SECURITIES PURCHASE AGREEMENT
EX- 10.26
THIS SECURITIES PURCHASE AGREEMENT (hereinafter this "Agreement") is made
and entered into as of this 22nd day of March, 1996, by and between PRIMEDEX
HEALTH SYSTEMS, INC., a New York corporation (hereinafter "PHS"), and DIAGNOSTIC
IMAGING SERVICES, INC., a Delaware corporation (hereinafter "DIS").
W I T N E S S E T H:
WHEREAS, PHS desires to purchase from DIS, and DIS desires to sell to PHS
shares of its common stock, $.01 par value and a warrant to purchase shares of
its common stock, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and agreements hereinafter
set forth, and other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as follows:
1. Sale and Purchase of the Shares.
(a) Sale of Shares. Upon the terms and subject to the conditions,
representations, warranties and agreements of this Agreement, Purchaser hereby
purchases 2,747,493 shares of DIS common stock, $.01 par value (the "Shares")
and a five year warrant to purchase an additional 1,521,739 Shares (the
"Warrant") from DIS, and DIS hereby sells the Shares and Warrant to PHS free and
clear of all liens, charges, encumbrances, equities, claims and options of any
nature whatsoever. The Warrant shall be in the form of Exhibit 1 attached.
(b) Purchase Price. As full payment for the Shares and Warrant PHS
shall pay DIS a purchase price of Three Million Dollars ($3,000,000)
(hereinafter the "Purchase Price") at the Closing.
2. Conditions to Closing.
(a) DIS, PHS and Xxxxxx Xxxxx shall have entered into a Stockholders
Agreement in the form of Exhibit 2(a) attached.
(b) DIS and PHS shall have entered into a Management Services Agreement
in the form of Exhibit 2(b) attached.
(c) DIS and PHS shall have entered into a loan agreement in the form of
Exhibit 2(c) attached whereby PHS shall make available to DIS up to $1,000,000,
all of which shall be advanced to DIS at the Closing.
(d) DVI Financial Services, Inc., or its affiliate shall have loaned
PHS $5,000,000.
3. Closing. The Closing shall be held at 0000 Xxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx, at 11:00 A.M. on March 22, 1996, or at such other time or at such
other place as may be mutually approved by the parties in writing ("Closing").
At the Closing the consideration required by Section 1 together with the
documents required by Section 2 shall be delivered whereupon the Shares and
Warrant shall be delivered together with the other certificates and materials
required by this Agreement to be exchanged at the Closing.
4. DIS Representations. As an inducement to PHS to enter into this
Agreement and consummate the transactions contemplated hereby, DIS hereby
represents and warrants to PHS and agrees as follows:
(a) Due Organization. DIS is a duly organized and validly existing
corporation under the laws of the Slate of Delaware and has the corporate power
and lawful authority to own its properties and to transact the business in which
it is currently engaged. DIS is not, and is not required to be, qualified to
transact business as a foreign corporation in any jurisdiction. DIS is the sole
shareholder of Diagnostic Imaging Services, Inc., a California corporation
("DIS-CA"). DIS-CA is duly organized and validly existing under laws of the
State of California and has the corporate power and lawful authority to own its
properties and to transact the business in which it is currently engaged. DIS-CA
is not and is not required to be, qualified to transact business as a foreign
corporation in any other jurisdiction.
(b) Power and Authority. DIS has full corporate power to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been authorized by the DIS Board of Directors. No other corporate
acts or proceedings on the part of DIS will be necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement constitutes a
valid and legally binding obligation of DIS and is enforceable against DIS in
accordance with its terms.
(c) Ownership of Shares. The authorized capital of DIS consists of
20,000,000 shares of common stock, $.01 par value of which 8,562,617 shares are
issued and outstanding, together with 2,482,000 shares of Series F Preferred
Stock and 2,000,000 shares of Series G Preferred Stock which are outstanding out
of an authorized 5,000,000 shares of Preferred Stock. All of the Shares of
capital stock of DIS are validly issued, fully paid and nonassessable. There are
no agreements, arrangements, options, warrants, calls, rights or commitments of
any character relating to the issuance, sale, purchase, retirement or redemption
of any Shares, except as set forth in the Form 10-K for DIS for the year ended
December 31, 1994, a copy which is attached hereto and marked as Exhibit 4(c)-1,
or except as may be issued pursuant to a proposed Series H Preferred Stock to be
issued in connection with the retirement of certain debt the presently
contemplated particulars of which are attached hereto as Exhibit 4(c)-2.
