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EXHIBIT 4.1
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SECURITIES PURCHASE AGREEMENT
Dated as of August 1, 1999
By and Among
AMERICAN PHYSICIAN PARTNERS, INC.
and
BT CAPITAL PARTNERS SBIC, L.P.
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TABLE OF CONTENTS
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ARTICLE IDEFINITIONS....................................................................................................1
Section 1.0 Definitions.........................................................................................1
ARTICLE II REPRESENTATIONS OF THE COMPANY..............................................................................10
Section 2.0 Representations of the Company.....................................................................10
Section 2.1 Existence and Good Standing........................................................................10
Section 2.2 Capital Stock......................................................................................11
Section 2.3 Authorization and Validity of the Documents........................................................12
Section 2.4 Subsidiaries and Investments.......................................................................12
Section 2.5 SEC and Other Documents; Financial Statements; Undisclosed Liabilities.............................12
Section 2.6 Title to Properties; Encumbrances; Leases..........................................................15
Section 2.7 Intellectual Property..............................................................................15
Section 2.8 Material Contracts.................................................................................15
Section 2.9 Consents and Approvals; No Violations..............................................................16
Section 2.10 Litigation........................................................................................16
Section 2.11 Taxes.............................................................................................17
Section 2.12 Liabilities.......................................................................................18
Section 2.13 Compliance with Laws; Permits; Billing Practices..................................................18
Section 2.14 Employment Relations..............................................................................21
Section 2.15 Employee Benefit Plans and Employees..............................................................21
Section 2.16 Environmental Laws and Regulations................................................................25
Section 2.17 Interests in Clients, Suppliers, etc..............................................................26
Section 2.18 Physician/Hospital Relationships..................................................................26
Section 2.19 No Misstatements or Omissions; Projections........................................................26
Section 2.20 Broker's or Finder's Fees.........................................................................27
Section 2.21 Investment Company Act............................................................................27
Section 2.22 Year 2000 Reprogramming...........................................................................27
Section 2.23 Practice Management Agreements; Affiliations......................................................27
Section 2.24 Securities Law Compliance.........................................................................27
Section 2.25 Transactions with Affiliates......................................................................27
Section 2.26 Capital Stock Reserved............................................................................28
Section 2.27 No Conflict of Rights.............................................................................28
Section 2.28 SBIC Information..................................................................................28
Section 2.29 SBIC Eligibility..................................................................................28
Section 2.30 Company Awareness.................................................................................28
Section 2.31 Use of Proceeds...................................................................................28
Section 2.32 Insurance.........................................................................................28
Section 2.33 Other Representations and Warranties..............................................................28
(i)
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ARTICLE III REPRESENTATIONS OF THE PURCHASER...........................................................................29
Section 3.0 Representations of the Purchaser...................................................................29
Section 3.1 Existence and Good Standing; Power and Authority...................................................29
Section 3.2 Restrictive Documents..............................................................................29
Section 3.3 Purchase for Investment............................................................................29
Section 3.4 Broker's or Finder's Fees..........................................................................30
ARTICLE IV ISSUANCE OF NOTES; PAYMENT OF SUBSCRIPTION PRICE; CLOSING...................................................30
Section 4.1 Issuance of Convertible Notes......................................................................30
Section 4.2 Purchase Price.....................................................................................30
Section 4.3 Time and Place of Closing..........................................................................30
Section 4.4 Closing Deliveries.................................................................................30
ARTICLE V CONDITIONS TO THE PURCHASER'S OBLIGATIONS....................................................................31
Section 5.0 Conditions to the Purchaser's Obligations..........................................................31
Section 5.1 Opinions of Counsel................................................................................31
Section 5.2 Good Standing and Other Certificates...............................................................31
Section 5.3 No Material Adverse Change.........................................................................31
Section 5.4 Truth of Representations and Warranties............................................................31
Section 5.5 No Litigation Threatened...........................................................................32
Section 5.6 Third Party Consents; Governmental Approvals.......................................................32
Section 5.7 Proceedings........................................................................................32
Section 5.8 SBA Forms..........................................................................................32
Section 5.9 Due Diligence......................................................................................32
Section 5.10 Credit Agreement..................................................................................32
Section 5.11 Acquisition Agreement.............................................................................32
Section 5.12 Performance of Obligations........................................................................32
ARTICLE VI CONDITIONS TO THE COMPANY'S OBLIGATIONS.....................................................................33
Section 6.1 Conditions to the Company's Obligations...........................................................33
Section 6.2 Truth of Representations and Warranties...........................................................33
Section 6.3 Third Party Consents; Governmental Approvals......................................................33
Section 6.4 Performance of Agreement..........................................................................33
Section 6.5 No Litigation Threatened..........................................................................33
ARTICLE VII COVENANTS OF THE COMPANY...................................................................................33
Section 7.1 Reservation of Common Stock........................................................................33
Section 7.2 Accountants........................................................................................33
Section 7.3 Financial Statements and Other Information.........................................................33
Section 7.4 Inspection.........................................................................................36
Section 7.5 Regulatory Sale or Disposition.....................................................................36
Section 7.6 Transaction with Affiliates........................................................................37
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Section 7.7 Business...........................................................................................37
Section 7.8 Registration Rights................................................................................37
Section 7.9 Limitation on Dividend/Indebtedness Restrictions...................................................37
Section 7.10 SBIC Information..................................................................................37
Section 7.11 Use of Proceeds...................................................................................38
Section 7.12 Change of Activity................................................................................38
Section 7.13 Non-Discrimination................................................................................38
Section 7.14 Asset Sales; Investments..........................................................................38
Section 7.15 Consolidation, Merger, Sale of Assets, etc........................................................39
Section 7.16 Indebtedness......................................................................................39
Section 7.17 Leverage Ratio....................................................................................39
Section 7.18 Dividends.........................................................................................39
Section 7.19 Amendment of Charter..............................................................................40
Section 7.20 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Compliance......................................................................40
Section 7.21 Board of Directors................................................................................41
Section 7.22 Grant of Preemptive Rights........................................................................41
Section 7.23 Reservation of Common Stock; Valid Issuance.......................................................42
Section 7.24 Insurance.........................................................................................43
Section 7.25 Questar Acquisition...............................................................................43
Section 7.26 Participation in Future Financing.................................................................43
Section 7.27 Limitation On Other Subordinated Debt.............................................................43
Section 7.28 Company's Performance of Covenants................................................................43
Section 7.29 Employee Benefits and Tax Information.............................................................44
ARTICLE VIII REGISTRATION RIGHTS.......................................................................................44
Section 8.1 Shelf Registration.................................................................................44
Section 8.2 Incidental Registrations...........................................................................47
Section 8.3 Registration Procedures............................................................................48
Section 8.4 Requested Underwritten Offerings...................................................................51
Section 8.5 Preparation; Reasonable Investigation..............................................................51
Section 8.6 Indemnification....................................................................................52
Section 8.7 Rule 144...........................................................................................54
ARTICLE IX SURVIVAL....................................................................................................54
Section 9.1 Survival...........................................................................................54
ARTICLE X INDEMNIFICATION..............................................................................................55
Section 10.1 Indemnification...................................................................................55
Section 10.2 Contribution......................................................................................56
Section 10.3 Remedies..........................................................................................56
ARTICLE XI MISCELLANEOUS...............................................................................................56
Section 11.1 Knowledge of the Transaction Parties..............................................................56
Section 11.2 Expenses..........................................................................................56
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Section 11.3 Governing Law.....................................................................................56
Section 11.4 Captions..........................................................................................57
Section 11.5 Publicity.........................................................................................57
Section 11.6 Notices...........................................................................................57
Section 11.7 Parties in Interest...............................................................................58
Section 11.8 Counterparts......................................................................................58
Section 11.9 Entire Agreement..................................................................................58
Section 11.10 Amendments.......................................................................................58
Section 11.11 Severability.....................................................................................58
Section 11.12 Third Party Beneficiaries........................................................................58
Section 11.13 Jurisdiction.....................................................................................58
(iv)
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of August 1, 1999 by and among
AMERICAN PHYSICIAN PARTNERS, INC., a Delaware corporation (the "Company") and BT
CAPITAL PARTNERS SBIC, L.P., a Delaware limited partnership (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Purchaser desires to purchase, and the Company desires to
issue, 8% convertible junior subordinated promissory note or notes in the form
attached as Exhibit A hereto for an aggregate principal amount of $20,000,000
(the "Convertible Notes") which Convertible Notes may be converted into shares
of common stock, par value $0.0001 per share, of the Company pursuant to the
terms set forth in such Convertible Notes;
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
Section 1.0 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Acquisition" shall mean the acquisition of all or substantially all of
the capital stock of Questar and the related acquisition of assets of certain
"Development Centers" (as defined in the Acquisition Agreement) by the Company.
"Acquisition Agreement" shall mean the Stock Purchase Agreement dated
as of August 1, 1999, between the Company, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and Questar, and any agreements related thereto and all
exhibits, schedules and any other documents relating to any of the foregoing.
"Advisor" shall have the meaning set forth in Section 7.21(c) of this
Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person; provided, however, that, an Affiliate shall include
any entity that directly or indirectly (including through limited partner or
general partner interests) owns more than 5% of any class of the equity of any
other entity.
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"Agreement" shall mean this Securities Purchase Agreement, as the same
may be amended, supplemented or modified in accordance with the terms hereof,
from time to time.
"Anti-Kickback Statute" shall have the meaning set forth in Section
2.13.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Closing" shall have the meaning set forth in Section 4.3 of this
Agreement.
"Closing Date" shall mean the date hereof, on which the Purchaser shall
purchase, and the Company shall issue, the Convertible Notes.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated and rulings issued thereunder.
"Commission" shall mean, at any time, the Securities and Exchange
Commission or any other Federal agency then administering the Securities Act and
other Federal securities laws.
"Common Stock" shall have the meaning set forth in Section 2.2 of this
Agreement.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Notice" shall have the meaning set forth in Section 8.2(a).
"Company Property" shall mean any real property and improvements owned,
leased, used, operated or occupied by any Transaction Party.
"Company Registration Statement" shall have the meaning set forth in
Section 2.5 of this Agreement.
"Company Reports" have the meaning set forth in Section 2.5 of this
Agreement.
"Consolidated EBITDA" shall mean, with respect to any fiscal period
taken as one accounting period determined in conformity with GAAP, an amount
equal to (a) consolidated net income of the Company and its Subsidiaries on a
consolidated basis for such period, minus (b) the sum of (i) income tax credits,
(ii) interest income, (iii) gain from extraordinary items for such period, and
(iv) any aggregate net gain during such period arising from the sale, exchange
or other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities), in each case to the extent
included in the calculation of consolidated net income of the Company and its
Subsidiaries on a consolidated basis for such period in accordance with GAAP,
but without duplication, minus (c) any cash payments made in
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respect of any item of extraordinary loss accrued during a prior period and
added back to Consolidated EBITDA in such prior period pursuant to clause (d)(v)
below, plus (d) the sum of (i) any provision for income taxes, (ii) Consolidated
Interest Expense, (iii) the amount of depreciation and amortization for such
period, (iv) the amount of any deduction to consolidated net income as the
result of any stock option expense, (v) the amount of any item of extraordinary
loss not paid in cash in such period, and (vi) the absolute value of any
aggregate net loss during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), in each case to the extent
included in the calculation of consolidated net income of the Company: (1) the
undistributed earnings of any Subsidiary of the Company or any of its
Subsidiaries to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the
terms of any contractual obligation or requirement of law applicable to such
Subsidiary; or (2) any restoration to income of any extraordinary contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period.
"Consolidated Indebtedness" shall mean, as of any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
the Company and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP exclusive of Indebtedness of the type described in clause
(vii) of the definition of Indebtedness except to the extent of amounts which
would be owing upon termination of such Indebtedness.
"Consolidated Interest Expense" shall mean, for any fiscal period,
interest expense (whether cash or non-cash) of the Company and its Subsidiaries
on a consolidated basis determined in accordance with GAAP; provided, however,
interest on the Convertible Notes which the Company has elected after two years
from the Closing Date to pay in PIK Securities shall not be included in
Consolidated Interest Expense.
"Convertible Notes" shall have the meaning set forth in the recitals of
this Agreement.
"Copyrights" shall have the meaning set forth in Section 2.7 of this
Agreement.
"Credit Agreement" shall mean the Credit Agreement dated as of November
26, 1997, among American Physician Partners, Inc., the lenders party thereto
from time to time and General Electric Capital Corporation, as Agent, as
amended, modified, supplemented, refinanced or replaced (whether by one or more
credit facilities) from time to time.
"Damages" shall have the meaning set forth in Section 10.1 of this
Agreement.
"Documents" shall mean this Agreement and the Convertible Notes.
"Employee Benefit Plan" shall have the meaning set forth in Section
2.15(a) of this Agreement.
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"Encumbrances" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Environmental Claims" shall mean all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Law (hereinafter
"Claims"), including (a) Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any federal, state or local statute,
law, rule, regulation, ordinance, code, policy or rule of common law in effect
and in each case as amended as of the Closing Date, and any judicial or
administrative interpretation thereof as of the Closing Date, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 43
U.S.C. Section 6901 et seq.; the Resource Conservation and Recovery Act, as
amended, 43 U.S.C. Section 9601 et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1351 et seq.; the Toxic Substances Control
Act, 15 U.S.C. Section 3601 et seq.; the Clean Air Act, 43 U.S.C. Section 7401
et seq.; the Safe Drinking Water Act, 43 U.S.C. Section 300f et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 3701 et seq.; and their state and local
counterparts and equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated and rulings issued thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Full Conversion Shares" means, as of any time of determination, that
number of shares of Common Stock equal to the sum of (i) the number of shares of
Common Stock (as such number may be adjusted for stock splits, stock dividends,
stock combinations or similar events) acquired by the Purchaser through
conversion(s) of the Convertible Notes (other than shares of Common Stock
acquired upon conversion of accrued interest), prior to such time; plus (ii) the
number of additional shares of Common Stock which the Purchaser would receive,
if, at such time, the Purchaser were to fully convert into shares of Common
Stock any unconverted portion (excluding accrued Interest eligible for
conversion) of the Convertible Notes.
"Fully-Diluted Basis" shall mean the total number of shares of Common
Stock outstanding at any time, after giving effect to (a) all Common Stock
outstanding at the time of such determination and (b) all Common Stock issuable
upon the exercise of any outstanding rights, options and/or warrants to acquire
Common Stock and outstanding securities (including, without limitation, the
Convertible Notes and (without duplication) accrued interest which could be
entitled to be converted into shares of Common Stock) that are, or may be,
pursuant to their
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terms convertible into or exchangeable for Common Stock or that may be required
to be issued pursuant to any other agreement, including, without limitation, any
agreements to issue stock to physicians and radiologists.
"GAAP" shall have the meaning set forth in Section 2.5(b) of this
Agreement.
"Governmental Authority" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, and radon gas; and (b)
any chemicals, materials or substances defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, pursuant to any applicable
Environmental Law.
"Incidental Registration" shall have the meaning set forth in Section
8.2(a) of this Agreement.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than trade payables or accrued expenses arising in the
ordinary course of business), (ii) the maximum amount available to be drawn
under letters of credit, (iii) all indebtedness of the type otherwise described
in this definition secured by any lien on any property owned by such Person or
any of its Subsidiaries, (iv) capitalized lease obligations, (v) all guarantees
of any type of indebtedness otherwise described in this definition, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay or similar
obligations and (vii) interest rate protection hedging agreements, currency
hedging agreements or commodity hedging agreements.
"Intellectual Property" shall have the meaning set forth in Section 2.7
of this Agreement.
"Interest Coverage Ratio" shall mean at any time the ratio of (i)
Consolidated EBITDA of the Company for the four consecutive fiscal quarters of
the Company ending immediately preceding the date of determination to (ii)
Consolidated Interest Expense of the Company for such period.
"Investment" shall mean the $20,000,000 investment by the Purchaser in
the Convertible Notes issued by the Company on the Closing Date.
"IRS" shall mean the United States Internal Revenue Service.
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"Joint Venture" shall mean a Person: (a) the stock or similar equity
interest of which is held by the Company or its Subsidiaries and a hospital or
other health care organization not owned by the Company or one of its
Subsidiaries, (b) over which the Company or one of its Subsidiaries has
management control, either as general partner, managing partner, by contract or
as holder of the controlling interest, and (c) the sole activity of which is to
own, lease or operate a radiological diagnostic, treatment or imaging center,
device or department and/or facilities providing services ancillary to such
center, device or department.
"Leaseholds" of any Person shall mean all the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Leases" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Leverage Ratio" shall mean, at any time, the ratio of Consolidated
Indebtedness at such time to the Consolidated EBITDA for the period of four
consecutive fiscal quarters then last ended, taken as one accounting period.
"Margin Stock" shall have the meaning set forth in Regulation U of the
Board of Governors of the Federal Reserve System.
"Marks" shall have the meaning set forth in Section 2.7 of this
Agreement.
"Material Adverse Effect" shall have the meaning set forth in Section
2.1 of this Agreement.
"Medical Practices" shall mean any Practices, physicians or
radiologists with whom the Company or any of its Subsidiaries has executed a
management services agreement, technical services agreement, asset purchase
agreement or other agreement related thereto.
"NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automatic Quotation System.
