EXHIBIT 10.23
AGREEMENT AND PLAN OF MERGER
BETWEEN
VIEWER ACQUISITION CORP.,
AND
ALLIANCE IMAGING, INC.
SEPTEMBER 13, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.......................................................... 2
1.1 THE MERGER............................................................ 2
1.2 CONSUMMATION OF THE MERGER............................................ 2
1.3 CLOSING............................................................... 3
1.4 EFFECTS OF THE MERGER................................................. 3
1.5 CERTIFICATE OF INCORPORATION AND BYLAWS............................... 3
1.6 DIRECTORS............................................................. 3
1.7 OFFICERS.............................................................. 3
ARTICLE II EFFECTS OF THE MERGER.............................................. 4
2.1 EFFECT ON CAPITAL STOCK............................................... 4
2.2 EXCHANGE OF CERTIFICATES.............................................. 5
2.3 THE DEBT OFFER........................................................ 6
2.4 CORPORATION STOCK OPTIONS............................................. 7
2.5 MERGER PRICE.......................................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CORPORATION................. 8
3.1 ORGANIZATION, STANDING, QUALIFICATION AND POWER....................... 8
3.2 AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY..................... 8
3.3 NO CONFLICTS; CONSENTS................................................ 9
3.4 CAPITALIZATION........................................................ 9
3.5 SUBSIDIARIES.......................................................... 10
3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; OTHER FINANCIAL INFORMATION...... 11
3.7 ASSETS OTHER THAN REAL PROPERTY INTERESTS............................. 11
3.8 REAL PROPERTY......................................................... 12
3.9 INTELLECTUAL PROPERTY................................................. 12
3.10 MATERIAL CONTRACTS.................................................... 13
3.11 PERMITS............................................................... 14
3.12 TAXES................................................................. 15
3.13 PROCEEDINGS........................................................... 15
3.14 BENEFIT PLANS......................................................... 16
3.15 ABSENCE OF CHANGES OR EVENTS.......................................... 17
3.16 COMPLIANCE WITH APPLICABLE LAWS....................................... 18
3.17 ENVIRONMENTAL MATTERS................................................. 19
3.18 EMPLOYEE AND LABOR MATTERS............................................ 19
3.19 AFFILIATE TRANSACTIONS................................................ 20
3.20 STATE TAKEOVER STATUTES............................................... 20
3.21 OPINION OF FINANCIAL ADVISOR.......................................... 20
3.22 CERTAIN ADDITIONAL REGULATORY MATTERS................................. 20
3.23 MEDICARE/MEDICAID PARTICIPATION ACCREDITATION......................... 21
3.24 BROKERS OR FINDERS.................................................... 22
3.25 NO ADDITIONAL REPRESENTATIONS......................................... 22
ARTICLE IV REPRESENTATION AND WARRANTIES OF PARENT CORP. AND NEW CO........... 23
4.1 ORGANIZATION, STANDING, QUALIFICATION AND POWER....................... 23
4.2 AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY..................... 23
4.3 NO CONFLICTS; CONSENT................................................. 23
4.4 LITIGATION............................................................ 24
4.5 AVAILABILITY OF FUNDS................................................. 24
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4.6 BROKERS OR FINDERS.................................................... 25
4.7 NEWCO................................................................ 25
ARTICLE V COVENANTS........................................................... 25
5.1 CONDUCT OF BUSINESS................................................... 25
5.2 ACCESS TO INFORMATION................................................. 27
5.3 CONFIDENTIALITY....................................................... 28
5.4 EFFORTS TO CONSUMMATE................................................. 28
5.5 EXPENSES.............................................................. 29
5.6 PUBLICITY............................................................. 29
5.7 EMPLOYEE MATTERS...................................................... 29
5.8 INDEMNIFICATION, EXCULPATION.......................................... 30
5.9 NO SOLICITATION....................................................... 30
5.10 FINANCIAL INFORMATION................................................. 31
5.11 NOTICE OF CHANGES..................................................... 31
5.12 REGISTRATION RIGHTS AGREEMENT......................................... 31
5.13 AFFILIATE AGREEMENTS.................................................. 31
5.14 LEASE AGREEMENTS...................................................... 31
ARTICLE VI CONDITIONS PRECEDENT............................................... 32
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION................................. 32
6.2 CONDITIONS TO OBLIGATION OF NEWCO..................................... 32
6.3 CONDITIONS TO THE OBLIGATION OF THE CORPORATION....................... 34
ARTICLE VII TERMINATION....................................................... 35
7.1 TERMINATION........................................................... 35
7.2 EFFECT OF TERMINATION................................................. 36
ARTICLE VIII GENERAL PROVISIONS............................................... 36
8.1 ASSIGNMENT............................................................ 36
8.2 NO THIRD-PARTY BENEFICIARIES.......................................... 36
8.3 SURVIVAL.............................................................. 36
8.4 NOTICES............................................................... 36
8.5 INTERPRETATION; EXHIBITS AND SCHEDULES................................ 37
8.6 COUNTERPARTS.......................................................... 38
8.7 ENTIRE AGREEMENT...................................................... 38
8.8 AMENDMENTS AND WAIVERS................................................ 38
8.9 SEVERABILITY.......................................................... 38
8.10 CONSENT TO JURISDICTION............................................... 39
8.11 LIMITATION OF DAMAGES................................................. 39
8.12 GOVERNING LAW......................................................... 39
8.13 WAIVER OF JURY TRIAL.................................................. 39
8.14 EQUITABLE REMEDIES.................................................... 40
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AGREEMENT AND PLAN OF MERGER dated
as of September 13, 1999, between VIEWER
ACQUISITION CORPORATION, a Delaware
corporation ("NEWCO") and ALLIANCE IMAGING,
INC., a Delaware corporation (the
"CORPORATION"). Capitalized terms used but
not defined herein have the meanings set
forth in ANNEX I hereto.
WHEREAS, the Board of Directors of the Corporation (the "BOARD") and
Newco have determined that the merger of Newco with and into the Corporation
(the "MERGER") pursuant to Section 251 of the Delaware General Corporation
Law ("DGCL"), upon the terms and subject to the conditions set forth in this
Agreement, would be fair and in the best interests of their respective
stockholders, and such Boards of Directors have approved this Agreement and
such Merger, pursuant to which each share of (A) Common Stock, par value $.01
per share, of the Corporation (the "COMMON STOCK") issued and outstanding
immediately prior to the Effective Time (other than (i) shares of Common
Stock owned, directly or indirectly, by the Corporation or any of its
Subsidiaries, (ii) shares of Common Stock owned by Viewer Holdings LLC, a
Delaware limited liability company ("HOLDINGS LLC"), a subsidiary of KKR 1996
Fund, L.P. ("PARENT"), Viewer Acquisition LLC, a Delaware limited liability
company, a subsidiary of Holdings LLC ("ACQUISITION LLC") and Newco, a
subsidiary of Acquisition LLC, (iii) the Retained Shares and (iv) Dissenting
Shares) will be converted into the right to receive the Cash Merger Price,
and (B) Series F Redeemable Preferred Stock, par value $.01 per share (the
"SERIES F PREFERRED") issued and outstanding immediately prior to the
Effective Time will be converted into the right to receive the Preferred
Merger Price;
WHEREAS, Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P., Apollo (U.K.) Partners III, L.P. and Newport Investment LLC
(collectively, the "PRINCIPAL STOCKHOLDERS") own 5,033,762 shares of Common
Stock and 141,000 shares of Series F Preferred;
WHEREAS, after the Board approved this Agreement and the Merger, the
Merger and this Agreement was approved by the written consent of the
Principal Stockholders as owners of at least a majority of the outstanding
shares of the Common Stock and by Newport Investment LLC as the owner of
141,000 of the outstanding shares of Series F Preferred;
WHEREAS, Newco is unwilling to enter into this Agreement unless,
contemporaneously with the execution and delivery of this Agreement, each of
the Principal Stockholders enter into an agreement (each, a "STOCKHOLDER
SUPPORT AGREEMENT") providing for certain actions relating to the shares of
Common Stock and Series F Preferred owned by them; and the Corporation has
approved the entering into by Holdings LLC and each Principal Stockholder of
a Stockholder Support Agreement, and such parties have, simultaneously with
the execution of this Agreement, executed and delivered a Stockholder Support
Agreement;
WHEREAS, the Principal Stockholders are unwilling to authorize the
transactions contemplated by this Agreement or enter into a Stockholder
Support Agreement unless, contemporaneously with the execution and delivery
of this Agreement, Holdings LLC and the
Corporation enter into an agreement (the "STOCKHOLDERS AGREEMENT") with the
Principal Stockholders and the Substitute Principal Stockholders that will
hold Retained Shares providing for certain minority shareholder protections,
and such parties have, simultaneously with the execution of this Agreement,
executed and delivered the Stockholders Agreement;
WHEREAS, the Board has approved and authorized for all purposes under
the DGCL, the Stockholder Support Agreements and the Stockholder Agreement;
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes; and
WHEREAS, Newco and the Corporation desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Newco and the Corporation hereby agrees as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Upon the terms and subject to the conditions hereof, and in accordance
with the relevant provisions of the DGCL, Newco shall be merged with and into
the Corporation as soon as practicable following the satisfaction or waiver,
if permissible, of the conditions set forth in Article VI. The Corporation
shall be the surviving corporation in the Merger (the "SURVIVING CORPORATION")
and shall continue its existence under the laws of Delaware. From and after
the Effective Time, the separate corporate existence of Newco shall cease.
1.2 CONSUMMATION OF THE MERGER.
Subject to the provisions of this Agreement, as soon as practicable
following the satisfaction or waiver, if permissible, of the conditions set
forth in ARTICLE VI, the parties hereto shall cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware a
duly executed certificate of merger (the "CERTIFICATE OF MERGER"), as
required by the DGCL, and shall take all such other and further actions as
may be required by law to make the Merger effective as promptly as
practicable. The Merger will become effective at such time as the Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware,
or at such other time as is permissible in accordance with the DGCL and as
Newco and the Corporation shall agree should be specified in the Certificate
of Merger (the time the Merger becomes effective being the "EFFECTIVE TIME").
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1.3 CLOSING.
Prior to the filing of the Certificate of Merger, a closing (the
"CLOSING") will be held at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ for such other place as the parties may
agree). The Closing shall take place on a date (the "CLOSING DATE") to be
mutually agreed upon by the parties.
1.4 EFFECTS OF THE MERGER.
The Merger shall have the effects set forth in the applicable provisions
of the DGCL and as set forth herein.
1.5 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) At the Effective Time, and without any further action on the part
of the Corporation and Newco, the Restated Certificate of Incorporation of
the Corporation (the "CERTIFICATE OF INCORPORATION") as in effect immediately
prior to the Effective Time shall be amended so as to read in its entirety in
the form set forth as EXHIBIT A hereto, and as so amended, until thereafter
changed or amended as provided therein or by applicable law, it shall be the
certificate of incorporation of the Surviving Corporation.
(b) At the Effective Time, and without any further action on the part
of the Corporation and Newco, the by-laws of the Corporation (the "BY-LAWS")
as in effect immediately prior to the Effective Time shall be amended so as
to read in their entirety in the form set forth in EXHIBIT B, and as so
amended, shall be the by-laws of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
1.6 DIRECTORS.
The directors of Newco at the Effective Time shall be the directors of
the Surviving Corporation until the earlier of their resignation or removal
or until their successors are duly elected or appointed and qualified.
1.7 OFFICERS.
The officers of the Corporation at the Effective Time shall be the
officers of the Surviving Corporation until the earlier of their resignation
or removal or until their successors are duly elected or appointed and
qualified.
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ARTICLE II
EFFECTS OF THE MERGER
2.1 EFFECT ON CAPITAL STOCK
As of the Effective Time, by virtue of the Merger and without any
action on the part of the Corporation, Newco or any holder of any shares of
Common Stock, Series F Preferred or any shares of capital stock of Newco:
(a) COMMON STOCK OF NEWCO. The common stock of Newco issued
and outstanding immediately prior to the Effective Time shall be converted,
in the aggregate, into a number of shares of the Common Stock, par value $.01
per share, of the Surviving Corporation following the Merger equal to the
quotient of (i) the aggregate cash contributed to Newco prior to or at the
Effective Time in exchange for Newco Common Stock and retained by Newco
through the Effective Time divided by (ii) the Cash Merger Price.
(b) CANCELLATION OF TREASURY STOCK. Each share of Common Stock
that is owned by the Corporation or by any Subsidiary of the Corporation
shall automatically be cancelled and retired and shall cease to exist.
(c) COMMON STOCK OF THE CORPORATION. Except as otherwise
provided herein, each issued and outstanding share of Common Stock (other than
any share of Common Stock that is owned by Newco, Acquisition LLC or Holdings
LLC and Retained Shares, each of which shall remain outstanding, shares
cancelled pursuant to Section 2.1(b) and Dissenting Shares)(the "MERGER
SHARES") shall be converted into the right to receive from the Surviving
Corporation, in cash, the Cash Merger Price.
(d) SERIES F PREFERRED. Each issued and outstanding share of
Series F Preferred shall be converted into the right to receive from the
Surviving Corporation, in cash, the Preferred Merger Price.
(e) RETAINED SHARES. Each issued and outstanding Retained
Share shall convert into the right to retain one fully paid and
nonassessable share of Common Stock and each issued and outstanding share of
Common Stock that is owned by Newco, Acquisition LLC or Holding LLC shall
convert into the right to retain one fully paid and nonassessable share of
Common Stock.
(f) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock issued and outstanding
immediately prior to the Effective Time held by a holder (if any) who has the
right to demand payment for and an appraisal of such shares in accordance
with Section 262 of the DGCL (or any successor provision)("DISSENTING SHARES")
shall not be converted into a right to receive the Cash Merger Price (but
shall have the rights set forth in Section 262 of the DGCL (or any successor
provision)) unless such holder fails to perfect or otherwise loses such
holder's right to such payment or appraisal, if any. If, after the Effective
Time, such holder fails to perfect or loses any such right to appraisal, each
such share of such holder shall be treated as a Merger Share in accordance
with SECTION 2.1(c). The Corporation shall give prompt notice to Newco of any
demands received by the Corporation for
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appraisal of shares of Common Stock, and Newco shall have the right to
participate in and approve all negotiations and proceedings with respect to
such demands. The Corporation shall not, except with the prior written
consent of Newco, make any payment with respect to, or settle or offer to
settle, any such demands.
