AGREEMENT AND PLAN OF MERGER
dated as of April 16, 1996
By and Among
ALLIANCE IMAGING, INC.,
ALLIANCE IMAGING OF PENNSYLVANIA, INC.
and
ROYAL MEDICAL HEALTH SERVICES INC.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is dated as of April
16, 1996, by and among ALLIANCE IMAGING, INC., a Delaware corporation
("Parent"), ALLIANCE IMAGING OF PENNSYLVANIA, INC., a Pennsylvania
corporation ("Acquisition Sub"), and ROYAL MEDICAL HEALTH SERVICES INC., a
Pennsylvania corporation ("Seller").
W I T N E S S E T H
A. Each of Parent and Seller is in the business of providing medical
diagnostic imaging equipment and services to health care providers.
B. Parent owns all of the issued and outstanding capital stock of
Acquisition Sub.
C. The Boards of Directors of each of Parent, Acquisition Sub and
Seller deem it advisable and in the best interests of their respective
stockholders that, subject to the terms and conditions hereof, Acquisition
Sub be merged with and into Seller, with Seller being the surviving
corporation (the "Merger"). Each of the foregoing Boards of Directors has
approved this Agreement, and Parent, as the sole stockholder of Acquisition
Sub, has likewise approved this Agreement, all in accordance with applicable
corporate law.
D. On or before the Closing (as hereinafter defined), the
stockholders of Seller as of the date of this Agreement holding not less than
ninety percent (90%) of the issued and outstanding stock of Seller as of such
date shall execute and deliver to Parent, Acquisition Sub and Seller a
Joinder and Consent substantially in the form of Exhibit A hereto
(collectively, the "Stockholder Consents"), pursuant to which, among other
things, such stockholder will (a) consent to the terms and conditions hereof,
(b) join in certain provisions hereof, (c) agree not to sell, transfer or
assign any of such stockholder's right, title or interest in or to any of the
capital stock of Seller (except pursuant to this Agreement) unless this
Agreement shall have been terminated in accordance with Article 7 hereof, and
(d) make certain representations
concerning the lack of an intention to resell securities of Parent, if any,
acquired pursuant to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for the purpose of
setting forth certain terms and conditions of the Merger and the mode of
carrying the same into effect, Parent, Acquisition Sub and Seller agree as
follows:
II.
MERGER AND ORGANIZATION
A. THE MERGER.
1. REVERSE MERGER. Subject to the terms and conditions hereof,
Acquisition Sub shall be merged with and into Seller as soon as practicable
following the satisfaction (or waiver by the appropriate party or parties) of
all of the conditions hereinafter set forth, as permitted by and in
accordance with Section 1922 and other applicable provisions of the
Pennsylvania Consolidated Statutes and other applicable law. Acquisition Sub
and Seller are herein sometimes referred to as the "Constituent
Corporations." Seller shall be the surviving corporation following the
effectiveness of the Merger (sometimes referred to herein as the "Surviving
Corporation").
2. EFFECT OF MERGER. The parties agree to the following
provisions with respect to the Merger:
(1) NAME OF SURVIVING CORPORATION. The name of the
Surviving Corporation from and after the Effective Date (as hereinafter
defined) shall be "Royal Medical Health Services, Inc."
(2) ARTICLES OF INCORPORATION. The Articles of
Incorporation of Acquisition Sub as in effect immediately prior to the
Effective Date shall from and after the Effective Date be and continue to be
the Articles of Incorporation of the Surviving Corporation, except that the
name of the Surviving Corporation shall be as specified in clause (i)
immediately above.
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(3) BYLAWS. The Bylaws of Acquisition Sub as in effect
immediately prior to the Effective Date shall from and after the Effective
Date be and continue to be the Bylaws of the Surviving Corporation until
changed or amended in accordance with the Articles of Incorporation or such
Bylaws or the provisions of applicable law.
(4) CORPORATE ORGANIZATION. The separate corporate
existence of Acquisition Sub shall cease on the Effective Date. All the
property, real, personal and mixed, and franchises of each of the Constituent
Corporations, and all debts due on whatever account to each of them,
including choses in action belonging to each of them, shall be taken and
deemed to be transferred to and vested in the Surviving Corporation without
further act or deed. The Surviving Corporation shall thenceforth be
responsible for all the liabilities and obligations of each of the
Constituent Corporations, with the effect set forth in applicable law. In
addition to the foregoing, the Merger shall have the further effects set
forth herein.
(5) DIRECTORS AND OFFICERS.
(a) The directors of Acquisition Sub immediately
prior to the Effective Date shall be the directors of the Surviving
Corporation and will hold office from the Effective Date until their
respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by applicable law.
(b) The officers of Acquisition Sub immediately
prior to the Effective Date shall be the officers of the Surviving
Corporation and will hold office from the Effective Date until their
respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by applicable law.
(6) FILING OF CERTIFICATE OF MERGER. This Agreement
having been duly approved by the Boards of Directors of each of the
Constituent Corporations and Parent, as the sole stockholder of Acquisition
Sub, in accordance with
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the Pennsylvania Consolidated Statutes and the respective Articles of
Incorporation and Bylaws of the Constituent Corporations, as soon as
practicable after the conditions to the Merger set forth in Article 6 hereof
have been satisfied (or waived by the appropriate party or parties), and
provided that this Agreement has not theretofore been terminated pursuant to
Article 7 hereof, Parent, Acquisition Sub and Seller shall cause articles of
merger which conform to the provisions of this Agreement (the "Certificate of
Merger") to be executed and filed with the Department of State of the
Commonwealth of Pennsylvania as provided in the Business Corporation Law of
Pennsylvania. The Merger shall be consummated and the closing of this
Agreement (the "Closing") shall occur immediately upon the filing of the
Certificate of Merger with the Department of State of the Commonwealth of
Pennsylvania (the date and time of such filing and Closing being referred to
herein as the "Effective Date"). The Closing shall take place at the offices
of Irell & Manella, 333 South Hope Street, 33rd Floor, Los Angeles,
California 90071, or at such other place as the parties may mutually agree,
on or before April 30, 1996 (as such date may be extended by mutual agreement
of the parties, the "Terminal Date").
(7) FURTHER ASSURANCES. If at any time after the Effective
Date, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to
or under any of the rights, properties or assets of the Constituent
Corporations acquired or to be acquired as a result of the Merger, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of the
Constituent Corporations, all such deeds, bills of sale, assignments and
assurances and do, in the name and on behalf of the Constituent Corporations,
all such other acts and things necessary, desirable or proper to vest,
perfect or confirm its right, title or interest in, to or under any of the
rights, properties or assets of the Constituent Corporations acquired or to
be acquired as a
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result of the Merger and otherwise to carry out the purposes of this
Agreement.
III.
CONVERSION OF SHARES
ON THE EFFECTIVE DATE
A. CONVERSION OF SHARES IN THE MERGER. Each share of Common Stock,
no par value, of Seller ("Seller Common Stock") that is issued and
outstanding immediately prior to the Effective Date shall, by virtue of the
Merger, be converted into the right to receive the Securities and Cash
Consideration or the Cash Only Consideration, at the election of each holder
of record of Seller Common Stock (subject to Section 2.4 below) as indicated
in such holder's Stockholder Consent or by separate letter of instruction.
"Cash Only Consideration" means Ten Dollars ($10.00) in cash per share of
Seller Common Stock. "Securities and Cash Consideration" means, per share of
Seller Common Stock, a combination of (a) Eight Dollars ($8.00) in cash, (b)
.04 shares of Parent's Series C Cumulative Convertible Redeemable Preferred
Stock, such stock to have rights, preferences and privileges and to be
subject to restrictions substantially as indicated in the form of designation
attached hereto as Exhibit 2.1A (the "Parent Preferred Stock"), and (c) a
warrant to acquire one (1) share of Parent Common Stock for $5.00 in cash,
such warrant to be evidenced by a Warrant Certificate substantially in the
form attached hereto as Exhibit 2.1B (the "Parent Warrants"; together, the
Parent Preferred Stock and the Parent Warrants are sometimes referred to
herein as the "Parent Securities").
B. CANCELLATION OF SHARES OF SELLER COMMON STOCK. Notwithstanding
anything in Section 2.1 to the contrary, each of the shares of Seller Common
Stock held by Seller as treasury shares or which is owned by Parent or
Acquisition Sub, if any, immediately prior to the Effective Date shall be
cancelled.
C. CONVERSION OF SHARES OF ACQUISITION SUB. The shares of the capital
stock of Acquisition Sub that are issued and outstanding immediately prior to
the Effective Date shall, by virtue of the Merger and without any action of
the part of
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the holder thereof, be converted into One Thousand (1,000) newly issued
shares of capital stock of the Surviving Corporation.
D. NO FURTHER TRANSFERS OF STOCK. On the date hereof, the stock
transfer books of Seller shall be closed and, unless this Agreement has
theretofore been terminated as provided herein, no transfers of shares of
Seller Common Stock shall be made thereafter, nor shall any such attempted
transfers be recognized by Seller on the stock transfer books or otherwise.
If, after the Effective Date, certificates representing former shares of
Seller Common Stock are properly presented to the Surviving Corporation, they
shall be exchanged for the appropriate Securities and Cash Consideration or
Cash Only Consideration and cancelled as provided in Section 2.5 below;
provided, however, that notwithstanding anything herein to the contrary any
such certificates surrendered after sixty (60) days following the Effective
Date will be exchanged for the Cash Only Consideration, and the holder
thereof will not have an election to select the Securities and Cash
Consideration.
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E. SURRENDER OF CERTIFICATES.
(1) On the Effective Date, each holder of former shares of Seller
Common Stock (other than shares, if any, held by Parent or Acquisition Sub)
who has executed a Stockholder Consent, shall surrender all certificates
representing such shares to the Surviving Corporation for cancellation. All
such shares shall be delivered to the Surviving Corporation free and clear
of all liens, claims and encumbrances of any party and of any nature
whatsoever. Upon surrender of such certificates to the Surviving Corporation,
each such holder of former shares of Seller Common Stock shall be entitled to
receive in exchange therefor the applicable Securities and Cash Consideration
or Cash Only Consideration in the form indicated in Section 2.1 above. No
interest will accrue or be paid with respect to any Merger consideration,
either with respect to the period from the date hereof to the Effective Date
or any period after the Effective Date. Until certificates representing
former shares of Seller Common Stock are surrendered as provided herein, such
certificates shall represent only the right to receive the applicable Merger
consideration, and shall not represent any right, title or interest in or to
the capital stock of Seller, either of the Constituent Corporations or the
Surviving Corporation.
(2) Seller shall use its best efforts to advise Parent and
Acquisition Sub, on a date that is at least five (5) business days prior to
the Closing, of the names in which certificates for new Parent Securities to
be issued in the Merger shall be issued and the names in which checks for the
Cash Only Consideration shall be drawn. If any such issuance or payment is to
be made in a name other than that of the registered holder of the former
Seller Common Stock being converted in the Merger, then it shall be a
condition of the issuance of the corresponding Parent Securities or payment
of Cash Only Consideration that the holder of the former Seller Common Stock
establish to the satisfaction of the Surviving Corporation that no transfer
or other tax is payable by reason of such issuance or payment, or that all
such taxes have been paid.
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IV.
ADDITIONAL AGREEMENTS IN
CONNECTION WITH THE MERGER
A. SELLER STOCKHOLDER APPROVAL.
3.1.1 STOCKHOLDER APPROVAL. Between the date hereof and the
Closing, Seller shall, in accordance with applicable requirements of the
Pennsylvania Consolidated Statutes and any other applicable law, and its
Articles of Incorporation and Bylaws, duly give notice of, and duly call, an
annual or a special meeting of the stockholders of Seller to be held at the
earliest practicable date for the purpose of voting on and approving this
Agreement and the Merger in accordance with the requirements of the
Pennsylvania Consolidated Statutes and any other applicable law. In
connection with such annual or special meeting (or, as provided in the next
sentence, written consent of stockholders), the Board of Directors of Seller
shall recommend that all of Seller's stockholders approve such matters and
shall otherwise use its best efforts to obtain such approval. Notwithstanding
the first sentence of this Section, subject to applicable provisions of the
Pennsylvania Consolidated Statutes and any other applicable law, Seller may
dispense with the annual or special meeting referred to above and, in lieu of
holding such a meeting, may provide for stockholder consent of this Agreement
and the Merger pursuant a written consent of stockholders. Whether the
approval of Seller's stockholders is obtained pursuant to a meeting or
written consent as hereinabove provided, Seller agrees to use, in addition to
any solicitation materials prepared by Seller (copies of which will be
provided to Parent), the Private Placement Memorandum (as hereinafter
defined) in connection with the solicitation of approval of its stockholders
of this Agreement and the Merger.