(d) Validity of Shares and Warrant. The Shares and Warrant, when issued
in accordance with the terms of this Agreement will be duly and validly issued.
The issuance of the Shares and Warrant and any subsequent issuance of the shares
underlying the Warrant are not and will not be subject to any preemptive rights
or rights of first refusal and, when issued, sold, and delivered in compliance
with the provisions of this Agreement and the terms of tile Warrant and in
accordance with the DIS Certificate of Incorporation, the Shares, Warrant and
shares underlying the Warrant will be validly issued, fully paid and
nonassessable, and will be free of any liens with the shares of DIS common stock
issuable on exercise of the Warrant having been duly reserved for issuance upon
exercise; provided, however, that the Shares, Warrant and shares underlying the
Warrant will be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
(e) Offering. Assuming the accuracy of the representations contained in
Section 5 hereof, the offer, issue and sale of the Shares and Warrant are and
will be exempt from the registration requirements of the 1933 Securities Act,
and have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
federal and California law.
(f) No Breach. This execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Certificate of Incorporation or By-Laws of DIS;
(ii)violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon DIS, or upon the properties or business of DIS; or
(iii)violate any statute, law or regulation of any jurisdiction applicable
to the transactions contemplated herein; or
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(iv)conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination, or cancellation under, the Certificate of
Incorporation or Bylaws of DIS, or any note, instrument, agreement, mortgage,
lease, license, permit, judgment, order, award, decree or other authorization,
right, restriction or obligation to which DIS is a party or any of its
properties is subject or by which any of them is bound or any statute, other law
or regulatory provision affecting any of them; or
(v) requiring the approval, consent or authorization of, or the
making of any declaration, filing or registration with, any third party or any
foreign, federal, state or local court, governmental authority or regulatory
body, except for such filings as are required pursuant to the Rules and
Regulations of the Securities and Exchange Commission.
(g) Financial Statements and Other Financial Information. Exhibit 4(c)
hereto contains: (i) the audited balance sheet and statements of operations of
DIS as of December 3 1, 1994 (herein sometimes called the "Balance Sheet") and
the related statements of operations and retained earnings for the year then
ended, together with appropriate notes to such financial statements. Exhibit
4(g) attached hereto is the DIS Form 10-Q for the nine months ended September
30, 1995 and contains the unaudited balance sheet and statement of operations
for the nine month period then ended. (the "Interim Statement"). The Balance
Sheet and Interim Statement are hereinafter collectively referred to as the
"Financial Statements." The financial statements present fairly the financial
condition, results of operations and charges in financial position of DIS as at
the dates or for the periods indicated therein in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise indicated in such Financial Statements or the notes thereto), subject,
in the case of unaudited interim consolidated financial statements, to year-end
adjustments consisting only of normal recurring accruals.
(h) Operations Since Interim Statement Date.
(i) Since September 30, 1995, there has been, except as otherwise
described in this Agreement: (i) no material adverse change (either in any one
case or in the aggregate) in the assets, properties, liabilities, business,
prospects or in the condition, financial or otherwise, of DIS and no fact or
condition exists which might cause such a change in the future; (ii) no damage,
destruction, loss or claim, to assets, whether or not covered by insurance, or
condemnation or other taking of assets, affecting the properties, assets,
business or prospects of DIS; and (iii) no other occurrence, event or condition
(either in one case or in the aggregate) which adversely affects the properties,
assets, business or prospects of DIS.
(ii)Since September 30, 1995, DIS has not: (A) issued, delivered,
agreed (actually or contingently) to issue or deliver, or granted any option,
warrant or right to purchase, any capital stock, or security convertible into
capital stock, or any bonds, notes, or other securities, or borrowed or agreed
to borrow any funds; (B) paid any obligation or liability (absolute or
contingent) other than current liabilities reflected in the Financial Statements
and current liabilities reasonably incurred since September 30, 1995, in the
ordinary course of business; (C) declared or made, or agreed to declare or make,
any payment of dividends or distributions to shareholders or purchased, retired,
redeemed or otherwise acquired, or agreed to purchase, redeem or otherwise
acquire any, of its capital stock; (D) except in the ordinary course of
business, mortgaged, pledged or encumbered any assets; (E) except for its sale
of its mobile MRI in San Diego, sold, leased, abandoned or otherwise disposed of
any real property or interest therein or any machinery equipment or other
operating property or sold, licensed, assigned, transferred or otherwise
disposed of any patent, or application therefor or any invention, process,
know-how, formula, pattern, design, trade secret or other intangible asset or,
except for fair value in the ordinary course of business, sold or transferred or
agreed to sell or transfer any other assets; (F) otherwise than in the ordinary
course of business canceled or agreed to cancel any debts or claims, waived or
agreed to waive any rights of value, or allowed to lapse or failed to keep in
force any franchise, permit or other authorization or right; (G) made or
permitted any amendment or termination of any material contract, license or
other agreement; (H) otherwise than in the ordinary course of business
undertaken or committed to capital expenditures exceeding $10,000 in the
aggregate; (I) other than in
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the ordinary course of business instituted, or made any material increase in,
any salary, profit sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare or other employee
benefit plan; (J) other than in the ordinary course of business made any accrual
or arrangement for or payment of any bonus or special compensation of any kind
or any severance or termination pay to any present or former officer or employee
during the past year; (K) made any change in the accounting policies, methods or
practices followed by DIS or made any material change in depreciation,
amortization or inventory valuation policies or rates or methods theretofore
used or adopted except as reflected in the Financial Statements; (L) amended its
Certificate of Incorporation or Bylaws; or (M) entered into or become committed
to enter into any other material transaction except in the ordinary course of
business.