(g) CANCELLATION AND RETIREMENT OF COMMON STOCK AND SERIES F
PREFERRED. As of the Effective Time, all shares of Common Stock (other than
the Dissenting Shares, the Retained Shares and the other shares described in
SECTION 2.1(e)) and all shares of Series F Preferred issued and outstanding
immediately prior to the Effective Time, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares of Common Stock or
Series F Preferred shall, to the extent such certificate represents such
shares, cease to have any rights with respect thereto, except the right to
receive cash to be issued or paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.2.
2.2 EXCHANGE OF CERTIFICATES.
(a) The Corporation shall appoint an independent bank or trust
company, reasonably acceptable to Newco, to act as paying agent (the "PAYING
AGENT"), which Paying Agent shall be responsible for payment of the Cash
Merger Price and Preferred Merger Price for all Merger Shares and shares of
Series F Preferred. As soon as reasonably practicable as of or after the
Effective Time, the Surviving Corporation shall deposit with the Paying
Agent, for payment in accordance with this Article II, the funds necessary to
pay the Cash Merger Price and Preferred Merger Price for all Merger Shares
and Series F Preferred.
(b) As soon as practicable after the Effective Time, each
holder of an outstanding certificate or certificates which prior thereto
represented Merger Shares or shares of Series F Preferred, upon surrender to
the Paying Agent of such certificate or certificates and acceptance thereof
by the Paying Agent, shall be entitled to a certificate or certificates
representing the number of Retained Shares, if any, represented by such
certificate or certificates and the amount of cash into which the number of
Merger Shares or shares of Series F Preferred previously represented by such
certificate or certificates surrendered shall have been converted pursuant to
this Agreement. The Paying Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Paying Agent may
impose to effect an orderly exchange thereof in accordance with normal
exchange practices, which shall include paying cash into which the Merger
Shares and shares of Series F Preferred shall have been converted at the
Effective Time to holders who have complied with such terms and conditions
prior to such time. After the Effective Time, there shall be no further
transfer on the records of the Corporation or its transfer agent of
certificates representing Merger Shares and shares of Series F Preferred
which have been converted, in whole or in part, pursuant to this Agreement,
into the right to receive cash, and if such certificates are presented to the
Corporation for transfer, they shall be canceled against delivery of such
cash. If any certificate for Retained Shares is to be issued or cash is to be
remitted to a name other than that in which the certificate for Merger Shares
surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed, with
signature guaranteed or otherwise in proper form for transfer. Until
surrendered as contemplated by this SECTION 2.2(b), each certificate for
Merger Shares and shares of Series F Preferred shall be deemed at any time
after
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the Effective Time to represent only the right to receive upon such surrender
the Cash Merger Price for each Merger Share or the Preferred Merger Price for
each share of Series F Preferred. No interest will be paid or will accrue on
any cash payable in the Merger.
(c) All cash paid upon the surrender for exchange of
certificates representing Merger Shares and shares of Series F Preferred in
accordance with the terms of this ARTICLE II shall be deemed to have been
paid in full satisfaction of all rights pertaining to the Merger Shares and
shares of Series F Preferred exchanged for cash theretofor represented by
such certificates.
(d) Any cash deposited with the Paying Agent pursuant to this
SECTION 2.2 (the "EXCHANGE FUND") which remains undistributed to the holders
of the certificates representing Merger Shares and shares of Series F
Preferred 180 days after the Effective Time shall be delivered to the
Surviving Corporation at such time and any holders of Merger Shares or shares
of Series F Preferred prior to the Merger who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation
and only as general unsecured creditors thereof for payment of their claim
for cash.
(e) None of Newco or the Corporation or the Paying Agent shall
be liable to any person in respect of any cash from the Exchange Fund
delivered to a public office pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing Merger Shares or
shares of Series F Preferred shall not have been surrendered prior to one
year after the Effective Time (or immediately prior to such earlier date on
which any cash in respect of such certificate would otherwise escheat to or
become the property of any Governmental Entity), any such cash in respect of
such certificate shall, to the extent permitted by Applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(f) The Paying Agent shall invest any cash included in the
Exchange Fund, as directed by the Corporation, on a daily basis.
(g) The Surviving Corporation shall pay all charges and
expenses of the Paying Agent.
(h) Notwithstanding anything to the contrary set forth in this
Agreement, Newco and the Surviving Corporation shall cause the Paying Agent
to pay by wire transfer at the Effective Time, in immediately available
funds, the full Cash Merger Price and the Preferred Merger Price payable to
the Principal Stockholders and to each other stockholder requesting payment
by wire transfer at such time in writing at least two Business Days prior to
the Closing.
2.3 THE DEBT OFFERS.
(a) Provided that this Agreement shall not have been
terminated in accordance with SECTION 7.1, the Corporation shall commence an
offer to purchase (i) all of the outstanding aggregate principal amount of
the Corporation's Senior Subordinated Notes and (ii) at the request of Newco,
all of the outstanding principal amount of the FIRSTS, in each case, on the
terms and conditions as are reasonably acceptable to Newco, subject to the
terms and conditions set forth in the indenture governing the Existing Notes
as amended to the date hereof (collectively, the "DEBT OFFERS"). The
Corporation shall waive any of the conditions to either
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[2.3 CONTINUING]
[2.4 TO COME]
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2.5 MERGER PRICE.
At least two days prior to the Closing Date, the Corporation shall
deliver to Newco a certificate which sets forth the estimated Cash Merger
Price. If Newco objects to any calculation set forth therein, the parties
will cooperate in good faith to resolve any disputed items prior to the
Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
For purposes of this Agreement, the phrase "TO THE KNOWLEDGE OF THE
CORPORATION," or other language of similar effect, shall mean to the actual
knowledge, without investigation or inquiry, of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. The exceptions, modifications,
descriptions and disclosures in any Schedule or Exhibit hereto are exceptions
to each representation and warranty set forth in this Agreement if a prudent
Person in the applicable party's position would reasonably conclude that such
exception, modification, description or disclosure would constitute an
exception, modification, description or disclosure to the applicable
representation and warranty if included in the appropriate Schedule or
Exhibit. Disclosure of any items not otherwise required to be disclosed shall
not create an inference of materiality. The Corporation hereby represents and
warrants to Newco as of the date hereof and as of the Closing Date as set
forth below:
3.1 ORGANIZATION, STANDING, QUALIFICATION AND POWER.
The Corporation is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to own, lease and operate its properties and to carry on its
business as presently conducted. The Corporation is duly qualified and in
good standing to do business in each jurisdiction in which the property owned
or leased or operated by it or by the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so
qualified is not reasonably likely to have a Material Adverse Effect. The
Corporation has made available to Newco or its counsel, representatives or
advisors, complete and correct copies of its certificate of incorporation, as
in effect on the date hereof and in effect immediately prior to the Effective
Time, and the by-laws, as amended to the date hereof.
3.2 AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY.
The Corporation has all corporate power and authority to execute this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
the Corporation of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Corporation, including all required
stockholder approval, and no other corporate proceedings on the part of the
Corporation are necessary to authorize the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby
(other than notice to stockholders pursuant to Sections 228 and 262 of the
DGCL). The Corporation has duly executed and delivered this Agreement and this
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Agreement constitutes a legal, valid and binding obligation of the
Corporation, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or other similar laws affecting the enforcement of creditors'
rights generally and general equitable principles.
3.3 NO CONFLICTS; CONSENTS.
(a) Except as set forth in SCHEDULE 3.3, the execution and delivery
by the Corporation of this Agreement and the consummation of the transactions
contemplated hereby does not conflict with, or result in any violation of or
default under, or give rise to any increase payment, loss of a material
benefit, a requirement of prepayment or offer to purchase any debt, a right
of termination, cancellation or acceleration of any obligation, or result in
the creation of any Lien (other than a Permitted Lien) upon any of the assets
owned or used by the Corporation or any of its Subsidiaries under, any
provision of (a) the Certification of Incorporation or By-Laws, (b) any
Contract to which the Corporation or any Subsidiary is a party or (c) any
judgment, writ, injunction, order or decree ("Judgment") or Applicable Law
applicable to the Corporation, other than, in the case of clauses (b) and (c)
above, any such conflicts, violations, defaults, rights or Liens that,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 3.3, no material consent,
approval, Permit, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required to be obtained or made by or
with respect to the Corporation or any of its Subsidiaries in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, other than (i)
compliance with and filings under the HSR Act, (ii) compliance with and
filings and notifications under applicable Environmental Laws, (iii) those
the failure of which to obtain or make would not have a Material Adverse
Effect, (iv) those that have been obtained, (v) those that may be required
solely by reason of Newco's (as opposed to any other third party's)
participation in the transactions contemplated hereby and (vi) filings
required pursuant to the indenture governing the Existing Notes or applicable
securities laws.
3.4 CAPITALIZATION
The authorized capital stock of the Corporation consists of 10,000,000
shares of Common Stock, consisting of 9,500,000 shares of voting common
stock, par value $.01 ("VOTING COMMON"), 500,000 shares of non-voting common
stock, par value $.01 ("NON-VOTING COMMON"), and 500,000 shares of preferred
stock, undesignated as to series ("PREFERRED STOCK"), of which 300,000 shares
have been designated and authorized by the Board as Series F Redeemable
Preferred Stock, $.01 par value. At the close of business of the date hereof,
(i) 5,506,651 shares of Voting Common, 242,898 shares of Non-Voting Common
and 150,000 shares of Series F Preferred are validly issued and outstanding,
fully paid and nonassessable, (ii) no shares of Voting Common, Non-Voting
Common or Series F Preferred are held by the Corporation in its treasury and
(iii) 842,033 shares of Common Stock were reserved for issuance upon the
exercise of options granted or available for grant under the Corporation
Stock Option Plans. Except as set forth above, except for shares issued since
the close of business on the Business Day immediately preceding the date
hereof upon the exercise of any then outstanding Corporation Stock Option,
since such date no shares of capital stock or other voting securities of
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the Corporation have been issued or reserved for issuance. All outstanding
Shares and shares of Series F Preferred are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are
no bonds, debentures, notes or other indebtedness of the Corporation having
the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the
Corporation may vote. Except for Corporation Stock Options with respect to
759,932 Shares, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
the Corporation is a party or by which it is bound obligating the Corporation
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Corporation or obligating the Corporation to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. Except as set forth in the Series F Preferred
Certificate of Designations relating to the Corporation's Series F Preferred
or SCHEDULE 3.4, there are no outstanding contractual obligations of the
Corporation to repurchase, redeem or otherwise acquire any shares of capital
stock of the Corporation.
3.5 SUBSIDIARIES.
(a) Except as set forth on SCHEDULE 3.5, all of the outstanding
shares of capital stock of Subsidiaries are owned of record and beneficially
by the Corporation, free and clear of all Liens other than Permitted Liens.
(b) Except as set forth on SCHEDULE 3.5, since June 30, 1999, no
shares of capital stock or other voting securities of any Subsidiary were
issued, reserved for issuance or issuable. All outstanding shares of capital
stock of Subsidiaries are, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of any Subsidiary having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of Subsidiaries may vote. There
are no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Corporation or any
Subsidiary is a party or by which any of them is bound obligating the
Corporation or any Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of any Subsidiary or obligating the Corporation or any Subsidiary
to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations of the Corporation or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of any
Subsidiary. There are no voting trusts, proxies or other agreements or
understandings to which the Corporation or its Subsidiaries is a party or by
which the Corporation or any of its Subsidiaries is bound with respect to the
voting of any shares of capital stock, or any other equity or voting security
or interest of the Corporation or any of its Subsidiaries. Except for
the Corporation's interest in the Subsidiaries, as set forth in SCHEDULE 3.5,
neither the Corporation nor any Subsidiary owns directly or indirectly any
interest or investment in the form of equity in, and neither the Corporation
nor any Subsidiary is subject to any obligation or requirement to provide for
or to make any investment in, any Person (other than financially
insignificant holdings of publicly reporting companies held in order to
obtain filings).
-10-
3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; OTHER FINANCIAL INFORMATION.
(a) The Corporation has filed with the SEC all reports, forms,
schedules and statements and other documents required to be filed by it since
December 18, 1997 (the "SEC Documents"). As of their respective filing dates,
(i) the SEC Documents complied in all material respects with the requirements
of the Securities Act, or the Securities Exchange Act of 1934, as amended
("Exchange Act"), as the case may be, and the rules and regulations of the
Securities and Exchange Commission ("SEC") promulgated thereunder applicable
to such SEC Documents, and (ii) none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein under applicable federal securities laws in
order to make the statements therein, in light of the circumstances under
which they were made, not materially misleading. The financial statements
included in the SEC Documents complied, as of their respective filing dates
as to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereof, were
prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present, in all material respects, the consolidated
financial position of the Corporation and its Subsidiaries as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(b) Neither the Corporation nor any of its Subsidiaries has any
debts, liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or
disclosed or reserved against in, a consolidated balance sheet of the
Corporation and its Subsidiaries or in the notes thereto, prepared in
accordance with GAAP consistently applied, except for debts, liabilities or
obligations (a) that were so reserved on, or disclosed or reflected in, the
consolidated balance sheet of the Corporation and its Subsidiaries as of
June 30, 1999 and the notes thereto, included in the Quarterly Report on Form
10-Q of the Corporation for the quarter then ended, or the consolidated
balance sheet of the Corporation and its Subsidiaries as of December 31, 1998
and the notes thereto, included in the Annual Report on Form 10-K of the
Corporation for the year then ended, (b) arising in the ordinary course of
business since June 30, 1999, (c) incurred in connection with the purchase of
equipment or (d) that have not had and are not reasonably likely to have a
Material Adverse Effect.