3.1.2 PRIVATE PLACEMENT MEMORANDUM. Promptly after the date hereof,
Parent shall prepare a Private Placement Memorandum (the "Private Placement
Memorandum") covering the issuance of shares of Parent Securities pursuant to
the Merger as provided in this Agreement. Prior to finalizing the Private
Placement Memorandum, Parent will
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provide a copy thereof to the Board of Directors of Seller to allow such
Board to provide input concerning the substance thereof, for Parent's
reasonable consideration. Parent represents and warrants to Seller, and
Seller represents and warrants to Parent and Acquisition Sub, that none of
the information with respect to it or them (in the case of Seller, including
its directors, officers and stockholders and their respective affiliates)
that is included in the Private Placement Memorandum will contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
3.1.3 STATE SECURITIES APPROVALS. Parent, Acquisition Sub and
Seller shall cooperate with one another in taking all such action as may be
required under state blue-sky or securities laws in connection with the
transactions contemplated by this Agreement.
B. NOTICE OF PROPOSALS; NO SHOP. If after the making of this Agreement
any person or entity extends to Seller any offer, or Seller becomes aware of
any offer, to acquire any shares of any capital stock of Seller or any assets
or properties of Seller, directly or indirectly and regardless of the form of
the transaction, or Seller becomes aware that any person or entity is seeking
to conduct any discussions with respect to any such matters, then in each
such case Seller shall promptly notify Parent and Acquisition Sub of such
information, including the identity of such person or entity. Unless this
Agreement has theretofore been terminated in accordance with Article 7
hereof, Seller shall not, and shall not permit any of its officers,
directors, employees, agents or representatives (including, without
limitation, investment bankers, attorneys and accountants) to, directly or
indirectly, initiate, solicit, encourage (including, without limitation, by
way of furnishing any non-public information concerning Seller) or conduct or
participate in any discussions with respect to any matter described in the
preceding sentence.
C. REASONABLE EFFORTS. Subject to the terms and conditions hereof, each
of the parties hereto agrees to use all its reasonable efforts to take, or
cause to be taken, to
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do, or cause to be done, and to assist and cooperate with the other parties
hereto in doing, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective, as soon as
practicable, the transactions contemplated by this Agreement. Such actions
shall include, without limitation, (a) using reasonable efforts to obtain any
consents, amendments to or waivers under the terms of any borrowing
arrangements of Parent, Acquisition Sub and Seller that are required or
advisable as a result of the transactions contemplated by this Agreement, (b)
using reasonable efforts to obtain consents, amendments to or waivers under
the terms of Seller's other material contracts and arrangements that are
required or advisable as a result of the transactions contemplated by this
Agreement, and (c) using reasonable efforts to defend any lawsuits or other
legal proceedings, whether judicial or administrative and whether brought
derivatively or on behalf of third parties (including governmental agencies
or officials), challenging this Agreement or the consummation of the
transactions contemplated hereby. Subject to the terms and conditions hereof,
each of the parties hereto agrees to use all its reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy all the conditions of Closing set forth herein at the
earliest possible time.
D. CONDUCT OF BUSINESS BY SELLER PENDING THE MERGER. Seller covenants
and agrees that, prior to the Effective Date, unless Parent and Acquisition
Sub shall otherwise agree in writing and except as contemplated by this
Agreement:
(1) the business of Seller shall be conducted only in the ordinary
and usual course and consistent with past practices, Seller shall not enter
into any agreement or transaction other than in the ordinary and usual course
of business, and Seller shall not purchase, lease or sell (or enter into any
agreement to purchase, lease or sell) any material properties, service or
cryogen contracts or other assets other than in the ordinary and usual course
of business; PROVIDED, HOWEVER, that Seller shall not enter into any
agreement or transaction for the acquisition (by purchase, lease, rental or
otherwise) of a diagnostic imaging unit or equipment or for provision of
equipment or services to a health-care provider client, whether or not such
agreement or transaction is in the ordinary course of business. In
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particular, but without limitation of the foregoing, Seller shall not (a)
incur or assume any indebtedness for money borrowed, or (b) agree to any
amendment, adjustment or modification of or to any Material Contract (as
hereinafter defined). Parent and Acquisition Sub acknowledge that Seller is
contemplating a transaction for a full-time unit at the Samaritan Medical
Center in Watertown, New York; consistent with the terms of this clause (i),
Seller agrees to obtain the consent of Parent and Acquisition Sub before
entering into any agreements with respect to the acquisition of a unit or its
provision to such customer for imaging services and the terms of such MRI
services contracts. Parent and Acquisition Sub acknowledge that Seller will
spend up to $30,000 (including costs incurred prior to the date hereof) on
the renovation and refurbishing of the Seller's office space;
(2) Seller shall not (a) amend its Articles of Incorporation or
Bylaws, (b) change the number of authorized or outstanding shares of its
capital stock or effect any reclassification thereof, or (c) declare, set
aside or pay any dividend or other distribution or payment in cash, stock or
property in respect of any of its shares of capital stock;
(3) Seller shall not (a) issue, grant, sell or pledge any shares of
its capital stock, equity securities or rights of any kind or rights to
acquire any such shares, securities or rights of Seller, (b) acquire,
directly or indirectly, by redemption or otherwise, any shares of the capital
stock or other securities of Seller, or (c) enter into or modify any
contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(4) Seller shall use its best efforts to preserve intact the
business organization of Seller and to preserve the goodwill of those having
business relationships with it;
(5) Seller shall conduct its relations with employees, including
termination and hiring practices, and their employee benefit plans only in
the ordinary and usual course and consistent with the past practices and
policies of Seller, and shall not increase or pay any employee salaries or
compensation in any manner; in particular, but without
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limitation of the foregoing, the salary of each of Mark J. Graham and Albert
F. Calfo, II shall continue through the Closing at $122,000 per annum, with
$8,000 per month of such salary for each accruing but not paid;
(6) Seller shall not assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, firm or corporation
or make any loans or advances to any individual, firm or corporation, except
any assumptions, guarantees, endorsements, loans advances or other
obligations in the ordinary and usual course of its business, and which do
not exceed $5,000 in the aggregate;
(7) Seller shall not make any investment of a capital nature either
by purchase of stock or securities, contributions to capital, property
transfers or otherwise, or by the purchase of any property or assets of any
individual, firm or corporation; and
(8) Seller shall not enter into an agreement or otherwise agree to
do any of the things described in any of clauses (i) through (vii).
E. NOTICE OF ACTIONS AND PROCEEDINGS. Seller shall promptly notify
Parent and Acquisition Sub of any claims, actions, proceedings or
investigations commenced or, to the best of its knowledge, threatened,
involving or affecting Seller or any of its properties or assets, or, to the
best of its knowledge, against any employee, consultant, director, officer or
stockholder of Seller in his, her or its capacity as such, which (a) if
decided adversely to Seller or such other person, might reasonably be
expected to materially and adversely affect the financial condition,
business, properties or results of operations of Seller, or (b) relates to
the consummation of the Merger or any of the other transactions or
obligations contemplated hereby.
F. NOTIFICATION OF CERTAIN OTHER MATTERS. Seller shall give prompt
notice to Parent and Acquisition Sub of (a) any notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by Seller subsequent to the
date of this Agreement and prior to the Effective Date, under any agreement,
indenture or instrument material to the
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financial condition, business, properties or results of operations of Seller,
and (b) any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement. In addition, each of Seller, on
the one hand, and Parent and Acquisition Sub, on the other hand, shall give
prompt notice to the other parties or party of any materially adverse change
in, or any facts or circumstances that arise or become evident after the date
of this Agreement and on or before the Effective Date that might result in a
materially adverse change in, its or their financial condition, properties,
business or results of operations.
G. ACCESS TO BOOKS AND RECORDS. Seller shall afford Parent, Acquisition
Sub and their attorneys, accountants and other agents and representatives
(collectively, "Representatives") access during normal business hours to all
of the assets, properties, books and records of Seller and such additional
information concerning the business and properties of Seller as Parent,
Acquisition Sub or their Representatives may request. Parent and Acquisition
Sub will, and will cause their Representatives to, hold in confidence all
confidential information, and will not use any such confidential information
except in connection with the transactions contemplated hereby, until such
time as (a) such information is otherwise publicly available, (b) they are
advised by counsel that any such information is required by law or
governmental process to be disclosed or (c) such information becomes known to
any of them through a third party that is not known to them to be under a
duty of confidentiality to Seller. In the event of the termination of this
Agreement for any reason, Parent and Acquisition Sub will, and will cause
their Representatives to, deliver to Seller all documents, work papers and
other materials obtained by them or on their behalf as a result of this
Agreement or in connection herewith, whether so obtained before or after the
execution hereof.
H. FEES AND EXPENSES. If the Merger is completed, Parent will cause the
Surviving Corporation to pay Seller's fees and expenses (including, without
limitation, all fees and expenses of attorneys, accountants and other agents
and representatives of Seller; PROVIDED, HOWEVER, that the fees
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and expenses of Seller's outside attorneys shall not exceed $25,000) in
connection with the transactions contemplated by this Agreement.
I. PUBLIC ANNOUNCEMENTS. Parent and Acquisition Sub, on the one
hand, and Seller, on the other hand, will consult with each other and
obtain the other's consent before issuing any press release or otherwise
making any public statements with respect to this Agreement, the Merger or
the other transactions contemplated hereby. Prior to such consultation
and obtaining such consent, no party hereto shall issue any such press
release or make any such public statement except as may otherwise be
required by law or governmental process (in which case the party required
to make disclosure shall nonetheless reasonably attempt to obtain approval
of the other party to the proposed disclosure).
J. PAYMENT OF CERTAIN TRUCKING TRADE PAYABLES. At the Closing,
Seller shall pay to A&M Trucking, Inc. ("Trucking") an amount in respect
of the accrued and outstanding trade payable amounts owed by Seller to
Trucking (the "Trucking Trade Payable") such that Trucking has an
amount of cash at the Closing equal to the accrued and unpaid outstanding
salary and payroll and employment taxes; provided, the amount to be so
paid shall not exceed the amount of the Trucking Trade Payable.
V.
REPRESENTATIONS AND WARRANTIES
OF SELLER
As an inducement to Parent and Acquisition Sub to enter into this
Agreement, Seller represents and warrants to Parent and Acquisition Sub as
follows:
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A. EXISTENCE AND RIGHTS; COMPLIANCE WITH LAWS.
1. EXISTENCE AND RIGHTS. Seller (i) is a corporation duly
organized and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania without limit as to the duration of its
existence; (ii) has the corporate power and adequate authority, rights and
franchises to own its properties and to carry on its business as now
conducted and to make and carry out this Agreement; and (iii) is duly
qualified and in good standing in each jurisdiction in which its owned or
leased properties or the character of its business makes such qualification
necessary. The copies of the Articles of Incorporation and Bylaws of Seller
previously delivered to Parent and Acquisition Sub remain complete and in
full force. Schedule 4.1.1 hereto contains a complete list of all
Certificates of Need and similar governmental approvals held by Seller or
under which Seller operates any part of its business, in the latter case
including the identity of the holder of such certificate or approval, and in
each case indicating the status thereof and whether the approval is being
actively used. All such certificates and approvals are valid and in full
force and effect.
2. COMPLIANCE WITH LAWS. Seller's business has been and is being
conducted in all material respects in accordance with all applicable federal,
state and local laws and regulations and rules and regulations of all
applicable private third party insurers and reimbursers of health care costs
and expenses, including, without limitation, such laws, regulations and rules
as relate to the practice of medicine and the provision of medical diagnostic
mobile imaging services and otherwise.
B. STOCK. Seller's authorized capital stock consists of 100,000
shares of a single class of stock, the Seller Common Stock, of which 100,000
have been duly authorized and are validly issued and outstanding as of the
date hereof and will be duly authorized and validly issued and outstanding as
of the Effective Date. All shares of such outstanding capital stock are
fully paid and non-assessable and were issued in compliance with all
applicable state and federal securities laws and other applicable laws.
There are no outstanding securities convertible into, or options, warrants,
rights,
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calls or other commitments of any nature relating to, the issuance of any
securities of Seller. Schedule 4.2 contains a true and correct list showing
the shareholders of record of Seller as of the date hereof, the number of
shares of Seller Common Stock owned of record by each such shareholder and,
to the best of Seller's knowledge, the state of residence of each such
shareholder.
