diagnostic equipment and accounts receivable, and total
liabilities of approximately $1.2 million comprised primarily of capital lease
obligations associated with the diagnostic equipment.
NOTE 8 - LITIGATION
The Company had been named as a defendant, along with the hospital which
contracts for the Company's MRI services, in a claim filed by a woman who
alleged to have incurred partial paralysis as a result of being mishandled
during an MRI procedure. The claim had been filed for $6.0 million in
damages. The claim was settled by the Company's insurance company in November
1996 with no admission of liability by the Company and no financial effect to
the Company.
-15-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 9 - ACQUISITION
On March 21, 1996, the Company purchased certain assets of a mobile provider
which operated mobile units in the state of North Carolina (the "Seller").
The purchase price approximated $600,000 in cash [net of negotiated trade-in
value of approximately $500,000 (which approximated the purchase price of the
units acquired) for two of the Seller's mobile MRI units] in exchange for MRI
Programs including Certificate of Need licenses or exemptions and certain
customer service contracts. The Company traded-in and upgraded one of the
purchased units to newer technology in April 1996 and traded-in and upgraded
the second unit during July 1996 (Note 4).
NOTE 10 - STOCK OPTIONS, UNIT PURCHASE OPTIONS AND WARRANTS
During the period May through September 1996, stock options covering 503,500
shares of Common Stock were exercised pursuant to the Company's 1991 Employee
Stock Option Plan and 1991 Director Stock Option Plan. The Company received
approximately $1,016,000 as a result of such stock option exercises. At
September 30, 1996, options to purchase 360,175 and 10,100 shares were
exercisable pursuant to the employee and director stock option plans,
respectively.
During the period July through October 1996, transferees of a Unit Purchase
Option initially granted to the Company's Initial Public Offering underwriter
exercised the Option to purchase 120,000 units (comprised of 1.05 shares of
Common Stock and one Warrant exercisable to 1.05 shares of Common Stock) at
$5.94. The Company received approximately $713,000 as a result of such
exercises and the Company issued 126,000 Common Shares and 120,000 Warrants.
In August 1996, a transferee exercised 24,000 Warrants received from the
aforementioned Unit Purchase Option exercise. As a result of the Warrant
exercise, 25,200 Common Shares were issued (1.05 Common Shares per Warrant
exercisable at $6.67 per share) and the Company received approximately
$168,000.
During July and October 1996, the Managing Director of Commonwealth
Associates, Inc. and Commonwealth Associates Inc. each exercised 50,000
Warrants, respectively, at an exercise price of $4.47 in a cashless
transaction whereby both tendered shares of Common Stock as payment of the
purchase price in connection with the exercise of the Warrants. Accordingly,
the Company issued 36,061 shares of Common Stock and retired into Treasury
Stock 63,939 shares of Common Stock pursuant to this exercise.
-16-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
SEPTEMBER 30, 1996
NOTE 10 - STOCK OPTIONS, UNIT PURCHASE OPTIONS AND WARRANTS
(Continued)
During September 1996, a former outside director and consultant to the Company
exercised 114,500 Warrants granted for services rendered at an exercise price
of $4.02. Accordingly, the Company issued 114,500 shares of Common Stock and
received approximately $460,000.
NOTE 11 - STATE SALES TAX REFUND
During September 1996, the Company received formal notification of a state
sales tax refund of approximately $300,000, net of expenses. The refund is
the result of sales tax paid to a certain state over a period of time which
the Company determined (by obtaining a private letter ruling from the state)
was actually exempt from such tax. Payment of the refund is expected in
November 1996.
NOTE 12 - RELATED PARTY TRANSACTIONS
During late September 1996, the Company financed the purchase of a new MRI
unit (Note 4) with DVI Financial Services Inc., a wholly-owned subsidiary of
DVI, Inc. A shareholder of and a consultant to DVI Inc. serves as a member of
the Company's Board of Directors. The new MRI unit cost approximately $1.8
million and the Company financed approximately $1.5 million at 9.5% over a 60
month period requiring monthly loan payments of approximately $32,000.
-17-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The discussion that follows should be read in conjunction with the
accompanying unaudited Consolidated Financial Statements and Notes thereto of
SMT Health Services Inc. and Subsidiaries.
Results of Operations
The following table sets forth for the periods indicated the percentages which
the items in the Statement of Earnings bear to revenues and the dollar
increase (decrease) of such items as compared to the corresponding period in
the prior year.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Percentage of Revenue Increase (Decrease) Prior Year
- ---------------------------------------------------------------------------------------------------------
Three Nine Months Three Nine Months
Months Ended Ended Months Ended Ended
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9/30/96 9/30/95 9/30/96 9/30/95 9/30/96 9/30/96
- ---------------------------------------------------------------------------------------------------------
Revenues 100% 100% 100% 100% $ 936,000 $2,201,000
- ---------------------------------------------------------------------------------------------------------
Cost & Expenses:
- ---------------------------------------------------------------------------------------------------------
Operating 33% 34% 33% 37% 260,000 296,000
- ---------------------------------------------------------------------------------------------------------
Depreciation & 25% 23% 24% 24% 328,000 581,000
Amortization
- ---------------------------------------------------------------------------------------------------------
S, G & A 13% 17% 15% 16% ( 23,000) 187,000
- ---------------------------------------------------------------------------------------------------------
Interest 10% 11% 11% 11% 71,000 129,000
- ---------------------------------------------------------------------------------------------------------
Other ( 6%) -- ( 2%) -- ( 300,000) ( 300,000)
- ---------------------------------------------------------------------------------------------------------
Total Costs and Expenses 75% 85% 81% 88% 336,000 893,000
- ---------------------------------------------------------------------------------------------------------
Income From Operations
Before Taxes, Minority 25% 15% 19% 12% 600,000 1,308,000
Interests and Gain on Sale
- ---------------------------------------------------------------------------------------------------------
Minority Interests -- -- -- -- -- ( 50,000)
- ---------------------------------------------------------------------------------------------------------
Income From Operations
Before Taxes and Gain On 25% 15% 19% 12% 600,000 1,358,000
Sale
- ---------------------------------------------------------------------------------------------------------
Gain on Sale of
Partnership Interests -- -- -- -- -- ( 48,000)
- ---------------------------------------------------------------------------------------------------------
Income Before Income Taxes 25% 15% 19% 12% 600,000 1,310,000
- ---------------------------------------------------------------------------------------------------------
Income Taxes 6% 4% 5% 3% 115,000 376,000
- ---------------------------------------------------------------------------------------------------------
Net Income 19% 11% 14% 9% $ 485,000 $ 934,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Three Months Ended September 30, 1996 Compared To The
Three Months Ended September 30, 1995
Revenues for the third quarter of 1996 increased $936,000, or 24%, to
$4,798,000 compared to $3,862,000 for the third quarter of 1995. This
increase in revenue was primarily attributed to the fact that the Company
purchased one new unit in September 1995, one new unit in February 1996, two
new units in March 1996 and upgraded two units to newer technology during
1996. Further revenue increases are due to increased utilization of the
Company's mobile MRI units. Revenues derived from hospitals which the Company
serviced in both comparable periods increased 9% during the third quarter of
1996 compared to the third quarter of 1995 primarily as a result of increased
MRI procedures. The Company purchased two new units during September 1996
which did not have a material effect on the third quarter 1996 operations and
which are anticipated to have a favorable impact in future periods.
Operating expenses increased $260,000, or 20%, to $1,587,000 during the third
quarter of 1996 compared to $1,327,000 during the third quarter of 1995. The
increase is primarily due to approximately $370,000 of operating expenses
associated with the Company's new units purchased in September 1995 and the
first quarter of 1996, partially offset by a decrease of approximately
$110,000 in operating expenses of units in operation for both comparable
periods. This 9% decrease in expenses of units in operation for both
comparable periods is principally the result of $62,000 savings on lower
maintenance and cryogen contracts, $34,000 savings on state sales tax on
certain units and $33,000 savings on general repairs and maintenance costs,
partially offset by higher payroll costs for operational personnel.
Depreciation and amortization expense increased $328,000, or 38%, in the third
quarter of 1996 to $1,198,000 from $870,000 during the third quarter of 1995.
This increase was primarily due to depreciation expense associated with the
Company's new units purchased in September 1995 and the first quarter of 1996
as well as the units upgraded during 1996.
Selling, general and administrative costs in the third quarter of 1996
decreased $23,000 to $629,000, or 13% of revenues, compared to $652,000, or
17% of revenues during the third quarter of 1995. The decrease is primarily
due to lower consulting and professional fees.
Interest expense for the third quarter of 1996 increased $71,000 to $500,000
compared to $429,000 for the third quarter of 1995 primarily as a result of
the new units purchased in September 1995, February 1996 and March 1996, as
well as the units upgraded during 1996.
-19-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Three Months Ended September 30, 1996 Compared To The
Three Months Ended September 30, 1995 (continued)
Other expense for the three months ended September 30, 1996 reflects a
$300,000 net state sales tax refund. The refund is the result of sales tax
paid to a certain state over a period of time which the Company determined (by
obtaining a private letter ruling from the state) was actually exempt from
such tax. The Company received formal notice of the refund in September 1996
and payment is expected in November 1996.
The Company reported net income of $916,000, or $.21 per share, during the
third quarter of 1996 versus $431,000, or $.14 per share, during the third
quarter of 1995. Income tax expense for the third quarter of 1996 was
$267,000, an effective tax rate of approximately 24%, as compared to income
tax expense of $152,000, an effective tax rate of approximately 26%, for the
third quarter of 1995. Income tax expense for the third quarter of 1996
reflects a $200,000 deferred tax benefit resulting from an adjustment to the
Company's Federal net operating loss carryforward (see Note 5 of the Company's
unaudited consolidated financial statements included in Item 1, which
information is incorporated herein by reference). Excluding the $200,000 tax
adjustment, the Company's effective tax rate for the three months ended
September 30, 1996 approximated 39%.
Nine Months Ended September 30, 1996 Compared To The
Nine Months Ended September 30, 1995
Revenues for the nine months ended September 30, 1996 increased $2,201,000, or
19%, to $13,606,000 compared to $11,405,000 for the nine months ended
September 30, 1995. Excluding revenues of approximately $548,000 for the six
months ended June 30, 1995 related to the company's cardiac partnerships,
which were sold on June 30, 1995, mobile MRI revenues increased approximately
20%. This increase in revenue was primarily attributed to the aforementioned
new units purchased during late 1995 and the first quarter of 1996, the
upgrade of two units to newer technology during 1996, as well as increased
utilization of the Company's mobile MRI units. Revenues derived from
hospitals which the Company serviced in both comparable periods increased
approximately 10% during the nine months ended September 30, 1996 compared to
the nine months ended September 30, 1995 primarily as a result of increased
MRI procedures.
-20-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Nine Months Ended September 30, 1996 Compared To The
Nine Months Ended September 30, 1995
(continued)
Operating expenses increased $296,000, or 7%, to $4,477,000 during the nine
months ended September 30, 1996 compared to $4,181,000 during the nine months
ended September 30, 1995. Excluding approximately $179,000 of operating
expenses associated with the cardiac partnerships which were sold on June 30,
1995, mobile MRI operating expenses increased $475,000 primarily due to
approximately $830,000 of operating expenses associated with the Company's new
units purchased in September 1995 and the first quarter of 1996, partially
offset by a decrease of approximately $355,000, or 9%, in operating expenses
of units in operation for both comparable periods. This 9% decrease is
primarily a result of $164,000 of savings on lower maintenance and cryogen
contracts, $124,000 saving on state sales tax on certain units, $66,000
savings on the rental of the tractors used to transport the MRI units and
$57,000 savings on general repairs and maintenance costs, partially offset by
higher payroll costs for operational personnel.
Depreciation and amortization expense increased $581,000, or 21%, during the
nine months ended September 30, 1996 to $3,307,000 from $2,726,000 during the
nine months ended September 30, 1995. This increase was primarily due to
depreciation expense associated with the Company's new units purchased during
late 1995 and the first quarter of 1996, as well as the two units upgraded
during 1996.
Selling, general and administrative costs during the nine months ended
September 30, 1996 increased $187,000 to $2,002,000, or 15% of revenues,
compared to $1,815,000, or 16% of revenues during the nine months ended
September 30, 1995. The increase is primarily due to increased compensation
costs related to the Company's management bonus plan.
Interest expense for the nine months ended September 30, 1996 increased
$129,000 to $1,447,000 compared to $1,318,000 for the nine months ended
September 30, 1995, primarily as a result of the new units purchased during
late 1995 and the first quarter of 1996, as well as the units upgraded during
1996.
Other expense for the nine months ended September 30, 1996 reflects a $300,000
net state sales tax refund. The refund is the result of sales tax paid to a
certain state over a period of time which the Company determined (by obtaining
a private letter ruling from the state) was actually exempt from such tax.
The Company received formal notice of the refund in September 1996 and payment
is expected in November 1996.
-21-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
Nine Months Ended September 30, 1996 Compared To The
Nine Months Ended September 30, 1995
(continued)
The Company reported net income of $1,936,000, or $.50 per share, for the nine
months ended September 30, 1996 versus $1,002,000, or $.36 per share, during
the nine months ended September 30, 1995. Income tax expense for the nine
months ended September 30, 1996 was $736,000, an effective tax rate of
approximately 28%, as compared to income tax expense of $360,000, an effective
tax rate of approximately 26%, for the nine months ended September 30, 1995.
Income tax expense for the nine months ended September 30, 1996 reflects a
$200,000 deferred tax benefit resulting from an adjustment to the Company's
Federal net operating loss carryforward (see Note 5 of the Company's unaudited
consolidated financial statements included in Item 1, which information is
incorporated herein by reference). Excluding the $200,000 tax adjustment, the
Company's effective tax rate for the nine months ended September 30, 1996
approximated 35%.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1996, the Company experienced a net
increase of $5,269,000 in cash from operations as compared to $3,933,000
during the nine months ended September 30, 1995. This increase is primarily
due to increased income.
The Company used cash in investing activities during the nine months ended
September 30, 1996 of $1,749,000, primarily related to down payments and
deposits on the purchase of new MRI units totaling approximately $1,936,000 as
well as the purchase of a mobile MRI company in March 1996 for approximately
$643,000 (see Note 9 of the Company's unaudited consolidated financial
statements included in Item 1, which information is incorporated herein by
reference) offset by a reduction of $930,000 in the amount of restricted cash
related to equipment financing.
The Company used cash in financing activities during the nine months ended
September 30, 1996 of approximately $1,512,000 primarily related to $3,388,000
of principal payments under loan agreements and capital leases partially
offset by approximately $1,876,000 received upon exercise of stock options and
warrants during the second and third quarters of 1996. The Company
experienced a net increase in unrestricted cash and cash equivalents of
approximately $2,008,000
-22-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
during the nine months ended September 30, 1996 and maintained an unrestricted
cash balance at September 30, 1996 of approximately $4,350,000. The Company
also maintained a restricted cash balance of $670,000 at September 30, 1996.
The Company's trade accounts receivable balance increased by $472,000 to
$1,532,000 at September 30, 1996 primarily due to higher service revenues
during the quarter ended September 30, 1996. In the experience of the
Company, average accounts receivable collections typically do not exceed 40
days, as there are no billings subject to traditional third-party payors, and
the accounts receivable balance turned over approximately ten times during the
nine months ended September 30, 1996. Approximately 30% of the Company's
billings and collections are processed through Hospital Shared Services
("HSS"), a representative of certain hospitals. As a fee for these services,
HSS retains approximately 2.5% of gross billings to these hospitals and the
Company records the service revenues and related receivables net of such fees.
At September 30, 1996, the Company had a working capital surplus of $336,000.
In addition, the Company's cash flow from operations totaled $5,269,000 for
the nine months ended September 30, 1996 and the Company continues a positive
cash flow. Further, $6,198,000 of the $7,304,000 of current liabilities
relate to the current portion of capital leases and long-term debt which will
be due over the next twelve months, as opposed to current assets of $7,641,000
which are highly liquid and turn over frequently. The Company has been able
to meet all past debt service obligations, currently is able to meet all such
obligations, and anticipates it will continue to meet such obligations. As in
the past, management anticipates that such obligations will be funded by the
revenues generated by the Mobile Units.
To date, the Company has financed its equipment acquisitions and working
capital requirements with loans and leases, from internal cash flow and
capital contributions. As of September 30, 1996, the Company was a party to
leases and loans covering all of its mobile MRI units. The aggregate
outstanding principal balance of all such leases and loans was approximately
$26,665,000 at September 30, 1996.
On June 30, 1995, the Company sold its majority ownership and general partner
rights in four cardiac care partnerships for a total sale price of $300,000
comprised of $200,000 in cash and a $100,000 thirty-month note. The Company
recognized a pre-tax gain on this sale of $48,219.
-23-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
The partnerships, which constituted approximately seven percent of the
Company's revenues, had total assets of approximately $1.4 million, comprised
primarily of diagnostic equipment and accounts receivable, and total
liabilities of approximately $1.2 million comprised primarily of capital lease
obligations associated with the diagnostic equipment.
In February 1995, the Company purchased an eighteen-month-old Siemens 1.0
Tesla Impact Mobile Unit for approximately $1.2 million. The Company financed
the purchase of this unit under a 48 month dollar-out lease requiring monthly
payments of approximately $31,000.
In June 1995, the Company upgraded one of its .5 Tesla General Electric Signas
to a 1.0 Tesla Signa for approximately $1.9 million. The Company financed the
purchase of this unit with a 60 month dollar-out lease requiring monthly
payments of approximately $41,000.
In September 1995, the Company purchased a new unit for approximately $1.9
million. The Company financed the purchase of this new unit with a 60 month
loan requiring monthly payments of approximately $40,000.
The Company upgraded one of its .5 Tesla Signas to a 1.0 Tesla Horizon unit.
The new unit was financed at a net total cost of approximately $2.0 million
and was delivered in late February 1996. The Company financed the purchase of
this new unit with a 60 month dollar-out lease requiring monthly payments of
approximately $44,000.
The Company contracted with several new hospital clients and purchased a new
Siemens 1.0 Tesla Impact unit which began service in mid-February 1996. The
cost of this new unit approximated $1.9 million which was financed with a 60
month loan requiring monthly payments of approximately $41,000.
In April 1996, the Company upgraded one of the units purchased from another
mobile provider (see Note 9 of the Company's unaudited consolidated financial
statements included in Item 1, which information is incorporated herein by
reference) to a Siemens 1.0 Tesla Impact unit with a net total cost of
approximately $1.9 million. The Company financed this new unit with a 60
month dollar-out lease requiring monthly payments of approximately $43,000.
-24-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
In June 1996, the Company upgraded one of its .5 Tesla Signas to a Siemens 1.0
Tesla Impact unit. The new unit was financed at a net total cost of
approximately $2.0 million and financed with a 60 month dollar-out lease
requiring monthly payments of approximately $43,000.
The Company in May 1996 signed an agreement with Siemens Medical Systems to
upgrade the second unit purchased from another mobile provider (see Note 9 of
the Company's unaudited consolidated financial statements included in Item 1,
which information is incorporated herein by reference) and to purchase a new
unit during the fourth quarter of 1996. Delivery of the upgraded unit
occurred in July 1996 and the new unit was delivered and began operation on or
about October 1, 1996. The upgrades' net cost approximated $1.9 million and
the Company financed approximately $1.7 million with a 60 month finance
agreement requiring monthly payments of approximately $36,000. The Company's
new unit cost approximately $1.9 million and the Company financed
approximately $1.7 million requiring a monthly payment of approximately
$37,000.
The Company purchased and took delivery of two new GE 1.0 Tesla Horizon units
in mid-to-late September 1996. These units were purchased at a cost of
approximately $1.8 million each and the Company financed approximately $1.6
million and $1.5 million with 60 month finance agreements requiring monthly
payments of approximately $34,000 and $32,000, respectively.
The Company completed a previously negotiated upgrade of a .5 Tesla system to
a 1.0 Tesla Horizon on November 2, 1996. The new unit was financed at a net
cost of approximately $1.5 million with a 60 month finance agreement requiring
monthly payments of approximately $32,000.
On November 1, 1996, the Company purchased a mobile MRI unit from Palmetto
Community Health Network (the "Network") for approximately $390,000 and signed
new service contracts with six South Carolina hospitals which are members of
the Network. The Company began servicing the new hospitals immediately with
the MRI unit purchased from the Network and plans to trade-in and upgrade the
purchased unit to a new 1.0 Tesla Horizon in mid-December 1996. This new unit
represents the Company's eighteenth mobile MRI unit and is the seventh new
unit acquired this year.
-25-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Prior to July 1, 1995, the Company subleased certain truck cabs from Shared
Mobile Enterprises ("SME"), which, in turn, leased such truck cabs from an
independent third-party leasing company. Effective July 1, 1995, SME released
the Company from its obligations under ten long-term subleases in exchange for
the issuance to SME of 120,000 unregistered Common Shares valued at $3 per
share, the weighted average closing price for the stock for the prior thirty
trading days. The Company received an opinion from an independent financial
advisor that the transaction was fair to the Company and its shareholders. At
the same time, with the concurrence of the third-party leasing company, the
Company assumed SME's obligations under its original lease and modified that
lease by (i) extending the lease term by one additional year and (ii) adding
one additional truck cab to the schedule of leased property with a
corresponding increase in base rental payments. The $360,000 value of the
shares represents the present value of the excess of the sublease payments
over the original lease payments. The Company has capitalized the $360,000
and is amortizing this prepaid rent over a period which approximates the lease
term. SME was one hundred percent beneficially owned by certain
officers/directors and a former director/consultant of the Company who own
approximately 18% of the Company's outstanding Common Shares.
The Company has outstanding a letter-of-credit totaling $400,000 related to
equipment financing at a freestanding diagnostic imaging center which it sold
in June 1995 and on which it remains obligated (see Note 4 of the Company's
unaudited consolidated financial statements included in Item 1, which
information is incorporated herein by reference).
In November 1994, the Company issued a letter-of-credit in the amount of
$270,000 related to the purchase and financing of a new Mobile Unit. The
lessor holding this letter-of-credit allowed the letter-of-credit to terminate
October 31, 1996.
In relation to a refinancing of four Mobile Units in February and March 1995,
the Company issued two letters-of-credit in the aggregate amount of $930,000.
In February 1996, the lessor holding one of the letters-of-credit totaling
$330,000 allowed the letter-of-credit to expire.
On July 31, 1996, the Company refinanced two MRI units which had previously
been refinanced in March 1995 to more favorable lease terms. The new leases
totaled approximately $2.3 million (net of a $150,000 down payment) in the
aggregate and are being financed over a thirty-six month
-26-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
period at an interest rate of 9.25%. The refinancing resulted in annual cash
flow savings to the Company of approximately $200,000. As a result of this
refinancing, the $600,000 letter-of-credit which had been issued in March 1995
was terminated.
On March 21, 1996, the Company purchased certain assets of a mobile provider
which operated mobile units in the state of North Carolina (the "Seller").
The purchase price approximated $600,000 in cash [net of negotiated trade-in
value of approximately $500,000 (which approximated the purchase price of the
units acquired) for two of the Seller's mobile MRI units] in exchange for MRI
Programs including Certificate of Need licenses or exemptions and certain
customer service contracts. The Company traded-in and upgraded one of the
purchased units to newer technology in April 1996 and traded-in and upgraded
the second unit in July 1996. The unit upgraded in July 1996 is currently
contracted to provide temporary interim service to hospitals for a period of
approximately one year.
During 1996, the Company has signed long-term contracts with approximately 18
new customers and has extended for an additional two to three years
approximately 26 existing customer contracts.
At September 30, 1996, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $8.0 million which are available
to offset future Federal taxable income through 2010.
The Company had been named as a defendant, along with the hospital which
contracts for the Company's MRI services, in a claim filed by a woman who
alleged to have incurred partial paralysis as a result of being mishandled
during an MRI procedure. The claim had been filed for $6.0 million in
damages. The claim was settled by the Company's insurance company in November
1996 with no admission of liability and no financial effect to the Company.
Management believes that the healthcare industry continues to be in a period
of consolidation characterized by mergers, joint ventures, acquisitions, sales
of all or part of healthcare companies or their assets, and other partnering
and investment transactions of various structures and sizes involving
healthcare companies. The Company continues to evaluate new opportunities
that allow for the expansion of its business through the acquisition of
additional Mobile Units in geographic
-27-
<PAGE>
SMT HEALTH SERVICES INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
proximity to its existing regional markets or in locations that can serve as a
basis for new market areas. The Company, like other healthcare companies, has
participated from time to time and is participating in preliminary discussions
with third parties regarding a variety of potential transactions, and the
Company has considered and expects to continue to consider and explore
potential transactions of various types with other healthcare companies.
However, no assurances can be given as to whether any such transactions may be
consummated or, if so, when.
-28-
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
See Note 8 - Litigation regarding termination of a legal proceeding which
information is included in Item 1 which is incorporated herein by reference.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
10.01 Employment Agreement by and between
SMT Health Services Inc. and Jeff D.
Bergman dated July 1, 1996..................... Filed herewith.
10.02 Employment Agreement by and between
SMT Health Services Inc. and Daniel
Dickman dated July 1, 1996..................... Filed herewith.
10.03 Employment Agreement by and between
SMT Health Services Inc. and David
Spindler dated October 1, 1996................. Filed herewith.
10.04 Employment Agreement by and between
SMT Health Services Inc. and David A.
Zynn dated October 1, 1996..................... Filed herewith.
10.05 Master Equipment Lease dated August
28, 1996 by and between SMT Health
Services Inc. and DVI Financial Services
Inc............................................ Filed herewith.
10.06 Loan and Security Agreement dated
September 11, 1996 by and between
Siemens Credit Corporation and SMT
Health Services Inc............................ Filed herewith.
10.07 Finance Lease and Security Agreement
dated September 26, 1996 by and between
Laurel Capital Corporation and SMT
Health Services Inc............................ Filed herewith.
10.08 Finance Lease and Security Agreement
dated July 26, 1996 by and between
Laurel Capital Corporation and SMT
Health Services Inc. (Lease 2165).............. Filed herewith.
-29-
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (Continued)
10.09 Finance Lease and Security Agreement
dated July 26, 1991 by and between
Laurel Capital Corporation and SMT
Health Services Inc. (Lease 2166).............. Filed herewith.
11.01 Earnings Per Share Computation................. Filed herewith.
27.01 Financial Data Schedule........................ Filed herewith.
99.01 Press release dated August 2, 1996............. Filed herewith.
99.02 Press release dated September 17, 1996......... Filed herewith.
99.03 Press release dated September 25, 1996......... Filed herewith.
99.04 Press release dated October 3, 1996............ Filed herewith.
99.05 Press release dated October 22, 1996........... Filed herewith.
99.06 Press release dated November 4, 1996........... Filed herewith.
(b) Report on Form 8-K.
The Company has not filed any reports on Form 8-K during the quarter
ended September 30, 1996.
-30-
<PAGE>
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
understanding thereunto duly authorized.
SMT Health Services Inc.
(Registrant)
Date: November 12, 1996 By: /s/ Jeff D. Bergman
------------------------------------
Jeff D. Bergman
Chairman and Chief Executive Officer
Date: November 12, 1996 By: /s/ David A. Zynn
------------------------------------
David A. Zynn
Chief Financial Officer, Treasurer
and Principal Accounting Officer
-31-
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential Page Number
Exhibit No. or Reference
- ----------- ------------
<C> <S> <C>
10.01 Employment Agreement by and between
SMT Health Services Inc. and Jeff D.
Bergman dated July 1, 1996 Filed herewith.
10.02 Employment Agreement by and between
SMT Health Services Inc. and Daniel
Dickman dated July 1, 1996 Filed herewith.
10.03 Employment Agreement by and between
SMT Health Services Inc. and David
Spindler dated October 1, 1996 Filed herewith.
10.04 Employment Agreement by and between
SMT Health Services Inc. and David A.
Zynn dated October 1, 1996 Filed herewith.
10.05 Master Equipment Lease dated August
28, 1996 by and between SMT Health
Services Inc. and DVI Financial Services
Inc. Filed herewith.
10.06 Loan and Security Agreement dated
September 11, 1996 by and between
Siemens Credit Corporation and SMT
Health Services Inc. Filed herewith.
10.07 Finance Lease and Security Agreement
dated September 26, 1996 by and between
Laurel Capital Corporation and SMT
Health Services Inc. Filed herewith.
10.08 Finance Lease and Security Agreement
dated July 26, 1996 by and between
Laurel Capital Corporation and SMT
Health Services Inc. (Lease 2165) Filed herewith.
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential Page Number
Exhibit No. or Reference
- ----------- ------------
<C> <S> <C>
10.09 Finance Lease and Security Agreement
dated July 26, 1991 by and between
Laurel Capital Corporation and SMT
Health Services Inc. (Lease 2166) Filed herewith.
11.01 Earnings Per Share Computation Filed herewith.
27.01 Financial Data Schedule Filed herewith.
99.01 Press release dated August 2, 1996 Filed herewith.
99.02 Press release dated September 17, 1996 Filed herewith.
99.03 Press release dated September 25, 1996 Filed herewith.
99.04 Press release dated October 3, 1996 Filed herewith.
99.05 Press release dated October 22, 1996 Filed herewith.
99.06 Press release dated November 4, 1996 Filed herewith.
</TABLE>
<PAGE>
Exhibit 10.01
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of the 1st
day of July, 1996 (the "Effective Date"), by and between SMT HEALTH SERVICES
INC., a Delaware corporation (the "Company"), and JEFF D. BERGMAN (the
"Employee").
WITNESSETH:
-----------
WHEREAS, the Company desires to secure the continued employment of Employee
in an executive capacity; and
WHEREAS, the Company and the Employee desire to enter into this Agreement
in order to set forth certain terms and conditions of Employee's continued
employment with the Company and to terminate the existing employment agreement
dated as of March 1, 1995;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
-----------
Employee and the Employee hereby agrees to continue to be employed by the
Company commencing on the date hereof for the Term (as defined below) of the
Agreement, in the position and with the duties and responsibilities set forth in
Section 2 below, and upon the other terms and subject to the conditions
hereinafter stated.
2. Position, Duties and Responsibilities.
--------------------------------------
(a) During the Term of the Agreement, the Employee shall serve as the
Chairman of the Board, President and Chief Executive Officer of the Company.
The Employee shall have general executive supervision over the property,
business and affairs of the Company, subject to the policies and directions of,
and the executive responsibilities that may be assigned to him by and reporting
directly and solely to, the Board of Directors of the Company (the "Board of
Directors"). The Employee shall be responsible for the development,
coordination and implementation of the strategies for the Company's business.
The Employee shall have general supervisory authority over the executive
officers and other employees of the Company and responsibilities with respect to
the retention and dismissal of such officers and employees, except that any
executive officer performing the functions customarily assigned to a chief
operating officer or chief financial officer, as the case may be, shall be
appointed by and may be dismissed only with the consent of the Board of
Directors. The Employee shall be a signatory, at all times during the term of
this Agreement, on all bank accounts, of every nature and kind, and all other
banking arrangements, including safety deposit boxes, lockbox accounts, and the
like. Employee's duties shall be performed principally at the Company's
executive offices which are located in the Pittsburgh Metropolitan Area and
Employee shall not be required to perform duties outside the Pittsburgh
Metropolitan Area which would necessitate changing his present residence, unless
Employee otherwise agrees in writing. For purposes of this Agreement,
the term "Pittsburgh Metropolitan Area" shall encompass the City of Pittsburgh,
Pennsylva nia, the Borough of Wexford, Pennsylvania, and the territory within a
fifteen (15) mile radius of such borough. The Company agrees that it shall not
relocate or transfer its principal executive offices to a location outside the
Pittsburgh Metropolitan Area.
<PAGE>
(b) During the Term, the Employee shall devote such time and attention
to affairs of the Company as are necessary to faithfully and diligently perform
his duties and responsibilities hereunder; provided, however, that nothing
contained herein shall prohibit the Employee from (a) engaging in officiating in
the National Football League or other leagues approved by the Board of
Directors, (b) serving as a member of the Board of Directors or officer of any
other for-profit entity so long as Employee has obtained the prior consent of
Board of Directors , or (c) engaging in charitable and community affairs.
3. Term. The initial term of this Agreement shall be for a period of
-----
three (3) years, commencing on July 1, 1996, and ending on June 30, 1999. On
each quarterly anniversary of the Effective Date while Employee remains Employed
hereunder, such term shall be automatically extended by three months, and shall
continue until Employee's employment hereunder is terminated pursuant to Section
5 hereof (the initial term of this Agreement, as extended by each renewal
period, is hereinafter defined as the "Term").
4. Compensation. For the services rendered by Employee pursuant to
-------------
Section 2 during the Term, the Employee shall be paid the compensation and
receive the benefits as set forth on Exhibit A annexed hereto.
---------
5. Termination of Agreement. The Employee's employment hereunder may be
-------------------------
terminated only as follows:
(a) By the Company Without Cause. The Company may at any time
-----------------------------
terminate the Employee's employment hereunder without Cause, by affirmative vote
of a majority of the entire Board of Directors (without counting the presence or
vote of the Employee), and upon no less than ninety (90) days' prior written
notice to the Employee.
(b) By the Employee Without Good Reason. The Employee may at any time
------------------------------------
terminate his employment hereunder for any reason upon no less than thirty (30)
days' prior written notice to the Company; provided; however; Section 5(d)
hereof shall apply in lieu of this Section 5(b) to any termination of employment
by the Employee for Good Reason (as defined therein).
(c) By the Company for Cause. The Company may at any time terminate
-------------------------
the Employee's employment hereunder for Cause. Prior to such event, the Company
by affirmative vote of a majority of the entire Board of Directors (without
counting the presence or vote of the Employee) shall give the Employee prompt
written notice specifying in reasonable detail the conduct which is believed to
provide the basis for a termination of Employee for Cause. Except in the event
of a termination of Employee pursuant to Section 5(c)(ii) (as to which the
termination shall be immediately effective after receipt of such letter), within
ten (10) business days of the Employee's receipt of such letter, the Employee
shall be provided an opportunity, together with his counsel, to present and
discuss with the Board of Directors the conduct which is asserted to provide a
basis for such purposed for Cause termination. Following such meeting, if
Employee does not, within ten (10) days thereof, take such reasonable steps as
directed by a majority vote of the entire Board of Directors (without
2
<PAGE>
counting the presence or vote of the Employee) to cease or correct the conduct
which is asserted to provide a basis for such proposed for Cause termination,
the Board of Directors may, by the affirmative vote of a majority of the entire
Board of Directors (without counting the presence or vote of the Employee),
terminate the Employee's employment for Cause. "Cause" shall mean only one or
more of the following:
(i) The material breach of this Agreement by Employee, which
breach shall not have been cured by Employee within thirty (30) days after the
Employee's receipt from the Company at the direction of a majority of the entire
Board of Directors (without counting the presence or vote of the Employee) of
written notice specifying in reasonable detail the nature of Employee's breach;
(ii) The conviction of Employee for a crime of moral turpitude or
a felony which is materially injurious to the reputation or business of the
Company; and
(iii) Any willful act or acts by Employee which is materially and
demonstrably injurious to the Company (excluding any act ratified or approved by
the Board of Directors of the Company and further excluding any act taken by
Employee in good faith with a reasonable belief that such act was in the best
interests of the Company).
Neither the Employee's participation in or presence at any meeting at which a
for Cause termination is discussed nor the Employee's efforts to cease or cure
any conduct purported to be sufficient basis for a for Cause termination, shall
be considered an admission, acknowledgment or agreement that such conduct does
in fact provide a sufficient basis for a for Cause termination.
(d) By the Employee for Good Reason. The Employee may terminate
--------------------------------
employment hereunder for Good Reason at any time by providing prompt written
notice to the Company within a reasonable time after the occurrence of the
event(s) constituting such Good Reason. For purposes of this Agreement, "Good
Reason" means only one or more of the following:
(i) The material breach of this Agreement by the Company, which
breach shall not have been cured by the Company within thirty (30) days after
the Company's receipt from the Employee or his agent of written notice
specifying in reasonable detail the nature of the Company's breach.
(ii) The required relocation of the Employee out of the Company's
principal executive offices or the Pittsburgh Metropolitan Area without his
specific prior written consent.
(iii) The assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status and
reporting requirements), authority, duties, powers or responsibilities as
contemplated by Section 2 of this Agreement, or any other diminution of such,
authority, duties, position or responsibili ties, excluding for this purpose any
isolated, insubstantial action by the Company not taken in bad faith and which
is remedied by the Company within thirty (30) days after receipt of written
notice from the Employee
3
<PAGE>
to the Company that such action will be considered a Good Reason
hereunder unless timely remedied.
(iv) A material increase in Employee's responsibilities,
workload, required hours or travel from that historically required of Employee,
not remedied by the company within thirty (30) days after receipt of written
notice from Employee to the Company that such increase will be considered a Good
Reason hereunder unless timely remedied.
(e) Death. The Employee's employment for all purposes under this
------
Agreement shall terminate upon his death.
(f) Disability. In the event that the Employee is determined by a
-----------
physician's written evaluation delivered to the Company (i) to be "permanently
and totally disabled" as defined in (S) 22(e)(3) of the Internal Revenue Code of
1986, as amended, or (ii) to have been for a period exceeding one year unable to
perform the important duties hereunder due to an injury or sickness (and has not
performed any such work) then the Company may, at its discretion, upon sixty
(60) days notice to the Employee or his guardian, as the case may be, terminate
the Employee's employment hereunder.
(g) Mutual Written Agreement. This Agreement and the Employee's
-------------------------
employment hereunder may be terminated at any time by the mutual written
agreement of the Employee and the Company.
6. Compensation in Event of Termination.
-------------------------------------
(a) Termination by Employee for Good Reason; by Company Without Cause.
------------------------------------------------------------------
In the event that the Employee's employment hereunder is terminated: (i) by the
Company without Cause pursuant to Section 5(a) hereof; or (ii) by the Employee
for Good Reason pursuant to Section 5(d) hereof, then the Company shall pay or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee:
(i) Continuation of full salary, bonuses (including profit
sharing) and benefits (including Automobile Allowance) during the time period
equal to the remaining Term of the Agreement immediately prior to the Employee's
termination (without regard to any future renewals that would have occurred
absent such termination) (the "Termination Period");
(ii) Any other amounts, awards, benefits or other compensation to
which the Employee is or, prior to his termination of employment, was entitled
during the Termination Period under any of the Company's other compensation
plans which to the extent of any vesting dates occurring during the Termination
Period, shall be considered to vest on such date notwithstanding such
termination (unless more quickly vested pursuant to Section 9(b) hereof or the
terms of such plan); and
(iii) Continuing coverage, to the extent not prohibited by law,
during the Termination Period or until comparable benefits are made available to
him in connection with subsequent employment, whichever period is shorter (or,
at Employee's election, for a period of twelve (12) months from the date of
Employee's termination of employment), for the Employee
4
<PAGE>
and his eligible dependents under all of the Company benefit plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and/or his eligible dependents,
because of the Employee's terminated status, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(b) Termination for Cause by the Company. In the event that the
-------------------------------------
Company shall terminate the Employee's employment hereunder for Cause pursuant
to Section 5(c), this Agreement shall forthwith terminate and the obligations of
the parties hereto shall be as set forth in Section 9 hereof.
(c) Termination by Employee Without Good Reason. In the event that the
--------------------------------------------
Employee shall terminate employment hereunder (other than for Good Reason)
pursuant to Section 5(b) hereof, this Agreement shall forthwith terminate and
the obligations of the parties hereto shall be as set forth in Section 9 hereof.
(d) Death. In the event of the death of the Employee, then the Company
------
shall pay (or cause to be paid), within thirty (30) days of such death, or
provide in the same manner as before the Employee's death, as applicable, the
following compensation and benefits to the estate of the Employee, or the
Employee's personal representative, or to those individuals designated in a
writing delivered to the Company by the Employee prior to his death;
(i) A lump sum payment equal to the sum of (A) the Employee's
highest annual Base Salary; (B) the Employee's highest annualized Automobile
Allowance; and (C) the Employee's highest award under the Company's Profit
Sharing Plan, in each case, for any of the three years preceding the date of
such termination (the "Lump Sum Amount"); and
(ii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's death for the
Employee's eligible dependents under all of the Company Benefit Plans in effect
and applicable to Employee and his eligible dependents as of the date of death.
In the event that such eligible dependents, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(e) Disability. In the event that the Company elects to terminate the
-----------
Employee's employment hereunder pursuant to Section 5(f), then the Company shall
pay (or cause to be paid) within thirty (30) days of the such termination or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee or his personal representative:
(i) All amounts as the Employee is entitled to under the
Company's disability policy and program applicable to Employee;
(ii) The Lump Sum Amount; and
5
<PAGE>
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's termination or
until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company Benefit Plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and his eligible dependents, because
of the Employee's terminated status, cannot be covered or fully covered under
any or all of the Company benefit plans, the Company shall continue to provide
the Employee and/or his eligible dependents with the same level of such coverage
in effect prior to termination, on the unfunded basis if necessary.
(f) Mutual Written Consent. In the event that the Employee and the
-----------------------
Company shall terminate the Employer's employment by mutual written agreement,
the Company shall pay such compensation and provide such benefits, if any, as
the parties may mutually agree upon in writing.
The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking employment or otherwise, nor shall any
amounts received from employment, insurance or otherwise by the Employee offset
or reduce in any manner the obligations of the Company hereunder.
7. Change in Control.
------------------
(a) Definition. For purposes of this Agreement, the term "Change of
-----------
Control" shall mean the occurrence of any of the following events:
(i) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group of
purchasers, other than to a person with respect to which, following such sale or
disposition, more than eighty percent (80%) of, respectively, the then
outstanding shares of Company common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors (herein, "voting securities") is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding Company common stock and
the combined voting power of the then outstanding voting securities immediately
prior to such sale or disposition in substantially the same proportion as their
ownership of the outstanding Company common stock and voting securities
immediately prior to such sale or disposition;
(ii) The acquisition in one or more transactions by any person or
group, directly or indirectly, of beneficial ownership of twenty-five percent
(25%) or more of the outstanding shares of Company common stock or the combined
voting power of the then outstanding voting securities of the Company; provided,
however, that any acquisition by (x) the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (y) the Employee or any other person who is
a director or executive officer of the Company as of the date hereof, or (z) any
person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as
such rule is in effect as of January 1, 1995), to file a statement on Schedule
13G with respect to its beneficial ownership of Company common stock or other
voting securities whether or not such person shall have filed a statement
6
<PAGE>
on Schedule 13G, unless such person shall have filed a statement on Schedule 13D
with respect to beneficial ownership of 15 percent (15%) or more of the Company
voting securities, shall not constitute a Change of Control;
(iii) The Company's termination of its business and liquidation of
its assets;
(iv) The reorganization, merger or consolidation of the Company
into or with another person or entity, by which reorganization, merger or
consolidation the persons who held one hundred percent (100%) of the voting
securities of the Company prior to such reorganization, merger or consolidation
receive less than fifty-two percent (52%) of the outstanding voting securities
of the new or continuing corporation(s); or
(v) If, on any Testing Date , less than a majority of the
members of the Board of Directors are persons who were either (A) nominated or
recommended for election by at least a two-thirds vote of those persons who were
members of the Board of Directors or Nominating Committee of the Board of
Directors two years prior to the Testing Date, or (B) elected by the Board of
Directors, including at least a two-thirds vote in favor of such election by the
persons who were members of the Board of Directors two years prior to the
Testing Date.
For the purpose of paragraph (v), each change in the composition of the members
of the Board of Directors during employee's employment hereunder and for six (6)
months thereafter, shall be considered a Testing Date.