"New Securities" shall mean (i) any shares of Common Stock; (ii) any
other equity or debt security (other than senior bank financing) convertible
into shares of Common Stock; (iii) any option, warrant or other right to
subscribe for, purchase or otherwise acquire any equity security or any such
debt security, provided that "New Securities" shall not include (I) securities
sold pursuant to a public offering pursuant to an effective registration
statement filed under the Securities Act, (II) securities issued by the Company
in the ordinary course of business to physicians and radiologists in connection
with entering into management service agreements with physician or radiology
practices and ancillary businesses, at no less than the fair market value at
such time, (III) securities issued to sellers of stock (or similar equity
interests) or assets of a business as consideration (partial or otherwise) for
the business acquired by the Company or of any of its Subsidiaries, (IV) options
(and securities issued pursuant thereto) described in the first parenthetical of
Section 3(h) of the Convertible Notes or subject to the Company's 1996 Employee
Stock Option Plan, as amended, (V) securities of the Company issued, distributed
or
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sold to the holders of Common Stock of the Company pro rata based on the number
of shares of Common Stock held by each such holder immediately prior to such
issuance or distribution of securities and (VI) Common Stock issued pursuant to
conversion of the Convertible Notes.
"Patents" shall have the meaning set forth in Section 2.7 of this
Agreement.
"Permitted Acquisition" shall mean any acquisition by the Company or
any of its Subsidiaries of the stock or assets of any Person permitted by this
Agreement.
"Permitted Business" shall mean (I) providing the technical component
of radiology services and any business reasonably related thereto and (II)
managing physician and radiology Practices and any business reasonably related
thereto.
"Permitted Encumbrances" shall have the meaning set forth in Section
2.6 of this Agreement.
"Person" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Practice" shall mean any medical or imaging practice in the radiology
sector to which the Company or any of its Subsidiaries agrees to provide or
arrange for comprehensive management, administrative and other non-medical
support services and with respect to which the Company or one of its
Subsidiaries has acquired all or substantially all of the non-medical assets.
"Pre-Closing Periods" shall have the meaning set forth in Section 2.11
of this Agreement.
"Preemptive Notice" shall have the meaning set forth in Section 7.22 of
this Agreement.
"Pro Forma Basis" shall mean the calculation of the consolidated
results of the Company and its Subsidiaries otherwise determined in accordance
with this Agreement as if the Permitted Acquisition, incurrence of Indebtedness
(other than revolving loans used for working capital purposes under the Credit
Agreement) or repayment of Indebtedness (other than revolving loans under the
Credit Agreement used for working capital purposes unless repayment of such
loans is made with the proceeds of Indebtedness other than Indebtedness under
the Credit Agreement) and all other Permitted Acquisitions, incurrences of
Indebtedness (other than revolving loans used for working capital purposes under
the Credit Agreement) and repayments of Indebtedness (other than revolving loans
under the Credit Agreement used for working capital purposes unless repayment of
such loans is made with the proceeds of Indebtedness other than Indebtedness
under the Credit Agreement), in each case consummated during the respective Test
Period and prior to the date of determination pursuant to Section 7.16 or 7.17
or other applicable
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provision of this Agreement, had been effected on the first day of the
respective Test Period; provided that all calculations shall take into account
the following assumptions:
(i) with respect to Consolidated Interest Expense and
Consolidated Indebtedness, any Indebtedness incurred during the
relevant Test Period and prior to the date of determination (except as
provided in the introductory paragraph of this definition, with respect
to Indebtedness in the nature of revolving loans used for working
capital purposes under the Credit Agreement) shall be deemed to have
been outstanding from the first day of the respective Test Period (and
the interest expense associated with any such Indebtedness incurred
shall be determined at the actual rates applicable thereto or for the
period when such Indebtedness was not outstanding, at the average
interest rate during the period when such Indebtedness was outstanding
and shall be included in determining Consolidated Interest Expense on
such Pro Forma Basis) and all Indebtedness incurred in connection with
a Permitted Acquisition of the Person or business division or product
line being acquired that was outstanding during the Test Period and
prior to the date of such Permitted Acquisition but not outstanding on
the date of the Permitted Acquisition shall be deemed to have been
repaid in full on the first day of the Test Period; and
(ii) with respect to all calculations of Consolidated EBITDA
(and the other components of the definition of Consolidated EBITDA
included therein), such calculations (a) shall include the Consolidated
EBITDA of the Company and its Subsidiaries (and the other components of
the definition of Consolidated EBITDA included therein) during the
relevant Test Period and shall include the Consolidated EBITDA (and
other components of such definition) of the Person or business,
division or product line being acquired pursuant to the Permitted
Acquisition but (b) shall not include increases to Consolidated EBITDA
which may arise from synergies or projected eliminations of any other
costs and expenses of the entity being acquired but shall reflect
actual costs and expenses that will cease to exist as a result of such
Permitted Acquisition.
"Pro Rata Amount" shall mean the quotient obtained by dividing the
number of shares of Common Stock owned by the Purchaser on a Fully-Diluted Basis
by the total number of shares of Common Stock outstanding at such time on a
Fully-Diluted Basis.
"Purchase Price" shall have the meaning provided in Section 4.2.
"Purchaser" shall have the meaning set forth in the first paragraph of
this Agreement.
"Questar" shall mean Questar Imaging, Inc., a Florida corporation.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Registrable Securities" shall mean (i) any and all Common Stock
acquired by, or issuable to, the Purchaser or any of its Affiliates pursuant to
the conversion of the Convertible
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Notes on or after the date hereof and (ii) any securities of the Company owned
by the Purchaser or any of its Affiliates issued or issuable with respect to
Common Stock by way of conversion, exchange, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (A) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, or (B)
such securities shall have been sold in accordance with Rule 144 (or any
successor provision) under the Securities Act.
"Registration" shall mean each Shelf Registration and each Incidental
Registration.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with Article VII, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), expenses of printing certificates for the Registrable Securities in
a form eligible for deposit with Depositary Trust Company, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), and fees and disbursements of counsel for the Company and
its independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by or
incident to such performance and compliance), securities acts liability
insurance (if the Company elects to obtain such insurance), the reasonable fees
and expenses of any special experts retained by the Company in connection with
such registration, fees and expenses of other Persons retained by the Company
and reasonable fees and expenses of one counsel (and local counsel) for holders
of Registrable Securities, selected by the holders of a majority of the
Registrable Securities to be included in such Registration; but not including
any underwriting fees, discounts or commissions attributable to the sale of
securities or fees.
"Returns" shall have the meaning set forth in Section 2.11 of this
Agreement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act.
"SBA Forms" shall have the meaning set forth in Section 5.8 of this
Agreement.
"SBIA" shall have the meaning set forth in Section 7.10 of this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Securities Laws" shall have the meaning set forth in Section 2.5 of
this Agreement.
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"Shelf Registration" shall have the meaning set forth in Section 8.1(a)
of this Agreement.
"▇▇▇▇▇ Amendments" shall have the meaning set forth in Section 2.13.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such stock
whether by proxy, agreement, operation of law or otherwise, (b) any partnership
or limited liability company in which such Person and/or one or more
Subsidiaries of such person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) and (c) immediately after giving effect to this Agreement,
Questar.
"Taxes" shall mean all taxes, assessments, charges, duties, fees,
levies or other governmental charges, including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity.
"Test Period" shall mean the period of four consecutive fiscal quarters
then last ended (taken as one accounting period).
"Transaction Party" shall have the meaning set forth in Section 2.1 of
this Agreement.
ARTICLE II
REPRESENTATIONS OF THE COMPANY
Section 2.0 Representations of the Company. In order to induce the
Purchaser to enter into this Agreement and to purchase the Convertible Notes,
the Company represents and warrants to and agrees with the Purchaser that on the
Closing Date:
Section 2.1 Existence and Good Standing. The Company and each of its
Subsidiaries (each a "Transaction Party," and collectively, the "Transaction
Parties") is a corporation or
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partnership, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each Transaction Party has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and as proposed to be conducted.
Each Transaction Party is duly qualified or licensed to do business and is in
good standing and is authorized to do business, in each jurisdiction in which
the character or location of the properties owned, leased or operated by such
entity or the nature of the business conducted by such entity makes such
qualification or license necessary, except where any such failure to be duly
qualified or licensed or in good standing could not reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
properties, assets, business, liabilities, accounting treatment, results of
operations or prospects of the Transaction Parties, taken as a whole, or on the
ability of the Company to perform its obligations under any of the Documents (a
"Material Adverse Effect").
Section 2.2 Capital Stock. The Company has an authorized capitalization
consisting of 50,000,000 shares of Common Stock, par value $0.0001 per share
("Common Stock") of which 19,312,213 shares of Common Stock are issued and
outstanding and 10,000,000 shares of Preferred Stock, par value $0.0001 per
share, of which zero shares are issued or outstanding. All outstanding shares of
capital stock of the Company have been, and will, on the Closing Date, be, duly
authorized and validly issued and fully paid and non-assessable. Except as set
forth on Schedule 2.2(a), there are no outstanding subscriptions, options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements (including, without limitation, agreements with
physicians and/or radiologists engaged by Practices) or commitments, contingent
or otherwise, of any character providing for the purchase, redemption,
acquisition, retirement, issuance or sale by any Transaction Party of any shares
of capital stock of any Transaction Party or other securities exchangeable or
convertible into capital stock of any Transaction Party and there are no stock
appreciation rights or phantom stock plans outstanding. Schedule 2.2(a) sets
forth the number of shares of Common Stock which the Company is obligated to
issue in connection with each specific item set forth on Schedule 2.2(a) and
described in the immediately preceding sentence. Except for security interests
granted pursuant to the Credit Agreement, there are no rights, agreements,
restrictions or encumbrances (such as preemptive rights, rights of first
refusal, rights of first offer, proxies, voting agreements, voting trusts,
registration rights agreements, shareholders agreements, etc., whether or not
the any Transaction Party is a party thereto) nor, except as set forth on
Schedule 2.2(b) (and Schedule 2.2(b) lists the dates on which such restrictions
lapse and the number of shares of capital stock with respect to which such
restrictions lapse on such date), are there any restrictions on the
transferability or sale of capital stock of any Transaction Party pursuant to
any provision of law, contract or otherwise with respect to the purchase, sale
or voting of any shares of capital stock of any Transaction Party (whether
outstanding or issuable upon conversion, exchange or exercise of any other
security of any Transaction Party). The Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities the holders of
which have the right to vote). The shares of Common Stock to be issued upon
conversion of the Convertible Notes are duly and validly authorized and when
issued upon conversion of the Convertible Notes, will be duly and validly
issued, fully paid and nonassessable, and free and clear of all Liens and
preemptive and other similar rights.
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Section 2.3 Authorization and Validity of the Documents. The Company
has the requisite corporate power and authority to execute and deliver the
Documents and to perform its obligations thereunder. The execution, delivery and
performance of the Documents by the Company and the performance of its
obligations thereunder have been duly authorized and approved by all necessary
corporate action (including, without limitation, all action of the Board of
Directors and shareholders of the Company) and no other corporate action on the
part of such persons is necessary to authorize the execution, delivery and
performance of the Documents by the Company. Each of the Documents has been duly
executed and delivered by the Company and, assuming due execution thereof by the
other parties thereto, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding brought
in equity or at law).
Section 2.4 Subsidiaries and Investments. (a) Set forth in Schedule
2.4(a) attached hereto is a list of (i) each Person in which the Company owns,
directly or indirectly, any equity or debt security excluding employee loans and
cash equivalent investments and the extent (expressed in percentage) of such
ownership and (ii) each Practice with whom the Company or any of the its
Subsidiaries has entered into a management services agreement, acquisition
agreement or affiliation agreement.
(b) All of the outstanding shares of capital stock or partnership
interests, as the case may be, of each Subsidiary of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, and those
shares of capital stock of each Subsidiary which are owned by the Company or
another Subsidiary of the Company are owned, of record and beneficially,
directly or indirectly, by the Company or a Subsidiary of the Company, free and
clear of all liens, encumbrances, restrictions and claims of every kind except
for Permitted Encumbrances and as set forth on Schedule 2.4(b). No capital stock
of any Subsidiary constitutes Margin Stock.
Section 2.5 SEC and Other Documents; Financial Statements; Undisclosed
Liabilities. (a) The Company has delivered or made available to the Purchaser
the registration statement of the Company filed with the Commission in
connection with the Company's initial public offering of Common Stock, and all
exhibits, amendments and supplements thereto (collectively, the "Company
Registration Statement"), and each registration statement, report, including
annual and quarterly reports, proxy statement or information statement and all
exhibits thereto prepared by it or relating to its properties since the
effective date of the Company Registration Statement, which documents are listed
in Schedule 2.5(a) attached hereto, each in the form (including exhibits and any
amendments thereto) filed with the Commission (collectively, the "Company
Reports"). The Company Reports were filed with the Commission in a timely manner
and constitute all forms, reports and documents required to be filed by the
Company under the Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder and any applicable state securities laws (the "Securities
Laws"). As of their respective dates the Company Reports (i) complied in all
material respects with the applicable
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requirements of the Securities Laws and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not materially misleading. There
is no unresolved violation of the Securities Laws asserted by any Government
Authority with respect to any of the Company Reports.
(b) Each of the balance sheets included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presented the financial position of the entity or entities to which it relates
as of its date and each of the statements of operations, shareholders' equity
(deficit) and cash flows included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly presented the
results of operations, retained earnings or cash flows, as the case may be, of
the entity or entities to which it relates for the periods set forth therein, in
each case in accordance with United States generally accepted accounting
principles consistently applied during the periods involved ("GAAP"), except as
may be noted therein and except, in the case of the unaudited statements,
subject to normal recurring year-end adjustments. The Company has heretofore
furnished the Purchaser with a pro forma consolidated balance sheet of the
Company, as of the Closing Date, giving effect to the issuance of the
Convertible Notes.
(c) Except as set forth on Schedules 2.5(c), 2.8, 2.11, 2.15 and 2.26
attached hereto and except in connection with the transactions contemplated
hereby, since December 31, 1998, no Transaction Party and, with respect to
clauses (i), (ii) and (xv) only, no Practice has: (i) failed, in any material
respect to conduct its business in the ordinary course in a manner consistent
with past practice; (ii) experienced any change, event or circumstance that
could reasonably be expected to have a Material Adverse Effect; (iii) other than
in the ordinary course of business consistent with past practice, purchased,
sold, leased, pledged, encumbered or otherwise acquired or disposed of any
properties or assets relating to its business or operations; (iv) experienced
any material damage, destruction or loss to or of any of its assets which are
necessary to the conduct of its business; (v) except in the ordinary course of
business consistent with past practice, made or agreed to make any increase in
the compensation or severance arrangement of any officer, director or employee;
(vi) experienced material adverse changes in lease rates under existing leases;
(vii) written down or cancelled any material Indebtedness or waived or released
any right or claim which individually or in the aggregate is material; (viii)
suffered any judgment with respect to, or made any settlement of, any claim,
suit, action or proceeding which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (ix) effected any
material change in accounting practices and procedures, other than changes
required as a result of changes in GAAP; (x) amended its organizational
documents; (xi) incurred or assumed any Indebtedness or guaranteed or otherwise
become responsible for any such liabilities, obligations or Indebtedness; (xii)
acquired or agreed to acquire by merging or consolidation with, or by purchasing
the assets or stock, of or by any other manner, any Person or division thereof
or otherwise acquire or agree to acquire any assets (other than inventory) which
are material to any Transaction Party taken together; (xiii) initiated or
settled any material litigation to which any Transaction Party is a party; (xiv)
failed to preserve intact its business organization; (xv) failed to keep
available the services of its officers and material employees; (xvi) adopted or
increased any profit sharing, bonus, deferred
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compensation, savings, insurance, pension, retirement, or other employee benefit
plan for or with any of its employees; (xvii) failed to maintain its reserves in
a manner consistent with the policies and principles used by the Company in
connection with the preparation of the balance sheets included in or
incorporated by reference into the Company Reports; (xviii) issued or sold any
shares of capital stock or any other securities, or issued any securities
convertible into, or options warrants or rights to purchase or subscribe to, or
entering into any arrangement or contract with respect to the issue and sale of,
any shares of its capital stock or any other securities, or made any other
changes in its capital structure; (xix) experienced material changes in HMO or
other payor contracts with respect to the purchase price paid for
Practice-related services or in volume reductions as set forth therein; (xx)
experienced material changes with respect to existing contracts with
radiologists; or (xxi) agreed to any of the foregoing.
(d) After giving effect to the transactions contemplated hereby, except
for the Convertible Notes, neither the Company nor any of its Subsidiaries shall
have any outstanding Indebtedness except for Indebtedness listed on Schedule
2.5(d).
Section 2.6 Title to Properties; Encumbrances; Leases. (a) Schedule 2.6
attached hereto, contains a complete and accurate list setting forth the name
and address of each parcel of material real property owned in fee by the
Transaction Parties. Except for such properties and assets which have been sold
or otherwise disposed of in the ordinary course of business, each of the
Transaction Parties has good title to all of its properties and assets (whether
real, personal, mixed, tangible or intangible), subject to no encumbrance, lien,
charge or other restriction of any kind or character ("Encumbrances"), except
for (i) Encumbrances for current taxes, assessments or governmental charges or
levies on property not yet due and delinquent, (ii) liens and security interests
created pursuant to the Credit Agreement, (iii) Encumbrances arising by
operation of law and (iv) other Encumbrances which could not reasonably be
expected to have a Material Adverse Effect (Encumbrances of the type described
in clauses (i) - (iv) above are hereinafter sometimes referred to as "Permitted
Encumbrances"). Each Transaction Party owns or otherwise has the right to use
all of the property now used and material to the operation of the business of
the Transaction Parties taken as a whole, which personal property is in good
operating condition and repair, ordinary wear and tear excepted and
substantially fit for the purpose for which they are being utilized and
constitutes all of the property necessary to conduct its business as it is
presently being conducted.