C. AGREEMENT AUTHORIZED. Except for obtaining stockholder approval as
elsewhere provided in this Agreement, the execution, delivery and performance
of this Agreement by Seller have been duly and validly authorized by all
necessary corporate action (including, without limitation, approval by the
Board of Directors and stockholders of Seller in accordance with applicable
law) on the part of Seller and do not require notice to, or the consent or
approval of, any governmental body or other regulatory authority. This
Agreement is a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
D. SUBSIDIARIES. Seller has no subsidiaries and no equity interests
in any other entities nor any obligation, option or right to acquire any such
interest, excepting solely six (6) limited partnership units of Western
Pennsylvania Eye Laser Associates, L.P., an entity that operates a Summit eye
laser in Pittsburgh, Pennsylvania. Seller has supplied to Parent a copy of
the private placement memorandum relating to such investment.
E. CONTRACTS. All Material Contracts (or copies thereof) to which
Seller is a party or by which it or any of its assets or properties are bound
have been previously delivered to Parent or its counsel by Seller. For the
purpose of this Section 4.5, the term "Material Contracts" means (a) all
contracts or commitments arising out of the ordinary and usual course of
business; (b) all contracts or commitments involving an obligation which
cannot or in reasonable probability will not be performed or terminated
within six (6) months from the date hereof or providing for termination only
upon the payment of a penalty or the equivalent thereof; (c) all contracts or
commitments affecting ownership of, title to, use of, or any interest in real
estate; (d) all bonuses, incentive compensation, pension, group insurance or
employee welfare plans of any nature whatsoever; (e) all collective
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bargaining agreements or other contracts or commitments to or with any labor
unions or other employee representatives or groups of employees; (f)
employment contracts and all other contracts, agreements or commitments to or
with individual employees or agents extending for a period of more than three
(3) months from the date hereof or providing for earlier termination only
upon the payment of a penalty or the equivalent thereof; (g) all other
contracts or commitments providing for payments based in any manner upon the
sales, purchases or profits of Seller; (h) all contracts or commitments,
whether in the ordinary course of business or not, which involve future
payments, performance of services or delivery of goods and/or materials, to
or by Seller of an aggregate amount or value in excess of Twenty-Five
Thousand Dollars ($25,000), including, without limitation, and whether or not
meeting that numerical standard all such contracts or commitments relating to
(x) the purchase, lease or other acquisition or use of medical diagnostic
imaging equipment, or (y) the provision of equipment or services to health
care providers or other customers or clients of Seller (in the case of this
clause (4), Schedule 4.5 attached hereto listing all such Material Contracts
and indicating which of them were entered into after February 1, 1996, if
any); and (i) all patent licensing agreements and all other agreements and
commitments with respect to patents, patent applications, trademarks, trade
names, service marks, inventions, technical assistance, know-how, special
processes, copyrights or other like items. There is no material default in
any obligation to be performed by Seller under any Material Contract and
Seller has not waived any material right under any Material Contract. Seller
does not have any outstanding contract, commitment or undertaking which will
result in any material loss upon completion or performance thereof after
allowance for general and administrative selling and distribution expenses or
will be unreasonably adverse, onerous or harmful to its assets, business,
operation or financial condition. Seller is not in default nor is there any
basis for any claim of default under any contract made or obligation owed to
it, and Seller has not waived any material right under any such contract or
obligation, except for defaults and waivers which are not material to the
financial condition, properties, business or results of operations of Seller.
Seller (including its employees) is not restricted by agreement from
carrying on its business anywhere in the United States.
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F. NO CONFLICT. The execution, delivery and perform-ance of this
Agreement will not (i) breach or constitute grounds for the occurrence or
declaration of an acceleration of payment or a default or a right of
termination under any agreement, indenture, undertaking or other instrument
to which Seller is a party or by which it or any of its properties may be
bound or affected; (ii) violate any provision of law or any regulation or any
order, judgment or decree of any court or other agency of government, the
violation of which could have a material adverse effect on the financial
condition, properties, business or results of operations of Seller; (iii)
result in a breach of, conflict with, or give to others any rights of
termination, amendment, or cancellation of, any permit, franchise or license
to which Seller is a party or by which it or any of its properties may be
bound or affected or which is otherwise material to the operation of its
business; (iv) violate any provision of the Articles of Incorporation or
Bylaws of Seller; or (v) result in the creation or imposition of (or the
obligation to create or impose) any lien, charge or encumbrance on, or
security interest in or on, any of its properties. Without limiting the
generality of the foregoing, the execution, delivery and performance of this
Agreement does not and will not require the consent of any third party under
any Material Contract except as set forth on Schedule 4.6 hereto.
G. LITIGATION. Except as set forth on Schedule 4.7, there is no
litigation, investigation, arbitration or other proceedings (formal or
informal) pending or, to the best knowledge of Seller, threatened against or
affecting it or its properties; nor does Seller know of any reasonable basis
for any litigation, investigation, arbitration or other pro-ceedings (formal
or informal), the results of which could have a material adverse effect on
its financial condition, properties, business or results of operations.
Seller is not in default with respect to any order, writ, injunction, decree
or demand of any court or other governmental or regulatory authority.
H. FINANCIAL CONDITION. The balance sheets of Seller as of June 30,
1995, February 29, 1996 and March 31, 1996, and the related profit and loss
and cash flow statements for the periods ended on those dates, and the
related notes for such
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financial statements, copies of which have heretofore been or will be
delivered to Parent and Acquisition Sub by Seller, and all other historical
financial statements and data submitted in writing by Seller to Parent and
Acquisition Sub at any time (collectively, the "Financial Statements"), are
or, when delivered, will be true and correct as of the respective dates
thereof, and the Financial Statements truly present and will truly present
the financial condition of Seller as at the respective dates thereof and the
results of the operations of Seller for the respective periods covered
thereby, and have been and will have been prepared in all material respects
in accordance with generally accepted accounting principles on a basis
consistently maintained ("GAAP"); provided, however, with respect to
technical GAAP issues relating to methods of depreciation, calculation of
depreciation, capitalization of leases, carrying value of intangible assets
and capitalization of equipment, Seller represents to the best of its
knowledge that the Financial Statements have been and will have been prepared
in all material respects in accordance with GAAP. Seller has no knowledge of
any liabilities or guarantees, matured or unmatured, contingent or otherwise,
as of the respective dates of the Financial Statements not accurately
reflected in the Financial Statements, and none have arisen since those times
except in the ordinary and usual course of business. With respect to
Seller's contracts, commitments and loss contingencies, the Financial
Statements contain and reflect adequate reserves. In addition to the
Financial Statements, Seller has provided Parent and Acquisition Sub with
financial projections relating to its 1996 fiscal year. Except as reflected
in the notes or assumptions to the latest iteration of such projections
delivered prior to the date hereof, Seller is not aware of any facts or
contingencies that cast significant doubt on Seller's ability to achieve the
financial results reflected in such projections nor does Seller otherwise
have a basis for believing that the financial results that are reflected in
such projections are not reasonably achievable. As of March 31, 1996, there
were no obligations or liabilities of Seller accrued and owing (or which
should have been shown on Seller's financial statements as accrued and owing)
other than those set forth on Schedule 4.8 (which Schedule provides a
detailed listing of all such obligations and liabilities).
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I. ACCOUNTANTS INDEPENDENT; BOOKS AND RECORDS. To Seller's knowledge,
the accountants who examined and reported on the Financial Statements, as
applicable, are, with respect to Seller, independent certified public
accountants within the meaning of the professional rules of the American
Institute of Certified Public Accountants. Seller maintains a system of
internal accounting control sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accounting for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
J. NO SUBSEQUENT CHANGES. Except as contemplated in this Agreement or
reflected in any Schedule attached hereto, since the respective dates of the
Financial Statements, (i) there have been no material adverse changes
(whether by sale, destruction, pledge, lease or otherwise and whether or not
covered by insurance) in the assets (including licenses, permits and
franchises), liabilities or financial condition of Seller, and (ii) Seller
has not entered into any commitments, contracts or transactions not reflected
in the Financial Statements, as required in accordance with GAAP, except as
specified on Schedule 4.10. Since the respective dates of the Financial
Statements, (a) Seller has not, directly or indirectly, paid, declared, or
set aside any dividends or distributions with respect to, nor repurchased,
any of its capital stock or securities of any class, and (b) to the knowledge
of Seller, no events have occurred which have had or can reasonably be
expected to have a material adverse effect on the financial condition,
properties, business, results of operations or prospects of Seller. Since
December 31, 1995, each of Mark J. Graham and Albert F. Calfo, II has earned
salary (including all cash compensation) at the rate of $122,000 per year and
neither of them has received any dividend or other distribution on Seller
Common Stock or any similar payment or distribution. No later than the
Closing, Seller shall have taken steps to terminate (without any cost to
Seller) the existing employment agreements with each of Mr. Graham and Mr.
Calfo, such agreements to be replaced by new
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employment agreements between each of Mr. Graham and Mr. Calfo, on the one
hand, and the Parent, on the other.
K. TITLE TO AND CONDITION OF ASSETS. Schedule 4.11 sets forth all
interests in real property held by Seller, including all leases of real
property. Seller has good, clear and marketable title to its assets
(including, without limitation, those shown in the Financial Statements,
except as subsequently sold in the ordinary course of business and listed on
Schedule 4.11 hereto) and the same are not subject to any mortgages, deeds of
trust, pledges, security interests, leases, licenses or other encumbrances
other than indicated in the Financial Statements or listed on Schedule 4.11
hereto. Schedule 4.11 includes a schedule of all bank indebtedness and
related liens currently in effect. None of the assets of Seller, tangible or
intangible, are located outside of the United States and Seller does not own
or hold any stock or securities, or receivables from or claims against
foreign entities. All of the assets and currently used properties of Seller
are in good operating condition, ordinary wear and tear excepted.
L. ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.12, Seller
has all permits, licenses and other authorizations required for the operation
of its business (as presently conducted) under federal, state, and local laws
relating to pollution, protection of the environment and the storage,
presence and discharge of chemicals and other substances (collectively,
"Environmental Laws"). There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter under the Environmental Laws pending, or to the best
knowledge of Seller threatened, against Seller or any of its owned or leased
real or personal property. Neither Seller nor, to the best knowledge of
Seller, any other person or entity has placed, stored, buried, dumped or
disposed of any regulated or prohibited substances or any materials produced
by, or resulting from, any business, commercial or industrial activities,
operations or processes on, beneath, or adjacent to any owned or leased real
property of Seller, except to the extent handled or reported and remedied in
all material respects in accordance with applicable Environmental Laws. To
the best knowledge of Seller, no employee of Seller has been exposed in the
course
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of his or her employment with Seller to any regulated or prohibited
substances or any materials produced or used by Seller in any manner that
could give rise to any material liability under any applicable Environmental
Law against Seller or its properties. Seller has not received any notice
from any governmental agency or private or public entity advising Seller that
it is responsible or potentially responsible for actual or potential response
costs with respect to a release, a threatened release or clean-up of
materials (including hazardous substances as defined in any Environmental
Laws) nor is Seller aware of any facts that might reasonably be expected to
give rise to any such notice.
M. TAX STATUS.
1. RETURNS FILED. Seller has timely filed all Tax Returns
required to have been filed by it and has paid or accrued all Taxes due to
any taxing authority with respect to all taxing periods ending on or prior to
the date hereof; and all such Tax Returns are true, correct and complete in
all material respects. The Financial Statements include an adequate reserve
for all Taxes not yet due or with respect to which Tax Returns, as of the
Closing, are not required to have been filed, in each case to reflect the
operations of Seller through the Closing. There is no pending Tax audit by a
governmental authority against or affecting Seller. Seller has (or before
the Closing will have) filed its federal and state income Tax Returns
relating to its fiscal year ended June 30, 1995 and paid all Taxes shown as
payable thereon. Seller has (or will) provide copies of such Tax Returns to
Parent.
2. COLLECTIONS AND PAYMENTS. (a) All amounts that are required
to be collected or withheld by Seller have been duly collected or withheld,
and (b) all such amounts that are required to be remitted to any taxing
authority (including license and other similar fees payable to the Department
of Motor Vehicles and other governmental agencies) have been duly remitted.
For purposes of this Agreement, "Taxes" means all taxes imposed of
any nature including federal, state, commonwealth, local or foreign net
income tax, alternative or add-on minimum tax, profits or excess profits tax,
franchise
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tax, gross income, adjusted gross income or gross receipts tax, employment
related tax (including employee withholding and employer payroll tax, FICA
and FUTA), real and personal property tax or ad valorem tax, sales or use
tax, excise tax, stamp tax or duty, any withholding or back up withholding
tax, value added tax, severance tax, prohibited transaction tax, premiums
tax, occupation tax, together with any interest or any penalty, in addition
to any tax or additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of such tax. "Tax
Return" means all returns, reports, forms or other information required to be
filed with respect to any Taxes.