(i) No Undisclosed Liabilities. DIS is not aware of any material
liability, absolute or contingent, accrued or unaccrued, which is not shown or
which is in excess of amounts shown or reserved for in the Financial Statements
or referred to in the notes thereto, other than liabilities of the same nature
as those set forth in the Financial Statements and notes thereto and reasonably
incurred in the ordinary course of its business after September 30, 1995.
(j) Taxes. DIS has filed all federal, state, county, local and foreign
income, excise, property, sales and other tax returns which are required, by
statute, other law, regulation or otherwise, to be filed up to and including the
date hereof and have paid all taxes (and any other governmental charges, duties,
penalties, interest or fines) which have become due pursuant to such returns or
otherwise, or pursuant to any assessment which has become payable, and no
extension of the time for filing any tax return is presently in effect. All such
returns and the returns to be filed by DIS with respect to any interim period
thereafter are or will be true and correct to the extent filed prior to the date
of this Agreement. To the extent that any tax liability or assessment had
accrued but had not yet become payable at September 30, 1995, or has been
proposed for assessment or determined but remains unpaid, the same has been
reflected as a liability on the books and records of DIS and in the Financial
Statements or referred to in the notes thereto. Tax reserves are adequate for
contingent liabilities which may arise after the date of this Agreement due to
events prior to the execution of this Agreement. No waiver or extension of the
statute of limitations relating to the assessment of any federal income tax
against DIS is presently in effect and DIS has not been notified of any audit.
All payments for withholding taxes, unemployment insurance and other amounts
required to be paid to any governmental authority in respect of employees of DIS
have been paid or duly provided for on their respective books and records,
except for approximately $400,000 presently due on unpaid withholding taxes,
which is in the process of being incrementally paid and should be paid within
the next 24 months.
The tax returns for DIS have never been examined by any governmental
authority.
(k) Availability and Ownership of Assets and Legality of Use. The
assets owned or leased by DIS constitute all of the assets used and needed for
its business as it has historically been conducted by it, are in good and
serviceable condition, ordinary wear and tear excepted, and suitable for the
uses for which intended; and such assets and their use conform in all material
respects to all applicable laws, regulations, rules, ordinances, codes, licenses
and permits (including without limitation, building, business use, environmental
and occupational safety and health requirements), and no notice of any material
violation of any applicable law, regulation, rule, ordinance, code, license or
permit relating to such assets and their use has been received by Seller.
(l) Accounts Receivable; Inventories. All accounts receivable of DIS
have arisen from a bona fide transactions by it in the ordinary course of
business and DIS has received no notice that such accounts receivable are
subject to defense, counterclaim or setoff or are in dispute except as otherwise
stated in this Agreement. All of such accounts are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserve for
contractuals and doubtful accounts which reserves (i) with respect to accounts
receivable shown in the Financial Statements are reflected thereon, and (ii)
with respect to accounts receivable acquired since September 30, 1995, are
reflected on the books and records and are not in excess of an amount bearing
the same proportion to such accounts receivable as the applicable reserves in
the Financial Statements bear to the aggregate recorded amount of the accounts
receivable shown on such Financial Statements.