(b) Payment Following Change in Control. In the event that the
------------------------------------
Employee's employment hereunder is terminated (other than for cause, death,
disability or pursuant to Section 5(c), (e) or (f), respectively) within twelve
(12) months prior to or within twenty-four (24) months following a Change in
Control, then, at Employee's sole election, in lieu of any compensation or
benefits owed to Employee pursuant to Section 6 of this Agreement, the Company
shall pay or provide the following compensation and benefits to Employee:
(i) Unless rejected pursuant to paragraph (d), three times the
Lump Sum Amount (reduced by any amounts previously paid pursuant to Section 6);
and, otherwise, a lump sum payment equal to three times Employee's then current
annual Base Salary (reduced by any amounts previously paid pursuant to Section
6);
(ii) Any other amounts, awards, benefits or other compensation to
which the Employee is or, prior to his termination of employment, was entitled
during the Termination Period under any of the Company's other compensation
plans, which to the extent of any vesting dates occurring during the Termination
Period, shall be considered to vest on such date notwithstanding such
termination (unless more quickly vested pursuant to Section 9(b) hereof or the
terms of such plans); and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twenty-four (24) months from the date of Employee's termination
or until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company benefit plans in
7
<PAGE>
effect and applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and/or his eligible dependents,
because of the Employee's terminated status, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(c) Alternative Payment Following Change in Control. If the Employee
------------------------------------------------
does not elect to receive the compensation and benefits set forth in paragraph
(b), the Employee shall receive the compensation and benefits set forth in
Section 6(a) with respect to such termination.
(d) Employee shall receive three times the Lump Sum Amount pursuant to
paragraph (b)(i), unless the applicable Board of Directors votes to limit such
payment to three times Employee's then current annual Base Salary. The
Company's Board of Directors shall be the applicable Board of Directors with
respect to a change of control described in subparagraph (a)(i), (ii), (iii) or
(v); and, the surviving entity's Board of Directors shall be the applicable
Board of Directors in the case of a change of control described in subparagraph
(a)(iv).
8. Expenses. Employee will be reimbursed all reasonable, ordinary and
---------
necessary business expenses, including expenses for entertainment, travel and
similar items that are approved by the Company. The Company will reimburse
Employee for all expenses upon a presentation of Employee of itemized accounts
of such expenditures in accordance and in the manner in a form reasonably
described by the Company.
9. Effect of Termination. Upon the termination of the Employee's
----------------------
employment hereunder, neither the Company nor the Employee shall have any
remaining duties or obligations hereunder except that:
(a) the Company shall:
(i) Pay the employee's accrued salary and any other accrued
benefits for all periods ending on or prior to the date of termination under
Sections 4 hereof or Exhibit A annexed hereto;
---------
(ii) Reimburse the Employee for expenses incurred in accordance
with Section 8 hereof for all periods ending on or prior to the date of
termination;
(iii) Pay or otherwise provide for any benefits, payments or
continuation or conversion rights in accordance with the provisions of any
Company benefit plan of which the Employee or any of his dependents is or was a
participant or as otherwise required by law;
(iv) Pay all compensation previously deferred by Employee and not
yet paid by Company (together with interest, if any, thereon) and any other
accrued benefits, including accrued vacation pay and the annual estate planning
allowance not yet paid by the Company;
(v) Pay the Employee and his beneficiaries any compensation or
provide the Employee or his eligible dependents any benefits due pursuant to
Sections 6 or 7
8
<PAGE>
hereof or Exhibit A annexed hereto.
---------
(b) Unless the employment of the Employee is terminated for Cause
pursuant to Section 5(c) or by the Employee without Good Reason pursuant to
Section 5(d), the vesting period and other restrictions shall lapse for all
stock options or other stock awards previously granted to the Employee by the
Company and all such stock awards shall be deemed to be fully vested. In such
case, the Company shall extend the option exercise period to the third
anniversary of the date of the Employee's termination for all such options held
by the Employee as of the date of the termination of his employment hereunder.
(c) Except in the event of Employee's termination of his employment
hereunder for Good Reason pursuant to Section 5(d) or by the Company without
Cause pursuant to Section 5(a), or by mutual agreement upon any other
termination, the Employee shall remain bound by the terms of Section 10(a)
hereof, and, in any event, Employee shall remain bound by the terms of Section
10(b)-(d) hereof.
(d) The Company shall be authorized to withhold from any payment to the
Employee, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable law or regulation.
10. Restrictions. The Company has invested and will continue to invest
-------------
considerable resources in the development of its business and in the research,
development and design of its activities and their delivery, which investment
has or will result in the generation of proprietary, confidential and/or trade
secret data, information, techniques and materials, both tangible and
intangible, which are owned by the Company.
(a) The Employee agrees that during the Term, and except in the event
of Employee's termination of his employment hereunder for Good Reason or by the
Company without Cause, for a period of two (2) year from the date of the
termination of the Employee's employment hereunder, he will not directly or
indirectly (i) engage in mobile magnetic resonance imaging business (the
"Company Business") within one hundred fifty (150) miles of any location then
serviced by the Company; (ii) compete or participate as agent, employee,
consultant, advisor, representative or otherwise in any enterprise engaged in a
business which has any material operations engaged in a business competitive
with the Company Business within one hundred fifty (150) miles of any location
then serviced by the Company; or (iii) compete or participate as a stockholder,
partner or joint venturer, or have any direct or indirect financial interest, in
any enterprise which has any material operations engaged in a business
competitive with the Company Business within one hundred fifty (150) miles of
any location then serviced by the Company; provided, however, that nothing
contained herein shall prohibit the Employee from (A) owning, operating and
managing and continuing to own, operate and manage the investments and
businesses owned, operated or managed by Employee on the date hereof; (B)
owning, operating or managing any business, or acting upon any business
opportunity after obtaining approval of a majority of the Board of Directors of
the Company and a majority of the independent members of the Board of Directors
of the Company (if any); or (C) owning no more than five percent (5%) of any
publicly-traded corporation with respect to which Employee does not serve as an
officer, director, employee, consultant or in any other capacity other than as
an investor.
9
<PAGE>
(b) The Employee shall abide by and be bound as part of the employment
relationship created by this Agreement to comply with the provisions regarding
confidential information, attached as Exhibit B annexed hereto.
---------
(c) To the extent the Employee develops, makes, conceives, contributes
to or reduces to practice any intellectual property related to the duties of the
Employee hereunder or which results in any way from the Employee using the
resources of the Company, such intellectual property is and shall be the sole
and exclusive property of the Company. Accordingly, the Employee shall abide by
and be bound to comply with the provisions regarding ownership of intellectual
property, attached as Exhibit C annexed hereto.
---------
(d) During the Term, except in the event of Employee's termination of
his employment hereunder for Good Reason pursuant to Section 5(d) or by the
Company without cause pursuant to Section 5(a) and for an additional period of
two (2) year immediately following termination of the Employee's employment with
the Company, he shall abide by and be bound to comply with the additional
restrictive covenants of the Company attached as Exhibit D annexed hereto.
---------
(e) Employee agrees and acknowledges that the compensation due to him
hereunder shall be full and adequate consideration for the Employee's agreement
to the foregoing restrictions.
Nothing in this Section 10 is intended to enhance or increase the rights
otherwise available to the Employee in respect of an unlawful act or omission by
the Company.
11. Acknowledgement. The Employee acknowledges that the restrictions set
----------------
forth in Section 10 hereto are reasonable in scope and essential to the
preservation of the Company's business and proprietary properties and that the
compensation paid to him pursuant to paragraph 10(e) fully compensates him for
accepting such restrictions. The Company acknowledges that the compensation
paid to the Employee pursuant to paragraph 10(e) is a reasonable payment for his
acceptance of the restrictions in Section 10.
12. Severability. The covenants of the Employee contained in Section 10
-------------
hereto shall be construed as an agreement independent of any other provision in
this Agreement and the existence of any claim or cause of action of the Employee
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
If, at the time of enforcement, any sentence, paragraph, clause, or combination
of the same of such independent agreement in Section 10 is in violation of the
law of any state where applicable, such sentence, paragraph, clause, or
combination of the same shall be void in the jurisdictions where it is unlawful,
and the remainder of such paragraph in Section 10 shall remain binding on the
parties. In the event that any part of any covenant of Section 10 is determined
by a court of law to be overly broad thereby making the covenant unenforceable,
the parties agree that such court shall substitute a judicially enforceable
limitation in its place, and that as so modified, the covenants shall be binding
upon the parties as if originally set forth in this Agreement.
13. Notices. All notices and other communications hereunder shall be in
--------
writing and
10
<PAGE>
shall be deemed to have been given if delivered personally or sent by registered
or certified mail (return receipt requested), postage prepaid, or by telecopy
(immediately followed by telephone confirmation of delivery of such telecopy
with the intended recipient of such notice and by notice in writing sent
promptly by registered or certified mail as provided above) to the parties to
this Agreement at the following addresses or at such other address for a party
as shall be specified by like notice:
To the Company:
SMT Health Services Inc.
10521 Perry Highway
Wexford, Pennsylvania 15090
(412) 933-3300
(412) 933-3311 (facsimile)
With a copy to:
Ronald Basso, Esquire
Buchanan Ingersoll Professional Corporation
One Oxford Center
20th Floor, 301 Grant Street
Pittsburgh, Pennsylvania 15219
(412) 562-3943
(412) 562-1041 (facsimile)
To the Employee:
Jeff D. Bergman
335 Golfside Drive
Wexford, Pennsylvania 15090
(412) 935-9590
With a copy to:
Steven M. Cherin, Esquire
Gefsky and Lehman, P.C.
2301 One PPG Place
Pittsburgh, Pa 15222
(412) 391-2727
(412) 391-1685 (facsimile)
All such notices and communications shall be deemed to have been received on the
date of personal delivery, on the date that the telecopy is confirmed as having
been received or on the third business day after the mailing thereof, as the
case may be.
14. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
its choice of
11
<PAGE>
law provisions.
15. Severability. If any provision of this Agreement is held to be
-------------
illegal, invalid or unenforceable under present or future laws effective during
the Term, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be effected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to the
illegal, invalid or unenforceable provision as may be possible and still be
legal, valid or enforceable. The lack of deductibility or recharacterization
for tax or accounting purposes, or the imposition of any excise taxes or
penalties, fines or other charges, or imposition of any injunction or similar
restraint against the Company with respect to the payment of any amount or
provision of any benefit hereunder, shall not be construed to make the
provisions of this Agreement providing for such payment or provision "illegal,
invalid or unenforceable", nor in any manner reduce the entitlement of the
Employee, or his successor or assign to receive such payment or benefit.
16. Recharacterization of Payments. To the extent that, but for this
-------------------------------
Section 16, any payment or benefit hereunder is determined by the Company's
outside auditors, Internal Revenue Service, or by any court of component
jurisdiction to be an "Excess Parachute Payment" as defined in Section 280G
(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), such
amount as may be necessary to preclude any such payment or benefit from being
considered an "Excess Parachute Payment" shall be recharacterized and shall
constitute an unsecured, long-term loan from the Company to the Employee, his
personal representative, his successors or assigns, as the case may be, payable
together with accrued interest on the tenth anniversary of the payment of such
recharacterized payment or the receipt of such recharacterized benefit, with
interest at the Applicable Federal Rate for loans in excess of nine years, as
defined in Section 1274 of the Code, on such principal amount. Such loan shall
be evidenced by a promissory note in the form attached hereto as Exhibit E.
---------
17. Indemnification. The Company agrees to indemnify the Employee to the
----------------
fullest extent permitted by law for his services to, or on behalf of the
Company, as an Employee hereunder, as a director and in any and every other
capacity in which he may serve the Company or its interests. In furtherance of
such agreement to indemnify, but no by way of limitation, the terms of the
Company's Certificate of Incorporation and By-Laws providing for such
indemnification and payment of expenses, as in effect on the date hereof (and,
which are attached hereto as Exhibit F), are hereby incorporated by reference as
---------
if fully stated herein. Additionally, the provisions of Exhibit G shall
supplement such provisions. For the purpose of this Agreement, any amendment to
said Certificate of Incorporation or By-Laws shall not be effective to reduce,
qualify or otherwise limit the scope, benefit or enforceability of this
provision; provided, however, if any such amendment extends or improves the
-------- -------
scope, benefit or enforceability of the indemnification and payment of expenses
contained in such By-Laws for any officer, director, employee or agent, such
extended or improved provisions shall be deemed to be incorporated by reference
herein for the benefit of the Employee without any further action by the Company
or the Employee.
18. Arbitration. Except as otherwise provided herein, in the event of any
------------
controversy,
12
<PAGE>
dispute or claim arising out of, or relating to, this Agreement, or the breach
thereof, or arising out of any other matter relating to the Employee's
employment with the Company or the termination of such employment, the parties
may seek recourse only for temporary or preliminary injunctive relief to the
courts having jurisdiction thereof and if any relief other than injunctive
relief is sought, the Company and the Employee agree that such underlying
controversy, dispute or claim shall be settled by arbitration conducted in
Pittsburgh, Pennsylvania, in accordance with this Section 16 of the Agreement
and the Commercial Arbitration Rules of the American Arbitration Association
("AAA"). The matter shall be heard and decided, and awards rendered, by a panel
of three (3) arbitrators (the "Arbitration Panel") each of which shall have at
least ten (10) years' experience in executive compensation and employment
matters. The Company and the Employee shall each select one qualified arbitrator
from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel")
and AAA shall select a third qualified arbitrator from the Commercial Panel. The
award rendered by the Arbitration Panel shall be final and binding as between
the parties hereto and their heirs, executors, administrators, successors and
assigns, and judgment on the award may be entered by any court having
jurisdiction thereof.
19. Entire Agreement. This Agreement sets forth the entire understanding
-----------------
of the parties with respect to the matters specified herein. No other terms or
conditions and no amendments or modifications shall be binding unless made in
writing and signed by the parties hereto. Upon execution and delivery by both
parties of this Agreement, the parties agree that the Employee Agreement dated
as of March 1, 1995, shall terminate without further obligation to either party.
20. Binding Effect. This Agreement shall be binding upon the parties
---------------
hereto and shall inure to the benefit of such parties, their respective heirs,
representatives, successors and permitted assigns. This Agreement may not be
assigned by the Employee nor may it be assigned by the Company without the
Employee's consent.
21. Expenses. The Company shall bear the costs of all expenses associated
---------
with the creation, negotiation and execution of this Agreement, including the
fees of its counsel, the Employee's counsel and of any consultant retained by
the Company to advice the Employee and/or the Board of Directors with respect to
the terms and conditions of this Agreement. The Company shall bear the full
cost of each arbitrator selected pursuant to Section 16 hereof with respect to
any dispute hereunder. Otherwise, each party shall pay their individual
expenses with respect to this Agreement.
* * * SIGNATURES APPEAR ON THE FOLLOWING PAGE * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
SMT HEALTH SERVICES INC.
13
<PAGE>
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
EMPLOYEE:
-----------------------------------
Jeff D. Bergman
14
<PAGE>
Exhibit 10.02
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of the 1st
day of July, 1996 (the "Effective Date"), by and between SMT HEALTH SERVICES
INC., a Delaware corporation (the "Company"), and DANIEL DICKMAN (the
"Employee").
WITNESSETH:
-----------
WHEREAS, the Company desires to secure the continued employment of Employee
in an executive capacity; and
WHEREAS, the Company and the Employee desire to enter into this Agreement
in order to set forth certain terms and conditions of Employee's continued
employment with the Company and to terminate the existing employment agreement
dated as of March 1, 1995;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
-----------
Employee and the Employee hereby agrees to continue to be employed by the
Company commencing on the date hereof for the Term (as defined below) of the
Agreement, in the position and with the duties and responsibilities set forth in
Section 2 below, and upon the other terms and subject to the conditions
hereinafter stated.
2. Position, Duties and Responsibilities.
--------------------------------------
(a) During the Term of the Agreement, the Employee shall serve as
Executive Vice President and Chief Operating Officer of the Company. The
Employee shall have general executive supervision over the property, business
and affairs of the Company, subject to the policies and directions of, and the
executive responsibilities that may be assigned to him by and reporting directly
and solely to, the Board of Directors of the Company (the "Board of Directors").
The Employee shall be responsible for the develop ment, coordination and
implementation of the strategies for the Company's business. The Employee shall
have general supervisory authority over the executive officers (other than the
Chief Executive Officer and President) and other employees of the Company and
responsibilities with respect to the retention and dismissal of such officers
and employees, except that any executive officer performing the functions
customarily assigned to a chief executive officer, president, or chief financial
officer, as the case may be, shall be appointed by and may be dismissed only
with the consent of the Board of Directors. The Employee shall be a signatory,
at all times during the term of this Agreement, on all bank accounts, of every
nature and kind, and all other banking arrangements, including safety deposit
boxes, lockbox accounts, and the like. Employee's duties shall be performed
principally at the Company's executive offices which are located in the
Pittsburgh Metropolitan Area and Employee shall not be required to perform
duties outside the Pittsburgh Metropolitan Area which would necessitate changing
his present residence, unless Employee otherwise agrees in writing. For purposes
of this Agreement, the term "Pittsburgh Metropolitan Area" shall encompass the
City of Pittsburgh, Pennsylvania, the Borough of Wexford, Pennsylvania, and the
territory within a fifteen (15) mile radius of such borough. The Company agrees
that it shall not relocate or transfer its principal executive offices to a
location outside the Pittsburgh Metropolitan Area.
<PAGE>
(b) During the Term, the Employee shall devote such time and attention
to affairs of the Company as are necessary to faithfully and diligently perform
his duties and responsibilities hereunder; provided, however, that nothing
contained herein shall prohibit the Employee from (a) serving as a member of the
Board of Directors or officer of any other for-profit entity so long as Employee
has obtained the prior consent of Board of Directors, or (b) engaging in
charitable and community affairs.
3. Term. The initial term of this Agreement shall be for a period of
-----
three (3) years, commencing on July 1, 1996, and ending on June 30, 1999. On
each quarterly anniversary of the Effective Date while Employee remains Employed
hereunder, such term shall be automatically extended by three months, and shall
continue until Employee's employment hereunder is terminated pursuant to Section
5 hereof (the initial term of this Agreement, as extended by each renewal
period, is hereinafter defined as the "Term").
4. Compensation. For the services rendered by Employee pursuant to
-------------
Section 2 during the Term, the Employee shall be paid the compensation and
receive the benefits as set forth on Exhibit A annexed hereto.
---------
5. Termination of Agreement. The Employee's employment hereunder may be
-------------------------
terminated only as follows:
(a) By the Company Without Cause. The Company may at any time
-----------------------------
terminate the Employee's employment hereunder without Cause, by affirmative vote
of a majority of the entire Board of Directors (without counting the presence or
vote of the Employee), and upon no less than ninety (90) days' prior written
notice to the Employee.
(b) By the Employee Without Good Reason. The Employee may at any time
------------------------------------
terminate his employment hereunder for any reason upon no less than thirty (30)
days' prior written notice to the Company; provided; however; Section 5(d)
hereof shall apply in lieu of this Section 5(b) to any termination of employment
by the Employee for Good Reason (as defined therein).
(c) By the Company for Cause. The Company may at any time terminate
-------------------------
the Employee's employment hereunder for Cause. Prior to such event, the Company
by affirmative vote of a majority of the entire Board of Directors (without
counting the presence or vote of the Employee) shall give the Employee prompt
written notice specifying in reasonable detail the conduct which is believed to
provide the basis for a termination of Employee for Cause. Except in the event
of a termination of Employee pursuant to Section 5(c)(ii) (as to which the
termination shall be immediately effective after receipt of such letter), within
ten (10) business days of the Employee's receipt of such letter, the Employee
shall be provided an opportunity, together with his counsel, to present and
discuss with the Board of Directors the conduct which is asserted to provide a
basis for such purposed for Cause termination. Following such meeting, if
Employee does not, within ten (10) days thereof, take such reasonable steps as
directed by a majority vote of the entire Board of Directors (without counting
the presence or vote of the Employee) to cease or correct the conduct which is
asserted to provide a basis for such proposed for Cause termination, the Board
of Directors may, by the
2
<PAGE>
affirmative vote of a majority of the entire Board of Directors (without
counting the presence or vote of the Employee), terminate the Employee's
employment for Cause. "Cause" shall mean only one or more of the following:
(i) The material breach of this Agreement by Employee, which
breach shall not have been cured by Employee within thirty (30) days after the
Employee's receipt from the Company at the direction of a majority of the entire
Board of Directors (without counting the presence or vote of the Employee) of
written notice specifying in reasonable detail the nature of Employee's breach;
(ii) The conviction of Employee for a crime of moral turpitude or
a felony which is materially injurious to the reputation or business of the
Company; and
(iii) Any willful act or acts by Employee which is materially and
demonstrably injurious to the Company (excluding any act ratified or approved by
the Board of Directors of the Company and further excluding any act taken by
Employee in good faith with a reasonable belief that such act was in the best
interests of the Company).
Neither the Employee's participation in or presence at any meeting at which a
for Cause termination is discussed nor the Employee's efforts to cease or cure
any conduct purported to be sufficient basis for a for Cause termination, shall
be considered an admission, acknowledgment or agreement that such conduct does
in fact provide a sufficient basis for a for Cause termination.
(d) By the Employee for Good Reason. The Employee may terminate
--------------------------------
employment hereunder for Good Reason at any time by providing prompt written
notice to the Company within a reasonable time after the occurrence of the
event(s) constituting such Good Reason. For purposes of this Agreement, "Good
Reason" means only one or more of the following:
(i) The material breach of this Agreement by the Company, which
breach shall not have been cured by the Company within thirty (30) days after
the Company's receipt from the Employee or his agent of written notice
specifying in reasonable detail the nature of the Company's breach.
(ii) The required relocation of the Employee out of the Company's
principal executive offices or the Pittsburgh Metropolitan Area without his
specific prior written consent.
(iii) The assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status and
reporting requirements), authority, duties, powers or responsibilities as
contemplated by Section 2 of this Agreement, or any other diminution of such,
authority, duties, position or responsibili ties, excluding for this purpose any
isolated, insubstantial action by the Company not taken in bad faith and which
is remedied by the Company within thirty (30) days after receipt of written
notice from the Employee to the Company that such action will be considered a
Good Reason hereunder unless timely remedied.
3
<PAGE>
(iv) A material increase in Employee's responsibilities,
workload, required hours or travel from that historically required of Employee,
not remedied by the company within thirty (30) days after receipt of written
notice from Employee to the Company that such increase will be considered a Good
Reason hereunder unless timely remedied.
(e) Death. The Employee's employment for all purposes under this
------
Agreement shall terminate upon his death.
(f) Disability. In the event that the Employee is determined by a
-----------
physician's written evaluation delivered to the Company (i) to be "permanently
and totally disabled" as defined in (S) 22(e)(3) of the Internal Revenue Code of
1986, as amended, or (ii) to have been for a period exceeding one year unable to
perform the important duties hereunder due to an injury or sickness (and has not
performed any such work) then the Company may, at its discretion, upon sixty
(60) days notice to the Employee or his guardian, as the case may be, terminate
the Employee's employment hereunder.
(g) Mutual Written Agreement. This Agreement and the Employee's
-------------------------
employment hereunder may be terminated at any time by the mutual written
agreement of the Employee and the Company.
6. Compensation in Event of Termination.
-------------------------------------
(a) Termination by Employee for Good Reason; by Company Without Cause.
------------------------------------------------------------------
In the event that the Employee's employment hereunder is terminated: (i) by the
Company without Cause pursuant to Section 5(a) hereof; or (ii) by the Employee
for Good Reason pursuant to Section 5(d) hereof, then the Company shall pay or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee:
(i) Continuation of full salary, bonuses (including profit
sharing) and benefits (including Automobile Allowance) during the time period
equal to the remaining Term of the Agreement immediately prior to the Employee's
termination (without regard to any future renewals that would have occurred
absent such termination) (the "Termination Period");
(ii) Any other amounts, awards, benefits or other compensation to
which the Employee is or, prior to his termination of employment, was entitled
during the Termination Period under any of the Company's other compensation
plans which to the extent of any vesting dates occurring during the Termination
Period, shall be considered to vest on such date notwithstanding such
termination (unless more quickly vested pursuant to Section 9(b) hereof or the
terms of such plan); and
(iii) Continuing coverage, to the extent not prohibited by law,
during the Termination Period or until comparable benefits are made available to
him in connection with subsequent employment, whichever period is shorter (or,
at Employee's election, for a period of twelve (12) months from the date of
Employee's termination of employment), for the Employee and his eligible
dependents under all of the Company benefit plans in effect and applicable to
Employee and his eligible dependents as of the date of termination. In the event
that the Employee and/or his eligible dependents, because of the Employee's
terminated status, cannot
4
<PAGE>
be covered or fully covered under any or all of the Company benefit plans, the
Company shall continue to provide the Employee and/or his eligible dependents
with the same level of such coverage in effect prior to termination, on an
unfunded basis if necessary.
(b) Termination for Cause by the Company. In the event that the
-------------------------------------
Company shall terminate the Employee's employment hereunder for Cause pursuant
to Section 5(c), this Agreement shall forthwith terminate and the obligations of
the parties hereto shall be as set forth in Section 9 hereof.
(c) Termination by Employee Without Good Reason. In the event that the
--------------------------------------------
Employee shall terminate employment hereunder (other than for Good Reason)
pursuant to Section 5(b) hereof, this Agreement shall forthwith terminate and
the obligations of the parties hereto shall be as set forth in Section 9 hereof.
(d) Death. In the event of the death of the Employee, then the Company
------
shall pay (or cause to be paid), within thirty (30) days of such death, or
provide in the same manner as before the Employee's death, as applicable, the
following compensation and benefits to the estate of the Employee, or the
Employee's personal representative, or to those individuals designated in a
writing delivered to the Company by the Employee prior to his death;
(i) A lump sum payment equal to the sum of (A) the Employee's
highest annual Base Salary; (B) the Employee's highest annualized Automobile
Allowance; and (C) the Employee's highest award under the Company's Profit
Sharing Plan, in each case, for any of the three years preceding the date of
such termination (the "Lump Sum Amount"); and
(ii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's death for the
Employee's eligible dependents under all of the Company Benefit Plans in effect
and applicable to Employee and his eligible dependents as of the date of death.
In the event that such eligible dependents, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(e) Disability. In the event that the Company elects to terminate the
-----------
Employee's employment hereunder pursuant to Section 5(f), then the Company shall
pay (or cause to be paid) within thirty (30) days of the such termination or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee or his personal representative:
(i) All amounts as the Employee is entitled to under the
Company's disability policy and program applicable to Employee;
(ii) The Lump Sum Amount; and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's termination or
until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter,
5
<PAGE>
for the Employee and his eligible dependents under all of the Company Benefit
Plans in effect and applicable to Employee and his eligible dependents as of the
date of termination. In the event that the Employee and his eligible dependents,
because of the Employee's terminated status, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on the unfunded basis if necessary.
(f) Mutual Written Consent. In the event that the Employee and the
-----------------------
Company shall terminate the Employer's employment by mutual written agreement,
the Company shall pay such compensation and provide such benefits, if any, as
the parties may mutually agree upon in writing.
The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking employment or otherwise, nor shall any
amounts received from employment, insurance or otherwise by the Employee offset
or reduce in any manner the obligations of the Company hereunder.
7. Change in Control.
------------------
(a) Definition. For purposes of this Agreement, the term "Change of
-----------
Control" shall mean the occurrence of any of the following events:
(i) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group of
purchasers, other than to a person with respect to which, following such sale or
disposition, more than eighty percent (80%) of, respectively, the then
outstanding shares of Company common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors (herein, "voting securities") is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding Company common stock and
the combined voting power of the then outstanding voting securities immediately
prior to such sale or disposition in substantially the same proportion as their
ownership of the outstanding Company common stock and voting securities
immediately prior to such sale or disposition;
(ii) The acquisition in one or more transactions by any person or
group, directly or indirectly, of beneficial ownership of twenty-five percent
(25%) or more of the outstanding shares of Company common stock or the combined
voting power of the then outstanding voting securities of the Company; provided,
however, that any acquisition by (x) the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (y) the Employee or any other person who is
a director or executive officer of the Company as of the date hereof, or (z) any
person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as
such rule is in effect as of January 1, 1995), to file a statement on Schedule
13G with respect to its beneficial ownership of Company common stock or other
voting securities whether or not such person shall have filed a statement on
Schedule 13G, unless such person shall have filed a statement on Schedule 13D
with respect to beneficial ownership of 15 percent (15%) or more of the Company
voting securities, shall not constitute a Change of Control;
6
<PAGE>
(iii) The Company's termination of its business and liquidation of
its assets;
(iv) The reorganization, merger or consolidation of the Company
into or with another person or entity, by which reorganization, merger or
consolidation the persons who held one hundred percent (100%) of the voting
securities of the Company prior to such reorganization, merger or consolidation
receive less than fifty-two percent (52%) of the outstanding voting securities
of the new or continuing corporation(s); or
(v) If, on any Testing Date , less than a majority of the
members of the Board of Directors are persons who were either (A) nominated or
recommended for election by at least a two-thirds vote of those persons who were
members of the Board of Directors or Nominating Committee of the Board of
Directors two years prior to the Testing Date, or (B) elected by the Board of
Directors, including at least a two-thirds vote in favor of such election by the
persons who were members of the Board of Directors two years prior to the
Testing Date.
For the purpose of paragraph (v), each change in the composition of the members
of the Board of Directors during employee's employment hereunder and for six (6)
months thereafter, shall be considered a Testing Date.
(b) Payment Following Change in Control. In the event that the
------------------------------------
Employee's employment hereunder is terminated (other than for cause, death,
disability or pursuant to Section 5(c), (e) or (f), respectively) within twelve
(12) months prior to or within twenty-four (24) months following a Change in
Control, then, at Employee's sole election, in lieu of any compensation or
benefits owed to Employee pursuant to Section 6 of this Agreement, the Company
shall pay or provide the following compensation and benefits to Employee:
(i) Unless rejected pursuant to paragraph (d), three times the
Lump Sum Amount (reduced by any amounts previously paid pursuant to Section 6);
and, otherwise, a lump sum payment equal to three times Employee's then current
annual Base Salary (reduced by any amounts previously paid pursuant to Section
6);
(ii) Any other amounts, awards, benefits or other compensation to
which the Employee is or, prior to his termination of employment, was entitled
during the Termination Period under any of the Company's other compensation
plans, which to the extent of any vesting dates occurring during the Termination
Period, shall be considered to vest on such date notwithstanding such
termination (unless more quickly vested pursuant to Section 9(b) hereof or the
terms of such plans); and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twenty-four (24) months from the date of Employee's termination
or until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company benefit plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and/or his eligible dependents,
because of the Employee's terminated status, cannot be covered or fully covered
under any or all of the Company benefit
7
<PAGE>
plans, the Company shall continue to provide the Employee and/or his eligible
dependents with the same level of such coverage in effect prior to termination,
on an unfunded basis if necessary.
(c) Alternative Payment Following Change in Control. If the Employee
------------------------------------------------
does not elect to receive the compensation and benefits set forth in paragraph
(b), the Employee shall receive the compensation and benefits set forth in
Section 6(a) with respect to such termination.
(d) Employee shall receive three times the Lump Sum Amount pursuant to
paragraph (b)(i), unless the applicable Board of Directors votes to limit such
payment to three times Employee's then current annual Base Salary. The
Company's Board of Directors shall be the applicable Board of Directors with
respect to a change of control described in subparagraph (a)(i), (ii), (iii) or
(v); and, the surviving entity's Board of Directors shall be the applicable
Board of Directors in the case of a change of control described in subparagraph
(a)(iv).
8. Expenses. Employee will be reimbursed all reasonable, ordinary and
---------
necessary business expenses, including expenses for entertainment, travel and
similar items that are approved by the Company. The Company will reimburse
Employee for all expenses upon a presentation of Employee of itemized accounts
of such expenditures in accordance and in the manner in a form reasonably
described by the Company.
9. Effect of Termination. Upon the termination of the Employee's
----------------------
employment hereunder, neither the Company nor the Employee shall have any
remaining duties or obligations hereunder except that:
(a) the Company shall:
(i) Pay the employee's accrued salary and any other accrued
benefits for all periods ending on or prior to the date of termination under
Sections 4 hereof or Exhibit A annexed hereto;
---------
(ii) Reimburse the Employee for expenses incurred in accordance
with Section 8 hereof for all periods ending on or prior to the date of
termination;
(iii) Pay or otherwise provide for any benefits, payments or
continuation or conversion rights in accordance with the provisions of any
Company benefit plan of which the Employee or any of his dependents is or was a
participant or as otherwise required by law;
(iv) Pay all compensation previously deferred by Employee and not
yet paid by Company (together with interest, if any, thereon) and any other
accrued benefits, including accrued vacation pay and the annual estate planning
allowance not yet paid by the Company;
(v) Pay the Employee and his beneficiaries any compensation or
provide the Employee or his eligible dependents any benefits due pursuant to
Sections 6 or 7 hereof or Exhibit A annexed hereto.
---------
8
<PAGE>
(b) Unless the employment of the Employee is terminated for Cause
pursuant to Section 5(c) or by the Employee without Good Reason pursuant to
Section 5(d), the vesting period and other restrictions shall lapse for all
stock options or other stock awards previously granted to the Employee by the
Company and all such stock awards shall be deemed to be fully vested. In such
case, the Company shall extend the option exercise period to the third
anniversary of the date of the Employee's termination for all such options held
by the Employee as of the date of the termination of his employment hereunder.
(c) Except in the event of Employee's termination of his employment
hereunder for Good Reason pursuant to Section 5(d) or by the Company without
Cause pursuant to Section 5(a), or by mutual agreement upon any other
termination, the Employee shall remain bound by the terms of Section 10(a)
hereof, and, in any event, Employee shall remain bound by the terms of Section
10(b)-(d) hereof.
(d) The Company shall be authorized to withhold from any payment to the
Employee, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable law or regulation.
10. Restrictions. The Company has invested and will continue to invest
-------------
considerable resources in the development of its business and in the research,
development and design of its activities and their delivery, which investment
has or will result in the generation of proprietary, confidential and/or trade
secret data, information, techniques and materials, both tangible and
intangible, which are owned by the Company.
(a) The Employee agrees that during the Term, and except in the event
of Employee's termination of his employment hereunder for Good Reason or by the
Company without Cause, for a period of two (2) year from the date of the
termination of the Employee's employment hereunder, he will not directly or
indirectly (i) engage in mobile magnetic resonance imaging business (the
"Company Business") within one hundred fifty (150) miles of any location then
serviced by the Company; (ii) compete or participate as agent, employee,
consultant, advisor, representative or otherwise in any enterprise engaged in a
business which has any material operations engaged in a business competitive
with the Company Business within one hundred fifty (150) miles of any location
then serviced by the Company; or (iii) compete or participate as a stockholder,
partner or joint venturer, or have any direct or indirect financial interest, in
any enterprise which has any material operations engaged in a business
competitive with the Company Business within one hundred fifty (150) miles of
any location then serviced by the Company; provided, however, that nothing
contained herein shall prohibit the Employee from (A) owning, operating and
managing and continuing to own, operate and manage the investments and
businesses owned, operated or managed by Employee on the date hereof; (B)
owning, operating or managing any business, or acting upon any business
opportunity after obtaining approval of a majority of the Board of Directors of
the Company and a majority of the independent members of the Board of Directors
of the Company (if any); or (C) owning no more than five percent (5%) of any
publicly-traded corporation with respect to which Employee does not serve as an
officer, director, employee, consultant or in any other capacity other than as
an investor.
(b) The Employee shall abide by and be bound as part of the employment
relationship created by this Agreement to comply with the provisions regarding
confidential information, attached as Exhibit B annexed hereto.
---------
9
<PAGE>
(c) To the extent the Employee develops, makes, conceives, contributes
to or reduces to practice any intellectual property related to the duties of the
Employee hereunder or which results in any way from the Employee using the
resources of the Company, such intellectual property is and shall be the sole
and exclusive property of the Company. Accordingly, the Employee shall abide by
and be bound to comply with the provisions regarding ownership of intellectual
property, attached as Exhibit C annexed hereto.
---------
(d) During the Term, except in the event of Employee's termination of
his employment hereunder for Good Reason pursuant to Section 5(d) or by the
Company without cause pursuant to Section 5(a) and for an additional period of
two (2) year immediately following termination of the Employee's employment with
the Company, he shall abide by and be bound to comply with the additional
restrictive covenants of the Company attached as Exhibit D annexed hereto.
---------
(e) Employee agrees and acknowledges that the compensation due to him
hereunder shall be full and adequate consideration for the Employee's agreement
to the foregoing restrictions.
Nothing in this Section 10 is intended to enhance or increase the rights
otherwise available to the Employee in respect of an unlawful act or omission by
the Company.
11. Acknowledgement. The Employee acknowledges that the restrictions set
----------------
forth in Section 10 hereto are reasonable in scope and essential to the
preservation of the Company's business and proprietary properties and that the
compensation paid to him pursuant to paragraph 10(e) fully compensates him for
accepting such restrictions. The Company acknowledges that the compensation
paid to the Employee pursuant to paragraph 10(e) is a reasonable payment for his
acceptance of the restrictions in Section 10.
12. Severability. The covenants of the Employee contained in Section 10
-------------
hereto shall be construed as an agreement independent of any other provision in
this Agreement and the existence of any claim or cause of action of the Employee
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
If, at the time of enforcement, any sentence, paragraph, clause, or combination
of the same of such independent agreement in Section 10 is in violation of the
law of any state where applicable, such sentence, paragraph, clause, or
combination of the same shall be void in the jurisdictions where it is unlawful,
and the remainder of such paragraph in Section 10 shall remain binding on the
parties. In the event that any part of any covenant of Section 10 is determined
by a court of law to be overly broad thereby making the covenant unenforceable,
the parties agree that such court shall substitute a judicially enforceable
limitation in its place, and that as so modified, the covenants shall be binding
upon the parties as if originally set forth in this Agreement.
13. Notices. All notices and other communications hereunder shall be in
--------
writing and shall be deemed to have been given if delivered personally or sent
by registered or certified mail (return receipt requested), postage prepaid, or
by telecopy (immediately followed by telephone confirmation of delivery of such
telecopy with the intended recipient of such notice and by notice in writing
sent promptly by registered or certified mail as provided above) to the parties
to this
10
<PAGE>
Agreement at the following addresses or at such other address for a party as
shall be specified by like notice:
To the Company:
SMT Health Services Inc.
10521 Perry Highway
Wexford, Pennsylvania 15090
(412) 933-3300
(412) 933-3311 (facsimile)
With a copy to:
Ronald Basso, Esquire
Buchanan Ingersoll Professional Corporation
One Oxford Center
20th Floor, 301 Grant Street
Pittsburgh, Pennsylvania 15219
(412) 562-3943
(412) 562-1041 (facsimile)
To the Employee:
Daniel Dickman
603 Golden Oaks Lane
Pittsburgh, Pennsylvania 15237
(412) 364-9753
With a copy to:
Steven M. Cherin, Esquire
Gefsky and Lehman, P.C.
2301 One PPG Place
Pittsburgh, Pa 15222
(412) 391-2727
(412) 391-1685 (facsimile)
All such notices and communications shall be deemed to have been received on the
date of personal delivery, on the date that the telecopy is confirmed as having
been received or on the third business day after the mailing thereof, as the
case may be.
14. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
its choice of law provisions.
15. Severability. If any provision of this Agreement is held to be
-------------
illegal, invalid or unenforceable under present or future laws effective during
the Term, such provision shall be fully
11
<PAGE>
severable and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and the
remaining provisions hereof shall remain in full force and effect and shall not
be effected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of illegal, invalid or unenforceable
provision there shall be added automatically as part of this Agreement a
provision as similar in terms to the illegal, invalid or unenforceable provision
as may be possible and still be legal, valid or enforceable. The lack of
deductibility or recharacterization for tax or accounting purposes, or the
imposition of any excise taxes or penalties, fines or other charges, or
imposition of any injunction or similar restraint against the Company with
respect to the payment of any amount or provision of any benefit hereunder,
shall not be construed to make the provisions of this Agreement providing for
such payment or provision "illegal, invalid or unenforceable", nor in any manner
reduce the entitlement of the Employee, or his successor or assign to receive
such payment or benefit.
16. Recharacterization of Payments. To the extent that, but for this
-------------------------------
Section 16, any payment or benefit hereunder is determined by the Company's
outside auditors, Internal Revenue Service, or by any court of component
jurisdiction to be an "Excess Parachute Payment" as defined in Section 280G
(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), such
amount as may be necessary to preclude any such payment or benefit from being
considered an "Excess Parachute Payment" shall be recharacterized and shall
constitute an unsecured, long-term loan from the Company to the Employee, his
personal representative, his successors or assigns, as the case may be, payable
together with accrued interest on the tenth anniversary of the payment of such
recharacterized payment or the receipt of such recharacterized benefit, with
interest at the Applicable Federal Rate for loans in excess of nine years, as
defined in Section 1274 of the Code, on such principal amount. Such loan shall
be evidenced by a promissory note in the form attached hereto as Exhibit E.
---------
17. Indemnification. The Company agrees to indemnify the Employee to the
----------------
fullest extent permitted by law for his services to, or on behalf of the
Company, as an Employee hereunder, as a director and in any and every other
capacity in which he may serve the Company or its interests. In furtherance of
such agreement to indemnify, but no by way of limitation, the terms of the
Company's Certificate of Incorporation and By-Laws providing for such
indemnification and payment of expenses, as in effect on the date hereof (and,
which are attached hereto as Exhibit F), are hereby incorporated by reference as
---------
if fully stated herein. Additionally, the provisions of Exhibit G shall
supplement such provisions. For the purpose of this Agreement, any amendment to
said Certificate of Incorporation or By-Laws shall not be effective to reduce,
qualify or otherwise limit the scope, benefit or enforceability of this
provision; provided, however, if any such amendment extends or improves the
-------- -------
scope, benefit or enforceability of the indemnification and payment of expenses
contained in such By-Laws for any officer, director, employee or agent, such
extended or improved provisions shall be deemed to be incorporated by reference
herein for the benefit of the Employee without any further action by the Company
or the Employee.
18. Arbitration. Except as otherwise provided herein, in the event of any
------------
controversy, dispute or claim arising out of, or relating to, this Agreement, or
the breach thereof, or arising out of any other matter relating to the
Employee's employment with the Company or the termination of such employment,
the parties may seek recourse only for temporary or preliminary injunctive
relief to the courts having jurisdiction thereof and if any relief other than
injunctive relief is sought,
12
<PAGE>
the Company and the Employee agree that such underlying controversy, dispute or
claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania, in
accordance with this Section 16 of the Agreement and the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). The matter shall be heard
and decided, and awards rendered, by a panel of three (3) arbitrators (the
"Arbitration Panel") each of which shall have at least ten (10) years'
experience in executive compensation and employment matters. The Company and the
Employee shall each select one qualified arbitrator from the AAA National Panel
of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third
qualified arbitrator from the Commercial Panel. The award rendered by the
Arbitration Panel shall be final and binding as between the parties hereto and
their heirs, executors, administrators, successors and assigns, and judgment on
the award may be entered by any court having jurisdiction thereof.
19. Entire Agreement. This Agreement sets forth the entire understanding
-----------------
of the parties with respect to the matters specified herein. No other terms or
conditions and no amendments or modifications shall be binding unless made in
writing and signed by the parties hereto. Upon execution and delivery by both
parties of this Agreement, the parties agree that the Employee Agreement dated
as of March 1, 1995, shall terminate without further obligation to either party.
20. Binding Effect. This Agreement shall be binding upon the parties
---------------
hereto and shall inure to the benefit of such parties, their respective heirs,
representatives, successors and permitted assigns. This Agreement may not be
assigned by the Employee nor may it be assigned by the Company without the
Employee's consent.
21. Expenses. The Company shall bear the costs of all expenses associated
---------
with the creation, negotiation and execution of this Agreement, including the
fees of its counsel, the Employee's counsel and of any consultant retained by
the Company to advice the Employee and/or the Board of Directors with respect to
the terms and conditions of this Agreement. The Company shall bear the full
cost of each arbitrator selected pursuant to Section 16 hereof with respect to
any dispute hereunder. Otherwise, each party shall pay their individual
expenses with respect to this Agreement.