N. MARKS. Seller owns or has the right to use its corporate name in
all jurisdictions in which the business of Seller is conducted as of the date
hereof. Seller is not infringing on any trademark, trade name, service mark,
copyright, patent, or license in the operation of its business, and Seller
does not know of any third party who has asserted any claim concerning such
an infringement.
O. ERISA. Neither Seller nor any affiliated company under common
control of or with Seller within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintains on the date
hereof any employee benefit plan subject to the provisions of ERISA, nor
contributes to any such plan (including any multi-employer plan) on behalf of
its employees. Seller does not have any unfunded pension, profit sharing or
deferred compensation plans or arrangements. Seller has complied in all
respects with, and is currently in compliance with, the continuation of
benefits provisions applicable to former employees under ERISA and similar
federal and state laws and regulations.
P. INSURANCE. Schedule 4.16 to this Agreement sets forth all insurance
policies of Seller that are currently in effect, including in each case the
type and amount of coverage and carrier. All of the material properties and
assets of Seller which are of an insurable character are insured against loss
or damage by fire, casualty and other risks, and Seller has general liability
insurance with independent carriers, in each case to the extent and in the
manner customary for companies engaged in a similar business or owning
similar assets.
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Q. LABOR CONTROVERSIES. There are no material labor controversies
pending or threatened between Seller and any of its employees and Seller does
not know of any organizational efforts presently being made involving any of
such employees. Seller's relations with its employees are generally good.
Seller does not know of any executive or key employee of Seller who has any
plans to terminate his or her employment with Seller.
R. MANAGEMENT TRANSACTIONS. Other than (a) the lease of Seller's
offices at a monthly rate of $5,756 from a partnership in which stockholders
of Seller have an interest and (b) the rental or lease of tractors from
Trucking, and except as disclosed on Schedule 4.18 hereto, none of Seller's
officers, directors or stockholders (i) owns, directly or indirectly,
individually or collectively, any interest in a corporation, partnership,
firm or association which is a competitor, potential competitor, customer or
supplier of Seller or has an existing contractual, business or financial
relationship with Seller, or (ii) owes any money to or is owed any money by
Seller, other than indebtedness for compensation earned and not yet paid in
the ordinary course of business (including, in the case of each of Mark J.
Graham and Albert F. Calfo, II, accrued and unpaid gross salary in the amount
of $95,000 through March 31, 1996, such amount increasing at the rate of
$8,000 per month (prorated for partial months on a daily basis) thereafter)
and other than notes payable to Mark J. Graham and Albert F. Calfo, II in the
aggregate amount of $104,868 plus accrued interest of $21,364 through March
31, 1996. The foregoing accrued and unpaid salary shall be paid to each of
Mr. Graham and Mr. Calfo at the Closing. Schedule 4.18 hereto lists all
affiliates and related entities of Seller, Mr. Graham and Mr. Calfo which own
assets related to, or engage in activities related to, the diagnostic medical
imaging business, in each case including the name of the entity and its type
and jurisdiction of organization, the nature and amount of the interest
therein of Seller and each of Mr. Graham and Mr. Calfo, and a brief
description of each agreement or transaction currently in effect or in effect
at any time during the last twelve months between such entity and Seller.
Since December 31, 1995, Seller has not (i) declared, set aside or paid any
dividend or other distribution or payment in cash, stock or property in
respect of any of its
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shares of capital stock, or (ii) paid any amounts to Mark J. Graham or Albert
F. Calfo II as salary, bonus or other compensation except in accordance with
Section 3.4(v) hereof.
S. NO FINDER'S FEES. Neither Seller nor any of its officers,
directors, agents or employees have employed or incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees, commissions or
other amounts with respect to the transactions contemplated by this
Agreement, and Seller agrees to hold Parent and Acquisition Sub harmless from
and against damages or cost incurred by reason of any such assertions.
T. NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 4.20,
to the best of Seller's knowledge, there is no outstanding claim, liability
or obligation of any nature, whether absolute, accrued, known or unknown,
contingent or otherwise, affecting Seller or its business, other than
obligations incurred in the ordinary course of the business consistent with
Seller's prior practices, none of which is materially adverse individually to
the financial condition, results of operations or prospects of Seller and all
of which are not materially adverse in the aggregate to the financial
condition, results of operations or prospects of Seller.
U. DISCLOSURE. This Agreement (including its Schedules and Exhibits)
and each other document and certificate prepared or delivered by or on behalf
of Seller and furnished or to be furnished to Parent in connection herewith,
as of their respective dates, did not, and as of the date hereof, do not (i)
contain any untrue statement of a material fact, or (ii) omit to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. Except as disclosed in this Agreement (including its
Schedules and Exhibits) and such other documents and certificates, there is
no fact known to Seller (other than matters relating to economic conditions
generally) which is materially adverse to the financial condition, results of
operations or prospects of Seller.
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VI.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB
As an inducement to Seller to enter into this Agreement, Parent and
Acquisition Sub, jointly and severally, represent and warrant to Seller as
follows:
A. EXISTENCE AND RIGHTS; COMPLIANCE WITH LAWS.
1. EXISTENCE AND RIGHTS. Parent is a corporation duly organized
and validly existing in good standing under the laws of Delaware without
limit as to the duration of its existence. Acquisition Sub is a corporation
duly organized and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania without limit as to the duration of its
existence. Acquisition Sub is a direct wholly-owned subsidiary of Parent.
Each of Parent and Acquisition Sub (i) has the corporate power and adequate
authority, rights and franchises to own its properties and to carry on its
business as now conducted and to make and carry out this Agreement, and (ii)
is duly qualified and in good standing in each jurisdiction in which its
owned or leased properties or the character of its business makes such
qualification necessary, or, if not so qualified, the failure to so qualify
will not have a material adverse effect upon the consolidated financial
condition of Parent.
2. COMPLIANCE WITH LAWS. Parent's business has been and is being
conducted in all material respects in accordance with all applicable federal,
state and local laws and regulations and rules and regulations of all
applicable private third party insurers and reimbursers of health care costs
and expenses, including, without limitation, such laws, regulations and rules
as relate to the practice of medicine and the provision of medical diagnostic
imaging services and otherwise.
B. AGREEMENT AUTHORIZED. The execution, delivery and performance of
this Agreement by each of Parent and Acquisition Sub have been duly and
validly authorized by all necessary corporate action on the part of each of
them and do not require notice to, or the consent or approval of, any
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governmental body or other regulatory authority. This Agreement is a legal,
valid and binding obligation of each of Parent and Acquisition Sub,
enforceable against each of them in accordance with its terms.
C. NO CONFLICT. The execution, delivery and performance of this
Agreement will not (i) except as will be cured, waived or consented to
pursuant to the Parent Debt Consents referred to in Section 6.1, breach or
constitute grounds for the occurrence or declaration of a default under any
agreement, indenture, undertaking or other instrument to Parent or
Acquisition Sub is a party or by which it or any of its properties may be
bound of affected, except any such breach or default which would not have a
material adverse effect on the ability of Parent and Acquisition Sub to
consummate the transactions contemplated by this Agreement; (ii) violate any
provision of law or any regulation or any order, judgment or decree of any
court of other agency of government, the violation of which could have a
material adverse effect on the ability of Parent and Acquisition Sub to
consummate the transactions contemplated by this Agreement; or (iii) violate
any provision of the Certificate of Incorporation or Bylaws of Parent or the
Articles of Incorporation or Bylaws of Acquisition Sub.
D. LITIGATION. There is no litigation, investigation, arbitration or
other proceedings (formal or informal) pending or, to the best knowledge of
Parent, threatened against or affecting it or its properties; nor does Parent
know of any reasonable basis for any litigation, investigation, arbitration
or other proceedings (formal or informal), in the case of any matter referred
to in this Section 5.4 the results of which could have a material adverse
effect on its financial condition, properties, business or results of
operations. Parent is not in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority.
E. FINANCIAL STATEMENTS. The consolidated financial statements of
Parent included in the Private Placement Memorandum (collectively, the
"Parent Financial Statements"), are true and correct as of the respective
dates thereof, and the Parent Financial Statements fairly present the
consolidated financial condition of Parent as at the
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respective dates thereof and the consolidated results of the operations of
Parent for the respective periods covered thereby, and have been prepared in
accordance with GAAP. Parent has no knowledge of any liabilities or
guarantees, matured or unmatured, contingent or otherwise, as of the
respective dates of the Parent Financial Statements not accurately reflected
in the Parent Financial Statements, and none have arisen since those times
except in the ordinary and usual course of business. With respect to
Parent's contracts, commitments and loss contingencies, the Parent Financial
Statements contain and reflect adequate reserves.
F. SHARES DULY AUTHORIZED. The shares of Parent Preferred Stock to be
issued in the Merger will, when issued pursuant to the terms and conditions
of this Agreement, and the shares of Parent Common Stock issuable upon
exercise of the Parent Warrants will, when issued pursuant to the terms and
conditions of the Parent Warrants, be duly and validly issued, fully paid and
non-assessable.
G. NO FINDER'S FEES. None of Parent, Acquisition Sub nor any of their
respective officers, directors, agents or employees have employed or incurred
any liability to any broker, finder or agent for any brokerage fees, finder's
fees, commissions or other amounts with respect to the transactions
contemplated by this Agreement, and Parent and Acquisition Sub agree to hold
Seller harmless from and against damages or cost incurred by reason of any
such assertions.
VII.
CONDITIONS
A. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger and consummate the
other transactions contemplated hereby shall be subject to the fulfillment at
or prior to the Effective Date (or the written waiver by all parties hereto)
of the following conditions:
(1) ADVERSE PROCEEDINGS. No effective preliminary or permanent
injunction or other order shall have been issued by any court of competent
jurisdiction or other
-28-
governmental body preventing the consummation of the Merger or any material
part of such other transactions; and
(2) LENDER CONSENTS. Parent and Acquisition Sub shall have
obtained all necessary and, as determined by Parent and Acquisition Sub,
advisable, consents with respect to the transactions contemplated by this
Agreement from their senior bank lenders and the holders of their debt
securities (the "Parent Debt Consents").
B. CONDITIONS TO OBLIGATION OF PARENT AND ACQUISITION SUB TO EFFECT
THE MERGER. The obligation of Parent and Acquisition Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Date
(or their written waiver) of the following additional conditions:
(1) REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the date hereof and (having
been deemed to have been made again at and as of the Closing) shall be true
and correct in all material respects as of the Closing; PROVIDED, HOWEVER,
that if any such representation or warranty is already qualified by
materiality, for purposes of determining whether this condition has been
satisfied, such representation or warranty as so qualified must be true and
correct in all respects. Each obligation of Seller under this Agreement
required to be performed by it at or prior to the Closing shall have been
duly performed and complied with in all material respects as of the Closing.
At the Closing, Parent and Acquisition Sub shall have received a certificate,
dated the Effective Date and duly executed by the chief executive officer and
the chief financial officer of Seller, to the effect that the conditions set
forth in this Section 6.2(i) have been satisfied;
(2) THIRD PARTY CONSENTS. All notices to, and declarations,
filings and registrations with, and consents, authorizations, approvals and
waivers from, governmental and regulatory bodies required to consummate the
transactions contemplated hereby, if any, and all material third party
consents or waivers necessary or advisable in connection with the
transactions contemplated hereby (including all necessary or appropriate
consents or waivers of Seller's bank(s),
-29-
equipment lenders and other third party providers of financing) shall have
been made or obtained. In particular, but without limitation of the
foregoing, Seller shall have secured and delivered to Parent and Acquisition
Sub the written consent or waiver (whether or not such consent or waiver is
listed as being required on Schedule 4.6 hereto) of each provider of
equipment or other financing that is an affiliate or related party of Seller
or its shareholders ("Related Party Lenders"), such that no "due on sale",
change of control or similar or other provision shall be applicable resulting
in or providing the lender the right to cause the repayment of the financing.
Notwithstanding the first sentence of this clause (ii), with respect to any
consent or waiver listed on Schedule 4.6 as being required from a provider of
equipment financing under a "due on sale", change of control or similar
provision, if such provider of equipment financing is not a Related Party
Lender, the obtaining of the indicated consent or waiver shall not be a
condition to Closing hereunder provided that Seller has nonetheless used its
reasonable best efforts to obtain the consent or waiver prior to Closing;
(3) STOCKHOLDER CONSENTS. Parent and Acquisition Sub shall have
received duly executed and delivered Stockholder Consents from Seller's
stockholders holding beneficially and of record not less than 90% of the
issued and outstanding Seller Common Stock, and all such Stockholder Consents
shall remain in full force and effect, and none of Parent, Acquisition Sub or
Seller shall have received any notice from any party challenging the
validity, effectiveness or enforceability thereof or of this Agreement;
(4) EMPLOYMENT AGREEMENT. Effective as of the Closing, Parent
and each of Mark J. Graham and Albert F. Calfo, II shall have entered into an
Employment Agreement substantially in the form attached hereto as Exhibit
6.2(iv);
(5) NONCOMPETITION AGREEMENTS. Parent shall have received duly
executed and delivered Covenants Not to Compete substantially in the form
attached hereto as Exhibit 6.2(v) from each of Mark J. Graham and Albert F.