3.7 ASSETS OTHER THAN REAL PROPERTY INTERESTS.
Each of the Corporation and its Subsidiaries has good and valid
title to all of the assets and properties reflected on the latest balance
sheet included in the SEC Documents or acquired subsequent thereto (except for
assets and properties sold, consumed or otherwise disposed of in the
ordinary course of business since the date thereof and except for real
property or interests in real property, such items being the subject of
SECTION 3.8), free and clear of all Liens, except Permitted Liens and except
as set forth in SCHEDULE 3.7. The properties and assets of the Corporation
and its Subsidiaries are in sufficient repair and operating condition for the
conduct of the business of the Corporation and Subsidiaries as presently
conducted.
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3.8 REAL PROPERTY.
(a) Except as set forth on SCHEDULE 3.8, neither the Corporation nor
any of its Subsidiaries owns in fee any real property (the "OWNED REAL
PROPERTY"). SCHEDULE 3.8 sets forth as of the date hereof, a complete and
correct list of all real property leases, subleases, licenses and use or
occupancy ("LEASES") agreements pursuant to which the Corporation or any of
its Subsidiaries is the lessee, sublessee, licensee, user or occupant of real
property, or interests therein, requiring annual payments in excess of
$150,000 (the "LEASED PROPERTY"). Each of the Corporation and its
Subsidiaries has good and valid title to the leasehold estate or other
interest created under its respective leases, free and clear of any Liens
other than Permitted Liens. Each Lease is valid or in full force and effect
without any material default thereunder by the Corporation or such
Subsidiary, except failures to be in full force and effect and defaults
which, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect.
(b) The Corporation has not received notice that the location,
construction, occupancy, operation or use of the buildings located on the
Leased Property violates any restrictive covenant or deed restriction or any
other Applicable Laws, except for such violations or restrictions which,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect.
3.9 INTELLECTUAL PROPERTY.
The Corporation and each Subsidiary owns, or is validly licensed or
otherwise has the right to use, as applicable, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, copyrights, trade secrets and other proprietary
intellectual property rights and computer programs that are used in the
conduct of the business of the Corporation and its Subsidiaries as now
operated (collectively, "INTELLECTUAL PROPERTY RIGHTS") other than those
Intellectual Property Rights in which the failure to own, license or have the
right to use would not be reasonably likely to have a Material Adverse
Effect. SCHEDULE 3.9 sets forth a description of all material patents,
trademarks and copyrights and applications therefor owned by or licensed to
the Corporation or its Subsidiaries that are used in the conduct of the
business of the Corporation or its Subsidiaries as now operated (excluding
customary commercial software licenses). No claims are pending or, to the
knowledge of the Corporation, threatened against the Corporation or any of
its Subsidiaries that the Corporation or any of its Subsidiaries is, and to
the knowledge of the Corporation, neither the Corporation nor any Subsidiary
is, infringing or otherwise adversely affecting the rights of any Person with
regard to any Intellectual Property Right, except for claims, infringements
or adverse effects which, individually, or in the aggregate, is not
reasonably likely to have a Material Adverse Effect. To the knowledge of the
Corporation, no Person is infringing the rights of the Corporation with
respect to any Intellectual Property Right in any manner that is reasonably
likely to have a Material Adverse Effect. The Corporation has not licensed,
or otherwise granted, to any Person, any rights in or to any Intellectual
Property Rights and none of the Corporation or its Subsidiaries has any
obligation to grant licenses or other right to any of the material
Intellectual Property Rights to any other Person, except for such licenses,
grants or obligations that are not reasonably likely to have a Material
Adverse Effect. The Corporation is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or
other agreement
-12-
relating to the Intellectual Property Rights, except for breaches which,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect. To the Corporation's knowledge, the information technology
systems of the Corporation and its Subsidiaries (including but not limited to
software), equipment and software which are used in business as currently
conducted by Corporation and its Subsidiaries, are (or will be prior to
December 31, 1999) "year 2000 compliant" in that they are (or will be prior to
December 31, 1999) designed to be used prior to, during and after the calendar
year 2000 A.D., except for such failure to be "year 2000 complaint" which,
individually or in the aggregate, would not have and is not reasonably likely to
have a Material Adverse Effect.
3.10 MATERIAL CONTRACTS.
(a) Except as set forth in SCHEDULE 3.10, as of the date hereof,
neither the Corporation nor any of its Subsidiaries is a party to or bound by
any Contract that is used in the operation or conduct of its business and
that is:
(i) a Contract not to compete against the diagnostic
imaging systems and related radiology services business of any third party
or a Contract that restricts the Corporation or any of its Subsidiary or
Affiliates from entering or conducting any line of business in any
location at any time, except for restrictions on providing imaging
services contained in Contracts with hospitals, clinics, medical or
healthcare providers or other customers and except for Contracts with
holders of equity interests in Subsidiaries and other Persons in which the
Corporation holds directly or indirectly equity interests, none of which
has had or is reasonably likely to have a Material Adverse Effect);
(ii) a Contract (other than Benefit Plans) with any
shareholder, officer, director or Affiliate of the Corporation requiring
annual payments in excess of $150,000;
(iii) a lease or similar Contract in connection with
tangible personal property requiring annual payments in excess of $200,000;
(iv) a Contract under which the Corporation or such
Subsidiary has directly or indirectly guaranteed indebtedness of any other
Person, other than endorsements for the purpose of collection in the
ordinary course of business that, individually, is in excess of $100,000
and other than guarantees of any indebtedness of the Corporation or any
Subsidiary.
(v) a Contract granting a Lien upon any assets of the
Corporation, the foreclosure of which would have a Material Adverse Effect;
(vi) a Contract involving an annual payment to or by the
Corporation or such Subsidiary of more than $150,000 (unless terminable
without payment or penalty) other than sales orders and purchase orders
entered into in the ordinary course of business after the date of this
Agreement;
(vii) a material Contract that relate to services provided
by the Corporation to or at hospitals, clinics, medical or healthcare
providers or other customers or services paid for by health maintenance
organizations or other third party payors;
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(viii) a material Contract that relates to the construction,
reconstruction, maintenance, transportation or use of Magnetic Resonance
Imaging equipment which will require payments in excess of $250,000.
(ix) a Contract for indebtedness for borrowed money in
excess of $200,000, or
(x) a Contract other than as set forth above to which the
Corporation or such Subsidiary is a party, the absence of which would have
a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 3.10(b), neither the Corporation
nor any Subsidiary is and, to the knowledge of the Corporation (which for
purposes, hereof, shall also include the actual knowledge of ▇▇▇ ▇▇▇▇▇▇▇,
without inquiry or investigation), no other party is in violation of or in
default under (nor does there exist any condition affecting the Corporation or
any Subsidiary, or to the Corporation's knowledge, other parties to the material
Contracts which upon the passage of time or the giving of notice or both is
reasonably likely to cause such a violation of or default under) any material
Contract to which it is a party or by which it or any of its properties or
assets is bound (it being understood that any non-payment shall be deemed not to
be a violation of or default under any such Contract if the financial statements
included in the most recently filed SEC Documents reflects, in the aggregate,
adequate reserves for doubtful accounts as of the date of filing). Each
material Contract constitutes a valid and binding obligation of the Corporation
and/or Subsidiary party thereto and, to the knowledge of the Corporation, each
other party thereto, enforceable against such other party in accordance with
its terms, except if the failure to be valid, binding and enforceable has not
had and is not reasonably likely to have a Material Adverse Effect. No party has
given any written notice or to the knowledge of the Corporation, oral notice of
termination or cancellation of any material Contract or that it intends to
assert a breach of, or seek to terminate or cancel, any material Contract as a
result of the transactions contemplated hereby, in each case that has had or is
reasonably likely to have a Material Adverse Effect. Copies of all Contracts
listed in SCHEDULE 3.10 have been made available to Newco or its representatives
or agents.
3.11 PERMITS.
Except as set forth in SCHEDULE 3.11, as of the date hereof, each of the
Corporation and its Subsidiaries holds all material certificates, franchises,
consents, licenses, permits, notices, rights, authorizations and approvals
(including, without limitation, all certificates of need) from all Governmental
Entities as are necessary for it to own, lease or operate its properties and
assets and to conduct the business of the Corporation and such Subsidiaries as
currently conducted as of the date hereof (collectively, "PERMITS"), except
where the failure to have any such Permit, individually or in the aggregate, is
not reasonably likely to have a Material Adverse Effect. SCHEDULE 3.11 contains
a list of all material Permits (including, without limitation, all certificates
of need), and copies thereof have been provided or made available to Newco or
its representatives or agents. No default under any Permit has occurred, except
for defaults under Permits that, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect.
-14-
3.12 TAXES.
(a) Except as set forth in SCHEDULE 3.12(a), the Corporation and
each of its Subsidiaries, and any consolidated, combined, unitary or aggregate
group for Tax purposes of which the Corporation or any of its Subsidiaries is
or has been a member (a "CONSOLIDATED GROUP") (i) has timely filed all material
Tax Returns required to be filed by it (and, with respect to any such
Consolidated Group, during the period for which they have been a member thereof)
and (ii) such Tax Returns are complete and correct in all material respects and
(iii) has paid all Taxes shown thereon to be due. The most recent financial
statements reflect adequate reserves for any Taxes payable by the Corporation
and its Subsidiaries, for all taxable periods and portions thereof that have not
been paid, whether or not shown as being due on any returns through the date of
such financial statements. Except as set forth in SCHEDULE 3.12(a), to the best
knowledge of the Corporation (which for purposes, hereof, shall also include the
actual knowledge of ▇▇▇▇▇▇▇▇ ▇▇▇▇, without inquiry or investigation), no audit
of any Tax Return of the Corporation or any of its Subsidiaries is pending,
threatened or being conducted by a Tax authority. No extension of the statute
of limitations on the assessment of any Taxes has been granted by the
Corporation or any of its Subsidiaries and is currently in effect. No consent
under Section 341(f) of the Code has been filed with respect to the Corporation
or any of its Subsidiaries. None of the Corporation or its Subsidiaries has been
a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. All Taxes required to be withheld, collected or
deposited by or with respect to the Corporation and each of its Subsidiaries
have been timely withheld, collected or deposited, as the case may be, and, to
the extent required, have been paid to the relevant taxing authority except to
the extent the failure to so withhold, collected or deposited is reasonably
likely to have a Material Adverse Effect. No power of attorney that is
currently in force has been granted with respect to any matter relating to
Taxes that could materially affect the Tax liability of the Corporation or one
of its Subsidiaries and that are reasonably likely to have a Material Adverse
Effect. Neither the Corporation nor any of its subsidiaries (i) is a party to
or bound by any tax indemnity, tax sharing or tax allocation agreement (or
administrative or accounting practice having substantially the same effect as
such an agreement), (ii) has agreed to make or is required to make any material
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise, or (iii) owns material assets that directly or indirectly
secure indebtedness the interest on which is tax-exempt under Section 103(a) of
the Code.
(b) Except as set forth in SCHEDULE 3.12, none of the Corporation or
any of its Subsidiaries has any liabilities for the Taxes of any Person (other
than any of the Corporation or any of its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law) as a transferee or successor, by contract or otherwise.
3.13 PROCEEDINGS.
SCHEDULE 3.13 sets forth a list of all pending Proceedings, and to the
Corporation's knowledge (which for purposes, hereof, shall also include the
actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, without inquiry or investigation),
threatened Proceedings, involving the Corporation or any of its Subsidiaries
which (i) relate to or involve more than $200,000 (in excess of available
insurance coverage), (ii) seek any equitable relief or (iii) which in any case,
individually or in the
-15-
aggregate, would materially impair the ability of the Corporation to perform its
obligations under this Agreement. Neither the Corporation nor any of its
Subsidiaries is a party or subject to or in default under any material Judgment
applicable to the conduct or the business of the Corporation or such Subsidiary,
except as, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect.
3.14 BENEFIT PLANS.
(a) SCHEDULE 3.14(a) hereto contains a true and complete list of
each material employee benefit plan (as defined in Section 3(3) of ERISA),
stock option plans and severance agreements and plans that the Corporation and
its Subsidiaries has any present or future obligations or liability on behalf of
its employees or former employees, contractual employees or their dependents or
beneficiaries (collectively, the "BENEFIT PLANS"). The following have been made
available to Newco (i) true and complete copies of all Benefit Plans (or in the
case of unwritten Benefit Plans, descriptions thereof), including, without
limitation, with respect to each Benefit Plan, all amendments to the Benefit
Plans, and any trust or other funding arrangement, (ii) Form 5500s for each
Benefit Plan for the two most recent plan years, (iii) the most recently
completed actuarial valuation for each Benefit Plan for which an actuarial
report is required by ERISA or for financial reporting purposes, and (iv) the
most recent summary plan description for each Benefit Plan for which a summary
plan description is required by ERISA.
(b) None of the Benefit Plans which is a "pension plan" within the
meaning of Section 3(2) of ERISA (a "PENSION PLAN") is a "multiemployer plan" as
defined in Section 3(37) of ERISA, or is subject to the requirements of Title IV
of ERISA, Section 302 of ERISA or Section 412 of the Code. Neither the
Corporation nor any Subsidiary has any liability under Title IV of ERISA that
has had or is reasonably likely to have a Material Adverse Effect. Each Pension
Plan that is intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a determination letter from the IRS that it is so
qualified or the remedial amendment period for such Pension Plan has not
expired, and no fact or event has occurred since the date of such determination
letter that could adversely affect the qualified status of any such Pension
Plan, except if the failure to be so qualified or the expiration of such
remedial amendment period would not be reasonably likely to have a Material
Adverse Effect.
(c) Neither Corporation nor any Subsidiary has incurred any
liability for any penalty or tax under Sections 4971, 4972, 4975, 4976, 4979, or
4980 of the Code or Section 502 of ERISA which is reasonably likely to have a
Material Adverse Effect.
(d) Each of the Benefit Plans that is a "group health plan" (as
defined in Code Section 5000(b)) has at all times been in compliance with the
provisions of Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA
and any similar applicable state laws except to the extent that the failure to
be in compliance would not be reasonably likely to have a Material Adverse
Effect. No Benefit Plan that is a "welfare plan" (as defined in Section 3(1) of
ERISA) (the "WELFARE PLANS") provides or promises post-retirement health or
life benefits to current employees or retirees of Corporation or any Subsidiary,
except to the extent required under any applicable state law or under Section
601 of ERISA. Each Welfare Plan contains a procedure for amendment and
termination of such plan.