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(m) No Violation or Litigation. (i) DIS has received no notice of any
facts which would lead it to believe DIS is in material violation of, or has
violated, any law, regulation, rule, writ, injunction, decree or order of any
court or any foreign, federal, state, municipal or other government,
governmental department, commission, board, bureau, agency or instrumentality
which will result in expense or interfere with the business of DIS; (ii) there
are no material lawsuits, claims, suits, proceedings or investigations pending
or to the best of its knowledge threatened against or affecting DIS, its
officers or directors or its properties, operations, or business; and (iii)
there is no action, suit or proceeding by any governmental agency pending or to
the best of its knowledge threatened which questions the legality or propriety
of this Agreement or the transactions contemplated hereby. DIS is in material
compliance with all laws, regulations, rules, writs, injunctions, decrees or
orders of any court or any foreign, federal, state, municipal or other
government, governmental department, commission, board, bureau, agency or
instrumentality which govern its business.
(n) Insurance. DIS keeps insurance of a type and in amounts standard
for its industry in full force and effect. DIS is not in default or breach under
any of such insurance policies or has not failed to give any notice or present
any claim thereunder in a due and timely manner.
(o) Real Property. DIS owns no real property.
(p) Real Property; Leases. (i) a description of each lease or other
agreement (showing the annual rental, the expiration date, option periods, if
any, a street address of the real property covered and a brief description of
the improvements thereon) under which DIS is lessee of, or holds or operates any
real property, (ii) a description of all other interests in real property of
DIS, and (iii) a description of any other contract, agreement, lease,
concession, or commitment relating to or affecting real property or any interest
therein to which DIS is a party or by which DIS is bound has been provided to
PHS. All of said leases are valid and in full force and there does not exist any
default or event that with notice or lapse of time or both would constitute a
default under any of those leases. None of the rights of DIS under any such
leasehold or other interest in such real property will be impaired by
consummation of the transactions contemplated by this Agreement.
(q) Easement; Ingress; Condemnation. DIS has all easements and rights
for ingress and egress and for utilities and services necessary for the
operations presently conducted by it. Neither the whole or any part of any real
property or interest therein owned, leased, used or occupied by DIS is
threatened by condemnation.
(r) Personal Property. DIS owns or leases all the personal property
used to conduct its business. DIS has good, indefeasible and marketable title to
all personal property that it purports to own, free and clear of all security
interests, liens, encumbrances, pledges, defects in title, restrictions and
other burdens, except as has previously been disclosed to PHS.
(s) Personal Property; Leases. A list of all leased machinery,
equipment, vehicles and other leased tangible personal property and a
description of all other interests, of DIS in tangible personal property has
been delivered to PHS. None of the rights of DIS under any such leasehold or
other interest in tangible personal property will be impaired by the
consummation of the transactions contemplated by this Agreement.
(t) Governmental and Other Authorizations. DIS has all governmental and
other licenses, permits, orders, certificates and other authorizations necessary
to own or lease its properties, to operate its respective properties and assets
and to carry on its business as now conducted ("Permits"). All of the permits
are in full force and effect and constitute legal, valid and binding obligations
of the respective parties hereto, and will not be materially affected as a
result of the execution of this Agreement. No proceeding or other action is
pending or threatened to revoke or limit any of the Permits, and there is no
basis for any such revocation or limitation. DIS has not breached or defaulted
under, nor is it in breach or default under, nor is it alleged to have breached
or defaulted under, any of the Permits and no event has occurred which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach.
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(u) Patents, Trade Names, Trademarks and Other Rights. DIS owns or has
the perpetual royalty free right to use all patents, trademarks, servicemarks,
copyrights, trade names, inventions, improvements, processes, formulae, trade
secrets, know-how and proprietary or confidential information used in conducting
its business or which are necessary to continue such business hereafter. DIS has
no knowledge or notice that any infringement of any patent, patent right,
trademark, servicemark, trade name, brand name or copyright or registration
thereof has occurred or results in any way from the operations or business of
DIS. DIS has had no notice of, or knowledge of any basis for, a claim against it
that any of its operations, activities, products, equipment, machinery or
processes infringes the patents, trademarks, servicemarks, trade names,
copyright or other property rights of others.
(v) Employees and Agents and Related Agreements.
(i) DIS is not a party to or bound by any (A) employee collective
bargaining agreement, employment agreement, consulting agreement, deferred
compensation agreement, or covenant not to compete except for those agreements
with Xxxxxx Xxxxx and Xxxxxx Xxxxxxxx; (B) contract or agreement with any
officer, director shareholder or employee, agent or attorney-in-fact; or (C)
employees' pension, profit sharing, stock option, bonus, incentive, stock
purchase, welfare, life insurance, hospital or medical benefit plan (DIS does
have a medical benefit plan, the provisions of which have been provided to PHS)
or any other employee benefit agreement or plan. DIS's relations with its
employees is satisfactory.