Calfo, II;
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(6) STOCKHOLDER APPROVAL. The stockholders of Seller shall have
approved this Agreement and the Merger as provided in Section 3.1.1 hereof;
(7) NO MATERIAL ADVERSE CHANGE. There shall not have been a
material adverse change from the date hereof in the financial condition,
properties, business, results of operations or prospects of Seller. For
purposes of this clause (vii), the termination of services to any of Seller's
top five (5) customers (determined based upon gross revenues during the
six-month period immediately preceding the date hereof), whether such
termination is the result of an election by the customer, Seller or
otherwise, shall be conclusively deemed to be a material adverse change
described in the preceding sentence;
(8) DUE DILIGENCE. Parent and Acquisition Sub shall have
completed their "due diligence" review of Seller's business and shall be
reasonably satisfied with the results thereof;
(9) OFFICE LEASE. Seller and the landlord of Seller's office
space shall have entered into an agreement unconditionally cancelling any
previously existing lease or rental agreement relating to the space and
releasing Seller from any and all liability with respect thereto, and the
Surviving Corporation and the landlord shall have entered into a new lease
covering the same premises in form and substance reasonably acceptable to
Parent, providing, among other things, for a term of two years and a rental
of $4,000 per month plus telephone bills, electricity and maintenance
attributable to such leased space;
(10) TRUCKING AGREEMENT. Parent and Trucking shall have
entered into and closed (such closing to be simultaneous with the Closing
hereunder) an agreement (the "Trucking Agreement") whereby Parent shall have
acquired substantially all of the assets of Trucking excluding only (a) such
entity's interest in the partnership owning the real estate that includes
Seller's office space and (b) the net intercompany account owed by Seller's
shareholders to Seller;
(11) SATISFACTION OF RMG RECEIVABLE. Royal Medical Group, Inc.
("RMG") shall have paid in full to Seller
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all amounts owed by RMG to Seller; PROVIDED, HOWEVER, $104,107 of such
amounts owed may be satisfied by the assignment to Seller by RMG of the
$104,107 intercompany amount which Trucking owes to RMG as of the date hereof
(the "Trucking Intercompany Payable") and the execution by RMG of a release
of Parent and Trucking with respect to the Trucking Intercompany Payable in
form and substance satisfactory to Parent; and
(12) OTHER CERTIFICATES. Parent and Acquisition Sub shall have
been furnished by Seller with such other certificates of Seller's officers
and others as Parent and Acquisition Sub may have reasonably requested to
evidence compliance with the conditions set forth in this Section 6.2.
C. CONDITIONS TO OBLIGATIONS OF SELLER TO EFFECT THE MERGER. The
obligations of Seller to effect the Merger and consummate the other
transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Effective Date (or the written waiver by Seller) of the
following additional condition:
(1) REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each of the
representations and warranties of Parent and Acquisition Sub contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and (having been deemed to have been made again at and as of the
Closing) shall be true and correct in all material respects as of the
Closing; provided, however, that if any such representation or warranty is
already qualified by materiality, for purposes of determining whether this
condition has been satisfied, such representation or warranty as so qualified
must be true and correct in all respects. Each obligation of Parent and
Acquisition Sub under this Agreement required to be performed by either of
them at or prior to the Closing shall have been duly performed and complied
with in all material respects as of the Closing. At the Closing, Seller
shall have received a certificate, dated the Effective Date and duly executed
by the chief executive officer and the chief financial officer of each of
Parent and Acquisition Sub, to the effect that the conditions set forth in
this Section 6.3 have been satisfied;
-32-
(2) EMPLOYMENT AGREEMENT. Effective as of the Closing Date,
Parent and each of Mark J. Graham and Albert F. Calfo, II shall have entered
into an Employment Agreement substantially in the form attached hereto as
Exhibit 6.2(iv);
(3) NONCOMPETITION AGREEMENTS. Each of Mark J. Graham and Albert
F. Calfo, II shall have received a duly executed and delivered Covenant Not
to Compete substantially in the form attached hereto as Exhibit 6.2(v) from
Parent;
(4) STOCKHOLDER APPROVAL. The stockholders of Seller shall have
approved this Agreement and the Merger as provided in Section 3.1.1 hereof;
(5) OFFICE LEASE. Seller and the landlord of Seller's office
space shall have entered into an agreement unconditionally cancelling any
previously existing lease or rental agreement relating to the space, and the
Surviving Corporation and the landlord shall have entered into a new lease
covering the same premises providing, among other things, for a rental of
$4,000 per month;
(6) TRUCKING AGREEMENT. Parent and Trucking shall have entered
into and closed an agreement (the "Trucking Agreement") whereby Parent shall
have acquired substantially all of the assets of Trucking excluding only (a)
such entity's interest in the partnership owning the real estate that
includes Seller's office space, (b) the net intercompany account owed by such
entity to Seller, and (c) an account receivable from its shareholders in the
amount of $19,799.50, for $628,000 in cash, subject to any contrary terms set
forth in the Trucking Agreement; and
(7) NO MATERIAL ADVERSE CHANGE. There shall not have been a
material adverse change from the date hereof in the financial condition,
properties, business, results of operations or prospects of Parent.
-33-
VIII.
TERMINATION
A. TERMINATION. This Agreement may be terminated by written notice
from the party or parties indicated below under the following circumstances:
(1) ADVERSE PROCEEDINGS. By either Parent and Acquisition Sub
or Seller in the event that any court of competent jurisdiction or other
governmental body shall have issued an order (other than a temporary
restraining order or preliminary injunction), decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger or
any material part of the other transactions contemplated hereby, and such
order, decree, ruling or other action shall have become final and
nonappealable;
(2) FAILURE OF CONDITION TO PARENT AND ACQUISITION SUB
OBLIGATIONS. By Parent and Acquisition Sub, if any of the conditions in
Section 6.1 or 6.2 is not satisfied by April 30, 1996 (other than as a result
of such party's breach or default hereunder) and is not waived in writing by
Parent and Acquisition Sub;
(3) FAILURE OF CONDITION TO SELLER OBLIGATIONS. By Seller, if any
of the conditions in Section 6.1 or 6.3 is not satisfied by April 30, 1996
(other than as a result of such party's breach or default hereunder) and is
not waived in writing by Seller; or
(4) MUTUAL AGREEMENT. By mutual agreement of the Boards of
Directors of Parent, Acquisition Sub and Seller.
B. EFFECT OF TERMINATION. In the event of the termination of this
Agreement according to its terms, this Agreement shall, except as provided in
Section 3.7 hereof, thereafter become void and have no effect and no party
hereto shall have any liability to any other party hereto or its stockholders
or directors or officers in respect thereof.
-34-
IX.
GENERAL AGREEMENTS
A. COOPERATION. Each of the parties hereto shall cooperate with the
others in every reasonable way in carrying out the transactions contemplated
herein, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel for any party hereto.
B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement or in any instrument or certificate
delivered pursuant to this Agreement delivered on or prior to the Effective
Date shall survive the consummation of the Merger. Except as expressly set
forth in the Schedules hereto, Parent and Acquisition Sub shall not be deemed
to have knowledge of any exceptions to the representations and warranties of
Seller, and Seller shall not be deemed to have knowledge of any exceptions to
the representations and warranties of Parent and Acquisition Sub, and the
decision by a party hereto to proceed with the closing of the transactions
contemplated herein shall not be deemed to be a waiver of any breach of any
representation or warranty of another party hereto.
C. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telecopy, telex or telegram or mailed by registered
or certified mail, postage prepaid, as follows:
i) If to Parent or Acquisition Sub:
Alliance Imaging, Inc.
3111 No. Tustin Avenue, Suite 150
Orange, California 92665
Telecopy No. (714) 921-5678
Attention: Richard N. Zehner
President
-35-
(b) If to Seller:
Royal Medical Health Services Inc.
245 Fort Pitt Boulevard, Fifth Floor
Pittsburgh, Pennsylvania 15222
Telecopy No. (412) 281-1767
Attention: Mark J. Graham and Albert F.
Calfo, II
The date of any such notice shall be deemed the date hand delivered or
transmitted by telecopy, telex or telegram (in each case provided written
confirmation of sending is retained) or three (3) days after being mailed as
provided above. Any party may change its address for notice by sending a
notice to that effect as herein provided to the other parties.
D. AMENDMENT; ENTIRE AGREEMENT; BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (a) except as
provided in the Stockholder Consents, constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and (b)
except as provided in the Stockholder Consents, is not intended to confer
upon any other person any rights or remedies hereunder. This Agreement may
be amended or modified in whole or in part to the extent permitted by
California law at any time, by an agreement in writing executed in the same
manner as this Agreement after authorization to do so by the Board of
Directors of Parent, Acquisition Sub and Seller.
E. WAIVER. At any time prior to the Effective Date, the parties
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) by mutual agreement waive any
inaccuracies contained herein or in any document delivered pursuant hereto,
and (c) by mutual agreement waive compliance with any of the agreements
contained herein, or, in the case of each party, waive compliance with any of
the conditions to its obligations contained herein. Any agreement on the
part of a party hereto and any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of the party making
the agreement or providing the extension or waiver.
-36-
F. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
G. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
permitted assigns of the parties hereto. The rights of Parent and
Acquisition Sub hereunder may be transferred in whole or in part to any
direct or indirect wholly-owned subsidiary of Parent.
H. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
the choice of law provisions thereof.
I. COSTS AND EXPENSES. If the transactions contemplated hereby are not
completed, except pursuant to available legal remedies, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. If
the transactions contemplated hereby are completed, Parent shall cause the
Surviving Corporation to pay all such costs and expenses subject to the
limitations provided in Section 3.8 hereof.
J. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
K. ATTORNEYS' FEES. Should any litigation be commenced between the
parties hereto or their representatives concerning any provision of this
Agreement or the rights and duties of any person or entity hereunder, solely
as between the parties hereto or their successors, the party prevailing in
such proceeding will be entitled to the attorneys' fees and expenses of
counsel and court costs incurred by reason of such litigation.
IN WITNESS WHEREOF the parties have executed this Agreement by their
duly authorized officers as of the date first above written.
-37-
ALLIANCE IMAGING, INC.
By
---------------------------------
Its
--------------------------------
ALLIANCE IMAGING OF PENNSYLVANIA,
INC.
By
---------------------------------
Its
--------------------------------
ROYAL MEDICAL HEALTH SERVICES, INC.