-16-
(e) No Benefit Plan is funded by a trust described in Section
501(c)(9) of the Code or subject to the provisions of Section 505 of the Code.
(f) Payment of all material amounts has been made to each Benefit
Plan which are required to be made as contributions thereto, under Applicable
Law or under any Benefit Plan or any agreement relating to a Benefit Plan as
of the last day of the most recent fiscal year of such Benefit Plan ended
prior to the date hereof. There is no accumulated funding deficiency with
respect to any Benefit Plan.
(g) Except as set forth in SCHEDULE 3.14 and except as provided in
the Corporation's certificates and bylaws or as expressly provided in this
Agreement, there exist no employment, consulting, severance, termination or
indemnification agreements between the Corporation and any current or former
employee, officer or director of the Corporation providing for a lump sum or
annual payment in excess of $100,000. Except as set forth in SCHEDULE 3.14,
the execution and delivery of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Benefit
Plan or individual agreement that will result in any payment (whether of
severance pay or otherwise), acceleration, vesting or increase in benefits
with respect to any employee.
(b) All applicable filings, notice or reports (including, without
limitation, annual reports filed on IRS Form 5500 and disclosure to
participants and beneficiaries) relating to any Benefit Plan have been timely
made.
(i) For purposes of this SECTION 3.14, any reference to the
Corporation shall be deemed also to refer to any entity which is under common
control or affiliated with the Corporation within the meaning of Section 4001
of ERISA and the rules and regulations thereunder and/or Section 414 of the
Code and the rules and regulations thereunder.
3.15 ABSENCE OF CHANGES OR EVENTS.
Except as set forth on SCHEDULE 3.15 hereto, since December 31, 1998,
the Corporation and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with prior practice except
in connection with the transactions contemplated hereby and the sale process,
and there has not been:
(a) any change, development, condition or effect that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of the Corporation's capital stock other than the declaration of dividends in
respect of the Series F Preferred;
(c) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock;
-17-
(d) except in the ordinary course of business (i) any granting by
the Corporation or any Subsidiary to any officer of the Corporation of any
material increase in compensation, (ii) any granting by the Corporation or
any Subsidiary to any officer, employee, director or consultant of any
increase in severance or termination pay, (iii) any entry by the Corporation
or any Subsidiary into any written employment agreement, or any severance or
termination agreement or arrangement with any officer, employee, director or
consultant, or (iv) any adoption or amendment of any Benefits Plans, in the
case of clauses (i) through (iv) that has had or is reasonably likely to have
a Material Adverse Effect;
(e) any damage, destruction or loss to property, whether or not
covered by insurance, that, individually or in the aggregate, has not been
cured and is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect;
(f) any material change in accounting methods, principles or
practices by the Corporation or any Subsidiary; or
(g) any material revaluation for financial statement purposes by
the Corporation or any of its Subsidiaries of any of asset (including,
without limitation, any material writing down of the value of any material
property, investment or assets).
3.16 COMPLIANCE WITH APPLICABLE LAWS.
The Corporation and its Subsidiaries are not in conflict with, or in
default or violation of, its respective certificate of incorporation, by-laws,
partnership agreement or other charter or organizational documents, except in
the case of the Subsidiaries if such conflict, default or violation has not
had and is not reasonably likely to have a Material Adverse Effect. The
Corporation and its Subsidiaries have complied in all material respects
with all Applicable Laws, except for instances of noncompliance
which, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect. Except as set forth in SCHEDULE 3.16, neither the
Corporation nor any of its Subsidiaries has received any written (or to the
knowledge of the Corporation, oral) communication during the past three years
from a Governmental Entity that alleges that the Corporation or its
Subsidiaries is not in compliance in any material respect with any Applicable
Law, except if such non-compliance has not had and is not reasonably likely
to have a Material Adverse Effect. Except as set forth in SCHEDULE 3.16,
neither the Corporation nor any of its Subsidiaries has received any written
(or to the knowledge of the Corporation, oral) communication during the past
three years from a Governmental Entity that alleges that the Corporation or
its Subsidiaries is not in compliance in any material respect with any
Applicable Law, except for any such non-compliance that has not had and is
not reasonably likely to have a Material Adverse Effect. Except as set forth
in SCHEDULE 3.16, the Corporation has not received any written (or to the
knowledge of the Corporation, oral) notice of any pending investigation by
any Governmental Entity with respect to any non-compliance with Applicable
Law by the Corporation or any of its Subsidiaries, which has had or is
reasonably likely to have a Material Adverse Effect. The Corporation's Common
Stock is not required to be registered pursuant to Section 12 of the Exchange
Act.
-18-
3.17 ENVIRONMENTAL MATTERS.
Except as set forth in SCHEDULE 3.16:
(a) the Corporation and each Subsidiary is, and has been, in
compliance with all applicable Environmental Laws except for any
noncompliance that, individually or in the aggregate, has not had a Material
Adverse Effect that has not been cured and is not reasonably likely to have a
Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means any Federal,
state, provincial, regional, municipal, local or foreign judgment, order,
decree, statute, law, ordinance, rule, regulation, code, permit, consent,
approval, license, writ, decree, directive, injunction or other enforceable
governmental requirement, including any registration requirement, relating
to: (A) Releases or threatened Releases of Hazardous Materials into the
environment; (B) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Materials; or (C)
otherwise relating to pollution or protection of health or safety or the
environment;
(b) since December 18, 1997 (and prior to such date, to the
knowledge of the Corporation), there has been no Release or threatened
Release of Hazardous Materials, in, on, under or affecting any property now
or previously owned, leased, controlled or operated by the Corporation or any
Subsidiary or, to the knowledge of the Corporation, any adjacent site, which
Release or threatened Release has had or is reasonably likely to have a
Material Adverse Effect. The term "RELEASE" has the meaning set forth in 42
U.S.C. (S) 9601(22). The term "HAZARDOUS MATERIALS" means any pollutant,
contaminant, hazardous, radioactive or toxic substance, material, constituent
or waste, or any other waste, substance, chemical or material regulated under
any Environmental Law, including (1) petroleum, crude oil and any fractions
thereof, (2) natural gas, synthetic gas and any mixtures thereof, (3)
asbestos and or asbestos-containing material, (4) radon and (5)
polychlorinated biphenyls ("PCBs"), or materials or fluids containing PCBs;
(c) there is no pending, or, to the knowledge of the Corporation,
threatened claim, action, demand, investigation or inquiry of or against the
Corporation or any of its Subsidiaries by any Governmental Entity or other
Person relating to any actual or potential violations of Environmental Law or
any actual or potential obligation to investigate or remediate a Release or
threatened Release of any Hazardous Materials, in each case, that has had or
is reasonably likely to have a Material Adverse Effect;
(d) neither the Corporation nor any Subsidiary has used any waste
disposal site, or otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Materials to any place or location, except
for any such use, disposal, transportation or arrangement that has not had a
Material Adverse Effect that has not been cured and is not reasonably likely
to have a Material Adverse Effect.
3.18 EMPLOYEE AND LABOR MATTERS.
Except as set forth in SCHEDULE 3.18, (i) neither the Corporation nor
any Subsidiary is a party to any collective bargaining agreement or similar
agreement with a labor organization, union or association; (ii) there are no
unfair labor practice complaints pending against the Corporation or any
Subsidiary, or to the Corporation's knowledge, threatened against any of
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them, before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against any of them; (iii) no strike, labor dispute,
slowdown or stoppage is pending (or to the Corporation's knowledge,
threatened) against the Corporation or any Subsidiary; (iv) there is no union
representation question existing with respect to the employees of the
Corporation or any Subsidiary, and (v) to the knowledge of the Corporation,
since January 1, 1998, neither the Corporation nor any Subsidiary has
encountered any labor union organizing activity, except with respect to any
matter specified above, which in the case of clauses (ii)-(v), individually
or in the aggregate, is not reasonably likely to have a Material Adverse
Effect.
3.19 AFFILIATE TRANSACTIONS.
SCHEDULE 3.19 sets forth a description of all transactions between the
Corporation or its Subsidiaries, on the one hand, and the Principal
Stockholders or any of their respective Affiliates, on the other hand, in
each case consummated at any time since January 1, 1999 and required to be
disclosed in an SEC Document (if such transaction occurred during the time
period covered by such SEC Document). Except as set forth on SCHEDULE 3.19,
there are no agreements or arrangements between the Corporation or its
Subsidiaries, on the one hand, and the Principal Stockholders or any of their
respective Affiliates, on the other hand, in each case, required to be
disclosed in an SEC Document (if such agreement or arrangement was in
existence during the time period covered by such SEC Document). To the
knowledge of the Corporation, no Principal Stockholder or any of their
respective Affiliates owns any interest in any asset or property (real or
personal, tangible or intangible), business or contract used or intended for
use or otherwise relating to the business currently conducted by the
Corporation or any Subsidiary other than minority investments in publicly
traded corporations.
3.20 STATE TAKEOVER STATUTES.
The Board has approved the Merger and this Agreement and the Stockholder
Support Agreements, and such approval is sufficient to render inapplicable to
the Merger, this Agreement and the Stockholder Support Agreements the
provisions of Section 203 of the DGCL to the extent, if any such Section is
applicable to the Merger, this Agreement, the Stockholder Support Agreement
and the transactions contemplated by this Agreement and the Stockholder
Support Agreements. To the knowledge of the Corporation, no other state
takeover statute or similar statute or regulation applies to the Merger, this
Agreement or the transactions contemplated by this Agreement and the
Stockholder Support Agreements.
3.21 OPINION OF FINANCIAL ADVISOR
The Board has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., the
financial advisor to the Corporation.
3.22 CERTAIN ADDITIONAL REGULATORY MATTERS.
None of (x) the Corporation, any Subsidiary of the Corporation, or, the
officers, directors, or employees or agents of the Corporation or any
Subsidiary or (y) to the Corporation's knowledge (which for purposes, hereof,
shall also include the actual knowledge of ▇▇▇▇▇ ▇▇▇▇), any Affiliate of the
Corporation having a direct or indirect ownership interest in the
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Corporation or any of its Subsidiaries within the meaning of Section
1320a-7(b)(8) of Title 42 of the United States Code have engaged in any
activities which constitute violations of, or are cause for imposition of
civil penalties upon the Corporation or mandatory or permissive exclusion of
the Corporation from Medicare or Medicaid, under Sections 1320a-7, 1320a-7a,
1320a-7b, or 1395nn of Title 42 of the United States Code, the federal
Civilian Health and Medical Plan of the Uniformed Services statute
("CHAMPUS"), or the regulations promulgated pursuant to such statutes or
regulations or related state or local statutes, including the following
activities (a) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment: (b) knowingly and willfully making or causing to be made
any false statement or representaiton of a material fact for use in
determining rights to any benefit or payment; (c) presenting or causing to be
presented a claim for reimbursement under CHAMPUS, Medicare, Medicaid or any
other State Health Care Program (as defined below) or Federal Health Care
Program (as defined below) that is (i) for an item or service that the Person
presenting or causing to be presented knows or should know was not provided as
claimed, or (ii) for an item or service and the Person presenting knows or
should know that the claim is false or fraudulent; (d) knowingly and
willfully offering, paying, soliciting or receiving any remuneration
(including any kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind (i) in return for referring, or to induce the
referral of, an individual to a Person for the furnishing or arranging for
the furnishing of any item or service for, which payment may be made in whole
or in part by CHAMPUS, Medicare or Medicaid, or any other State Health Care
Program or any Federal Health Care Program, or (ii) in return for, or to
induce, the purchase, lease, or order, or the arranging for or recommending
of the purchase, lease, or order, of any good, facility, service, or item for
which payment may be made in whole or in part by CHAMPUS, Medicare or
Medicaid or any other State Health Care Program or any Federal Health Care
Program; or (e) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading)
of a material fact with respect to (i) the conditions or operations of a
facility in order that the facility may qualify for CHAMPUS, Medicare,
Medicaid or any other State Health Care Program certification or any Federal
Health Care Program certification, or (iii) information required to be
provided under Section 1124(A) of the Social Security Act ("SSA") (Section
1320a-3 of Title 42 of the United States Code), except for such matters
which, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect. For purposes of this SECTION 3.22 only, "Subsidiary"
shall also include, without limitation, the entities set forth in SCHEDULE
3.22.
3.23 MEDICARE/MEDICAID PARTICIPATION ACCREDITATION.
(a) None of the Corporation, its Subsidiaries or any existing officers
or directors of the Corporation or the respective Subsidiary who (based on
advice by Newco to the Corporation) is expected to be an officer, director,
agent (as defined in 42 C.F.R. Section 1001.1001(a)(2)), or managing employee
(as defined in SSA Section 1126(b) or any regulations promulgated thereunder)
of the Corporation or the respective Subsidiary: (1) has had a civil monetary
penalty assessed against it under Section 1128A of the SSA or any regulations
promulgated thereunder; (2) has A-I-21 been excluded from participation under
the Medicare program or a state health care program as defined in SSA Section
1128(h) or any regulations promulgated thereunder ("STATE HEALTH CARE
PROGRAM") or a federal health care program as defined in SSA Section
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1123B(f) ("FEDERAL HEALTH CARE PROGRAM"): or (3) has been convicted (as that
term is defined in 42 C.F.R. Section 1001.2) of any of the following
categories of offenses as described in SSA Section 1128(a) and (b)(1),(2),(3)
or any regulations promulgated thereunder: (i) criminal offenses relating to
the delivery of an item or service under Medicare or any State Health Care
Program or any Federal Health Care Program; (ii) criminal offenses under
federal or state law relating to patient neglect or abuse in connection with
the delivery of a health care item or service: criminal offenses under
federal or state law relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct in connection with
the delivery of a health care item or service or with respect to any act or
omission in a program operated by or financed in whole or in part by any
federal, state or local governmental agency; (iii) federal or state laws
relating to the interference with or obstruction of any investigation into
any criminal offense described above in this clause (a); or (iv) criminal
offenses under federal or state law relating to the unlawful manufacture,
distribution, prescription or dispensing of a controlled substance, except
for such matters which, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect.
(b) The Corporation or a Subsidiary has a Medicare provider number, and
a participating provider agreement in force with a Medicare Part B carrier,
in each locale, as applicable, in which the Corporation or such Subsidiary
bills directly to Medicare for services furnished by the Corporation or such
Subsidiary.
(c) The Corporation or a Subsidiary has a Medicaid number and a
participating provider agreement in each state, as applicable, in which the
Corporation or such Subsidiary bills directly to such states' Medicaid agency
for services provided by the Corporation or such Subsidiary.
(d) For purposes of this SECTION 3.23 only, "Subsidiary" shall also
include, without limitation, the entities set forth in SCHEDULE 3.23.
3.24 BROKERS OR FINDERS.
The Corporation represents, as to itself and its Affiliates, that no
agent, broker, investment banker or other firm or Person is or will be
entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this
Agreement, except ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Inc. and BT Alex. ▇▇▇▇▇ & Co., based
upon arrangements made by or on behalf of the Corporation. The Corporation
has heretofore provided or made available to Newco or its representatives or
agents a true and complete copy of all valid and binding written agreements
between the Corporation and such firms pursuant to which such firms would be
entitled to any payment from the Corporation relating to the Merger.
3.25 NO ADDITIONAL REPRESENTATIONS.
THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE III ARE THE
ONLY REPRESENTATIONS AND WARRANTIES MADE BY THE CORPORATION, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN, ALL WARRANTIES, EXPRESS OR IMPLIED, ARE HEREBY
DISCLAIMED AND EXCLUDED, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A
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PARTICULAR PURPOSE. IN NO EVENT SHALL THE CORPORATION BE LIABLE FOR SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES. THE CORPORATION MAKES NO REPRESENTATION
OR WARRANTY AS TO THE ACCURACY OR RELIABILITY OF ANY FORECASTS OR PROJECTIONS
OF REVENUES, SALES, EXPENSES OR PROFITS OF THE BUSINESS.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT CORP. AND NEWCO
Newco hereby represent and warrant to the Corporation, as of the date
hereof, and as of the Closing Date, as follows:
4.1 ORGANIZATION, STANDING, QUALIFICATION AND POWER
Newco is duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
own, lease and operate its properties and to carry on its business as
presently conducted. Newco is duly qualified and in good standing to do
business in each jurisdiction in which the property owned or leased or
operated by it or by the nature of business conducted by it makes such
qualification necessary, except where the failure to be so qualified would
not have a Material Adverse Effect. From the date of its incorporation, Newco
has not engaged in any activities other than in connection with or as
contemplated by this Agreement and the Merger or in connection with or as
contemplated by this Agreement and the Merger. Newco has made available to
the Corporation or its counsel, representatives or advisors, complete and
correct copies of its certificate of incorporation, as in effect on the date
hereof and its by-laws.
4.2 AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY
Newco has all corporate power and authority to execute this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Newco of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the
part of Newco, and no other corporate proceedings on the part of Newco are
necessary to authorize the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby. Newco
has duly executed and delivered this Agreement and this Agreement constitutes
a legal, valid and binding obligation of Newco, enforceable against it in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally and general
equitable principles.
4.3 NO CONFLICTS; CONSENT
The execution and delivery by Newco of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance by Newco
with the terms hereof will not conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or a loss of a material benefit under, or result in the creation
of any Lien upon any of the
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properties or assets of Newco under any provision of (a) the certificate of
incorporation or by-laws of Newco, (b) any Contract to which Newco is a party
or by which any of its properties or assets is bound or (c) any Judgment or
Applicable Law applicable to Newco or its properties or assets. No consent of
or registration, declaration or filing with any Governmental Entity is
required to be obtained or made by or with respect to Newco in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, other than (i)
compliance with and filings under the HSR Act and (ii) as set forth in
SCHEDULE 4.3.
4.4 LITIGATION
There are not any (a) outstanding Judgments against Newco, or (b)
Proceedings pending or, to the knowledge of Newco, threatened against Newco
or its Affiliates that are in any case, individually or in the aggregate, are
reasonably likely to materially impair the ability of Newco to perform its
obligations under this Agreement or to materially delay the consummation of
the transactions contemplated hereunder.
4.5 AVAILABILITY OF FUNDS
(a) SCHEDULE 4.5(a) contains a true, correct and complete copy of a
commitment letter from Bankers Trust Corporation for the aggregate amount of
$650 million in senior bank financing.
(b) SCHEDULE 4.5(b) contains a true, correct and complete copy of
commitment letters for the aggregate amount of $260 million in subordinated
debt financing. SCHEDULE 4.5(b) also contains a true, correct and complete
copy of a commitment letter from Parent for equity financing. Newco cannot
amend the letters set forth in SCHEDULE 4.5(b) without the consent of the
Corporation.
(c) The commitment letters referred to in SECTIONS 4.5(a) and (b) are
hereinafter referred to as the "FINANCING COMMITMENTS."
(d) No Financing Commitment has been modified, withdrawn or terminated
as of the date hereof, and Newco has no reason to believe as of the date
hereof that the Financing Commitments will not lead to the financing as
contemplated by the Financing Commitments. Assuming the satisfaction or
waiver of the conditions set forth in the Financing Commitment, the Financing
Commitments are sufficient to pay the Cash Merger Price, the Preferred Merger
Price and all fees and expenses arising out of or relating to the
transactions contemplated by this Agreement, including, without limitation,
the amount required to purchase or defease all of the outstanding Senior
Subordinated Notes and to purchase or redeem all of the outstanding FIRSTS.
4.6 BROKERS OR FINDERS.
Except for ▇▇ ▇▇▇▇▇▇ and Kohlberg Kravis ▇▇▇▇▇▇▇ & Co. LLP, Newco
represents, as to itself and its Affiliates, that no agent, broker,
investment banker or other firm or Person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement. No Principal
Stockholder shall
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have any liability or obligation, and if this Agreement is terminated, the
Corporation shall not have any liability or obligation to ▇▇ ▇▇▇▇▇▇ or
Kohlberg, Kravis ▇▇▇▇▇▇▇ & Co. LLP.
4.7 NEWCO.
No Affiliate of Parent or Newco owns any material equity interest in any
Person engaged in the mobile magnetic resonance imaging business. Newco has
no reason to believe that the Federal Trade Commission or the Department of
Justice will request any information in connection with the consummation of
the transactions contemplated by this Agreement or that there is any
antitrust impediment to the consummation of the transactions contemplated
hereby.
ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS.
From the date hereof to the Effective Time (or the termination of this
Agreement), except as set forth on SCHEDULE 5.1, the Corporation shall, and
shall cause each Subsidiary to, carry on its business in the ordinary course
consistent with past practice and use reasonable efforts to preserve intact
its current business organization, keep available the services of its current
officers and employees and preserve its relationships with customers,
suppliers, licensors, licensees and others having material business dealings
with it, in each case in accordance with past practice. Without limiting the
generality of the foregoing, from the date hereof to the Effective Time, the
Corporation shall not and shall cause each Subsidiary not to (except as
expressly permitted or contemplated by this Agreement or with the prior
written consent of Newco, which consent will not be unreasonably withheld or
delayed):
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iii) purchase, redeem or otherwise acquire any Shares
or any capital stock of the Corporation or any Subsidiary or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Shares upon
the exercise of Corporation Stock Options outstanding on the date hereof);
(c) amend its Certificate of Incorporation or Bylaws or other
comparable charter or organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets or stock of, or by any
other manner, any business or any person, other than as set forth on SCHEDULE
5.1 or (ii) any assets or make other capital expenditures except for the
purchase of equipment or other assets consistent with the
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Corporation's capital expenditure forecast for 1999 and the first quarter of
2000 as set forth in SCHEDULE 5.1(d); PROVIDED that the Corporation may agree
to acquire any asset or agree to make any capital expenditure if such
agreement is terminable or may be substantially delayed for any reason by the
Corporation without premium or penalty;
(e) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, except (i)
immaterial assets, (ii) in the ordinary course of business (including for
trade-ins) or (iii) where the amount of such sales does not exceed,
individually or in the aggregate, $1,000,000 (excluding trade-ins);
(f) (i) incur any indebtedness or guarantee any such indebtedness of
another Person, issue or sell any debt securities or warrants or other rights
to acquire any debt securities of the Corporation or any Subsidiary (other
than incurrence of indebtedness under the Corporation's revolving credit
facility or equipment financing in the ordinary course of business
consistent with past practice), guarantee any debt securities of another
Person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another Person or enter into any arrangement
having the economic effect of any of the foregoing, or (ii) make any loans,
advances (other than advances to Subsidiaries or among Subsidiaries) or
capital contributions to, or investments in, any other Person;
(g) make any material tax election or settle or compromise any
material income tax liability other than the payment of taxes in the ordinary
course of business;
(h) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, or liabilities reflected or reserved against in the most recent
consolidated financial statements (or the notes thereto) of the Corporation
included in the SEC Documents or incurred thereafter in the ordinary course
of business consistent with past practice, or waive any material benefits of,
or agree to modify in any material respect, any confidentiality, standstill,
non-solicitation or similar agreement to which the Corporation or any
Subsidiary is a party;
(i) modify, amend or terminate any material Contract to which the
Corporation or any Subsidiary is a party (other than those Contracts subject
to SECTION 5.1(j)), or waive, release or assign any material rights or claims
under any material Contract (other than those Contracts subject to SECTION
5.1(j)), other than in the ordinary course of business consistent with past
practice;
(j) enter into any material Contract, which is not terminable by the
Corporation without premium or penalty, relating to the provision of services
by the Corporation or any Subsidiary, the maintenance of any MRI Unit or CT
Unit or the distribution, sale or marketing by third parties of the
Corporation's or any Subsidiary's services, including any material Contract
with any hospital, clinic, medical or healthcare provider, health maintenance
organization or other customer or third party payor, other than in the
ordinary course of business consistent with past practice; PROVIDED that the
Corporation shall be permitted to enter into any Contract or engage in any
transaction which is otherwise permitted under this SECTION 5.1;
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(k) except as set forth in SCHEDULE 5.1(k) and except as required to
comply with Applicable Law, (i) adopt, enter into, terminate or amend any
Benefit Plan or other arrangement for the benefit or welfare of any director,
officer or current or former employee, other than, in the case of
non-executive officer employees, in the ordinary course of business consistent
with past practice, (ii) materially increase in any manner the compensation
or fringe benefits of, or pay any material bonus to any director or executive
officer (other than as set forth on SCHEDULE 5.1(k)), (iii) pay any material
benefit to any director or executive officer not provided for under any
Benefit Plan (other than customary director fees and expenses), (iv) except
as permitted in clause (ii), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock based
or stock related awards, performance units or restricted stock, or the removal
of existing restrictions in any Benefit Plans or agreement or awards made
thereunder) or (v) fund or secure the payment of material compensation or
benefits under any Benefit Plan other than in the ordinary course of business
consistent with past practice;
(l) terminate the employment of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.;
(m) willingly allow or permit to be done, any act by which any of the
material Insurance Policies may be suspended, materially impaired or canceled;
(n) enter into, renew, modify or revise any agreement or transaction
with any Principal Stockholder or any of its Affiliates if such renewal,
modification or revision is not on an arms' length basis or would be required
to be disclosed in an SEC Document assuming the renewal, modification or
revision was executed or the transaction occurred during the period covered
by such SEC Document; or
(o) authorize any of, or commit or agree to take any of, the foregoing
actions.
5.2 ACCESS TO INFORMATION.
The Corporation shall, and shall cause its Subsidiaries and its and
their respective officers, directors, employees and agents to, afford to
Newco, its Affiliates and their respective accountants, counsel and other
representatives reasonable access during normal business hours during the
period prior to the Effective Time to all the properties, officers,
employees, agents, attorneys, accountants, books, contracts, commitments, Tax
Returns and records of the Corporation and its Subsidiaries and, during such
period shall furnish promptly to Newco any information concerning the
Corporation and its Subsidiaries as Newco may reasonably request; PROVIDED,
HOWEVER, that (a) such access does not unreasonably disrupt the normal
operations of the Corporation or any of its Subsidiaries, (b) the Corporation
is under no obligation to disclose to Newco any information, the disclosure
of which is restricted by Contract or Applicable Law or any information
relating to the proposed sale of the Corporation or (c) the Corporation may
withhold access to any of the foregoing to the extent the matters covered
thereby have been previously disclosed to Newco.
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5.3 CONFIDENTIALITY.
Newco acknowledges that the information being provided to it in
connection with the consummation of the transactions contemplated hereby is
subject to the terms of a confidentiality agreement dated as of June 18, 1999
between the Corporation and Affiliates of Newco as if Newco was a party to
such Confidentiality Agreement (the "CONFIDENTIALITY AGREEMENT"), the terms
of which are incorporated herein by reference.
5.4 EFFORTS TO CONSUMMATE.
(a) Subject to the terms and conditions of this Agreement, the parties
agree (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of
the transactions contemplated hereunder, and (iii) to cooperate with each
other in connection with the foregoing. Without limiting the foregoing, the
parties agree to use their respective reasonable efforts (A) to obtain all
necessary waivers, consents and approvals from any Person; PROVIDED, HOWEVER
that neither the Corporation nor Newco shall be required to make any
payments, commence litigation or agree to modifications of the terms of any
Contracts in order to obtain any such waivers, consents or approvals, (B) to
obtain all necessary Permits as are required to be obtained under any
Applicable Law, (C) to give all notices to, and make all registrations and
filings with third parties, including without limitation submissions of
information requested by Governmental Entities, (D) to reasonably cooperate
with all potential sources of financing to the Corporation in connection
with the Merger, and the other transactions contemplated by this Agreement,
and to take all reasonable steps as may be necessary or advisable to
consummate one or more financing transactions with such potential sources of
financing, (E) to the extent necessary to obtain recapitalization accounting
treatment of the Merger, taking reasonable actions to restructure the
transactions contemplated by this Agreement; PROVIDED that the Corporation
will not be required to take any action that, in the Corporation's reasonable
discretion, may materially delay the consummation of the Merger or may
adversely affect the Cash Merger Price, the Preferred Merger Price, the Taxes
payable by any holder of the Corporation's Common Stock or the risk of
liability to any such holder and (F) to cause all conditions to this
Agreement to be satisfied; PROVIDED, HOWEVER that neither the Corporation nor
Newco shall be required to make any payments or commence litigation in
connection therewith.
(b) Each of the Corporation and Newco shall, as promptly as
practicable, but in no event later than ten Business Days following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form, if any, required for the
transactions contemplated hereby and any supplemental information requested
in connection therewith pursuant to the HSR Act. Any such notification and
report form and supplemental information shall be in substantial compliance
with the requirements of the HSR Act. Each of Newco and the Corporation shall
furnish to the other such necessary information and reasonable assistance as
the other may request in connection with its preparation of any filing or
submission that is necessary under the HSR Act. The Corporation and Newco
shall keep each other apprised of the status of any communications with, and
any inquiries or requests for additional information
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from, the FTC and the DOJ and shall comply promptly with any such inquiry or
request. Each of the Corporation and Newco shall use its reasonable efforts to
obtain any clearance required under the HSR Act for the consummation of the
transactions contemplated by this Agreement.
(c) Without limiting the foregoing, Newco shall use its commercially
reasonable best efforts to obtain the requisite funds for the consummation of
the transactions contemplated hereby, including the Merger, the Debt Offers
(or the defeasance of the Senior Subordinated Notes and the redemption of the
FIRSTS), and to pay the related fees and expenses, on substantially the terms
and conditions set forth in the Financing Commitments or on substantially
comparable terms.
(d) Without limiting the foregoing, the Corporation shall defease all
of the outstanding Senior Subordinated Notes and redeem all of the
outstanding FIRSTS at the Effective Time to the extent that the Debt Offer
with respect to such Existing Notes has not been consummated, in each case,
with the proceeds from the Financing Commitments.
5.5 EXPENSES.
Whether or not the Closing takes place, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expense, including all costs and
expenses incurred pursuant to SECTION 5.4(a). Upon the Closing, the Surviving
Corporation shall pay the fees and expenses incurred by Newco and its
Affiliates in connection with this Agreement and the transactions
contemplated hereby, including the financial advisory fees of Kohlberg Kravis
▇▇▇▇▇▇▇ & Co. ("KKR") and shall enter into a fee agreement pursuant to which
the Surviving Corporation will agree to pay KKR an annual management fee,
reimburse KKR's expenses in connection with its services to the Surviving
Corporation and its ownership of Shares and indemnify Newco and its
Affiliates and their respective partners, members, shareholders, officers,
directors, employees, agents, representatives and advisors in connection with
their service on the board of directors of the Corporation and the provision
of services under the fee agreement.
5.6 PUBLICITY.
From the date hereof through the Closing Date, Newco, on the one hand,
and the Corporation on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon,
any press release or other public statements with respect to the transactions
contemplated hereby. Without the prior written consent of the other party
(which consent shall not be unreasonably withheld), no public release or
announcement concerning the transactions contemplated hereby shall be issued
by the Corporation, on the one hand, or Newco, on the other hand, without the
prior consent of Newco, as the case may be, except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange.
5.7 EMPLOYEE MATTERS.
Newco has no present intention to provide employees of the Corporation
with benefits substantially different from those in effect on the date
hereof, except for equity incentive programs. Newco has no present intention
to terminate the employment of any employee of the
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Corporation or any of its Subsidiaries within 60 days following the Closing
Date except for existing plans of the Corporation.
5.8 INDEMNIFICATION, EXCULPATION.
(a) All rights to indemnification and exculpation (including the
advancement of expenses) from liabilities for acts or omissions occurring at
or prior to the Effective Time (including with respect to the transactions
contemplated by this Agreement) existing as of the date hereof in favor of
the current or former directors, officers and employees of the Corporation,
as provided in the Certificate of Incorporation and or the By-Laws and or any
indemnification agreements and pursuant to applicable law shall be assumed by
the Surviving Corporation in the Merger, without further action, as of the
Effective Time and shall survive the Merger and shall continue in full force
and effect without amendment, modification or repeal in accordance with their
terms for a period of not less than 5 years after the Effective Time;
PROVIDED, HOWEVER, that if any claims are asserted or made within such
period, all rights to indemnification (and to advancement of expenses)
hereunder in respect of any such claims shall continue, without diminution,
until disposition of any and all such claims.
(b) For a period of at least five years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect standard
policies of directors' and officers' liability insurance in an aggregate
coverage amount not less than the coverage amounts maintained by the
Corporation as of the date hereof and including coverage with respect to
claim arising from facts or events which occurred before the Effective Time
to the extent available; provided, however, that (i) the Surviving
Corporation shall not be required in order to maintain or procure such
coverage to pay an annual premium in excess of $200,000 (other than with
respect to any existing run-off coverage) and that if equivalent can be
obtained only by paying an annual premium in excess of such limit, the
Surviving Corporation shall only be required to obtain as much coverage as
can be obtained by paying an annual premium equal to such limit (subject to
the availability of such (or similar) coverage) and (ii) such policies may in
the sole discretion of the Surviving Corporation be one or more "tail"
policies for all or portion of the full five years.
(c) The provisions of this Section 5.8 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives.
5.9 NO SOLICITATION.
The Corporation shall, and shall cause each Subsidiary to, and shall
direct and use reasonable efforts to cause its and its Subsidiaries'
officers, directors, employees, representatives and agents to, immediately
cease any discussions or negotiations with any parties other than Parent,
Newco and their Affiliates and representatives that may be ongoing with
respect to an Alternative Transaction. The Corporation shall not, shall cause
each Subsidiary not to, and shall not authorize and shall direct and use
reasonable efforts to cause its and its Subsidiaries' officers, directors,
employees and any investment banker, financial advisor, attorney, accountant
or other representative retained by it not to, directly or indirectly, (i)
solicit, initiate or encourage (including by way of furnishing information),
or take any other action to facilitate, any inquiries
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or the making of any proposal that may lead to an Alternative Transaction, or
(ii) participate in any discussions or negotiations regarding any proposed
Alternative Transaction.
5.10 FINANCIAL INFORMATION.
The Corporation shall furnish to Newco the following financial
information (all to be prepared in accordance with GAAP consistently applied,
subject, in the case of unaudited financial information, to normal year-end
audit adjustments): (a) as soon as available but in any event within 45 days
of each of March 31, June 30, September 30 and December 31 and 35 days of
each other month, the unaudited consolidated balance sheets and income
statements of the Corporation, showing its financial condition as of the
close of such month and the results of operations during such month and for
the then elapsed portion of the Corporation's fiscal year, in each case,
setting forth the comparative figures for the corresponding month in the
prior fiscal year, the corresponding elapsed portion of the prior fiscal year
and the corresponding period in the Corporation's budget for 1999 as in
effect on the date hereof; and (b) all documents filed with or submitted to
the SEC by the Corporation simultaneously with such filing or submission.
5.11 NOTICE OF CHANGES.
From the date hereof to the Effective Time, each party (the "BREACHING
PARTY") shall give reasonably prompt notice to the other party of any breach
of any representation, warranty or covenant made by the Breaching Party that
it becomes aware of, in each case, which breach would cause a condition to
the non-Breaching Party's obligations not to be satisfied. The Corporation
shall give reasonably prompt notice to Newco of any action commenced after
the date hereof and prior to the Effective Time that could reasonably be
expected to materially affect the Corporation or its Subsidiaries. A breach
of this SECTION 5.11 shall be deemed not to have occurred if the failure to
give any notice hereunder has not materially prejudiced the non-Breaching
Party.
5.12 REGISTRATION RIGHTS AGREEMENT.
Immediately prior to the Effective Time, the Corporation shall execute
and deliver to Parent or Holdings LLC, the Principal Stockholders and any
Substitute Principal Stockholder a registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT") substantially in the form set forth in
SCHEDULE 5.12.
5.13 AFFILIATE AGREEMENTS.
The Corporation shall use its reasonable efforts to cause the condition
set forth in SECTION 6.2(h) to be satisfied prior to the Effective Time.
5.14 LEASE AGREEMENTS.
The Corporation shall use its reasonable efforts to amend all real
estate leases in respect of retail sites that have provisions for lease
payments that are based on revenues at the applicable site to provide for
lease payments that are not based on revenues.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION.
The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the
Effective Time, of the following conditions:
(a) HSR ACT. The waiting period (and any extensions thereof) under
the HSR Act shall have expired or been terminated.
(b) NO INJUNCTIONS OR RESTRAINTS. No Applicable Law or injunction
enacted, entered, promulgated, enforced or issued by any Governmental Entity
or other legal restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect; PROVIDED, HOWEVER, that
each of the Corporation and Newco shall have used its reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any such injunction or other order that may be entered.
6.2 CONDITIONS TO OBLIGATION OF NEWCO.
The obligation of Newco to effect the Merger is subject to the
satisfaction (or waiver by Newco) on or prior to the Closing of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Corporation made in this Agreement shall be true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect"), as of the Closing Date as though made on and as
of the Closing Date (except as to any representation or warranty that
expressly relates to a specific date, which representation and warranty shall
be true and correct on the date so specified), except where the failure to be
so true and correct is not, individually or in the aggregate reasonably
likely to have a Material Adverse Effect. Newco shall have received a
certificate signed by an authorized officer of the Corporation certifying as
to fulfillment of the conditions set forth in this SECTION 6.2(a) with
respect to the Corporation.
(b) PERFORMANCE OF OBLIGATIONS. The Corporation shall have
performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by the
Corporation by the time of the Closing, and Newco shall have received a
certificate signed by an authorized officer of the Corporation certifying as
to fulfillment of the conditions set forth in this SECTION 6.2(b) with
respect to the Corporation.
(c) SECRETARY'S CERTIFICATES. Newco shall have received a
certificate, dated as of the Closing Date, signed by the Secretary of the
Corporation and certifying as to (i) its certificate of incorporation and
bylaws, (ii) the incumbency of officers executing this Agreement and (iii)
the resolutions of the board of director of the Corporation authorizing the
execution, delivery, and performance by the Corporation of this Agreement.
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(d) NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall have
been no change, development, condition or effect that has had or is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
(e) NO LITIGATION. If Newco has complied in all material respects with
its obligations under SECTION 5.4, there shall not be pending by any
Governmental Entity (x) any suit, action or proceeding (i) challenging or
seeking to restrain or prohibit the consummation of the Merger or the
Stockholder Support Agreements, (ii) seeking to prohibit or limit the
ownership or operation by the Corporation, Parent or any of their respective
Affiliates of any material portion of the business or assets of the
Corporation or any of its Subsidiaries, to dispose of or hold separate any
material portion of the business or assets of the Corporation or any of its
Subsidiaries, as a result of the Merger or any of the other transactions
contemplated by this Agreement or the Stockholder Support Agreements, (iii)
seeking to impose limitations on the ability of Parent, Newco or their
Affiliates to acquire or hold, or exercise full rights of ownership of, any
shares of the Common Stock, including, without limitation, the right to vote
the Common Stock on all matters properly presented to the stockholders of the
Corporation, or (iv) seeking to prohibit Parent or any of its Affiliates from
effectively controlling in any material respect the business or operation of
the Corporation or its Subsidiaries, or (y) any formal investigation, audit or
Qui Tam proceeding with respect to the Corporation's compliance with Health
Care Laws that Newco reasonably determines has the potential to be material
to the Corporation and its Subsidiaries, taken as a whole (other than any
such investigation, audit or Qui Tam proceeding relating to a matter that has
been previously disclosed to Newco); PROVIDED that the condition set forth in
this SECTION 6.2(e)(y) shall be deemed to be waived on the tenth Business Day
following delivery of a notice to Newco of any such investigation, audit or
Qui Tam proceeding if Newco shall not have delivered on or prior to such
tenth day a notice to the effect that it has reasonably determined that such
investigation, audit or Qui Tam proceeding has the potential to be material
and adverse to the Company and its Subsidiaries, taken as a whole.
(f) FINANCING. The Corporation shall have received the proceeds of
financing described in the Financing Commitment referred to in Section
4.5(a) on substantially the terms set forth in the Financing Commitment or on
substantially comparable terms.
(g) PAYOUT OPTIONS. Each Payout Option, except for Payout Options which
are exercisable with respect to fewer than 50,000 shares of Common Stock,
shall have been cancelled for the cash payment contemplated by SECTION 2.4.
(h) TERMINATION OF AFFILIATE AGREEMENTS. Each of the agreements set
forth in SCHEDULE 6.2(h) shall have been terminated without further
liability (it being understood that all amounts payable thereunder shall be
paid at or prior to the Effective Time), and all obligations and liabilities
of the Corporation to the Principal Stockholders and their Affiliates
thereunder shall be cancelled, except, in each case for rights to
indemnification and exculpation set forth in the agreements referred to in
SCHEDULE 6.2(h).
(i) RESIGNATIONS. Prior to the Effective Time, each member of the Board
that is employed by or an Affiliate of the Principal Stockholders shall have
executed letters of resignation which shall become effective as of the
Effective Time.
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(j) STOCKHOLDER AGREEMENTS. Each of the Principal Stockholders shall
have performed in all material respects its obligations under each of the
Stockholder Support Agreements.
(k) RECAPITALIZATION ACCOUNTING TREATMENT. The Chief Accountant or other
senior staff members of the SEC shall not have issued any public
communication which (i) changes its policy with respect to recapitalization
accounting treatment as in effect on the date hereof and (ii) would result in
transactions contemplated by this Agreement not to be treated as a
recapitalization for accounting purposes.
6.3 CONDITIONS TO THE OBLIGATION OF THE CORPORATION.
The obligation of the Corporation to effect the Merger is subject to the
satisfaction (or waiver by the Corporation) on or prior to the Closing Date
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF NEWCO. The representations and
warranties of Newco made in this Agreement shall be true and correct (without
giving effect to any limitation as to "materiality" or "Material Adverse
Effect"), as of the Closing Date as though made on and as of the Closing Date
(except as to any representation or warranty that expressly relates to a
specific date, which representation and warranty shall be correct in all
material respects on the date so specified), except where the failure to be
so true and correct is not, individually or in the aggregate reasonably
likely to have a Material Adverse Effect (except for the representations
contained in Sections 4.1 and 4.2, which shall be true and correct in all
respects). The Corporation shall have received a certificate signed by an
authorized officer of Newco to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF NEWCO. Newco shall have performed or
complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by Newco by the
time of the Closing, and the Corporation shall have received a certificate
signed by an authorized officer of Newco to such effect (it being understood
that Newco shall not have been deemed to have complied in all material
respects if it has not paid the Cash Merger Price and the Preferred Merger
Price in full).
(c) SECRETARY'S CERTIFICATE. The Corporation shall have received a
certificate, dated as of the Closing Date, signed by the Secretary of Newco
certifying as to (i) its certificate of incorporation and bylaws, (ii) the
incumbency of officers executing this Agreement and (iii) the resolutions of
the board of directors of Newco authorizing the execution, delivery and
performance by Newco of this Agreement.
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ARTICLE VII
TERMINATION
7.1 TERMINATION.
(a) Subject to the provisions of SECTION 7.2, this Agreement may be
terminated and the transactions contemplated by this Agreement abandoned at
any time prior to the Closing, notwithstanding approval thereof by the
stockholders of the Corporation:
(i) by mutual written consent of the Corporation and Newco;
(ii) by either the Corporation or Newco, if the Effective Time
shall not have occurred on or before November 30, 1999; PROVIDED that
the right to terminate this Agreement pursuant to this SECTION
7.1(a)(ii) shall not be available to the party seeking to terminate if
any willful failure of such party to perform any of its obligations
under this Agreement required to be performed at or prior to the
Effective Time has been the cause of the failure of the Effective Time
to occur on or before such date and such failure constitutes a breach of
this Agreement;
(iii) by the Corporation, on or after November 8, 1999 if all
conditions to the obligations of Newco shall have been satisfied or
waived on or before such date other than the condition set forth in
Section 6.2(f); PROVIDED that Newco shall be entitled to extend such
date to a date not later than November 12, 1999 if the Corporation is
required under Applicable Law to extend the Debt Offer beyond November
8, 1999; PROVIDED, FURTHER, that the right to terminate this Agreement
pursuant to this SECTION 7.1(a)(iii) shall not be available to the party
seeking to terminate if any willful failure of such party to perform any
of its obligations under this Agreement required to be performed at or
prior to the Effective Time has been the cause of the failure of the
Effective Time to occur on or before November 8, 1999 (or, if extended,
November 12, 1999) and such failure constitutes a breach of this
Agreement;
(iv) by the Corporation or Newco if any Governmental Entity shall
have issued a final order, decree or ruling or taken any other final action
permanently restraining, enjoining or otherwise prohibiting the Merger and
such order, decree or other action is or shall have become final and
nonappealable; or
(v) by the Corporation following delivery by Newco to the
Corporation of a notice pursuant to SECTION 6.2(e).
(b) In the event of termination by the Corporation or Newco pursuant to
this SECTION 7.1, written notice thereof shall forthwith be given to the
other and the transactions contemplated by this Agreement shall be terminated
without further action by any party.
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7.2 EFFECT OF TERMINATION.
If this Agreement is terminated and the transactions contemplated hereby
are abandoned as described in SECTION 7.1, this Agreement shall become null
and void and of no further force and effect, except for the provisions of
SECTIONS 2.3, 5.3, 5.5, 5.6, this Article VII and Article VIII. Nothing in
this SECTION 7.2 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
8.1 ASSIGNMENT.
This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by Newco or the Corporation (including by
operation of law in connection with a merger or consolidation of Newco or the
Corporation) without the prior written consent of the other party hereto. Any
attempted assignment in violation of this SECTION 8.1 shall be void.
8.2 NO THIRD-PARTY BENEFICIARIES.
This Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder.
8.3 SURVIVAL.
The representations and warranties and covenants applicable to periods
prior to the Closing contained in this Agreement and in any document
delivered in connection herewith shall survive until the Closing and the
consummation of the transactions contemplated hereby and shall not survive
the Closing. From and after the Effect Time, no party shall have any claim or
cause of action arising out of or relating to this Agreement, including any
claim or cause of action in respect of any breach of any representation or
warranty or covenant applicable to periods prior to the Closing contained in
this Agreement, other than any claim in respect of any covenant to be
performed after the Closing Date.
8.4 NOTICES.
All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by
facsimile or sent, postage prepaid, by registered, certified or nationally
recognized overnight courier service and shall be deemed given when so
delivered by hand or facsimile, or if mailed, three days after mailing (one
Business Day in the case of overnight courier service), as follows:
(i) if to Newco, or the Surviving Corporation after the Closing,
to
Viewer Acquisition Corporation
c/o Kohlberg Kravis ▇▇▇▇▇▇▇ & Co. LLP
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(ii) if to the Corporation prior to the Closing to:
Alliance Imaging, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Apollo Management, L.P.
1301 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
and
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
8.5 INTERPRETATION: EXHIBITS AND SCHEDULES.
The headings contained in this Agreement, in any Exhibit or Schedule
hereto and in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Except when the context requires otherwise, any reference
in this Agreement to any Article, Section, clause, Schedule or Exhibit
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shall be to the Articles, Sections and clauses of, and Schedules and Exhibits
to this Agreement. The words "include," "includes" and "including" are deemed
to be followed by the phrase "without limitation." Any reference to the
masculine, feminine or neuter gender shall include such other genders and any
reference to the singular or plural shall include the other, in each case
unless the context otherwise requires. All Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made a part of
this Agreement as if set forth on full herein. The consummation of the
matters set forth on EXHIBIT C shall be exceptions to the representations,
warranties and covenants of the Corporation contained in this Agreement.
8.6 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
8.7 ENTIRE AGREEMENT.
This Agreement, the Stockholder Support Agreements, the Stockholder
Agreement, the Registration Rights Agreement and the Confidentiality
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements relating to such subject matter. Neither party hereto shall be
liable or bound to the other party hereto in any manner by any
representations, warranties or covenants relating to such subject matter
except as specifically set forth herein or in such other documents set forth
in this Section 8.7.
8.8 AMENDMENTS AND WAIVERS.
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. By an instrument in writing
the Corporation, on the one hand, or Newco, on the other hand, may waive
compliance by the other party with any term or provision of this Agreement
that such other party was or is obligated to comply with or perform. No delay
on the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part
of any party hereto of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder or preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or
remedies which the parties hereto may otherwise have at law or in equity.
8.9 SEVERABILITY.
It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
this Agreement or affecting the validity or enforceability of such provision
in any other
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jurisdiction so long as the economic or legal substance of the transactions
contemplated hereunder not affected in any manner adverse to any party.
Notwithstanding the foregoing, if such provision could be more narrowly drawn
so as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Upon such
adjudication that any particular provision shall be invalid, prohibited or
unenforceable, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.
8.10 CONSENT TO JURISDICTION.
Each of Newco and the Corporation irrevocably submits to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, the United States District Court for the Southern District of
New York and any appellate courts thereof, for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transaction
contemplated hereby. Each of Newco and the Corporation further agrees that
service of any process, summons, notice or document by U.S. registered mail
to such party's respective address set forth above shall be effective service
of process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this SECTION 8.10. Each
of Newco and the Corporation irrevocably, and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in the Supreme
Court of the State of New York, New York County, the United States District
Court for the Southern District of New York and any appellate courts thereof,
and hereby and thereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
8.11 LIMITATION OF DAMAGES.
Notwithstanding any provision of this Agreement, no party shall be
liable for any punitive, exemplary or consequential damages, including loss
of revenue or income, or loss of business reputation or opportunity relating
to the breach of this Agreement.
8.12 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State, without regard to the
conflicts of law principles of such State.
8.13 WAIVER OF JURY TRIAL.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY
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ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT IN THE EVENT OF LITIGATION SEEK TO ENFORCE
EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND
(iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.13
8.14 EQUITABLE REMEDIES.
Each of the parties acknowledges and agrees that the other party
would be irreparably damaged in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or
otherwise are breached. Therefore, notwithstanding anything to the contrary
in this Agreement, each of the parties agrees that the other party shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically the performance by
the other party under this Agreement, and each party agrees to waive the
defense in any such suit that the other party has an adequate remedy at law
and to interpose no opposition, legal or otherwise, as to the propriety of
injunction or specific performance as a remedy. The equitable remedies
described in this Section 8.14 shall be in addition to, and not in lieu of,
any other remedies at law or in equity that the parties hereto may elect to
pursue.
* * *
-40-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Merger as of the date first written above.
VIEWER ACQUISITION
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
ALLIANCE IMAGING, INC.
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Merger as of the date first written above.
VIEWER ACQUISITION
CORPORATION
By:
-----------------------------------
Name:
Title:
ALLIANCE IMAGING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
ANNEX I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following respective meanings:
"ACQUISITION LLC" has the meaning set forth in the preamble hereto.
"AFFILIATE" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first Person.
"AGREEMENT" means this Agreement and Plan of Merger.
"ALTERNATIVE TRANSACTION" means (i) any acquisition or purchase of
20% or more of the consolidated assets of the Corporation and its
Subsidiaries or of over 20% of any class of equity securities of the
Corporation or any of its Subsidiaries, (ii) any tender offer (including a
self tender offer) or exchange offer that if consummated would result in any
Person beneficially owning 20% or more of any class of equity securities of
the Corporation or any of its Subsidiaries, (iii) any merger, consolidation,
business combination, sale of all or substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Corporation or any of its Subsidiaries whose assets, individually or in
the aggregate, constitute more than 20% of the consolidated assets of the
Corporation other than the transactions contemplated by this Agreement, or
(iv) any other transaction the consummation of which would be reasonably
likely to impede, interfere with, prevent or materially delay the Merger or
which would be reasonably likely to materially dilute the benefits to Newco
of the transaction contemplated hereby.
"APPLICABLE LAW" means shall mean any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any Governmental Entity.
"BENEFIT PLAN" has the meaning set forth in SECTION 3.14(a).
"BOARD" has the meaning set forth in the preamble hereof.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day which banking institutions in New York, New York are not required to be
open.
"BY-LAWS" has the meaning set forth in SECTION 1.5(b)
"CASH MERGER PRICE" means (a) an amount equal to (i) $915 million
PLUS (ii) the aggregate exercise price of all Corporation Stock Options
(whether or not vested) outstanding immediately prior to the Effective Time
PLUS (iii) all cash proceeds received by the Corporation in connection with
the exercise of any Corporation Stock Option after the date hereof and prior
to the Effective Time (any such exercised Corporation Stock Options shall not
be considered outstanding under clause (ii) above LESS (iv) the Net Debt
Amount LESS (v) the product of 150,000 multiplied by the Preferred Merger
Price LESS (vi) the Corporation Expenses LESS (vii) the aggregate retention
bonuses paid or payable in accordance with the arrangements set forth in
EXHIBIT C (as the amount of such bonuses may be revised by the
Corporation, in its sole discretion, from time to time prior to the Effective
Time) PLUS (viii) $582,500 (adjusted in the same proportion as the retention
bonuses) divided by (b) the total number of shares of Common Stock
outstanding immediately prior to the Effective Time assuming all Corporation
Stock Options (whether or not vested) have been exercised.
"CERTIFICATE OF INCORPORATION" has the meaning set forth in
SECTION 1.5(a).
"CERTIFICATE OF MERGER" has the meaning set forth SECTION 1.2.
"CLOSING" has the meaning set forth in SECTION 1.3.
"CLOSING DATE" has the meaning set forth in SECTION 1.3.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" has the meaning set forth in the preamble hereof.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in SECTION 5.3.
"CONSENT" has the meaning set forth in SECTION 3.3(b).
"CONTRACT" all agreements, contracts, leases, purchase orders,
undertakings, understandings, covenants not to compete, employment
agreements, confidentiality agreements, licenses, instruments, obligations
and commitments to which the Corporation or one of its Subsidiaries is a party
or by which any assets of the Corporation or its Subsidiaries are bound or
affected, whether written or oral.
"CONTROL" (including the terms "CONTROLLED", "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of stock, by contract or credit
arrangement or otherwise.
"CORPORATION" has the meaning set forth in the caption.
"CORPORATION EXPENSES" means all expenses incurred by the
Corporation in connection with the negotiation, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
including all fees payable to the Corporation's financial advisors and
counsel in connection with such transactions, other than those expenses
relating to the Debt Offers, the debt and equity financing to be provided in
connection with the Merger, the financial advisory work provided to Newco
and its Affiliates and the rollover of management equity and other
compensation arrangements for management after the Closing (it being
understood that the Corporation will cause its financial advisors and
counsel to provide final invoices prior to Closing for all services that are
included in Corporation Expenses).
"CORPORATION STOCK OPTION PLANS" means the Corporation's 1991 Stock
Option Plan, 1997 Stock Option Plan, 1999 Non-Employee Director Stock Option
Plan, the Three Rivers Holding Corp. 1997 Stock Option Plan, the Rollover
Option Agreements between Three Rivers Holding Corp. and certain of its
employees and any other plan, agreement or arrangement which grants options
or any other rights in Common Stock, in each case, as amended, supplemented
or restated to the date hereof.
"CORPORATION STOCK OPTIONS" means all options to acquire Common
Stock.
"CREDIT AGREEMENT" means the Third Amended and Restated Credit
Agreement dated as of May 13, 1999, among the Corporation, Salomon Brothers
Holding Company, Inc., Bankers Trust Company and the Various Lending
Institutions party thereto.
"DEBT OFFERS" has the meaning set forth in SECTION 2.3.
"DGCL" has the meaning set forth in the preamble hereof.
"DISSENTING SHARES" has the meaning set forth in SECTION 2.1.
"DOJ" has the meaning set forth in SECTION 5.4(b).
"EFFECTIVE TIME" has the meaning set forth in SECTION 1.2.
"ENVIRONMENTAL LAW" has the meaning set forth in SECTION 3.17.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, the regulations promulgated thereunder.
"EXCHANGE FUND" has the meaning set forth in SECTION 2.2(d).
"EXISTING NOTES" means the FIRSTS and the Senior Subordinated Notes.
"FIRSTS" means the Corporation's Floating Interest Rate Subordinated
Term Securities due 2005.
"FTC" has the meaning set forth in SECTION 5.4(b).
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession in the United States, consistently applied.
"GOVERNMENTAL ENTITY" means any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority, agency, department, board,
commission or instrumentality, domestic or foreign.
"HAZARDOUS MATERIALS" has the meaning set forth in SECTION 3.17.