(ii)No shareholder, director or officer of DIS, (A) owns, directly
or indirectly, any interest in, or is a director, officer or employee of, or
consultant to, any entity which is a competitor, supplier or customer of DIS;
(B) owns directly or indirectly, in whole or in part, any property, asset or
right, tangible or intangible (including, but not limited to, any patent,
trademark, serviceman, trade name, brand name, copyright, pending application
for any patent, trademark, serviceman, or copyright, invention, process,
know-how, formula, design or trade secret) which is associated with any
property, asset or right owned by DIS or which DIS is presently operating or
using or the use of which is necessary for its business; (C) is, subject to any
agreement with any person or entity requiring such shareholder, director,
officer or employee to assign any interest in any inventions or trade secrets or
to keep confidential any information or containing any prohibitions or
restriction of competition or solicitation of customers.
(w) Status of Contracts. Each of DIS' material contracts is a valid and
binding obligation of the parties thereto. DIS has not breached or defaulted
under, nor is it in breach or default under, or has notice of any breach or
default under, any of the contracts and, no other party to any of the contracts
has breached or defaulted under any of the contracts, and no event has occurred
which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by DIS or, by any such otter party. In late
1995, DIS received a notice of default under a financing arrangement with Sanwa
Bank. The financing is current and has been for sometimes however, Sanwa has
never withdrawn the default notice.
(x) Use of Proceeds. DIS will utilize the Purchase Price and PHS loan
proceeds totalling$4,000,000 as payment against what is referred to as its "Loan
B" from DVI Financial Services, Inc.
(y) Disclosure. None of the information or documents furnished to PHS
or any of its representatives and none of the representations or warranties
contained herein is false or misleading or omits to state a material fact
required to be stated therein or herein in order to make the statements therein
or herein not misleading.
(z) Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving DIS. There is no material action, suit
or claim or legal, administrative or arbitral proceeding or any investigation
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending or, to the best knowledge of Seller, threatened
against or involving DIS or any of its properties or assets.
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(aa) Brokers or Finders. No broker's or finder's fee will be payable by
DIS in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by D IS.
5. PHS Representations. As an inducement for DIS to enter into this
Agreement and consummate the transactions contemplated hereby, PHS hereby
represents and warrants to DIS and agrees as follows:
(a) PHS acknowledges that the Shares and Warrant, and shares underlying
the Warrant, are being acquired solely by and for PHS for investment and not as
nominees or agents for the benefit of any other person, and PHS has no current
intention of distributing, reselling or assigning the Shares, Warrant, and hares
underlying the Warrant, other than in accordance with the provisions of the
Securities Act of 1933, as amended (the "1933 Act"), rules under the 1933 Act
and any other applicable laws.
(b) PHS understands that neither the Shares, Warrant, or the shares
underlying the Warrant, have been registered under the 1933 Act, or under the
laws of any jurisdiction, and that DIS is under no obligation to register or
assist PHS in registering the Shares, Warrant, or the shares underlying the
Warrant. PHS understands and agrees further that (i) the Shares, Warrant, or the
shares underlying the Warrant, must be held indefinitely unless subsequently
registered under the 1933 Act or an exemption from registration under the 1933
Act covering the sale of the Shares, Warrant, or he shares underlying the
Warrant, is available. PHS understands that legends stating that the Shares have
not been registered under the 1933 Act and setting out or referring to the
restrictions on transferability and sale of the Shares and Warrant, or the
shares underlying the Warrant, will be placed on the certificates, evidencing
the Shares, and Warrant, or the shares underlying the Warrant.
(c) PHS is aware that (i) investment in the Shares, Warrant, or the
shares underlying the Warrant, involves a possible degree of risk, lack of
liquidity and substantial restrictions on transferability of interest, and (ii)
no federal or state agency has made any finding or determination as to the
fairness for investment in, nor has made any recommendation or endorsement of,
the Shares, Warrant, or the shares underlying the Warrant.
(d) PHS has sufficient financial resources available to support the
loss of all or a portion of PHS's investment in the Shares and Warrant, has no
need for liquidity in the investment in the Shares and Warrant and is able to
bear the economic risk of the investment.
(e) PHS is sophisticated and experienced in financial, business and
investment matters, is in the same business as DIS, is aware of DIS' financial
condition and business affairs, and, as a result, PHS is in a position to
evaluate the merits-and risks of an investment in the Shares and Warrant, the
restrictions on transferability and the tax consequences of the investment.