By
---------------------------------
Its
--------------------------------
-38-
TABLE OF CONTENTS
Page
----
ARTICLE 1 MERGER AND ORGANIZATION. . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 2
1.1.1 Reverse Merger. . . . . . . . . . . . . . . . 2
1.1.2 Effect of Merger. . . . . . . . . . . . . . . 2
(i) Name of Surviving
Corporation. . . . . . . . . . . . . . 2
(ii) Articles of
Incorporation. . . . . . . . . . . . . 2
(iii) Bylaws . . . . . . . . . . . . . . . . 2
(iv) Corporate Organization . . . . . . . . 2
(v) Directors and Officers . . . . . . . . 3
(vi) Filing of Certificate
of Merger. . . . . . . . . . . . . . . 3
(vii) Further Assurances . . . . . . . . . . 3
ARTICLE 2 CONVERSION OF SHARES ON THE EFFECTIVE DATE . . . . . 4
2.1 Conversion of Shares in the Merger . . . . . . . . . 4
2.2 Cancellation of Shares of Seller Common
Stock. . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Conversion of Shares of Acquisition Sub. . . . . . . 5
2.4 No Further Transfers of Stock. . . . . . . . . . . . 5
2.5 Surrender of Certificates. . . . . . . . . . . . . . 5
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Page
----
ARTICLE 3 ADDITIONAL AGREEMENTS IN CONNECTION WITH
THE MERGER . . . . . . . . . . . . . . . . . . . . . 6
3.1 Seller Stockholder Approval. . . . . . . . . . . . . 6
3.1.1 Stockholder Approval. . . . . . . . . . . . . 6
3.1.2 Private Placement Memorandum. . . . . . . . . 6
3.1.3 State Securities Approvals. . . . . . . . . . 7
3.2 Notice of Proposals; No Shop . . . . . . . . . . . . 7
3.3 Reasonable Efforts . . . . . . . . . . . . . . . . . 7
3.4 Conduct of Business by Seller Pending
the Merger . . . . . . . . . . . . . . . . . . . . . 8
3.5 Notice of Actions and Proceedings. . . . . . . . . . 9
3.6 Notification of Certain Other Matters. . . . . . . . 10
3.7 Access to Books and Records. . . . . . . . . . . . . 10
3.8 Fees and Expenses. . . . . . . . . . . . . . . . . . 11
3.9 Public Announcements . . . . . . . . . . . . . . . . 11
3.10 Payment of Certain Trucking Trade
Payables . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . 11
4.1 Existence and Rights; Compliance With
Laws . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1.1 Existence and Rights. . . . . . . . . . . . . 11
4.1.2 Compliance With Laws. . . . . . . . . . . . . 12
4.2 Stock. . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Agreement Authorized . . . . . . . . . . . . . . . . 12
-ii-
Page
----
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . 13
4.5 Contracts. . . . . . . . . . . . . . . . . . . . . . 13
4.6 No Conflict. . . . . . . . . . . . . . . . . . . . . 14
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . 14
4.8 Financial Condition. . . . . . . . . . . . . . . . . 15
4.9 Accountants Independent; Books and
Records. . . . . . . . . . . . . . . . . . . . . . . 15
4.10 No Subsequent Changes. . . . . . . . . . . . . . . . 16
4.11 Title to and Condition of Assets . . . . . . . . . . 16
4.12 Environmental Matters. . . . . . . . . . . . . . . . 17
4.13 Tax Status . . . . . . . . . . . . . . . . . . . . . 17
4.13.1 Returns Filed. . . . . . . . . . . . . . . . 17
4.13.2 Collections and Payments . . . . . . . . . . 18
4.14 Marks. . . . . . . . . . . . . . . . . . . . . . . . 18
4.15 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 18
4.16 Insurance. . . . . . . . . . . . . . . . . . . . . . 18
4.17 Labor Controversies. . . . . . . . . . . . . . . . . 19
4.18 Management Transactions. . . . . . . . . . . . . . . 19
4.19 No Finder's Fees . . . . . . . . . . . . . . . . . . 20
4.20 No Undisclosed Liabilities. . . . . . . . . . . . . 20
4.21 Disclosure . . . . . . . . . . . . . . . . . . . . . 20
-iii-
Page
----
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT
AND ACQUISITION SUB . . . . . . . . . . . . . . . . 20
5.1 Existence and Rights; Compliance With
Laws.. . . . . . . . . . . . . . . . . . . . . . . . 20
5.1.1 Existence and Rights. . . . . . . . . . . . . 20
5.1.2 Compliance With Laws. . . . . . . . . . . . . 21
5.2 Agreement Authorized . . . . . . . . . . . . . . . . 21
5.3 No Conflict. . . . . . . . . . . . . . . . . . . . 21
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . 21
5.5 Financial Statements . . . . . . . . . . . . . . . . 22
5.6 Shares Duly Authorized . . . . . . . . . . . . . . . 22
5.7 No Finder's Fees . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 CONDITIONS . . . . . . . . . . . . . . . . . . . . . 22
6.1 Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . . . . . . . . . 22
(i) Adverse Proceedings . . . . . . . . . . . . . 23
(ii) Lender Consents . . . . . . . . . . . . . . . 23
6.2 Conditions to Obligation of Parent and
Acquisition Sub to Effect the Merger . . . . . . . . 23
(i) Representations and Warranties;
Agreements. . . . . . . . . . . . . . . . . . 23
(ii) Third Party Consents. . . . . . . . . . . . . 23
(iii) Stockholder Consents. . . . . . . . . . . . . 24
(iv) Employment Agreement. . . . . . . . . . . . . 24
-iv-
Page
----
(v) Noncompetition Agreements . . . . . . . . . . 24
(vi) Stockholder Approval. . . . . . . . . . . . . 24
(vii) No Material Adverse Change. . . . . . . . . . 24
(viii) Due Diligence . . . . . . . . . . . . . . . . 25
(ix) Office Lease. . . . . . . . . . . . . . . . . 25
(x) Trucking Agreement. . . . . . . . . . . . . . 25
(xi) Satisfaction of RMG Receivable. . . . . . . . 25
(xii) Other Certificates. . . . . . . . . . . . . . 25
6.3 Conditions to Obligations of Seller to
Effect the Merger. . . . . . . . . . . . . . . . . . 25
(i) Representations and Warranties;
Agreements. . . . . . . . . . . . . . . . . . 25
(ii) Employment Agreement. . . . . . . . . . . . . 26
(iii) Noncompetition Agreements . . . . . . . . . . 26
(iv) Stockholder Approval. . . . . . . . . . . . . 26
(v) Office Lease. . . . . . . . . . . . . . . . . 26
(vi) Trucking Agreement. . . . . . . . . . . . . . 26
(vii) No Material Adverse Change. . . . . . . . . . 26
ARTICLE 7 TERMINATION. . . . . . . . . . . . . . . . . . . . . 27
7.1 Termination. . . . . . . . . . . . . . . . . . . . . 27
(i) Adverse Proceedings . . . . . . . . . . . . . 27
(ii) Failure of Condition to Parent
and Acquisition Sub Obligations . . . . . . . 27
-v-
Page
----
(iii) Failure of Condition to Seller
Obligations . . . . . . . . . . . . . . . . . 27
(iv) Mutual Agreement. . . . . . . . . . . . . . . 27
7.2 Effect of Termination. . . . . . . . . . . . . . . . 27
ARTICLE 8 GENERAL AGREEMENTS . . . . . . . . . . . . . . . . . 27
8.1 Cooperation. . . . . . . . . . . . . . . . . . . . . 27
8.2 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . 27
8.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Amendment; Entire Agreement;
Beneficiaries. . . . . . . . . . . . . . . . . . . . 28
8.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Successors and Assigns . . . . . . . . . . . . . . . 29
8.8 Governing Law. . . . . . . . . . . . . . . . . . . . 29
8.9 Costs and Expenses . . . . . . . . . . . . . . . . . 29
8.10 Counterparts . . . . . . . . . . . . . . . . . . . . 29
8.11 Attorneys' Fees. . . . . . . . . . . . . . . . . . . 29
-vi-
SCHEDULES AND EXHIBITS
EXHIBIT ITEM
------- ----
A Joinder and Consent
2.1A Parent Preferred Stock
2.1B Parent Warrants
6.2(iv) Employment Agreements
6.2(v) Noncompetition Agreements
SCHEDULE ITEM
-------- ----
4.1.1 Certificates of Need, Etc.
4.2 List of Shareholders
4.5 Certain Material Contracts
4.6 Third Party Consents
4.7 Seller Litigation
4.8 March 31, 1996 Detail of Liabilities and
Payables
4.10 Certain Commitments
4.11 Title to Assets; Certain Dispositions
4.12 Environmental Matters
4.16 Insurance
4.18 Management Transactions
4.20 Undisclosed Liabilities
5.4 Alliance Litigation
-vii-
SCHEDULE 5.4
ALLIANCE LITIGATION
NONE
-viii-
JOINDER AND CONSENT
THIS JOINDER AND CONSENT (the "Agreement") is dated as of April 16, 1996,
by and among ALLIANCE IMAGING, INC., a Delaware corporation ("Parent"), ALLIANCE
IMAGING OF PENNSYLVANIA, INC., a Pennsylvania corporation ("Acquisition Sub"),
and ___________________________________, an individual ("Stockholder").
W I T N E S S E T H
A. Parent, Acquisition Sub and Royal Medical Health Services Inc., a
Pennsylvania corporation ("Seller"), are parties to an Agreement and Plan of
Merger dated as of April 16, 1996 (the "Merger Agreement"), pursuant to which,
among other things, it is contemplated that Acquisition Sub will be merged with
and into Seller (the "Merger") and that all of the shares of Seller's capital
stock issued and outstanding will be converted into the right to receive either
the Cash Only Consideration or the Securities and Cash Consideration (both as
defined in and subject to the terms of the Merger Agreement). A copy of the
Merger Agreement is attached hereto as Exhibit A.
B. Stockholder is the record, legal and beneficial owner of _________
shares (approximately ___% of the issued and outstanding capital stock of Seller
as of the date hereof) (the "Stockholder Shares") of the Common Stock, no par
value, of Seller ("Seller Common Stock"). Stockholder has approved of and
consented to the Merger Agreement and the Merger and the other transactions
contemplated by the Merger Agreement. As a stockholder of Seller, Stockholder
will derive significant benefits from the closing of such transactions.
C. The execution and delivery of this Agreement by Stockholder is a
condition to the obligations of Parent and Acquisition Sub under the Merger
Agreement. In order to induce Parent and Acquisition Sub to complete the Merger
and the other transactions contemplated by the Merger Agreement and to satisfy
such condition, Stockholder has agreed to the provisions herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein and, in the case of Parent and
Acquisition Sub, in the Merger Agreement, Parent, Acquisition Sub and
Stockholder agree as follows:
II. REPRESENTATIONS AND WARRANTIES. Stockholder hereby represents and
warrants to Parent and Acquisition Sub as follows:
-2-
A. OWNERSHIP OF SHARES. Stockholder is the record, legal and
beneficial owner of all of the Stockholder Shares referred to in Recital B
above, and no other person or entity has any right, title or interest in or to
any of such shares. Stockholder does not have any option, warrant or other
right to acquire any shares of capital stock of Seller. At the Closing (as
defined in the Merger Agreement), in accordance with Section 2.5(i) of the
Merger Agreement, Stockholder will deliver to the Surviving Corporation (as
defined in the Merger Agreement) for cancellation all certificates representing
the Stockholder Shares, free and clear of all liens, claims and encumbrances of
any party and of any nature whatsoever.
B. RESALE. As of the date hereof and the Closing, Stockholder does
not have and will not have a present plan or intention of disposing of any
Parent Securities (as defined in the Merger Agreement) acquired pursuant to the
Merger, if any. Assuming completion of the Merger, Stockholder will acquire
such Parent Securities for investment purposes and not for resale in any manner
that would violate any applicable federal or state securities law or other law
or regulation. Stockholder is aware that the Parent Securities issued in the
Merger (including the Common Stock issuable upon exercise or conversion thereof)
will be "restricted securities" within the meaning of Rule 144 promulgated under
the Securities Act of 1933, as amended, and that no trading market for either
the Parent Warrants or the Parent Preferred Stock (both as defined in the Merger
Agreement) exists or is contemplated to exist. Consequently, if Stockholder has
elected to receive the Securities and Cash Consideration, Stockholder has the
ability to hold the Parent Securities for an indefinite period of time.
Pursuant to the Pennsylvania Securities Law any Pennsylvania purchaser hereby
agrees not to sell, transfer or otherwise dispose of the Parent Securities
within 12 months of the date of purchase.
C. CONSENT. Stockholder has carefully reviewed the Merger Agreement
and sought independent legal counsel as necessary to fully understand its terms
and conditions, and based upon such review and consultation approves of and
consents to the Merger Agreement and the Merger and the other transactions
contemplated by the Merger Agreement. Stockholder has approved such agreement
and transactions in accordance with the Pennsylvania Consolidated Statutes and
-3-
other applicable laws and the Articles of Incorporation and Bylaws of Seller.
III. ADDITIONAL AGREEMENTS.
A. NO TRANSFER OF STOCK. Unless and until the Merger Agreement
shall have been terminated in accordance with its terms, Stockholder shall
not sell, transfer or otherwise dispose of any right, title or interest in or
to any of the Stockholder Shares.
-4-
B. FEES AND EXPENSES. If the Merger is completed and the legal fees
and legal expenses incurred by Seller in connection with the transactions
contemplated by the Merger Agreement exceed $25,000, then Stockholder agrees to
pay, in addition to the fees and expenses incurred by him in connection with the
Merger Agreement and this Agreement and the transactions contemplated thereby
and hereby, his Pro Rata Share (as hereinafter defined) of such fees and
expenses in excess of such amount. If Parent or the Surviving Corporation pays
any such fees or expenses on behalf of Stockholder or Seller (which they shall
not be obligated to do), then Stockholder shall, promptly following notice
thereof from Parent or the Surviving Corporation, reimburse Parent or the
Surviving Corporation for such Stockholder's Pro Rata Share of such payment.
"Pro Rata Share" means the number of shares of Seller Common Stock owned by
Stockholder as of the date hereof divided by the number of shares of Seller
Common Stock issued and outstanding as of the date hereof.