(b) Schedule 2.6 attached hereto contains an accurate and complete list
of all material property (whether real, personal, mixed, tangible or intangible)
leased or sub-leased by the Transaction Parties, including all amendments,
extensions and other modifications but excluding customary equipment leases (the
"Leases"). Each Lease is in full force and effect; the Transaction Parties have
a good and valid leasehold interest in and to all of the leased property,
subject to no Encumbrances, except Permitted Encumbrances; all rents and
additional rents due to date from any of the Transaction Parties in respect of
each such Lease have been paid; no Transaction Party has received notice that it
is in default under any Lease; and, to the knowledge of each of the Transaction
Parties, there exists no event, occurrence, condition or act (including the
consummation of the Transaction) which, with the giving of notice, the lapse of
time or the
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happening of any further event or condition, would become a default by any
Transaction Party under any such Lease.
Section 2.7 Intellectual Property. Schedule 2.7 attached hereto
contains an accurate and complete description of all (a) registrations for
trademarks and service marks and all pending applications for such registrations
owned by, assigned to or subject to assignment to the Transaction Parties
anywhere in the world and all material unregistered trademarks, trade names,
service marks, brand names, and business names (collectively "the Marks"); (b)
copyrights, whether registered or unregistered, owned by, assigned to or subject
to assignment to the Transaction Parties anywhere in the world (collectively
"the Copyrights"); and (c) patents and patent applications owned by, assigned to
or subject to assignment to the Transaction Parties anywhere in the world
(collectively the "Patents"). The Company owns the entire right, title and
interest in and to the Marks, the Copyrights and the Patents free and clear of
any Encumbrances except for Permitted Encumbrances. Except as could not
reasonably be expected to have a Material Adverse Effect, each item that is
indicated as registered on Schedule 2.7 has been duly registered, filed with or
issued by the appropriate authorities in the countries indicated on Schedule 2.7
and to the knowledge of each of the Transaction Parties, all such registrations,
filings and issuances remain in full force and effect. Except as could not
reasonably be expected to have a Material Adverse Effect, none of the Marks, the
Copyrights or the Patents are the subject of any pending, or to the knowledge of
each of the Transaction Parties, threatened opposition, interference,
cancellation proceeding or other legal or governmental proceeding before a
registration or issuing authority in any jurisdiction. Except as could not
reasonably be expected to have a Material Adverse Effect, the conduct of the
Transaction Parties' business as presently conducted does not infringe, violate,
or constitute misappropriation of any trademark, service ▇▇▇▇, copyright
(whether registered or unregistered), patent, trade secret, industrial design,
computer program, data base, know-how or other proprietary right (collectively
"Intellectual Property") of any other Person, nor, during the past six years,
has any Transaction Party received notice to the contrary from any Person.
Except as could not reasonably be expected to have a Material Adverse Effect,
the Company owns or has the right to use through assignment, lease, license or
other agreement all Intellectual Property necessary for the conduct of the
business as presently conducted. Except as could not reasonably be expected to
have a Material Adverse Effect, there are no pending or, to the knowledge of
each of the Transaction Parties, threatened material claims by any Person for
infringement of any Intellectual Property or unfair competition by any
Transaction Party. To the Company's knowledge, no Person is infringing upon the
Intellectual Property owned by, assigned to or subject to assignment of, the
Transaction Parties, and the Transaction Parties are aware of no facts that
would support such a claim by the Transaction Parties. The consummation of the
transaction contemplated hereby will not result in the loss or impairment of the
Transaction Parties' right to own or use any of the Intellectual Property
necessary to the conduct of the Transaction Parties' business as presently
conducted (including, but not limited to the Marks, the Copyrights and the
Patents).
Section 2.8 Material Contracts. Except as set forth on Schedule 2.8, no
Transaction Party is bound by (a) any agreement, contract or commitment that
involves the delivery of goods and/or materials by it of an amount or value in
excess of $100,000, (b) any material agreement, contract or commitment not in
the ordinary course of business, (c) any agreement, indenture or
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other instrument which contains restrictions with respect to payment of
dividends or any other distribution in respect of its capital stock, (d) any
agreement, indenture or instrument relating to Indebtedness (whether or not such
Indebtedness is being repaid in connection with the transactions contemplated
hereby), (e) any agreement, contract or understanding with any Affiliate (other
than ordinary course contracts with employees), (f) any management service,
technical service, consulting or any other similar type of contract, (g) any
agreement, contract or commitment limiting the ability of any Transaction Party
to engage in any line of business or to compete with any Person or to otherwise
acquire property or conduct business in any area, (h) any material agreement
with respect to the purchase or affiliation with, or proposed purchase or
affiliation with, or management of, a Practice or other physician or radiology
entity, including, without limitation, any agreement, arrangement or
understanding which has not yet closed or (i) any agreement with any bank,
investment bank or other Person with respect to the providing of financial
advisory services of any type or with respect to the raising of debt or equity.
Each contract or agreement set forth on Schedule 2.8 (or required to be set
forth in Schedule 2.8) is in full force and effect and there exists no material
default or material event of default or to the knowledge of each of the
Transaction Parties, event, occurrence, condition or act (including the
consummation of the sale contemplated hereby) which, with the giving of notice,
the lapse of time or the happening of any other material event or condition,
could become a material default or material event of default thereunder. None of
the Transaction Parties and none of their Affiliates, is a party to, or bound
by, any contract, agreement, instrument or commitment relating to the issuance
of the Convertible Notes, other than the Documents.
Section 2.9 Consents and Approvals; No Violations. The execution and
delivery of the Documents by the Company and compliance by each Transaction
Party with the terms and provisions hereof and thereof and the issuance of the
Convertible Notes by the Company and the consummation of the transactions
contemplated by the Documents does not and will not (a) violate or contravene
any provision of the Certificates, Articles of Incorporation or Bylaws of any
Transaction Party, (b) violate or contravene any statute, rule, regulation,
licensing requirement, order or decree of any court, arbitrator or any other
public body or authority by which any Transaction Party is bound or by which any
of its properties or assets are bound, (c) require any filing with, or permit,
consent authorization, qualification or approval of, or exemption from, or the
giving of any notice to, any governmental or regulatory body, agency or
authority, or any other Person or (d) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of any Transaction Party under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or any other instrument
or obligation to which any Transaction Party is bound, or by which it or any of
its properties or assets may be bound.
Section 2.10 Litigation. There is no action, suit, proceeding at law or
in equity, arbitration or administrative or other proceeding by or before (or,
to the knowledge of each of the Transaction Parties, any investigation by) any
governmental or other instrumentality or agency pending, or, to the knowledge of
each of the Transaction Parties, threatened, against or affecting any
Transaction Party or any Practice or any such entity's properties or rights
which could
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reasonably be expected to have a Material Adverse Effect. No Transaction Party
is subject to any judgment, order or decree entered in any lawsuit or proceeding
which could reasonably be expected to have a Material Adverse Effect.
Section 2.11 Taxes. (a) Tax Returns. Each of the Transaction Parties
has timely filed or caused to be timely filed or will timely file or cause to be
timely filed with the appropriate taxing authorities all material returns,
statements, forms and reports for Taxes ("Returns") that are required to be
filed by, or with respect to, the Transaction Parties on or prior to the Closing
Date. The Returns have accurately reflected and will accurately reflect all
material liability for Taxes of the Transaction Parties for the periods covered
thereby.
(b) Payment of Taxes. All material Taxes and material Tax liabilities
that are due by or with respect to the Transaction Parties for all taxable years
or periods that end on or before the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing Date
("Pre-Closing Period") have been timely paid or accrued and adequately disclosed
and fully provided for pursuant to the financial statements which has been
provided to the Purchaser by the Company and is in accordance with GAAP.
(c) Other Tax Matters. (i) Schedule 2.11 attached hereto sets forth (A)
each taxable year or other taxable period of the Transaction Parties for which
an audit or other examination of Taxes by the appropriate tax authorities of any
nation, state or locality is currently in progress (or scheduled as of the
Closing Date to be conducted) together with the names of the respective tax
authorities conducting (or scheduled to conduct) such audit or examination and a
description of the subject matter of such audits or examinations, (B) the most
recent taxable year or other taxable period for which an audit or other
examination relating to Federal income taxes of any Transaction Party have been
finally completed and the disposition of such audits or examinations, (C) the
taxable years or other taxable periods of any Transaction Party which will not
be subject to the normally applicable statute of limitations by reason of any
waiver or extension of the applicable statute of limitations for Taxes entered
into or granted by or on behalf of such Transaction Party, (D) the amount of any
material proposed adjustments (and the principal reason therefor) relating to
any Returns for Tax liability of any Transaction Party which have been proposed
(and that are outstanding) or assessed by any taxing authority and (E) a list of
all material notices received by any Transaction Party from any taxing authority
relating to any issue which could affect the Tax liability of any Transaction
Party, which issue has not been finally determined and which, if determined
adversely to such Transaction Party, could result in a material Tax liability.
Neither the Company nor any of the Transaction Parties (A) are presently
contesting the Tax liability of any of the Transaction Parties before any court,
tribunal or agency or (B) has applied for and/or received a ruling or
determination from a tax authority regarding a past or prospective transaction
of any of the Transaction Parties.
(ii) No Transaction Party has been included in any "consolidated,"
"unitary" or "combined" Return provided for under the law of the United States,
any foreign jurisdiction or any state or locality with respect to Taxes for any
taxable period for which the statute of limitations has not expired.
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(iii) All material Taxes which any Transaction Party are (or were)
required by law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the proper authorities to the extent due and
payable.
(iv) None of the Transaction Parties are a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code.
(v) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between any Transaction Party and any
other party under which the Purchaser, or any of its Affiliates, or any
Transaction Party could be liable for any Taxes or other claims of any party.
(vi) The Transaction Parties have not applied for, been granted, or
agreed to any accounting method change for which it will be required to take
into account any adjustment under Section 481 of the Code or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality.
(vii) No indebtedness of any Transaction Party consists of "corporate
acquisition indebtedness" within the meaning of Section 279 of the Code.
(viii) The Transaction Parties are not a party to any agreement that
would require them to make any payment that would constitute an "excess
parachute payment" for purposes of Sections 280G and 4999 of the Code.
Section 2.12 Liabilities. No Transaction Party has any outstanding
claims, liabilities or indebtedness, contingent or otherwise, except as set
forth in the balance sheet included in the Company's 1998 audited financial
statements except for such as has been incurred in the ordinary course of
business and could not be reasonably expected to have a Material Adverse Effect
and is not Indebtedness or is Indebtedness pursuant to the Credit Agreement. No
Transaction Party is in default in respect of the terms or conditions of any
material indebtedness. Except for customary conditions precedent in the Credit
Agreement with which the Company is in compliance, there are no restrictions on
the Company's ability to borrow up to $10,799,000 under the Credit Agreement to
be used to effect the transactions contemplated by the Documents, including the
Acquisition Agreement.
Section 2.13 Compliance with Laws; Permits; Billing Practices. Each of
the Transaction Parties and the Practices is in compliance with all applicable
laws, regulations, licensing requirements, orders, judgments and decrees and
have obtained all required governmental approvals and permits in each
jurisdiction in which they currently do business, including the right to receive
Medicare and Medicaid reimbursements, except where the failure to so comply or
obtain, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect or give rise to criminal liability. Without
limiting the generality of the foregoing:
(i) Each of the Company and its Subsidiaries and the Practices
has timely filed all claims and/or reports legally required to be filed
in connection with federal
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Medicare, TRICARE/CHAMPUS and applicable state Medicaid programs and
due on or before the Closing Date, and all required reports are true
and complete in all material respects; there are no claims, actions or
appeals pending (and neither the Company nor any of its Subsidiaries
nor any Practice has filed anything that would result in any claims,
actions or appeals other than in the ordinary course of business)
before any commission, board or agency with respect to any state or
federal Medicare, TRICARE/CHAMPUS or Medicaid claims filed by the
Company or any of its Subsidiaries or (since its affiliation with the
Company) any Practice on or before the date hereof, that, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect; no validation review or program integrity review related to the
Company or any of its Subsidiaries or any Practice has been conducted
with respect to the Company or any of its Subsidiaries or any Practice
by any commission, board or agency in connection with federal Medicare,
TRICARE/CHAMPUS or state Medicaid programs, and no such reviews are
scheduled, pending or, to the Company's knowledge, threatened against
or affecting the Company or any of its Subsidiaries; each of the
Company and its Subsidiaries and the Practices has timely filed all
material reports, data and other information required by any other
Governmental Authority with authority to regulate the Company or any of
its Subsidiaries or any Practice or its business in any manner; each of
the Company and its Subsidiaries and the Practices is in compliance in
all material respects with all rules, regulations and requirements of
all health Governmental Authorities, except where such noncompliance
could not reasonably be expected to have a Material Adverse Effect; and
the conduct of the business of each of the Company and its Subsidiaries
does not violate 42 U.S.C. Section 1320a-7, 1320a-7a, 1320a-7b (the
"Anti-Kickback Statute") Section 1395nn, 1396b; 31 U.S.C. Section 3729
et seq., the federal TRICARE/CHAMPUS statute or the regulations
promulgated pursuant to such statutes or related state or local
statutes or regulations (the "▇▇▇▇▇ Amendments"), including all
amendments thereto.
(ii) Without limiting anything contained in Section 2.13(i),
none of the Company or any of its Subsidiaries or any Practice, or any
of the Company's or any of its Subsidiaries' or any Practice's
executive officers or directors has:
(A) knowingly and willfully made or caused to be made a
false statement or representation of a material fact in any
application for any benefit or payment;
(B) knowingly and willfully made or caused to be made any
false statement or representation of a material fact for use
in determining rights to any benefit or payment under
applicable health care laws;
(C) presented or caused to be presented a claim for
reimbursement under TRICARE/CHAMPUS, Medicare, Medicaid, or
other state health care program that is (1) for an item or
service that the Person presenting or causing to be presented
knows or should know was not provided as claimed, or (2) for
an
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item or service and the Person presenting knows or should know
that the claim is false or fraudulent;
(D) failed to disclose knowledge of the occurrence of any
event affecting the initial or continuing right of a claimant
to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit or
payment; or
(E) knowingly and willfully made or caused to be made or
induced or sought to induce the making of any false statement
or representation (or omitted to state a fact required to be
stated therein or necessary to make the statements contained
therein not misleading) of a material fact with respect to (1)
the conditions or operations of a Practice in order that the
Practice may qualify for TRICARE/CHAMPUS, Medicare, Medicaid
or other state health care program certification, or (2)
information required to be proved under Section 1124A of the
Social Security Act (42 U.S.C Section 1320a-3).
(iii) Without limiting anything contained in Section 2.13(i),
there are no material Medicare, Medicaid or TRICARE/CHAMPUS recoupments
or recoupments of any other third-party payor being sought, threatened,
requested or claimed against the Company or any of its Subsidiaries.
(iv) Without limiting anything contained in Section 2.13(i),
the Company and its Subsidiaries and the Practices are in compliance in
all material respects with applicable federal and state laws and
regulations prohibiting the payment or solicitation of remuneration in
exchange for or to induce the referral of patients or the ordering of
items and services and regulating the ability of physicians to refer
patients to entities in which they have an ownership interest or
compensation arrangement.
(v) Without limiting anything contained in Section 2.13(i),
all billing practices by the Company and its Subsidiaries and the
Practices to all third party payors, including, but not limited to, the
federal Medicare program, TRICARE/CHAMPUS program, state Medicaid
programs and private insurance companies, have been true, fair and
correct in all material respects and in compliance in all material
respects with all federal and state applicable laws, regulations and
policies of all such third party payors.Neither the Company nor any of
its Subsidiaries nor any Practice has billed for or received any
payment or reimbursement in excess of amounts allowed by law.
(vi) Without limiting anything contained in Section 2.13(i),
the Company and its Subsidiaries and the Practices are not in material
violation of any state or federal law or regulation which prohibits
non-physician entities from practicing medicine or prohibits physicians
from splitting fees with non-physicians.
Notwithstanding anything to the contrary contained in this
Section 2.13, to the extent relating to any Practice or any Practice's
executive officers or directors, any representation or warranty made in
this Section 2.13 shall only be deemed breached if it
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could reasonably be expected that a Material Adverse Effect could
result from such breach.
Section 2.14 Employment Relations. Except as could not reasonably be
expected to have a Material Adverse Effect (a) the Transaction Parties are in
compliance with all Federal, state or other applicable laws, domestic or
foreign, respecting employment and employment practices, terms and conditions of
employment and wages and hours, and has not, and is not, engaged in any unfair
labor practice;
(b) no unfair labor practice complaint against any Transaction Party is
pending before the National Labor Relations Board;
(c) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving any Transaction Party;
(d) no claim in respect of the employment of any employee has been
asserted in writing or, to the knowledge of each of the Transaction Parties,
asserted orally or threatened, against the Transaction Parties;
(e) the Transaction Parties have not experienced any labor difficulty
in the past three years; and
(f) there has not been since December 31, 1998 any material adverse
change in the relations of the Transaction Parties with their employees.
Section 2.15 Employee Benefit Plans and Employees. (a) List of Plans.
