FINANCIAL AND CONSULTING SERVICES AGREEMENT
This FINANCIAL AND CONSULTING SERVICES AGREEMENT ("Agreement") is made
and entered into as of October 1, 1998 by and between HEALTHCARE IMAGING
SERVICES, INC., a Delaware corporation (the "Company") located at 000 Xxxxxx
Xxxxx, Xxx Xxxx, XX 00000, and DVI FINANCIAL SERVICES INC., a Delaware
corporation ("Consultant") located at 000 Xxxx Xxxx, Xxxxxxxxxx, XX 00000.
WHEREAS, Consultant currently provides medical equipment and working
capital financing to the Company;
WHEREAS, the Company desires to expand its current diagnostic imaging
operations;
WHEREAS, the Company also intends to become a leading provider of
physician practice management services to an integrated network of physicians
in New Jersey offering a comprehensive array of primary care, multi-specialty
and diagnostic imaging services;
WHEREAS, the Company desires, where appropriate, to complete acquisitions
(referred to collectively herein as "Acquisitions") of certain entities
designated by the Company (referred to collectively herein as "Acquisition
Candidates") in furtherance of its strategy to expand its current diagnostic
imaging operations and to establish physician practice management operations;
WHEREAS, Consultant, at the request of the Company, provided a $1.0
million term loan (the "Jersey Integrated Term Loan") to Jersey Integrated
HealthPractice, Inc. ("Jersey Integrated"), an Acquisition Candidate, on
January 8, 1998;
WHEREAS, Consultant, at the request of the Company, has provided a $4.0
million line of credit (the "Pavonia Line of Credit") to Pavonia Medical
Associates, P.A., a stockholder of Jersey Integrated; and
WHEREAS, the Company may require assistance in financing and structuring
the Acquisitions, and, therefore, the Company desires to engage Consultant to
provide those services set forth in Section 3 herein.
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual obligations hereinafter set forth, and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and Consultant hereby agree as follows:
1. Appointment as Consultant. The Company hereby appoints
Consultant as an independent contractor, and Consultant hereby accepts such
appointment by the Company, commencing on the date hereof (the "Effective
Date"), for the Term (as defined below), with the obligations set forth in
Section 3 below, and upon the other terms and subject to the conditions
hereinafter stated.
2. Term. Except as otherwise specifically provided in Section 5
below, the term of the Agreement (the "Term") shall commence on the Effective
Date and shall continue until the fifth (5th) anniversary of the Effective
Date, subject to the terms and conditions of this Agreement.
3. Obligations of Consultant. During the Term, Consultant shall
devote such working time, attention and energies to the affairs of the Company
as shall be necessary to provide the services set forth herein. Consultant
shall be subject to the supervision of the Company's Chairman of the Board,
Chief Executive Officer and President. All services under this Agreement shall
be performed by Consultant, and Consultant shall not engage any other person,
entity or group to perform such activities without the Company's prior written
consent. Consultant shall provide to the Company such services as are
reasonably requested by the Company from time to time which may include, but
not be limited to, the following:
a. Rendering advice regarding any aspect of an Acquisition,
including the financial structuring of such Acquisition;
b. Rendering advice with respect to the securing of any
additional financing by the Company through banks, insurance
companies and/or other institutions;
c. Providing some or all of the financing, in amounts and on
terms and conditions reasonably acceptable to Consultant,
necessary for the Company to fund the Acquisitions; and
d. Providing Acquisition Candidates with interim financing,
in amounts and on terms and conditions reasonably acceptable
to Consultant, pending the consummation of such Acquisition
by the Company.
4. Compensation.
a. In consideration for the consulting services provided by
Consultant pursuant to this Agreement, the Company hereby agrees to grant to
Consultant an option, substantially in the form attached hereto as Exhibit A,
to purchase 50,000 shares of common stock, par value of $.01 per share ("Common
Stock"), of the Company at an exercise price per share equal to the closing
sale price of the Common Stock, as reported by The Nasdaq Stock Market
("NASDAQ"), on the date of this Agreement.
b. In consideration for Consultant providing the Jersey
Integrated Term Loan, the Company hereby agrees to grant to Consultant an
option, substantially in the form attached hereto as Exhibit A, to purchase
10,000 shares of Common Stock at an exercise price of $1.25 per share.