C. COOPERATION; FURTHER ASSURANCES. Stockholder agrees to use all
reasonable efforts (in all capacities, including, without limitation, as an
officer, director, employee and stockholder of Seller, as applicable) to take,
or cause to be taken, to do, or cause to be done, and to assist and cooperate
with Parent, Acquisition Sub and Seller in order to aid and facilitate the
completion of the Merger and the other transactions contemplated by the Merger
Agreement and this Agreement at the earliest practicable times. In particular,
but without limitation, Stockholder agrees to use all reasonable efforts (in all
capacities, as provided above) to cause Seller to perform all of its agreements
in the Merger Agreement and to cause all of its representations and warranties
therein to be and remain true and correct. In addition to the specific
provisions of the Merger Agreement, Stockholder further agrees to execute and
deliver such further documents and to perform such further actions as Parent or
the Surviving Corporation shall reasonably request from time to time, both
before and after the completion of the Merger, in connection with the
transactions contemplated by the Merger Agreement and this Agreement.
-5-
2.4 RELEASE. Stockholder agrees and acknowledges that he has taken
all steps that he has deemed appropriate to fully inform himself of the
transactions contemplated by the Merger Agreement and to make an informed
decision to enter into this Agreement. Stockholder further acknowledges that,
if he has elected to receive the Securities and Cash Consideration in the
Merger, (a) he has carefully reviewed the Private Placement Memorandum (as
defined in the Merger Agreement), and (b) he has not relied upon any
representation, warranty or other communication, written or oral, in electing to
receive Parent Securities, except for the information set forth in the Private
Placement Memorandum. Further, Stockholder, on behalf of himself and his
affiliates, and for all of his and their respective affiliates, administrators,
trustees, beneficiaries and successors and assigns, does hereby fully, finally
and forever irrevocably and unconditionally release, acquit and discharge
Parent, Acquisition Sub and Seller, and all past, present and future parents,
subsidiaries and affiliates thereof, and all past, present and future officers,
directors, partners, employees, agents, attorneys, shareholders, accountants,
financial advisors, successors, heirs and assigns of such party or parties, of
and from any and all liabilities, claims or obligations, whensoever arising,
relating to or arising from the transactions contemplated by the Merger
Agreement (excluding from the foregoing only, if Stockholder has elected to
receive the Securities and Cash Consideration, any breach or default by or of
Parent under or with respect to the Parent Securities). As further
consideration for this Agreement, each person granting or deemed to be granting
a release hereunder hereby agrees, represents and warrants that the matters
released herein are not limited to matters which are known or disclosed, and in
connection with the subject matter of this Agreement and the Merger Agreement,
each such person granting or deemed to be granting a release hereunder, hereby
waives any and all rights and benefits which it now has or in the future may
have conferred upon it by virtue of any provision of law of any jurisdiction
which may now exist or hereafter be enacted and which may be applicable to the
subject matter of this Agreement, purporting to grant to any such person fully
or partial relief from the releases contained in this Agreement, including,
without limitation, the provisions of Section 1542 of the Civil Code of the
State of California, or any similar or comparable provision of law of any
jurisdiction. Said Section 1542 provides as follows:
-6-
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
IV. INDEMNITY.
A. STOCKHOLDER INDEMNITIES. Stockholder agrees to indemnify, hold
harmless and reimburse Parent, Acquisition Sub and Seller from and against any
and all losses, liabilities, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees) (hereinafter "Losses"), actually
suffered or incurred by any of Parent, Acquisition Sub and/or Seller, or any
parent, subsidiary or affiliate thereof or any assignee or successor thereof,
and each officer and director of any of the foregoing, which is incurred as a
result of any breach of a representation, warranty or covenant of Stockholder in
this Agreement.
B. RECOVERIES. The amount of any Loss suffered or incurred by any
person entitled to indemnification hereunder (an "Indemnified Person") shall be
reduced by the amount of any insurance proceeds or other cash receipts paid to
the Indemnified Person or any affiliate thereof as an offset against such Loss
(and no right of subrogation shall accrue to any insurer hereunder), including
any indemnification received by the Indemnified Person or such affiliate from an
unrelated party with respect to such Loss.
C. CLAIMS. An Indemnified Person shall promptly give the
indemnifying party (an "Indemnifying Person") written notice of any matter which
such Indemnified Person has determined has given rise to a right of
indemnification under this Agreement, stating the amount of the Loss, if known,
and method of computation thereof, all with reasonable particularity (subject to
the last sentence of this paragraph). The obligations and liabilities of any
party under this Section 3 with respect to Losses arising from claims,
assertions, events or proceedings of any third party (including, without
limitation, claims by any assignee or successor of the Indemnified Person or any
governmental agency), which are subject to the indemnification provided for in
this Section 3 ("Third Party Claims") shall be governed by and be subject to the
following additional terms and
-7-
conditions: if any Indemnified Person shall receive written notice of any
Third Party Claim, the Indemnified Person shall give the Indemnifying Person
prompt written notice of such Third Party Claim (subject to the last sentence
of this paragraph) and shall permit the Indemnifying Person, at its option,
to participate in the defense of such Third Party Claim by counsel of its own
choosing and at its expense. Furthermore, if the Indemnifying Person
acknowledges in writing its obligation to indemnify the Indemnified Person
hereunder against any Loss (without limitation) that may result from such
Third Party Claim, then the Indemnifying Person shall be entitled, at its
option, to assume and control the defense against such Third Party Claim at
its expense and through counsel of its choice if it gives prompt written
notice of its intention to do so to the Indemnified Person unless, in the
reasonable opinion of counsel for the Indemnified Person, there is a conflict
or a potential conflict of interests between the Indemnified Person and the
Indemnifying Person in such action, suit or proceeding, in which event the
Indemnified Person shall be entitled to direct the defense with respect to,
but only with respect to, those issues with respect to which such conflict
exists. In the event the Indemnifying Person exercises its right to undertake
the defense against any such Third Party Claim as provided above, the
Indemnified Person shall, and it shall cause its affiliates to, cooperate
with the Indemnifying Person in such defense and make available to he
Indemnifying Person all pertinent records, materials and information in their
possession or under their control relating thereto as is required by the
Indemnifying Person. No such Third Party Claim, except the settlement
thereof which involves (i) the payment of money only for which any
Indemnified Person is totally indemnified (without limitation) by the
Indemnifying Person and (ii) the unconditional release from all related
liability of the Indemnified Person, may be settled by the Indemnifying
Person without the written consent of the Indemnified Person. Any settlement
of a Third Party Claim by an Indemnified Person without the written consent
of the Indemnifying Person shall discharge the Indemnifying Person from all
liability hereunder with respect to the subject matter of such Third Party
Claim. The foregoing notwithstanding, the failure of any Indemnified Person
to give any notice required to be given hereunder shall not affect such
Indemnified Person's right to indemnification hereunder except to the extent
the Indemnifying Person from whom such indemnity is sought shall have been
actually and materially
-8-
prejudiced in its ability to defend the claim or action for which such
indemnification is sought by reason of such failure.
V. GENERAL AGREEMENTS.
A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement or in any instrument or certificate delivered
pursuant to this Agreement delivered on or prior to the Effective Date (as
defined in the Merger Agreement) shall survive the completion of the Merger.
B. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telecopy, telex or telegram or mailed by registered or
certified mail, postage prepaid, as follows:
(1) If to Parent or Acquisition Sub:
Alliance Imaging, Inc.
3111 No. Tustin Ave., Suite 150
Orange, California 92665
Telecopy No. (714) 921-5678
Attention: Richard N. Zehner
President
(2) If to Stockholder:
__________________________
__________________________
__________________________
__________________________
Telecopy No. (___) ___-___
The date of any such notice shall be deemed the date hand delivered or
transmitted by telecopy, telex or telegram (in each case provided written
confirmation of sending is retained) or three (3) days after being mailed as
provided above. Any party may change its address for notice by sending a notice
to that effect as herein provided to the other parties.
C. AMENDMENT; ENTIRE AGREEMENT; BENEFICIARIES. This Agreement
(including the documents and instruments
-9-
referred to herein) (a) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and (b) is not intended to
confer upon any other person any rights or remedies hereunder. This
Agreement may be amended or modified in whole or in part by an agreement in
writing executed in the same manner as this Agreement after authorization to
do so, as applicable, by the Boards of Directors of Parent and Acquisition
Sub and Stockholder.
D. WAIVER. Any agreement on the part of a party hereto and any
extension or waiver granted by any such party shall be valid only if set forth
in an instrument in writing signed on behalf of the party making the agreement
or providing the extension or waiver.
E. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
F. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
permitted assigns of the parties hereto. The rights of Parent and Acquisition
Sub hereunder may be transferred in whole or in part to any direct or indirect
wholly-owned subsidiary of Parent.
G. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
the choice of law provisions thereof.
H. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
I. ATTORNEYS' FEES. Should Parent or Acquisition Sub (or, following
the Merger, the Surviving Corporation) be required to engage counsel to seek to
enforce any of the provisions of this Agreement (whether or not a legal
proceeding is required to be filed), such party or parties shall be entitled, in
addition to its or their other remedies, to recover the fees and expenses of
counsel and, as
-10-
applicable, court costs, incurred in connection with such matter.
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers as of the date first above written.
ALLIANCE IMAGING, INC.
By______________________________
Its_____________________________
ALLIANCE IMAGING OF
PENNSYLVANIA, INC.
By______________________________
Its_____________________________
STOCKHOLDER(S)
Name(s):________________________
________________________________
________________________________
Stockholder elects to receive the following consideration in the Merger
(check one):
____ Cash Only Consideration
____ Securities and Cash Consideration
Stockholder Initials: ____
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JOINDER AND CONSENT
THIS JOINDER AND CONSENT (the "Agreement") is dated as of April 16,
1996, by and among ALLIANCE IMAGING, INC., a Delaware corporation ("Parent"),
ALLIANCE IMAGING OF PENNSYLVANIA, INC., a Pennsylvania corporation
("Acquisition Sub"), and ________________ an individual ("Stockholder").
W I T N E S S E T H
A. Parent, Acquisition Sub and Royal Medical Health Services Inc., a
Pennsylvania corporation ("Seller"), are parties to an Agreement and Plan of
Merger dated as of April 16, 1996 (the "Merger Agreement"), pursuant to
which, among other things, it is contemplated that Acquisition Sub will be
merged with and into Seller (the "Merger") and that all of the shares of
Seller's capital stock issued and outstanding will be converted into the
right to receive either the Cash Only Consideration or the Securities and
Cash Consideration (both as defined in and subject to the terms of the Merger
Agreement). A copy of the Merger Agreement is attached hereto as Exhibit A.
B. Stockholder is the record, legal and beneficial owner of 41,736
shares (approximately 41.7% of the issued and outstanding capital stock of
Seller as of the date hereof) (the "Stockholder Shares") of the Common Stock,
no par value, of Seller ("Seller Common Stock"). Stockholder has approved of
and consented to the Merger Agreement and the Merger and the other
transactions contemplated by the Merger Agreement. As a substantial
stockholder of Seller, Stockholder will derive substantial benefits from the
closing of such transactions.
C. The execution and delivery of this Agreement by Stockholder is a
condition to the obligations of Parent and Acquisition Sub under the Merger
Agreement. In order to induce Parent and Acquisition Sub to complete the
Merger and the other transactions contemplated by the Merger Agreement and to
satisfy such condition, Stockholder has agreed to the provisions herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein and, in the case of Parent
and Acquisition Sub, in the Merger Agreement, Parent, Acquisition Sub and
Stockholder agree as follows:
II. REPRESENTATIONS AND WARRANTIES. Stockholder hereby represents and
warrants to Parent and Acquisition Sub as follows:
-2-
A. OWNERSHIP OF SHARES. Stockholder is the record, legal and
beneficial owner of all of the Stockholder Shares referred to in Recital B
above, and no other person or entity has any right, title or interest in or
to any of such shares. Stockholder does not have any option, warrant or
other right to acquire any shares of capital stock of Seller. At the Closing
(as defined in the Merger Agreement), in accordance with Section 2.5(i) of
the Merger Agreement, Stockholder will deliver to the Surviving Corporation
(as defined in the Merger Agreement) for cancellation all certificates
representing the Stockholder Shares, free and clear of all liens, claims and
encumbrances of any party and of any nature whatsoever.
B. RESALE. As of the date hereof and the Closing, Stockholder
does not have and will not have a present plan or intention of disposing of
any Parent Securities (as defined in the Merger Agreement) acquired pursuant
to the Merger, if any. Assuming completion of the Merger, Stockholder will
acquire such Parent Securities for investment purposes and not for resale in
any manner that would violate any applicable federal or state securities law
or other law or regulation. Stockholder is aware that the Parent Securities
issued in the Merger (including the Common Stock issuable upon exercise or
conversion thereof) will be "restricted securities" within the meaning of
Rule 144 promulgated under the Securities Act of 1933, as amended, and that
no trading market for either the Parent Warrants or the Parent Preferred
Stock (both as defined in the Merger Agreement) exists or is contemplated to
exist. Consequently, if Stockholder has elected to receive the Securities
and Cash Consideration, Stockholder has the ability to hold the Parent
Securities for an indefinite period of time. Pursuant to the Pennsylvania
Securities Law any Pennsylvania purchaser hereby agrees not to sell, transfer
or otherwise dispose of the Parent Securities within 12 months of the date of
purchase.