Set forth in Schedule 2.15(a) attached hereto is an accurate and complete list
of all domestic and foreign (i) "employee benefit plans," within the meaning of
Section 3(3) of ERISA; (ii) bonus, stock option, stock purchase, restricted
stock, incentive, fringe benefit, "voluntary employees' beneficiary
associations" under Section 501(c)(9) of the Code, profit-sharing, pension or
retirement, deferred compensation, medical, life, disability, accident, salary
continuation, severance, accrued leave, vacation, sick pay, sick leave,
supplemental retirement and unemployment benefit plans, programs, arrangements,
commitments and/or practices (whether or not insured); and (iii) employment,
consulting, termination, severance, non-competition contracts or agreements; in
each case for active, retired or former employees or directors/whether or not
any such plans, programs, arrangements, commitments, contracts, agreements
and/or practices (referred to in (i), (ii) or (iii) above) are in writing or are
otherwise exempt from the provisions of ERISA; that have been established,
maintained or contributed to (or with respect to which an obligation to
contribute has been undertaken) or with respect to which any potential liability
is borne by the Company or any of its Subsidiaries (including, for this purpose
and for the purpose of all of the representations in this Section 2.15, any
predecessors to the Company or to any of its Subsidiaries and all employers
(whether or not incorporated) that are by reason of common control treated
together with the Company, and/or any of its Subsidiaries as a single employer
(i) within the meaning of Section 414 of the Code or (ii) as a result of the
Company or any Subsidiary being or having been a general partner of any such
employer, since September 2, 1974 ("Employee Benefit Plans"). Each Employee
Benefit Plan is in writing.
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(b) Status of Plans. Each Employee Benefit Plan (including any related
trust) complies in form with the requirements of all applicable laws, including,
without limitation, ERISA and the Code, and has at all times been maintained and
operated in substantial compliance with its terms and the requirements of all
applicable laws, including, without limitation, ERISA and the Code. No complete
or partial termination of any Employee Benefit Plan has occurred or is expected
to occur. Neither the Company nor any of its Subsidiaries has any commitment,
intention or understanding to create, modify or terminate any Employee Benefit
Plan. Except as required to maintain the tax-qualified status of any Employee
Benefit Plan intended to qualify under Section 401(a) of the Code, no condition
or circumstance exists that would prevent the amendment or termination of any
Employee Benefit Plan. No event has occurred and no condition or circumstance
has existed that could result in a material increase in the benefits under or
the expense of maintaining any Employee Benefit Plan from the level of benefits
or expense incurred for the most recent fiscal year ended thereof.
(c) No Pension Plans. No Employee Benefit Plan is a "defined benefit
plan" (within the meaning of Section 3(2) of ERISA) subject to Section 412 of
the Code or Section 302 or Title IV of ERISA. Neither the Company nor any of its
Subsidiaries has ever maintained or contributed to, or had any obligation to
contribute to (or borne any liability with respect to) any "multiple employer
plan" (within the meaning of the Code or ERISA) or any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA).
(d) Liabilities. No Employee Benefit Plan subject to Section 412 or
418B of the Code or Section 302 of ERISA has incurred any accumulated funding
deficiency within the meaning of Section 412 or 418B of the Code or Section 302
of ERISA, respectively, or has applied for or obtained a waiver from the IRS of
any minimum funding requirement or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA. Neither the Company nor
any of its Subsidiaries has incurred any liability (including, for this purpose
and for the purpose of all of the representations in this Section 2.15, any
indirect, contingent, or secondary liability) to the Pension Benefit Guaranty
Corporation ("PBGC") in connection with any Employee Benefit Plan covering any
active, retired or former employees or directors of the Company or any of its
Subsidiaries, including, without limitation, any liability under Section 4069 or
4212(c) of ERISA or any penalty imposed under Section 4071 of ERISA, or ceased
operations at any facility or withdrawn from any such Employee Benefit Plan in a
manner which could subject it to liability under Section 4062, 4063 or 4064 of
ERISA, or knows of any facts or circumstances that might give rise to any
liability of the Company or any of its Subsidiaries to the PBGC under Title IV
of ERISA.
Neither the Company nor any of its Subsidiaries has incurred any
withdrawal liability (including any contingent or secondary withdrawal
liability) within the meaning of Section 4201 or 4204 of ERISA to any Employee
Benefit Plan which is a "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) ("Multiemployer Plan"), and no event has occurred and no
condition or circumstance has existed, that presents a material risk of the
occurrence of any withdrawal from or the partition, termination, reorganization
or insolvency of any such Multiemployer Plan which could result in any liability
of the Company or any of its Subsidiaries to any such Multiemployer Plan.
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Neither the Company nor any of its Subsidiaries maintains any Employee
Benefit Plan which is a "group health plan" (as such term is defined in Section
607(1) of ERISA or Section 5000(b)(1) of the Code) that has not been
administered and operated in all respects in compliance with the applicable
requirements of Section 601 of ERISA and Section 4980B(f) of the Code and
neither the Company nor any of its Subsidiaries is subject to any material
liability, including, without limitation, additional contributions, fines,
taxes, penalties or loss of tax deduction as a result of such administration and
operation. Neither the Company nor any of its Subsidiaries maintains any
Employee Benefit Plan (whether qualified or nonqualified within the meaning of
Section 401(a) of the Code) providing for post-employment or retiree health,
life and/or other welfare benefits and having unfunded liabilities, and neither
the Company nor any of its Subsidiaries have any obligation to provide any such
benefits to any retired or former employees or active employees following such
employees' retirement or termination of service. Neither the Company nor any of
its Subsidiaries maintains any Employee Benefit Plan which is an "employee
welfare benefit plan" (as such term is defined in Section 3(1) of ERISA) that
has provided any "disqualified benefit" (as such term is defined in Section
4976(b) of the Code) with respect to which an excise tax could be imposed. No
Employee Benefit Plan which is a group health plan is a "multiple employer
welfare arrangement," within the meaning of Section 3(40) of ERISA. Each
Employee Benefit Plan that is intended to meet the requirements of Section 125
of the Code meets such requirements, and each program of benefits for which
employee contributions are provided pursuant to elections under any Employee
Benefit Plan meets the requirements of the Code applicable thereto. No Employee
Benefit Plan holds as an asset any interest in any annuity contract, guaranteed
investment contract or any other investment or insurance contract, policy or
instrument issued by an insurance company that, to the knowledge of each of the
Transaction Parties, is or may be the subject of bankruptcy, conservatorship,
insolvency, liquidation, rehabilitation or similar proceedings.
Neither the Company nor any of its Subsidiaries has any unfunded
liabilities pursuant to any Employee Benefit Plan that is not intended to be
qualified under Section 401(a) of the Code.
Neither the Company nor any of its Subsidiaries has incurred any
liability for any tax or excise tax arising under Chapter 43 of the Code, and no
event has occurred and no condition or circumstance has existed that could give
rise to any such liability.
Other than as described in Schedule 2.15(d) attached hereto, there are
no actions, suits or claims pending, or, to the best knowledge and belief of
each of the Transaction Parties, threatened, anticipated or expected to be
asserted against any Employee Benefit Plan or the assets of any such plan (other
than routine claims for benefits and appeals of denied routine claims), and no
civil or criminal action brought pursuant to the provisions of Title I, Subtitle
B, Part 5 of ERISA is pending, threatened, anticipated or expected to be
asserted against the Company or any of its Subsidiaries or any fiduciary of any
Employee Benefit Plan, in any case with respect to any Employee Benefit Plan. No
Employee Benefit Plan or any fiduciary thereof has been the direct or indirect
subject of an audit, investigation or examination by any governmental or
quasi-governmental agency.
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(e) Contributions. Full payment has been, or will be within the time
required by ERISA and the Code, made of all amounts which the Company or any of
its Subsidiaries is required, under applicable law or under any Employee Benefit
Plan or any agreement relating to any Employee Benefit Plan to which the Company
or any of its Subsidiaries is a party, to have paid as contributions or premiums
thereto as of the last day of the most recent fiscal year of such Employee
Benefit Plan ended prior to the date hereof. All such contributions and/or
premiums have been, or will be, fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any governmental entity, and
to the best knowledge and belief of each of the Transaction Parties, no event
has occurred and no condition or circumstance has existed that could give rise
to any such challenge or disallowance. The Company has made adequate provision
for reserves to meet contributions and premiums and any other liabilities that
have not been paid or satisfied because they are not yet due under the terms of
any Employee Benefit Plan, applicable law or related agreements. Benefits under
all Employee Benefit Plans are as represented and have not been increased
subsequent to the date as of which documents have been provided. No asset of the
Company or any of its Subsidiaries is subject to any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code, and no event has occurred and no
condition or circumstance has existed that could give rise to any such lien.
Neither the Company nor any of its Subsidiaries has been required to provide any
security under Section 307 of ERISA or Section 401(a)(29) or 412(f) of the Code,
and no event has occurred and no condition or circumstance has existed that
could give rise to any such requirement to provide any such security.
(f) Tax Qualification. Each Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code has been determined to be so
qualified by the IRS; and each trust established in connection with any Employee
Benefit Plan which is intended to be exempt from Federal income taxation under
Section 501(a) of the Code has been determined to be so exempt by the IRS (or
has been submitted to the IRS for a determination letter, or is within the
remedial amendment period for submitting an application for a determination
letter to the IRS, and is awaiting receipt of a response). Since the date of
each most recent determination referred to in this paragraph (f), no event has
occurred and no condition or circumstance has existed that resulted or is likely
to result in the revocation of any such determination or that could adversely
affect the qualified status of any such Employee Benefit Plan or the exempt
status of any such trust.
(g) Transactions. Neither the Company nor any of its Subsidiaries nor
any of their respective directors, officers, employees or, to the best knowledge
and belief of each of the Transaction Parties, other persons who participate in
the operation of any Employee Benefit Plan or related trust or funding vehicle,
has engaged in any transaction with respect to any Employee Benefit Plan or
breached any applicable fiduciary responsibilities or obligations under Title I
of ERISA that would subject any of them to a tax, penalty or liability for
prohibited transactions or breach of any obligations under ERISA or the Code or
would result in any claim being made under, by or on behalf of any such Employee
Benefit Plan by any party with standing to make such claim.
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(h) Triggering Events. The execution of this Agreement and the
consummation of the transactions contemplated hereby, do not constitute a
triggering event under any Employee Benefit Plan, policy, arrangement,
statement, commitment or agreement, whether or not legally enforceable, which
(either alone or upon the occurrence of any additional or subsequent event) will
or may result in any payment (whether of severance pay or otherwise), "parachute
payment" (as such term is defined in Section 280G of the Code), acceleration,
vesting or increase in benefits to any employee or former employee or director
of the Company or any of its Subsidiaries. No Employee Benefit Plan provides for
the payment of severance, termination, change in control or similar-type
payments or benefits.
(i) Documents. The Company has delivered or caused to be delivered to
the Purchaser and its counsel true and complete copies of all material documents
in connection with each Employee Benefit Plan, including, without limitation
(where applicable): (i) all Employee Benefit Plans as in effect on the date
hereof, together with all amendments thereto, including, in the case of any
Employee Benefit Plan not set forth in writing, a written description thereof;
(ii) all current summary plan descriptions, summaries of material modifications,
and material communications; (iii) all current trust agreements, declarations of
trust and other documents establishing other funding arrangements (and all
amendments thereto and the latest financial statements thereof); (iv) the most
recent IRS determination letter obtained with respect to each Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code or exempt under
Section 501(a) of the Code; (v) the annual report on Internal Revenue Service
Form 5500-series for each of the last three years for each Employee Benefit Plan
required to file such form; (vi) the most recently prepared financial statements
for each Employee Benefit Plan for which such statements are required; and (vii)
all contracts and agreements relating to each Employee Benefit Plan, including,
without limitation, service provider agreements, insurance contracts, annuity
contracts, investment management agreements, subscription agreements,
participation agreements, and recordkeeping agreements and collective bargaining
agreements.
(j) Employees. Except as provided in Schedule ___, no physician or
radiologist employed by a Medical Practice is a common law employee of the
Company or any of its Subsidiaries, and no employee of the Company or any of its
Subsidiaries is a common law employee of a Medical Practice.
Section 2.16 Environmental Laws and Regulations. Except as could not
reasonably be expected to have a Material Adverse Effect:
(a) No Transaction Party has generated, used, treated or stored any
Hazardous Materials and, to the knowledge of each of the Transaction
Parties, no Hazardous Materials have been generated, used, treated or
stored, or released or disposed by any Transaction Party in each case,
except in compliance with Environmental Laws.
(b) The Transaction Parties are in compliance in all material respects
with Environmental Laws and the terms and conditions of permits issued
under such Environmental Laws.
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(c) There are no pending or, to the knowledge of each of the
Transaction Parties, threatened Environmental Claims against any
Transaction Party or, to the knowledge of the Transaction Parties, any
Company Property.
(d) There are no facts, circumstances, conditions or occurrences
regarding any Company Property that could reasonably be anticipated (i) to
form the basis of an Environmental Claim against the Company, any of its
Subsidiaries or any Company Property or assets, or (ii) to cause such
Company Property or assets to be subject to any restrictions on its
ownership, occupancy, use or transferability under any Environmental Law.
Section 2.17 Interests in Clients, Suppliers, etc. No Transaction Party
and none of their respective officers, directors or shareholders that own more
than 10% of the outstanding Common Stock of the Borrower (and none of any of the
foregoing Person's Affiliates) possess, directly or indirectly, any financial
interest in, and is not a director, officer or shareholder or employee of, any
entity which is a client, supplier, customer, lessor, lessee or competitor or
potential competitor of any Transaction Party. Ownership of securities of a
company whose securities are registered under the Exchange Act of 1% or less of
any class of such securities shall not be deemed to be a financial interest for
purposes of this Section 2.17.
Section 2.18 Physician/Hospital Relationships. The transactions
contemplated hereby will not have a material adverse effect on the relationship
of the Company or any of its Subsidiaries with any physician, radiologist,
Practice or hospital to which the Company or any of its Subsidiaries provides
radiology services. Except as could not reasonably be expected to have a
Material Adverse Effect, since December 31, 1998, no physician, radiologist,
Practice or hospital to which the Company or any of its Subsidiaries provides
radiology services has indicated to any Transaction Party that such person or
entity may stop practicing with, outsourcing to, or otherwise using the services
of, any Transaction Party and neither the Company nor any of its Subsidiaries
has any reason to believe that any physician, radiologist, Practice or hospital
to which the Company or any of its Subsidiaries provides radiology services, has
any intention to discontinue its affiliation with any Transaction Party.
Section 2.19 No Misstatements or Omissions; Projections. No
representation or warranty by the Company contained in this Agreement and no
statement contained in any certificate, schedule, exhibit or other instrument
specified or referred to in this Agreement or any other Document whether
heretofore furnished to the Purchaser or hereafter furnished to the Purchaser
pursuant to this Agreement or any other Document contains as of the Closing Date
or will contain any untrue statement of a material fact or omits or will omit as
of the date of such document any material fact necessary to make the statements
contained therein in light of the circumstances under which such statement was
made, not misleading. The financial projections provided by the Company to the
Purchaser were prepared in good faith using the best information available to
management of the Company and represent management's good faith estimates of the
future performance of the Company for the periods referred to therein. The
Company is not aware of any material facts or circumstances which would render
such financial projections unreasonable or unobtainable; provided, however, it
being recognized by the
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Purchaser that actual results may differ from the projections and no
representation is made that the projections will in fact be attained.
Section 2.20 Broker's or Finder's Fees. Except for the Purchaser and
its Affiliates, no agent, broker, person or firm acting on behalf of any
Transaction Party is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any Person controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the transactions contemplated hereby.
Section 2.21 Investment Company Act. No Transaction Party is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
Section 2.22 Year 2000 Reprogramming. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of the Company's
or any of its Subsidiaries' (i) computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others and
utilized in the Company's business) and the testing of all such systems and
equipment, as so reprogrammed shall be completed no later than the fourth
quarter of 1999, except for additional corrections not material to the Company's
operations. The costs to the Company of such reprogramming and testing and of
the reasonably foreseeable consequences of year 2000 (including, without
limitation, reprogramming errors and the failure of others' systems or
equipment) could, individually or in the aggregate, not reasonably be expected
to have a Material Adverse Effect. Except for such of the reprogramming referred
to in the preceding sentence as may be necessary, the computer and management
information systems of the Company and its Subsidiaries are sufficient to permit
the Company and its Subsidiaries to conduct its business without such conduct
resulting in a Material Adverse Effect.
Section 2.23 Practice Management Agreements; Affiliations. As of the
Closing Date, the Company (i) owns 73 imaging centers and operates and manages
17 additional imaging centers, through joint venture relationships, in 7 states
and in the District of Columbia, (ii) provides management services to 10
radiology practices in 7 states and the District of Columbia, (iii) is
affiliated with approximately 260 radiologists, and (iv) the Practices provide
services to 58 hospitals. Schedule 2.23 correctly lists all such imaging
centers, management services, radiology affiliates and hospitals.
Section 2.24 Securities Law Compliance. Assuming that the
representations and warranties of the Purchaser are true and correct, the
offering, issuance, sale and delivery of the Convertible Notes to the Purchaser
is exempt from the registration requirements of the Securities Act. The Company
has complied with, or is exempt from, all registration requirements of all
applicable state securities laws in connection with the offering, issue, sale
and delivery of the Convertible Notes.
Section 2.25 Transactions with Affiliates. Except as set forth on
Schedule 2.25, none of the Transaction Parties have entered into any transaction
or series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of any Transaction Party.
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Section 2.26 Capital Stock Reserved. Sufficient shares of the Company's
Common Stock have been authorized and duly reserved for issuance upon conversion
of the Convertible Notes.