* * * SIGNATURES APPEAR ON THE FOLLOWING PAGE * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
SMT HEALTH SERVICES INC.
By:
---------------------------------
Name:
-------------------------------
13
<PAGE>
Title:
------------------------------
EMPLOYEE:
------------------------------------
Daniel Dickman
14
<PAGE>
Exhibit 10.03
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of the 1st
day of October, 1996 (the "Effective Date"), by and between SMT HEALTH SERVICES
INC., a Delaware corporation (the "Company"), and DAVID SPINDLER (the
"Employee").
WITNESSETH:
-----------
WHEREAS, the Company desires to secure the continued employment of Employee
in an executive capacity; and
WHEREAS, the Company and the Employee desire to enter into this Agreement
in order to set forth certain terms and conditions of Employee's continued
employment with the Company and to terminate the existing employment agreement
dated as of January 1, 1996;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
-----------
Employee and the Employee hereby agrees to continue to be employed by the
Company commencing on the date hereof for the Term (as defined below) of the
Agreement, in the position and with the duties and responsibilities set forth in
Section 2 below, and upon the other terms and subject to the conditions
hereinafter stated.
2. Position, Duties and Responsibilities.
--------------------------------------
(a) During the Term of the Agreement, the Employee shall serve as
Senior Vice President of Operations and Marketing of the Company. The Employee
shall have general executive supervision over the operations and marketing
activities of the Company, subject to the policies and directions of, and the
executive responsibilities that may be assigned to him by the Board of Directors
of the Company (the "Board of Directors"). The Employee shall have general
supervisory authority over day-to-day operations and securing new customers or
markets for the Company, reporting to the Executive Vice President. Employee's
duties shall be based at the Company's executive offices which are located in
the Pittsburgh Metropolitan Area and Employee shall not be required to perform
duties outside the Pittsburgh Metropolitan Area which would necessitate changing
his present residence, unless Employee otherwise agrees in writing. For purposes
of this Agreement, the term "Pittsburgh Metropolitan Area" shall encompass the
City of Pittsburgh, Pennsylva nia, the Borough of Wexford, Pennsylvania, and the
territory within a fifteen (15) mile radius of such borough. The Company agrees
that it shall not relocate or transfer its principal executive offices to a
location outside the Pittsburgh Metropolitan Area.
(b) During the Term, the Employee shall devote such time and attention
to affairs of the Company as are necessary to faithfully and diligently perform
his duties and responsibilities hereunder; provided, however, that nothing
contained herein shall prohibit the Employee from (a) serving as a member of the
Board of Directors of any other for-profit entity so long as Employee has
obtained the prior consent of the President or Executive Vice President, or (b)
engaging in charitable and community affairs.
<PAGE>
3. Term. The initial term of this Agreement shall be for a period of two
-----
(2) years, commencing on October 1, 1996, and ending on September 30, 1998. On
each quarterly anniversary of the Effective Date while Employee remains Employed
hereunder, such term shall be automatically extended by three months, and shall
continue until Employee's employment hereunder is terminated pursuant to Section
5 hereof (the initial term of this Agreement, as extended by each renewal
period, is hereinafter defined as the "Term").
4. Compensation. For the services rendered by Employee pursuant to
-------------
Section 2 during the Term, the Employee shall be paid the compensation and
receive the benefits as set forth on Exhibit A annexed hereto.
---------
5. Termination of Agreement. The Employee's employment hereunder may be
-------------------------
terminated only as follows:
(a) By the Company Without Cause. The Company may at any time
-----------------------------
terminate the Employee's employment hereunder without Cause, by affirmative vote
of a majority of the entire Board of Directors, and upon no less than ninety
(90) days' prior written notice to the Employee.
(b) By the Employee Without Good Reason. The Employee may at any time
------------------------------------
terminate his employment hereunder for any reason upon no less than thirty (30)
days' prior written notice to the Company; provided; however; Section 5(d)
hereof shall apply in lieu of this Section 5(b) to any termination of employment
by the Employee for Good Reason (as defined therein).
(c) By the Company for Cause. The Company may at any time terminate
-------------------------
the Employee's employment hereunder for Cause. Prior to such event, the Company
by affirmative vote of a majority of the entire Board of Directors shall give
the Employee prompt written notice specifying in reasonable detail the conduct
which is believed to provide the basis for a termination of Employee for Cause.
Except in the event of a termination of Employee pursuant to Section 5(c)(ii)
(as to which the termination shall be immediately effective after receipt of
such letter), within ten (10) business days of the Employee's receipt of such
letter, the Employee shall be provided an opportunity, together with his
counsel, to present and discuss with the Board of Directors the conduct which is
asserted to provide a basis for such purposed for Cause termination. Following
such meeting, if Employee does not, within ten (10) days thereof, take such
reasonable steps as directed by a majority vote of the entire Board of Directors
to cease or correct the conduct which is asserted to provide a basis for such
proposed for Cause termination, the Board of Directors may, by the affirmative
vote of a majority of the entire Board of Directors, terminate the Employee's
employment for Cause. "Cause" shall mean only one or more of the following:
(i) The material breach of this Agreement by Employee, which
breach shall not have been cured by Employee within thirty (30) days after the
Employee's receipt from the Company at the direction of a majority of the entire
Board of Directors of written notice specifying in reasonable detail the nature
of Employee's breach;
2
<PAGE>
(ii) The conviction of Employee for a crime of moral turpitude or
a felony which is materially injurious to the reputation or business of the
Company; and
(iii) Any willful act or acts by Employee which is materially and
demonstrably injurious to the Company (excluding any act ratified or approved by
the Board of Directors of the Company and further excluding any act taken by
Employee in good faith with a reasonable belief that such act was in the best
interests of the Company).
Neither the Employee's participation in or presence at any meeting at which a
for Cause termination is discussed nor the Employee's efforts to cease or cure
any conduct purported to be sufficient basis for a for Cause termination, shall
be considered an admission, acknowledgment or agreement that such conduct does
in fact provide a sufficient basis for a for Cause termination.
(d) By the Employee for Good Reason. The Employee may terminate
--------------------------------
employment hereunder for Good Reason at any time by providing prompt written
notice to the Company within a reasonable time after the occurrence of the
event(s) constituting such Good Reason. For purposes of this Agreement, "Good
Reason" means only one or more of the following:
(i) The material breach of this Agreement by the Company, which
breach shall not have been cured by the Company within thirty (30) days after
the Company's receipt from the Employee or his agent of written notice
specifying in reasonable detail the nature of the Company's breach.
(ii) The required relocation of the Employee out of the Company's
principal executive offices or the Pittsburgh Metropolitan Area without his
specific prior written consent.
(iii) The assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status and
reporting requirements), authority, duties, powers or responsibilities as
contemplated by Section 2 of this Agreement, or any other diminution of such,
authority, duties, position or responsibili ties, excluding for this purpose any
isolated, insubstantial action by the Company not taken in bad faith and which
is remedied by the Company within thirty (30) days after receipt of written
notice from the Employee to the Company that such action will be considered a
Good Reason hereunder unless timely remedied.
(iv) A material increase in Employee's responsibilities,
workload, required hours or travel from that historically required of Employee,
not remedied by the company within thirty (30) days after receipt of written
notice from Employee to the Company that such increase will be considered a Good
Reason hereunder unless timely remedied.
(e) Death. The Employee's employment for all purposes under this
------
Agreement shall terminate upon his death.
3
<PAGE>
(f) Disability. In the event that the Employee is determined by a
-----------
physician's written evaluation delivered to the Company (i) to be "permanently
and totally disabled" as defined in (S) 22(e)(3) of the Internal Revenue Code of
1986, as amended, the Company may, at its discretion, upon sixty (60) days
notice to the Employee or his guardian, as the case may be, terminate the
Employee's employment hereunder.
(g) Mutual Written Agreement. This Agreement and the Employee's
-------------------------
employment hereunder may be terminated at any time by the mutual written
agreement of the Employee and the Company.
6. Compensation in Event of Termination.
-------------------------------------
(a) Termination by Employee for Good Reason; by Company Without Cause.
------------------------------------------------------------------
In the event that the Employee's employment hereunder is terminated: (i) by the
Company without Cause pursuant to Section 5(a) hereof; or (ii) by the Employee
for Good Reason pursuant to Section 5(d) hereof, then the Company shall pay or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee:
(i) Continuation of full salary, bonuses (including profit
sharing) and benefits (including Automobile Allowance) during the time period
equal to the remaining Term of the Agreement immediately prior to the Employee's
termination (without regard to any future renewals that would have occurred
absent such termination) (the "Termination Period");
(ii) Any other amounts, awards, benefits or other compensation to
which the Employee is or, prior to his termination of employment, was entitled
during the Termination Period under any of the Company's other compensation
plans which to the extent of any vesting dates occurring during the Termination
Period, shall be considered to vest on such date notwithstanding such
termination (unless more quickly vested pursuant to Section 9(b) hereof or the
terms of such plan); and
(iii) Continuing coverage, to the extent not prohibited by law,
during the Termination Period or until comparable benefits are made available to
him in connection with subsequent employment, whichever period is shorter (or,
at Employee's election, for a period of twelve (12) months from the date of
Employee's termination of employment), for the Employee and his eligible
dependents under all of the Company benefit plans in effect and applicable to
Employee and his eligible dependents as of the date of termination. In the event
that the Employee and/or his eligible dependents, because of the Employee's
terminated status, cannot be covered or fully covered under any or all of the
Company benefit plans, the Company shall continue to provide the Employee and/or
his eligible dependents with the same level of such coverage in effect prior to
termination, on an unfunded basis if necessary.
(b) Termination for Cause by the Company. In the event that the
-------------------------------------
Company shall terminate the Employee's employment hereunder for Cause pursuant
to Section 5(c), this Agreement shall forthwith terminate and the obligations of
the parties hereto shall be as set forth in Section 9 hereof.
4
<PAGE>
(c) Termination by Employee Without Good Reason. In the event that the
--------------------------------------------
Employee shall terminate employment hereunder (other than for Good Reason)
pursuant to Section 5(b) hereof, this Agreement shall forthwith terminate and
the obligations of the parties hereto shall be as set forth in Section 9 hereof.
(d) Death. In the event of the death of the Employee, then the Company
------
shall pay (or cause to be paid), within thirty (30) days of such death, or
provide in the same manner as before the Employee's death, as applicable, the
following compensation and benefits to the estate of the Employee, or the
Employee's personal representative, or to those individuals designated in a
writing delivered to the Company by the Employee prior to his death;
(i) A lump sum payment equal to the sum of (A) the Employee's
highest annual Base Salary; (B) the Employee's highest annualized Automobile
Allowance; and (C) the Employee's highest award under the Company's Profit
Sharing Plan, in each case, for any of the three years preceding the date of
such termination (the "Lump Sum Amount"); and
(ii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's death for the
Employee's eligible dependents under all of the Company Benefit Plans in effect
and applicable to Employee and his eligible dependents as of the date of death.
In the event that such eligible dependents, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(e) Disability. In the event that the Company elects to terminate the
-----------
Employee's employment hereunder pursuant to Section 5(f), then the Company shall
pay (or cause to be paid) within thirty (30) days of the such termination or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee or his personal representative:
(i) All amounts as the Employee is entitled to under the
Company's disability policy and program applicable to Employee;
(ii) Sixty percent (60%) of Employee's then current Annual Base
Salary; and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's termination or
until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company Benefit Plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and his eligible dependents, because
of the Employee's terminated status, cannot be covered or fully covered under
any or all of the Company benefit plans, the Company shall continue to provide
the Employee and/or his eligible dependents with the same level of such coverage
in effect prior to termination, on the unfunded basis if necessary.
5
<PAGE>
(f) Mutual Written Consent. In the event that the Employee and the
-----------------------
Company shall terminate the Employer's employment by mutual written agreement,
the Company shall pay such compensation and provide such benefits, if any, as
the parties may mutually agree upon in writing.
The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking employment or otherwise, nor shall any
amounts received from employment, insurance or otherwise by the Employee offset
or reduce in any manner the obligations of the Company hereunder.
7. Change in Control.
------------------
(a) Definition. For purposes of this Agreement, the term "Change of
-----------
Control" shall mean the occurrence of any of the following events:
(i) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group of
purchasers, other than to a person with respect to which, following such sale or
disposition, more than eighty percent (80%) of, respectively, the then
outstanding shares of Company common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors (herein, "voting securities") is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding Company common stock and
the combined voting power of the then outstanding voting securities immediately
prior to such sale or disposition in substantially the same proportion as their
ownership of the outstanding Company common stock and voting securities
immediately prior to such sale or disposition;
(ii) The acquisition in one or more transactions by any person or
group, directly or indirectly, of beneficial ownership of twenty-five percent
(25%) or more of the outstanding shares of Company common stock or the combined
voting power of the then outstanding voting securities of the Company; provided,
however, that any acquisition by (x) the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (y) the Employee or any other person who is
a director or executive officer of the Company as of the date hereof, or (z) any
person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as
such rule is in effect as of January 1, 1995), to file a statement on Schedule
13G with respect to its beneficial ownership of Company common stock or other
voting securities whether or not such person shall have filed a statement on
Schedule 13G, unless such person shall have filed a statement on Schedule 13D
with respect to beneficial ownership of 15 percent (15%) or more of the Company
voting securities, shall not constitute a Change of Control;
(iii) The Company's termination of its business and liquidation of
its assets;
(iv) The reorganization, merger or consolidation of the Company
into or with another person or entity, by which reorganization, merger or
consolidation the persons who held one hundred percent (100%) of the voting
securities of the Company prior to such
6
<PAGE>
reorganization, merger or consolidation receive less than fifty-two percent
(52%) of the outstanding voting securities of the new or continuing
corporation(s); or
(v) If, on any Testing Date , less than a majority of the
members of the Board of Directors are persons who were either (A) nominated or
recommended for election by at least a two-thirds vote of those persons who were
members of the Board of Directors or Nominating Committee of the Board of
Directors two years prior to the Testing Date, or (B) elected by the Board of
Directors, including at least a two-thirds vote in favor of such election by the
persons who were members of the Board of Directors two years prior to the
Testing Date.
For the purpose of paragraph (v), each change in the composition of the members
of the Board of Directors during employee's employment hereunder and for six (6)
months thereafter, shall be considered a Testing Date.
(b) Payment Following Change in Control. In the event that the
------------------------------------
Employee's employment hereunder is terminated (other than for cause, death,
disability or pursuant to Section 5(c), (e) or (f), respectively) within twelve
(12) months prior to or within twenty-four (24) months following a Change in
Control, then, at Employee's sole election, in lieu of any compensation or
benefits owed to Employee pursuant to Section 6 of this Agreement, the Company
shall pay or provide the following compensation and benefits to Employee:
(i) A lump sum payment equal to two times Employee's then
current annual Base Salary (reduced by any amounts previously paid pursuant to
Section 6);
(ii) Any other amounts, awards, benefits or other compensation to
which the Employee is or, prior to his termination of employment, was entitled
during the Termination Period under any of the Company's other compensation
plans, which to the extent of any vesting dates occurring during the Termination
Period, shall be considered to vest on such date notwithstanding such
termination (unless more quickly vested pursuant to Section 9(b) hereof or the
terms of such plans); and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twenty-four (24) months from the date of Employee's termination
or until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company benefit plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and/or his eligible dependents,
because of the Employee's terminated status, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(c) Alternative Payment Following Change in Control. If the Employee
------------------------------------------------
does not elect to receive the compensation and benefits set forth in paragraph
(b), the Employee shall receive the compensation and benefits set forth in
Section 6(a) with respect to such termination.
8. Expenses. Employee will be reimbursed all reasonable, ordinary and
---------
necessary business expenses, including expenses for entertainment, travel and
similar items that are
7
<PAGE>
approved by the Company. The Company will reimburse Employee for all expenses
upon a presentation of Employee of itemized accounts of such expenditures in
accordance and in the manner in a form reasonably described by the Company.
9. Effect of Termination. Upon the termination of the Employee's
----------------------
employment hereunder, neither the Company nor the Employee shall have any
remaining duties or obligations hereunder except that:
(a) the Company shall:
(i) Pay the employee's accrued salary and any other accrued
benefits for all periods ending on or prior to the date of termination under
Sections 4 hereof or Exhibit A annexed hereto;
---------
(ii) Reimburse the Employee for expenses incurred in accordance
with Section 8 hereof for all periods ending on or prior to the date of
termination;
(iii) Pay or otherwise provide for any benefits, payments or
continuation or conversion rights in accordance with the provisions of any
Company benefit plan of which the Employee or any of his dependents is or was a
participant or as otherwise required by law;
(iv) Pay all compensation previously deferred by Employee and not
yet paid by Company (together with interest, if any, thereon) and any other
accrued benefits, including accrued vacation pay not yet paid by the Company;
(v) Pay the Employee and his beneficiaries any compensation or
provide the Employee or his eligible dependents any benefits due pursuant to
Sections 6 or 7 hereof or Exhibit A annexed hereto.
---------
(b) Unless the employment of the Employee is terminated for Cause
pursuant to Section 5(c) or by the Employee without Good Reason pursuant to
Section 5(d), the vesting period and other restrictions shall lapse for all
stock options or other stock awards previously granted to the Employee by the
Company and all such stock awards shall be deemed to be fully vested. In such
case, the Company shall extend the option exercise period to the third
anniversary of the date of the Employee's termination for all such options held
by the Employee as of the date of the termination of his employment hereunder.
(c) Except in the event of Employee's termination of his employment
hereunder for Good Reason pursuant to Section 5(d) or by the Company without
Cause pursuant to Section 5(a), or by mutual agreement upon any other
termination, the Employee shall remain bound by the terms of Section 10(a)
hereof, and, in any event, Employee shall remain bound by the terms of Section
10(b)-(d) hereof.
(d) The Company shall be authorized to withhold from any payment to the
Employee, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable law or regulation.
8
<PAGE>
10. Restrictions. The Company has invested and will continue to invest
-------------
considerable resources in the development of its business and in the research,
development and design of its activities and their delivery, which investment
has or will result in the generation of proprietary, confidential and/or trade
secret data, information, techniques and materials, both tangible and
intangible, which are owned by the Company.
(a) The Employee agrees that during the Term, and except in the event
of Employee's termination of his employment hereunder for Good Reason or by the
Company without Cause, for a period of two (2) year from the date of the
termination of the Employee's employment hereunder, he will not directly or
indirectly (i) engage in mobile magnetic resonance imaging business (the
"Company Business") within one hundred fifty (150) miles of any location then
serviced by the Company; (ii) compete or participate as agent, employee,
consultant, advisor, representative or otherwise in any enterprise engaged in a
business which has any material operations engaged in a business competitive
with the Company Business within one hundred fifty (150) miles of any location
then serviced by the Company; or (iii) compete or participate as a stockholder,
partner or joint venturer, or have any direct or indirect financial interest, in
any enterprise which has any material operations engaged in a business
competitive with the Company Business within one hundred fifty (150) miles of
any location then serviced by the Company; provided, however, that nothing
contained herein shall prohibit the Employee from (A) owning, operating and
managing and continuing to own, operate and manage the investments and
businesses owned, operated or managed by Employee on the date hereof; (B)
owning, operating or managing any business, or acting upon any business
opportunity after obtaining approval of a majority of the Board of Directors of
the Company and a majority of the independent members of the Board of Directors
of the Company (if any); or (C) owning no more than five percent (5%) of any
publicly-traded corporation with respect to which Employee does not serve as an
officer, director, employee, consultant or in any other capacity other than as
an investor.
(b) The Employee shall abide by and be bound as part of the employment
relationship created by this Agreement to comply with the provisions regarding
confidential information, attached as Exhibit B annexed hereto.
---------
(c) To the extent the Employee develops, makes, conceives, contributes
to or reduces to practice any intellectual property related to the duties of the
Employee hereunder or which results in any way from the Employee using the
resources of the Company, such intellectual property is and shall be the sole
and exclusive property of the Company. Accordingly, the Employee shall abide by
and be bound to comply with the provisions regarding ownership of intellectual
property, attached as Exhibit C annexed hereto.
---------
(d) During the Term, except in the event of Employee's termination of
his employment hereunder for Good Reason pursuant to Section 5(d) or by the
Company without cause pursuant to Section 5(a) and for an additional period of
two (2) year immediately following termination of the Employee's employment with
the Company, he shall abide by and be bound to comply with the additional
restrictive covenants of the Company attached as Exhibit D annexed hereto.
---------
9
<PAGE>
(e) Employee agrees and acknowledges that the compensation due to him
hereunder shall be full and adequate consideration for the Employee's agreement
to the foregoing restrictions.
Nothing in this Section 10 is intended to enhance or increase the rights
otherwise available to the Employee in respect of an unlawful act or omission by
the Company.
11. Acknowledgement. The Employee acknowledges that the restrictions set
----------------
forth in Section 10 hereto are reasonable in scope and essential to the
preservation of the Company's business and proprietary properties and that the
compensation paid to him pursuant to paragraph 10(e) fully compensates him for
accepting such restrictions. The Company acknowledges that the compensation
paid to the Employee pursuant to paragraph 10(e) is a reasonable payment for his
acceptance of the restrictions in Section 10.
12. Severability. The covenants of the Employee contained in Section 10
-------------
hereto shall be construed as an agreement independent of any other provision in
this Agreement and the existence of any claim or cause of action of the Employee
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
If, at the time of enforcement, any sentence, paragraph, clause, or combination
of the same of such independent agreement in Section 10 is in violation of the
law of any state where applicable, such sentence, paragraph, clause, or
combination of the same shall be void in the jurisdictions where it is unlawful,
and the remainder of such paragraph in Section 10 shall remain binding on the
parties. In the event that any part of any covenant of Section 10 is determined
by a court of law to be overly broad thereby making the covenant unenforceable,
the parties agree that such court shall substitute a judicially enforceable
limitation in its place, and that as so modified, the covenants shall be binding
upon the parties as if originally set forth in this Agreement.
13. Notices. All notices and other communications hereunder shall be in
--------
writing and shall be deemed to have been given if delivered personally or sent
by registered or certified mail (return receipt requested), postage prepaid, or
by telecopy (immediately followed by telephone confirmation of delivery of such
telecopy with the intended recipient of such notice and by notice in writing
sent promptly by registered or certified mail as provided above) to the parties
to this Agreement at the following addresses or at such other address for a
party as shall be specified by like notice:
To the Company:
SMT Health Services Inc.
10521 Perry Highway
Wexford, Pennsylvania 15090
(412) 933-3300
(412) 933-3311 (facsimile)
With a copy to:
Ronald Basso, Esquire
10
<PAGE>
Buchanan Ingersoll Professional Corporation
One Oxford Center
20th Floor, 301 Grant Street
Pittsburgh, Pennsylvania 15219
(412) 562-3943
(412) 562-1041 (facsimile)
To the Employee:
David Spindler
439 Jeffreys Drive
Elizabeth, Pennsylvania 15037
(412) 754-0778
With a copy to:
Steven M. Cherin, Esquire
Gefsky and Lehman, P.C.
2301 One PPG Place
Pittsburgh, Pa 15222
(412) 391-2727
(412) 391-1685 (facsimile)
All such notices and communications shall be deemed to have been received on the
date of personal delivery, on the date that the telecopy is confirmed as having
been received or on the third business day after the mailing thereof, as the
case may be.
14. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
its choice of law provisions.
15. Severability. If any provision of this Agreement is held to be
-------------
illegal, invalid or unenforceable under present or future laws effective during
the Term, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be effected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to the
illegal, invalid or unenforceable provision as may be possible and still be
legal, valid or enforceable. The lack of deductibility or recharacterization
for tax or accounting purposes, or the imposition of any excise taxes or
penalties, fines or other charges, or imposition of any injunction or similar
restraint against the Company with respect to the payment of any amount or
provision of any benefit hereunder, shall not be construed to make the
provisions of this Agreement providing for such payment or provision "illegal,
invalid or unenforceable", nor in any manner reduce the entitlement of the
Employee, or his successor or assign to receive such payment or benefit.
11
<PAGE>
16. Recharacterization of Payments. To the extent that, but for this
-------------------------------
Section 16, any payment or benefit hereunder is determined by the Company's
outside auditors, Internal Revenue Service, or by any court of component
jurisdiction to be an "Excess Parachute Payment" as defined in Section 280G
(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), such
amount as may be necessary to preclude any such payment or benefit from being
considered an "Excess Parachute Payment" shall be recharacterized and shall
constitute an unsecured, long-term loan from the Company to the Employee, his
personal representative, his successors or assigns, as the case may be, payable
together with accrued interest on the tenth anniversary of the payment of such
recharacterized payment or the receipt of such recharacterized benefit, with
interest at the Applicable Federal Rate for loans in excess of nine years, as
defined in Section 1274 of the Code, on such principal amount. Such loan shall
be evidenced by a promissory note in the form attached hereto as Exhibit E.
---------
17. Indemnification. The Company agrees to indemnify the Employee to the
----------------
fullest extent permitted by law for his services to, or on behalf of the
Company, as an Employee hereunder, as a director and in any and every other
capacity in which he may serve the Company or its interests. In furtherance of
such agreement to indemnify, but no by way of limitation, the terms of the
Company's Certificate of Incorporation and By-Laws providing for such
indemnification and payment of expenses, as in effect on the date hereof (and,
which are attached hereto as Exhibit F), are hereby incorporated by reference as
---------
if fully stated herein. Additionally, the provisions of Exhibit G shall
supplement such provisions. For the purpose of this Agreement, any amendment to
said Certificate of Incorporation or By-Laws shall not be effective to reduce,
qualify or otherwise limit the scope, benefit or enforceability of this
provision; provided, however, if any such amendment extends or improves the
-------- -------
scope, benefit or enforceability of the indemnification and payment of expenses
contained in such By-Laws for any officer, director, employee or agent, such
extended or improved provisions shall be deemed to be incorporated by reference
herein for the benefit of the Employee without any further action by the Company
or the Employee.
18. Arbitration. Except as otherwise provided herein, in the event of any
------------
controversy, dispute or claim arising out of, or relating to, this Agreement, or
the breach thereof, or arising out of any other matter relating to the
Employee's employment with the Company or the termination of such employment,
the parties may seek recourse only for temporary or preliminary injunctive
relief to the courts having jurisdiction thereof and if any relief other than
injunctive relief is sought, the Company and the Employee agree that such
underlying controversy, dispute or claim shall be settled by arbitration
conducted in Pittsburgh, Pennsylvania, in accordance with this Section 16 of the
Agreement and the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). The matter shall be heard and decided, and awards
rendered, by a panel of three (3) arbitrators (the "Arbitration Panel") each of
which shall have at least ten (10) years' experience in executive compensation
and employment matters. The Company and the Employee shall each select one
qualified arbitrator from the AAA National Panel of Commercial Arbitrators (the
"Commercial Panel") and AAA shall select a third qualified arbitrator from the
Commercial Panel. The award rendered by the Arbitration Panel shall be final
and binding as between the parties hereto and their heirs, executors,
administrators, successors and assigns, and judgment on the award may be entered
by any court having jurisdiction thereof.
19. Entire Agreement. This Agreement sets forth the entire understanding
-----------------
of the parties with respect to the matters specified herein. No other terms or
conditions and no
12
<PAGE>
amendments or modifications shall be binding unless made in writing and signed
by the parties hereto. Upon execution and delivery by both parties of this
Agreement, the parties agree that the Employee Agreement dated as of March 1,
1995, shall terminate without further obligation to either party.
20. Binding Effect. This Agreement shall be binding upon the parties
---------------
hereto and shall inure to the benefit of such parties, their respective heirs,
representatives, successors and permitted assigns. This Agreement may not be
assigned by the Employee nor may it be assigned by the Company without the
Employee's consent.
21. Expenses. The Company shall bear the costs of all its expenses
---------
associated with the creation, negotiation and execution of this Agreement,
including the fees of its counsel and of any consultant retained by the Company
to advice the Board of Directors with respect to the terms and conditions of
this Agreement. Employee shall bear the cost of all of his expenses in
connection therewith, including his counsel fees. The Company shall bear the
full cost of each arbitrator selected pursuant to Section 16 hereof with respect
to any dispute hereunder. Otherwise, each party shall pay their individual
expenses with respect to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
SMT HEALTH SERVICES INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EMPLOYEE:
------------------------------------
David Spindler
13
<PAGE>
Exhibit 10.04
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of the 1st
day of October, 1996 (the "Effective Date"), by and between SMT HEALTH SERVICES
INC., a Delaware corporation (the "Company"), and DAVID ZYNN (the "Employee").
WITNESSETH:
-----------
WHEREAS, the Company desires to secure the continued employment of Employee
in an executive capacity; and
WHEREAS, the Company and the Employee desire to enter into this Agreement
in order to set forth certain terms and conditions of Employee's continued
employment with the Company and to terminate the existing employment agreement
dated as of January 1, 1996;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
-----------
Employee and the Employee hereby agrees to continue to be employed by the
Company commencing on the date hereof for the Term (as defined below) of the
Agreement, in the position and with the duties and responsibilities set forth in
Section 2 below, and upon the other terms and subject to the conditions
hereinafter stated.
2. Position, Duties and Responsibilities.
--------------------------------------
(a) During the Term of the Agreement, the Employee shall serve as
Treasurer, Assistant Secretary and Chief Financial Officer of the Company. The
Employee shall have general executive supervision over the property, business
and affairs of the Company, subject to the policies and directions of, and the
executive responsibilities that may be assigned to him by the Board of Directors
of the Company (the "Board of Directors"). The Employee shall have general
supervisory authority over the financial affairs and reporting of the Company,
reporting to the Executive Vice President. The Employee shall be a signatory,
at all times during the term of this Agreement, on all bank accounts, of every
nature and kind, and all other banking arrangements, including safety deposit
boxes, lockbox accounts, and the like. Employee's duties shall be performed
principally at the Company's executive offices which are located in the
Pittsburgh Metropolitan Area and Employee shall not be required to perform
duties outside the Pittsburgh Metropolitan Area which would necessitate changing
his present residence, unless Employee otherwise agrees in writing. For
purposes of this Agreement, the term "Pittsburgh Metropolitan Area" shall
encompass the City of Pittsburgh, Pennsylvania, the Borough of Wexford,
Pennsylvania, and the territory within a fifteen (15) mile radius of such
borough. The Company agrees that it shall not relocate or transfer its
principal executive offices to a location outside the Pittsburgh Metropolitan
Area.
(b) During the Term, the Employee shall devote such time and attention
to affairs of the Company as are necessary to faithfully and diligently perform
his duties and responsibilities hereunder; provided, however, that nothing
contained herein shall prohibit the Employee from (a) serving as consultant to
and a member of the Board of Directors of any other
<PAGE>
for-profit entity so long as Employee has obtained the prior consent of the
President or Executive Vice President, or (b) engaging in charitable and
community affairs.
3. Term. The initial term of this Agreement shall be for a period of two
-----
(2) years, commencing on October 1, 1996, and ending on September 30, 1998. On
each quarterly anniversary of the Effective Date while Employee remains Employed
hereunder, such term shall be automatically extended by three months, and shall
continue until Employee's employment hereunder is terminated pursuant to Section
5 hereof (the initial term of this Agreement, as extended by each renewal
period, is hereinafter defined as the "Term").
4. Compensation. For the services rendered by Employee pursuant to
-------------
Section 2 during the Term, the Employee shall be paid the compensation and
receive the benefits as set forth on Exhibit A annexed hereto.
---------
5. Termination of Agreement. The Employee's employment hereunder may be
-------------------------
terminated only as follows:
(a) By the Company Without Cause. The Company may at any time terminate
-----------------------------
the Employee's employment hereunder without Cause, by affirmative vote of a
majority of the entire Board of Directors, and upon no less than ninety (90)
days' prior written notice to the Employee.
(b) By the Employee Without Good Reason. The Employee may at any time
------------------------------------
terminate his employment hereunder for any reason upon no less than thirty (30)
days' prior written notice to the Company; provided; however; Section 5(d)
hereof shall apply in lieu of this Section 5(b) to any termination of employment
by the Employee for Good Reason (as defined therein).
(c) By the Company for Cause. The Company may at any time terminate the
-------------------------
Employee's employment hereunder for Cause. Prior to such event, the Company by
affirmative vote of a majority of the entire Board of Directors shall give the
Employee prompt written notice specifying in reasonable detail the conduct which
is believed to provide the basis for a termination of Employee for Cause. Except
in the event of a termination of Employee pursuant to Section 5(c)(ii) (as to
which the termination shall be immediately effective after receipt of such
letter), within ten (10) business days of the Employee's receipt of such letter,
the Employee shall be provided an opportunity, together with his counsel, to
present and discuss with the Board of Directors the conduct which is asserted to
provide a basis for such purposed for Cause termination. Following such meeting,
if Employee does not, within ten (10) days thereof, take such reasonable steps
as directed by a majority vote of the entire Board of Directors to cease or
correct the conduct which is asserted to provide a basis for such proposed for
Cause termination, the Board of Directors may, by the affirmative vote of a
majority of the entire Board of Directors, terminate the Employee's employment
for Cause. "Cause" shall mean only one or more of the following:
(i) The material breach of this Agreement by Employee, which
breach shall not have been cured by Employee within thirty (30) days after the
Employee's receipt from
2
<PAGE>
the Company at the direction of a majority of the entire Board of Directors of
written notice specifying in reasonable detail the nature of Employee's breach;
(ii) The conviction of Employee for a crime of moral turpitude
or a felony which is materially injurious to the reputation or business of the
Company; and
(iii) Any willful act or acts by Employee which is materially and
demonstrably injurious to the Company (excluding any act ratified or approved by
the Board of Directors of the Company and further excluding any act taken by
Employee in good faith with a reasonable belief that such act was in the best
interests of the Company).
Neither the Employee's participation in or presence at any meeting at which a
for Cause termination is discussed nor the Employee's efforts to cease or cure
any conduct purported to be sufficient basis for a for Cause termination, shall
be considered an admission, acknowledgment or agreement that such conduct does
in fact provide a sufficient basis for a for Cause termination.
(d) By the Employee for Good Reason. The Employee may terminate
--------------------------------
employment hereunder for Good Reason at any time by providing prompt written
notice to the Company within a reasonable time after the occurrence of the
event(s) constituting such Good Reason. For purposes of this Agreement, "Good
Reason" means only one or more of the following:
(i) The material breach of this Agreement by the Company, which
breach shall not have been cured by the Company within thirty (30) days after
the Company's receipt from the Employee or his agent of written notice
specifying in reasonable detail the nature of the Company's breach.
(ii) The required relocation of the Employee out of the Company's
principal executive offices or the Pittsburgh Metropolitan Area without his
specific prior written consent.
(iii) The assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status and
reporting requirements), authority, duties, powers or responsibilities as
contemplated by Section 2 of this Agreement, or any other diminution of such,
authority, duties, position or responsibili ties, excluding for this purpose any
isolated, insubstantial action by the Company not taken in bad faith and which
is remedied by the Company within thirty (30) days after receipt of written
notice from the Employee to the Company that such action will be considered a
Good Reason hereunder unless timely remedied.
(iv) A material increase in Employee's responsibilities,
workload, required hours or travel from that historically required of Employee,
not remedied by the company within thirty (30) days after receipt of written
notice from Employee to the Company that such increase will be considered a Good
Reason hereunder unless timely remedied.
3
<PAGE>
(e) Death. The Employee's employment for all purposes under this
-----
Agreement shall terminate upon his death.
(f) Disability. In the event that the Employee is determined by a
-----------
physician's written evaluation delivered to the Company (i) to be "permanently
and totally disabled" as defined in (S) 22(e)(3) of the Internal Revenue Code of
1986, as amended, the Company may, at its discretion, upon sixty (60) days
notice to the Employee or his guardian, as the case may be, terminate the
Employee's employment hereunder.
(g) Mutual Written Agreement. This Agreement and the Employee's
-------------------------
employment hereunder may be terminated at any time by the mutual written
agreement of the Employee and the Company.
6. Compensation in Event of Termination.
-------------------------------------
(a) Termination by Employee for Good Reason; by Company Without Cause.
------------------------------------------------------------------
In the event that the Employee's employment hereunder is terminated: (i) by the
Company without Cause pursuant to Section 5(a) hereof; or (ii) by the Employee
for Good Reason pursuant to Section 5(d) hereof, then the Company shall pay or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee:
(i) Continuation of full salary, bonuses (including profit
sharing) and benefits (including Automobile Allowance) during the time period
equal to the remaining Term of the Agreement immediately prior to the Employee's
termination (without regard to any future renewals that would have occurred
absent such termination) (the "Termination Period");
(ii) Any other amounts, awards, benefits or other compensation
to which the Employee is or, prior to his termination of employment, was
entitled during the Termination Period under any of the Company's other
compensation plans which to the extent of any vesting dates occurring during the
Termination Period, shall be considered to vest on such date notwithstanding
such termination (unless more quickly vested pursuant to Section 9(b) hereof or
the terms of such plan); and
(iii) Continuing coverage, to the extent not prohibited by law,
during the Termination Period or until comparable benefits are made available to
him in connection with subsequent employment, whichever period is shorter (or,
at Employee's election, for a period of twelve (12) months from the date of
Employee's termination of employment), for the Employee and his eligible
dependents under all of the Company benefit plans in effect and applicable to
Employee and his eligible dependents as of the date of termination. In the event
that the Employee and/or his eligible dependents, because of the Employee's
terminated status, cannot be covered or fully covered under any or all of the
Company benefit plans, the Company shall continue to provide the Employee and/or
his eligible dependents with the same level of such coverage in effect prior to
termination, on an unfunded basis if necessary.
(b) Termination for Cause by the Company. In the event that the Company
-------------------------------------
shall terminate the Employee's employment hereunder for Cause pursuant to
Section 5(c), this
4
<PAGE>
Agreement shall forthwith terminate and the obligations of the parties hereto
shall be as set forth in Section 9 hereof.
(c) Termination by Employee Without Good Reason. In the event that the
--------------------------------------------
Employee shall terminate employment hereunder (other than for Good Reason)
pursuant to Section 5(b) hereof, this Agreement shall forthwith terminate and
the obligations of the parties hereto shall be as set forth in Section 9 hereof.
(d) Death. In the event of the death of the Employee, then the Company
------
shall pay (or cause to be paid), within thirty (30) days of such death, or
provide in the same manner as before the Employee's death, as applicable, the
following compensation and benefits to the estate of the Employee, or the
Employee's personal representative, or to those individuals designated in a
writing delivered to the Company by the Employee prior to his death;
(i) A lump sum payment equal to the sum of (A) the Employee's
highest annual Base Salary; (B) the Employee's highest annualized Automobile
Allowance; and (C) the Employee's highest award under the Company's Profit
Sharing Plan, in each case, for any of the three years preceding the date of
such termination (the "Lump Sum Amount"); and
(ii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's death for the
Employee's eligible dependents under all of the Company Benefit Plans in effect
and applicable to Employee and his eligible dependents as of the date of death.
In the event that such eligible dependents, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(e) Disability. In the event that the Company elects to terminate the
-----------
Employee's employment hereunder pursuant to Section 5(f), then the Company shall
pay (or cause to be paid) within thirty (30) days of the such termination or
provide in the same manner as before termination, as applicable, the following
compensation and benefits to the Employee or his personal representative:
(i) All amounts as the Employee is entitled to under the
Company's disability policy and program applicable to Employee;
(ii) Sixty percent (60%) of Employee's then current Annual Base
Salary; and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twelve (12) months from the date of Employee's termination or
until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company Benefit Plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and his eligible dependents, because
of the Employee's terminated status, cannot be covered or fully covered under
any or all of the Company benefit plans, the Company
5
<PAGE>
shall continue to provide the Employee and/or his eligible dependents with the
same level of such coverage in effect prior to termination, on the unfunded
basis if necessary.
(f) Mutual Written Consent. In the event that the Employee and the
-----------------------
Company shall terminate the Employer's employment by mutual written agreement,
the Company shall pay such compensation and provide such benefits, if any, as
the parties may mutually agree upon in writing.
The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking employment or otherwise, nor shall any
amounts received from employment, insurance or otherwise by the Employee offset
or reduce in any manner the obligations of the Company hereunder.
7. Change in Control.
------------------
(a) Definition. For purposes of this Agreement, the term "Change of
-----------
Control" shall mean the occurrence of any of the following events:
(i) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group of
purchasers, other than to a person with respect to which, following such sale or
disposition, more than eighty percent (80%) of, respectively, the then
outstanding shares of Company common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors (herein, "voting securities") is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding Company common stock and
the combined voting power of the then outstanding voting securities immediately
prior to such sale or disposition in substantially the same proportion as their
ownership of the outstanding Company common stock and voting securities
immediately prior to such sale or disposition;
(ii) The acquisition in one or more transactions by any person
or group, directly or indirectly, of beneficial ownership of twenty-five percent
(25%) or more of the outstanding shares of Company common stock or the combined
voting power of the then outstanding voting securities of the Company; provided,
however, that any acquisition by (x) the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (y) the Employee or any other person who is
a director or executive officer of the Company as of the date hereof, or (z) any
person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as
such rule is in effect as of January 1, 1995), to file a statement on Schedule
13G with respect to its beneficial ownership of Company common stock or other
voting securities whether or not such person shall have filed a statement on
Schedule 13G, unless such person shall have filed a statement on Schedule 13D
with respect to beneficial ownership of 15 percent (15%) or more of the Company
voting securities, shall not constitute a Change of Control;
(iii) The Company's termination of its business and liquidation
of its assets;
6
<PAGE>
(iv) The reorganization, merger or consolidation of the Company
into or with another person or entity, by which reorganization, merger or
consolidation the persons who held one hundred percent (100%) of the voting
securities of the Company prior to such reorganization, merger or consolidation
receive less than fifty-two percent (52%) of the outstanding voting securities
of the new or continuing corporation(s); or
(v) If, on any Testing Date , less than a majority of the
members of the Board of Directors are persons who were either (A) nominated or
recommended for election by at least a two-thirds vote of those persons who were
members of the Board of Directors or Nominating Committee of the Board of
Directors two years prior to the Testing Date, or (B) elected by the Board of
Directors, including at least a two-thirds vote in favor of such election by the
persons who were members of the Board of Directors two years prior to the
Testing Date.
For the purpose of paragraph (v), each change in the composition of the members
of the Board of Directors during employee's employment hereunder and for six (6)
months thereafter, shall be considered a Testing Date.
(b) Payment Following Change in Control. In the event that the
------------------------------------
Employee's employment hereunder is terminated (other than for cause, death,
disability or pursuant to Section 5(c), (e) or (f), respectively) within twelve
(12) months prior to or within twenty-four (24) months following a Change in
Control, then, at Employee's sole election, in lieu of any compensation or
benefits owed to Employee pursuant to Section 6 of this Agreement, the Company
shall pay or provide the following compensation and benefits to Employee:
(i) A lump sum payment equal to two times Employee's then
current annual Base Salary (reduced by any amounts previously paid pursuant to
Section 6);
(ii) Any other amounts, awards, benefits or other compensation
to which the Employee is or, prior to his termination of employment, was
entitled during the Termination Period under any of the Company's other
compensation plans, which to the extent of any vesting dates occurring during
the Termination Period, shall be considered to vest on such date notwithstanding
such termination (unless more quickly vested pursuant to Section 9(b) hereof or
the terms of such plans); and
(iii) Continuing coverage, to the extent not prohibited by law,
for a period of twenty-four (24) months from the date of Employee's termination
or until comparable benefits are made available to him in connection with
subsequent employment, whichever period is shorter, for the Employee and his
eligible dependents under all of the Company benefit plans in effect and
applicable to Employee and his eligible dependents as of the date of
termination. In the event that the Employee and/or his eligible dependents,
because of the Employee's terminated status, cannot be covered or fully covered
under any or all of the Company benefit plans, the Company shall continue to
provide the Employee and/or his eligible dependents with the same level of such
coverage in effect prior to termination, on an unfunded basis if necessary.