C. CONSENT. Stockholder has carefully reviewed the Merger
Agreement and sought independent legal counsel as necessary to fully
understand its terms and conditions, and based upon such review and
consultation approves of and consents to the Merger Agreement and the Merger
and the other transactions contemplated by the Merger Agreement. Stockholder
has approved such agreement and transactions in accordance with the
Pennsylvania Consolidated Statutes and
-3-
other applicable laws and the Articles of Incorporation and Bylaws of Seller.
D. SELLER REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Seller in the Merger Agreement (including,
without limitation, those in Article 4 of such agreement) were, are and will
be, as of the respective dates made or deemed to have been made pursuant to
the terms of the Merger Agreement, true and correct in all respects
(qualified by materiality to the extent provided therein). Stockholder
agrees that the representation and warranty contained in this Section 1.4
shall survive consummation of
-4-
the Merger and shall remain in full force and effect for the period of
limitations provided under applicable law.
III. ADDITIONAL AGREEMENTS.
A. NO TRANSFER OF STOCK. Unless and until the Merger Agreement
shall have been terminated in accordance with its terms, Stockholder shall
not sell, transfer or otherwise dispose of any right, title or interest in or
to any of the Stockholder Shares.
B. FEES AND EXPENSES. If the Merger is completed and the legal
fees and legal expenses incurred by Seller in connection with the
transactions contemplated by the Merger Agreement exceed $25,000, then
Stockholder agrees to pay, in addition to the fees and expenses incurred by
him in connection with the Merger Agreement and this Agreement and the
transactions contemplated thereby and hereby, his Pro Rata Share (as
hereinafter defined) of such fees and expenses in excess of such amount. If
Parent or the Surviving Corporation pays any such fees or expenses on behalf
of Stockholder or Seller (which they shall not be obligated to do), then
Stockholder shall, promptly following notice thereof from Parent or the
Surviving Corporation, reimburse Parent or the Surviving Corporation for such
Stockholder's Pro Rata Share of such payment. "Pro Rata Share" means the
number of shares of Seller Common Stock owned by Stockholder as of the date
hereof divided by the number of shares of Seller Common Stock issued and
outstanding as of the date hereof.
C. COOPERATION; FURTHER ASSURANCES; NAME CHANGES. Stockholder
agrees to use all reasonable efforts (in all capacities, including, without
limitation, as an officer, director, employee and stockholder of Seller, as
applicable) to take, or cause to be taken, to do, or cause to be done, and to
assist and cooperate with Parent, Acquisition Sub and Seller in order to aid
and facilitate the completion of the Merger and the other transactions
contemplated by the Merger Agreement and this Agreement at the earliest
practicable times. In particular, but without limitation, Stockholder agrees
to use all reasonable efforts (in all capacities, as provided above) to cause
Seller to perform all of its agreements in the Merger Agreement and to cause
all of its representations and warranties therein to be and remain true and
correct. In addition to the specific provisions of the Merger Agreement,
Stockholder further agrees to execute and
-5-
deliver such further documents and to perform such further actions as Parent
or the Surviving Corporation shall reasonably request from time to time, both
before and after the completion of the Merger, in connection with the
transactions contemplated by the Merger Agreement and this Agreement. In
addition, Stockholder agrees to cause all affiliated and related entities of
Seller and all entities owned or controlled by Stockholder that are engaged
in the diagnostic medical imaging business, to take all necessary steps to
change their names as promptly following the Closing as is practicable (and
in any event within 30 days thereof) to eliminate the word "Royal" and any
derivative or similar word or phrase.
2.4 RELEASE. Stockholder agrees and acknowledges that he has taken
all steps that he has deemed appropriate to fully inform himself of the
transactions contemplated by the Merger Agreement and to make an informed
decision to enter into this Agreement. Stockholder further acknowledges
that, if he has elected to receive the Securities and Cash Consideration in
the Merger, (a) he has carefully reviewed the Private Placement Memorandum
(as defined in the Merger Agreement), and (b) he has not relied upon any
representation, warranty or other communication, written or oral, in electing
to receive Parent Securities, except for the information set forth in the
Private Placement Memorandum. Further, Stockholder, on behalf of himself and
his affiliates, and for all of his and their respective affiliates,
administrators, trustees, beneficiaries and successors and assigns, does
hereby fully, finally and forever irrevocably and unconditionally release,
acquit and discharge Parent, Acquisition Sub and Seller, and all past,
present and future parents, subsidiaries and affiliates thereof, and all
past, present and future officers, directors, partners, employees, agents,
attorneys, shareholders, accountants, financial advisors, successors, heirs
and assigns of such party or parties, of and from any and all liabilities,
claims or obligations, whensoever arising, relating to or arising from the
transactions contemplated by the Merger Agreement (excluding from the
foregoing only (i) any breach of an obligation under the employment agreement
with Stockholder referred to therein and (ii) if Stockholder has elected to
receive the Securities and Cash Consideration, any breach or default by or of
Parent under or with respect to the Parent Securities). As further
consideration for this Agreement, each person granting or deemed to be
granting a release
-6-
hereunder hereby agrees, represents and warrants that the matters released
herein are not limited to matters which are known or disclosed, and in
connection with the subject matter of this Agreement and the Merger
Agreement, each such person granting or deemed to be granting a release
hereunder, hereby waives any and all rights and benefits which it now has or
in the future may have conferred upon it by virtue of any provision of law of
any jurisdiction which may now exist or hereafter be enacted and which may be
applicable to the subject matter of this Agreement, purporting to grant to
any such person fully or partial relief from the releases contained in this
Agreement, including, without limitation, the provisions of Section 1542 of
the Civil Code of the State of California, or any similar or comparable
provision of law of any jurisdiction. Said Section 1542 provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
IV. INDEMNITY.
A. STOCKHOLDER INDEMNITIES. Stockholder agrees to indemnify, hold
harmless and reimburse Parent, Acquisition Sub and Seller from and against
any and all losses, liabilities, damages, costs and expenses (including,
without limitation, reasonable attorneys' fees) (hereinafter "Losses"),
actually suffered or incurred by any of Parent, Acquisition Sub and/or
Seller, or any parent, subsidiary or affiliate thereof or any assignee or
successor thereof, and each officer and director of any of the foregoing,
which is incurred as a result of any breach of a representation, warranty or
covenant of Stockholder in this Agreement.
B. RECOVERIES. The amount of any Loss suffered or incurred by any
person entitled to indemnification hereunder (an "Indemnified Person") shall
be reduced by the amount of any insurance proceeds or other cash receipts
paid to the Indemnified Person or any affiliate thereof as an offset against
such Loss (and no right of subrogation shall accrue to any insurer
hereunder), including any indemnification received by the Indemnified Person
or such affiliate from an unrelated party with respect to such Loss.
-7-
C. CLAIMS. An Indemnified Person shall promptly give the
indemnifying party (an "Indemnifying Person") written notice of any matter
which such Indemnified Person has determined has given rise to a right of
indemnification under this Agreement, stating the amount of the Loss, if
known, and method of computation thereof, all with reasonable particularity
(subject to the last sentence of this paragraph). The obligations and
liabilities of any party under this Section 3 with respect to Losses arising
from claims, assertions, events or proceedings of any third party (including,
without limitation, claims by any assignee or successor of the Indemnified
Person or any governmental agency), which are subject to the indemnification
provided for in this Section 3 ("Third Party Claims") shall be governed by
and be subject to the following additional terms and conditions: if any
Indemnified Person shall receive written notice of any Third Party Claim, the
Indemnified Person shall give the Indemnifying Person prompt written notice
of such Third Party Claim (subject to the last sentence of this paragraph)
and shall permit the Indemnifying Person, at its option, to participate in
the defense of such Third Party Claim by counsel of its own choosing and at
its expense. Furthermore, if the Indemnifying Person acknowledges in writing
its obligation to indemnify the Indemnified Person hereunder against any Loss
(without limitation) that may result from such Third Party Claim, then the
Indemnifying Person shall be entitled, at its option, to assume and control
the defense against such Third Party Claim at its expense and through counsel
of its choice if it gives prompt written notice of its intention to do so to
the Indemnified Person unless, in the reasonable opinion of counsel for the
Indemnified Person, there is a conflict or a potential conflict of interests
between the Indemnified Person and the Indemnifying Person in such action,
suit or proceeding, in which event the Indemnified Person shall be entitled
to direct the defense with respect to, but only with respect to, those issues
with respect to which such conflict exists. In the event the Indemnifying
Person exercises its right to undertake the defense against any such Third
Party Claim as provided above, the Indemnified Person shall, and it shall
cause its affiliates to, cooperate with the Indemnifying Person in such
defense and make available to he Indemnifying Person all pertinent records,
materials and information in their possession or under their control relating
thereto as is required by the Indemnifying Person. No such Third Party
Claim, except the settlement thereof which involves (i) the
-8-
payment of money only for which any Indemnified Person is totally indemnified
(without limitation) by the Indemnifying Person and (ii) the unconditional
release from all related liability of the Indemnified Person, may be settled
by the Indemnifying Person without the written consent of the Indemnified
Person. Any settlement of a Third Party Claim by an Indemnified Person
without the written consent of the Indemnifying Person shall discharge the
Indemnifying Person from all liability hereunder with respect to the subject
matter of such Third Party Claim. The foregoing notwithstanding, the failure
of any Indemnified Person to give any notice required to be given hereunder
shall not affect such Indemnified Person's right to indemnification hereunder
except to the extent the Indemnifying Person from whom such indemnity is
sought shall have been actually and materially prejudiced in its ability to
defend the claim or action for which such indemnification is sought by reason
of such failure.
V. GENERAL AGREEMENTS.
A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties in this Agreement or in any instrument or
certificate delivered pursuant to this Agreement delivered on or prior to the
Effective Date (as defined in the Merger Agreement) shall survive the
completion of the Merger.
B. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telecopy, telex or telegram or mailed by registered
or certified mail, postage prepaid, as follows:
(1) If to Parent or Acquisition Sub:
Alliance Imaging, Inc.
3111 No. Tustin Ave., Suite 150
Orange, California 92665
Telecopy No. (714) 921-5678
Attention: Richard N. Zehner
President
-9-
(b) If to Stockholder:
[___________________________]
___________________________
___________________________
___________________________
Telecopy No. (___) ___-____
The date of any such notice shall be deemed the date hand delivered or
transmitted by telecopy, telex or telegram (in each case provided written
confirmation of sending is retained) or three (3) days after being mailed as
provided above. Any party may change its address for notice by sending a
notice to that effect as herein provided to the other parties.
C. AMENDMENT; ENTIRE AGREEMENT; BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (a) constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any other person
any rights or remedies hereunder. This Agreement may be amended or modified
in whole or in part by an agreement in writing executed in the same manner as
this Agreement after authorization to do so, as applicable, by the Boards of
Directors of Parent and Acquisition Sub and Stockholder.
D. WAIVER. Any agreement on the part of a party hereto and any
extension or waiver granted by any such party shall be valid only if set
forth in an instrument in writing signed on behalf of the party making the
agreement or providing the extension or waiver.
E. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
F. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors
and permitted assigns of the parties hereto. The rights of Parent and
Acquisition Sub hereunder may be transferred in whole or in part to any
direct or indirect wholly-owned subsidiary of Parent.
-10-
G. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
giving effect to the choice of law provisions thereof.
H. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
I. ATTORNEYS' FEES. Should Parent or Acquisition Sub (or,
following the Merger, the Surviving Corporation) be required to engage
counsel to seek to enforce any of the provisions of this Agreement (whether
or not a legal proceeding is required to be filed), such party or parties
shall be entitled, in addition to its or their other remedies, to recover the
fees and expenses of counsel and, as applicable, court costs, incurred in
connection with such matter.
IN WITNESS WHEREOF the parties have executed this Agreement by their
duly authorized officers as of the date first above written.
ALLIANCE IMAGING, INC.
By______________________________
Its_____________________________
ALLIANCE IMAGING OF PENNSYLVANIA, INC.
By______________________________
Its_____________________________
STOCKHOLDER(S)
Name(s):________________________
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________________________________
________________________________
Stockholder elects to receive the following consideration in the Merger
(check one):
____ Cash Only Consideration
____ Securities and Cash Consideration
Stockholder Initials: ______
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