Section 2.27 No Conflict of Rights. Set forth on Schedule 2.27 is a
description of all registration rights held by any Person. The registration
rights granted to the Purchaser pursuant to Article VII do not conflict with any
other registration rights granted by the Company.
Section 2.28 SBIC Information. All information set forth in the SBA
Forms regarding the Company and its Affiliates is accurate and complete in all
material respects. Copies of such forms have been, on or prior to the date
hereof, completed and executed by the Company and delivered to the Purchaser.
Section 2.29 SBIC Eligibility. The Company and its Subsidiaries do not
engage in any activity which would render the Company ineligible to receive
financing assistance from a Small Business Investment Company as provided in 13
CFR 107.720.
Section 2.30 Company Awareness. The Company is aware that the Purchaser
is a Federal licensee under the SBIA.
Section 2.31 Use of Proceeds. All of the proceeds from the sale of the
Convertible Notes shall be used for general corporate purposes and not for any
purposes which would violate 13 CFR 107.720.
Section 2.32 Insurance. Set forth on Schedule 2.32 hereto is a true,
correct and complete summary of all insurance, including, without limitation,
all medical malpractice insurance, carried by each Transaction Party on and as
of the Closing Date, with the amounts insured set forth therein.
Section 2.33 Other Representations and Warranties. Except for breaches
thereof that could not reasonably be expected to have a Material Adverse Effect
(and except for representations and warranties that are stated as of a specific
date), each of the representations and warranties contained in the Credit
Agreement and Acquisition Agreement in each case as in effect on the Closing
Date are hereby confirmed and restated, each such representation and warranty,
together with all related definitions and ancillary provisions and any
information contained in any schedule to the Credit Agreement and Acquisition
Agreement in each case, as in effect on the date hereof relating thereto, being
hereby incorporated by reference into this Agreement (without duplication) as a
representation and warranty to the Purchaser as if specifically set forth in
this Section 2.33 (each such document referred to therein as having been
delivered to a "Lender" or "APPM", as the case may be, thereunder having been
delivered to the Purchaser hereunder).
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ARTICLE III
REPRESENTATIONS OF THE PURCHASER
Section 3.0 Representations of the Purchaser. In order to induce the
Company to enter into this Agreement and in order to induce the Company to issue
the Convertible Notes, the Purchaser represents, warrants and agrees as follows:
Section 3.1 Existence and Good Standing; Power and Authority. The
Purchaser is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. The Purchaser has the requisite
power and authority to execute and deliver this Agreement and perform its
obligations thereunder. This Agreement has been duly authorized and approved by
the Purchaser, and assuming due execution by the other parties thereto is a
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms, except to the extent that its enforceability may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws effecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding brought in equity or law).
Section 3.2 Restrictive Documents. The Purchaser is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation by any the Purchaser of the transactions contemplated
hereby or which would result in a violation of breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
under, or result in the creation of any Encumbrance on the Convertible Notes
under the terms of any agreement to which the Purchaser is a party.
Section 3.3 Purchase for Investment. (a) The Purchaser will acquire the
Convertible Notes for its own account for investment and not with a view toward
any resale or distribution thereof; provided, however, that the disposition of
the Purchaser's property shall at all times remain within the sole control of
the Purchaser.
(b) The Purchaser understands that the Convertible Notes have not been
registered under the Securities Act or under any state securities laws and may
not be sold or transferred unless they are subsequently registered under the
Securities Act and any applicable state or other securities laws, or unless
exemptions from registration under such laws are available and complied with;
(c) The Purchaser represents that it is an accredited investor, as
defined in Regulation D promulgated under the Securities Act and experienced in
investment matters, fully understands the transactions contemplated by this
Agreement, has the knowledge and experience in financial matters as to be
capable of evaluating the merits and risks of its investment and has had the
financial ability and resources to bear the economic risks of its investment;
(d) The Purchaser represents and warrants that the Company has given
the Purchaser the opportunity to ask questions and receive answers concerning
the Company, and the
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Company has made available to the Purchaser an opportunity to conduct such
investigations and reviews as it has requested to conduct and all of those
investigations and reviews have been completed;
(e) The Purchaser acknowledges that it has received no general
solicitation or general advertising, and that the Purchaser's representatives
have attended no seminar or meeting with respect to the Convertible Notes, nor
is it aware of any such solicitation or advertisement that may have been
received by others.
Section 3.4 Broker's or Finder's Fees. Except for the Purchaser and its
Affiliates, no agent, broker, person or firm acting on behalf of the Purchaser
is, or will be, entitled to any commission or broker's or finder's fees from any
Transaction Party, or from any Person controlling, controlled by or under common
control with any Transaction Party, in connection with the transactions
contemplated hereby.
ARTICLE IV
ISSUANCE OF NOTES; PAYMENT OF SUBSCRIPTION PRICE; CLOSING
Section 4.1 Issuance of Convertible Notes. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date, the Company agrees
to sell to the Purchaser, and the Purchaser agrees to purchase the Convertible
Notes. Delivery of the Convertible Notes to be purchased by the Purchaser
pursuant to this Agreement shall be made, pursuant to Section 4.4, on the
Closing Date by the Company to the Purchaser, against payment of the Purchase
Price.
Section 4.2 Purchase Price. Subject to the terms and conditions set
forth in this Agreement, in full consideration for the sale by the Company of
the Convertible Notes to the Purchaser, the Purchaser shall deliver to the
Company $20,000,000 (the "Purchase Price") on the Closing Date, by wire transfer
of immediately available funds to the accounts specified by the Company.
Section 4.3 Time and Place of Closing. The deliveries made on the
Closing Date (the "Closing") shall take place at 10:00 a.m. on the Closing Date,
at the offices of White & Case LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, or such other place and time as the Company and the Purchaser shall
mutually agree.
Section 4.4 Closing Deliveries. At the Closing the Company shall
deliver, or cause to be delivered, to the Purchaser the following: (i) the
Convertible Notes for the account of the Purchaser duly executed and delivered
by the Company to be issued and delivered at Closing, free and clear of all
Encumbrances, (ii) evidence or copies of any consents, approvals, orders,
qualifications, agreements or waivers required pursuant to Article V, (iii) all
certificates and other instruments and documents required by this Agreement to
be delivered by the Company to the Purchaser at or prior to the Closing and (iv)
such other documents and instruments reasonably requested by the Purchaser, as
may be necessary or appropriate to confirm or carry out the provisions of the
Documents.
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ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
Section 5.0 Conditions to the Purchaser's Obligations. The obligation
of the Purchaser to purchase the Convertible Notes contemplated by this
Agreement is conditioned upon satisfaction, at or prior to the Closing of the
following conditions:
Section 5.1 Opinions of Counsel. The Company shall have furnished the
Purchaser (i) with the opinion, dated the Closing Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
counsel to the Company, to the effect set forth in Exhibit A hereto and (ii)
with an opinion of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, special regulatory health care
counsel to the Company, in form and substance satisfactory to the Purchaser,
with respect to the Company's compliance with all applicable health care laws.
Section 5.2 Good Standing and Other Certificates. The Purchaser shall
have received (a) a copy of the articles of incorporation or other
organizational documents of the Company, including all amendments thereto,
certified by the Secretary of State of Delaware, (b) a certificate from the
Secretary of State or other appropriate official of the respective State or
country of incorporation or formation to the effect that the Company is in good
standing and listing all charter documents of such entity, (c) a certificate
from the Secretary of State or other appropriate official in each State or
country in which the Company is qualified to do business to the effect that such
entity is in good standing in each such State or country and (d) a copy of the
Bylaws of the Company and the resolutions of the Board of Directors of the
Company authorizing the transactions contemplated hereby, certified by the
Secretary of such Person as being true and correct and in effect on the Closing
Date.
Section 5.3 No Material Adverse Change. Since December 31, 1998, there
shall have been no material adverse change in the business, operations, assets,
nature of assets, accounting treatment, liabilities, condition (financial or
otherwise), results of operations or prospects of the Company and its
Subsidiaries taken as a whole and the Company shall have delivered to the
Purchaser a certificate of an executive officer of the Company, dated the
Closing Date, to such effect.
Section 5.4 Truth of Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement and
the other Documents, shall be true and correct in all material respects on and
as of the Closing Date other than such representations and warranties made as of
a specific date, which shall be true and correct in all material respects as of
such date, with the same effect as though such representations and warranties
had been made on and as of such date, and the Company shall have delivered to
the Purchaser a certificate of an executive officer of the Company dated as of
the Closing Date, to such effect.
Section 5.5 No Litigation Threatened. No action or proceedings shall
have been instituted or threatened before a court or other government body or by
any public authority to restrain or prohibit any of the transactions
contemplated by the Documents, and the Company shall have delivered to the
Purchaser a certificate of an executive officer of the Company dated as of the
Closing Date, to such effect.
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Section 5.6 Third Party Consents; Governmental Approvals. All consents,
approvals, authorizations, exemptions or waivers required in connection with the
consummation of the transactions contemplated by the Documents shall have been
received.
Section 5.7 Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be satisfactory in form and substance to the Purchaser and its
counsel, and the Purchaser shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
Section 5.8 SBA Forms. On the Closing Date, the Purchaser shall have
received from the Company, fully executed Small Business Administration Forms
480 and 652 and Small Business Administration Form 1031 with Parts A and B
thereof fully executed (the "SBA Forms").
Section 5.9 Due Diligence. The Purchaser shall have completed its
business, legal and accounting due diligence and shall be satisfied with the
results thereof.
Section 5.10 Credit Agreement. The Credit Agreement shall have been
amended and/or consent been obtained with respect thereto, in each case, to
permit the issuance of the Convertible Notes and the other transactions
contemplated by the Documents.
Section 5.11 Acquisition Agreement. On or prior to the Closing Date,
there shall have been delivered to the Purchaser a true and correct copy of the
Acquisition Agreement and all terms and provisions of the Acquisition Agreement
shall be in form and substance satisfactory to the Purchaser and shall not have
been amended without the consent of the Purchaser. The Acquisition, including
all of the terms and conditions thereof, shall have been duly approved by the
board of directors and (if required by applicable law) the shareholders of the
parties thereto, and the Acquisition Agreement shall have been duly executed and
delivered by the parties thereto and shall be in full force and effect. All
conditions precedent to the consummation of the Acquisition shall have been
satisfied and the parties to the Acquisition Agreement shall have irrevocably
committed in writing (a copy of such commitment having been delivered to the
Purchaser) to consummate the Acquisition immediately following the purchase of
the Convertible Notes.
Section 5.12 Performance of Obligations. The Company shall have
performed, in all material respects, its obligations under this Agreement and
all other agreements between the Company and the Purchaser.
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ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATIONS
Section 6.1 Conditions to the Company's Obligations. The obligation of
the Company to sell the Convertible Notes contemplated by this Agreement is
conditioned upon satisfaction, at or prior to the Closing, of the following
conditions:
Section 6.2 Truth of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
other than such representatives and warranties made as of a specific date, which
shall be true and correct in all material respects as of such date, with the
same effect as though such representations and warranties had been made on and
as of such date.
Section 6.3 Third Party Consents; Governmental Approvals. All consents,
approvals authorizations, exemptions or waivers, if any, required in connection
with the consummation of the transactions contemplated by this Agreement shall
have been received.
Section 6.4 Performance of Agreement. The Purchaser shall have
performed, in all material respects, its obligations under this Agreement.
Section 6.5 No Litigation Threatened. No action or proceeding shall be
instituted or threatened before a court or other government body or any public
authority to restrain or prohibit any of the transactions contemplated hereby.
ARTICLE VII
COVENANTS OF THE COMPANY
The Company shall comply with each of the following covenants, except
to the extent that the Purchaser, in its discretion, otherwise expressly
consents in writing:
Section 7.1 Reservation of Common Stock. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock, a number of shares of Common Stock
which may be deliverable upon the conversion of the Convertible Notes.
Section 7.2 Accountants. The Company shall at all times retain a
nationally recognized independent, accounting firm as its auditors reasonably
acceptable to the Purchaser.
Section 7.3 Financial Statements and Other Information. The Company
shall deliver to the Purchaser:
(i) within 30 days after the end of each fiscal month of the Company
other than the last such month of any fiscal quarter of the Company,
commencing July 31,
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1999, consolidated statements of earnings, shareholders' equity and cash
flows of the Company for such fiscal month and consolidated balance sheets
of the Company as of the end of such fiscal month. In each case,
comparisons to comparable budgeted figures and supplemental information
setting forth a calculation of Consolidated EBITDA for the period then
ended will be provided, and commencing July 31, 1999 comparable figures
will be provided for the corresponding fiscal month of the preceding fiscal
year, all prepared in accordance with GAAP, consistently applied, subject
to normal year-end adjustments, and certified by the chief financial
officer or controller of the Company;
(ii) within 45 days after the end of each of the first three quarterly
accounting periods in each fiscal year, commencing September 30, 1999,
consolidated statements of earnings, shareholders' equity and cash flows of
the Company for such fiscal quarter and consolidated balance sheets of the
Company as of the end of such fiscal quarter. In each case, comparisons to
comparable budgeted figures and supplemental information setting forth a
calculation of Consolidated EBITDA for the period then ended will be
provided, and commencing September 30, 1999 comparable figures will be
provided for the corresponding quarter of the preceding fiscal year, all
prepared in accordance with GAAP, consistently applied, subject to normal
year-end adjustments, and certified by the chief financial officer or
controller of the Company;
(iii) within 90 days after the end of each fiscal year, consolidating
and audited consolidated statements of earnings, shareholders' equity and
cash flows of the Company for such fiscal year, and consolidated and
consolidating balance sheets of the Company as of the end of such fiscal
year. In each case comparisons to comparable budgeted figures and
supplemental information setting forth a calculation of Consolidated EBITDA
for the period then ended will be provided, and commencing December 31,
1999, comparable figures will be provided for the preceding fiscal year,
all prepared in accordance with GAAP, consistently applied, and certified
by, (a) with respect to the consolidated portions of such statements (and
not with respect to the budget comparisons or the calculation of
Consolidated EBITDA), a nationally recognized independent accounting firm
selected by the Company and reasonably acceptable to the Purchaser (such
certification to be accompanied, or followed promptly after the Company's
receipt thereof, by a copy of such firm's annual management letter to the
Board of Directors of the Company) and (b) the financial statements shall
be accompanied by a statement from the chief financial officer of the
Company that the Company is not in default under any provision of the
Documents or any other agreement to which the Company is a party (a
"Default") and if any Default exists, specifying the nature and the period
of existence thereof; it being understood that such audit examination need
only extend to accounting matters;
(iv) promptly upon receipt thereof, any additional reports, management
letters or other detailed information concerning significant aspects of the
Company's operations or financial affairs prepared by the Company's
independent accountants and provided to the Company or its Board of
Directors (and not otherwise contained in other materials provided
hereunder);
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(v) as soon as available but in no event later than 45 days after the
end of each fiscal year, an annual budget of the Company and its
Subsidiaries for the following year (such annual budget to include, without
limitation, budgeted statements of earnings and sources and uses of cash
and balance sheets) and, in addition, to the extent delivered to any of the
Company's shareholders, any other significant budgets prepared by the
Company and any revisions of such annual or other budgets each prepared and
reasonable detail with appropriate presentation and discussion of the
principle assumptions upon which such budgets are based accompanied by a
certificate of the chief financial officer or controller of the Company to
the effect that, to the best of his or her knowledge, such budget is a
reasonable estimate for the period covered thereby, and within 45 days
after any monthly period in which there is a material adverse deviation
from the consolidated annual budget, an officer's certificate explaining
the deviation and what actions the Company has taken and proposes to take
with respect thereto;
(vi) promptly (but in any event within five business days) after the
discovery or receipt of notice of (a) any material default under any
agreement to which any Transaction Party is a party or (b) any other event
or circumstance affecting any Transaction Party (including, without
limitation, the filing of any material litigation against any Transaction
Party or the existence of any dispute with any Person which involves a
reasonable likelihood of such material litigation being commenced) which
event or circumstance could reasonably be expected to have a Material
Adverse Effect, an officer's certificate specifying the nature and period
of existence thereof and what actions the Company has taken and proposes to
take with respect thereto;
(vii) other than filings pursuant to Section 16 of the Exchange Act,
promptly (but in any event within three business days) after transmission
thereof, copies of all financial statements, proxy statements, reports and
any other information, documents or communications which the Company or its
material Subsidiaries sends to its shareholders and copies of all
registration statements and all regular, special or periodic reports which
it files, or any of its officers or directors file with respect to the
Company, with the Commission or with any securities exchange on which any
of its securities are then listed, and copies of all press releases and
other statements made available generally by the Company to the public
concerning material developments in the business of the Company and/or its
Subsidiaries;
(viii) (I) In the case of any proposed acquisition by the Company or
any of its Subsidiaries for which the aggregate consideration paid by the
Company and its Subsidiaries exceeds $15,000,000, the Purchaser shall
receive (1) at least fifteen days prior to the closing date of such
proposed acquisition, a reasonably detailed description of the acquired
target and the terms of such proposed acquisition in each case no less
detailed and comprehensive than such descriptions if any, delivered to the
agent under the Credit Agreement and (2) within 10 days following the
closing date of such proposed acquisition, copies of any management service
agreements, technical service agreements, acquisition or merger agreements,
professional employment and non-competition agreements and all other
agreements executed in connection therewith and (II) in the case
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of any acquisition consummated by the Company or any of its Subsidiaries
for which the aggregate consideration paid by the Company and its
Subsidiaries is less than $15,000,000, the Purchaser shall receive, within
10 days following the closing date of such acquisition, a reasonably
detailed description of the acquired target and the terms of such
acquisition in each case no less detailed and comprehensive than such
descriptions if any, delivered to the agent under the Credit Agreement; and
(ix) with reasonable promptness, such other information and financial
data concerning the Company or any Subsidiary of the Company that any
person entitled to receive information under this Section 7.3 may
reasonably request.