(c) Alternative Payment Following Change in Control. If the Employee
------------------------------------------------
does not elect to receive the compensation and benefits set forth in paragraph
(b), the Employee shall receive the compensation and benefits set forth in
Section 6(a) with respect to such termination.
7
<PAGE>
8. Expenses. Employee will be reimbursed all reasonable, ordinary and
---------
necessary business expenses, including expenses for entertainment, travel and
similar items that are approved by the Company. The Company will reimburse
Employee for all expenses upon a presentation of Employee of itemized accounts
of such expenditures in accordance and in the manner in a form reasonably
described by the Company.
9. Effect of Termination. Upon the termination of the Employee's
----------------------
employment hereunder, neither the Company nor the Employee shall have any
remaining duties or obligations hereunder except that:
(a) the Company shall:
(i) Pay the employee's accrued salary and any other accrued
benefits for all periods ending on or prior to the date of termination under
Sections 4 hereof or Exhibit A annexed hereto;
---------
(ii) Reimburse the Employee for expenses incurred in accordance
with Section 8 hereof for all periods ending on or prior to the date of
termination;
(iii) Pay or otherwise provide for any benefits, payments or
continuation or conversion rights in accordance with the provisions of any
Company benefit plan of which the Employee or any of his dependents is or was a
participant or as otherwise required by law;
(iv) Pay all compensation previously deferred by Employee and
not yet paid by Company (together with interest, if any, thereon) and any other
accrued benefits, including accrued vacation pay not yet paid by the Company;
(v) Pay the Employee and his beneficiaries any compensation or
provide the Employee or his eligible dependents any benefits due pursuant to
Sections 6 or 7 hereof or Exhibit A annexed hereto.
---------
(b) Unless the employment of the Employee is terminated for Cause
pursuant to Section 5(c) or by the Employee without Good Reason pursuant to
Section 5(d), the vesting period and other restrictions shall lapse for all
stock options or other stock awards previously granted to the Employee by the
Company and all such stock awards shall be deemed to be fully vested. In such
case, the Company shall extend the option exercise period to the third
anniversary of the date of the Employee's termination for all such options held
by the Employee as of the date of the termination of his employment hereunder.
(c) Except in the event of Employee's termination of his employment
hereunder for Good Reason pursuant to Section 5(d) or by the Company without
Cause pursuant to Section 5(a), or by mutual agreement upon any other
termination, the Employee shall remain bound by the terms of Section 10(a)
hereof, and, in any event, Employee shall remain bound by the terms of Section
10(b)-(d) hereof.
8
<PAGE>
(d) The Company shall be authorized to withhold from any payment to the
Employee, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable law or regulation.
10. Restrictions. The Company has invested and will continue to invest
-------------
considerable resources in the development of its business and in the research,
development and design of its activities and their delivery, which investment
has or will result in the generation of proprietary, confidential and/or trade
secret data, information, techniques and materials, both tangible and
intangible, which are owned by the Company.
(a) The Employee agrees that during the Term, and except in the event
of Employee's termination of his employment hereunder for Good Reason or by the
Company without Cause, for a period of two (2) year from the date of the
termination of the Employee's employment hereunder, he will not directly or
indirectly (i) engage in mobile magnetic resonance imaging business (the
"Company Business") within one hundred fifty (150) miles of any location then
serviced by the Company; (ii) compete or participate as agent, employee,
consultant, advisor, representative or otherwise in any enterprise engaged in a
business which has any material operations engaged in a business competitive
with the Company Business within one hundred fifty (150) miles of any location
then serviced by the Company; or (iii) compete or participate as a stockholder,
partner or joint venturer, or have any direct or indirect financial interest, in
any enterprise which has any material operations engaged in a business
competitive with the Company Business within one hundred fifty (150) miles of
any location then serviced by the Company; provided, however, that nothing
contained herein shall prohibit the Employee from (A) owning, operating and
managing and continuing to own, operate and manage the investments and
businesses owned, operated or managed by Employee on the date hereof; (B)
owning, operating or managing any business, or acting upon any business
opportunity after obtaining approval of a majority of the Board of Directors of
the Company and a majority of the independent members of the Board of Directors
of the Company (if any); or (C) owning no more than five percent (5%) of any
publicly-traded corporation with respect to which Employee does not serve as an
officer, director, employee, consultant or in any other capacity other than as
an investor.
(b) The Employee shall abide by and be bound as part of the employment
relationship created by this Agreement to comply with the provisions regarding
confidential information, attached as Exhibit B annexed hereto.
---------
(c) To the extent the Employee develops, makes, conceives, contributes
to or reduces to practice any intellectual property related to the duties of the
Employee hereunder or which results in any way from the Employee using the
resources of the Company, such intellectual property is and shall be the sole
and exclusive property of the Company. Accordingly, the Employee shall abide by
and be bound to comply with the provisions regarding ownership of intellectual
property, attached as Exhibit C annexed hereto.
---------
(d) During the Term, except in the event of Employee's termination of
his employment hereunder for Good Reason pursuant to Section 5(d) or by the
Company without cause pursuant to Section 5(a) and for an additional period of
two (2) year immediately following termination of the Employee's employment with
the Company, he shall abide by and be bound to
9
<PAGE>
comply with the additional restrictive covenants of the Company attached as
Exhibit D annexed hereto.
- ---------
(e) Employee agrees and acknowledges that the compensation due to him
hereunder shall be full and adequate consideration for the Employee's agreement
to the foregoing restrictions.
Nothing in this Section 10 is intended to enhance or increase the rights
otherwise available to the Employee in respect of an unlawful act or omission by
the Company.
11. Acknowledgement. The Employee acknowledges that the restrictions set
----------------
forth in Section 10 hereto are reasonable in scope and essential to the
preservation of the Company's business and proprietary properties and that the
compensation paid to him pursuant to paragraph 10(e) fully compensates him for
accepting such restrictions. The Company acknowledges that the compensation
paid to the Employee pursuant to paragraph 10(e) is a reasonable payment for his
acceptance of the restrictions in Section 10.
12. Severability. The covenants of the Employee contained in Section 10
-------------
hereto shall be construed as an agreement independent of any other provision in
this Agreement and the existence of any claim or cause of action of the Employee
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
If, at the time of enforcement, any sentence, paragraph, clause, or combination
of the same of such independent agreement in Section 10 is in violation of the
law of any state where applicable, such sentence, paragraph, clause, or
combination of the same shall be void in the jurisdictions where it is unlawful,
and the remainder of such paragraph in Section 10 shall remain binding on the
parties. In the event that any part of any covenant of Section 10 is determined
by a court of law to be overly broad thereby making the covenant unenforceable,
the parties agree that such court shall substitute a judicially enforceable
limitation in its place, and that as so modified, the covenants shall be binding
upon the parties as if originally set forth in this Agreement.
13. Notices. All notices and other communications hereunder shall be in
--------
writing and shall be deemed to have been given if delivered personally or sent
by registered or certified mail (return receipt requested), postage prepaid, or
by telecopy (immediately followed by telephone confirmation of delivery of such
telecopy with the intended recipient of such notice and by notice in writing
sent promptly by registered or certified mail as provided above) to the parties
to this Agreement at the following addresses or at such other address for a
party as shall be specified by like notice:
To the Company:
SMT Health Services Inc.
10521 Perry Highway
Wexford, Pennsylvania 15090
(412) 933-3300
(412) 933-3311 (facsimile)
10
<PAGE>
With a copy to:
Ronald Basso, Esquire
Buchanan Ingersoll Professional Corporation
One Oxford Center
20th Floor, 301 Grant Street
Pittsburgh, Pennsylvania 15219
(412) 562-3943
(412) 562-1041 (facsimile)
To the Employee:
David Zynn
5011 Karrington Drive
Gibsonia, Pennsylvania 15004
(412) 443-7567
With a copy to:
Steven M. Cherin, Esquire
Gefsky and Lehman, P.C.
2301 One PPG Place
Pittsburgh, Pa 15222
(412) 391-2727
(412) 391-1685 (facsimile)
All such notices and communications shall be deemed to have been received on the
date of personal delivery, on the date that the telecopy is confirmed as having
been received or on the third business day after the mailing thereof, as the
case may be.
14. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
its choice of law provisions.
15. Severability. If any provision of this Agreement is held to be
-------------
illegal, invalid or unenforceable under present or future laws effective during
the Term, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be effected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to the
illegal, invalid or unenforceable provision as may be possible and still be
legal, valid or enforceable. The lack of deductibility or recharacterization
for tax or accounting purposes, or the imposition of any excise taxes or
penalties, fines or other charges, or imposition of any injunction or similar
restraint against the Company with respect to the payment of any amount or
provision of any benefit hereunder, shall not be construed to make the
provisions of this Agreement providing for such payment or provision "illegal,
invalid or unenforceable", nor in
11
<PAGE>
any manner reduce the entitlement of the Employee, or his successor or assign to
receive such payment or benefit.
16. Recharacterization of Payments. To the extent that, but for this
-------------------------------
Section 16, any payment or benefit hereunder is determined by the Company's
outside auditors, Internal Revenue Service, or by any court of component
jurisdiction to be an "Excess Parachute Payment" as defined in Section 280G
(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), such
amount as may be necessary to preclude any such payment or benefit from being
considered an "Excess Parachute Payment" shall be recharacterized and shall
constitute an unsecured, long-term loan from the Company to the Employee, his
personal representative, his successors or assigns, as the case may be, payable
together with accrued interest on the tenth anniversary of the payment of such
recharacterized payment or the receipt of such recharacterized benefit, with
interest at the Applicable Federal Rate for loans in excess of nine years, as
defined in Section 1274 of the Code, on such principal amount. Such loan shall
be evidenced by a promissory note in the form attached hereto as Exhibit E.
---------
17. Indemnification. The Company agrees to indemnify the Employee to the
----------------
fullest extent permitted by law for his services to, or on behalf of the
Company, as an Employee hereunder, as a director and in any and every other
capacity in which he may serve the Company or its interests. In furtherance of
such agreement to indemnify, but no by way of limitation, the terms of the
Company's Certificate of Incorporation and By-Laws providing for such
indemnification and payment of expenses, as in effect on the date hereof (and,
which are attached hereto as Exhibit F), are hereby incorporated by reference as
---------
if fully stated herein. Additionally, the provisions of Exhibit G shall
supplement such provisions. For the purpose of this Agreement, any amendment to
said Certificate of Incorporation or By-Laws shall not be effective to reduce,
qualify or otherwise limit the scope, benefit or enforceability of this
provision; provided, however, if any such amendment extends or improves the
-------- -------
scope, benefit or enforceability of the indemnification and payment of expenses
contained in such By-Laws for any officer, director, employee or agent, such
extended or improved provisions shall be deemed to be incorporated by reference
herein for the benefit of the Employee without any further action by the Company
or the Employee.
18. Arbitration. Except as otherwise provided herein, in the event of any
------------
controversy, dispute or claim arising out of, or relating to, this Agreement, or
the breach thereof, or arising out of any other matter relating to the
Employee's employment with the Company or the termination of such employment,
the parties may seek recourse only for temporary or preliminary injunctive
relief to the courts having jurisdiction thereof and if any relief other than
injunctive relief is sought, the Company and the Employee agree that such
underlying controversy, dispute or claim shall be settled by arbitration
conducted in Pittsburgh, Pennsylvania, in accordance with this Section 16 of the
Agreement and the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). The matter shall be heard and decided, and awards
rendered, by a panel of three (3) arbitrators (the "Arbitration Panel") each of
which shall have at least ten (10) years' experience in executive compensation
and employment matters. The Company and the Employee shall each select one
qualified arbitrator from the AAA National Panel of Commercial Arbitrators (the
"Commercial Panel") and AAA shall select a third qualified arbitrator from the
Commercial Panel. The award rendered by the Arbitration Panel shall be final
and binding as between the parties hereto and their heirs, executors,
administrators, successors and assigns, and judgment on the award may be entered
by any court having jurisdiction thereof.
12
<PAGE>
19. Entire Agreement. This Agreement sets forth the entire understanding
-----------------
of the parties with respect to the matters specified herein. No other terms or
conditions and no amendments or modifications shall be binding unless made in
writing and signed by the parties hereto. Upon execution and delivery by both
parties of this Agreement, the parties agree that the Employee Agreement dated
as of March 1, 1995, shall terminate without further obligation to either party.
20. Binding Effect. This Agreement shall be binding upon the parties
---------------
hereto and shall inure to the benefit of such parties, their respective heirs,
representatives, successors and permitted assigns. This Agreement may not be
assigned by the Employee nor may it be assigned by the Company without the
Employee's consent.
21. Expenses. The Company shall bear the costs of all its expenses
---------
associated with the creation, negotiation and execution of this Agreement,
including the fees of its counsel and of any consultant retained by the Company
to advice the Board of Directors with respect to the terms and conditions of
this Agreement. Employee shall bear the cost of all of his expenses in
connection therewith, including his counsel fees. The Company shall bear the
full cost of each arbitrator selected pursuant to Section 16 hereof with respect
to any dispute hereunder. Otherwise, each party shall pay their individual
expenses with respect to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
SMT HEALTH SERVICES INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
EMPLOYEE:
---------------------------------------------
David Zynn
13
<PAGE>
Exhibit 10.05
DVI FINANCIAL SERVICES INC.
MASTER EQUIPMENT LEASE
LESSOR: ("Master Lease") LEASE NO. 0001357
----------
DVI Financial Services Inc.
500 Hyde Park DATE: August 28, 1996
Doylestown, PA 18901 -----------------
Telephone (215) 345-6600
LESSEE:SMT Health Services Inc.
BILLING ADDRESS: EQUIPMENT ADDRESSES:
1200 Johnie Dodds Boulevard
10521 Perry Highway Mount Pleasant, SC 29464
Wexford, PA 15090 510 South Mill Street
Manning, SC 29102
501 Robertson Boulevard
Walterboro, SC 29488
TERMS AND CONDITIONS
1. LEASE.
Lessor leases to Lessee, and Lessee hires from Lessor, all of the tangible
personal property (with all present and future accessories, additions, upgrades,
attachments, repairs and replacement parts, collectively called "Equipment")
described in each equipment schedule executed from time to time pursuant to this
Master Lease ("Equipment Schedule"). Each Equipment Schedule shall (a) be on
Lessor's form, (b) incorporate all of the terms of this Master Lease, and (c)
contain additional terms as Lessor and Lessee agree.
2. TERM.
(a) The term of this Master Lease shall begin on the date set forth above
and shall continue in effect so long as any Equipment Schedule remains in
effect.
(b) The lease term for each Equipment Schedule shall begin on the date of
shipment to Lessee of the Equipment (or any part thereof) described in such
Equipment Schedule or such later date as Lessor may designate in writing (the
"Commencement Date"), and shall continue thereafter for the term set forth in
such Equipment Schedule. On the Commencement Date, Lessee shall execute and
deliver to Lessor a Delivery and Acceptance Certificate, in a form to be
specified by Lessor, which confirms the Commencement Date.
(c) THIS LEASE AND THE LEASE TERM FOR EACH EQUIPMENT SCHEDULE ARE NOT
CANCELABLE BY LESSEE.
3. RENT AND PAYMENT.
Lessee shall pay Lessor, as rental for the Equipment during each month of
the term of any Equipment Schedule, the monthly rent set forth in such Equipment
Schedule, together with any and all monthly rent payable pursuant to Section
8(a) hereof in connection with any accessions, additions, upgrades with
attendant maintenance contracts, and improvements to any of the Equipment, which
shall be payable in advance without notice or demand on the dates set forth in
such Equipment Schedule. Lessee agrees to pay interim rent in an amount equal to
the pro rata periodic monthly rent from the Commencement Date to the first
regular monthly periodic rent payment date. Thereafter, the regular periodic
rent shall be due on the first day of each succeeding period commencing with the
first day of the month following the Commencement Date as set forth on the
Equipment Schedule. Lessee shall pay the monthly rent and all other money due
under this Master Lease or any Equipment Schedule by check or wire transfer so
as to constitute immediately available funds at Lessor's address set forth above
or at such other place as Lessor shall designate in writing, or if to an
assignee of Lessor, at such place as such assignee shall designate in writing,
and Lessee shall make such payments free and clear of all claims, demands or
setoffs against Lessor or such assignee. Whenever any payment (of rent or
otherwise) is not made within three (10) business days from the date due
hereunder, Lessee shall pay Lessor a late charge of five percent (5%) of any
payment not paid when due, plus the lesser of eighteen percent (18%) interest
per year or the highest lawful rates on such payment until received, or such
lesser maximum amount as is permitted by applicable law. In addition, Lessor at
its option may require at any time that Lessee make all payments due hereunder
or under any Equipment Schedule by certified check or by wire transfer.
4. REQUEST FOR EQUIPMENT.
Lessee requests Lessor to order the Equipment described in any Equipment
Schedule executed by Lessee from the supplier named in such Equipment Schedule,
to arrange for delivery to Lessee at Lessee's expense, and to pay for the
Equipment as provided in such Equipment Schedule. Lessee acknowledges and agrees
that: (a) Lessee has independently selected the supplier and the Equipment, and
that Lessor will rely on specifications provided by Lessee in ordering the
Equipment; (b) Lessee shall be responsible for all costs and expenses relating
to the selection, shipment, delivery, assembly, installation, testing,
adjusting, servicing, operation and acceptance of the Equipment; (c) unless the
Equipment Schedule otherwise provides, Lessor's payment to the supplier will
occur only after Lessee has confirmed (on Lessor's Delivery and Acceptance
Certificate) satisfactory delivery, assembly, installation, inspection and
acceptance of the Equipment; (d) Lessor shall have no responsibility for any
delay, failure or refusal on the part of any supplier to accept or fill Lessor's
order; (e) upon Lessee's acceptance of Equipment, Lessee shall execute Lessor's
Delivery and Acceptance Certificate; (f) Lessor has the option to terminate any
Equipment Schedule and all obligations to Lessee under such Equipment Schedule,
and to recover from Lessee any deposit paid by Lessor to the supplier, if the
Equipment described in such Equipment Schedule has not been delivered,
assembled, installed and accepted by Lessee within 60 days from the date that
Lessor orders the Equipment; (g) no supplier is Lessor's agent, or authorized to
bind Lessor or waive or alter any provision of this Master Lease or any
Equipment Schedule; and (h) if Lessee cancels this Master Lease after execution
of such but prior to the Lessee's execution of the Delivery and Acceptance
Certificate, Lessor may withhold and keep any deposits or funds paid by Lessee
to Lessor.
5. EQUIPMENT SELECTION; DISCLAIMER OF WARRANTIES; WAIVERS.
(a) Lessee acknowledges, represents and warrants that Lessee has made the
selection of Equipment based on Lessee's own judgment, and expressly disclaims
any reliance upon statements made by Lessor or Lessor's agents, employees or
salespersons.
(b) LESSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE CAPACITY, CONDITION, DESIGN, DURABILITY, MATERIAL, MERCHANTABILITY,
PERFORMANCE, QUALITY, SUITABILITY, WORKMANSHIP OR VALUE OF THE EQUIPMENT OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE OR THAT THE EQUIPMENT WILL SATISFY THE
REQUIREMENTS OF ANYLAW, RULE, REGULATION, SPECIFICATION OR CONTRACT, OR ANY
OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT
TO THE EQUIPMENT OR ANY ASSOCIATED ITEM OR ANY ASPECT THEREOF. AS TO THE LESSOR,
LESSEE LEASES THE EQUIPMENT "AS IS".
(c) Lessee acknowledges that (i) Lessor is neither the manufacturer of the
Equipment nor a manufacturer's agent, supplier or dealer, and has no familiarity
with the Equipment; and (ii) Lessor shall have no obligation to assemble,
install, test, adjust or service the Equipment.
(d) Lessor shall not be liable, to Lessee or otherwise, to any extent
whatsoever, for the selection, quality, condition, merchantability, suitability,
fitness, operation or performance of the Equipment. Without limiting the
generality of the foregoing, Lessor shall not be liable, to Lessee or otherwise,
for any liability, claim, loss, damage or expense of any kind or nature
(including strict negligent liability in tort) caused, directly or indirectly,
by the Equipment or any inadequacy thereof for any purpose, or any deficiency or
defect therein, or the use or maintenance thereof, or any repairs, servicing or
adjustments thereto; or any delay in providing or failure to provide any part
thereof, or any interruption or loss of service thereof, or any loss of
business, or any damage whatsoever and howsoever caused.
(e) REGARDLESS OF CAUSE, LESSEE WILL NOT ASSERT ANY CLAIM WHATSOEVER
AGAINST LESSOR FOR LOSS OF ANTICIPATORY PROFITS OR ANY OTHER INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND
EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF LIABILITY,
DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES, IS INTENDED BY THE PARTIES TO
BE SEVERABLE FROM ANY OTHER PROVISION AND IS A SEPARABLE AND INDEPENDENT ELEMENT
OF RISK ALLOCATION AND IS INTENDED TO BE ENFORCED AS SUCH.
(f) If the Equipment fails to comply with any representation or warranty
made by the supplier or manufacturer thereof, or is defective or improperly
assembled or installed or otherwise unsatisfactory for any reason, Lessee shall
make claim on account thereof against the supplier or manufacturer thereof, and
Lessee shall nevertheless pay all rent and perform all other obligations under
this Master Lease and all Equipment Schedules without asserting any claim
against Lessor. Lessor hereby assigns to Lessee, without recourse and solely for
the purpose of prosecuting such a claim, all rights that Lessor may have against
the supplier and manufacturer of Equipment for breach of warranty or other
representations with respect to the Equipment; provided, however, that this
assignment shall not preclude Lessor, in its sole discretion, from asserting and
prosecuting such a claim. Lessee shall indemnify and hold Lessor harmless from
and against any and all claims, costs, expenses, damages, losses and liabilities
incurred or suffered by Lessor as a result or incident to any such action by
Lessee for breach of warranty or other representations with respect to the
Equipment.
(g) Lessor makes no representation or warranty as to the treatment of this
Master Lease or any Equipment Schedule for tax or accounting purposes or
otherwise.
(h) Lessee hereby waives its rights and remedies under Pennsylvania
Commercial Code Section 10508 through 10522 with respect to Lessee's right to
cancel any Equipment Schedule, reject any of the Equipment, recover damages or
any other rights and remedies provided thereunder in connection with any default
by Lessor or any other circumstances therein provided.
6. TITLE AND ASSIGNMENT.
(a) Nothing contained in this Master Lease, or in any Equipment Schedule,
shall give or convey to Lessee any right, title or interest in or to the
Equipment, or any additions, upgrades, accessions, or improvements thereto,
except as a Lessee as set forth in this Master Lease and such Equipment
Schedule, and Lessee represents and agrees that Lessee shall hold the Equipment
subject and subordinate to the rights of the owner thereof. The Equipment is
and at all times shall remain the property of Lessor (or Lessor's successor in
interest), and except as expressly set forth in this Master Lease or any
Equipment Schedule, Lessee shall have no right, title, equity or interest in the
Equipment and no right or option to purchase or otherwise acquire title to or
ownership of the Equipment. Lessee shall, at Lessee's sole cost and expense:
(i) defend and protect the ownership of, title to, and interest in the Equipment
of Lessor, Lessor's successors in interest, and any assignee or secured party,
against all parties claiming against or through Lessee; (ii) keep the Equipment
free and clear from any legal process, liens, claims, demands and encumbrances
(except those incurred by Lessor); and (iii) give Lessor prompt written notice
of any legal process, liens, claims, demands and encumbrances made by any party
(except Lessor) with respect to the Equipment. Lessee shall, and Lessor may on
behalf of Lessee, at Lessee's expense, execute and file such financing
statements, applications for registration and other documentation as Lessor
shall require for the purpose of protecting or perfecting the interest of
Lessor, or any assignee, transferee or secured party, in the Equipment.
(b) Lessee shall, at Lessee's expense, affix to the Equipment such labels,
signs or other devices as Lessor may supply to identify Lessor as the owner and
Lessor of the Equipment. Lessee authorizes Lessor to insert in any Equipment
Schedule and in any financing statement or other documents the serial numbers
and other identification data of the Equipment when determined by Lessor. The
Equipment is and at all times shall remain personal property regardless of any
attachment or affixation of the Equipment to any real property or improvements
thereon.
(c) LESSEE SHALL NOT, WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, (i) ASSIGN
THIS MASTER LEASE OR ANY EQUIPMENT SCHEDULE OR ANY INTEREST HEREIN OR
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THEREIN, (ii) ENTER INTO ANY SUBLEASE, LOAN OR SIMILAR ARRANGEMENT WITH RESPECT
TO THE EQUIPMENT, OR (iii) TRANSFER, ASSIGN, CONVEY, ENCUMBER, PLEDGE OR
OTHERWISE DISPOSE OF ANY EQUIPMENT OR ANY INTEREST THEREIN; AND ANY ATTEMPT BY
LESSEE TO DO ANY OF THE FOREGOING WITHOUT LESSOR'S PRIOR WRITTEN CONSENT SHALL
BE VOID.
(d) Lessee shall keep, maintain and use the Equipment only at the place
designated on the Equipment Schedule, and shall not move the Equipment to any
other location without the Lessor's prior written consent.
(e) This Master Lease and any rights of Lessor hereunder and under any
Equipment Schedule shall be assignable by Lessor without notice to or the
consent of Lessee. Lessee acknowledges and understands that the terms and
conditions of each Equipment Schedule have been fixed by Lessor in anticipation
of Lessor's ability to sell and assign its interest or grant a security interest
under each Equipment Schedule and the Equipment listed therein in whole or in
part to a security assignee (the "Secured Party") for the purpose of either
assigning: (i) Lessee's obligation to pay rent pursuant to such Equipment
Schedule (Lessor having transferred the right to receive such rent to the
Secured Party), or (ii) securing a loan to Lessor. Lessor may also sell and
assign its rights as owner and lessor of the Equipment under any Equipment
Schedule to an assignee (the "Assignee") which may be represented by a bank or a
trust company acting as a trustee (the "Owner Trustee") for the Assignee. After
such assignments the term Lessor shall mean, as the case may be, such Assignee
or Owner Trustee and any Secured Party (collectively "Lessor Transferee").
Lessee acknowledges and agrees that:
(1) Any such Lessor Transferee shall have and be entitled to exercise any and
all discretion, rights and powers of Lessor hereunder or under any Equipment
Schedule, but such Lessor Transferee shall not be obligated to perform any of
Lessor's obligations hereunder or under any Equipment Schedule; provided,
however, that such Lessor Transferee shall not disturb Lessee's quiet and
peaceful possession of the Equipment and use thereof for its intended purpose
during the terms hereof so long as Lessee is not in default of any provision
hereof and such Lessor Transferee continues to timely receive all amounts of
rent payable under such Equipment Schedule;
(2) Lessee will pay all rent and any and all other amounts payable by Lessee
under any Equipment Schedule to such Lessor Transferee, notwithstanding and
Lessee hereby waives any defense or claim of whatever nature, whether by reason
of breach of such Equipment Schedule or otherwise, which Lessee may or might now
or hereafter have as against Lessor or any prior Lessor Transferee (Lessee
reserving its right to have recourse directly against Lessor on account of any
such defense or claim); and
(3) Subject to and without impairment of Lessee's leasehold rights in and to
the Equipment, Lessee holds the Equipment for such Lessor Transferee to the
extent of such Lessor Transferee's rights therein.
7. NET LEASE, TAXES AND FEES.
(a) Lessor and Lessee acknowledge and agree that each Equipment Schedule
constitutes a net lease and that Lessee's obligation to pay all rent and any and
all amounts payable by Lessee under any Equipment Schedule shall be absolute and
unconditional, and shall not be subject to any abatement, reduction, setoff,
defense, counterclaim, interruption, deferment or recoupment for any reason
whatsoever; and that such payments shall be and continue to be payable in all
events.
(b) Lessee shall, at Lessee's sole cost and expense and in addition to the
rent due under any Equipment Schedule, promptly pay all taxes, assessments,
license fees, permit fees, registration fees, fines, interest, penalties and all
other governmental charges (including without limitation income, gross receipts,
sales, use, excise, personal property, ad valorem, stamp, documentary and other
taxes), whether levied, assessed or imposed on Lessee, Lessor, the Equipment or
otherwise, relating to the Equipment or the delivery, leasing, operations,
ownership, possession, purchase, registration, rental, sales or use thereof
during the term of any Equipment Schedule, or the interest of Lessee in the
Equipment or under any Equipment Schedule, or the rental or other payments
thereunder or earnings arising therefrom (excepting only taxes on Lessor's net
income). Lessee shall file all returns required in connection therewith and
shall promptly furnish copies to Lessor. Lessee shall reimburse Lessor for any
such taxes paid by Lessor within ten (10) days of receipt of Lessor's invoice
therefor. Any applicable sales tax will be paid to the manufacturer,
manufacturer's agent, supplier, dealer or appropriate taxing agency by Lessor.
Where applicable, Lessee acknowledges that such tax may have been included in
calculating lease payments.
8. CARE, USE, MAINTENANCE AND REPAIR, AND INSPECTION BY LESSOR.
(a) Lessee shall, at Lessee's sole expense, at all times during the term of
each Equipment Schedule and until return of the Equipment to Lessor, (i)
maintain the Equipment in good operating order, repair, condition, appearance
and protect the Equipment from deterioration, and provide all accessories,
upgrades, repairs, replacement parts and service required therefor; (ii) enter
into and maintain a maintenance contract with the manufacturer of the Equipment
or, with the prior written consent of Lessor, with such other party as shall be
acceptable to Lessor, and shall provide Lessor with a copy of such contract and
all supplements thereto; (iii) use the Equipment in a careful, proper and lawful
manner in accordance with standards, specifications or instructions issued by
the manufacturer, and provide necessary site preparation, supplies, energy and
personnel; (iv) comply with all the laws, ordinances, rules, regulations and
other requirements relating to the installation, possession, use or maintenance
of the Equipment, including the requirements of any applicable insurance policy
or warranty; (v) obtain and comply with the requirements of all permits,
licenses and agreements relating to the installation, possession, use or
maintenance of the Equipment; and (vi) purchase, or permit Lessor to purchase,
any and all additions, improvements, upgrades (as and when any upgrades may
become available) and maintenance contracts associated with such upgrades, or
accessions to any of the Equipment which Lessor may permit or require Lessee to
acquire or which Lessor may, at its option, elect to acquire, with the cost of
any and all such additions, improvements, upgrades, maintenance contracts or
accessions to be treated as additional original equipment cost with respect to
the applicable items of Equipment and which additional cost shall be amortized
as additional rental payments by increasing the monthly rental amount payable
under Section 3 hereof by the amount corresponding to the amount which would be
payable as monthly rent hereunder as if such additional cost constituted a
portion of the original equipment cost of the applicable Equipment for Equipment
to be leased under the applicable Equipment Schedule for a term equal to the
remaining lease term of the applicable Equipment Schedule.
(b) Unless Lessor otherwise consents in writing, Lessee shall not: (i) part
with possession of or control over the Equipment; (ii) permit any party other
than Lessee and Lessee's qualified employees to operate the Equipment; (iii)
permit any nonqualified party to repair or service the Equipment; (iv) permit
the Equipment to be used for personal, family, household or agricultural
purposes; or (v) make any additions, alterations orimprovements to the Equipment
other than as required or permitted by the terms of this Master Lease. All
repairs, replacement parts, alterations, additions, improvements, upgrades and
accessions to any of the Equipment, whether or not any of the foregoing was
authorized, required, financed or purchased by Lessor, shall become the property
of Lessor.
(c) Upon the request of Lessor, Lessee shall at reasonable times during
business hours make the Equipment available to Lessor for inspection at the
place where it is normally located and shall make Lessee's log and maintenance
records pertaining to the Equipment available to Lessor for inspection.
9. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee hereby represents, warrants and agrees that, with respect to this
Master Lease and each Equipment Schedule:
(a) The execution, delivery and performance thereof by Lessee have been
duly authorized by all necessary corporate or partnership action.
(b) Each individual executing such was duly authorized to do so.
(c) This Master Lease and each Equipment Schedule constitute legal, valid
and binding agreements of Lessee enforceable in accordance with their terms.
(d) The Equipment is personal property and when subjected to use by Lessee
will not become fixtures under applicable law.
(e) During the lease term, Lessee shall deliver and shall cause all
obligors, guarantors and parties whose contracts with Lessee are used as
additional collateral under this Master Lease to deliver to Lessor audited or
reviewed financial statements for each of such party's most recent fiscal years
ended, tax returns and unaudited financial statements certified by such party
for the most recent quarter ended, consisting of at least a balance sheet,
income statements and statements of changes in financial position, and any other
information requested by Lessor from time to time, prepared in accordance with
generally accepted accounting principles.
(f) Lessee shall provide any and all monthly operating statistics or data
and shall use its best efforts to obtain from any party benefitting from the use
of the Equipment through services provided by the Lessee any and all operating
statistics, data, or information requested by Lessor from time to time.
(g) The execution, delivery and performance of this Master Lease and each
Equipment Schedule will not violate any law or regulation applicable to Lessee,
or cause a default under any agreement to which Lessee is a party or is subject.
10. DELIVERY AND RETURN OF EQUIPMENT.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Equipment Schedule, Lessee
shall, pursuant to Lessor's instructions and at Lessee's expense (including
without limitation expenses of transportation and in-transit insurance), return
the Equipment to Lessor in the same operating order, repair, condition, and
appearance as when received, less normal depreciation and wear and tear. Lessee
shall have the Equipment deinstalled and removed from its location only by the
manufacturer of the Equipment or by such other party as shall have been
previously approved in writing by Lessor. The manufacturer or such other
preapproved party shall certify in writing to Lessor at the time of such
deinstallation that the Equipment includes all appropriate or required upgrades
and that it is in good working order. Lessee shall transport the Equipment by
means and return the Equipment to Lessor at such address all as shall be
directed by Lessor. Lessee shall bear all costs of deinstallation, removal and
return of the Equipment, including all costs as may be incurred by Lessee or
Lessor to acquire the upgrades required under the terms of this Master Lease, to
service and repair the Equipment and to otherwise put the Equipment in the
condition required under this Section 10.
11. INSURANCE.
During the term hereof and until return of the Equipment to Lessor, Lessee
shall, at Lessee's expense: (i) maintain insurance covering damage, destruction,
loss or theft of the Equipment from any cause whatsoever for not less than an
amount equal to the greater of the replacement value or the amount calculated
pursuant to clause (vi) of Section 15(b) hereof; (ii) maintain public liability
(including liability with respect to the use of the Equipment), professional
liability insurance (covering Lessee and its employees and any and all other
parties as may have possession of or as may operate any of the Equipment), and
property damage insurance in an amount satisfactory to Lessor; (iii) maintain,
if applicable as determined in the sole discretion of Lessor, business
interruption and automobile insurance (where the Equipment constitutes mobile
magnetic resonance imaging equipment or other mobile equipment); and (iv)
promptly notify Lessor of any actual or alleged damage, destruction, liability,
loss or theft relating to the Equipment or the use or operation thereof. All
insurance shall be in form, substance and amount satisfactory to Lessor and/or
Lessor's Transferee, shall contain a lender's form endorsement with waiver of
breach of warranty clause (form 438-BFU or its equivalent), and shall be issued
by insurers acceptable to Lessor, and shall name Lessor or any Lessor Transferee
as loss payee with respect to all policies of property insurance and as an
additional insured with respect to all other policies of insurance. Lessee
shall obtain endorsements to all such policies of insurance which shall provide
that any amendment or cancellation of any such policy shall not be effective
unless Lessor shall have been given thirty (30) days' prior written notice of
any such intended amendment or cancellation. Self-insurance is unacceptable
unless Lessor shall so provide upon its prior written consent. Lessee shall
deliver to Lessor originals or certified copies of such policies, certificates
of coverage thereunder and loss payee, additional insured, and notice of
amendment or cancellation endorsements. In addition, as collateral security for
Lessee's obligations hereunder and under the Equipment Schedules, Lessee hereby
assigns, transfers and conveys to Lessor all of Lessee's right, title and
interest in and to all of the foregoing policies of insurance and the insurance
coverage provided thereunder and Lessee shall deliver and cause each insurer
under each of such policies of insurance to deliver to Lessor assignments of
such policies and coverage which assignments shall be in form and substance
satisfactory to Lessor.
12. RISK OF LOSS.
During the term of each Equipment Schedule, and until return of the
Equipment to Lessor, Lessee shall bear all risk of damage, destruction, loss or
theft of the Equipment from any cause whatsoever. No damage, destruction, loss
or theft of the Equipment or delay in payment or deficiency or absence of
insurance proceeds, and no unavailability or delay in obtaining supplies,
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parts or service for the Equipment or failure of the Equipment to function for
any cause whatsoever, and no change in laws or regulations governing or
restricting the use of the Equipment (including the future enactment of any laws
or regulations prohibiting the use of the Equipment), shall release Lessee of
the obligation to pay rent or any other obligation hereunder. Upon the
occurrence of any reparable damage, Lessee shall promptly make such repairs and
restore the Equipment to good repair, condition and working order. Upon the
occurrence of any irreparable damage, destruction or loss of the Equipment,
Lessee shall, at Lessor's option: (i) replace the Equipment with like equipment
in good repair, conditionand working order with documentation creating clear
title thereto in Lessor; or (ii) pay Lessor the amounts required under Section
15 of this Master Lease to the same extent as though a default had occurred
hereunder. Subject to such conditions as Lessor may require, any insurance
proceeds paid to Lessor as a result of any damage, destruction, loss or theft of
the Equipment shall be applied to Lessee's obligations hereunder, provided that
if the Equipment is not repaired or replaced as provided above, such insurance
proceeds shall be applied first to Lessor's expected residual interest in the
Equipment. Lessor shall have no obligation to collect or pursue any claim
arising from any damage, destruction, loss or theft of the Equipment, including
any claim under any applicable insurance policy.
13. INDEMNITY.
Lessee shall, at Lessee's sole cost and expense, indemnify, hold harmless
and defend Lessor and its agents, employees, officers and directors, and its
successors in interest, from and against any and all claims, actions, suits,
proceedings, costs, expenses, damages and liabilities, including attorney's
fees, arising out of, connected with, resulting from or relating to the
Equipment or the condition, delivery, leasing, location, maintenance,
manufacture, operation, ownership, possession, purchase, repair, repossession,
return, sale, selection, service or use thereof, including without limitation:
(i) claims involving latent or other defects (whether or not discoverable by
Lessee or Lessor), (ii) claims for trademark, patent or copyright infringement,
and (iii) claims for injury or death to persons or damage to property or loss of
business or anticipatory profits, whether resulting from acts or omissions of
Lessee or Lessor or otherwise. Lessee shall give Lessor prompt written notice of
any claim or liability covered by this section. The indemnities under this
section shall survive the satisfaction of all other obligations of Lessee herein
and the termination of this Master Lease or any Equipment Schedule.
14. SECURITY DEPOSIT.
For the purpose of securing all of Lessee's obligations under this Master
Lease and each Equipment Schedule, Lessee grants Lessor a security interest in
any security deposit described in any Equipment Schedule. Any such security
deposit may be commingled with other funds and shall be held without interest to
Lessee. Upon default under this Master Lease or any Equipment Schedule, Lessor
may, but shall not be obligated to, apply any such security deposit to any
obligation of Lessee under this Master Lease or any Equipment Schedule, in which
event Lessee shall promptly restore the amount thereof on demand. Upon
compliance by Lessee with all terms of this Master Lease and each Equipment
Schedule Lessor shall, at the end of the term of each Equipment Schedule and the
return of the Equipment to Lessor as provided herein, refund to Lessee the
balance of any security deposit pertaining to such Equipment Schedule.
15. DEFAULT AND REMEDIES.
(a) The occurrences of any one or more of the following events ("Events of
Default") shall constitute a default under this Master Lease, any Equipment
Schedule, or any other agreement between Lessor and Lessee: (i) Lessee's failure
to pay rent or any other amount required under an Equipment Schedule when due;
(ii) Lessee's failure to perform any other obligation or observe any other term
of this Master Lease or any Equipment Schedule; (iii) any representation or
warranty made to Lessor by Lessee in this Master Lease or in any other agreement
between Lessor and Lessee or by any guarantor proves to have been false in any
material respect when made; (iv) Lessee or any guarantor suffers a material
adverse change in its financial condition; (v) an event of default shall have
occurred under and be continuing under any other financing arrangement by Lessee
or any guarantor; (vi) levy, seizure or attachment of any Equipment; (vii)
commencement of proceedings under any bankruptcy, arrangement, reorganization or
insolvency law by or against, or appointment of a receiver or liquidator for any
property of, Lessee or any guarantor; (viii) any failure by Lessee, or any
direct or indirect subsidiary or affiliate of Lessee, or any direct or indirect
owner or party controlling, directly or indirectly, Lessee or any direct or
indirect subsidiary or affiliate of Lessee, to perform any obligation under any
agreement between Lessee or any such subsidiary, affiliate, owner or controlling
party, on the one hand, and Lessor, any Lessor Transferee, or any direct or
indirect subsidiary or affiliate of Lessor or any Lessor Transferee, on the
other hand, which agreement shall include, without limitation, any master lease,
any equipment schedule, any promissory note or other debt obligation of Lessee
to Lessor; or (ix) assignment for the benefit of creditors or bulk transfer of
assets by, or insolvency, cessation of business, termination of existence, death
or dissolution of, Lessee or any guarantor. As used in this Master Lease, the
term "guarantor" shall include any guarantor of this Master Lease or any
Equipment Schedule, and any owner of any property given as security for Lessee's
obligations hereunder or thereunder.
(b) Upon the occurrence of any one or more Events of Default, Lessor may
exercise any one or more of the following remedies without demand or notice to
Lessee and without terminating or otherwise affecting Lessee's obligations
hereunder: (i) declare the entire balance of rent for the remaining term of this
Lease to be immediately due and payable; (ii) require Lessee to assemble the
Equipment and make it available to Lessor at a place designated by Lessor; (iii)
take and hold possession of the Equipment and render the Equipment unusable, and
for this purpose enter and remove the Equipment from any premises where the same
may be located without liability to Lessor for any damage caused thereby; (iv)
sell or lease the Equipment or any part thereof at public or private sale for
cash, on credit or otherwise, with or without representations or warranties, and
upon such terms as shall be acceptable to Lessor; (v) use and occupy the
premises of Lessee for the purpose of taking, holding, reconditioning,
displaying, selling or leasing the Equipment, without cost to Lessor or
liability to Lessor; (vi) demand, sue for and recover from Lessee the sum of (A)
all rent and other amounts due hereunder, plus, as liquidated damages for loss
of a bargain and not as a penalty, and in lieu of any further payments of rent
for the Equipment, an amount equal to Lessor's Return for such Equipment
("Lessor's Return" shall mean, if the applicable Equipment Schedule provides for
Stipulated Loss Values, the applicable Stipulated Loss Value, and, otherwise,
the present value, discounted at five percent (5%), of all unpaid rent payments
to become due during the remaining lease term, (B) all late charges provided in
this Master Lease or any Equipment Schedule; (C) all expenses, including
attorney's fees, of Lessor or any Lessor Transferee incurred in enforcing any of
their rights under this Master Lease or any Equipment Schedule, including the
taking, holding, reconditioning, preparing for sale or lease, and selling or
leasing of the Equipment; (D) all other expenses, including attorney's fees,
incurred by Lessor or any Lessor Transferee incurred in enforcing any of their
rights under this Master Lease or any Equipment Schedule and including any and
all damages to real property arising from the removal of any of the Equipment,
and in the event any party holding an interest in any real property upon which
any of the Equipment is located shall demand a security deposit in connection
with any such removal, Lessee shall deliver and provide such deposit; (E) any
actual or anticipated loss in tax benefits to Lessor (as determined by Lessor)
resulting from the default or Lessor's repossession or disposition of the
Equipment; and (F) any other amounts payable by Lessee to Lessor underthis
Master Lease or any Equipment Schedule or damages suffered by Lessor not
otherwise compensated herein including, without limitation, damages arising from
Lessee's failure to maintain the Equipment as provided herein. Any sale or
lease of the Equipment by Lessor after default shall be free and clear of any
interest of Lessee.
(c) The rights and remedies of Lessor hereunder are in addition to all
other rights and remedies provided by law. All of Lessor's rights and remedies
are cumulative and not exclusive, and may be exercised separately or
concurrently and in such order and manner as Lessor may determine. The exercise
of any one remedy shall not be deemed to be an election of such remedy or to
preclude the exercise of any other remedy. No default by Lessee or action by
Lessor shall result in a termination of this Master Lease or any Equipment
Schedule unless Lessor so notifies Lessee in writing, and no termination of this
Master Lease or any Equipment Schedule shall release or impair any of Lessee's
obligations hereunder or thereunder.
16. PURCHASE OPTION.
Notwithstanding anything to the contrary in the Master Lease and Equipment
Schedule, Lessor and Lessee hereby agree, provided no default has occurred and
is continuing under the Master Lease, at the end of the Equipment Schedule term,
Lessor will sell all, but not part of, the Equipment listed on the Equipment
Schedule AS IS, WHERE IS and transfer title to Lessee for the considersation of
One Hundred-One dollars (101.00) and will execute such documentation as
necessary to effect such transfer of title to the extent title was conveyed to
the Lessor. Any instrument(s) of transfer shall contain the following: THE
EQUIPMENT TRANSFERRED HEREBY IS TRANSFERRED "AS IS" AND "WHERE IS". THE SELLER
MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER
IN REGARD TO SUCH EQUIPMENT. THE SELLER HEREBY DISCLAIMS ANY AND ALL
REPRESENTATIONS AND WARRANTIES IN REGARD TO SUCH EQUIPMENT, INCLUDING, WITHOUT
LIMITATION, THOSE OF MERCHANTABILITY OR FITNESS FOR USE OR FITNESS FOR ANY
PARTICULAR USE, OR OF QUALITY, DESIGN, CONDITION, CAPACITY, SUITABILITY OR
PERFORMANCE.
17. COSTS AND EXPENSES.
Lessee shall pay to Lessor, on demand, all costs and expenses incurred by
Lessor in connection with the execution, delivery, administration and
enforcement of this Master Lease, any Equipment Schedule, the transactions
contemplated hereby and thereby, and any costs and expenses related hereto or
thereto, including without limitation filing fees, registration fees, attorney's
fees and other out-of-pocket expenses.
18. PERFORMANCE BY LESSOR.
If Lessee shall fail to perform any obligation under this Master Lease or
any Equipment Schedule, Lessor shall have the right, but shall not be obligated,
with or without prior notice to Lessee, to perform the same (or, in the case of
Lessee's failure to maintain insurance, Lessor may obtain insurance protecting
the interest of Lessor only), and the costs thereof, together with interest at
the lesser of eighteen percent (18%) per year or the highest lawful rate, shall
be immediately payable by Lessee as additional rent for the Equipment.
19. FURTHER ASSURANCES.
Lessee shall, at its sole cost and expense, execute and deliver such
financial statements, certificates of title and other related documents and take
such action as Lessor or any Lessor Transferee may from time to time request for
the purpose of continuing and assuring the rights intended to be created by this
Lease or any Equipment Schedule, including without limitation, any
redocumentation of errors and omissions of this Master Lease and any Equipment
Schedule required by any Lessor Transferee or other successor to any interest of
Lessor.
20. NOTICES.
All notices, demands, requests and other communications under this Master
Lease and any Equipment Schedule: (a) shall be in writing; (b) shall be
delivered personally or by first class mail addressed to the party at its
respective address set forth herein or such other address as such party may
designate from time to time in writing; and (c) shall be effective when
personally delivered or deposited in the United States mail, duly addressed with
postage prepaid.
21. LAW GOVERNING - JURISDICTION, WAIVER OF JURY TRIAL.
LESSEE WARRANTS, REPRESENTS AND AGREES THAT: (a) THIS MASTER LEASE AND ANY
EQUIPMENT SCHEDULE HAVE BEEN MADE AND ENTERED INTO AS PENNSYLVANIA TRANSACTIONS;
(b) THIS MASTER LEASE AND ANY EQUIPMENT SCHEDULE SHALL BE CONSTRUED,
INTERPRETED, GOVERNED AND ENFORCED UNDER AND IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS) OF PENNSYLVANIA; (c)
JURISDICTION TO HEAR AND DECIDE ANY CASE OR CONTROVERSY ARISING OUT OF, OR TO
ENFORCE OR CONSTRUE, THIS MASTER LEASE OR ANY EQUIPMENT SCHEDULE, SHALL
EXCLUSIVELY RESIDE AND VEST IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF PENNSYLVANIA, OR IF THAT COURT DOES NOT HAVE JURISDICTION, THEN IN
THE COURT OF COMMON PLEAS OF THE COMMONWEALTH OF PENNSYLVANIA FOR THE COUNTY OF
BUCKS; AND (d) THIS SECTION 21 MAY BE ENFORCED BY INJUNCTION, SPECIFIC
PERFORMANCE OR ANY OTHER EXTRAORDINARY OR EQUITABLE REMEDY. LESSOR AND LESSEE
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS LEASE
OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LESSOR AND LESSEE.
23. MISCELLANEOUS.
This Master Lease, any Equipment Schedule, and any other documents executed
herewith or therewith constitute the entire agreement with respect to the
subject matter hereof. No oral agreement, representation or warranty shall be
binding. Any provision of this Master Lease which is invalid or unenforceable
under applicable law shall not affect the remaining provisions hereof, and to
this end the provisions hereof are declared to be severable. Section headings
are for convenience of reference only, and shall not affect the interpretation
hereof. If more than one Lessee is named herein, the liability of each shall be
joint and several. Where appropriate and the
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context permits, the singular shall include the plural and vice versa. Upon
assignment of this Master Lease or any Equipment Schedule or Equipment (or any
part hereof or thereof or any interest herein or therein) by Lessor, the term
"Lessor" shall include the Assignee. Lessee waives notice and acceptance of this
Master Lease and any Equipment Schedule by Lessor. Time is of the essence of
this Master Lease and any Equipment Schedule.
24. WAIVER AND AMENDMENT.
No waiver or amendment of this Master Lease or any Equipment Schedule, or
any provision hereof or thereof, shall be effective unless in writing signed by
Lessor. No delay or failure to exercise any right, power or remedy accruing to
Lessor upon any default of Lessee shall impair any such right, power or remedy,
nor shall it be construed as a waiver of any such default, or an acquiescence
therein, or in any similar default thereafteroccurring, nor shall any waiver of
any single default be deemed a waiver of any other default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of Lessor must be in writing and shall be effective only
to the extent specifically set forth therein.
LESSEE INITIAL
-----------------
THIS MASTER LEASE, AND ANY EQUIPMENT SCHEDULE, ARE SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH HEREIN
LESSEE ACKNOWLEDGES RECEIPT OF A COPY OF THIS MASTER LEASE
THIS MASTER LEASE, AND ANY EQUIPMENT SCHEDULE, SHALL BECOME EFFECTIVE ONLY UPON
WRITTEN ACCEPTANCE BY LESSOR
LESSOR: DVI FINANCIAL SERVICES INC. LESSEE: SMT Health Services Inc.
By: By:
-------------------------------- --------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
----------------------------- -----------------------------
No security interest in an Equipment Schedule may be created through the
transfer or possession of any counterpart of the orginal Equipment Schedule
other than that Equipment Schedule marked "Secured Party's Original" and a
certified copy of the Master Agreement.
4
<PAGE>
EQUIPMENT SCHEDULE NO. 001
-----
TO
MASTER EQUIPMENT LEASE NO. 0001357
---------
("Master Lease")
LESSOR: DVI Financial Services Inc.
LESSEE: SMT Health Services Inc.
DATE OF MASTER LEASE: August 28, 1996
DATE OF EQUIPMENT SCHEDULE: August 28, 1996
LEASE TERM: 60
COMMENCEMENT DATE: September 20, 1996
RENT COMMENCEMENT DATE: October 1, 1996
MONTHLY RENT: $31,837.53
In the event there is an increase in the thirty (30) month Treasury
Note rate from the rate quoted in the proposal/commitment letter to the rate in
effect on the date the Schedule funds, then Lessor reserves the right to adjust
the Monthly Rent set forth in the Schedule by increasing the Monthly Rent by
that same rate of increase.
SALES/USE TAX: To be added to the monthly rental
ADVANCED PAYMENT: First Only
EQUIPMENT:ONE (1) GE HORIZON HISPEED 1.0T MOBILE MRI UNIT; ONE (1) 48' TRAILER
S/N 15251 MODEL TL4853 VIN 1JJV482E5TL291834, TOGETHER WITH ALL PARTS,
ACCESSORIES, ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS
THERETO AND THEREFOR.
EQUIPMENT LOCATIONS: East Cooper Community Hospital
1200 Johnie Dodds Boulevard
Mount Pleasant, SC 29464
Clarendon Memorial Hospital
510 South Mill Street
Manning, SC 29102
Colleton Regional Hospital
501 Robertson Boulevard
Walterboro, SC 29488
MASTER LEASE:
This Equipment Schedule is issued pursuant to the Master Lease. All of the
terms, conditions representations and warranties of the Master Lease are hereby
incorporated by reference herein and made a part hereof as if they were
expressly set forth in this Equipment Schedule and this Equipment Schedule
constitutes a separate lease with respect to the Equipment described herein.
The parties hereby reaffirm all of the terms, conditions, representations and
warranties of the Master Lease except as modified herein, by their execution and
delivery of this Equipment Schedule.
If this Equipment Schedule contains a Stipulated Loss Value Rider, attached
hereto as Rider "A" and incorporated herein by this reference, then the
Stipulated Loss Value of each item of Equipment (to be determined as of the
rental payment date which has most recently occurred as of the date of
determination) shall be the percentage of the original purchase price of the
item or the dollar amount, as applicable, set forth in the Rider opposite the
applicable rental payment. If a
5
<PAGE>
percentage of the purchase price of the Equipment is to be used to calculate the
Stipulated Loss Value, the original purchase price of the Equipment subject to
this Schedule, including all applicable taxes, freight, transportation,
assembly, installation and other charges, is
$1,514,989.00.
------------
DVI Financial Services Inc. SMT Health Services Inc.
(Lessor) (Lessee)
By: By:
-------------------------------- --------------------------------
Title: Title:
----------------------------- -----------------------------
- ----------------------------------- -----------------------------------
(Print Name) (Print Name)
DVI.sch
6
<PAGE>
Exhibit 10.06
SIEMENS Siemens Credit Corporation
LOAN AND SECURITY AGREEMENT
AGREEMENT #: 130-001480-000
----------------
LENDER: SIEMENS CREDIT CORPORATION, 1301 AVENUE OF THE AMERICAS, NEW YORK,
NY 10019
Administrative Offices:5300 Broken Sound Blvd. N.W., Boca Raton, FL
33487-3509
BORROWER: SMT Health Services Inc., 10521 Perry Highway, Wexford, PA 15090
-----------------------------------------------------------------
EQUIPMENT
DESCRIPTION: Magnetom Mobile Impact as described in Quote #000172108 V02
-----------------------------------------------------------
SUPPLIER: Siemens Medical Systems, Inc., 186 Wood Avenue So., Iselin,
NJ 08830
-----------------------------------------------------------
ORIGINAL EQUIPMENT
LOCATION: Ohio Valley Medical Center, 2000 Eoff Street, Wheeling, WV 26003 &
Wheeling Hospital, Medical Park, Wheeling, WV 26003
-------------------------------------------------------------------
LOAN AMOUNT: One Million Eight Hundred Twenty-One Thousand Two Hundred Sixty
One Dollars (1,821,261.00)
---------------------------------------------------------------
TERMS AND CONDITIONS OF AGREEMENT
1. THE LOAN: Lender hereby agrees, on the terms stated in this Loan and
Security Agreement (herein "Agreement"), to lend to Borrower on an agreed upon
date (herein "Loan Date"), the loan amount as set forth above in immediately
available funds (the "Loan"). The proceeds of the Loan shall be applied by
Borrower on the Loan Date to the purchase price of the property described above
(herein "Equipment") in accordance with the "Pay Proceeds Authorization"
previously given by Borrower to Lender (in a form supplied by Lender).
Borrower's obligation to pay the principal of and interest on the Loan shall be
evidenced by its promissory note in the form supplied by Lender (the "Note"),
dated the date of the Loan, payable to the order of Lender. Interest on the
loan shall accrue on the outstanding principal amounts thereof in accordance
with the terms of the Note. Unless accelerated in accordance
(CONTINUED ON FOLLOWING PAGES)
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have duly executed the Agreement as of
the dates set forth below. The Agreement shall become effective at the time of
Lender's acceptance (by execution hereof) at its New York address set forth
above, by an authorized representative of Lender. For all purposes hereof, the
date of the Agreement shall be the date of Lender's acceptance as set forth
below. BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR THE SUPPLIER IS AN AGENT
OF THE OTHER AND NEITHER HAS AUTHORITY TO BIND THE OTHER.
BY EXECUTION HEREOF, THE SIGNER CERTIFIES
THAT (S)HE HAS READ THE ENTIRE AGREEMENT
AND NOTE, THAT LENDER OR ITS
REPRESENTATIVES HAVE MADE NO AGREEMENT
OR REPRESENTATIONS EXCEPT AS SET FORTH
HEREIN OR IN THE NOTE, AND THAT (S)HE IS DULY
AUTHORIZED TO EXECUTE THE AGREEMENT AND
THE NOTE ON BEHALF OF BORROWER.
ACCEPTED BY:
LENDER: SIEMENS CREDIT CORPORATION BORROWER: SMT Health Services Inc.
--------------------------------
BY: BY:
-------------------------------- --------------------------------
NAME: NAME:
------------------------------ ------------------------------
TITLE: TITLE:
----------------------------- -----------------------------
DATE: DATE:
------------------------------ ------------------------------
<PAGE>
with the provisions of the Agreement, the principal of and interest on the Loan
shall be paid in accordance with the terms of the Note on the payment dates as
set forth therein. Borrower agrees to pay on demand, as a late charge, 1.3% per
month limited by the maximum rate permitted by law on all overdue payments
hereunder and under the Note, whether such payments are due prior to or after a
Default (as hereinafter defined). All amounts payable to Lender hereunder and
under the Note shall be made not later than the date specified for payment, in
lawful money of the United States of America and in immediately available funds,
free and clear of and without any withholding, deduction, setoff or
counterclaim. If any payment hereunder or under the Note is due on a day when
banks are required to close in New York, New York, such payment shall be due on
the next succeeding business day, except as may otherwise by provided herein or
in the Note, all payments to Lender hereunder shall be paid to Lender at its
address above or any other address designated by Lender in writing. All amounts
paid shall be applied first, to the payment of all expenses and charges,
including attorneys' fees, incurred by Lender in the protection of its rights or
the pursuance of its remedies and to provide adequate indemnity to Lender
against all taxes and liens which by all have, or may have, priority over the
rights of Lender to any receipts or proceeds with respect to the Equipment;
second, to the payment of all other costs, expenses and indemnities payable
hereunder to the extent Lender is aware of the same, third, to the payment of
all interest accrued and payable with respect to the Loan; and fourth, to the
payment of principal on the Loan. The Loan or any part thereof, may not be
prepaid without prior consent of Lender, which consent will not be unreasonably
withheld.
2. CONDITIONS PRECEDENT: The obligation of Lender to make the Loan is subject
to the fulfillment of the following conditions: (a) on the Loan Date, no Default
or event which with the giving of notice or lapse of time or both would
constitute a default has occurred and is continuing or would result from the
performance of the Agreement; (b) no material adverse change shall have occurred
prior to funding, in the financial condition or operations of the Borrower, (c)
the Equipment shall be in good working condition; and (d) Lender shall have
received from Borrower all documents requested by Lender.
3. SECURITY INTEREST: To secure all payments hereunder and under the Note and
all other obligations of Borrower to Lender hereunder and under the Note (all
hereinafter call "Obligations"). Borrower hereby grants to Lender a security
interest in the Equipment, together with all accessions, attachments,
replacements, substitutions, modification and additions thereto, now or
hereafter acquired, and all proceeds thereof (including insurance proceeds).
Borrower agrees to execute and authorizes Lender to file with such authorities
and at such locations as it may deem appropriate, any further Uniform Commercial
Code financing statements relating to the equipment and/or the Agreement and
Borrower agrees to reimburse Lender upon demand for all costs incurred relative
thereto. In addition, Borrower hereby irrevocably appoints Lender its agent and
attorney-in-fact to execute in the name of Borrower and file any Uniform
Commercial Code financing statements or security agreements with respect to the
Equipment in any place Lender deems necessary. Borrower also agrees that a
photocopy or original of the Agreement (including any addenda, attachments and
amendments hereto) may be filed by Lender as a Uniform Commercial Code financing
statement.
4. REPRESENTATIONS AND WARRANTIES: Borrower represents and warrants to Lender
as of the Loan Date that: (a) Borrower is an entity duly organized and validly
existing in good standing under the laws of the state of its organization; (b)
Borrower has full power to own its properties to carry on its business as now
being conducted and has full power to execute, deliver and perform all of its
obligations under the Agreement and the Note; (c) the making and performance by
Borrower of the Agreement and the Note have been duly authorized by all
necessary action of Borrower and do not and will not violate any provision of
law, statute, rule of regulation, or any judgment, franchise, permit, order,
decree, ruling writ or injunction of any court or administrative body, or of
Borrower's organizational or charger documents, or the terms of any of its
securities or result in the breach of, or constitute a default under, or require
any consent under, any indenture, bank loan, credit agreement or other agreement
or instrument to which Borrower is a party or by which Borrower or any of its
property may be bound or affected; (d) except for any Uniform Commercial Code
financing statement filings, fixture filings or other recordings required
hereunder with respect to the Equipment and the creation of the security
interests contemplated hereby, no filings, recordations, notifications,
registrations, notarizations, authentications or other formalities or property,
stamp or similar taxes or duties and no approvals, licenses, orders
authorizations, consents or undertakings of any governmental bodies or
regulatory, supervisory authorities are necessary or appropriate in connection
with the execution, delivery and performance by Borrower of the Agreement or the
Note or for the payment to Lender of all sums hereunder or under the Note or
for the legality, validity, binding effect or enforceability hereof or thereof;
(e) the Agreement and the Note have been duly executed and delivered by Borrower
and are legal, valid and binding enforceability hereof or thereof; (e) the
Agreement and the Note have been duly executed and delivered by Borrower and are
legal, valid and binding obligations of Borrower, enforceable in accordance with
their respective terms; (f) there are no agreements or understandings to which
Borrower and Lender are parties respecting the Equipment, verbal or written,
other than those expressed herein and Borrower has not created any licensor
encumbrances against the Equipment except the lien created hereby; (g) Borrower
has good title to the Equipment free and clear of any liens and encumbrances
except those granted to Lender hereunder, and the security interest granted to
Lender herein will at all times constitute a valid perfected and enforceable
first priority security interest in favor of Lender, subject to no other
security interest, mortgage, lien or encumbrance except as may otherwise be
permitted under the Agreement; (h) Borrower has delivered to Lender all
requested balance sheets and the related statements of income and retained
earnings of Borrower and its subsidiaries (if applicable) for its most recent
fiscal year end and for the most recent fiscal quarter then ended and such
balance sheets and statements fairly present the financial condition of Borrower
(and its subsidiaries) as of such dates and the results of the operations of
Borrower and its subsidiaries for the period ended on such dates, all in
accordance with generally accepted accounting principles consistently applied.
Since the end of the latest fiscal quarter there has been no material adverse
change in such condition or operations (i) Borrower has filed all applicable tax
returns required to be filed by it, and has paid or made provisions for the
payment of all taxes which have become due pursuant to said returns or pursuant
to any assessment received by Borrower except such taxes, if any, as are being
contested in good faith and as to which adequate reservices have been provided
in accordance with generally accepted accounting principles and such returns
properly reflect the United States, state and local income and tax liability of
Borrower for the period covered thereby.
5. COVENANTS: Borrower hereby covenants and agrees that until satisfaction of
all its Obligations, it shall: (a) preserve and maintain its existence and all
of its rights, privileges and franchises, and continue the conduct of its
present
<PAGE>
business in an orderly, efficient and regular manner; (b) keep the Equipment
free and clear of all liens, charges, encumbrances, taxes and assessments, and
keep the Equipment at the original Equipment Location and not change the
location of any item of the Equipment without the prior written consent of
Lender which consent shall not be unreasonably withheld; (c) retain possession
of the Equipment during the term of the Agreement and not sell, exchange,
assign, loan, deliver, lease, mortgage or otherwise dispose of such Equipment;
not alter the Equipment; and not allow the Equipment to be affixed to reality in
such manner as to cause the Equipment not become a fixture; (d) operate the
Equipment by qualified and duly authorized personnel only, in accordance with
all applicable laws and regulations, and for business purposes only; and keep
the Equipment in good repair and condition, properly maintain the Equipment or
cause it to be properly maintained by a fully qualified service company, and
immediately notify Lender in writing of the entity maintaining the Equipment and
any change of such entity. Lender shall have the right upon advance notice to
inspect the Equipment and all maintenance records thereto, if any, at any
reasonable time during normal business hours and to require Borrower, at
Borrower's expense, to affix plates or markings on the Equipment indicating
lender's interest; (e) pay when due all license fees, charges, assessments,
duties, privilege, sales use, excise, ad valorem, intangible, stamp, property,
and other similar taxes now or hereafter imposed upon or relating to the
ownership, purchase event that Lender shall pay any such taxes to reimburse
Lender upon demand therefor; (f) promptly and duly execute and deliver to Lender
such event that Lender shall pay any such taxes to reimburse Lender upon demand
therefor; (f) promptly and duly execute and deliver to Lender such further
documents, instruments and assurances and take such further action as Lender may
from time to time reasonably request in order to carry out the intent and
purpose of the Agreement and to establish and protect the rights and remedies
created or intended to be created in favor of Lender hereunder, including
without limitation, the execution and delivery of any Uniform Commercial Code
financing statements, landlord and mortgagee waivers or those documents
reasonably requested by Lender; (g) furnish Lender promptly with any financial
information or statements requested by Lender; (h) timely file any and all tax
returns and tax filings required under any governmental statue and pay and
discharge, when due, all material obligations to third parties, except those
obligations being contested in good faith, and for which Borrower shall have
maintained in accordance with generally accepted accounting principles, adequate
reserves for the payment of the same; (i) notify Lender immediately upon receipt
of notice of any lien, attachment or judicial proceeding affecting the Equipment
in whole or in part, and provide written notice to Lender thirty (30) days prior
to any change in the name or address of Borrower, its identity or corporate
structure, social security or taxpayer identification number as applicable, or
discontinuance of any of its places of business, and immediately upon any
Default or event which, with the lapse of time or giving of notice, would
constitute a Default.
6. DISCLAIMER OF WARRANTIES; LIMITATION OF REMEDIES; LIMITATION OF LIABILITY:
THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT. BORROWER HAS SELECTED BOTH THE
EQUIPMENT AND THE SUPPLIER OF THE EQUIPMENT AND ACKNOWLEDGES THAT LENDER IS NOT
THE SUPPLIER OF THE EQUIPMENT. LENDER HAS NOT MADE, DOES NOT MAKE, AND HEREBY
DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED, RELATING TO THE EQUIPMENT,
INCLUDING ALL EXPRESS OR IMPLIED WARRANTIES OR MERCHANTABILITY AND WARRANTIES OR
FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL LENDER BE LIABLE (INCLUDING
WITHOUT LITIGATION, UNDER ANY THEORY IN TORTS) FOR ANY LOSS OF USE, REVENUE,
ANTICIPATED PROFITS OR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENT OR THE USE, PERFORMANCE OR
MAINTENANCE OF THE EQUIPMENT. Borrower agrees to settle all claims relating to
the Equipment directly with the manufacturer, Supplier or service company of the
Equipment, as applicable, and not with Lender.
7. RISK OF LOSS; INSURANCE: (a) Borrower agrees that it shall bear all risk of
loss, damage to or destruction of the Equipment. Borrower shall give Lender
prompt notice of any damage to or loss of the Equipment or of any occurrence
arising from the possession, use or operation of the Equipment resulting in
death or bodily injury, or damage to property. In the event of damage to any
item(s) of Equipment, borrower shall immediately place such item(s) in good
repair (with no abatement of payments hereunder or under the Note), with the
proceeds of any insurance recovery applied to the cost of such repair. If,
however, any item(s) of Equipment shall become lost, stolen, destroyed, worn
out, damaged beyond repair, condemned, confiscated, seized or requisitioned
(herein "Event of Loss"), Borrower shall, at the option of Lender, either
replace the same with like equipment in good repair (with no abatement of
payments hereunder or under the Note), or pay to Lender on the next scheduled
payment date immediately following such Event of Loss, the remaining unpaid
principal balance of the Note, all accrued but unpaid interest thereon, plus all
other amounts due from Borrower hereunder, whereupon the Agreement shall
terminate. (b) Until satisfaction by Borrower of its Obligations, Borrower, at
its expense, shall maintain comprehensive general liability insurance, and "fire
and allied perils" and "all risks" property insurance covering the Equipment (as
primary insurance for Borrower and Lender), both in such amounts as Lender shall
require, except that such property insurance shall be in an amount at least
equal to the remaining unpaid principal balance of the Note and such insurance
shall be placed with carriers acceptable to Lender. The liability insurance
policy shall name Lender (and any assignee of Lender) as additional insured(s)
and the property insurance policy shall name Lender (and any assignee of Lender)
as loss payee(s) tot he extent its interest(s) may appear, and both policies
shall provide that they may not be cancelled or altered without at least thirty
(30) days prior written notice to Lender (and any assignee of Lender). Borrower
irrevocably appoints Lender its agent and attorney-in-fact for the purpose of
adjusting and settling any property insurance hereunder and endorsing in
Borrower's name any instruments or payments received in respect thereof.
Borrower shall furnish to Lender, upon request, a certificate of insurance that
such coverage is in effect, however, Lender shall be under no duty either to
ascertain the existence of or to examine such insurance policies or to advise
Borrower in the event that such insurance coverage does not comply with the
requirements hereof.
8. DEFAULT AND REMEDIES: (a) Any of the following shall constitute a default
by Borrower hereunder (herein "Default"): (i) failure by Borrower to pay any
amounts hereunder or under the Note when due and such remains unremedied for a
period of ten (10) days from the due date; or (ii) failure of Borrower to comply
with any provisions or perform any of its obligations arising under the
Agreement or under any other documents or agreements related hereto and such
remains unremedied by Borrower for a period of twenty (20) days; or (iii) any
representations or warranties made or given by Borrower in connection with the
Agreement or any other document or agreement related hereto were false or
misleading in a material way when made; or (iv) subjection of the Equipment to
levy or execution or other judicial process which is not or cannot be
<PAGE>
removed within thirty (30) days from the subjection thereof; or the imposition
of any unauthorized lien on or transfer of the Equipment by or through Borrower;
or (v) commencement of any insolvency, bankruptcy or similar proceedings by or
against Borrower or any guarantor of any of Borrower's Obligations (herein
"Guarantor"), including any assignment by Borrower or any Guarantor for the
benefit of creditors, and in the case of any such involuntary proceedings, such
is not dismissed within thirty (30) days of institution; or the inability of
Borrower to generally pay its debts as they become due; or (vi) any act of
Borrower which imperils the value of the Equipment or the prospect of full
performance of the Obligations, including but not limited to the liquidation or
dissolution of Borrower or the commencement of any acts relative thereto, or
without the prior written consent of Lender, any sale or other disposition of
all or substantially all of the assets of Borrower, or any merger or
consolidation of Borrower unless Borrower is the surviving entity, or the
cessation of business by Borrower; or (vii) a default by Borrower under any
other agreement or note with Lender or any assignee of the Agreement and/or
Note; or (viii) the death or dissolution of Borrower or of any Guarantor, the
withdrawal of any partner if Borrower is a partnership, or the inability of
Borrower or of any Guarantor hereunder to perform any of the obligations
contained herein or in any applicable guaranty.
(b) Upon any Default, Lender may exercise any one or more of the following
remedies (which remedies shall be cumulative to the extent permitted by law);
(i) terminate the Agreement; (ii) declare the remaining unpaid principal balance
of the Note, plus all accrued but unpaid interest thereon, plus all other
amounts due from Borrower hereunder, immediately due and payable in full without
notice or demand, whereupon such shall become immediately due and payable; (iii)
secure peaceable repossession and removal of the Equipment by Lender or its
agent without judicial process; (iv) demand and Borrower shall at its own risk
and expense immediately return the Equipment to Lender, packed for shipment in
accordance with manufacturer's specifications and eligible for manufacturer's
maintenance, freight prepaid and insured, to such location as Lender shall
designate; (v) sell, lease or otherwise dispose of the Equipment at public or
private sale without advertisement or notice except that required by law, upon
such terms and at such place as Lender may deem advisable and lender may be the
purchaser at any such sale; (vi) demand and Borrower shall pay all expenses in
connection with the Equipment relating to its retaking, refurbishing, selling or
the like; (vii) exercise any other right or remedy which may be available to it
under the Uniform Commercial code or any other applicable law. Any proceeds
received from Borrower or net proceeds received with respect to disposition of
the Equipment, shall be applied by Lender to the Obligations, in the order of
application as Lender shall elect.
9. INDEMNIFICATION: Borrower hereby indemnifies and agrees to hold Lender, its
employees, officers, directors and agents harmless from and against any and all
losses, claims, suits, damages, expenses and liabilities (including negligence,
tort and strict liability), together with reasonable attorneys' fees, caused by,
arising from, or related to, the manufacture, purchase, ownership, maintenance,
modification, delivery, installation, possession, condition, use, acceptance,
rejection, operation, disposition or return of the Equipment.
10. NOTICES; CHANGES: Notices, requests or other communications required
hereunder to be sent to either party shall be in writing and shall be (a) by
United States first class mail, postage prepaid, and addressed to the other
party at the address set forth above (or to such other address as such party
shall have designated by proper notice) or (b) by personal delivery. Borrower
consents to service of process by certified mail at its address above (or to
such other address as Borrower shall be designated by proper notice) in
connection with any legal action brought by Lender. Borrower authorizes Lender
to fill in descriptive material herein (including serial numbers) and to correct
any patient errors hereunder or under the Note.
11. MISCELLANEOUS: THE AGREEMENT AND NOTE CONTAIN THE COMPLETE AGREEMENT OF
THE PARTIES WITH RESPECT TO ITS SUBJECT MATTER AND SUPERSEDE AND REPLACE ANY
PREVIOUSLY MADE PROPOSALS, REPRESENTATIONS, WARRANTIES OR AGREEMENTS. LENDER
MAY ASSIGN OR TRANSFER THE AGREEMENT, THE NOTE AND/OR LENDER'S INTEREST IN THE
EQUIPMENT WITHOUT NOTICE TO BORROWER. Any assignee of Lender shall have all of
the rights but none of the obligations of Lender under the Agreement and Note,
and BORROWER AGREES THAT IT WILL NOT ASSERT AGAINST ANY ASSIGNEE OF LENDER ANY
DEFENSE, COUNTERCLAIM OR OFFSET THAT BORROWER MAY HAVE AGAINST LENDER. BORROWER
SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR
OBLIGATIONS UNDER THE AGREEMENT AND THE NOTE WITHOUT THE PRIOR WRITTEN CONSENT
OF LENDER. The Agreement and the Note shall be binding upon and inure to the
benefit of the parties hereto, their legal representatives, permitted successors
and assigns. THE PARTIES HERETO WAIVE ALL RIGHTS TO A JURY TRIAL IN ANY
LITIGATION ARISING FROM OR RELATED IN ANY WAY TO THE AGREEMENT, NOTE OR THE
TRANSACTION CONTEMPLATED HEREBY. No amendment hereunder shall be effective
unless in writing signed by the parties hereto and no waiver hereunder shall be
effective unless in writing, signed by the party to be charged. No failure to
exercise, no delay in exercising, and no single or partial exercise on the part
of Lender of any right, remedy, or power hereunder, shall operate as a waiver
thereof or preclude Lender from exercising any other right, remedy or power
hereunder. Any provision of the Agreement or the Note which is unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions hereof or of the Note. No action regardless of form arising out of
the Agreement or the Note may be brought by Borrower more than two (2) years
after the cause of action has accrued. The representations, warranties,
obligations and indemnities of the Borrower hereunder shall survive the
termination of the Agreement to the extent required for their full observance
and performance. The obligations of each co-maker (if any) of the Agreement or
the Note shall be primary, joint and several. In the event borrower fails to
meet any obligation of it hereunder, Lender may at its option satisfy such
obligation and Borrower shall reimburse Lender on demand therefor. In the event
that legal or other action is required to enforce Lender's rights under the
Agreement or under the Note (including but not limited to the exercise of
remedies hereunder), borrower agrees to reimburse lender on demand for its
reasonable attorneys' fees and its other related costs and expenses.
Notwithstanding any applicable stage laws to the contrary, borrower agrees to
reimburse lender for all reasonable attorneys' fees incurred by it incident to
any action or proceeding involving the borrower brought pursuant to the
bankruptcy code, as amended which are allowable under section 506(b) thereof.
The captions in the Agreement are for convenience only and shall not defined or
limit any of the terms hereof. THE AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
<PAGE>
SIEMENS Siemens Credit Corporation
PROMISSORY NOTE
TO LOAN AND SECURITY AGREEMENT
#: 130-001480-000
----------------
- --------------------------------------------------------------------------------
PROMISSORY NOTE
U.S. $1,821,261.00
-------------- ---------------------------------------
(Date of Note)
NEW YORK, NEW YORK
------------------
The undersigned, organized and validly existing under the laws of its state of
organization, for value received, hereby unconditionally promises to pay to the
order of Siemens Credit Corporation (the "Payee") at 1301 Avenue of the
Americas, new York, NY 10019 in lawful money of the United States of America and
in immediately available funds, the principal amount of U.S. One Million Eight
------------------
Hundred Twenty-One Thousand Two Hundred Sixty-One Dollars, with interest (based
- ---------------------------------------------------------
on a year of 360 days and 30 day months) at a per annum rate of Nine & Forty-
-------------
Five Hundredths percent (9.45%) on the principal amount hereof remaining from
- ----------------------- -----
time to time unpaid, such principal and interest to be paid in 60 consecutive
---
monthly installments of $37,907.00 each, beginning on Date of Note Above and on
---------- -------------------
the same day of each consecutive month thereafter until fully paid.
This Note evidences a Loan by the Payee to the undersigned pursuant to the Loan
and Security Agreement indicated above between the undersigned and the Payee
(the "Agreement") as from time to time may be amended, restated, replaced,
supplemented, substituted for or renewed, and the holder of this Note is
entitled to the benefits thereof, including without limitation, the security
interest in the Equipment granted therein. Each term defined in the Agreement
and not otherwise defined herein shall have the same definition when used
herein.
The principal hereof and accrued interest hereon shall become forthwith due and
payable as provided in the Agreement. Payments hereunder not made when due shall
accrue late charges as provided in the Agreement. This Note may not be prepaid
in whole or in part (without the prior consent of the Lender (Payee) which
consent will not be unreasonably withheld).
All payments made pursuant to the terms of this Note shall be made free and
clear of, and without deduction for, withholding, setoff or counterclaim of any
kind.
The undersigned hereby promises to pay all costs and expenses, including but not
limited to reasonable attorneys' fees which may be incurred in connection with
the enforcement and/or collection of this Note.
Neither the failure on the part of the holder of this Note in exercising any
right or remedy nor any single or partial exercise or the exercise of any other
right or remedy shall operate as any waiver. No amendment hereunder shall be
effective unless in writing signed by the undersigned and holder of this Note
and no wavier hereunder shall be effective unless in writing, signed by the
party to be charged. The undersigned hereby waives demand for payment,
presentment, protest and notice of any kind in connection with the delivery,
acceptance, performance, default or enforcement of this Note and hereby consents
to any extensions of time, renewals, releases of any party to this Note, waivers
or modifications that may be granted or consented to by the holder of this Note
in respect of the time of payment or any other matter.
Anything in this Note to the contrary notwithstanding, in the event that any
payment of interest hereunder shall exceed the legal limit, such amount in
excess of such limit shall be deemed a payment of principal hereunder.
The undersigned authorizes the Payee to insert above as the date of the Note,
the date on which the Payee disburses funds pursuant to the Agreement.
THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS
THEREOF.
MAKER WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY LITIGATION ARISING FROM OR
RELATED IN ANY WAY TO THIS NOTE OR THE TRANSACTION CONTEMPLATED HEREBY.
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by its
authorized representative, who certifies that (s)he has all necessary authority
on behalf of the undersigned to execute this Note and bind it to the terms
hereof.
SMT Health Services Inc.
BY:
---------------------------------
NAME:
-------------------------------
TITLE:
------------------------------
<PAGE>
Exhibit 10.07
LAUREL CAPITAL CORPORATION
FINANCE LEASE
3810 McKnight East Drive
Pittsburgh, PA 15237
[412] 366-6440
Finance Lease No. 2179
This Lease, made this 12th day of September 1996 by and between LAUREL CAPITAL
CORPORATION ("Lessor") and SMT HEALTH SERVICES INC. ("Lessee").
1. LEASE AGREEMENT. Lessor hereby leases to Lessee, and Lessee hereby rents
from Lessor, all the machinery, equipment and other personal property
(individually "Item of Equipment" and collectively "Equipment") described in
Equipment Lease Schedules which are or may from time to time hereafter be
executed by Lessor and Lessee and attached hereto or incorporated herein by
reference ("Schedules") upon the terms and conditions set forth in this Lease,
as supplemented, as regards each Item of Equipment, by the terms and conditions
set forth in the Schedule identifying that Item of Equipment. Whenever reference
is made herein to "this Lease", it shall be deemed to include each of the
several Schedules and the Insurance Schedule(s) referred to herein all of which
constitute one undivided lease of the Equipment.
2. TERM.
(a) The obligations under this Lease commence upon the written acceptance
hereof by Lessor and shall end upon full performance and observance of each and
every term, condition and covenant set forth in this Lease and any extensions
hereof. The rental term for Equipment listed in each Schedule shall commence on
the date indicated on such Schedule and shall terminate on the last day of the
term stated in such Schedule.
(b) In the event Lessor shall make payments on the Equipment prior to the
commencement date of the rental term as indicated on the Schedule, Lessee shall
pay interim rental payments from the date of such payments by Lessor to the
commencement date of the rental term. The interim rental payments shall be
based on the daily equivalent of two (2.00%) percent over the prime interest
rate (fully floating) as announced from time to time by PNC Bank, National
Association. Interim rental payments are due monthly.
3. RENT. The rent, including interim rental payments, for the Items of
Equipment described in each Schedule shall be the amount stated in such
Schedule. Rent is an absolute obligation of Lessee due upon the inception of
each rental or interim rental term and payable as specified in each particular
Schedule irrespective of any claims, demands, set-offs, actions, suits or
proceedings that Lessee may have or assert against Lessor or any supplier of
Equipment. Rent and interim rent shall be payable to Lessor at its office, 3810
McKnight East Drive, Pittsburgh, Pennsylvania 15237, or at such other place as
Lessor or its assigns may designate in writing to Lessee from time to time.
4. DELINQUENT RENT PENALTY. If Lessee shall fail to pay any rent, interim
rent installment or other amount due hereunder within ten (10) days after the
due date and until all sums due hereunder have been declared due and payable
in accordance with Paragraph 24, Lessee shall pay to Lessor a late charge
of five (5%) percent of such amount due for each month or part thereof for which
said rent or other sums shall be
<PAGE>
delinquent. After all sums are declared due and payable in accordance with
Paragraph 24, Lessee shall pay interest at the rate of fifteen (15%) percent
per annum or the maximum contract rate permitted by law, whichever is less, on
such accelerated sums from the date of acceleration until paid, and whether or
not judgment hereon has been entered.
5. DELIVERY AND INSTALLATION. Lessee will select the type, quantity and
supplier of each Item of Equipment and in reliance thereon such Equipment will
then be ordered by Lessor from such supplier or Lessor may at its option elect
to accept an assignment of any existing purchase order. Lessor shall not be
liable for loss or damage occasioned by any cause, circumstance or event of
whatsoever nature, including, but not limited to, failure of or delay in
delivery, delivery to wrong location, delivery of improper equipment or property
other than the Equipment, damage to the Equipment, governmental regulations,
strikes, embargoes or other causes, circumstances or events whether of a like or
unlike nature. Lessee, at its expense, will pay all transportation, packing,
installation, testing and other charges in connection with the delivery,
installation and use of each Item of Equipment. In the event that the cost of
any Item of Equipment differs from the price set forth in the purchase order
therefor, the monthly rental shall be changed accordingly to fully reflect any
such difference. In the event that Lessee fails or refuses to accept delivery
of the Equipment within ninety (90) days following the execution of the Lease
(unless such period is extended by an agreement between Lessor and Lessee in
writing), Lessor may terminate the Lease and Lessee will remit to the Lessor an
amount equal to the down payment and installments previously paid by the Lessor
to the vendor or supplier of the Equipment, together with interest accrued
thereon at the highest contractual rate enforceable against Lessee under
applicable law but never at a rate higher than fifteen (15%) percent per annum.
Lessor shall assign to Lessee without recourse all of Lessor's interest in and
to the Equipment under the vendor purchase agreements.
6. WARRANTY OF LESSEE'S QUIET POSSESSION. Lessor warrants and covenants that
so long as Lessee faithfully performs this Lease, Lessee, subject to the
disclaimer of warranties set forth immediately below, shall be entitled to
quietly possess and use the Equipment without interference.
7. DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTIES SET FORTH ABOVE,
LESSOR, NOT BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S
AGENT, MAKES NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT
TO THE EQUIPMENT. THIS DISCLAIMER OF WARRANTIES INCLUDES BUT IS NOT LIMITED TO
ANY WARRANTY REGARDING: THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR
ANY PARTICULAR PURPOSE; THE DESIGN OR CONDITION OF THE EQUIPMENT; THE QUALITY OR
CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP OF THE EQUIPMENT; COMPLIANCE OF THE
EQUIPMENT WITH THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT
PERTAINING THERETO; PATENT INFRINGEMENT; OR LATENT DEFECTS; it being agreed that
all such risks, as between Lessor and Lessee, are to be borne by the Lessee.
Lessor is not responsible or liable for any direct, indirect, incidental or
consequential damage to, or loss resulting from, the installation, operation or
use of any Item of Equipment or any product manufactured thereby.
8. NATURE OF EQUIPMENT. Not withstanding anything to the contrary contained
in this Agreement, including the characterization of this Agreement as a lease,
the parties hereto acknowledge and agree that, legal title to each Item of
Equipment leased hereunder shall be with the Lessee. Each Item of Equipment
shall remain personal property, notwithstanding the manner in which it may be
affixed to any real property. Lessee will otherwise take all action required to
keep the Equipment free and clear of all levies, liens and encumbrances which
result from any act or omission of the Lessee. Lessor assumes no liability and
makes no representation as to the treatment by Lessee of this Lease, the
Equipment, or to the rental payments for
<PAGE>
financial statement or tax purposes.
9. LOCATION OF EQUIPMENT. Each Item of Equipment shall be placed into service
at the location specified in Exhibit B, Location of Equipment attached to the
Schedule. Lessee shall promptly provide written notice to Lessor of any and all
location changes.
10. LESSOR'S RIGHT OF INSPECTION. Lessor and its agents shall have the right
during business hours to enter upon the premises where any Item of Equipment is
located (to the extent Lessee can permit) for the purpose of inspection.
11. USE OF EQUIPMENT. Lessee must use the Equipment in a careful and proper
manner in conformity with (i) all statutes and regulations of each governmental
authority having jurisdiction over the Lessee and/or the Equipment and its use,
and (ii) all policies of insurance relating to the Equipment and/or its use. In
addition, Lessee shall not (i) use any Item of Equipment in any manner that
would impair the applicability of manufacturer's warranties or render any Item
of Equipment unfit for its originally intended use; nor (ii) permit anyone other
than authorized and competent personnel to operate any Item of Equipment.
12. ALTERATIONS. Without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, Lessee shall not make any alterations,
modifications or attachments to the Equipment. All alterations, modifications
and attachments of whatsoever kind or nature made to any Item of Equipment must
be removed without damaging the functional capabilities or economic value of the
affected Item of Equipment upon the termination of the Lease. Under no
circumstances shall any such alteration, modification or attachment be
encumbered by Lessee.
13. MAINTENANCE AND REPAIRS. Lessee shall at its own expense and without
authority to bind Lessor maintain each Item of Equipment in good mechanical
condition and running order, normal wear and tear excepted. Immediately upon
installation, Lessee shall provide to Lessor a perfected first lien security
interest in any and all replacement parts.
14. RISK OF LOSS, DAMAGE AND THEFT.
(a) All risk of loss, damage, theft or destruction, partial or complete, to
any Item of Equipment incurred or occasioned by any cause, circumstance or event
of whatever nature will be borne by Lessee from and after delivery of each Item
of Equipment to a carrier FOB point of origin. Lessee shall promptly notify
Lessor of any theft of or loss or damage to the Equipment.
(b) Neither total nor partial loss of use or possession of any Item of
Equipment shall abate the rent.
(c) An Item of Equipment shall be deemed subjected to total loss when (i) it
has disappeared regardless of the reason for disappearance or (ii) when it has
sustained physical damage and the estimated cost of repair exceeds 75% of the
fair market value (as determined by an independent appraiser chosen by Lessor)
on the date of damage. Lessee's duty to pay rent for any Item of Equipment
subjected to total loss shall be discharged by paying to Lessor the sum of the
then unpaid principal plus accrued interest plus the purchase option at the
price specified on the Schedule plus any applicable prepayment penalty plus all
costs associated with releasing the Lessor's security interest plus any other
sums then due and payable under the Lease. The amount of applicable insurance
proceeds, if any, actually received by Lessor shall be subtracted from the
amount for which Lessee is liable under this Paragraph 14.
<PAGE>
(d) Lessee shall cause any Equipment subjected to partial loss to be restored
to original capability. Lessor shall, upon receiving satisfactory evidence of
restoration, promptly pay to Lessee the proceeds of any insurance or
compensation received by Lessor, by reason of such partial loss, provided
however, that Lessor shall release such proceeds, to the extent such proceeds
have been received by Lessor, in advance of restoration to the extent necessary
to purchase materials or make progress payments upon the submission of
appropriated work orders, invoices, estimates, or other satisfactory
documentation.
(e) Lessor shall not be obligated to undertake the collection of any claim
against any person for either total or partial loss of any Item of Equipment.
After Lessee discharges its obligations to Lessor under either 14(c) or 14(d)
above, Lessee may, for Lessee's own account, proceed to recover from third
parties and shall be entitled to retain any amount recovered. Lessor shall
supply Lessee with any necessary assignment of claim.
15. INDEMNIFICATION.
(a) Non-tax Liability. Lessee assumes liability for, and hereby agrees to
------------------
indemnify, protect and hold harmless, Lessor, its agents, servants, employees,
officers, successors and assigns from and against, any and all liabilities,
obligations, losses, damages, injuries, claims, demands, penalties, actions,
costs and expenses, including reasonable attorney's fees, of whatsoever kind and
nature, arising out of (i) the manufacture, installation, use, condition
(including, but not limited to, latent and other defects and whether or not
discoverable by Lessee or Lessor), operation, ownership, selection, delivery,
leasing, removal or return of any Item of Equipment, regardless of where, how
and by whom operated, or (ii) any failure on the part of Lessee to perform or
comply with any covenantor condition of this lease.
(b) Direct Tax Costs. In addition to all other rents payable hereunder, the
-----------------
Lessee agrees to indemnify, protect and hold harmless Lessor, its agents,
servants, employees, officers, successors and assigns from and against any and
all taxes, license fees, assessments and other governmental charges, fees, fines
or penalties of whatsoever kind or character and by whomsoever payable, which
are levied, assessed, imposed or incurred during the lease term, (i) on or
relating to each Item of Equipment, including any tax on the sale, ownership,
use, leasing, shipment, transportation, delivery or operation thereof, (ii) on
the exercise of any option, election or performance of an obligation by the
Lessee hereunder, (iii) of the kind generally referred to in items (i) and (ii)
above which may remain unpaid as of the date of delivery of any Item of
Equipment to the Lessee irrespective of when the same may have been levied,
assessed, imposed or incurred, and (iv) by reason of all gross receipts,
business and occupation, and like taxes on or measured by rents payable
hereunder levied by any state or local taxing authority having jurisdiction
where any Item of Equipment is located. The Lessee agrees to comply with all
state and local laws requiring the filing of ad valorem tax returns relating to
each Item of Equipment. Any statements for such taxes received by the Lessor
shall be promptly forwarded to the Lessee. This subparagraph shall not be
deemed to obligate the Lessee to pay (i) any taxes, fees, assessments and
charges which may have been included in the Lessor's cost of each Item of
Equipment as set forth in Schedule(s) hereto, or (ii) any income or like taxes
against the Lessor on or measured by the net income from the rents payable
hereunder. The Lessee shall not be obligated to pay any amount under this
subparagraph so long as it shall, at its expense and in good faith and by
appropriate proceedings, contest the validity or the amount thereof unless such
contest would adversely affect the title of the Lessee, or any security interest
of Lessor, to an Item of Equipment or would subject any Item of Equipment to
forfeiture or sale. The Lessee agrees to indemnify the Lessor against any loss,
claim, demand and expense including legal expense resulting from such nonpayment
or contest.
(c) Indemnity Payment. The amount payable pursuant to subparagraphs 15(a)
------------------
and 15(b) shall be payable upon demand of the Lessor accompanied by a statement
describing in reasonable detail such loss,
<PAGE>
liability, injury, claim, expense or tax and setting forth the computation of
the amount so payable.
(d) Survival. The indemnities and assumptions of liabilities and obligations
---------
provided for in this Paragraph 15 shall continue in full force and effect
notwithstanding the expiration or other termination of this Lease.
16. LESSEE'S ASSIGNMENT. Without the prior written consent of the Lessor,
Lessee shall not bail, hypothecate, transfer or dispose of any Item of Equipment
or any interest in this Lease nor impair the Lessor's title to the Equipment.
Lessee shall not assign this Lease, nor shall this Lease or any rights under
this Lease or in any Item of Equipment inure to the benefit of any trustee in
bankruptcy, receiver, creditor, or other successor of Lessee whether by
operation of law or otherwise, without prior written consent of the Lessor.
17. LESSOR'S ASSIGNMENT. All rights of Lessor hereunder and in any Item of
Equipment may be assigned, pledged, mortgaged, transferred, or otherwise
disposed of, either in whole or in part, without notice to Lessee. No such
assignee shall be obligated to perform any duty, covenant, or condition required
to be performed by Lessor under the terms of this Lease. Such assignee shall
have all rights, powers and remedies given to Lessor by this Lease, and upon
notice to Lessee, shall be named as loss payee or co-insured under all policies
of insurance maintained pursuant to Paragraph 18 hereof. If Lessor assigns this
Lease or the monies due or to become due hereunder or any other interest herein,
Lessee agrees not to assert against Lessor's assignee any defense, set-off,
recoupment, claim or counterclaim which Lessee may have against Lessor, whether
arising under this Lease or any other transaction between Lessor and Lessee.
Subject to Paragraph 16 hereof and this Paragraph 17, this Lease inures to the
benefit of, and is binding upon, the heirs, legatees, personal representatives,
successors and assigns of the parties hereto.
18. INSURANCE. Lessee will at its own expense insure each Item of Equipment in
compliance with the terms and conditions of the Insurance Schedule(s) attached
hereto or incorporated herein by reference inform satisfactory to Lessor with
insurance carriers approved by Lessor and in an amount not less than one hundred
five (105%) percent of the unpaid principal balance due hereunder. The proceeds
of any insurance policy due by reason of theft or loss of or damage to any Item
of Equipment shall be applied as provided in Paragraph 14 hereof. In addition
to the compliance with the terms and conditions of the Insurance Schedule(s) and
the other terms and conditions of this Paragraph 18, the Lessee shall comply
with the following conditions:
(a) Lessee, prior to the inception of any rental term, shall deliver to
Lessor all required policies of insurance or in the alternative certificates of
insurance (in triplicate);
(b) Lessee shall cause each insurer to agree by endorsement on the policies
or certificates of insurance or by an independent instrument furnished Lessor
that each such insurer will give at least thirty (30) days written notice to
Lessor before any such policy or policies of insurance will be altered or
cancelled for any reason, including without limitation, failure of the Lessee to
pay premiums;
(c) All coverage required by the Insurance Schedule(s) must be in effect when
Lessor takes delivery or causes delivery to be made FOB point of origin;
(d) All insurance policies must indicate that the Lessor is an additional
insured for all aspects of liability insurance coverage and is loss payee for
all aspects of insurance coverage relating to the theft or loss of or damage to
Equipment and the proceeds of any public liability or property damage insurance
shall be applied first to the extent of the Lessor's liability;
<PAGE>
(e) Lessee will furnish renewal policies or renewal certificates of insurance
(in triplicate) listing Lessor as an additional insured and/or loss payee, as
required by this Lease, no later than thirty (30) days prior to the expiration
of any insurance coverage required hereby.
19. ADDITIONAL DOCUMENTS. If Lessor shall so request, Lessee shall execute and
deliver to Lessor such documents, including without limitation, UCC Financing
and Continuation Statements, as Lessor shall deem necessary or desirable for
purposes of continuing this Lease or recording or filing to protect the interest
of Lessor in each Item of Equipment. Any such filing or recording shall not be
deemed evidence of any intent to create a security interest.
20. FURNISHING FINANCIAL INFORMATION. During the term of this Lease and any
extensions or renewals hereof, Lessee will furnish to Lessor:
(a) Within forty five (45) days after the end of each of the first three
quarterly periods of Lessee's fiscal year, a balance sheet and statement of
income of Lessee as at the close of such quarterly period from the beginning of
the fiscal year to the date of such statement, prepared in accordance with
generally accepted accounting principles, consistently applied, and in such
reasonable detail as Lessor may request, certified as true, complete and correct
by an authorized officer of the Lessee.
(b) As soon as practicable, but in any event within ninety (90) days after
the end of each fiscal year, a copy of its annual audit prepared by a certified
public accountant selected by Lessee and satisfactory to Lessor.
(c) In a timely manner such financial statements, reports and other
information as the Lessee shall send from time to time to its stockholders
and/or file with the Securities and Exchange Commission and/or other materials
which Lessor shall reasonably request.
21. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR. If Lessee fails to
promptly perform any of its obligations under this Lease, Lessor may perform the
same for the account of Lessee without waiving Lessee's failure as a default.
All sums paid or expense or liability incurred by Lessor in such performance
(including reasonable legal fees) together with interest thereon at the highest
contractual rate enforceable against Lessee, but never at a higher rate than
15% per annum simple, shall be payable by the Lessee upon demand as additional
rent.
22. PURCHASE OPTION. Provided Lessee is not in default hereunder, Lessee may
purchase all, but not less than all, of the Items of Equipment listed on each
individual Schedule at the price specified in such Schedule at the end of the
rental term. The purchase of the Items of Equipment shall occur AS IS, WHERE IS,
WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER except that Lessor shall
deliver title to the Items of Equipment free of any lien or encumbrance created
by any act of the Lessor. In the event the Lessee fails to exercise its purchase
option, Lessee will return those Items of Equipment not purchased, freight and
insurance prepaid, to Lessor (or Lessor's nominee) at a location designated by
Lessor. If Lessee fails to exercise its purchase option and fails to return any
Item of Equipment, then at Lessor's option this Lease may be extended on a
month-to-month basis, with rent payable on the first of each month, at the rate
applicable during the lease term just ended.
23. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an Event of Default hereunder and entitle the Lessor, at its option,
to avail itself of the remedies more fully set forth in Paragraph 24 hereof:
<PAGE>
(a) Non-payment by Lessee of any rent or other amount provided for in this
Lease when the same becomes due whether by acceleration or otherwise;
(b) Failure of the Lessee to perform any of the non-monetary obligations,
terms or conditions of this Lease within thirty (30) of receipt of written
notification thereof from Lessor;
(c) The Lessee shall commence a voluntary case or other proceeding seeking
liquidation, reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or the taking
possession by any official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of its creditors,
or shall fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(d) If an involuntary case or other proceeding should be commenced against
Lessee seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of thirty (30) days;
(e) The occurrence of any event described in this Paragraph 23(c) through (d)
hereof with respect to any guarantor or any other party liable for payment or
performance of this Lease;
(f) Any certificate, statement, representation, warranty or financial
statement heretofore or hereafter furnished pursuant to or in connection with
this Lease by or on behalf of Lessee or any guarantor or other party liable for
payment or performance of this Lease is false in any material respect at the
time as of which the facts therein set forth were stated or certified, or omits
any substantial contingent or unliquidated liability or claim against Lessee or
any such guarantor or other party, or, upon the date of execution of this
document or any Schedule, there shall have been any materially adverse change in
any of the facts disclosed by any such certificate, statement, representation or
warranty, which shall not have been disclosed in writing to Lessor at or prior
to the time of the execution of this document or such Schedule.
24. REMEDIES. Upon the happening of any Event of Default hereunder, the rights
and duties of the parties shall be as set forth in this Paragraph 24.
(a) Upon Lessor's demand, the Equipment shall be promptly delivered to
Lessor, at that place or those places designated by Lessor. If Lessee does not
so deliver the Equipment, Lessee shall make the Equipment available for retaking
and authorizes Lessor, its employees and agents to enter the premises of the
Lessee and any other premises (insofar as Lessee can permit) for the purpose of
retaking. In the event of retaking, Lessee expressly waives all rights to
possession and all claims for injuries suffered through or loss caused by
retaking. Any repossession accomplished under this Paragraph 24(a) shall not
release Lessee from liability for damages of Lessor sustained by reason of
Lessee's default hereunder.
(b) Lessor may revoke Lessee's privilege of paying rent in installments and,
upon Lessor's demand, the Lessee shall promptly pay to Lessor the portion of the
rent then remaining unpaid plus all other sums due and unpaid.
(c) Lessor may sell or release the Equipment or any part thereof, at public
auction or by private sale
<PAGE>
or lease at such time or times and upon such terms as Lessor may determine, free
and clear of any rights of Lessee and, if notice thereof is required by law, any
notice in writing of such sale or lease by Lessor to Lessee not less than ten
(10) days prior to the date thereof shall constitute reasonable notice thereof
to Lessee. All proceeds of the sale or releasing, or both (less (i) all expenses
incurred in retaking the Equipment, making necessary repairs to the Equipment
and enforcing this Lease, (ii) all damages that Lessor shall have sustained by
reason of Lessee's default, and (iii) reasonable attorney's fees) shall be
credited against Lessee's liability hereunder as and when received by Lessor.
Sums in excess of Lessee's liability shall belong to Lessee. The Lessee shall be
liable for any deficiency.
(d) The provisions of this Paragraph 24 shall not prejudice Lessor's right to
recover or prove damages for unpaid rent accrued prior to default, or bar an
action for a deficiency as herein provided, and the bringing of an action with
an entry of judgment against Lessee shall not bar the Lessor's right to
repossess any or all Items of Equipment.
(e) Lessor's remedies shall be available to Lessor's successors and assigns,
shall be in addition to all other remedies provided bylaw, and may be exercised
concurrently or consecutively. LESSEE WAIVES ANY AND ALL RIGHTS TO NOTICE AND
TO JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF THE EQUIPMENT BY LESSOR
IN THE EVENT OF A DEFAULT HEREUNDER BY LESSEE. LESSEE HEREBY WAIVES ANY RIGHT
TO DEMAND A JURY TRIAL WITH RESPECT TO ANY ACTION OR PROCEEDING INSTITUTED BY
THE LESSOR OR THE LESSEE IN CONNECTION WITH THIS LEASE.
25. GOVERNING LAW AND CONSENT OF JURISDICTION. This Lease has been executed
and delivered in the Commonwealth of Pennsylvania. The laws and decisions of
said Commonwealth will govern and control the construction, enforceability,
validity and interpretation of this Lease, and of all agreements, instruments
and documents, heretofore, now or hereafter executed by Lessee and delivered to
Lessor pertaining or relating to this Lease or the transactions contemplated
herein. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in the Court of Common Pleas of
Allegheny County, Pennsylvania, or in the United States District Court for the
Western District of Pennsylvania and Lessee agrees that, in addition to any
other manner of service prescribed bylaw or rule of court, a summons and
complaint commencing an action or proceeding in either such Court shall be
properly served upon Lessee and shall confer personal jurisdiction if served
personally or by United States registered mail, return receipt requested, to the
Lessee at the address indicated below.
26. JUDGMENT BY CONFESSION. LESSEE HEREBY EMPOWERS THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR
FOR LESSEE AND, WITH OR WITHOUT ONE OR MORE DECLARATIONS FILED, ENTER A JUDGMENT
OR JUDGMENTS AGAINST LESSEE IN FAVOR OF LESSOR, AS OF ANY TERM, FOR THE SUM THEN
DUE AND PAYABLE UNDER THIS LEASE, WITH COSTS OF SUIT AND ATTORNEY'S COMMISSION
OF 15% FOR COLLECTION; WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF EXECUTION,
AND INQUISITION AND EXTENSION UPON ANY LEVY IS HEREBY WAIVED AND CONDEMNATION
AGREED TO, AND THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON ANY EXECUTION
HEREON IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF EXEMPTION SHALL BE
CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN FORCE OR WHICH MAY
HEREAFTER BE ENACTED.
27. CONFLICT OF PROVISIONS. In the event of any conflict of provisions between
any Schedule and any other document, the provisions of the Schedule shall
control.
<PAGE>
28. AMENDMENTS AND WAIVERS. This document, the Schedule(s) and Insurance
Schedule(s) executed by Lessor and Lessee constitute the entire agreement
between Lessor and Lessee with respect to the Equipment and the subject matter
of this Lease. No term or provision of this Lease may be changed, waived,
amended or terminated except by a written agreement signed by both Lessor and
Lessee, except that Lessor may insert on the appropriate Schedule the serial
number of any Item of Equipment after delivery thereof. No express or implied
waiver by Lessor of any Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Event of Default whether
similar in kind or otherwise.
29. NOTICES. Except as otherwise provided in Paragraph 28 above, service of
all notices under this Lease shall be sufficient if given personally or mailed
to the party involved at its respective address set forth in the most recent
Schedule relating hereto, or at such address as such party may otherwise provide
in writing from time to time. Any such notice mailed to such address shall be
effective three (3) business days from the date of deposit in the United States
mail, duly addressed with first class postage prepaid.
30. GENDER; NUMBER. Whenever the context of this Lease requires, the neuter
gender includes the masculine and the feminine, and the singular number includes
the plural. Whenever the word Lessor is used herein, it shall include all
assignees of Lessor. If there is more than one Lessee named in this Lease, the
liability of each shall be joint and several.
31. TITLES. The titles to the paragraphs of this Lease are solely for the
convenience of the parties, and are not an aid in the interpretation of the
instrument.
32. SEVERABILITY OF PROVISIONS. If any provision of this Lease is held invalid
or unenforceable, the remaining provisions will not be affected thereby, and to
this end the provisions of this Lease are declared severable.
33. LESSEE RIGHT TO SUBLEASE. Lessor acknowledges and agrees that Lessee will
sublease the Equipment to SMT Mobile V Corp., or to any other wholly owned
subsidiary of Lessee upon prior written notice to Lessor, for the purpose of
providing magnetic resonance imaging services under certain Magnetic Resonance
Imaging Service Agreements. Lessee shall execute and assign to Lessor such
documents between Lessee and Sublessee as Lessor may reasonably request to
protect Lessor's rights under this Lease. Lessee acknowledges and agrees that in
no event shall any such sublease relieve Lessee from its obligations under this
Lease.
34. ADDITIONAL SECURITY. Lessee covenants and agrees that on or before the
commencement date of the rental term for the Equipment as designated in the
Schedule, Lessee will provide or cause to be provided to Lessor, in form and
substance satisfactory to Lessor an assignment of any and all Magnetic Resonance
Imaging Service Agreements, or similar agreements, now existing or hereinafter
acquired, to be serviced by the Equipment leased hereunder, and a first security
interest in any and all payments due thereunder. Lessee will promptly provide
written notice to Lessor of any additions, deletions, amendments, or
substitutions to any such agreements. Lessee also covenants and agrees to
provide, or cause to be provided to Lessor, upon Lessor's request, a Letter of
Credit inform and substance satisfactory to Lessor. WITNESS the due execution
hereof with the intent to be legally bound.
<PAGE>
ATTEST/WITNESS: LESSEE: SMT HEALTH SERVICES INC.
ADDRESS: 10521 Perry Highway
Wexford, PA 15090
By By David A. Zynn
------------------------ ---------------------------------
Title Title CFO / Treasurer
--------------------- ------------------------------
Accepted at Pittsburgh, Pennsylvania by:
LAUREL CAPITAL CORPORATION
By
--------------------------------------
Title
-----------------------------------
<PAGE>
LAUREL CAPITAL CORPORATION
3810 McKnight East Drive
Pittsburgh, PA 15237
GUARANTY
September 12, 1996
Dear Sirs:
For value received, Undersigned jointly and severally unconditionally guarantee
to you and become surety to you for the full and prompt performance by SMT
Health Services Inc.; 10521 Perry Highway; Wexford, PA 15090; herein called
"Obligor", of all obligations which Obligor presently or hereafter may have to
you, and payment when due of all sums presently or hereafter owing by Obligor to
you, and agree to indemnify you against any losses you may sustain and expenses
you may incur in the enforcement of this agreement.
For the purposes of this guaranty and indemnity, all sums owing to you by
Obligor shall be deemed to have become immediately due and payable if (a)
Obligor defaults in any of its obligations to you; (b) a petition under any
provisions of the Bankruptcy Code, as amended, or for the appointment of a
receiver of any part of the property of Obligor be filed against Obligor, and be
not dismissed within thirty days; (c) such a petition is filed by Obligor;
(d) Obligor make a general assignment for the benefit of creditors, suspends
business or commits any act amounting to a business failure, or (e) an
attachment be levied or tax lien be filed against any of Obligor's property.
This shall be a continuing guaranty and indemnity and, irrespective of the lack
of any notice to or consent of the Undersigned, their obligations hereunder
shall not be impaired in any manner whatsoever by any (a) new agreements or
obligations of Obligor with you; amendments, extensions, modifications, renewals
or waivers of default as to any existing or future agreements or obligations of
Obligor or third parties with or to you, or extensions of credit by you to
Obligor; (b) adjustments, compromises or releases of any obligations of Obligor,
Undersigned or other parties, or exchanges, releases or sales of any security of
Obligor, Undersigned or other parties; (c) fictitiousness, incorrectness,
invalidity or unenforceability, for any reason, of any instrument or writing,
or acts of commission or omission by you or Obligor; (d) compositions,
extensions, moratoria or other relief granted to Obligor pursuant to any statute
presently in force or hereafter enacted, or (e) interruptions in the business
relations between you and Obligor. Notice of your acceptance hereof, of default
and non-payment by Obligor or any other parties, of presentment, protest and
demand, and of all other matters of which Undersigned otherwise might be
entitled, is waived.
The obligations hereunder of Undersigned are both joint and several, and shall
be binding upon their respective heirs and personal representatives. The
failure of any person to sign this guaranty and indemnity shall not affect the
liability hereunder of any signer thereof. The death or release from liability
hereunder of any of Undersigned shall not relieve the others from liability
hereunder. Each of Undersigned may terminate his obligations hereunder as to
then future transactions between you and Obligor by registered mail notice to
you at your above-stated address, provided, however, that such termination shall
not affect either his liability hereunder with respect to any obligations of
Obligor to you incurred prior to your receipt of such notice, or the continuing
liability of such of the others of Undersigned as have not given such notice.
<PAGE>
This guaranty and indemnity is assignable, shall be construed liberally in your
favor and shall inure to the benefit of your successors and assigns. If Obligor
should default in the performance of any of Obligor's obligations to you, and if
any third party makes any payment to you with respect thereto, such third party
shall, to the extent thereof, be subrogated to all of your rights against
Undersigned hereunder. Legal rights and obligations hereunder shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania.
UNDERSIGNED HEREBY EMPOWER THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF
RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR FOR THEM AND, WITH OR
WITHOUT ONE OR MORE DECLARATIONS FILED, ENTER A JUDGMENT OR JUDGMENTS AGAINST
THEM OR ANY OF THEM IN FAVOR OF YOU, AS OF ANY TERM, FOR THE SUM THEN DUE AND
PAYABLE UNDER THIS AGREEMENT OF GUARANTY, WITH COSTS OF SUIT AND ATTORNEY'S
COMMISSION OF 15% FOR COLLECTION; WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF
EXECUTION, AND INQUISITION AND EXTENSION UPON ANY LEVY IS HEREBY WAIVED AND
CONDEMNATION AGREED TO, AND THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON
ANY EXECUTION HEREON IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF EXEMPTION
SHALL BE CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN FORCE OR WHICH
MAY HEREAFTER BE ENACTED.
This Guaranty has been executed and delivered in the Commonwealth of
Pennsylvania. The laws and decisions of said Commonwealth will govern and
control the construction, enforceability, validity and interpretation of this
Guaranty, and of all agreements, instruments and documents, heretofore, now or
hereafter executed by Undersigned and delivered to Lessor pertaining or relating
to this Guaranty or the transactions contemplated herein. The parties agree
that any action or proceeding arising out of or relating to this Guaranty may be
commenced in the Court of Common Pleas of Allegheny County, Pennsylvania, or in
the United States District Court for the Western District of Pennsylvania and
Undersigned agrees that, in addition to any other manner of service prescribed
by law or rule of court, a summons and complaint commencing an action or
proceeding in either such Court shall be properly served upon Undersigned and
shall confer personal jurisdiction if served personally or by United States
registered mail, return receipt requested, to the Undersigned at the address
indicated below.
Very truly yours,
CORPORATE GUARANTORS: SMT MOBILE V CORP.
Attest:
By By
----------------------------- ---------------------------------------
Title Title
Address: 10521 Perry Highway
-------------------
Wexford PA 15090
-------------------
(Corporate Seal)
<PAGE>
CONDITIONAL ASSIGNMENT AND SECURITY AGREEMENT
- ---------------------------------------------
This Conditional Assignment and Security Agreement ("Agreement") dated
September 12, 1996 is entered into between SMT Health Services Inc.
("Assignor"/"Lessee"/"Sublessor"), SMT Mobile V Corp. ("Sublessee") and Laurel
Capital Corporation ("Assignee/Lessor").
This Agreement is entered into with reference to the following mutually agreed
to facts:
1. WHEREAS, Assignor and Assignee have entered into that certain Master
Equipment Lease ("Lease") dated September 12, 1996 providing for the lease of
the personal property described in the Lease ("Equipment");
2. WHEREAS, Assignor desires to sublease the Equipment pursuant to the terms
of a sublease dated September 12, 1996 entered into between Assignor and
Sublessee ("Sublease").
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the above parties, hereby agree to the following
terms and conditions:
1. Consent to Sublease. Assignee hereby consents to Assignor's Sublease of
--------------------
the Equipment to Sublessee under the terms and conditions as provided herein.
2. Conditional Assignment. Assignor hereby conditionally assigns and grants
-----------------------
to Assignee a security interest in and all of its rights flowing from and under
the Lease and Sublease including without limitation the Equipment; provided,
--------
however, Assignee does not hereby assume duties, liabilities or obligations of
- -------
Assignor under the Sublease.
3. Conditional Nature of Assignment. Assignee hereby acknowledges and agrees
---------------------------------
that so long as there exists no default of any of the terms of the Lease and/or
Sublease, Assignor shall have the right to enjoy all of the rights, benefits and
privileges arising under the Sublease.
4. Default. Upon or at any time after the occurrence of a breach under any
--------
of the terms, provisions or conditions as defined in the Lease and/or Sublease,
Assignee may, at its election, exercise any and all rights under the Lease
and/or Sublease, in addition to all of its rights under the Lease and/or
Sublease, in addition to all of its rights and remedies as a Secured party under
the Uniform Commercial Code.
5. Term. This Agreement shall remain in full force and effect so long as any
-----
of the obligations, liabilities and debtness of Assignor to Assignee, whether
arising under the Lease or otherwise, remain outstanding.
<PAGE>
6. Assignment. Assignee shall have the right to assign all of its rights
-----------
under this Agreement. Assignor and Sublessee shall not have any right to assign
this Agreement without the prior written consent of Assignee.
7. Amendment of Sublease. The Sublease shall not be changed, altered or
-----------------------
modified in any manner, except by the prior written consent of Assignee.
8. Subordination. Sublessee acknowledges that the Sublease is in all
--------------
respects subject and subordinate to the Lease, including without limitation, the
rights of Assignee to repossess the equipment and void the Sublease in the event
of a default by Assignor under the Lease.
9. Amendment. This Agreement shall not be released, discharged, changed or
-----------
modified in any manner, except by the prior written consent of Assignee.
10. Waiver. No waiver of any right hereunder shall be deemed a waiver or
-------
forfeiture of such right as to future matters.
11. California Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LAUREL CAPITAL CORPORATION SMT HEALTH SERVICES INC.
"Assignee/Lessor" "Assignor/Lessee/Sublessor"
By: By:
-------------------------- ----------------------------
Title: Title:
----------------------- --------------------------
- ------------------------------ --------------------------------
(Print Name) (Print Name)
SMT MOBILE V CORP.
"Sublessee"
By:
----------------------------
Title:
-------------------------
--------------------------------
(Print Name)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE OF LEASED EQUIPMENT LAUREL CAPITAL CORPORATION 810 MCKNIGHT EAST DRIVE
LESSOR PITTSBURGH, PA 15237
</TABLE>
SCHEDULE NO. 2179-1
------
- -------------------------------------------------------------------------------
LESSEE (COMPLETE NAME AND ADDRESS) SUPPLIER (COMPLETE NAME AND ADDRESS)
SMT Health Services Inc. 1) GE Medical Systems; P.O. Box 414
10521 Perry Highway Milwaukee, WI 53201
Wexford, PA 15090
2) Ellis Watts
P.O. Box 44010
Cincinnati, OH 45244
- -------------------------------------------------------------------------------
1. This schedule of leased equipment ("Schedule") is hereby made a part of the
lease between the undersigned Lessor and the undersigned Lessee dated
September 12, 1996. All terms and conditions of said lease are incorporated
------------------
herein by reference.
2. The equipment subject to the to the lease is:
- -------------------------------------------------------------------------------
QUANTITY DESCRIPTION AND SERIAL NUMBER PRICE
- -------------------------------------------------------------------------------
See Attached Schedule of Equipment, Exhibit "A"
Include all taxes levied at the time of sale, or
include in block 4.E. below, whichever is appropriate
in jurisdiction where equipment is located.
- -------------------------------------------------------------------------------
THE TOTAL EQUIPMENT COST INCLUDING TAXES LEVIED AT THE TIME OF SALE IS:
$1,600,000
- -------------
- -------------------------------------------------------------------------------
3. Equipment shall be located at See Attached Schedule of Location of Equipment.
----------------------------------------------
Exhibit "B" and shall not be removed therefrom without Lessor's prior written
-----------
consent.
4. The original term of the lease as to the equipment described in this
Schedule is 5 years commencing on September 15, 1996 and terminating on
--- ------------------
September 15, 2001 unless sooner terminated under the terms of the lease. As
------------------
rent for the equipment, Lessee shall pay total rent of $2,027,926.80 as
-------------
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
A B C D E F G
Security Number and Date these Amt. of Tax on Total payment Date these
Deposit type payments payment payment (D+E) payments
(If any) of payments commence (if any) terminate
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Monthly 60 9/15/96 33,798.79 0.00 33,798.79 7/15/2001
-------- ------------- -------------- -------------- ----------------- ---------------
Quarterly
-------- ------------- -------------- -------------- ----------------- ---------------
Annually
-------- ------------- -------------- -------------- ----------------- ---------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Lessee may, pursuant to Section 22 Purchase Option of the Lease Agreement,
purchase all but not less than all of the Items of Equipment listed hereon
for $1.00 at the end of the rental term.
6. By executing and delivering to Lessor, the Lessee Acceptance form attached
hereto, Lessee warrants, covenants and agrees that (a) Lessee has
received all Equipment described in this Schedule at the location described
in 3 hereof; (b) Lessee has duly inspected and accepts such Equipment without
reservations; (c) Lessee is unconditionally bound to pay to Lessor the Total
Rent and other payments due under the Lease, whether or not any Equipment
described herein may now be or hereafter become unsatisfactory in any
respect; and (d) Notwithstanding anything contained herein, Lessor and
Lessee shall continue to have all rights which either of them might
otherwise have with respect to Equipment described herein against any
manufacturer or seller of said Equipment or any part thereof.
- --------------------------------------------------------------------------------
ADDITIONAL REMARKS:
Lessee paid the first and last monthly rental payments in advance.
- --------------------------------------------------------------------------------
SIGNATURES - IN INK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date , 19 Date , 19
------------------------ --- ------------------------ ---
Lessee: (Full legal name)
Lessor: LAUREL CAPITAL CORPORATION
SMT HEALTH SERVICES INC.
By By
---------------------------------- -----------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.08
LAUREL CAPITAL CORPORATION
FINANCE LEASE
3810 McKnight East Drive
Pittsburgh, PA 15237
[412] 366-6440
Finance Lease No. 2165
This Lease, made this 26st day of July 1996 by and between LAUREL CAPITAL
CORPORATION ("Lessor") and SMT HEALTH SERVICES INC. ("Lessee").
1. LEASE AGREEMENT. Lessor hereby leases to Lessee, and Lessee hereby rents
from Lessor, all the machinery, equipment and other personal property
(individually "Item of Equipment" and collectively "Equipment") described in
Equipment Lease Schedules which are or may from time to time hereafter be
executed by Lessor and Lessee and attached hereto or incorporated herein by
reference ("Schedules") upon the terms and conditions set forth in this Lease,
as supplemented, as regards each Item of Equipment, by the terms and conditions
set forth in the Schedule identifying that Item of Equipment. Whenever reference
is made herein to "this Lease", it shall be deemed to include each of the
several Schedules and the Insurance Schedule(s) referred to herein all of which
constitute one undivided lease of the Equipment.
2. TERM.
(a) The obligations under this Lease commence upon the written acceptance
hereof by Lessor and shall end upon full performance and observance of each and
every term, condition and covenant set forth in this Lease and any extensions
hereof. The rental term for Equipment listed in each Schedule shall commence on
the date indicated on such Schedule and shall terminate on the last day of the
term stated in such Schedule.
(b) In the event Lessor shall make payments on the Equipment prior to the
commencement date of the rental term as indicated on the Schedule, Lessee shall
pay interim rental payments from the date of such payments by Lessor to the
commencement date of the rental term. The interim rental payments shall be
based on the daily equivalent of two (2.00%) percent over the prime interest
rate (fully floating) as announced from time to time by PNC Bank, National
Association. Interim rental payments are due monthly.
3. RENT. The rent, including interim rental payments, for the Items of
Equipment described in each Schedule shall be the amount stated in such
Schedule. Rent is an absolute obligation of Lessee due upon the inception of
each rental or interim rental term and payable as specified in each particular
Schedule irrespective of any claims, demands, set-offs, actions, suits or
proceedings that Lessee may have or assert against Lessor or any supplier of
Equipment. Rent and interim rent shall be payable to Lessor at its office, 3810
McKnight East Drive, Pittsburgh, Pennsylvania 15237, or at such other place as
Lessor or its assigns may designate in writing to Lessee from time to time.
4. DELINQUENT RENT PENALTY. If Lessee shall fail to pay any rent, interim rent
installment or other amount due hereunder within ten (10) days after the due
date and until all sums due hereunder have been declared due and payable in
accordance with Paragraph 24, Lessee shall pay to Lessor a late charge of five
(5%) percent of such amount due for each month or part thereof for which said
rent or other sums shall be
<PAGE>
delinquent. After all sums are declared due and payable in accordance with
Paragraph 24, Lessee shall pay interest at the rate of fifteen (15%) percent per
annum or the maximum contract rate permitted by law, whichever is less, on such
accelerated sums from the date of acceleration until paid, and whether or not
judgment hereon has been entered.
5. DELIVERY AND INSTALLATION. Lessee will select the type, quantity and
supplier of each Item of Equipment and in reliance thereon such Equipment will
then be ordered by Lessor from such supplier or Lessor may at its option elect
to accept an assignment of any existing purchase order. Lessor shall not be
liable for loss or damage occasioned by any cause, circumstance or event of
whatsoever nature, including, but not limited to, failure of or delay in
delivery, delivery to wrong location, delivery of improper equipment or property
other than the Equipment, damage to the Equipment, governmental regulations,
strikes, embargoes or other causes, circumstances or events whether of a like or
unlike nature. Lessee, at its expense, will pay all transportation, packing,
installation, testing and other charges in connection with the delivery,
installation and use of each Item of Equipment. In the event that the cost of
any Item of Equipment differs from the price set forth in the purchase order
therefor, the monthly rental shall be changed accordingly to fully reflect any
such difference. In the event that Lessee fails or refuses to accept delivery
of the Equipment within ninety (90) days following the execution of the Lease
(unless such period is extended by an agreement between Lessor and Lessee in
writing), Lessor may terminate the Lease and Lessee will remit to the Lessor an
amount equal to the down payment and installments previously paid by the Lessor
to the vendor or supplier of the Equipment, together with interest accrued
thereon at the highest contractual rate enforceable against Lessee under
applicable law but never at a rate higher than fifteen (15%) percent per annum.
Lessor shall assign to Lessee without recourse all of Lessor's interest in and
to the Equipment under the vendor purchase agreements.
6. WARRANTY OF LESSEE'S QUIET POSSESSION. Lessor warrants and covenants that
so long as Lessee faithfully performs this Lease, Lessee, subject to the
disclaimer of warranties set forth immediately below, shall be entitled to
quietly possess and use the Equipment without interference.
7. DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTIES SET FORTH ABOVE,
LESSOR, NOT BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S
AGENT, MAKES NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT
TO THE EQUIPMENT. THIS DISCLAIMER OF WARRANTIES INCLUDES BUT IS NOT LIMITED TO
ANY WARRANTY REGARDING: THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR
ANY PARTICULAR PURPOSE; THE DESIGN OR CONDITION OF THE EQUIPMENT; THE QUALITY OR
CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP OF THE EQUIPMENT; COMPLIANCE OF THE
EQUIPMENT WITH THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT
PERTAINING THERETO; PATENT INFRINGEMENT; OR LATENT DEFECTS; it being agreed that
all such risks, as between Lessor and Lessee, are to be borne by the Lessee.
Lessor is not responsible or liable for any direct, indirect, incidental or
consequential damage to, or loss resulting from, the installation, operation or
use of any Item of Equipment or any product manufactured thereby.
8. NATURE OF EQUIPMENT. Not withstanding anything to the contrary contained
in this Agreement, including the characterization of this Agreement as a lease,
the parties hereto acknowledge and agree that, legal title to each Item of
Equipment leased hereunder shall be with the Lessee. Each Item of Equipment
shall remain personal property, notwithstanding the manner in which it may be
affixed to any real property. Lessee will otherwise take all action required to
keep the Equipment free and clear of all levies, liens and encumbrances which
result from any act or omission of the Lessee. Lessor assumes no liability and
makes no representation as to the treatment by Lessee of this Lease, the
Equipment, or to the rental payments for
<PAGE>
financial statement or tax purposes.
9. LOCATION OF EQUIPMENT. Each Item of Equipment shall be placed into service
at the location specified in Exhibit B, Location of Equipment attached to the
Schedule. Lessee shall promptly provide written notice to Lessor of any and all
location changes.
10. LESSOR'S RIGHT OF INSPECTION. Lessor and its agents shall have the right
during business hours to enter upon the premises where any Item of Equipment is
located (to the extent Lessee can permit) for the purpose of inspection.
11. USE OF EQUIPMENT. Lessee must use the Equipment in a careful and proper
manner in conformity with (i) all statutes and regulations of each governmental
authority having jurisdiction over the Lessee and/or the Equipment and its use,
and (ii) all policies of insurance relating to the Equipment and/or its use. In
addition, Lessee shall not (i) use any Item of Equipment in any manner that
would impair the applicability of manufacturer's warranties or render any Item
of Equipment unfit for its originally intended use; nor (ii) permit anyone other
than authorized and competent personnel to operate any Item of Equipment.
12. ALTERATIONS. Without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, Lessee shall not make any alterations,
modifications or attachments to the Equipment. All alterations, modifications
and attachments of whatsoever kind or nature made to any Item of Equipment must
be removed without damaging the functional capabilities or economic value of the
affected Item of Equipment upon the termination of the Lease. Under no
circumstances shall any such alteration, modification or attachment be
encumbered by Lessee.
13. MAINTENANCE AND REPAIRS. Lessee shall at its own expense and without
authority to bind Lessor maintain each Item of Equipment in good mechanical
condition and running order, normal wear and tear excepted. Immediately upon
installation, Lessee shall provide to Lessor a perfected first lien security
interest in any and all replacement parts.
14. RISK OF LOSS, DAMAGE AND THEFT.
(a) All risk of loss, damage, theft or destruction, partial or complete, to
any Item of Equipment incurred or occasioned by any cause, circumstance or event
of whatever nature will be borne by Lessee from and after delivery of each Item
of Equipment to a carrier FOB point of origin. Lessee shall promptly notify
Lessor of any theft of or loss or damage to the Equipment.
(b) Neither total nor partial loss of use or possession of any Item of
Equipment shall abate the rent.
(c) An Item of Equipment shall be deemed subjected to total loss when (i) it
has disappeared regardless of the reason for disappearance or (ii) when it has
sustained physical damage and the estimated cost of repair exceeds 75% of the
fair market value (as determined by an independent appraiser chosen by Lessor)
on the date of damage. Lessee's duty to pay rent for any Item of Equipment
subjected to total loss shall be discharged by paying to Lessor the sum of the
then unpaid principal plus accrued interest plus the purchase option at the
price specified on the Schedule plus any applicable prepayment penalty plus all
costs associated with releasing the Lessor's security interest plus any other
sums then due and payable under the Lease. The amount of applicable insurance
proceeds, if any, actually received by Lessor shall be subtracted from the
amount for which Lessee is liable under this Paragraph 14.
<PAGE>
(d) Lessee shall cause any Equipment subjected to partial loss to be restored
to original capability. Lessor shall, upon receiving satisfactory evidence of
restoration, promptly pay to Lessee the proceeds of any insurance or
compensation received by Lessor, by reason of such partial loss, provided
however, that Lessor shall release such proceeds, to the extent such proceeds
have been received by Lessor, in advance of restoration to the extent necessary
to purchase materials or make progress payments upon the submission of
appropriated work orders, invoices, estimates, or other satisfactory
documentation.
(e) Lessor shall not be obligated to undertake the collection of any claim
against any person for either total or partial loss of any Item of Equipment.
After Lessee discharges its obligations to Lessor under either 14(c) or 14(d)
above, Lessee may, for Lessee's own account, proceed to recover from third
parties and shall be entitled to retain any amount recovered. Lessor shall
supply Lessee with any necessary assignment of claim.