c. In consideration for Consultant providing the Pavonia Line
of Credit, the Company hereby agrees to grant to Consultant options,
substantially in the form attached hereto as Exhibit A,
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to purchase (i) 20,000 shares of Common Stock at an exercise price per share
equal to the closing sale price of the Common Stock, as reported by NASDAQ, on
the date the definitive credit documentation with respect to the Pavonia Line
of Credit was executed by all parties thereto and (ii) 20,000 shares of Common
Stock at an exercise price per share equal to the closing sale price of the
Common Stock, as reported by NASDAQ, on the date the Pavonia Line of Credit was
initially funded.
d. The Company hereby agrees to grant an additional option
(the "Xxxxx Option"), substantially in the form attached hereto as Exhibit A,
to purchase up to 400,000 shares of Common Stock to Consultant contemporaneous
with Consultant providing $15.0 million of financing (the "Xxxxx Financing") to
the Company to fully fund the acquisition of certain diagnostic imaging centers
owned by the Estate of Xxxxxx X. Xxxxx, among other parties, pursuant to that
certain letter of intent among the Company, the Estate of Xxxxxx X. Xxxxx, and
other related persons, dated March 6, 1998 (the "Xxxxx Acquisition"). The
400,000 shares of Common Stock underlying the Xxxxx Option shall have a
purchase price per share equal to the lesser of (i) $2.00 and (ii) the closing
sale price of the Common Stock, as reported by NASDAQ, on the date the Xxxxx
Financing is provided to the Company. If Consultant issues a firm commitment,
not subject to any material conditions (including, without limitation,
completion of due diligence, absence of material adverse changes or the like)
to provide the Xxxxx Financing, and (x) the Xxxxx Financing is not utilized by
the Company and (y) the Xxxxx Acquisition is consummated, then the Xxxxx Option
will only be exercisable as to 100,000 shares of Common Stock. Notwithstanding
anything to the contrary contained herein, Consultant will only be entitled to
receive and/or exercise the Xxxxx Option if (1) the Xxxxx Financing is on
commercially reasonable terms and conditions and (2) the Xxxxx Financing, the
Jersey Integrated Term Loan, the Pavonia Line of Credit and any other credit
facility (other than capital leases) provided by Consultant or any affiliate
thereof to the Company or any Acquisition Candidate contain no, or there is a
waiver or relinquishment of all, prepayment or other early repayment fees or
charges.
5. Termination. Either party may, upon ninety (90) days prior
written notice to the other, terminate this Agreement.
6. Confidential Information.
a. Consultant agrees not to use, disclose or make accessible
to any person, entity or group any Confidential Information (as defined below)
pertaining to the business of the Company and/or any of its affiliates or
subsidiaries, except when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company, or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order Consultant to
divulge, disclose or make accessible such information. For purposes of this
Agreement, "Confidential Information" means any non-public information
concerning the Company's and/or any of its affiliates' or subsidiaries'
financial data, statistical data, strategic business plans, pricing or pricing
strategies, customer and supplier lists, customer and supplier information,
information relating to governmental relations, practices, processes, methods,
trade secrets, marketing plans and other non-public, confidential information
of the Company and/or any of its affiliates or subsidiaries, that, in any case,
is not otherwise generally available to the public.
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b. In the event this Agreement expires or is terminated,
Consultant shall immediately return to the Company all Confidential Information
in its possession.
c. Consultant and the Company agree that the covenant
regarding Confidential Information contained in this Section 6 is a reasonable
covenant under the circumstances, and further agree that if, in the opinion of
any court of competent jurisdiction, such covenant is not reasonable in any
respect, such court shall have the right, power and authority to excise or
modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended.
d. Consultant acknowledges that the consideration received,
and to be received, by it under this Agreement adequately and sufficiently
compensates it for the restrictions set forth in this Section 6.
e. The provisions of this Section 6 shall extend for the Term
and shall survive the expiration or termination of the Agreement for a period
of three (3) years.
7. Remedy for Breach. Consultant hereby acknowledges that, in the
event of any breach of Section 6 of this Agreement, the Company would have no
adequate remedy at law and would suffer substantial and irreparable damage.
Accordingly, Consultant hereby agrees that, in such event, the Company shall be
entitled, without the necessity of proving damages or posting bond, and
notwithstanding any election by the Company to claim damages, to obtain a
temporary and/or permanent injunction (without proving a breach therefor) to
restrain any such breach or threatened breach or to obtain specific performance
of any such provisions, all without prejudice to any and all other remedies
that the Company may have at law or in equity.
8. Representations of Consultant. Consultant hereby represents and
warrants to the Company the following:
a. Neither the execution and delivery of this Agreement by
Consultant, the consummation of the transactions required of
Consultant herein, nor the fulfillment of, or compliance
with, the terms and conditions of this Agreement, will
conflict with, or result in, with or without the giving of
notice or the passage of time or both, a breach of any of the
terms, conditions or provisions of any agreement or
instrument to which Consultant is now a party or by which it
or its assets or property is bound or subject, or constitute
a default or result in an acceleration under any of the
foregoing, or result in the creation of any liens, claims or
encumbrances on any assets or property of Consultant or the
violation of any law, rule, regulation, order, judgment or
decree to which it or its assets or property is subject;
b. Consultant is aware of the Anti-Fraud and Abuse Amendments
to the Social
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Security Act, the Medicare and Medicaid Program Protection
Act and the Federal Safe Harbor Regulations, and that, as a
consultant, it cannot knowingly or willfully offer, pay,
solicit or receive remuneration in order to induce business,
and if it does so, it will be subject to civil and/or
criminal penalties;
c. Consultant has reviewed and executed the Company's
Statement of Policy for Contractors and Consultants attached
hereto; and
d. Consultant will not enter into any contractual or other
arrangement, which is inconsistent with the performance of
its obligations pursuant to Section 3 herein.
9. Miscellaneous.
a. Relationship of the Parties. In performing the services
provided for hereunder, Consultant is acting as an independent contractor, and
Consultant shall not be deemed by virtue of this Agreement to be the servant,
agent or employee of the Company for any purpose whatsoever.
b. Notices. Any notice or other communication under this
Agreement shall be in writing and shall be deemed to have been duly given on
the date of delivery if personally delivered or sent by telecopy, on the
business day after notice is delivered to a courier or mailed by express mail
if sent by courier delivery or express mail for next day delivery, and on the
third day after mailing if mailed to the other party to whom notice is to be
given, by first class mail, registered, return receipt requested, postage
prepaid and addressed as follows:
If to the Company, to:
Healthcare Imaging Services, Inc.
Tri-Parkway Corporate Park
000 Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to Consultant, to:
DVI Financial Services Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, President
Fax: (000) 000-0000
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with a copy to:
DVI Financial Services Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxx Xxxxxx-Xxxxx, Deputy General Counsel
Fax: (000) 000-0000
c. Entire Agreement; Amendment; Construction. This Agreement
constitutes the entire agreement and understanding between the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof, whether oral or written. Any amendment to this Agreement shall be made
only upon the written consent of Consultant and a duly authorized officer of
the Company. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Accordingly,
the language of all parts of this Agreement shall at all times be construed as
a whole, allowing for a fair reading, and not strictly construing such language
for or against any of the parties to this Agreement. Furthermore, it is
acknowledged and agreed by each of the parties to this Agreement that each of
the parties participated in the drafting of this Agreement, and any time any
claims arise concerning such language, such language shall not be construed for
or against the party alleged to be responsible for such drafting.
d. No Waivers. No failure or delay by any party in exercising
any right, power or privilege under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by any law,
rule, regulation or order.
e. Severability. This Agreement shall be deemed to be severable and the
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
Furthermore, in lieu of any such invalid or unenforceable provision, the
parties hereto intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as
possible to be valid and enforceable.
f. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their permitted
successors and assigns. However, Consultant shall not assign any of its rights
or obligations under this Agreement (whether by operation of law or otherwise),
in whole or in part, without the prior written consent of the Company, which
the Company may grant or withhold in its sole discretion.
g. Governing Law. This Agreement shall be construed and governed in
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accordance with the laws of the State of New Jersey, without any regard to the
conflicts-of-law principles thereof.
h. Headings. Section headings contained in this Agreement are
intended solely for convenience of the parties hereto, and no provision of this
Agreement is to be construed by reference to any such heading.
i. Counterparts. This Agreement may be executed in multiple
counterparts, each of which when so executed and delivered shall be an
original, but all of such counterparts shall together constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first written above.