Section 7.4 Inspection. The Company covenants and agrees that it will
permit the Purchaser and its representatives (including without limitation, its
legal counsel, accountants and examiners from the Small Business Administration)
so long as the Purchaser holds any Convertible Notes and/or shares of Common
Stock, upon reasonable notice during normal business hours to inspect the
properties of the Transaction Parties and to examine and make extracts and
copies from the books and records of the Transaction Parties and discuss with
management and the Company's accountants the business and affairs of the
Transaction Parties.
Section 7.5 Regulatory Sale or Disposition. Anything herein to the
contrary notwithstanding, in the event that the Purchaser or any of its
Affiliates reasonably believes that if the Purchaser or such Affiliate, shall
continue to hold some or all of the Convertible Notes or upon conversion, Common
Stock, or any other notes or securities of the Company held by it, there is a
material risk that such ownership will result in the violation of any statute,
regulation or rule of any governmental authority (including, without limitation,
Regulation Y) shall promptly notify the Company thereof, use reasonable efforts
to avoid such violation, and consult with the Company regarding appropriate
remedial actions. Thereafter, to the extent permitted by applicable law, the
Purchaser or such Affiliate may sell, exchange or otherwise dispose of some or
all of such Convertible Notes, Common Stock or other securities of the Company,
as the case may be, in as prompt and orderly a manner as is reasonably necessary
to a third party or third parties acceptable to the Company acting in good
faith. In such event, the Company shall cooperate with the Purchaser or such
Affiliate in (i) disposing of such Convertible Notes, Common Stock or other
securities of the Company to a third party or third parties acceptable to the
Company acting in good faith or (ii) exchanging all or any portion of its voting
securities on a share-for-share basis for shares of a non-voting security of the
Company (such non-voting security being identical in all respects to such Common
Stock or other voting securities, except that they shall be non-voting and shall
be convertible or exercisable into voting securities on such conditions as are
requested by the Purchaser or such Affiliate in light of the regulatory
considerations then prevailing). Without limiting the foregoing, at the request
of the Purchaser or such Affiliate, the Company shall provide (and authorize the
Purchaser or such Affiliate, to provide) financial and other information
concerning the Company to any prospective purchaser (acceptable to the Company
acting in good faith) of the Convertible Notes, Common Stock or other securities
of the Company owned by the Purchaser or such Affiliate, and shall use best
reasonable efforts to amend this Agreement, the certificate of incorporation of
the Company, the bylaws of the Company, and any related agreements and
instruments and shall take any
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additional actions necessary or appropriate in order to effectuate and reflect
the foregoing. The Company shall not be required to provide any such information
unless the recipient thereof signs a confidentiality agreement satisfactory to
the Company acting in good faith.
Section 7.6 Transaction with Affiliates. Except as set forth on
Schedule 2.27, the Company will not, and will not permit any of its Subsidiaries
to, enter into any transaction or series of related transactions, whether or not
in the ordinary course of business, with any Affiliate of the Company, or any
Affiliate of any Subsidiary of the Company, other than transactions on terms and
conditions as favorable to the Company or such Subsidiary, as would be
obtainable in a comparable third-party transaction negotiated on an arm's length
basis with a person other than an Affiliate; provided, however, that nothing in
this Section 7.6 shall prohibit or otherwise restrict transactions (i) between
the Company and its wholly-owned Subsidiaries or (ii) relating to management
service agreements or technical services agreements entered into the ordinary
course of business.
Section 7.7 Business. The Company will not, and will not permit any of
its Subsidiaries to, engage (directly or indirectly) in any line of business
other than a Permitted Business.
Section 7.8 Registration Rights. The Company shall not, after the date
hereof, grant any registration rights which conflict with or impair the
registration rights granted pursuant to this Agreement and shall not, without
the prior written consent of the holders of a majority of the Registrable
Securities then outstanding, amend, modify or waive any provision contained in
any other registration rights agreement to which the Company is a party, which
would adversely affect the Purchaser. The covenants in this Section 7.8 shall
automatically terminate when no Registrable Securities are outstanding.
Section 7.9 Limitation on Dividend/Indebtedness Restrictions. The
Company will not, and will not permit any of its Subsidiaries (other than Joint
Ventures) to directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of the
Company or any such Subsidiary (i) to pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the Company or any Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of applicable law or
documents pertaining to borrowed money incurred by the Company or (ii) to
exchange any debt security of the Company for an equity security of the Company.
Section 7.10 SBIC Information. In addition, the Company covenants and
agrees to provide to the Purchaser any other information which the Purchaser
reasonably requests, including, without limitation, at least annually,
sufficient financial and other information necessary to allow the Purchaser to
evaluate the financial condition of the Company for the purpose of valuing the
Purchaser's interest in the Company, to determine the continued eligibility of
the Company under the Small Business Investment Act of 1958, as amended (the
"SBIA") and the regulations thereunder, including 13 CFR 121.301, and to verify
the use of the proceeds received by the Company from the purchase of the
Convertible Notes. All such
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information shall be certified by the President, Chief Executive Officer,
Treasurer or Chief Financial Officer of the Company. Promptly after the end of
each fiscal year of the Company (and in any event prior to February 28 of each
year), at the request of the Purchaser, the Company shall provide to the
Purchaser a written assessment in form and substance satisfactory to the
Purchaser of the economic impact, if any, of the financing assistance provided
to the Company by the Purchaser, specifying the full time equivalent jobs
created or retained, and the impact of the financing on the revenues and profits
of the business and on taxes paid by the business and its employees. Upon the
request of the Purchaser the Company will also provide all information requested
by the Purchaser in order for it prepare and file SBA Form 468 and any other
information requested or required by any governmental agency asserting
jurisdiction over the Purchaser.
Section 7.11 Use of Proceeds. The Company agrees that it will use the
proceeds from the issuance of the Convertible Notes for ongoing working capital,
future acquisitions, to repay indebtedness and, in any event, not for any
purpose that would be a violation of 13 CFR 107.720.
Section 7.12 Change of Activity. For a period of one year following the
date hereof, the Company will not change its business activity if such change
would render the Company ineligible to receive financial assistance from a Small
Business Investment Company under the SBIA and the regulations thereunder.
Section 7.13 Non-Discrimination. The Company will at all times comply
with the nondiscrimination requirements of 13 CFR, Parts 112, 113 and 117.
Section 7.14 Asset Sales; Investments. (a) The Company will not, and
will not permit any of its Subsidiaries to sell, convey, transfer or dispose of
assets, property or equity securities of any of the Company's Subsidiaries (each
such transaction or transactions an "Asset Sale") unless the gross cash proceeds
(including any cash received or receivable by way of deferred payment) received
or receivable from all such Asset Sales occurring during any fiscal year does
not exceed $7,500,000 in the aggregate excluding from such $7,500,000 limit
sales permitted by Sections 6.8(a), (b), (c), (d), and (f) of the Credit
Agreement (as in effect on the date hereof and whether or not the Credit
Agreement is in effect).
(b) The Company will not, and will not permit any of its Subsidiaries
to, purchase or acquire stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person, or buy a
substantial portion of the assets of, or any business or product line of, any
other Person, if (i) any such purchase or acquisition shall exceed $25,000,000
and (ii) after giving effect to all other such purchases or acquisitions during
any fiscal year of the Company, exceeds $50,000,000 excluding from such limits
(1) any purchases or acquisitions for less than $3,500,000, (2) purchases of
cash equivalents, (3) investments, loans and advances of money in or to
wholly-owned Subsidiaries of the Company, (4) loans to employees in the ordinary
course of business, (5) the Acquisition and any purchase, acquisition,
contribution or investment made prior to the date hereof, and (6) investments,
loans and advances in or to joint ventures by the Company and its Subsidiaries
to the extent the aggregate amount of such investments in joint ventures, during
any fiscal year of the Company, does not exceed
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$20,000,000 (it being understood and agreed that if the aggregate amount of
investments in joint ventures exceeds $20,000,000 in any fiscal year of the
Company, such excess shall be included in the calculation of the $50,000,000
limitation set forth above).
Section 7.15 Consolidation, Merger, Sale of Assets, etc. The Company
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or substantially all of the property and
assets of the Company and its Subsidiaries taken as a whole. Notwithstanding the
foregoing (a) any Subsidiary may merge or consolidate with the Company or any
other wholly-owned Subsidiary of the Company, (b) any Subsidiary may transfer
all or substantially all of its assets to the Company or any other wholly-owned
Subsidiary of the Company, (c) the Company may liquidate or dissolve inactive
Subsidiaries having insignificant assets, (d) a subsidiary that is a Joint
Venture may merge or consolidate with another subsidiary that is a Joint Venture
if (1) the terms of such transaction are fair and in the best interests of the
Company, (2) at the time of the transaction, neither Joint Venture is insolvent
(i.e., has liabilities in excess of its assets, fairly valued) and (3) no equity
holder of any of the merging or consolidating Joint Ventures other than the
Company or a Subsidiary of the Company will have, after giving effect to such
merger, a disproportionately large equity interest of the surviving Joint
Venture and (e) Subsidiaries of the Company may consummate transactions
permitted by Section 7.14 so long as in no event shall the Company and its
Subsidiaries transfer in one or more transactions (whether or not related) all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole.
Section 7.16 Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, incur Indebtedness unless after giving effect to
such incurrence, the Interest Coverage Ratio does not exceed 2.25 to 1.0 on a
Pro Forma Basis; provided, however, that the Company and its Subsidiaries may
incur Indebtedness under the Credit Agreement so long as the principal amount of
such Indebtedness does not exceed $180,000,000 (less any repayments of loans
thereunder which may not be reborrowed and less any permanent commitment
reductions thereof).
Section 7.17 Leverage Ratio. At the end of each fiscal quarter, the
Leverage Ratio shall not exceed 4.50 to 1.0 on a Pro Forma Basis.
Section 7.18 Dividends. The Company will not, and will not permit any
of its Subsidiaries to declare or pay or set aside for payment (whether in cash,
property or obligations of the Company or any of its Subsidiaries) any dividends
on, or other distributions in respect of, or any other payment of any kind with
respect to, or purchase, redeem or otherwise acquire, any capital stock or other
securities of the Company or any of its Subsidiaries except that (a)
Subsidiaries of the Company may make such payments to the Company or a
wholly-owned Subsidiary of the Company, (b) the Company may purchase, redeem, or
acquire its capital stock from employees and board members and their estates or
members of their immediate families upon the resignation, termination or death
of such employee or board member, provided that the aggregate amount of all such
purchases over the term of this Agreement does not exceed $2,000,000 and that at
the time of such transaction there shall exist no Default, (c) Joint Ventures
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may pay dividends on their equity securities so long as such dividends are paid
on a pro rata basis to their respective equity holders and (d) the Company may
repurchase shares of its Common Stock for an amount not to exceed 10% of the
consolidated net income of the Company and its Subsidiaries less extraordinary
non-cash losses associated with the write-off of goodwill to the extent that
such losses were not already included in determining consolidated net income,
that, on a cumulative basis, has accrued since the beginning of the 1999 fiscal
year so long as at the time of such transaction, there shall exist no Default;
provided, however, notwithstanding the foregoing, in no event may the Company or
any of its Subsidiaries purchase, redeem or acquire (or make any announcement
with respect to any of the foregoing) any shares of its capital stock during the
120-day period ending on any of the second, third or fourth anniversary of the
Closing Date (other than stock transferred to the Company as consideration (i)
upon the termination of a service agreement between a Practice and the Company
or (ii) for a Practice's contractual indemnification obligations to the
Company).
Section 7.19 Amendment of Charter. The Company will not amend the
certificate of incorporation of the Company in a manner which could adversely
affects the rights of Purchaser or any of its Affiliates as a holder of
Convertible Notes or Common Stock. By way of example, and not by way of
limitation, the following amendments to the Company's certificate of
incorporation shall not be deemed to adversely affect the rights of Purchaser or
any of its Affiliates as a holder of Convertible Notes or Common Stock: the
filing of certificates of designation to specify the terms of preferred stock,
the institution of a classified board of directors, the denial of action by
written consent of shareholders, a "fair price" amendment whereby certain
business combinations and transactions with significant stockholders (i.e., to
be defined as stockholders who "beneficially own" a specified percentage of
stock of the Company in excess of the percentage "beneficially owned" by the
Purchaser at the time the amendment is adopted) must be approved by
disinterested directors or satisfy certain designated price and form of
consideration requirements, provisions stating that members of the board of
directors may only be removed for cause, provisions allowing only then existing
directors to fix the size of the board of directors and fill vacancies on the
board of directors, provisions allowing only the board of directors to adopt,
amend or repeal bylaws, provisions requiring advance notice of director
nominations and shareholder proposals and provisions stating that shareholders
cannot call a special meeting of shareholders.
Section 7.20 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Compliance. The Company agrees that in
the event the conversion of the Convertible Notes requires the prior compliance
with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), from and after the date on which the Purchaser notifies the Company
that compliance is so required under the HSR Act (whether or not the Purchaser
has a then current intention to convert the Convertible Notes), the Company
shall use its best efforts, including, without limitation, by making all
necessary filings under the HSR Act, responding to all requests for additional
information and otherwise taking all other necessary actions, as shall cause the
termination of all waiting periods under the HSR Act, in respect of the
conversion of the Convertible Notes. The Company shall pay all fees and expenses
of the Purchaser incurred in compliance with this Section 7.20, including its
legal fees and expenses and all filing fees required by the HSR Act. The Company
shall provide the Purchaser with all such information in respect of the Company
as the Purchaser may request to
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enable the Purchaser to determine whether the issuance of Common Stock may
require compliance with the HSR Act.
Section 7.21 Board of Directors. (a) The Company shall take all
necessary or desirable action to include one director designated by the
Purchaser and acceptable to the Company (and in all events one of the managing
directors of the Purchaser shall be acceptable to the Company) on the Company's
Board of Directors.
(b) The removal of any director designated by the Purchaser may be only
at the written request of the Purchaser, except if such director is removed or
is not elected as a director of the Company by the requisite action of the
Company's shareholders; provided however, that if such director is so removed or
not elected, the Company shall still comply with Section 7.21(a).
(c) In addition, in the event the Purchaser does not elect to designate
a member of the Company's Board of Directors, the Purchaser shall have the right
to appoint a non-voting advisor acceptable to the Company (and in all events one
of the managing directors of the Purchaser shall be acceptable to the Company)
(the "Advisor") to the Company's Board of Directors to attend each meeting of
the Board of Directors of the Company including by telephone at the request of
the Purchaser. The Company shall give the Advisor oral or written notice of each
meeting of the Board of Directors (whether annual or special) at the same time
and in the same manner as oral or written notice is given to the members of the
Board of Directors. The Company shall provide the Advisor with all written
materials and other information (including copies of meeting minutes) given to
the members of the Board of Directors in connection with any such meeting at the
same time as such information is delivered to the members of the Board of
Directors and, if the Advisor does not attend (or, in the case of a telephonic
meeting, does not listen by telephone to) a meeting of the Board of Directors,
the Advisor will be entitled, upon request, to receive a written or oral summary
of the meeting from the Secretary of the Company. If the Company proposes to
take any action by written consent of the Board of Directors in lieu of a
meeting of the Board of Directors, then the Company shall give prior written
notice of such action to the Advisor.
(d) The Company shall pay the out-of-pocket expenses (in accordance
with the Company's policy regarding repayment of director expenses) of any
Advisor or Board Member incurred in connection with the attendance at any such
meeting.
Section 7.22 Grant of Preemptive Rights. (a) In the event (and on each
occasion) that the Company or any of its Subsidiaries, shall decide to undertake
an issuance of New Securities (except New Securities issued by a Subsidiary of
the Company to the Company or a wholly-owned Subsidiary of the Company or a
Subsidiary that is a Joint Venture) at a price per share lower than the then
effective Conversion Price, the Company will give to the Purchaser, written
notice (a "Preemptive Notice") of the Company's decision, describing the amount,
type and terms of such New Securities, the purchase price to be paid by the
purchasers of such New Securities and the general terms upon which the New
Securities will be issued (including, without limitation, the expected timing of
such issuance which will in no event be more than one
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hundred twenty (120) days after the date upon which such Preemptive Notice is
given or less than twenty (20) Business Days after the date upon which such
Preemptive Notice is given). The Purchaser shall have twenty (20) Business Days
from the date on which it receives the Preemptive Notice to agree to purchase
its Pro Rata Amount of such New Securities for the Preemptive Price and upon the
general terms specified in the Preemptive Notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased by
any such Person. If, in such written notice, the Purchaser specifies an amount
of New Securities equal to less than the total number of New Securities it is
entitled to purchase pursuant to such issuance, the Company may undertake to
sell any unused portion of such new Securities to any Person on terms no more
favorable to such Person than those contained in the Preemptive Notice so long
as such sale is consummated within one hundred twenty (120) days after the date
upon which such Preemptive Notice was originally given. If, in connection with
such a proposed issuance of New Securities, the Purchaser shall for any reason
fail or refuse to give such written notice to the Company within such 20-
Business Day period or shall elect to purchase its Pro Rata Amount of such New
Securities but shall fail to consummate the purchase of such New Securities on
the terms set forth in the Preemptive Notice within forty-five (45) days after
the date upon which the Preemptive Notice is given, the Purchaser shall, for all
purposes of this Section 7.22, be deemed to have refused (in that particular
instance only) to purchase any of such New Securities and to have waived (in
that particular instance only) all of its rights under this Section 7.22 to
purchase any of such New Securities and the Company may issue such New
Securities without further compliance with this Section 7.22 for a period of one
hundred twenty (120) days beginning immediately after such 20-Business Day
period. Notwithstanding the foregoing, in the case of New Securities that are
convertible into, or exchangeable or exercisable for, Common Stock, the
Purchaser shall have the preemptive rights set forth in this Section 7.22 when
such New Securities that are convertible into, or exchangeable or exercisable
for, Common Stock are issued and not when shares of Common Stock are issued upon
conversion, exchange or exercise of such New Securities.