"HEALTH CARE LAWS" means laws and regulations relating to the
Permits referred to in SECTION 3.11 that are specific to the healthcare
industry (such as certificates of need and clinic licenses), laws and
regulations referred to in SECTIONS 3.22 and 3.23 and laws and regulations
enacted or promulgated pursuant to State Health Care Programs and Federal
Health Care Programs.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"JUDGMENT" means any judgment, decision, ruling, writ, injunction,
order, award or decree of any Governmental Entity.
"LEASED PROPERTY" has the meaning set forth in SECTION 3.8.
"LEASES" has the meaning set forth in SECTION 3.8.
"LIENS" means mortgages, liens, security interests, pledges,
easements, rights of first refusal, options, restrictions, claims, easements,
encroachment, building or use restriction, or encumbrances of any kind,
whether voluntarily incurred or arising by operation of law, and includes any
agreement to give any of the foregoing in the future and any contingent sale
or other title retention agreement or lease in the nature thereof.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
business, assets, liabilities, properties, condition (financial or
otherwise) or results of operations of the Corporation and its Subsidiaries,
taken as a whole, other than any such effect caused by or relating to general
economic conditions or (ii) the prevention or material delay of the ability
of the Corporation to consummate the transactions contemplated hereby.
"MERGER" has the meaning set forth in the preamble hereof.
"MERGER SHARES" has the meaning set forth in SECTION 2.1(a)(i).
"NET DEBT AMOUNT" means (a) $526,998,000 less (b) if the Effective
Time occurs after October 31 but prior to November 30, the product of
$141,333 multiplied by the number of days that has elapsed from October 31
through the Closing Date.
"NEWCO" has the meaning set forth in the first paragraph hereof.
"NON-VOTING COMMON" has the meaning set forth in SECTION 3.4(a).
"OFFER DOCUMENTS" has the meaning set forth in SECTION 2.3.
"OWNED REAL PROPERTY" has the meaning set forth in SECTION 3.8(a).
"PARENT" has the meaning set forth in the preamble hereof.
"PAYING AGENT" has the meaning set forth in SECTION 2.2.
"PAYOUT OPTIONS" has the meaning set forth in SECTION 2.4.
"PERMITS" has the meaning set forth in SECTION 3.11.
"PERMITTED LIENS" means (i) those Liens granted pursuant to real
property loans and leases disclosed in SCHEDULE 3.8 or which the failure to
disclose would not be reasonably likely to have a Material Adverse Effect,
(ii) mechanics', carriers', workmen's, repairmen's or other like Liens
arising or incurred in the ordinary course of business, Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business and liens for
Taxes that continued use and operation of the Corporation's or its
Subsidiaries' assets in the conduct of its business as presently conducted,
(iv) easements, covenants, rights-of-way and other similar restrictions of
record, (v) any conditions that may be shown by a current, accurate survey or
physical inspection of any Owned Real Property made prior to Closing, (vi)(A)
zoning, building and other similar restrictions, (B) Liens that have been
placed by any developer, landlord or other third party on property are not
due and payable or that may thereafter be paid without penalty or that are
being contested in good faith by appropriate proceedings, (iii) other
imperfections of title or encumbrances, if any, that do not, individually or
in the aggregate, materially impair the over which the Corporation has
easement rights and (C) unrecorded easements, covenants, rights-of-way and
other similar restrictions (none of which have had or are reasonably likely
to have a Material Adverse Effect), (vi) liens granted pursuant to the Credit
Agreement and (vii) other Liens which have not had and are not reasonably
likely to have a Material Adverse Effect.
"PERSON" means and includes any person or entity, whether an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, firm or a governmental entity (or any department,
agency or political subdivision thereof).
"PREFERRED MERGER PRICE" means a per share amount equal to the
amount that a holder of a share of Series F Preferred would have received if
that share of Series F Preferred was redeemed immediately prior to the
Effective Time.
"PREFERRED STOCK" has the meaning set forth in SECTION 3.4.
"PRINCIPAL STOCKHOLDERS" has the meaning set forth in the preamble
hereto.
"PROCEEDING" means any claim, action, suit, investigation or
proceeding before any Governmental Entity.
"RELEASE" has the meaning set forth in SECTION 3.17.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in SECTION
5.12.
"RETAINED SHARES" means the number of shares of Common Stock set
forth opposite the name of each stockholder set forth on SCHEDULE 2.1;
PROVIDED that after the date hereof, the Corporation and/or the Principal
Stockholders may, in their sole discretion, amend SCHEDULE 2.1 to add
additional stockholders who have agreed to retain shares of Voting Common
Stock in lieu of a portion of the shares set forth opposite the name of the
Principal Stockholders
in such Schedule (a "SUBSTITUTE PRINCIPAL STOCKHOLDER"); PROVIDED, FURTHER,
that (i) no such Substitute Principal Stockholder shall retain more than 5%
of the number of Shares it holds immediately prior to the Effective Time and
(ii) that an employee, officer or director of the Corporation shall not be a
Substitute Principal Shareholder.
"SEC DOCUMENTS" has the meaning set forth in SECTION 3.6.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
as the same may be further amended, modified or supplemented from time to
time, or any successor statute, and the rules and regulations thereunder, as
the same are from time to time in effect.
"SENIOR SUBORDINATED NOTES" means the 9.625% Senior Subordinated
Notes, due 2005.
"SERIES F PREFERRED" has the meaning set forth in the preamble
hereof.
"SERIES F PREFERRED CERTIFICATE OF DESIGNATIONS" means the
Certificate of Designations, Powers, Preferences and Rights of Series F
Preferred, dated as of December 17, 1997.
"SHARES" means shares of Voting Common and Non-Voting Common issued
and outstanding.
"STOCKHOLDERS AGREEMENT" has the meaning set forth in the preamble
hereof.
"STOCKHOLDER SUPPORT AGREEMENTS" has the meaning set forth in the
preamble hereof.
"SUBSIDIARY" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, more than
50% of the equity interests of which) is owned (either alone or through or
together with any other Subsidiary or Subsidiaries) directly or indirectly by
such first Person.
"SUBSTITUTE PRINCIPAL SHAREHOLDER" has the meaning set forth in the
definition of Retained Shares.
"SURVIVING CORPORATION" has the meaning set forth in SECTION 1.1.
"TAXES" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, net worth, profits, license, estimated,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, transfer taxes, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any Governmental Entity.
"TAX RETURN" shall mean any return, report or statement required to
be filed with any Governmental Entity with respect to Taxes.
"VOTING COMMON STOCK" has the meaning set forth in SECTION 3.4.
AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER
This Amendment No.1 to the Agreement and Plan of Merger (the "Amendment
No. 1") is entered into as of November 1, 1999 by and between Alliance Imaging,
Inc., a Delaware corporation ("Alliance"), and Viewer Acquisition Corporation, a
Delaware corporation ("Newco").
RECITALS
WHEREAS, Newco and Alliance have entered into the Agreement and Plan of
Merger (the "Merger Agreement") dated as of September 13, 1999, whereby Newco
shall merge with and into Alliance, with Alliance as the surviving corporation.
WHEREAS, the parties wish to amend the Merger Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants herein provided, the parties agree as follows:
1. Clause (ii) of the first "WHEREAS" paragraph of the Merger Agreement
shall be amended in its entirety as follows:
"(ii) shares of Common Stock owned by Viewer Holdings LLC, a Delaware
limited liability company ("HOLDINGS LLC"), a subsidiary of KKR 1996 Fund,
L.P. ("PARENT") and Newco.
2. EXHIBIT A to the Merger Agreement shall be deleted and be replaced with
EXHIBIT A attached hereto.
3. Section 1.6 shall be deleted in its entirety and shall be replaced as
follows:
"The directors of the Corporation at the Effective Time shall be the
directors of the Surviving Corporation until the earlier of their
resignation or removal or until their successors are duly elected or
appointed and qualified."
4. The definition of "ACQUISITION LLC" in ANNEX I to the Merger Agreement
shall be deleted in its entirety. References to Acquisition LLC in Sections
2.1(c) and 2.1(e) and elsewhere in the Merger Agreement shall be deleted.
5. SCHEDULE 2.1 provided in the definition of "Retained Shares" in ANNEX I
to the Merger Agreement shall be deleted and be replaced with SCHEDULE 2.1
attached hereto.
6. SCHEDULE 2.4 attached to the Merger Agreement shall be deleted and be
replaced with SCHEDULE 2.4 attached hereto.
7. On and after the date of this Amendment No. 1, each reference in the
Merger Agreement shall mean the Merger Agreement as amended hereby. Except as
specifically amended above, the Merger Agreement shall remain in full force and
effect and is hereby ratified and confirmed. The execution, delivery and
execution of this Amendment No. 1 shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of any of the parties.
The Merger Agreement shall not be amended without the prior written consent of
the majority of the outstanding shares of the Common Stock.
8. This Amendment No. 1 shall be governed by, and construed in accordance
with, the internal laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to conflict of
laws principles.
9. This Amendment No. 1 may be executed in any number of counterparts and
by facsimile, each of which shall be deemed to be an original, and all of which
together shall constitute one agreement binding on the parties hereto.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment No. 1
to the Agreement and Plan of Merger as of the date first written above.
VIEWER ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
ALLIANCE IMAGING, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
EXHIBIT A
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ALLIANCE IMAGING, INC.
ARTICLE I
The name of the corporation (the "Corporation") is:
Alliance Imaging, Inc.
ARTICLE II
The address of its registered office in the State of Delaware is ▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in the City of Dover, County of ▇▇▇▇, ▇▇▇▇▇. The name of its
registered agent at such address is National Registered Agents, Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is ten million (10,000,000), all of which shall be Common
Stock, $.01 par value per share.
ARTICLE V
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to adopt, amend or repeal the
Bylaws of the Corporation.
ARTICLE VI
Election of directors need not be by written ballot unless the Bylaws of
the Corporation shall so provide.
ARTICLE VII
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the General Corporation Law of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit."
SCHEDULE 2.1
--------------------------------------------------------------------------
STOCKHOLDER NO. OF RETAINED SHARES
--------------------------------------------------------------------------
Apollo Investment Fund III, L.P. 248,244
--------------------------------------------------------------------------
Apollo Overseas Partners III, L.P. 14,838
--------------------------------------------------------------------------
Apollo (U.K.) Partners III, L.P. 9,175
--------------------------------------------------------------------------
BT Investment Partners, Inc. 12,144
--------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ 16,250
--------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ 16,250
--------------------------------------------------------------------------
SCHEDULE 2.4
A.
---------------------------------------------------------------------------
OPTION HOLDER OPTION GRANT DATE ROLLOVER OPTIONS
---------------------------------------------------------------------------
ALLIANCE
---------------------------------------------------------------------------
▇▇▇▇▇▇ 12/18/1997 (98,953); 102,077
02/05/98 (3,124)
---------------------------------------------------------------------------
▇▇▇▇ 12/18/1997; 02/06/1998 85,350
---------------------------------------------------------------------------
ORD 01/19/1998 33,750
---------------------------------------------------------------------------
▇▇▇▇▇▇▇ 01/02/1998 8,800
---------------------------------------------------------------------------
ANDRUES 01/02/1998 8,800
---------------------------------------------------------------------------
FORD 01/02/1998 8,800
---------------------------------------------------------------------------
▇▇▇▇▇▇ 01/02/1998 3,400
---------------------------------------------------------------------------
▇▇▇▇ 01/02/1998 2,200
---------------------------------------------------------------------------
GRISMER 01/02/1998 2,618
---------------------------------------------------------------------------
CALFO 01/02/1998 2,000
---------------------------------------------------------------------------
▇▇▇▇▇ 01/02/1998 500
---------------------------------------------------------------------------
▇▇▇▇ 01/02/1998 500
---------------------------------------------------------------------------
HORN 01/02/1998 500
---------------------------------------------------------------------------
ALMIERI 04/28/1998 5,400
---------------------------------------------------------------------------
▇▇▇▇▇▇▇ 04/28/1998 3,400
---------------------------------------------------------------------------
▇▇▇▇▇▇ 04/28/1998 3,400
---------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ 03/10/1999 4,250
---------------------------------------------------------------------------
AMIN 04/28/1998 750
---------------------------------------------------------------------------
▇▇▇▇▇▇ 03/10/1999 2,000
---------------------------------------------------------------------------
▇▇▇▇ 03/10/1999 2,000
---------------------------------------------------------------------------
▇▇▇▇▇ 03/10/1999 750
---------------------------------------------------------------------------
▇▇▇▇▇ 10/14/1997 2,810
---------------------------------------------------------------------------
▇▇▇▇▇▇▇ 10/14/1997 9,835
---------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ 10/14/1997 787
---------------------------------------------------------------------------
▇▇▇▇ 10/14/1997 2,810
---------------------------------------------------------------------------
▇▇▇▇▇▇▇ 10/14/1997 9,835
---------------------------------------------------------------------------
▇▇▇▇▇ 10/14/1997 900
---------------------------------------------------------------------------
PANNICK 10/14/1997 169
---------------------------------------------------------------------------
▇▇▇▇▇ 10/14/97 (635); 12/31/1998 (735) 1,370
---------------------------------------------------------------------------
PETCHENY 10/14/1997 1,405
---------------------------------------------------------------------------
▇▇▇▇▇ 10/14/1997 338
---------------------------------------------------------------------------
▇▇▇▇▇▇ 10/14/1997 450
---------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ 10/14/1997 (4,608); 8,180
12/31/1998 (3,572)
---------------------------------------------------------------------------
▇▇▇▇▇▇ 10/14/1997 (19); 12/31/1998 (1,225) 1,244
---------------------------------------------------------------------------
WONSETTLER 10/15/1997 (1,700); 5,620
12/31/1998 (3,920)
---------------------------------------------------------------------------
▇▇▇▇▇ 10/14/1997 48
---------------------------------------------------------------------------
▇▇▇▇▇ 10/14/1997 (645); 12/31/1998 (980) 1,625
---------------------------------------------------------------------------
GRAND TOTAL 328,671
---------------------------------------------------------------------------
B. ALLIANCE IMAGING, INC. 1997 STOCK OPTION PLAN.
THREE RIVERS HOLDING CORP. 1997 STOCK OPTION PLAN