15. INDEMNIFICATION.
(a) Non-tax Liability. Lessee assumes liability for, and hereby agrees to
------------------
indemnify, protect and hold harmless, Lessor, its agents, servants, employees,
officers, successors and assigns from and against, any and all liabilities,
obligations, losses, damages, injuries, claims, demands, penalties, actions,
costs and expenses, including reasonable attorney's fees, of whatsoever kind and
nature, arising out of (i) the manufacture, installation, use, condition
(including, but not limited to, latent and other defects and whether or not
discoverable by Lessee or Lessor), operation, ownership, selection, delivery,
leasing, removal or return of any Item of Equipment, regardless of where, how
and by whom operated, or (ii) any failure on the part of Lessee to perform or
comply with any covenantor condition of this lease.
(b) Direct Tax Costs. In addition to all other rents payable hereunder, the
-----------------
Lessee agrees to indemnify, protect and hold harmless Lessor, its agents,
servants, employees, officers, successors and assigns from and against any and
all taxes, license fees, assessments and other governmental charges, fees, fines
or penalties of whatsoever kind or character and by whomsoever payable, which
are levied, assessed, imposed or incurred during the lease term, (i) on or
relating to each Item of Equipment, including any tax on the sale, ownership,
use, leasing, shipment, transportation, delivery or operation thereof, (ii) on
the exercise of any option, election or performance of an obligation by the
Lessee hereunder, (iii) of the kind generally referred to in items (i) and (ii)
above which may remain unpaid as of the date of delivery of any Item of
Equipment to the Lessee irrespective of when the same may have been levied,
assessed, imposed or incurred, and (iv) by reason of all gross receipts,
business and occupation, and like taxes on or measured by rents payable
hereunder levied by any state or local taxing authority having jurisdiction
where any Item of Equipment is located. The Lessee agrees to comply with all
state and local laws requiring the filing of ad valorem tax returns relating to
each Item of Equipment. Any statements for such taxes received by the Lessor
shall be promptly forwarded to the Lessee. This subparagraph shall not be
deemed to obligate the Lessee to pay (i) any taxes, fees, assessments and
charges which may have been included in the Lessor's cost of each Item of
Equipment as set forth in Schedule(s) hereto, or (ii) any income or like taxes
against the Lessor on or measured by the net income from the rents payable
hereunder. The Lessee shall not be obligated to pay any amount under this
subparagraph so long as it shall, at its expense and in good faith and by
appropriate proceedings, contest the validity or the amount thereof unless such
contest would adversely affect the title of the Lessee, or any security interest
of Lessor, to an Item of Equipment or would subject any Item of Equipment to
forfeiture or sale. The Lessee agrees to indemnify the Lessor against any loss,
claim, demand and expense including legal expense resulting from such nonpayment
or contest.
(c) Indemnity Payment. The amount payable pursuant to subparagraphs 15(a)
------------------
and 15(b) shall be payable upon demand of the Lessor accompanied by a statement
describing in reasonable detail such loss,
<PAGE>
liability, injury, claim, expense or tax and setting forth the computation of
the amount so payable.
(d) Survival. The indemnities and assumptions of liabilities and obligations
---------
provided for in this Paragraph 15 shall continue in full force and effect
notwithstanding the expiration or other termination of this Lease.
16. LESSEE'S ASSIGNMENT. Without the prior written consent of the Lessor,
Lessee shall not bail, hypothecate, transfer or dispose of any Item of Equipment
or any interest in this Lease nor impair the Lessor's title to the Equipment.
Lessee shall not assign this Lease, nor shall this Lease or any rights under
this Lease or in any Item of Equipment inure to the benefit of any trustee in
bankruptcy, receiver, creditor, or other successor of Lessee whether by
operation of law or otherwise, without prior written consent of the Lessor.
17. LESSOR'S ASSIGNMENT. All rights of Lessor hereunder and in any Item of
Equipment may be assigned, pledged, mortgaged, transferred, or otherwise
disposed of, either in whole or in part, without notice to Lessee. No such
assignee shall be obligated to perform any duty, covenant, or condition required
to be performed by Lessor under the terms of this Lease. Such assignee shall
have all rights, powers and remedies given to Lessor by this Lease, and upon
notice to Lessee, shall be named as loss payee or co-insured under all policies
of insurance maintained pursuant to Paragraph 18 hereof. If Lessor assigns this
Lease or the monies due or to become due hereunder or any other interest herein,
Lessee agrees not to assert against Lessor's assignee any defense, set-off,
recoupment, claim or counterclaim which Lessee may have against Lessor, whether
arising under this Lease or any other transaction between Lessor and Lessee.
Subject to Paragraph 16 hereof and this Paragraph 17, this Lease inures to the
benefit of, and is binding upon, the heirs, legatees, personal representatives,
successors and assigns of the parties hereto.
18. INSURANCE. Lessee will at its own expense insure each Item of Equipment in
compliance with the terms and conditions of the Insurance Schedule(s) attached
hereto or incorporated herein by reference inform satisfactory to Lessor with
insurance carriers approved by Lessor and in an amount not less than one hundred
five (105%) percent of the unpaid principal balance due hereunder. The proceeds
of any insurance policy due by reason of theft or loss of or damage to any Item
of Equipment shall be applied as provided in Paragraph 14 hereof. In addition
to the compliance with the terms and conditions of the Insurance Schedule(s) and
the other terms and conditions of this Paragraph 18, the Lessee shall comply
with the following conditions:
(a) Lessee, prior to the inception of any rental term, shall deliver to
Lessor all required policies of insurance or in the alternative certificates of
insurance (in triplicate);
(b) Lessee shall cause each insurer to agree by endorsement on the policies
or certificates of insurance or by an independent instrument furnished Lessor
that each such insurer will give at least thirty (30) days written notice to
Lessor before any such policy or policies of insurance will be altered or
cancelled for any reason, including without limitation, failure of the Lessee to
pay premiums;
(c) All coverage required by the Insurance Schedule(s) must be in effect when
Lessor takes delivery or causes delivery to be made FOB point of origin;
(d) All insurance policies must indicate that the Lessor is an additional
insured for all aspects of liability insurance coverage and is loss payee for
all aspects of insurance coverage relating to the theft or loss of or damage to
Equipment and the proceeds of any public liability or property damage insurance
shall be applied first to the extent of the Lessor's liability;
<PAGE>
(e) Lessee will furnish renewal policies or renewal certificates of insurance
(in triplicate) listing Lessor as an additional insured and/or loss payee, as
required by this Lease, no later than thirty (30) days prior to the expiration
of any insurance coverage required hereby.
19. ADDITIONAL DOCUMENTS. If Lessor shall so request, Lessee shall execute and
deliver to Lessor such documents, including without limitation, UCC Financing
and Continuation Statements, as Lessor shall deem necessary or desirable for
purposes of continuing this Lease or recording or filing to protect the interest
of Lessor in each Item of Equipment. Any such filing or recording shall not be
deemed evidence of any intent to create a security interest.
20. FURNISHING FINANCIAL INFORMATION. During the term of this Lease and any
extensions or renewals hereof, Lessee will furnish to Lessor:
(a) Within forty five (45) days after the end of each of the first three
quarterly periods of Lessee's fiscal year, a balance sheet and statement of
income of Lessee as at the close of such quarterly period from the beginning of
the fiscal year to the date of such statement, prepared in accordance with
generally accepted accounting principles, consistently applied, and in such
reasonable detail as Lessor may request, certified as true, complete and correct
by an authorized officer of the Lessee.
(b) As soon as practicable, but in any event within ninety (90) days after the
end of each fiscal year, a copy of its annual audit prepared by a certified
public accountant selected by Lessee and satisfactory to Lessor.
(c) In a timely manner such financial statements, reports and other
information as the Lessee shall send from time to time to its stockholders
and/or file with the Securities and Exchange Commission and/or other materials
which Lessor shall reasonably request.
21. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR. If Lessee fails to
promptly perform any of its obligations under this Lease, Lessor may perform the
same for the account of Lessee without waiving Lessee's failure as a default.
All sums paid or expense or liability incurred by Lessor in such performance
(including reasonable legal fees) together with interest thereon at the highest
contractual rate enforceable against Lessee, but never at a higher rate than
15% per annum simple, shall be payable by the Lessee upon demand as additional
rent.
22. PURCHASE OPTION. Provided Lessee is not in default hereunder, Lessee may
purchase all, but not less than all, of the Items of Equipment listed on each
individual Schedule at the price specified in such Schedule at the end of the
rental term. The purchase of the Items of Equipment shall occur AS IS, WHERE
IS, WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER except that Lessor
shall deliver title to the Items of Equipment free of any lien or encumbrance
created by any act of the Lessor. In the event the Lessee fails to exercise its
purchase option, Lessee will return those Items of Equipment not purchased,
freight and insurance prepaid, to Lessor (or Lessor's nominee) at a location
designated by Lessor. If Lessee fails to exercise its purchase option and fails
to return any Item of Equipment, then at Lessor's option this Lease may be
extended on a month-to-month basis, with rent payable on the first of each
month, at the rate applicable during the lease term just ended.
23. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an Event of Default hereunder and entitle the Lessor, at its option,
to avail itself of the remedies more fully set forth in Paragraph 24 hereof:
<PAGE>
(a) Non-payment by Lessee of any rent or other amount provided for in this
Lease when the same becomes due whether by acceleration or otherwise;
(b) Failure of the Lessee to perform any of the non-monetary obligations,
terms or conditions of this Lease within thirty (30) of receipt of written
notification thereof from Lessor;
(c) The Lessee shall commence a voluntary case or other proceeding seeking
liquidation, reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or the taking
possession by any official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of its creditors,
or shall fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(d) If an involuntary case or other proceeding should be commenced against
Lessee seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of thirty (30) days;
(e) The occurrence of any event described in this Paragraph 23(c) through (d)
hereof with respect to any guarantor or any other party liable for payment or
performance of this Lease;
(f) Any certificate, statement, representation, warranty or financial
statement heretofore or hereafter furnished pursuant to or in connection with
this Lease by or on behalf of Lessee or any guarantor or other party liable for
payment or performance of this Lease is false in any material respect at the
time as of which the facts therein set forth were stated or certified, or omits
any substantial contingent or unliquidated liability or claim against Lessee or
any such guarantor or other party, or, upon the date of execution of this
document or any Schedule, there shall have been any materially adverse change in
any of the facts disclosed by any such certificate, statement, representation or
warranty, which shall not have been disclosed in writing to Lessor at or prior
to the time of the execution of this document or such Schedule.
24. REMEDIES. Upon the happening of any Event of Default hereunder, the rights
and duties of the parties shall be as set forth in this Paragraph 24.
(a) Upon Lessor's demand, the Equipment shall be promptly delivered to
Lessor, at that place or those places designated by Lessor. If Lessee does not
so deliver the Equipment, Lessee shall make the Equipment available for retaking
and authorizes Lessor, its employees and agents to enter the premises of the
Lessee and any other premises (insofar as Lessee can permit) for the purpose of
retaking. In the event of retaking, Lessee expressly waives all rights to
possession and all claims for injuries suffered through or loss caused by
retaking. Any repossession accomplished under this Paragraph 24(a) shall not
release Lessee from liability for damages of Lessor sustained by reason of
Lessee's default hereunder.
(b) Lessor may revoke Lessee's privilege of paying rent in installments and,
upon Lessor's demand, the Lessee shall promptly pay to Lessor the portion of the
rent then remaining unpaid plus all other sums due and unpaid.
(c) Lessor may sell or release the Equipment or any part thereof, at public
auction or by private sale
<PAGE>
or lease at such time or times and upon such terms as Lessor may determine, free
and clear of any rights of Lessee and, if notice thereof is required by law, any
notice in writing of such sale or lease by Lessor to Lessee not less than ten
(10) days prior to the date thereof shall constitute reasonable notice thereof
to Lessee. All proceeds of the sale or releasing, or both (less (i) all expenses
incurred in retaking the Equipment, making necessary repairs to the Equipment
and enforcing this Lease, (ii) all damages that Lessor shall have sustained by
reason of Lessee's default, and (iii) reasonable attorney's fees) shall be
credited against Lessee's liability hereunder as and when received by Lessor.
Sums in excess of Lessee's liability shall belong to Lessee. The Lessee shall be
liable for any deficiency.
(d) The provisions of this Paragraph 24 shall not prejudice Lessor's right to
recover or prove damages for unpaid rent accrued prior to default, or bar an
action for a deficiency as herein provided, and the bringing of an action with
an entry of judgment against Lessee shall not bar the Lessor's right to
repossess any or all Items of Equipment.
(e) Lessor's remedies shall be available to Lessor's successors and assigns,
shall be in addition to all other remedies provided bylaw, and may be exercised
concurrently or consecutively. LESSEE WAIVES ANY AND ALL RIGHTS TO NOTICE AND
TO JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF THE EQUIPMENT BY LESSOR
IN THE EVENT OF A DEFAULT HEREUNDER BY LESSEE. LESSEE HEREBY WAIVES ANY RIGHT
TO DEMAND A JURY TRIAL WITH RESPECT TO ANY ACTION OR PROCEEDING INSTITUTED BY
THE LESSOR OR THE LESSEE IN CONNECTION WITH THIS LEASE.
25. GOVERNING LAW AND CONSENT OF JURISDICTION. This Lease has been executed
and delivered in the Commonwealth of Pennsylvania. The laws and decisions of
said Commonwealth will govern and control the construction, enforceability,
validity and interpretation of this Lease, and of all agreements, instruments
and documents, heretofore, now or hereafter executed by Lessee and delivered to
Lessor pertaining or relating to this Lease or the transactions contemplated
herein. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in the Court of Common Pleas of
Allegheny County, Pennsylvania, or in the United States District Court for the
Western District of Pennsylvania and Lessee agrees that, in addition to any
other manner of service prescribed bylaw or rule of court, a summons and
complaint commencing an action or proceeding in either such Court shall be
properly served upon Lessee and shall confer personal jurisdiction if served
personally or by United States registered mail, return receipt requested, to the
Lessee at the address indicated below.
26. JUDGMENT BY CONFESSION. LESSEE HEREBY EMPOWERS THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR
FOR LESSEE AND, WITH OR WITHOUT ONE OR MORE DECLARATIONS FILED, ENTER A JUDGMENT
OR JUDGMENTS AGAINST LESSEE IN FAVOR OF LESSOR, AS OF ANY TERM, FOR THE SUM THEN
DUE AND PAYABLE UNDER THIS LEASE, WITH COSTS OF SUIT AND ATTORNEY'S COMMISSION
OF 15% FOR COLLECTION; WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF EXECUTION,
AND INQUISITION AND EXTENSION UPON ANY LEVY IS HEREBY WAIVED AND CONDEMNATION
AGREED TO, AND THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON ANY EXECUTION
HEREON IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF EXEMPTION SHALL BE
CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN FORCE OR WHICH MAY
HEREAFTER BE ENACTED.
27. CONFLICT OF PROVISIONS. In the event of any conflict of provisions between
any Schedule and any other document, the provisions of the Schedule shall
control.
<PAGE>
28. AMENDMENTS AND WAIVERS. This document, the Schedule(s) and Insurance
Schedule(s) executed by Lessor and Lessee constitute the entire agreement
between Lessor and Lessee with respect to the Equipment and the subject matter
of this Lease. No term or provision of this Lease may be changed, waived,
amended or terminated except by a written agreement signed by both Lessor and
Lessee, except that Lessor may insert on the appropriate Schedule the serial
number of any Item of Equipment after delivery thereof. No express or implied
waiver by Lessor of any Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Event of Default whether
similar in kind or otherwise.
29. NOTICES. Except as otherwise provided in Paragraph 28 above, service of
all notices under this Lease shall be sufficient if given personally or mailed
to the party involved at its respective address set forth in the most recent
Schedule relating hereto, or at such address as such party may otherwise provide
in writing from time to time. Any such notice mailed to such address shall be
effective three (3) business days from the date of deposit in the United States
mail, duly addressed with first class postage prepaid.
30. GENDER; NUMBER. Whenever the context of this Lease requires, the neuter
gender includes the masculine and the feminine, and the singular number includes
the plural. Whenever the word Lessor is used herein, it shall include all
assignees of Lessor. If there is more than one Lessee named in this Lease, the
liability of each shall be joint and several.
31. TITLES. The titles to the paragraphs of this Lease are solely for the
convenience of the parties, and are not an aid in the interpretation of the
instrument.
32. SEVERABILITY OF PROVISIONS. If any provision of this Lease is held invalid
or unenforceable, the remaining provisions will not be affected thereby, and to
this end the provisions of this Lease are declared severable.
33. LESSEE RIGHT TO SUBLEASE. Lessor acknowledges and agrees that Lessee will
sublease the Equipment to SMT Mobile V Corp., or to any other wholly owned
subsidiary of Lessee upon prior written notice to Lessor, for the purpose of
providing magnetic resonance imaging services under certain Magnetic Resonance
Imaging Service Agreements. Lessee shall execute and assign to Lessor such
documents between Lessee and Sublessee as Lessor may reasonably request to
protect Lessor's rights under this Lease. Lessee acknowledges and agrees that in
no event shall any such sublease relieve Lessee from its obligations under this
Lease.
34. ADDITIONAL SECURITY. Lessee covenants and agrees that on or before the
commencement date of the rental term for the Equipment as designated in the
Schedule, Lessee will provide or cause to be provided to Lessor, in form and
substance satisfactory to Lessor an assignment of any and all Magnetic Resonance
Imaging Service Agreements, or similar agreements, now existing or hereinafter
acquired, to be serviced by the Equipment leased hereunder, and a first security
interest in any and all payments due thereunder. Lessee will promptly provide
written notice to Lessor of any additions, deletions, amendments, or
substitutions to any such agreements. Lessee also covenants and agrees to
provide, or cause to be provided to Lessor, upon Lessor's request, a Letter of
Credit inform and substance satisfactory to Lessor. WITNESS the due execution
hereof with the intent to be legally bound.
<PAGE>
ATTEST/WITNESS: LESSEE: SMT HEALTH SERVICES INC.
ADDRESS: 10521 Perry Highway
Wexford, PA 15090
By By David A. Zynn
------------------------ ---------------------------------
Title Title CFO / Treasurer
--------------------- ------------------------------
Accepted at Pittsburgh, Pennsylvania by:
LAUREL CAPITAL CORPORATION
By
--------------------------------------
Title
-----------------------------------
<PAGE>
LAUREL CAPITAL CORPORATION
3810 McKnight East Drive
Pittsburgh, PA 15237
GUARANTY
July 26, 1996
Dear Sirs:
For value received, Undersigned jointly and severally unconditionally guarantee
to you and become surety to you for the full and prompt performance by SMT
Health Services Inc.; 10521 Perry Highway; Wexford, PA 15090; herein called
"Obligor", of all obligations which Obligor presently or hereafter may have to
you, and payment when due of all sums presently or hereafter owing by Obligor to
you, and agree to indemnify you against any losses you may sustain and expenses
you may incur in the enforcement of this agreement.
For the purposes of this guaranty and indemnity, all sums owing to you by
Obligor shall be deemed to have become immediately due and payable if (a)
Obligor defaults in any of its obligations to you; (b) a petition under any
provisions of the Bankruptcy Code, as amended, or for the appointment of a
receiver of any part of the property of Obligor be filed against Obligor, and be
not dismissed within thirty days; (c) such a petition is filed by Obligor;
(d) Obligor make a general assignment for the benefit of creditors, suspends
business or commits any act amounting to a business failure, or (e) an
attachment be levied or tax lien be filed against any of Obligor's property.
This shall be a continuing guaranty and indemnity and, irrespective of the lack
of any notice to or consent of the Undersigned, their obligations hereunder
shall not be impaired in any manner whatsoever by any (a) new agreements or
obligations of Obligor with you; amendments, extensions, modifications, renewals
or waivers of default as to any existing or future agreements or obligations of
Obligor or third parties with or to you, or extensions of credit by you to
Obligor; (b) adjustments, compromises or releases of any obligations of Obligor,
Undersigned or other parties, or exchanges, releases or sales of any security of
Obligor, Undersigned or other parties; (c) fictitiousness, incorrectness,
invalidity or unenforce-ability, for any reason, of any instrument or writing,
or acts of commission or omission by you or Obligor; (d) compositions,
extensions, moratoria or other relief granted to Obligor pursuant to any statute
presently in force or hereafter enacted, or (e) interruptions in the business
relations between you and Obligor. Notice of your acceptance hereof, of default
and non-payment by Obligor or any other parties, of presentment, protest and
demand, and of all other matters of which Undersigned otherwise might be
entitled, is waived.
The obligations hereunder of Undersigned are both joint and several, and shall
be binding upon their respective heirs and personal representatives. The
failure of any person to sign this guaranty and indemnity shall not affect the
liability hereunder of any signer thereof. The death or release from liability
hereunder of any of Undersigned shall not relieve the others from liability
hereunder. Each of Undersigned may terminate his obligations hereunder as to
then future transactions between you and Obligor by registered mail notice to
you at your above-stated address, provided, however, that such termination shall
not affect either his liability hereunder with respect to any obligations of
Obligor to you incurred prior to your receipt of such notice, or the continuing
liability of such of the others of Undersigned as have not given such notice.
<PAGE>
This guaranty and indemnity is assignable, shall be construed liberally in your
favor and shall inure to the benefit of your successors and assigns. If Obligor
should default in the performance of any of Obligor's obligations to you, and if
any third party makes any payment to you with respect thereto, such third party
shall, to the extent thereof, be subrogated to all of your rights against
Undersigned hereunder. Legal rights and obligations hereunder shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania.
UNDERSIGNED HEREBY EMPOWER THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF
RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR FOR THEM AND, WITH OR
WITHOUT ONE OR MORE DECLARATIONS FILED, ENTER A JUDGMENT OR JUDGMENTS AGAINST
THEM OR ANY OF THEM IN FAVOR OF YOU, AS OF ANY TERM, FOR THE SUM THEN DUE AND
PAYABLE UNDER THIS AGREEMENT OF GUARANTY, WITH COSTS OF SUIT AND ATTORNEY'S
COMMISSION OF 15% FOR COLLECTION; WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF
EXECUTION, AND INQUISITION AND EXTENSION UPON ANY LEVY IS HEREBY WAIVED AND
CONDEMNATION AGREED TO, AND THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON
ANY EXECUTION HEREON IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF EXEMPTION
SHALL BE CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN FORCE OR WHICH
MAY HEREAFTER BE ENACTED.
This Guaranty has been executed and delivered in the Commonwealth of
Pennsylvania. The laws and decisions of said Commonwealth will govern and
control the construction, enforceability, validity and interpretation of this
Guaranty, and of all agreements, instruments and documents, heretofore, now or
hereafter executed by Undersigned and delivered to Lessor pertaining or relating
to this Guaranty or the transactions contemplated herein. The parties agree
that any action or proceeding arising out of or relating to this Guaranty may be
commenced in the Court of Common Pleas of Allegheny County, Pennsylvania, or in
the United States District Court for the Western District of Pennsylvania and
Undersigned agrees that, in addition to any other manner of service prescribed
by law or rule of court, a summons and complaint commencing an action or
proceeding in either such Court shall be properly served upon Undersigned and
shall confer personal jurisdiction if served personally or by United States
registered mail, return receipt requested, to the Undersigned at the address
indicated below.
Very truly yours,
CORPORATE GUARANTORS: SMT MOBILE V CORP.
Attest:
By By
----------------------------- ---------------------------------------
Title Title
Address: 10521 Perry Highway
-------------------
Wexford PA 15090
-------------------
(Corporate Seal)
<PAGE>
CONDITIONAL ASSIGNMENT AND SECURITY AGREEMENT
- ---------------------------------------------
This Conditional Assignment and Security Agreement ("Agreement") dated July
26, 1996 is entered into between SMT Health Services Inc.
("Assignor"/"Lessee"/"Sublessor"), SMT Mobile V Corp. ("Sublessee") and Laurel
Capital Corporation ("Assignee/Lessor").
This Agreement is entered into with reference to the following mutually agreed
to facts:
1. WHEREAS, Assignor and Assignee have entered into that certain Master
Equipment Lease ("Lease") dated July 26, 1996 providing for the lease of the
personal property described in the Lease ("Equipment");
2. WHEREAS, Assignor desires to sublease the Equipment pursuant to the terms
of a sublease dated July 26, 1996 entered into between Assignor and Sublessee
("Sublease").
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the above parties, hereby agree to the following
terms and conditions:
1. Consent to Sublease. Assignee hereby consents to Assignor's Sublease of
--------------------
the Equipment to Sublessee under the terms and conditions as provided herein.
2. Conditional Assignment. Assignor hereby conditionally assigns and grants
-----------------------
to Assignee a security interest in and all of its rights flowing from and under
the Lease and Sublease including without limitation the Equipment; provided,
--------
however, Assignee does not hereby assume duties, liabilities or obligations of
- -------
Assignor under the Sublease.
3. Conditional Nature of Assignment. Assignee hereby acknowledges and agrees
---------------------------------
that so long as there exists no default of any of the terms of the Lease and/or
Sublease, Assignor shall have the right to enjoy all of the rights, benefits and
privileges arising under the Sublease.
4. Default. Upon or at any time after the occurrence of a breach under any
--------
of the terms, provisions or conditions as defined in the Lease and/or Sublease,
Assignee may, at its election, exercise any and all rights under the Lease
and/or Sublease, in addition to all of its rights under the Lease and/or
Sublease, in addition to all of its rights and remedies as a Secured party under
the Uniform Commercial Code.
5. Term. This Agreement shall remain in full force and effect so long as any
-----
of the obligations, liabilities and debtness of Assignor to Assignee, whether
arising under the Lease or otherwise, remain outstanding.
<PAGE>
6. Assignment. Assignee shall have the right to assign all of its rights
-----------
under this Agreement. Assignor and Sublessee shall not have any right to assign
this Agreement without the prior written consent of Assignee.
7. Amendment of Sublease. The Sublease shall not be changed, altered or
-----------------------
modified in any manner, except by the prior written consent of Assignee.
8. Subordination. Sublessee acknowledges that the Sublease is in all
--------------
respects subject and subordinate to the Lease, including without limitation, the
rights of Assignee to repossess the equipment and void the Sublease in the event
of a default by Assignor under the Lease.
9. Amendment. This Agreement shall not be released, discharged, changed or
-----------
modified in any manner, except by the prior written consent of Assignee.
10. Waiver. No waiver of any right hereunder shall be deemed a waiver or
-------
forfeiture of such right as to future matters.
11. California Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LAUREL CAPITAL CORPORATION SMT HEALTH SERVICES INC.
"Assignee/Lessor" "Assignor/Lessee/Sublessor"
By: By:
-------------------------- ----------------------------
Title: Title:
----------------------- --------------------------
- ------------------------------ --------------------------------
(Print Name) (Print Name)
SMT MOBILE V CORP.
"Sublessee"
By:
----------------------------
Title:
-------------------------
--------------------------------
(Print Name)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE OF LEASED EQUIPMENT LAUREL CAPITAL CORPORATION 810 MCKNIGHT EAST DRIVE
LESSOR PITTSBURGH, PA 15237
</TABLE>
SCHEDULE NO. 2165-1
------
- -------------------------------------------------------------------------------
LESSEE (COMPLETE NAME AND ADDRESS) SUPPLIER (COMPLETE NAME AND ADDRESS)
SMT Health Services Inc. 1) GE Medical Systems; P.O. Box 414
10521 Perry Highway Milwaukee, WI 53201
Wexford, PA 15090
2) Calumet Coach Company
Calumet City, IL 60409-1411
- -------------------------------------------------------------------------------
1. This schedule of leased equipment ("Schedule") is hereby made a part of the
lease between the undersigned Lessee and the undersigned Lessor dated
July 26, 1996. All terms and conditions of said lease are incorporated
-------------
herein by reference.
2. The equipment subject to the to the lease is:
- -------------------------------------------------------------------------------
QUANTITY DESCRIPTION AND SERIAL NUMBER PRICE
- -------------------------------------------------------------------------------
See Attached Schedule of Equipment, Exhibit "A"
Include all taxes levied at the time of sale, or
include in block 4.E. below, whichever is appropriate
in jurisdiction where equipment is located.
- -------------------------------------------------------------------------------
THE TOTAL EQUIPMENT COST INCLUDING TAXES LEVIED AT THE TIME OF SALE IS:
$1,290,273.87
- -------------
- -------------------------------------------------------------------------------
3. Equipment shall be located at See Attached Schedule of Location of Equipment,
-------------------------------------------
Exhibit "B" and shall not be removed therefrom without Lessor's prior written
- -----------
consent.
4. The original term of the lease as to the equipment described in this
Schedule is 3 years commencing on July 30, 1996 and terminating on
----- -------------
July 30, 1999 unless sooner terminated under the terms of the lease. As rent
- -------------
for the equipment, Lessee shall pay total rent of $1,482,503.04 as follows:
-------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
A B C D E F G
Security Number and Date these Amt. of Tax on Total payment Date these
Deposit type payments payment payment (D+E) payments
(If any) of payments commence (if any) terminate
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Monthly 36 7/31/96 41,180.64 0.00 41,180.64 5/31/99
-------- ------------- -------------- -------------- ----------------- ---------------
Quarterly
-------- ------------- -------------- -------------- ----------------- ---------------
Annually
-------- ------------- -------------- -------------- ----------------- ---------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Lessee may, pursuant to Section 22 Purchase Option of the Lease Agreement,
purchase all but not less than all of the Items of Equipment listed hereon
for $1.00 at the end of the rental term.
6. By executing and delivering to Lessor, the Lessee Acceptance form attached
hereto, Lessee warrants, covenants and agrees that (a) Lessee has received
all Equipment described in this Schedule at the location described in 3
hereof; (b) Lessee has duly inspected and accepts such Equipment without
reservations; (c) Lessee is unconditionally bound to pay to Lessor the Total
Rent and other payments due under the Lease, whether or not any Equipment
described herein may now be or hereafter become unsatisfactory in any
respect; and (d) Notwithstanding anything contained herein, Lessor and Lessee
shall continue to have all rights which either of them might otherwise have
with respect to Equipment described herein against any manufacturer or seller
of said Equipment or any part thereof.
- --------------------------------------------------------------------------------
ADDITIONAL REMARKS:
Lessee paid the first and last monthly rental payments in advance.
- --------------------------------------------------------------------------------
SIGNATURES - IN INK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date , 19 Date , 19
------------------------ --- ------------------------ ---
Lessee: (Full legal name)
Lessor: LAUREL CAPITAL CORPORATION
SMT HEALTH SERVICES INC.
By By
---------------------------------- -----------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.09
LAUREL CAPITAL CORPORATION
FINANCE LEASE
3810 McKnight East Drive
Pittsburgh, PA 15237
[412] 366-6440
Finance Lease No. 2166
This Lease, made this 26st day of July 1996 by and between LAUREL CAPITAL
CORPORATION ("Lessor") and SMT HEALTH SERVICES INC. ("Lessee").
1. LEASE AGREEMENT. Lessor hereby leases to Lessee, and Lessee hereby rents
from Lessor, all the machinery, equipment and other personal property
(individually "Item of Equipment" and collectively "Equipment") described in
Equipment Lease Schedules which are or may from time to time hereafter be
executed by Lessor and Lessee and attached hereto or incorporated herein by
reference ("Schedules") upon the terms and conditions set forth in this Lease,
as supplemented, as regards each Item of Equipment, by the terms and conditions
set forth in the Schedule identifying that Item of Equipment. Whenever reference
is made herein to "this Lease", it shall be deemed to include each of the
several Schedules and the Insurance Schedule(s) referred to herein all of which
constitute one undivided lease of the Equipment.
2. TERM.
(a) The obligations under this Lease commence upon the written acceptance
hereof by Lessor and shall end upon full performance and observance of each and
every term, condition and covenant set forth in this Lease and any extensions
hereof. The rental term for Equipment listed in each Schedule shall commence on
the date indicated on such Schedule and shall terminate on the last day of the
term stated in such Schedule.
(b) In the event Lessor shall make payments on the Equipment prior to the
commencement date of the rental term as indicated on the Schedule, Lessee shall
pay interim rental payments from the date of such payments by Lessor to the
commencement date of the rental term. The interim rental payments shall be
based on the daily equivalent of two (2.00%) percent over the prime interest
rate (fully floating) as announced from time to time by PNC Bank, National
Association. Interim rental payments are due monthly.
3. RENT. The rent, including interim rental payments, for the Items of
Equipment described in each Schedule shall be the amount stated in such
Schedule. Rent is an absolute obligation of Lessee due upon the inception of
each rental or interim rental term and payable as specified in each particular
Schedule irrespective of any claims, demands, set-offs, actions, suits or
proceedings that Lessee may have or assert against Lessor or any supplier of
Equipment. Rent and interim rent shall be payable to Lessor at its office, 3810
McKnight East Drive, Pittsburgh, Pennsylvania 15237, or at such other place as
Lessor or its assigns may designate in writing to Lessee from time to time.
4. DELINQUENT RENT PENALTY. If Lessee shall fail to pay any rent, interim rent
installment or other amount due hereunder within ten (10) days after the due
date and until all sums due hereunder have been declared due and payable in
accordance with Paragraph 24, Lessee shall pay to Lessor a late charge of five
(5%) percent of such amount due for each month or part thereof for which said
rent or other sums shall be
<PAGE>
delinquent. After all sums are declared due and payable in accordance with
Paragraph 24, Lessee shall pay interest at the rate of fifteen (15%) percent per
annum or the maximum contract rate permitted by law, whichever is less, on such
accelerated sums from the date of acceleration until paid, and whether or not
judgment hereon has been entered.
5. DELIVERY AND INSTALLATION. Lessee will select the type, quantity and
supplier of each Item of Equipment and in reliance thereon such Equipment will
then be ordered by Lessor from such supplier or Lessor may at its option elect
to accept an assignment of any existing purchase order. Lessor shall not be
liable for loss or damage occasioned by any cause, circumstance or event of
whatsoever nature, including, but not limited to, failure of or delay in
delivery, delivery to wrong location, delivery of improper equipment or property
other than the Equipment, damage to the Equipment, governmental regulations,
strikes, embargoes or other causes, circumstances or events whether of a like or
unlike nature. Lessee, at its expense, will pay all transportation, packing,
installation, testing and other charges in connection with the delivery,
installation and use of each Item of Equipment. In the event that the cost of
any Item of Equipment differs from the price set forth in the purchase order
therefor, the monthly rental shall be changed accordingly to fully reflect any
such difference. In the event that Lessee fails or refuses to accept delivery
of the Equipment within ninety (90) days following the execution of the Lease
(unless such period is extended by an agreement between Lessor and Lessee in
writing), Lessor may terminate the Lease and Lessee will remit to the Lessor an
amount equal to the down payment and installments previously paid by the Lessor
to the vendor or supplier of the Equipment, together with interest accrued
thereon at the highest contractual rate enforceable against Lessee under
applicable law but never at a rate higher than fifteen (15%) percent per annum.
Lessor shall assign to Lessee without recourse all of Lessor's interest in and
to the Equipment under the vendor purchase agreements.
6. WARRANTY OF LESSEE'S QUIET POSSESSION. Lessor warrants and covenants that
so long as Lessee faithfully performs this Lease, Lessee, subject to the
disclaimer of warranties set forth immediately below, shall be entitled to
quietly possess and use the Equipment without interference.
7. DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTIES SET FORTH ABOVE,
LESSOR, NOT BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S
AGENT, MAKES NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT
TO THE EQUIPMENT. THIS DISCLAIMER OF WARRANTIES INCLUDES BUT IS NOT LIMITED TO
ANY WARRANTY REGARDING: THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR
ANY PARTICULAR PURPOSE; THE DESIGN OR CONDITION OF THE EQUIPMENT; THE QUALITY OR
CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP OF THE EQUIPMENT; COMPLIANCE OF THE
EQUIPMENT WITH THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT
PERTAINING THERETO; PATENT INFRINGEMENT; OR LATENT DEFECTS; it being agreed that
all such risks, as between Lessor and Lessee, are to be borne by the Lessee.
Lessor is not responsible or liable for any direct, indirect, incidental or
consequential damage to, or loss resulting from, the installation, operation or
use of any Item of Equipment or any product manufactured thereby.
8. NATURE OF EQUIPMENT. Not withstanding anything to the contrary contained
in this Agreement, including the characterization of this Agreement as a lease,
the parties hereto acknowledge and agree that, legal title to each Item of
Equipment leased hereunder shall be with the Lessee. Each Item of Equipment
shall remain personal property, notwithstanding the manner in which it may be
affixed to any real property. Lessee will otherwise take all action required to
keep the Equipment free and clear of all levies, liens and encumbrances which
result from any act or omission of the Lessee. Lessor assumes no liability and
makes no representation as to the treatment by Lessee of this Lease, the
Equipment, or to the rental payments for
<PAGE>
financial statement or tax purposes.
9. LOCATION OF EQUIPMENT. Each Item of Equipment shall be placed into service
at the location specified in Exhibit B, Location of Equipment attached to the
Schedule. Lessee shall promptly provide written notice to Lessor of any and all
location changes.
10. LESSOR'S RIGHT OF INSPECTION. Lessor and its agents shall have the right
during business hours to enter upon the premises where any Item of Equipment is
located (to the extent Lessee can permit) for the purpose of inspection.
11. USE OF EQUIPMENT. Lessee must use the Equipment in a careful and proper
manner in conformity with (i) all statutes and regulations of each governmental
authority having jurisdiction over the Lessee and/or the Equipment and its use,
and (ii) all policies of insurance relating to the Equipment and/or its use. In
addition, Lessee shall not (i) use any Item of Equipment in any manner that
would impair the applicability of manufacturer's warranties or render any Item
of Equipment unfit for its originally intended use; nor (ii) permit anyone other
than authorized and competent personnel to operate any Item of Equipment.
12. ALTERATIONS. Without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, Lessee shall not make any alterations,
modifications or attachments to the Equipment. All alterations, modifications
and attachments of whatsoever kind or nature made to any Item of Equipment must
be removed without damaging the functional capabilities or economic value of the
affected Item of Equipment upon the termination of the Lease. Under no
circumstances shall any such alteration, modification or attachment be
encumbered by Lessee.
13. MAINTENANCE AND REPAIRS. Lessee shall at its own expense and without
authority to bind Lessor maintain each Item of Equipment in good mechanical
condition and running order, normal wear and tear excepted. Immediately upon
installation, Lessee shall provide to Lessor a perfected first lien security
interest in any and all replacement parts.
14. RISK OF LOSS, DAMAGE AND THEFT.
(a) All risk of loss, damage, theft or destruction, partial or complete, to
any Item of Equipment incurred or occasioned by any cause, circumstance or event
of whatever nature will be borne by Lessee from and after delivery of each Item
of Equipment to a carrier FOB point of origin. Lessee shall promptly notify
Lessor of any theft of or loss or damage to the Equipment.
(b) Neither total nor partial loss of use or possession of any Item of
Equipment shall abate the rent.
(c) An Item of Equipment shall be deemed subjected to total loss when (i) it
has disappeared regardless of the reason for disappearance or (ii) when it has
sustained physical damage and the estimated cost of repair exceeds 75% of the
fair market value (as determined by an independent appraiser chosen by Lessor)
on the date of damage. Lessee's duty to pay rent for any Item of Equipment
subjected to total loss shall be discharged by paying to Lessor the sum of the
then unpaid principal plus accrued interest plus the purchase option at the
price specified on the Schedule plus any applicable prepayment penalty plus all
costs associated with releasing the Lessor's security interest plus any other
sums then due and payable under the Lease. The amount of applicable insurance
proceeds, if any, actually received by Lessor shall be subtracted from the
amount for which Lessee is liable under this Paragraph 14.
<PAGE>
(d) Lessee shall cause any Equipment subjected to partial loss to be restored
to original capability. Lessor shall, upon receiving satisfactory evidence of
restoration, promptly pay to Lessee the proceeds of any insurance or
compensation received by Lessor, by reason of such partial loss, provided
however, that Lessor shall release such proceeds, to the extent such proceeds
have been received by Lessor, in advance of restoration to the extent necessary
to purchase materials or make progress payments upon the submission of
appropriated work orders, invoices, estimates, or other satisfactory
documentation.
(e) Lessor shall not be obligated to undertake the collection of any claim
against any person for either total or partial loss of any Item of Equipment.
After Lessee discharges its obligations to Lessor under either 14(c) or 14(d)
above, Lessee may, for Lessee's own account, proceed to recover from third
parties and shall be entitled to retain any amount recovered. Lessor shall
supply Lessee with any necessary assignment of claim.
15. INDEMNIFICATION.
(a) Non-tax Liability. Lessee assumes liability for, and hereby agrees to
------------------
indemnify, protect and hold harmless, Lessor, its agents, servants, employees,
officers, successors and assigns from and against, any and all liabilities,
obligations, losses, damages, injuries, claims, demands, penalties, actions,
costs and expenses, including reasonable attorney's fees, of whatsoever kind and
nature, arising out of (i) the manufacture, installation, use, condition
(including, but not limited to, latent and other defects and whether or not
discoverable by Lessee or Lessor), operation, ownership, selection, delivery,
leasing, removal or return of any Item of Equipment, regardless of where, how
and by whom operated, or (ii) any failure on the part of Lessee to perform or
comply with any covenant or condition of this lease.
(b) Direct Tax Costs. In addition to all other rents payable hereunder, the
-----------------
Lessee agrees to indemnify, protect and hold harmless Lessor, its agents,
servants, employees, officers, successors and assigns from and against any and
all taxes, license fees, assessments and other governmental charges, fees, fines
or penalties of whatsoever kind or character and by whomsoever payable, which
are levied, assessed, imposed or incurred during the lease term, (i) on or
relating to each Item of Equipment, including any tax on the sale, ownership,
use, leasing, shipment, transportation, delivery or operation thereof, (ii) on
the exercise of any option, election or performance of an obligation by the
Lessee hereunder, (iii) of the kind generally referred to in items (i) and (ii)
above which may remain unpaid as of the date of delivery of any Item of
Equipment to the Lessee irrespective of when the same may have been levied,
assessed, imposed or incurred, and (iv) by reason of all gross receipts,
business and occupation, and like taxes on or measured by rents payable
hereunder levied by any state or local taxing authority having jurisdiction
where any Item of Equipment is located. The Lessee agrees to comply with all
state and local laws requiring the filing of ad valorem tax returns relating to
each Item of Equipment. Any statements for such taxes received by the Lessor
shall be promptly forwarded to the Lessee. This subparagraph shall not be
deemed to obligate the Lessee to pay (i) any taxes, fees, assessments and
charges which may have been included in the Lessor's cost of each Item of
Equipment as set forth in Schedule(s) hereto, or (ii) any income or like taxes
against the Lessor on or measured by the net income from the rents payable
hereunder. The Lessee shall not be obligated to pay any amount under this
subparagraph so long as it shall, at its expense and in good faith and by
appropriate proceedings, contest the validity or the amount thereof unless such
contest would adversely affect the title of the Lessee, or any security interest
of Lessor, to an Item of Equipment or would subject any Item of Equipment to
forfeiture or sale. The Lessee agrees to indemnify the Lessor against any loss,
claim, demand and expense including legal expense resulting from such nonpayment
or contest.
(c) Indemnity Payment. The amount payable pursuant to subparagraphs 15(a)
------------------
and 15(b) shall be payable upon demand of the Lessor accompanied by a statement
describing in reasonable detail such loss,
<PAGE>
liability, injury, claim, expense or tax and setting forth the computation of
the amount so payable.
(d) Survival. The indemnities and assumptions of liabilities and obligations
---------
provided for in this Paragraph 15 shall continue in full force and effect
notwithstanding the expiration or other termination of this Lease.
16. LESSEE'S ASSIGNMENT. Without the prior written consent of the Lessor,
Lessee shall not bail, hypothecate, transfer or dispose of any Item of Equipment
or any interest in this Lease nor impair the Lessor's title to the Equipment.
Lessee shall not assign this Lease, nor shall this Lease or any rights under
this Lease or in any Item of Equipment inure to the benefit of any trustee in
bankruptcy, receiver, creditor, or other successor of Lessee whether by
operation of law or otherwise, without prior written consent of the Lessor.
17. LESSOR'S ASSIGNMENT. All rights of Lessor hereunder and in any Item of
Equipment may be assigned, pledged, mortgaged, transferred, or otherwise
disposed of, either in whole or in part, without notice to Lessee. No such
assignee shall be obligated to perform any duty, covenant, or condition required
to be performed by Lessor under the terms of this Lease. Such assignee shall
have all rights, powers and remedies given to Lessor by this Lease, and upon
notice to Lessee, shall be named as loss payee or co-insured under all policies
of insurance maintained pursuant to Paragraph 18 hereof. If Lessor assigns this
Lease or the monies due or to become due hereunder or any other interest herein,
Lessee agrees not to assert against Lessor's assignee any defense, set-off,
recoupment, claim or counterclaim which Lessee may have against Lessor, whether
arising under this Lease or any other transaction between Lessor and Lessee.
Subject to Paragraph 16 hereof and this Paragraph 17, this Lease inures to the
benefit of, and is binding upon, the heirs, legatees, personal representatives,
successors and assigns of the parties hereto.
18. INSURANCE. Lessee will at its own expense insure each Item of Equipment in
compliance with the terms and conditions of the Insurance Schedule(s) attached
hereto or incorporated herein by reference inform satisfactory to Lessor with
insurance carriers approved by Lessor and in an amount not less than one hundred
five (105%) percent of the unpaid principal balance due hereunder. The proceeds
of any insurance policy due by reason of theft or loss of or damage to any Item
of Equipment shall be applied as provided in Paragraph 14 hereof. In addition
to the compliance with the terms and conditions of the Insurance Schedule(s) and
the other terms and conditions of this Paragraph 18, the Lessee shall comply
with the following conditions:
(a) Lessee, prior to the inception of any rental term, shall deliver to
Lessor all required policies of insurance or in the alternative certificates of
insurance (in triplicate);
(b) Lessee shall cause each insurer to agree by endorsement on the policies
or certificates of insurance or by an independent instrument furnished Lessor
that each such insurer will give at least thirty (30) days written notice to
Lessor before any such policy or policies of insurance will be altered or
cancelled for any reason, including without limitation, failure of the Lessee to
pay premiums;
(c) All coverage required by the Insurance Schedule(s) must be in effect when
Lessor takes delivery or causes delivery to be made FOB point of origin;
(d) All insurance policies must indicate that the Lessor is an additional
insured for all aspects of liability insurance coverage and is loss payee for
all aspects of insurance coverage relating to the theft or loss of or damage to
Equipment and the proceeds of any public liability or property damage insurance
shall be applied first to the extent of the Lessor's liability;
<PAGE>
(e) Lessee will furnish renewal policies or renewal certificates of insurance
(in triplicate) listing Lessor as an additional insured and/or loss payee, as
required by this Lease, no later than thirty (30) days prior to the expiration
of any insurance coverage required hereby.
19. ADDITIONAL DOCUMENTS. If Lessor shall so request, Lessee shall execute and
deliver to Lessor such documents, including without limitation, UCC Financing
and Continuation Statements, as Lessor shall deem necessary or desirable for
purposes of continuing this Lease or recording or filing to protect the interest
of Lessor in each Item of Equipment. Any such filing or recording shall not be
deemed evidence of any intent to create a security interest.
20. FURNISHING FINANCIAL INFORMATION. During the term of this Lease and any
extensions or renewals hereof, Lessee will furnish to Lessor:
(a) Within forty five (45) days after the end of each of the first three
quarterly periods of Lessee's fiscal year, a balance sheet and statement of
income of Lessee as at the close of such quarterly period from the beginning of
the fiscal year to the date of such statement, prepared in accordance with
generally accepted accounting principles, consistently applied, and in such
reasonable detail as Lessor may request, certified as true, complete and correct
by an authorized officer of the Lessee.
(b) As soon as practicable, but in any event within ninety (90) days after the
end of each fiscal year, a copy of its annual audit prepared by a certified
public accountant selected by Lessee and satisfactory to Lessor.
(c) In a timely manner such financial statements, reports and other
information as the Lessee shall send from time to time to its stockholders
and/or file with the Securities and Exchange Commission and/or other materials
which Lessor shall reasonably request.
21. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR. If Lessee fails to
promptly perform any of its obligations under this Lease, Lessor may perform the
same for the account of Lessee without waiving Lessee's failure as a default.
All sums paid or expense or liability incurred by Lessor in such performance
(including reasonable legal fees) together with interest thereon at the highest
contractual rate enforceable against Lessee, but never at a higher rate than
15% per annum simple, shall be payable by the Lessee upon demand as additional
rent.
22. PURCHASE OPTION. Provided Lessee is not in default hereunder, Lessee may
purchase all, but not less than all, of the Items of Equipment listed on each
individual Schedule at the price specified in such Schedule at the end of the
rental term. The purchase of the Items of Equipment shall occur AS IS, WHERE
IS, WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER except that Lessor
shall deliver title to the Items of Equipment free of any lien or encumbrance
created by any act of the Lessor. In the event the Lessee fails to exercise its
purchase option, Lessee will return those Items of Equipment not purchased,
freight and insurance prepaid, to Lessor (or Lessor's nominee) at a location
designated by Lessor. If Lessee fails to exercise its purchase option and fails
to return any Item of Equipment, then at Lessor's option this Lease may be
extended on a month-to-month basis, with rent payable on the first of each
month, at the rate applicable during the lease term just ended.
23. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an Event of Default hereunder and entitle the Lessor, at its option,
to avail itself of the remedies more fully set forth in Paragraph 24 hereof:
<PAGE>
(a) Non-payment by Lessee of any rent or other amount provided for in this
Lease when the same becomes due whether by acceleration or otherwise;
(b) Failure of the Lessee to perform any of the non-monetary obligations,
terms or conditions of this Lease within thirty (30) of receipt of written
notification thereof from Lessor;
(c) The Lessee shall commence a voluntary case or other proceeding seeking
liquidation, reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or the taking
possession by any official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of its creditors,
or shall fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(d) If an involuntary case or other proceeding should be commenced against
Lessee seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of thirty (30) days;
(e) The occurrence of any event described in this Paragraph 23(c) through (d)
hereof with respect to any guarantor or any other party liable for payment or
performance of this Lease;
(f) Any certificate, statement, representation, warranty or financial
statement heretofore or hereafter furnished pursuant to or in connection with
this Lease by or on behalf of Lessee or any guarantor or other party liable for
payment or performance of this Lease is false in any material respect at the
time as of which the facts therein set forth were stated or certified, or omits
any substantial contingent or unliquidated liability or claim against Lessee or
any such guarantor or other party, or, upon the date of execution of this
document or any Schedule, there shall have been any materially adverse change in
any of the facts disclosed by any such certificate, statement, representation or
warranty, which shall not have been disclosed in writing to Lessor at or prior
to the time of the execution of this document or such Schedule.
24. REMEDIES. Upon the happening of any Event of Default hereunder, the rights
and duties of the parties shall be as set forth in this Paragraph 24.
(a) Upon Lessor's demand, the Equipment shall be promptly delivered to
Lessor, at that place or those places designated by Lessor. If Lessee does not
so deliver the Equipment, Lessee shall make the Equipment available for retaking
and authorizes Lessor, its employees and agents to enter the premises of the
Lessee and any other premises (insofar as Lessee can permit) for the purpose of
retaking. In the event of retaking, Lessee expressly waives all rights to
possession and all claims for injuries suffered through or loss caused by
retaking. Any repossession accomplished under this Paragraph 24(a) shall not
release Lessee from liability for damages of Lessor sustained by reason of
Lessee's default hereunder.
(b) Lessor may revoke Lessee's privilege of paying rent in installments and,
upon Lessor's demand, the Lessee shall promptly pay to Lessor the portion of the
rent then remaining unpaid plus all other sums due and unpaid.
(c) Lessor may sell or release the Equipment or any part thereof, at public
auction or by private sale
<PAGE>
or lease at such time or times and upon such terms as Lessor may determine, free
and clear of any rights of Lessee and, if notice thereof is required by law, any
notice in writing of such sale or lease by Lessor to Lessee not less than ten
(10) days prior to the date thereof shall constitute reasonable notice thereof
to Lessee. All proceeds of the sale or releasing, or both (less (i) all expenses
incurred in retaking the Equipment, making necessary repairs to the Equipment
and enforcing this Lease, (ii) all damages that Lessor shall have sustained by
reason of Lessee's default, and (iii) reasonable attorney's fees) shall be
credited against Lessee's liability hereunder as and when received by Lessor.
Sums in excess of Lessee's liability shall belong to Lessee. The Lessee shall be
liable for any deficiency.
(d) The provisions of this Paragraph 24 shall not prejudice Lessor's right to
recover or prove damages for unpaid rent accrued prior to default, or bar an
action for a deficiency as herein provided, and the bringing of an action with
an entry of judgment against Lessee shall not bar the Lessor's right to
repossess any or all Items of Equipment.
(e) Lessor's remedies shall be available to Lessor's successors and assigns,
shall be in addition to all other remedies provided bylaw, and may be exercised
concurrently or consecutively. LESSEE WAIVES ANY AND ALL RIGHTS TO NOTICE AND
TO JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF THE EQUIPMENT BY LESSOR
IN THE EVENT OF A DEFAULT HEREUNDER BY LESSEE. LESSEE HEREBY WAIVES ANY RIGHT
TO DEMAND A JURY TRIAL WITH RESPECT TO ANY ACTION OR PROCEEDING INSTITUTED BY
THE LESSOR OR THE LESSEE IN CONNECTION WITH THIS LEASE.
25. GOVERNING LAW AND CONSENT OF JURISDICTION. This Lease has been executed
and delivered in the Commonwealth of Pennsylvania. The laws and decisions of
said Commonwealth will govern and control the construction, enforceability,
validity and interpretation of this Lease, and of all agreements, instruments
and documents, heretofore, now or hereafter executed by Lessee and delivered to
Lessor pertaining or relating to this Lease or the transactions contemplated
herein. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in the Court of Common Pleas of
Allegheny County, Pennsylvania, or in the United States District Court for the
Western District of Pennsylvania and Lessee agrees that, in addition to any
other manner of service prescribed bylaw or rule of court, a summons and
complaint commencing an action or proceeding in either such Court shall be
properly served upon Lessee and shall confer personal jurisdiction if served
personally or by United States registered mail, return receipt requested, to the
Lessee at the address indicated below.
26. JUDGMENT BY CONFESSION. LESSEE HEREBY EMPOWERS THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR
FOR LESSEE AND, WITH OR WITHOUT ONE OR MORE DECLARATIONS FILED, ENTER A JUDGMENT
OR JUDGMENTS AGAINST LESSEE IN FAVOR OF LESSOR, AS OF ANY TERM, FOR THE SUM THEN
DUE AND PAYABLE UNDER THIS LEASE, WITH COSTS OF SUIT AND ATTORNEY'S COMMISSION
OF 15% FOR COLLECTION; WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF EXECUTION,
AND INQUISITION AND EXTENSION UPON ANY LEVY IS HEREBY WAIVED AND CONDEMNATION
AGREED TO, AND THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON ANY EXECUTION
HEREON IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF EXEMPTION SHALL BE
CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN FORCE OR WHICH MAY
HEREAFTER BE ENACTED.
27. CONFLICT OF PROVISIONS. In the event of any conflict of provisions between
any Schedule and any other document, the provisions of the Schedule shall
control.
<PAGE>
28. AMENDMENTS AND WAIVERS. This document, the Schedule(s) and Insurance
Schedule(s) executed by Lessor and Lessee constitute the entire agreement
between Lessor and Lessee with respect to the Equipment and the subject matter
of this Lease. No term or provision of this Lease may be changed, waived,
amended or terminated except by a written agreement signed by both Lessor and
Lessee, except that Lessor may insert on the appropriate Schedule the serial
number of any Item of Equipment after delivery thereof. No express or implied
waiver by Lessor of any Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Event of Default whether
similar in kind or otherwise.
29. NOTICES. Except as otherwise provided in Paragraph 28 above, service of
all notices under this Lease shall be sufficient if given personally or mailed
to the party involved at its respective address set forth in the most recent
Schedule relating hereto, or at such address as such party may otherwise provide
in writing from time to time. Any such notice mailed to such address shall be
effective three (3) business days from the date of deposit in the United States
mail, duly addressed with first class postage prepaid.
30. GENDER; NUMBER. Whenever the context of this Lease requires, the neuter
gender includes the masculine and the feminine, and the singular number includes
the plural. Whenever the word Lessor is used herein, it shall include all
assignees of Lessor. If there is more than one Lessee named in this Lease, the
liability of each shall be joint and several.
31. TITLES. The titles to the paragraphs of this Lease are solely for the
convenience of the parties, and are not an aid in the interpretation of the
instrument.
32. SEVERABILITY OF PROVISIONS. If any provision of this Lease is held invalid
or unenforceable, the remaining provisions will not be affected thereby, and to
this end the provisions of this Lease are declared severable.
33. LESSEE RIGHT TO SUBLEASE. Lessor acknowledges and agrees that Lessee will
sublease the Equipment to SMT Mobile VI Corp., or to any other wholly owned
subsidiary of Lessee upon prior written notice to Lessor, for the purpose of
providing magnetic resonance imaging services under certain Magnetic Resonance
Imaging Service Agreements. Lessee shall execute and assign to Lessor such
documents between Lessee and Sublessee as Lessor may reasonably request to
protect Lessor's rights under this Lease. Lessee acknowledges and agrees that in
no event shall any such sublease relieve Lessee from its obligations under this
Lease.
34. ADDITIONAL SECURITY. Lessee covenants and agrees that on or before the
commencement date of the rental term for the Equipment as designated in the
Schedule, Lessee will provide or cause to be provided to Lessor, in form and
substance satisfactory to Lessor an assignment of any and all Magnetic Resonance
Imaging Service Agreements, or similar agreements, now existing or hereinafter
acquired, to be serviced by the Equipment leased hereunder, and a first security
interest in any and all payments due thereunder. Lessee will promptly provide
written notice to Lessor of any additions, deletions, amendments, or
substitutions to any such agreements. Lessee also covenants and agrees to
provide, or cause to be provided to Lessor, upon Lessor's request, a Letter of
Credit inform and substance satisfactory to Lessor. WITNESS the due execution
hereof with the intent to be legally bound.
<PAGE>
ATTEST/WITNESS: LESSEE: SMT HEALTH SERVICES INC.
ADDRESS: 10521 Perry Highway
Wexford, PA 15090
By By David A. Zynn
------------------------ ---- ----------------
Title Title CFO / Treasurer
--------------------- ---- -----------
Accepted at Pittsburgh, Pennsylvania by:
LAUREL CAPITAL CORPORATION
By
--------------------------------------
Title
-----------------------------------
<PAGE>
LAUREL CAPITAL CORPORATION
3810 McKnight East Drive
Pittsburgh, PA 15237
GUARANTY
July 26, 1996
Dear Sirs:
For value received, Undersigned jointly and severally unconditionally guarantee
to you and become surety to you for the full and prompt performance by SMT
Health Services Inc.; 10521 Perry Highway; Wexford, PA 15090; herein called
"Obligor", of all obligations which Obligor presently or hereafter may have to
you, and payment when due of all sums presently or hereafter owing by Obligor to
you, and agree to indemnify you against any losses you may sustain and expenses
you may incur in the enforcement of this agreement.
For the purposes of this guaranty and indemnity, all sums owing to you by
Obligor shall be deemed to have become immediately due and payable if (a)
Obligor defaults in any of its obligations to you; (b) a petition under any
provisions of the Bankruptcy Code, as amended, or for the appointment of a
receiver of any part of the property of Obligor be filed against Obligor, and be
not dismissed within thirty days; (c) such a petition is filed by Obligor;
(d) Obligor make a general assignment for the benefit of creditors, suspends
business or commits any act amounting to a business failure, or (e) an
attachment be levied or tax lien be filed against any of Obligor's property.
This shall be a continuing guaranty and indemnity and, irrespective of the lack
of any notice to or consent of the Undersigned, their obligations hereunder
shall not be impaired in any manner whatsoever by any (a) new agreements or
obligations of Obligor with you; amendments, extensions, modifications, renewals
or waivers of default as to any existing or future agreements or obligations of
Obligor or third parties with or to you, or extensions of credit by you to
Obligor; (b) adjustments, compromises or releases of any obligations of Obligor,
Undersigned or other parties, or exchanges, releases or sales of any security of
Obligor, Undersigned or other parties; (c) fictitiousness, incorrectness,
invalidity or unenforce-ability, for any reason, of any instrument or writing,
or acts of commission or omission by you or Obligor; (d) compositions,
extensions, moratoria or other relief granted to Obligor pursuant to any statute
presently in force or hereafter enacted, or (e) interruptions in the business
relations between you and Obligor. Notice of your acceptance hereof, of default
and non-payment by Obligor or any other parties, of presentment, protest and
demand, and of all other matters of which Undersigned otherwise might be
entitled, is waived.
The obligations hereunder of Undersigned are both joint and several, and shall
be binding upon their respective heirs and personal representatives. The
failure of any person to sign this guaranty and indemnity shall not affect the
liability hereunder of any signer thereof. The death or release from liability
hereunder of any of Undersigned shall not relieve the others from liability
hereunder. Each of Undersigned may terminate his obligations hereunder as to
then future transactions between you and Obligor by registered mail notice to
you at your above-stated address, provided, however, that such termination shall
not affect either his liability hereunder with respect to any obligations of
Obligor to you incurred prior to your receipt of such notice, or the continuing
liability of such of the others of Undersigned as have not given such notice.
<PAGE>
This guaranty and indemnity is assignable, shall be construed liberally in your
favor and shall inure to the benefit of your successors and assigns. If Obligor
should default in the performance of any of Obligor's obligations to you, and if
any third party makes any payment to you with respect thereto, such third party
shall, to the extent thereof, be subrogated to all of your rights against
Undersigned hereunder. Legal rights and obligations hereunder shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania.
UNDERSIGNED HEREBY EMPOWER THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF
RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR FOR THEM AND, WITH OR
WITHOUT ONE OR MORE DECLARATIONS FILED, ENTER A JUDGMENT OR JUDGMENTS AGAINST
THEM OR ANY OF THEM IN FAVOR OF YOU, AS OF ANY TERM, FOR THE SUM THEN DUE AND
PAYABLE UNDER THIS AGREEMENT OF GUARANTY, WITH COSTS OF SUIT AND ATTORNEY'S
COMMISSION OF 15% FOR COLLECTION; WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF
EXECUTION, AND INQUISITION AND EXTENSION UPON ANY LEVY IS HEREBY WAIVED AND
CONDEMNATION AGREED TO, AND THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON
ANY EXECUTION HEREON IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF EXEMPTION
SHALL BE CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN FORCE OR WHICH
MAY HEREAFTER BE ENACTED.
This Guaranty has been executed and delivered in the Commonwealth of
Pennsylvania. The laws and decisions of said Commonwealth will govern and
control the construction, enforceability, validity and interpretation of this
Guaranty, and of all agreements, instruments and documents, heretofore, now or
hereafter executed by Undersigned and delivered to Lessor pertaining or relating
to this Guaranty or the transactions contemplated herein. The parties agree
that any action or proceeding arising out of or relating to this Guaranty may be
commenced in the Court of Common Pleas of Allegheny County, Pennsylvania, or in
the United States District Court for the Western District of Pennsylvania and
Undersigned agrees that, in addition to any other manner of service prescribed
by law or rule of court, a summons and complaint commencing an action or
proceeding in either such Court shall be properly served upon Undersigned and
shall confer personal jurisdiction if served personally or by United States
registered mail, return receipt requested, to the Undersigned at the address
indicated below.
Very truly yours,
CORPORATE GUARANTORS: SMT MOBILE VI CORP.
Attest:
By By
----------------------------- ---------------------------------------
Title Title
Address: 10521 Perry Highway
-------------------
Wexford PA 15090
-------------------
(Corporate Seal)
<PAGE>
CONDITIONAL ASSIGNMENT AND SECURITY AGREEMENT
- ---------------------------------------------
This Conditional Assignment and Security Agreement ("Agreement") dated July
26, 1996 is entered into between SMT Health Services Inc.
("Assignor"/"Lessee"/"Sublessor"), SMT Mobile VI Corp. ("Sublessee") and Laurel
Capital Corporation ("Assignee/Lessor").
This Agreement is entered into with reference to the following mutually agreed
to facts:
1. WHEREAS, Assignor and Assignee have entered into that certain Master
Equipment Lease ("Lease") dated July 26, 1996 providing for the lease of the
personal property described in the Lease ("Equipment");
2. WHEREAS, Assignor desires to sublease the Equipment pursuant to the terms
of a sublease dated July 26, 1996 entered into between Assignor and Sublessee
("Sublease").
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the above parties, hereby agree to the following
terms and conditions:
1. Consent to Sublease. Assignee hereby consents to Assignor's Sublease of
--------------------
the Equipment to Sublessee under the terms and conditions as provided herein.
2. Conditional Assignment. Assignor hereby conditionally assigns and grants
-----------------------
to Assignee a security interest in and all of its rights flowing from and under
the Lease and Sublease including without limitation the Equipment; provided,
--------
however, Assignee does not hereby assume duties, liabilities or obligations of
- -------
Assignor under the Sublease.
3. Conditional Nature of Assignment. Assignee hereby acknowledges and agrees
---------------------------------
that so long as there exists no default of any of the terms of the Lease and/or
Sublease, Assignor shall have the right to enjoy all of the rights, benefits and
privileges arising under the Sublease.
4. Default. Upon or at any time after the occurrence of a breach under any
--------
of the terms, provisions or conditions as defined in the Lease and/or Sublease,
Assignee may, at its election, exercise any and all rights under the Lease
and/or Sublease, in addition to all of its rights under the Lease and/or
Sublease, in addition to all of its rights and remedies as a Secured party under
the Uniform Commercial Code.
5. Term. This Agreement shall remain in full force and effect so long as any
-----
of the obligations, liabilities and debtness of Assignor to Assignee, whether
arising under the Lease or otherwise, remain outstanding.
<PAGE>
6. Assignment. Assignee shall have the right to assign all of its rights
-----------
under this Agreement. Assignor and Sublessee shall not have any right to assign
this Agreement without the prior written consent of Assignee.
7. Amendment of Sublease. The Sublease shall not be changed, altered or
-----------------------
modified in any manner, except by the prior written consent of Assignee.
8. Subordination. Sublessee acknowledges that the Sublease is in all
--------------
respects subject and subordinate to the Lease, including without limitation, the
rights of Assignee to repossess the equipment and void the Sublease in the event
of a default by Assignor under the Lease.
9. Amendment. This Agreement shall not be released, discharged, changed or
-----------
modified in any manner, except by the prior written consent of Assignee.
10. Waiver. No waiver of any right hereunder shall be deemed a waiver or
-------
forfeiture of such right as to future matters.
11. California Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LAUREL CAPITAL CORPORATION SMT HEALTH SERVICES INC.
"Assignee/Lessor" "Assignor/Lessee/Sublessor"
By: By:
-------------------------- ----------------------------
Title: Title:
----------------------- --------------------------
- ------------------------------ --------------------------------
(Print Name) (Print Name)
SMT MOBILE VI CORP.
"Sublessee"
By:
----------------------------
Title:
-------------------------
--------------------------------
(Print Name)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE OF LEASED EQUIPMENT LAUREL CAPITAL CORPORATION 810 MCKNIGHT EAST DRIVE
LESSOR PITTSBURGH, PA 15237
</TABLE>
SCHEDULE NO. 2166-1
------
- -------------------------------------------------------------------------------
LESSEE (COMPLETE NAME AND ADDRESS) SUPPLIER (COMPLETE NAME AND ADDRESS)
SMT Health Services Inc. 1) GE Medical Systems; P.O. Box 414
10521 Perry Highway Milwaukee, WI 53201
Wexford, PA 15090
2) Calumet Coach Company
Calumet City, IL 60409-1411
- -------------------------------------------------------------------------------
1. This schedule of leased equipment ("Schedule") is hereby made a part of the
lease between the undersigned Lessor and the undersigned Lessee dated
July 26, 1996. All terms and conditions of said lease are incorporated
-------------
herein by reference.
2. The equipment subject to the to the lease is:
- -------------------------------------------------------------------------------
QUANTITY DESCRIPTION AND SERIAL NUMBER PRICE
- -------------------------------------------------------------------------------
See Attached Schedule of Equipment, Exhibit "A"
Include all taxes levied at the time of sale, or
include in block 4.E. below, whichever is appropriate
in jurisdiction where equipment is located.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE TOTAL EQUIPMENT COST INCLUDING TAXES LEVIED AT THE TIME OF SALE IS:
$1,294,962.33
- -------------
- -------------------------------------------------------------------------------
3. Equipment shall be located at See Attached Schedule of Location of Equipment,
-----------------------------------------------
Exhibit "B" and shall not be removed therefrom without Lessor's prior written
-----------
consent.
4. The original term of the lease as to the equipment described in this
Schedule is 3 years commencing on July 31, 1996 and terminating on
----- -------------
July 31, 1999 unless sooner terminated under the terms of the lease.
-------------
As rent for the equipment, Lessee shall pay total rent of $1,487,890.08 as
-------------
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
A B C D E F G
Security Number and Date these Amt. of Tax on Total payment Date these
Deposit type payments payment payment (D+E) payments
(If any) of payments commence (if any) terminate
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Monthly 36 7/31/96 41,330.28 0.00 41,330.28 5/31/99
------ ------------- -------------- -------------- ----------------- ---------------
Quarterly
----- ------------- -------------- -------------- ----------------- ---------------
Annually
------ ------------- -------------- -------------- ----------------- ---------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Lessee may, pursuant to Section 22 Purchase Option of the Lease Agreement,
purchase all but not less than all of the Items of Equipment listed hereon
for $1.00 at the end of the rental term.
6. By executing and delivering to Lessor, the Lessee Acceptance form attached
hereto, Lessee warrants, covenants and agrees that (a) Lessee has received
all Equipment described in this Schedule at the location described in 3
hereof; (b) Lessee has duly inspected and accepts such Equipment without
reservations; (c) Lessee is unconditionally bound to pay to Lessor the Total
Rent and other payments due under the Lease, whether or not any Equipment
described herein may now be or hereafter become unsatisfactory in any
respect; and (d) Notwithstanding anything contained herein, Lessor and Lessee
shall continue to have all rights which either of them might otherwise have
with respect to Equipment described herein against any manufacturer or seller
of said Equipment or any part thereof.
- --------------------------------------------------------------------------------
ADDITIONAL REMARKS:
Lessee paid the first and last monthly rental payments in advance.
- --------------------------------------------------------------------------------
SIGNATURES - IN INK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date , 19 Date , 19
------------------------ --- ------------------------ ---
Lessee: (Full legal name)
Lessor: LAUREL CAPITAL CORPORATION
SMT HEALTH SERVICES INC.
By By
---------------------------------- -----------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 11.01
SMT
EPS Calculation-Modified Treasury Stock Method
Three Months Ended September 30, 1996
<TABLE>
<CAPTION>
Exercise Assumed
Assumptions Shares Price Proceeds
<S> <C> <C> <C>
Net income $915,730
Common Shares Outstanding 3,179,000
20% of Common Shares Outstanding 635,800
Common Stock Equivalent (Aggregate):
Warrants-IPO 1,587,950 $6.67 $10,591,627
Effect of 5% Dividend 79,398
Options-employees
1993 Grant 121,275 3.33 403,846
1994 Grant 50 1.37 69
1995 Grant 36,750 2.46 90,405
1995 Grant-#2 150,000 3.81 571,875
1996 Grant 39,700 4.5 178,650
Options-Directors:
1992 Grant 2,100 3.21 6,741
1993 Grant 2,100 1.78 3,738
1994 Grant 2,100 2.2 4,620
1995 Grant 2,100 4.38 9,198
Misc Grant 0 1.78 0
Warrants-Directors
All 500,000 3.88 1,940,000
Other 0 4.01 0
Warrants-Commonwealth 50,000 4.47 223,500
Underwriter options 76,000 5.94 451,440
Underwriter Warrants (Unit) 76,000 6.67 506,920
5% dividend on Warrants 7,600
Total CSE Aggregate 2,733,123 14,982,628
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Average and Quarter End Market Value:
Average Closing Price 6.83
Quarter End Closing Price 6.75
<CAPTION>
Computation: Primary Fully Diluted
Total Proceeds 14,982,628 14,982,628
Application of assumed proceeds:
Toward repurchase of o/s shares 4,342,514 4,291,650
Toward Paydown of debt 10,640,114 10,690,978
14,982,628 14,982,628
Adjustment to Net Income:
Net income 915,730 915,730
Interest expense reduction:
Debt paydown * avg. int rate * tax eff 180,882 181,747
Adjusted Net Income 1,096,612 1,097,477
Adjustments to Shares Outstanding:
Actual shares o/s 3,179,000 3,179,000
Net additional shares 2,097,323 2,097,323
Adjusted shares o/s 5,276,323 5,276,323
Earnings Per Share:
Before adjustment $0.29 $0.29
After adjustment $0.208 $0.21
</TABLE>
<PAGE>
SMT
EPS Calculation- Modified Treasury Stock Method
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Exercise Assumed
Assumptions Shares Price Proceeds
<S> <C> <C> <C>
Net income $1,936,206
Common Shares Outstanding 2,879,000
20% of Common Shares Outstanding 575,800
Common Stock Equivalent (Aggregate):
Warrants-IPO 1,587,950 $6.67 10,591,627
Effect of 5% Dividend 79,398
Options-employees
1993 Grant 121,275 3.33 403,846
1994 Grant 50 1.37 69
1995 Grant 36,750 2.46 90,405
1995 Grant-#2 150,000 3.81 571,875
1996 Grant 39,700 4.5 178,650
Options-Directors:
1992 Grant 2,100 3.21 6,741
1993 Grant 2,100 1.78 3,738
1994 Grant 2,100 2.2 4,620
1995 Grant 2,100 4.38 9,198
Misc Grant 0 1.78 0
Warrants-Directors
All 500,000 3.88 1,940,000
Other 0 4.01 0
Warrants-Commonwealth 50,000 4.47 223,500
Underwriter options 76,000 5.94 451,440
Underwriter Warrants (Unit) 76,000 6.67 506,920
5% dividend on Warrants 7,600
Total CSE Aggregate 2,733,123 14,982,628
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Average and Quarter End Market Value:
Average Closing Bid 6.21
Quarter End Closing Bid 6.75
<CAPTION>
Computation: Primary Fully Diluted
Total Proceeds 14,982,628 14,982,628
Application of assumed proceeds:
Toward repurchase of o/s shares 3,575,718 3,886,650
Toward Paydown of debt 11,406,910 11,095,978
14,982,628 14,982,628
Adjustment to Net Income:
Net income 1,936,206 1,936,206
Interest expense reduction:
Debt paydown * avg. int rate * tax eff 581,752 574,217
Adjusted Net Income 2,517,958 2,510,423
Adjustments to Shares Outstanding:
Actual shares o/s 2,879,000 2,879,000
Net additional shares 2,157,323 2,157,323
Adjusted shares o/s 5,036,323 5,036,323
Earnings Per Share:
Before adjustment $0.67 $0.67
After adjustment $0.50 $0.50
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,019,569
<SECURITIES> 0
<RECEIVABLES> 1,531,685
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,640,597
<PP&E> 34,294,523
<DEPRECIATION> 6,373,022
<TOTAL-ASSETS> 38,209,501
<CURRENT-LIABILITIES> 7,304,258
<BONDS> 0
33,570
0
<COMMON> 0
<OTHER-SE> 10,404,990
<TOTAL-LIABILITY-AND-EQUITY> 38,209,501
<SALES> 13,478,930
<TOTAL-REVENUES> 13,606,467
<CGS> 0
<TOTAL-COSTS> 9,487,159
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,447,102
<INCOME-PRETAX> 2,672,206
<INCOME-TAX> 736,000
<INCOME-CONTINUING> 1,936,206
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,936,206
<EPS-PRIMARY> .50
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99.01
Contact: David Zynn, CPA
Chief Financial Officer
SMT Health Services Inc.
(412) 933-3300
http://www.smthealth.com
SMT HEALTH SERVICES INC. CLARIFIES PREVIOUS
SHELF REGISTRATION ANNOUNCEMENT
Pittsburgh, PA, August 2, 1996 -- SMT Health Services Inc. (NASDAQ/NMS: SHED,
SHEDW) today clarified a misinterpretation in the market related to its previous
July 16, 1996 press release announcing the effectiveness of a Form S-3 shelf
registration statement. The Company clarified that the Form S-3 shelf
registration statement does not represent an offering of securities by the
Company. The Form S-3 shelf registration statement, declared effective by the
Securities and Exchange Commission on July 12, 1996, simply provided
registration rights to previously outstanding unregistered securities. In
total, the shelf registration statement covers 3,494,623 shares of Common Stock,
including approximately 1.8 million shares related to the Company's publicly-
traded Warrants. Approximately 2.7 million of the total shares covered by the
registration statement had been previously registered.
SMT Health Services Inc., through its fleet of fourteen mobile MRI units,
provides diagnostic imaging services to healthcare providers in Pennsylvania,
West Virginia, North Carolina, Ohio, Virginia and Kentucky.
# # #
<PAGE>
Exhibit 99.02
Contact: David Zynn, CFO
SMT Health Services Inc.
(412) 933-3300
http://www.smthealth.com
SMT HEALTH SERVICES RESPONDS TO ANNOUNCEMENT
REGARDING CEO
Pittsburgh, PA, September 17, 1996 -- SMT Health Services Inc. (NASDAQ/NMS:
SHED, SHEDW), in response to an announcement last week by Northstar Health
Services, Inc. (NASDAQ: NSTRE) that Northstar had named Jeff Bergman, the SMT's
Chairman and CEO, individually as a defendant in a civil lawsuit, today stressed
that the Company is not named as a defendant and that the allegations made in
the lawsuit do not in any regard relate to SMT nor to Mr. Bergman in his
capacity as Chairman, CEO and President of SMT.
SMT Health Services Inc., through its fleet of fifteen mobile units, provides
diagnostic imaging services to healthcare providers in Pennsylvania, West
Virginia, North Carolina, Ohio, Virginia, Kentucky and South Carolina.
# # #
<PAGE>
Exhibit 99.03
Contact: David Zynn, CFO
SMT Health Services Inc.
(412) 933-3300
http://www.smthealth.com
SMT HEALTH SERVICES ANNOUNCES PURCHASE
OF NEW MOBILE MRI UNIT
Pittsburgh, PA, September 25, 1996 -- SMT Health Services Inc. (NASDAQ/NMS:
SHED, SHEDW) today announced that it has purchased a new 1.0 Tesla mobile MRI
unit which will begin operation on October 1, 1996. The new unit represents the
Company's seventeenth mobile MRI unit and is the sixth new unit acquired this
year. This unit will service hospitals located in West Virginia which the
Company recently signed to long-term service contracts.
Earlier this month, the Company took delivery and began operation of a new
mobile unit (which the Company had previously announced acquiring) to service
new hospital customers in North Carolina and South Carolina. This unit
represents the Company's initial venture into the state of South Carolina, where
SMT expects to expand its operations further in months ahead.
SMT Health Services Inc., through its fleet of seventeen mobile units, provides
diagnostic imaging services to healthcare providers in Pennsylvania, West
Virginia, North Carolina, Ohio, Virginia, Kentucky and South Carolina.
# # #
<PAGE>
Exhibit 99.04
Contact: David Zynn, CFO
SMT Health Services Inc.
(412) 933-3300
http://www.smthealth.com
SMT HEALTH SERVICES ANNOUNCES PRELIMINARY
THIRD QUARTER RESULTS
Pittsburgh, PA, October 3, 1996 -- SMT Health Services Inc. (NASDAQ/NMS: SHED,
SHEDW) today announced preliminary quarterly results for the third quarter ended
September 30, 1996. The Company stated that it anticipates that net income for
the 1996 third quarter will approximate $.19 to $.21 per share which exceed
analyst estimates of approximately $.16 per share and the $.14 per share
reported for the third quarter of 1995.
The Company anticipates that net income from operations will approximate $.17 to
$.19, including an after-tax adjustment of approximately $200,000 related to a
sales tax refund. The Company also anticipates recording a deferred tax
adjustment which will reduce its income tax provision approximately $200,000, or
$.02 per share, during the third quarter of 1996.
The Company anticipates that its net income for the nine months ended September
30, 1996 will approximate $.48 to $.50 per share as compared to net income per
share of $.36 for the nine months ended September 30, 1995.
The Company further announced that it continues a positive cashflow and
maintained a cash balance of approximately $5.0 million as of September 30, 1996
as compared to $3.8 million and $3.9 million reported as of June 30, 1996 and
December 31, 1995, respectively. Cash outflows during the nine months ended
September 30, 1996 included approximately $600,000 for the acquisition of a
mobile provider in March, approximately $2.0 million used to acquire new MRI
units and other equipment and approximately $3.6 million of principal payments
under loan agreements and capital leases. In addition to the approximate $5.4
million of cash generated from operations, SMT also received approximately $1.9
million as a result of the exercise of stock options and warrants during the
second and third quarter.
The statements contained in this press release are forward-looking statements
that are subject to risks and uncertainties which could cause actual results to
differ materially from those set forth herein, including material adjustments
from final review by management and the Company's independent auditors. The
Company anticipates announcing its actual results for the third quarter of 1996
on or about October 22, 1996.
SMT Health Services Inc., through its fleet of seventeen mobile units, provides
diagnostic imaging services to healthcare providers in Pennsylvania, West
Virginia, North Carolina, Ohio, Virginia, Kentucky and South Carolina.
# # #
<PAGE>
Exhibit 99.05
Contact: David Zynn, CFO James K. White, Managing Director
SMT Health Services Inc. Kehoe, White, Savage & Company, Inc.
(412) 933-3300 (310) 437-0655
http://www.smthealth.com
SMT HEALTH SERVICES REPORTS RECORD THIRD QUARTER
AND NINE MONTH EARNINGS; NET INCOME UP 112% AND 93%
RESPECTIVELY; MOBILE MRI REVENUES RISE 24%
AND 19%, RESPECTIVELY
Pittsburgh, PA, October 22, 1996 -- SMT Health Services Inc. (NASDAQ/NMS: SHED,
SHEDW) today reported record earnings for the third quarter and nine month
periods ended September 30, 1996. Net income for the 1996 third quarter
increased 112% to $916,000, or $0.21 per share, from $431,000, or $.14 per
share, reported for the third quarter of 1995. Net income for the nine months
ended September 30, 1996 increased 93% to $1,936,000, or $.50 per share, as
compared to $1,002,000, or $.36 per share for the nine months ended September
30, 1995. The Company attributed the income gains to increased revenues from
four additional MRI units and greater operating efficiencies. Additional income
gains are attributed to an approximate $180,000 state sales tax refund (after
tax) and a $200,000 favorable tax provision adjustment resulting from an
increase in the Company's Federal net operating loss carryforward. Excluding
the tax adjustments, the Company's net income for the three and nine months
ended September 30, 1996 increased approximately $105,000, or 24%, and $554,000,
or 55%, over net income for the same periods of 1995, respectively. The
Company's effective tax rate for 1996 has increased approximately 10% over 1995.
However, the Company has available approximately $8.0 million of federal tax net
operating loss carryforwards which are available to offset future Federal
taxable income through 2010. The Company had reported preliminary results for
the third quarter on October 3, 1996.
Revenues for the third quarter of 1996 rose 24% to $4,798,000 from $3,861,000
recorded for the third quarter of 1995. The revenue gains stemmed from the
addition of one new mobile unit placed into service in September 1995, one new
mobile unit placed into service in February 1996, two new mobile units placed
into service in late March 1996 and two units upgraded during 1996. Further
revenue gains are attributed to greater utilization of the Company's existing
fleet of mobile MRI units. Revenues derived from hospitals which the Company
serviced in both comparable periods increased 9% during the third quarter of
1996, compared to the third quarter of 1995. Revenues for the nine months ended
September 30, 1996 rose 19% to $13.6 million from $11.4 million in the similar
year ago period.
The Company previously announced that it had purchased and begun operation of
two new MRI units in late September 1996 and one additional new unit on October
1, 1996 (increasing the Company's total MRI fleet to seventeen units). "The new
units had little impact on our third quarter results but will have a positive
impact on our earnings in the fourth quarter of 1996," stated Daniel Dickman,
the Company's Executive Vice President and Chief Operating Officer.
SMT Health Services Inc., through its fleet of seventeen mobile units, provides
diagnostic imaging services to healthcare providers in Pennsylvania, West
Virginia, North Carolina, Ohio, Virginia, Kentucky and South Carolina.
(table follows)
<PAGE>
SMT HEALTH SERVICES INC.
AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
For The Three Months Ended For The Nine Months Ended
September 30, September 30,
----------------------------- -------------------------
1996 1995 1996 1995
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Total Revenues $4,798,000 $3,861,000 $13,606,000 $11,405,000 *
---------- ---------- ----------- -----------
Operating Expenses 1,587,000 1,327,000 4,478,000 4,181,000
Depreciation and
Amortization 1,198,000 870,000 3,307,000 2,726,000
Selling, General and
Administrative 629,000 652,000 2,002,000 1,815,000
Interest Expense 501,000 429,000 1,447,000 1,319,000
Other ( 300,000) -- ( 300,000) --
---------- ---------- ----------- -----------
Total Costs and
Expenses $3,615,000 $3,278,000 $10,934,000 $10,041,000
---------- ---------- ----------- ===========
Income Before
Income Taxes $1,183,000 $ 583,000 $ 2,672,000 $ 1,362,000
Income Taxes 267,000 ** 152,000 736,000** 360,000
---------- -------- ----------- -----------
Net Income $ 916,000 $431,000 $ 1,936,000 $ 1,002,000
========== ======== =========== ===========
Earnings Per Common
Share $.21 $.14 $.50 $.36
========== ======== =========== ===========
Average Number of
Shares Outstanding 3,179,000 2,648,000 2,879,000 2,568,000
========= =========== =========== =========
</TABLE>
*Includes revenues related to the cardiac partnerships which were sold on June
30, 1995 totaling $548,000 for the nine months ended September 30, 1995.
**Includes a $200,000 favorable adjustment to increase the Company's Federal Tax
NOL.
# # #
<PAGE>
Exhibit 99.06
Contact: David Zynn, CFO James K. White, Managing Director
SMT Health Services Inc. Kehoe, White, Savage & Company, Inc.
(412) 933-3300 (310) 437-0655
http://www.smthealth.com
SMT HEALTH SERVICES ANNOUNCES ADDITION OF ITS
EIGHTEENTH MOBILE MRI UNIT
Pittsburgh, PA, November 4, 1996 -- SMT Health Services Inc. (NASDAQ/NMS: SHED,
SHEDW) today announced that it has purchased a mobile MRI unit from Palmetto
Community Health Network (the "Network") and has signed new service contracts
with six (6) South Carolina hospitals which are members of the Network. The
Company will begin servicing the new hospitals with the unit purchased from the
Network immediately and plans to trade-in and upgrade the purchased unit to a
new 1.0 T GE Horizon in mid-December. The Company anticipates signing several
additional service contracts with Network affiliated hospitals.
The new unit represents the Company's eighteenth mobile MRI unit and is the
seventh new unit acquired this year.
SMT Health Services Inc., through its fleet of eighteen mobile units, provides
diagnostic imaging services to healthcare providers in Pennsylvania, West
Virginia, North Carolina, Virginia, South Carolina, Kentucky and Ohio.
# # #