(b) In the event the Purchaser has the right to acquire any voting New
Securities under this Section 7.22, but is prohibited from exercising such right
under applicable law, the Company, at the Purchaser's request, shall offer to
sell to the Purchaser, New Securities that do not have voting rights but
otherwise have the same terms as such voting New Securities and which shall be
convertible into voting New Securities on terms reasonably requested by the
Purchaser.
Section 7.23 Reservation of Common Stock; Valid Issuance. (a) The
Company shall at all times reserve for issuance free from preemptive rights and
other rights to preempt or subscribe, a number of shares of Common Stock at
least equal to the number of shares of Common Stock issuable upon conversion or
exercise of the Convertible Notes (including, without limitation, accrued
interest convertible into Common Stock) including anti-dilution adjustments then
in effect.
(b) The shares of Common Stock issuable upon conversion or exercise of
the Convertible Notes, when issued in accordance with their respective terms,
will be validly issued,
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fully paid and nonassessable, free of all preemptive or similar rights, and
shall be delivered free and clear of all Encumbrances.
Section 7.24 Insurance. The Company will, and will cause each of its
Subsidiaries to, (i) keep all material property useful and necessary in its
business in good working order and condition (ordinary wear and tear excepted),
(ii) maintain with financially sound and reputable insurance companies insurance
on all its property in at least such amounts and against at least such risks as
are described on Schedule 2.6, and (iii) furnish to the Purchaser, upon written
request, full information as to the insurance carried.
Section 7.25 Questar Acquisition. Immediately following the purchase of
the Convertible Notes, the Company shall cause the Acquisition to be
consummated.
Section 7.26 Participation in Future Financing. Purchaser or any
Affiliate of Purchaser designated by the Purchaser shall have the opportunity to
participate in any future private issuance of subordinated debt or any private
equity issuances of the Company or any of its Subsidiaries (other than Joint
Ventures), on terms and conditions to be agreed upon by such parties.
Section 7.27 Limitation On Other Subordinated Debt. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
incur any Indebtedness that is (i) subordinate in right of payment to any other
Indebtedness of the Company or any of its Subsidiaries, and (ii) senior in right
of payment to the Convertible Notes. Neither the Company nor any of its
Subsidiaries will, directly or indirectly, incur any Indebtedness which is pari
passu in right of payment to the Convertible Notes unless such Indebtedness has
no principal payment dates prior to the maturity date of the Convertible Notes.
Notwithstanding anything to the contrary contained in this Section 7.26, the
Company and its Subsidiaries may issue Indebtedness for borrowed money
(including, without limitation, convertible Indebtedness) pursuant to a public
offering or an offering effected pursuant to Rule 144(A).
Section 7.28 Company's Performance of Covenants. Notwithstanding
anything to the contrary contained herein, in no event shall (i) the Company be
required to comply with the covenants set forth in this Section 7 other than
Sections 7.1, 7.4, 7.5, 7.8, 7.10, 7.12 and 7.13, if the Purchaser owns no
Convertible Notes and owns less than a number of shares of Common Stock less
than one-third of the number of Full Conversion Shares (as such number may be
adjusted for stock splits, stock dividends, stock combinations or similar
events), and (ii) the Company be required to comply with the covenants contained
in Section 7 other than Sections 7.1, 7.3, 7.4, 7.5, 7.7, 7.8, 7.10, 7.12, 7.13,
7.14(b), 7.19, 7.21, 7.22, 7.23 and 7.26, if the Purchaser owns no Convertible
Notes and owns more than a number of shares of Common Stock greater than or
equal to one-third of the number of Full Conversion Shares (as such number of
shares may be adjusted for stock splits, stock dividends, stock combinations or
similar events). Notwithstanding anything to the contrary contained in this
Section 7.28, the Company shall be required to comply with Section 7.15 at any
time any principal amount of the Convertible Notes remains outstanding.
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Section 7.29 Employee Benefits and Tax Information. The Company shall
request clarification of the initial determination letter issued by the IRS as
to the Company's 401(k) and Profit Sharing Plan with respect to the issues
raised by the Company's determination letter request and shall furnish the
Purchaser with a revised IRS determination letter which addresses these issues.
ARTICLE VIII
REGISTRATION RIGHTS
Section 8.1 Shelf Registration. (a) Obligation to File and Maintain.
Subject to the limitations provided herein, if at any time the Company shall be
requested in writing (which writing shall specify the Registrable Securities to
be sold and the intended method of disposition) by the Purchaser or any
subsequent holders of Convertible Notes or Registrable Securities constituting
51% or more of the Registrable Securities then outstanding (treating the
Registrable Securities issuable upon conversion of the Convertible Notes as
outstanding for this purpose), to effect the registration under the Securities
Act of the Registrable Securities, the Company shall, within 10 business days
after the Company receives such written request give written notice of such
requested registration to all other holders of Convertible Notes and Registrable
Securities. The Company shall within sixty (60) days of such request, file a
registration statement covering all of the number of Registrable Securities that
the Company has been so requested to register by the holder(s) sending the
initial request for registration to the Company and all other Registrable
Securities that the Company has been requested to register by the other holders
thereof by written request given to the Company within thirty (30) days after
the giving of such written notice by the Company. The registration statement
shall include a number of shares of Common Stock issuable upon the conversion of
the Convertible Notes issued hereunder or if all the Convertible Notes have been
already converted, such number of shares of Common Stock issued upon such
conversion on a continuous or delayed basis in the future (the "Shelf
Registration"). The Company shall not be required to effect more than three (3)
Shelf Registration statements pursuant to this Section 8.1(a) if, with respect
to any such registration, the following conditions are met: (i) such
registration becomes effective and remains effective until such time as all
securities registered thereunder have been sold and (ii) the Purchaser does not
withdraw its request for registration in its entirety prior to the time such
Shelf Registration becomes effective; provided, however, the Company shall file
any additional Shelf Registration Statements from time to time to include a
number of shares of Common Stock sufficient to reflect any anti-dilution
adjustments and accrual of interest paid as PIK Securities (as defined in the
Convertible Notes). The Common Stock registered under the Shelf Registration
shall be reserved for the Common Stock issued or issuable, as the case may be,
upon the conversion of the Convertible Notes. The Shelf Registration shall be on
an appropriate form and such Registration and any form of prospectus included
therein or prospectus supplement relating thereto shall reflect such plan of
distribution or method of sale as the holders of Registrable Securities may from
time to time notify the Company, including (I) the sale of some or all of the
Registrable Securities in a public offering, or (II) if requested by the any
holder of Registrable Securities, subject to receipt by the Company of such
information (including information relating to purchasers) as the
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Company reasonably may require, (i) a transaction constituting an offering
outside the United States which is exempt from the registration requirements of
the Securities Act in which any holder of Registrable Securities undertakes to
effect registration after the completion of such offering in order to permit
such shares to be freely tradable in the United States, (ii) a transaction
constituting a private placement under Section 4(2) of the Securities Act in
connection with which any holder of Registrable Securities undertakes to effect
a registration after the conclusion of such placement to permit such shares to
be freely tradable by the purchasers thereof, or (iii) a transaction under Rule
144A of the Securities Act in connection with which any holder of Registrable
Securities undertakes to effect a registration after the conclusion of such
transaction to permit such shares to be freely tradable by the purchasers
thereof.
(b) Time for Filing and Effectiveness. The Company shall file with the
Commission the Shelf Registration with respect to all Registrable Securities in
accordance with Section 8.1(a) and shall use its reasonable best efforts to
cause such Shelf Registration to become effective as promptly as practicable
after filing thereon, but in no event later than the date which is 90 days after
the date of request therefor. The Company shall keep the Shelf Registration
filed pursuant to this Section 8.1 continuously effective until there are no
outstanding Registrable Securities. During the period during which the Shelf
Registration is effective, the Company shall supplement or make amendments to
the Shelf Registration, if required by the Securities Act and the policies,
rules and regulations of the Commission as announced from time to time, or if
requested by the Purchaser or an underwriter of Registrable Securities,
including to reflect any specific plan of distribution or method of sale, and
shall use its best efforts to have such supplements and amendments declared
effective, if required, as soon as practicable after filing.
(c) Black-Out Periods of the Purchaser. Notwithstanding anything herein
to the contrary, (i) the Company shall have the right from time to time to
require any holder of Registrable Securities not to sell Registrable Securities
pursuant to any Shelf Registration or to suspend the effectiveness thereof
during the period starting with the date 30 days prior to the Company's good
faith estimate, as certified in writing by an executive officer of the Company
to the holders of Registrable Securities, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement relating to an
underwritten public offering of equity securities of the Company for the account
of the Company, and ending on the date 120 days following the delivery of such
estimate and (ii) the Company shall be entitled to require the holders of
Registrable Securities not to sell Registrable Securities pursuant to any Shelf
Registration or to suspend the effectiveness thereof (but not for a period
exceeding 90 days) if the Company determines that such offering or continued
effectiveness would interfere with any material financing, acquisition,
disposition, corporate reorganization or other material transaction involving
the Company or any of its subsidiaries because, based on the opinion of legal
counsel, public disclosure thereof would be required prior to the time such
disclosure might otherwise be required. In any event, the Company shall not be
entitled to exercise the rights granted to the Company pursuant to this Section
8.1(c) more than twice in any two-year period.
(d) Coordination of Registrations. In the event that the Company
determines to sell any equity securities of the Company or any securities
convertible into equity securities of the Company under any registration
statement or prospectus supplement, during the period
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starting with the date 30 days prior to the proposed date of filing of a
preliminary prospectus supplement relating to a Shelf Registration filed
pursuant to Section 8.1(a), pertaining to an underwritten offering of
Registrable Securities, and ending on the date 90 days following the date of
filing of the final prospectus supplement, but in no event on a date later than
90 days following the date of filing of the preliminary prospectus supplement,
then the Company and such holder of Registrable Securities shall cooperate in
selling the securities to be sold by such holder and the securities to be sold
by the Company in one offering; provided, however, in the event the managing
underwriter of such underwritten offering shall advise the Company and such
holder in writing that, in such underwriter's opinion, the amount of securities
requested to be sold would adversely affect the offering and sale (including
price) of such securities, then the Company shall be entitled to reduce the
amount of securities requested to be sold by such holders of Registrable
Securities in such offering; provided, however, that the Company shall not be
entitled to reduce the total amount of securities requested to be sold by such
holders of Registrable Securities if (i) the proportion that the amount of
securities sold in the offering by such holders bears to the amount of
securities sold in the offering by the Company, would be less than (ii) the
proportion that the total amount of securities originally requested to be sold
by such holders of Registrable Securities bears to the amount of securities
originally specified to be sold by the Company in such offering; provided,
further, in the event that the holder is unable to sell at least 50% of the
Registrable Securities desired to be sold by such holder in such offering, then
such registration shall not count as one of the three (3) registrations
permitted to be demanded by the Purchaser pursuant to Section 8.1(a).
(e) Priority on Shelf Registrations. If the managing underwriter for
any underwritten offering contemplated by this Section 8.1 shall advise the
Company in writing that, in such underwriter's opinion, the amount of securities
requested to be included in such Shelf Registration would adversely affect the
offering and sale (including pricing) of such securities then the Company will
include in such Shelf Registration, the number of securities that the Company is
so advised can be sold in such offering, in the following priority:
(i) first, all Registrable Securities requested to be sold pro rata
among such holders on the basis of the number of Registrable Securities
requested to be sold by such holders pursuant to this Section 8.1;
(ii) second, securities proposed to be sold by the Company for its own
account; and
(iii) third, any other securities requested to be included in such
Registration in such manner as the Company may determine.
(f) Notice. The Company shall give each holder of Registrable
Securities prompt notice in the event that the Company has suspended sales of
Registrable Securities under Section 8.1(b).
(g) Selection of Underwriters. Any and all underwriters or other agents
involved in any sale of Registrable Securities pursuant to a Shelf Registration
shall include one
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or more underwriting firms of nationally recognized standing selected by the
Company and reasonably satisfactory to the Purchaser.
(h) Expenses. All Registration Expenses incurred in connection with any
Shelf Registration shall be borne by the Company. The Company shall, in any
event, bear its internal costs (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company.
Section 8.2 Incidental Registrations. (a) Notification and Inclusion.
If the Company proposes to register for its own account or the account of any
other securityholder, any equity securities of the Company or any securities
convertible into equity securities of the Company under the Securities Act
(other than pursuant to a registration on Form S-4 or Form S-8 or any similar
form or pursuant to a Shelf Registration under this Agreement), the Company
shall, at each such time after the date hereof, promptly give notice to each
holder of Registrable Securities (the "Company Notice") of such registration and
of such holder's rights under this Section 8.2(a). Upon the written request of
any holder of Registrable Securities given within 20 days after receipt of a
Company Notice by such holder of Registrable Securities, the Company shall
include in such proposed registration such Registrable Securities as such
holders shall request and shall use its best efforts to cause a registration
statement covering all of the Registrable Securities that such holders have
requested to be registered to become effective under the Securities Act (an
"Incidental Registration"). The Company shall not be required to include in such
Incidental Registration any Registrable Securities held by a holder that does
not submit a written request within such 20 day period.
(b) Priority on Incidental Registration. If an Incidental Registration
pursuant to this Section 8.2 involves an underwritten offering, the managing
underwriter of such underwritten offering shall advise the Company in writing
that, in such underwriter's opinion, the amount of securities requested to be
included in such Incidental Registration, would adversely affect the offering
and sale (including price) of such securities, then the Company will include in
such Incidental Registration, the number of securities that the Company is so
advised can be sold in such offering, in the following priority:
(i) first, all the securities of the Company which the Company proposes
to sell for its own account;
(ii) second, if the Incidental Registration is being filed because
securityholder(s) of the Company have exercised their rights to demand the
Company to file a registration statement that covers their securities, then
all such securities demanded to be sold by such holder(s) pro rata among
such holders on the basis of the number of securities demanded to be sold
by such holders; and
(iii) third, all remaining securities requested to be sold pro rata
among selling shareholders according to the total amount of securities
entitled to be included therein owned by each selling shareholder or in
such other proportions as shall mutually be agreed to by such selling
shareholders. For purposes of the preceding sentence
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concerning apportionment of any selling shareholder which is a holder of
Registrable Securities and which is a partnership or corporation, the
partners, retired partners and shareholders of such holder, or the estates
and family members or any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons shall be deemed to be a
single "selling shareholder", and any pro rata reduction with respect to
such "selling shareholder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder", as defined in this sentence.
(c) Expenses. All Registration Expenses incurred in connection with any
Incidental Registration shall be borne by the Company. The Company shall, in any
event, bear its internal costs (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company.
Section 8.3 Registration Procedures. In connection with the filing of
any registration statement as provided in Section 8.1 or 8.2 of this Agreement,
the Company shall use its reasonable best efforts to effect the Registration and
sale of Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto, the Company will as expeditiously as
possible:
(a) prepare and (within 60 days after the end of the period within
which requests for registration may be given to the Company) file with the
Commission the requisite registration statement (including a prospectus
therein) to effect such Registration and use its reasonable best efforts to
cause such registration statement to become effective, provided that before
filing such registration statement or any amendments or supplements
thereto, the Company will furnish to the counsel selected by the Purchaser
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel before any such filing is made, and
the Company will comply with any reasonable request made by such counsel to
make changes in any information contained in such documents relating to
such holders, and upon filing such documents, the Company shall promptly
notify in writing such counsel of the receipt by the Company of any
comments by the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto;
(b) subject to Section 8.3(g) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to maintain the
effectiveness of such registration and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement until, in the case of
Section 8.1, the termination of the period during which the Shelf
Registration is required to be kept effective, or, in the case of Section
8.2, the earlier of such time as
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all of such securities have been disposed of and the date which is 180 days
after the date of initial effectiveness of such registration statement;
(c) furnish to each holder of Registrable Securities included in a
Registration hereunder and the underwriter or underwriters, if any, without
charge, at least one signed copy of the registration statement and any
post-effective amendments thereto, and upon request, such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statements
(including each preliminary prospectus, complete prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, including documents incorporated by reference, as
such holders and the underwriters may request (it being understood that the
Company consents to the use of the prospectus and any amendment or
supplement thereto by each holder of Registrable Securities covered by such
registration statement and the underwriters, if any, in connection with the
offering and sale of the Registrable Notes covered by the prospectus or any
amendment or supplement thereto);
(d) register or qualify all Registrable Securities under such other
securities or blue sky laws of such jurisdictions as the Purchaser shall
reasonably request, to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and take any
other action which may be necessary or advisable to enable such holders to
consummate the disposition in such jurisdictions of the securities owned by
such holders, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
paragraph be obligated to be so qualified, or to consent to general service
of process in any such jurisdiction, or to subject the Company to any
material tax in any such jurisdiction where it is not then so subject;
(e) cause all Registrable Securities covered by such registration
statement to be registered with or approved by such other government
authority as may be necessary to enable such holder to consummate the
disposition of such Registrable Securities;
(f) furnish to each holder of Registrable Securities included in a
Registration hereunder a signed counterpart, addressed to such holders (and
the underwriters, if any), of (i) an opinion of counsel for the Company,
dated the effective date of such registration statement (and, if such
Registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), reasonably satisfactory in
form and substance to the Purchaser, and (ii) a "cold comfort" letter,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), signed by the independent
public accountants who have certified the Company's financial statements
included in such registration statement, covering substantially the same
matters with respect to such registration statement (and the prospectus
included therein) and, in the
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case of the accountants' letter, with respect to events subsequent to the
date of such financial statements, all as are customarily covered in
opinions of issuer's counsel and in accountants' "cold comfort" letters
delivered to the underwriters in underwritten public offerings of
securities;
(g) immediately notify each holder of Registrable Securities included
in a registration statement hereunder at any time when the Company becomes
aware that a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the discovery of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and at the request
of such holders, subject to Section 8.1(c), promptly prepare and furnish to
such holders a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they
were made;
(h) comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable policies, rules
and regulations of the Commission, as announced from time to time, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months, but not more
than 18 months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act, and
not file any amendment or supplement to such registration statement or
prospectus to which the Purchaser shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act, having been furnished
with a copy thereof at least two business days prior to the filing thereof;
(i) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement;
(j) list all Registrable Securities covered by such registration
statement on any securities exchange or inter-dealer quotation system on
which any shares of Common Stock are then listed;
(k) in connection with any sale pursuant to a Registration, cooperate
with the holders of Registrable Securities and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing securities
to be sold under such Registration, and enable such
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securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or such holders may request;
(l) enter into such agreements (including underwriting agreements in
customary form) and take such other actions as the Purchaser shall
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities; and
(m) cause its employees and personnel to use their reasonable best
efforts to support the marketing of the Registrable Securities to the
extent reasonably necessary to sell the Registrable Securities if the offer
and sale of such Registrable Securities is being effected by means of an
underwritten public offering (including, without limitation, the
participation in "road shows," at the request of the underwriters or the
Purchaser).