HEALTHCARE IMAGING SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board, President and
Chief Executive Officer
DVI FINANCIAL SERVICES INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
EXHIBIT A
OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is made and entered into as of
___________, ____ by and between HEALTHCARE IMAGING SERVICES, INC., a Delaware
corporation (the "Company") located at 000 Xxxxxx Xxxxx, Xxx Xxxx, XX 00000,
and DVI Financial Services Inc., a Delaware corporation (the "Grantee") located
at 000 Xxxx Xxxx, Xxxxxxxxxx, XX 00000.
1. Grant of Option. Subject to the provisions of the Financial and
Consulting Services Agreement dated as of October 1, 1998 between the Company
and the Grantee, as applicable, the Company does hereby grant to the Grantee a
non-qualified stock option to purchase up to _______ (____) shares (the
"Shares") of common stock, par value $0.01 per share, of the Company (the
"Common Stock") at an exercise price of $_____ per share (the "Option"). The
Option is, in its entirety, intended to be a non-qualified stock option.
2. Term of the Option. The Option (to the extent not earlier exercised or
forfeited) will expire five (5) years from the date hereof.
3. Vesting of the Option. The Option shall be fully vested on the date of
this Agreement.
4. Manner of Exercise. The Option may be exercised solely by delivery to
the secretary of the Company, or to his/her office, of all of the following
after the vesting thereof and prior to the expiration thereof:
(a) Notice in writing signed by the Grantee or any other person
then entitled to exercise the Option, stating that the Option, or a
portion thereof, is thereby exercised;
(b) Full payment (in cash or by check, or as otherwise permitted
under Section 5 of this Agreement) to the Company for the Shares with
respect to which the Option, or any portion thereof, is exercised;
(c) Such representations and documents as the Company deems
reasonably necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended (the
"Act"), and any other federal or state securities laws or regulations.
(The Company may also take whatever additional actions it deems
reasonably appropriate to effect such compliance including, without
limitation, placing legends on the certificate(s) evidencing the Shares
and issuing stop transfer orders to transfer agents and registrars);
(d) Promptly upon delivery of a written statement by the Company
describing in detail
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the withholding taxes due upon exercise of the Option, full payment to
the Company of all amounts which, under federal, state or local tax laws,
the Company is required to withhold upon exercise of the Option as
determined by the Company promptly upon the Grantee's delivery of the
notice described in Section 4(a); and
(e) In the event the Option shall be exercised by any person or
persons other than the Grantee, appropriate proof of the right of such
person or persons to exercise the Option.
The date of exercise of the Option shall be deemed to be the date
all of the foregoing conditions have been satisfied.
5. Cashless Exercise Procedures. The Company agrees, at the request of
the Grantee, to allow the cashless exercise of the Option, or a portion
thereof, through a brokerage firm acceptable to the Company whereby the Grantee
(to the extent permitted by, and subject to, applicable law) can exercise the
Option, or a portion thereof, without making a direct payment of the exercise
price thereof to the Company.
6. Conditions to Issuance of Stock Certificates. The Shares deliverable
upon exercise of the Option, or any portion thereof, may be either previously
authorized but unissued shares of Common Stock or issued shares of Common Stock
which have then been reacquired by the Company. Such Shares shall be fully paid
and nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates evidencing the Shares purchased upon the exercise
of the Option, or any portion thereof, prior to fulfillment of all of the
following conditions (in addition to the conditions set forth in Section 4 of
this Agreement):
(a) The completion of any registration or other qualification of
such Shares under any state or federal law or under ruling or regulations
of the Securities and Exchange Commission or of any other governmental
regulatory body, which the Company shall deem reasonably necessary or
advisable;
(b) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Company shall determine to be
reasonably necessary or advisable; or
(c) The lapse of such reasonable period of time following the
exercise of the Option as the Company may from time to time reasonably
establish for reasons of administrative convenience.
The Company agrees that to the extent its action is required to
fulfill the conditions set forth in Sections 4 and 6 hereof, the Company shall
use its reasonable efforts to promptly fulfill its obligations thereunder;
provided, however, that the foregoing shall in no event be deemed to require
the Company to
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register or otherwise qualify any Shares under any federal, state or local law,
rule or regulation or to obtain any approval or other clearance from any
federal, state or local governmental agency.
7. Transfer of Option. The Option shall not be assignable, saleable, or
transferable by the Grantee without the consent of the Company. The Option may
not be pledged, alienated, attached, or otherwise encumbered, and any purported
pledge, alienation, attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any affiliate.
8. Rights of Stockholder. The holder of the Option shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any Shares purchasable upon the exercise of any part of the Option unless and
until the conditions set forth in Sections 4 and 6 have been satisfied.
9. Other Conditions and Limitations.
(a) The Option is granted on the condition that the purchase of
Shares thereunder shall be for investment purposes and not with a view to
resale or distribution, except that such condition shall be inoperative if the
offering of Shares subject to the Option is registered under the Act or if in
the opinion of counsel for the Company such Shares may be resold without
registration. At the time of the exercise of the Option or any portion thereof,
the Grantee will execute such further agreements as the Company may reasonably
require to implement the foregoing condition and to acknowledge the Grantee's
familiarity with restrictions on the resale of the Shares under applicable
securities laws.
(b) The Company will furnish upon request of the Grantee copies of
such publicly available financial and other information concerning the Company
and its business and prospects as may be reasonably requested by the Grantee in
connection with the exercise of the Option, or any portion thereof.
10. Adjustments Upon Certain Events.
(a) In the event of any (i) subdivision or consolidation of the
Common Stock, (ii) dividend or other distribution (whether in the form of cash,
shares of Common Stock, other securities, or other property), (iii)
recapitalization or other capital adjustment of the Company or (iv) merger,
consolidation or other reorganization of the Company or other similar corporate
transaction or event that affects the Common Stock, appropriate adjustments
shall be made to prevent dilution of the Grantee's interest in the Common Stock
and to preserve the benefits or potential benefits intended to be made
available to the Grantee under this Agreement; provided, however, that the
number of shares of Common Stock subject to the Option shall always be a whole
number.
(b) No adjustment in the current exercise price per share (the "Per
Share Option Price") shall be required unless such adjustment would require an
increase or decrease of at least $0.10 in such price, provided, however, that
any adjustments which by reason of this clause (b) are not required to
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be made shall be carried forward cumulatively and taken into account in any
subsequent calculation.
(c) In any case in which this Section 10 shall require that an
adjustment as a result of any event become effective from and after a record
date, the Company may elect to defer until the occurrence of such event (i) the
issuance to the Grantee exercised after such record date and before the
occurrence of such event of the additional shares of Common Stock issuable upon
such exercise over and above the shares issuable immediately prior to
adjustment and (ii) the payment to the Grantee of any amount in cash in lieu of
a fractional share of Common Stock; provided, however, that the Company shall
deliver to the Grantee a due xxxx or other appropriate instrument evidencing
the Grantee's right to receive such additional Common Stock or such payment in
lieu of such fractional shares.
(d) Whenever the Per Share Option Price is adjusted as provided in
this Section 10 and upon any modification of the rights of the holder in
accordance with this Section 10, the Company shall promptly prepare a
certificate of an officer of the Company setting forth the Per Share Option
Price and the number of shares of Common Stock issuable upon exercise of the
Option after such adjustment or modification, a brief statement of the facts
requiring such adjustment or modification and the manner of computing the same
and cause a copy of such certificate to be mailed to the Grantee.
11. Notices. Any notice or other communication under this Agreement shall
be in writing and shall be deemed to have been duly given on the date of
delivery if personally delivered or sent by telecopy, on the business day after
notice is delivered to a courier or mailed by express mail if sent by courier
delivery or express mail for next day delivery and on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered, return receipt requested, postage prepaid and addressed as
follows:
If to the Company to:
Healthcare Imaging Services, Inc.
Tri-Parkway Corporate Park
000 Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to the Grantee to:
DVI Financial Services Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, President
Fax: (000) 000-0000
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with a copy to:
DVI Financial Services Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxx Xxxxxx-Xxxxx, Deputy General Counsel
Fax: (000) 000-0000
12. Miscellaneous. This Agreement shall bind and inure to the benefit of
the parties hereto, the successors and assigns of the Company and the permitted
successors and assigns of the Grantee. The validity, interpretation,
construction, performance and enforcement of this Agreement shall be governed
by the internal laws of the State of New Jersey, without regard to its
conflicts of law rules. This Agreement may be executed in one or more
counterparts, which together shall constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HEALTHCARE IMAGING SERVICES, INC.
By:
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Name:
Title:
DVI FINANCIAL SERVICES INC.
By:
-----------------------------------
Name:
Title:
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