(f) PHS has been furnished any and all materials PHS has requested
relating to DIS, the Shares, Warrant, or the shares underlying the Warrant, or
the purchase and sale of the Shares and Warrant hereby and PHS has been afforded
the opportunity to ask questions of DIS concerning the terms and conditions of
the purchase and sale hereby and to obtain any additional information necessary
to verify the accuracy of any representations or information appearing in this
Agreement. PHS, either alone or with PHS's professional advisors, has the
capacity to protect PHS's interests in connection with this transaction.
(g) PHS has relied solely upon the advice of its advisors (if any),
advice of its tax experts and independent investigations made by PHS and/or its
representative(s) in deciding to invest in the Shares and Warrant, and no oral
or other representations other than those explicitly in this Agreement have been
made to PHS regarding the Shares and Warrant.
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(h) PHS is a duly organized and validly existing corporation under the
laws of the State of New York and has the power and lawful authority to own its
properties and to transact the business in which it is currently engaged. PHS is
not, and is not required to be, qualified to transact business as a foreign
corporation in any jurisdiction where it is not so qualified.
(i) PHS has full power to enter into this Agreement and the related
agreements which are exhibits to this Agreement and to carry out its respective
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the related agreements and the consummation of the transactions
contemplated hereby and thereby have been or will be duly and validly authorized
by PHS's board of directors. No other acts or proceedings on the part Of PHS
will be necessary to authorize this Agreement or the related agreements or the
transactions contemplated hereby and thereby. This Agreement constitutes a valid
and legally binding obligation of PHS and is enforceable against PHS in
accordance with its terms.
(j) No Breach. The execution, delivery and performance of this
Agreement and the related agreements which are exhibits to this Agreement and
the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the articles of incorporation of PHS;
(ii)violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon PHS, or upon the properties or business of PHS;
(iii) violate any statute,law or regulation of any jurisdiction applicable
to the transactions contemplated herein;
(iv)conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination, or cancellation under, any note,
instrument, agreement, mortgage, lease, license, permit, judgment, order, award,
decree or other authorization, right, restriction or obligation to which the PHS
is a par y or any of its properties is subject or by which any of them are bound
or any statute, other law or regulatory provision affecting any of them; or
(v) requiring the approval, consent or authorization of, or the
making of any declaration, filing or registration with, any third party or any
foreign, federal, state or local court, governmental authority or regulatory
body.
(k) No Violation or Litigation. PHS has received no notice of any facts
which would lead it to believe (i) PHS is in material violation of, or has
violated, any law, regulation, rule, writ, injunction, decree or order of any
court or any foreign, federal, state, municipal or other government,
governmental department, commission, board, bureau, agency or instrumentality
which will result in expense or interfere with the business of PHS; and (ii)
there is any action, suit or proceeding by any governmental agency pending or to
the best of its knowledge threatened which question; the legality or propriety
of this Agreement or the transactions contemplated hereby. PHS is in compliance
with all laws, regulations, rules, writs, injunctions, decrees or orders of any
court or any foreign, federal, state, municipal or other government,
governmental department commission, board, bureau, agency or instrumentality
which govern its business.
(l) Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving PHS.
(m) Xxxxx Guaranty. PHS will use its best efforts to promptly remove
Xxxxxx Xxxxx from all personal guarantees which he has given in behalf of DIS
obligations.
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(n) Brokers or Finders. No broker's or finder's fee will be payable by
PHS in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by PHS.
(o) Disclosure. None of the information or documents furnished to DIS
or any of its representatives and none of the representations or warranties
contained herein is false or misleading or omits to state a material fact
required to be stated therein or herein in order to make the statements therein
or herein not misleading.
6. Post Execution Obligations.
(a) Further Assurances. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. PHS shall be bound by and shall implement the related agreements.
(b) Survival of Representations and Warranties of Parties. All
representations and warranties of DIS and PHS made herein shall survive the
execution and delivery hereof for one (1) year following the date hereof.
(c) Registration Rights.
(i) "Piggyback Registration". If DIS at any time proposes to
register any of its common stock, $.01 par value under the 1933 Act (other than
in connection with a merger or pursuant to Form S-8 or other comparable form),
DIS shall request that the managing underwriter (if any) of such underwritten
offering include up to 1,000,000 shares of the Shares (the "Registrable
Securities") in such registration and DIS shall use its best efforts to cause
such managing underwriter to grant such request so long as it doesn't diminish
the proceeds to be received by DIS from such offering. If such managing
underwriter agrees to include the Registrable Securities in the underwritten
offering, DIS shall at such time give prompt written notice to PHS of its
intention to effect such registration and of PHS' right under such proposed
registration, and upon the request of 'HS delivered to DIS within twenty (20)
days after giving such notice (which request shall specify the Registrable
Securities intended to be disposed of by PHS and the intended method of
Disposition thereof), DIS shall include such Registrable Securities held by PHS
requested to be included in such registration; provided, however, that:
A. If, at any time after giving such written notice of DIS'
intention to register any of the Registrable Securities and prior to the
effective date of the registration statement filed in connection with such
registration, DIS shall determine for any reason not to register or to delay the
registration of such Registrable Securities, at its sole election, DIS may give
written notice of such determination to PHS and thereupon shall be relieved of
its obligation to register any Registrable Securities issued or issuable in
connection with such registration (but not from its obligation to pay
registration expenses in connection therewith or to register the Registrable
Securities in a subsequent registration); and in the case of a determination to
delay a registration shall thereupon be permitted to delay registering any
Registrable Securities for the same period as the delay in respect of securities
being registered for DIS' own account.
B. If the managing underwriter in such underwritten offering
shall advise DIS that it declines to include a portion or all of the Registrable
Securities requested by PHS to be included in the registration statement, then
distribution of all or a specified portion of the Registrable Securities shall
be excluded from such registration statement. In such event DIS shall give PHS
prompt notice of the number of Registrable Securities excluded from such
registration at the request of the managing underwriter. No such exclusion shall
reduce the securities being offered by the Company for its own account to be
included in such registration statement.
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(ii)Option to Include Registrable Securities in Offering. PHS,
subject to the provisions of Section 6(c), shall have the option to include the
Registrable Securities in DIS' underwritten offering. DIS shall not be required
to include any of the Registrable Securities in an underwritten offering of DIS'
securities unless PHS accepts the terms of the underwriting as agreed upon
between DIS and the underwriters selected by it (provided such terms are usual
and customary for selling stockholders) and PHS agrees to execute and/or deliver
such documents in connection with stock registration as DIS or the managing
underwriter may reasonably request.
(iiiCooperation with DIS. PHS will cooperate with DIS in all
respects in connection with the registration rights, including, timely supplying
all information reasonably requested by DIS and executing and returning all
documents reasonably requested in connection with the registration and sale of
the Registrable Securities.
(d) Registration Procedures. If and whenever DIS is required by any of
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Securities under the 1933 Act, DIS shall
(except as otherwise provided in this Agreement), as expeditiously as possible:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement and shall use its best efforts to
cause such registration statement to become effective and remain effective until
all the Registrable Securities are sold or become capable of being publicly sold
without registration under the 1933 Act.
(ii)prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the 1933 Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
DIS shall desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to sales of securities from time to time in connection
with a registration statement pursuant to Rule 415 of the Commission);
(iiifurnish to PHS such numbers of copies of a summary prospectus
or other prospectus, including a preliminary prospectus or any amendment or
supplement to any prospectus, in conformity with the requirements of the 1933
Act, and such other documents, as PHS may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities;
(iv)use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the underwriter shall reasonably request, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable PHS to consummate the public sale or other disposition in such
jurisdictions of the securities owned by PHS, except that DIS shall not for any
such purpose be required to qualify to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(v) use its best efforts to list such securities on (x) any
securities exchange on which any securities of DIS is then listed, if the
listing of such securities is then permitted under the rules of such exchange
and/or (y) Nasdaq, if the securities are then traded or quoted thereon, subject
to applicable Nasdaq rules;
(vi)enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
10
(viinotify PHS at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(viitake such other actions as shall be reasonably requested by
PHS to facilitate the registration and sale of the Registrable Securities;
provided, however, that DIS shall not be obligated to take any actions not
specifically required elsewhere herein which in the aggregate would cost in
excess of $5,000.
(e) Expenses. All expenses incurred in any registration of the
Registrable Securities under this Agreement shall be paid by DIS, including,
without limitation, printing expenses, fees and disbursements of counsel for
DIS, expenses of any audits to which DIS shall agree or which shall be necessary
to comply with governmental I requirements in connection with any such
registration, all registration and filing fees for the Registrable Securities
under federal and State securities laws, and expenses of complying with the
securities or blue sky laws of any jurisdictions pursuant to Section 6(d)(iv);
provided, however, DIS shall not be liable for (i) any discounts or commissions
to any underwriter; (ii) any stock transfer taxes incurred with respect to
Registrable Securities sold in the Offering or (iii) the fees and expenses of
counsel for PHS, provided that DIS will pay the costs and expenses of DIS
counsel when the DIS counsel is representing any or all selling security
holders.
(f) Indemnification. In the event any Registrable Securities are
included in a registration statement pursuant to this Agreement:
(i) Indemnity. Without limitation of any other indemnity provided
to PHS, either in connection with the Offering or otherwise, to the extent
permitted by law, DIS shall indemnify and hold harmless PHS, the affiliates,
officers, directors and partners of PHS, any underwriter (as defined in the 0000
Xxx) for PHS, and each person, if any, who controls PHS or underwriter (within
the meaning of the 1933 Act or the Securities Exchange Act of 1934 (the
"Exchange Act"), against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the 1933 Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (1) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (2) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (3) any violation or alleged violation by DIS of the 1933 Act, the
Exchange Act, or any state securities law or any rule or regulation promulgated
under the 1933 Act, the Exchange Act or any state securities law, and in each
case, the Company shall reimburse PHS, and each such affiliate, officer or
director or partner, underwriter or controlling person for any legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that DIS shall not
be liable to PHS or any other party in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
PHS or any underwriter or any other officer, director or controlling person
thereof.
(ii)Indemnity. PHS shall indemnify and hold harmless DIS, its
affiliates, its counsel, officers, directors, shareholders and representatives,
any underwriter (as defined in the 0000 Xxx) and each person, if any, who
controls DIS or the underwriter (within the meaning of the 1933 Act or the
Exchange Act), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act, the Exchange Act
or any state securities law, and PHS shall reimburse DIS and each such
affiliate, counsel, Officer, director, shareholder, partner, or representative,
11
underwriter or controlling person for any legal or other expenses incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages or liabilities (or
actions and respect thereof) arise out of or are based upon any statements or
information provided in writing by PHS to DIS in connection with the offer or
sale of Registrable Securities. Notwithstanding the above, the PHS
indemnification shall be limited to an amount equal to the proceeds to PHS of
the Registrable Securities sold for the account of PHS.
(iii Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 6(f) of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 6(f), deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in and if the indemnifying party agrees in writing that it will be
responsible for any costs or expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Agreement only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Agreement.
(iv)Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified f arty as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
consideration. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount PHS shall be obligated to contribute
pursuant to the Agreement shall be limited to an amount equal to the proceeds to
PHS Of the Registrable Securities sold pursuant to the registration statement
which gives rise to such obligation to contribute (less the aggregate amount of
any damages which PHS has otherwise been required to pay in respect of such
loss, claim, damage, liability or action or any substantially similar loss,
claim, damage, liability or action arising from the sale of such Registrable
Securities).
(v) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
(g) Assignment of Registration Rights. The registration rights of PHS
under this Agreement may not be assigned without the written prior consent of
DIS.
12
7. Miscellaneous.
(a) Entire Agreement. This Agreement (including the Exhibits hereto)
represent the entire understanding and agreement among the parties with respect
to the subject matter hereof, and supersedes all other negotiations,
understandings and representations (if any) made by and among such parties.
(b) Amendments. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
(c) Binding Effect. All of the terms and provisions of this Agreement,
whether so expressed or not, shall be binding upon, inure, to the benefit of,
and be enforceable by the parties and their respective administrators,
executors, legal representatives, heirs, successors and permitted assigns.
(d) Headings. The headings contained in this Agreement are for
convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect in any way the meaning or interpretation of this
Agreement.
(e) Notices. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telefax communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To PHS:
Primedex Health Systems, Inc.
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Senior Vice President
Fax No.: (000) 000-0000
To DIS:
Diagnostic Imaging Services, Inc.
0000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
AttentionNorman Xxxxx, President
Fax No.: (000) 000-0000
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by telex or telefax; and (c) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
(f) Severability. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
13
(g) Waivers. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder. Any waiver by any
party of any breach of any provision of this Agreement should not be construed
as a waiver of any continuing or succeeding breach of such provision, a waiver
of the provision itself, or a waiver of any right, power or remedy under this
Agreement. No notice to or demand or any party in any case shall, of itself,
entitle such party to any other or further notice or demand in similar or other
circumstances.
(h) Governing Law. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the internal laws of the State of California without regard to principles
of conflicts of laws.
(i) Preparation of Agreement. This Agreement shall not be construed
more strongly against any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and is equally responsible
for its preparation.
(j) Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original agreement but all
of which shall be considered one and the same instrument, and shall become a
binding agreement when one or more counterparts have been signed by each of the
parties.
(k) Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any right, or remedies under or by reason of this
Agreement on any persons other than the parties to t and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any Party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
IN WITNESS WHEREOF, the parties of this Agreement have duly executed it on
the 22nd day of March, 1996.
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx, President
DIAGNOSTIC IMAGING SERVICES, INC.
By: /s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx, President