Section 8.4 Requested Underwritten Offerings. If requested by the
underwriters for any Registration, the Company and each holder of Registrable
Securities participating in such Registration will enter into a customary
underwriting agreement with such underwriters for such offering, which shall
contain such representations and warranties by the Company and such other terms
as are customarily contained in agreements of this type, including indemnities
to the effect and to the extent provided in Section 8.6 hereof. Each holder of
Registrable Securities may be a party to such underwriting agreement and may, at
its option, require that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders. The holders of Registrable
Securities included in an underwritten registration hereunder shall not be
required to (i) make any representations or warranties to or agreement with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder and such holder's intended method of distribution and (ii)
undertake any indemnification or contribution obligations to the Company or the
underwriters with respect thereto, except such indemnification or contribution
obligations otherwise provided in Section 8.6 hereof.
It shall be a condition precedent to the obligations of the Company to
take any action with respect to registering Registrable Securities pursuant to
this Article VIII that such seller of Registrable Securities as to which any
registration is being effected furnish the Company in writing such information
regarding such seller, the Registrable Securities and other securities of the
Company held by such seller, and the distribution of such securities as the
Company may from time to time reasonably request in writing. If a Holder refuses
to provide the Company with any of such information on the grounds that it is
not necessary to include such information in the registration statement, the
Company may exclude such Holder's Registrable Securities from the registration
statement if the Company provides such Holder with an opinion of counsel to the
effect that such information must be included in the registration statement and
such Holder thereafter continues to withhold such information. The deletion of
such Holder's Registrable Securities from a registration statement shall not
affect the registration of the other Registrable Securities to be included in
such registration statement.
Section 8.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of any registration statement under the Securities
Act, the Company will give the
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Purchaser, its underwriters, if any, and their respective counsel, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records during normal working hours and such opportunities to
discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Purchaser, such underwriters and their
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
Section 8.6 Indemnification. (a) Indemnification by the Company. In the
event of any registration of any Registrable Securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and hold harmless
the holders of such securities, their officers, directors, members, employees,
agents, representatives, stockholders and general and limited partners and each
Person who controls such holder (within the meaning of the Securities Act and
Exchange Act) against any losses, claims, damages, liabilities, costs and
expenses (or actions or proceedings, whether commenced or threatened, in respect
thereof), joint or several, insofar as such losses, claims, damages,
liabilities, costs and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of, are based upon or are incurred in
connection with, any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Registrable Securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and the Company will reimburse such indemnified persons for any
legal or any other expenses incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable to a holder of Registrable
Securities in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof), costs or expense arises
out of, is based upon or are incurred in connection with, an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such holder of Registrable
Securities specifically stating that it is for use in the preparation thereof;
and provided further that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any indemnified person
from whom the person asserting such losses, claims, damages, liabilities, costs
and expenses purchased securities if such untrue statement or omission or
alleged untrue statement or omission made in such prospectus is eliminated or
remedied in a modified, supplemented or amended prospectus provided to such
indemnified person prior to the sale of such securities and a copy of the
prospectus shall not have been furnished to such person in a timely manner due
to the wrongful action or wrongful inaction of such indemnified person, whether
as a result of negligence or otherwise. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of each
holder of Registrable Securities and shall survive the transfer of such
securities by such holders.
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(b) Indemnification by the Holder of Registrable Notes. The Company may
require, as a condition to including any Registrable Securities in any
registration statement pursuant to Section 8.1, that the Company shall have
received an undertaking satisfactory to it from each holder of Registrable
Securities to indemnify and hold harmless (in the same manner and to the same
extent as set forth in paragraph (a) of this Section 8.6) the Company, each
director of the Company, each officer of the Company and each other person, if
any, who controls the Company within the meaning of the Securities Act with
respect to any untrue statement or alleged untrue statement of a material fact
in or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such holders specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer, or controlling person and
shall survive the transfer of such securities by the holders of Registrable
Securities; provided, however, that the obligation to indemnify will be
individual, not joint and several, for each holder and will be limited to the
net amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 8.6, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 8.6, except to the
extent that the indemnifying party is actually prejudiced by such failure to
receive such notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation and the
indemnifying party shall not, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof, a release from all liability in
respect of such claim or litigation provided by the claimant or plaintiff to
such indemnified party.
(d) Contribution. If, for any reason, the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such expenses, losses,
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damages, liabilities or expenses, (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other (determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in the proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other, but also the relative fault of
the indemnifying party on the one hand and the indemnified party on the other,
as well as any other relevant equitable considerations. Notwithstanding the
foregoing, no holder of Registrable Securities shall be required to contribute
any amount in excess of the amount such holder would have been required to pay
to an indemnified party if the indemnity under Section 8.6(b) was available. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation. The
obligation of any Person to contribute pursuant to this Section 8.6 shall be
several and not joint.
Section 8.7 Rule 144. With a view to making available the benefits of
certain rules and regulations of the Commission that may at any time permit the
sale of the Registrable Securities to the public without registration, the
Company shall:
(a) use its reasonable best efforts to facilitate the sale of the
Registrable Securities to the public, without registration under the
Securities Act, pursuant to Rule 144;
(b) make and keep public information available, as those terms are
understood and defined in Rule 144 at all times during such time as
Registrable Securities are outstanding; and;
(c) use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
ARTICLE IX
SURVIVAL
Section 9.1 Survival. The representations and warranties of the Company
and the Purchaser contained in this Agreement and the schedules and certificates
delivered in connection herewith shall survive the Closing until the later of
(x) the payment in full of the Convertible Notes and (y) the date occurring 24
months following the sale of all of the Common Stock of the Company held by the
Purchaser except in the case of clause (y) with respect to representations and
warranties contained in Sections 2.11, 2.13, 2.15 and 2.16 which shall survive
for a period of
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six (6) months after the expiration of the applicable statute of limitations
relating to such claim (including any extensions thereof) and, in each case, may
be relied upon by the Purchaser regardless of any investigation made at any time
by or on behalf of the Purchaser. All covenants made hereunder shall survive in
accordance with their terms.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification. The Company agrees to indemnify and hold
the Purchaser and its officers, directors, employees, Affiliates and agents, and
any successors thereto (and any officers, directors, employees, Affiliates and
agents of such successors) harmless from any liability (whether fixed or
unfixed, liquidated or unliquidated), actual or punitive damage, deficiency,
demand, claim, suit, action, or cause of action, fine, penalty, loss, cost,
expense, Taxes, including without limitation, reasonable attorney fees
("Damages") incurred or suffered as a result of, in connection with, or arising
out of, the transactions contemplated hereby, including without limitation, (a)
any Damages incurred or suffered as a result of, or in connection with, or
arising out of, the failure of any representation, warranty, covenant or
agreement made by the Company pursuant to this Agreement, any schedule or
exhibit to this Agreement or any other Document or any certificates delivered
pursuant thereto (without regard to any "materiality", "material adverse
effect", "substantial compliance" or similar exception or qualifier and without
regard to any knowledge or similar exception or qualifier) to be true and
correct as of the date hereof and on the Closing Date, (b) other than pursuant
to the Purchaser's gross negligence or willful misconduct as determined by a
court of competent jurisdiction, any Damages incurred or suffered as a result
of, or in connection with, or arising out of, any investigation, litigation or
other proceeding (whether or not the Purchaser is a party thereto and whether or
not such investigation, litigation or other proceeding is brought by or on
behalf of the Company or any of its Subsidiaries) related to the entering into
and/or performance of this Agreement or any other Document or the consummation
of the transactions contemplated hereby or the exercise of any of their rights
or remedies provided herein or in the other Documents, (c) any Damages incurred
or suffered as a result of, or in connection with, or arising out of, any Taxes
or Tax liabilities of the Company or any of its Subsidiaries (or any predecessor
to any of the foregoing) for all Pre-Closing Periods, in each case, to the
extent the amount of such Tax Liabilities exceed the liability accruals for such
Taxes as set forth in the pro forma consolidated balance sheet of the Company
delivered pursuant to Section 2.5(b) and (d)) any Damages incurred or suffered
as a result of, or in connection with, or arising out of, any actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property owned, leased or at any time
operated by the Company or any of its Subsidiaries, the generation, storage,
transportation, handling or disposal of Hazardous Materials by Company or any of
its Subsidiaries at any location, whether or not owned, leased or operated by
Company or any of its Subsidiaries, the non-compliance of any Real Property with
any Environmental Law (including applicable permits thereunder) applicable to
any Real Property, or any Environmental Claim asserted against Company, any of
its Subsidiaries or any Real Property owned, leased or at any time operated by
Company or any of its Subsidiaries, including, in each case, without limitation,
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the reasonable fees and disbursements of counsel and other consultants incurred
in connection therewith, AND FURTHER INCLUDING DAMAGES RESULTING FROM AN
INDEMNIFIED PARTY'S OWN NEGLIGENCE, OTHER THAN GROSS NEGLIGENCE.
Section 10.2 Contribution. To the extent that the undertaking to
indemnify, pay or hold harmless the Purchaser pursuant to Section 10.1 of this
Agreement may be unenforceable, the Company shall make the maximum contribution
to the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
Section 10.3 Remedies. The rights and remedies of the Purchaser under
this Article X arising by reason of the breach of any representation or warranty
shall not be exclusive of any other remedies the Purchaser may have at law or
otherwise.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Knowledge of the Transaction Parties. Where any
representation or warranty made by the Company contained in this Agreement is
expressly qualified by reference to its knowledge, such knowledge shall be
deemed to exist if the matter should be within the knowledge of any director,
executive officer or other senior member of management of the Company after due
inquiry.
Section 11.2 Expenses. The Company agrees to pay the costs and expenses
incurred by the Purchaser in connection with the transactions contemplated
hereby and the Purchaser's investment in the Company (including without
limitation, reasonable attorney's fees and expenses incurred in connection with
the (a) preparation, execution and delivery of this Agreement and the other
Documents, (b) any subsequent amendments, modifications or waivers relating
thereto and (c) any regulatory filings, including without limitation filings
under the Exchange Act or in connection with compliance with the HSR Act) and
all costs and expenses incurred by the Purchaser (including, without limitation,
the reasonable attorney's fees and expenses and the fees and expenses of any
experts retained by the Purchaser) in connection with any amendments or waivers
to the Documents and in connection with the exercise or enforcement of any
rights contained in the Documents; provided, however, (x) the Purchaser shall
use reasonable efforts to notify the Company of any material costs and expenses
of the type described in Sections 11.2(b) and (c), prior to the incurrence by
the Purchaser and its legal counsel of such costs and expenses; provided,
further, however, the Company shall not be permitted to object if such expenses
were otherwise incurred in accordance with provisions hereof and (y) the Company
shall not be responsible for costs or expenses of the Purchaser incurred on or
prior to the date hereof to the extent such costs and expenses exceed $175,000.
Section 11.3 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York applicable to agreements executed and to be performed solely
within such State.
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Section 11.4 Captions. The Article and Section captions used herein are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 11.5 Publicity. Except as otherwise required by law, none of
the parties hereto shall issue any press release or make any other public
statement, in each case relating to, connected with or arising out of this
Agreement or the matters contained herein or therein, without obtaining the
prior approval of the Purchaser and the Company to the contents and the manner
of presentation and publication thereof. No references to the Purchaser shall be
made in any public statement without the Purchaser's consent.
Section 11.6 Notices. Any notice or other communication required or
permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy or by registered or certified mail, postage prepaid,
addressed as follows:
if to the Company:
American Physician Partners, Inc.
3600 Chase Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and if to the Purchaser:
BT Capital Partners SBIC, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to its counsel:
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given upon
automatic confirmation of
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receipt by the receiving machine if sent by telecopier, upon delivery if
delivered in person, and upon mailing if mailed.
Section 11.7 Parties in Interest. The Company may not transfer, assign
or pledge any of its rights in, or otherwise grant any rights to any Person in,
this Agreement. The Purchaser may transfer any of its rights hereunder and any
assignee or transferee of the Convertible Notes or the Common Stock issued upon
conversion of the Convertible Notes (other than transferees receiving the
Securities pursuant to a registered sale or a sale pursuant to Rule 144) shall
have all the rights of the Purchaser hereunder; provided that unless an Event of
Default (as defined in the Convertible Notes) has occurred and is continuing,
neither Purchaser nor any of its assignees shall assign all or any portion of
the Convertible Notes without the prior written consent of the Company. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Section 11.8 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
Section 11.9 Entire Agreement. This Agreement and the Convertible
Notes, including the exhibits, schedules, and other documents referred to herein
and therein which form a part hereof and thereof, contain the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein. This Agreement and the Convertible Notes supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
Section 11.10 Amendments. This Agreement and the Convertible Notes may
not be changed orally, but only by an agreement in writing signed by the
Purchaser and the Company; provided that so long as any Convertible Notes are
outstanding and except with respect to (i) reducing the rate or extending the
time of payment of interest thereon, (ii) modifying the principal amount thereof
or (iii) extending the final maturity thereof, all modifications, amendments, or
consents hereunder shall be approved by the holders of a majority of the
principal balance of the Convertible Notes. Section 11.11 Severability. In case
any provision in this Agreement shall be held invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions hereof
will not in any way be affected or impaired thereby.
Section 11.12 Third Party Beneficiaries. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto (and, in the case of the
Purchaser, its transferees) and those Persons entitled to indemnification
pursuant to Article X hereof.
Section 11.13 Jurisdiction. (a) Each of the parties hereto hereby
irrevocably acknowledges and consents that any legal action or proceeding
brought with respect to any of the obligations arising under or relating to this
Agreement may be brought in the courts of the State of New York or in the United
States Southern District Court of New York, as the party bringing such action or
proceeding may elect and each of the parties hereto hereby irrevocably submits
to
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and accepts with regard to any such action proceeding, for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party hereby further irrevocably waives any claim that
any such courts lack jurisdiction over such party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or the
transactions contemplated hereby brought in any of the aforesaid courts, that
any such court lacks jurisdiction such party. Each party irrevocably consents to
the service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party, at its
address for notices set forth in Section 11.6, such service to become effective
10 days after such mailing. Each party hereby irrevocably waives any objection
to such service of process and further irrevocably waives and agrees not to
plead or claim in any action or proceeding commenced hereunder or under any
other documents contemplated hereby that service of process was in any way
invalid or ineffective. The foregoing shall not limit the rights of any party to
serve process in any other manner permitted by law. The foregoing consents to
jurisdiction shall not constitute general consents to service of process for any
purpose except as provided above and shall not be deemed to confer rights on any
Person other than the respective parties to this Agreement.
(b) To the fullest extent permitted by applicable law, each of the
parties hereto hereby irrevocably waives the objection which it may not or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby in any of the Courts referred to in Section 11.13(a) and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.
(c) The parties hereto agree that any judgment obtained by any party
hereto or its successors or assigns in any action, suit or proceeding referred
to above may, in the discretion of such party (or its successors, or assigns),
be enforced in any jurisdiction, to the extent permitted by applicable law.
* * * * *
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IN WITNESS WHEREOF the Purchaser has signed this Securities Purchase
Agreement and the Company has caused its corporate name to be hereunto
subscribed by its officers thereunto duly authorized, all as of the day and year
first above written.
AMERICAN PHYSICIAN PARTNERS, INC.
By:
--------------------------------------
Name:
Title:
66
BT CAPITAL PARTNERS SBIC, L.P.
By:
--------------------------------------
Name:
Title:
