BRIDGE LOAN AGREEMENT
BETWEEN
ALLIANCE IMAGING, INC.,
AS BORROWER
AND
GENERAL ELECTRIC COMPANY,
AS LENDER
DATED AS OF DECEMBER 31, 1996
1
Page 2
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS 1
1.1. Defined Terms. 1
1.2. Exhibits and Schedules Incorporated 8
ARTICLE II. SENIOR LOAN 9
2.1. Senior Loan 9
2.2. Senior Note 9
2.3. Interest; Payments 9
2.4. Prepayments 9
2.5. Maturity Date 9
2.6. Default Interest 9
2.7. Payments on Non-Business Days; Calculations 9
2.8. Stamp Taxes, Etc 9
2.09. Costs of Closing 10
2.10. Use of Proceeds 10
ARTICLE III. CONDITIONS PRECEDENT TO CLOSING AND LOANS 10
3.1. Conditions Precedent to Closing 10
3.2. Closing Mechanics 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BORROWER 11
4.1. Organization, Powers and Good Standing 11
4.2. Capitalization 12
4.3. Subsidiaries 13
4.4. Authorization 13
4.5. Governmental and Other Consents; No Violation 14
4.6. Litigation 14
4.7. Financial Statements 14
4.8. Proprietary Information 15
4.9. Registration Rights 15
4.10. Contracts 15
4.11. Absence of Changes 16
4.12. Intellectual Property 17
4.13. Compliance with Other Instruments 17
4.14. Compliance with Law; Approvals 17
4.15. Title to Assets 18
4.16. Plant, Property and Equipment 19
4.17. Accounts and Notes Receivable 19
4.18. Indebtedness 19
4.19. Real Property 19
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4.20. Employee Plans and Arrangements 20
4.21. Employees 22
4.22. Insurance 23
4.23. Environmental Compliance 23
4.24. No Undisclosed Liabilities 24
4.25. Taxes 24
4.26. No Research Grants 25
4.27. Certain Regulatory Matters 26
4.28. Transactions with Affiliates 26
4.29. Reports; SEC Documents 26
4.30. Disclosure 26
4.31. Brokers 26
4.32. Certain Additional Regulatory Matters 26
4.33. Medicare/Medicaid Participation 27
ARTICLE V. COVENANTS OF BORROWER 28
5.1. Corporate Existence, Etc. 28
5.2. Payment of Taxes 28
5.3. Maintenance of Properties 29
5.4. Maintenance of Insurance 29
5.5 Expenses. 29
5.6. Conversion Stock. 29
5.7. Compliance with Note Purchase Agreement. 29
5.8. Certain Regulatory Matters 29
ARTICLE VI. DEFAULTS AND REMEDIES 30
6.1. Default 30
6.2. Acceleration Upon Default. 31
6.3. Repayment of Funds Advanced. 31
6.4. Rights Cumulative, No Waiver. 31
ARTICLE VII. LENDER'S OPTION TO EXTEND MATURITY DATE;
OPTIONAL CONVERSION OF SENIOR LOAN 32
7.1. Lender's Option to Extend Maturity Date 32
7.2. Conversion of Senior Loan Prior to Maturity Date 32
7.3. Conversion of Senior Loan After Maturity Date 33
7.4. Acknowledgement 33
ARTICLE VIII. MISCELLANEOUS PROVISIONS 33
8.1. Indemnity 33
8.2. Notices 34
8.3. Attorneys' Fees and Expenses; Enforcement 34
8.4. Immediately Available Funds 34
8.5. Successors and Assigns 34
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8.6. Participations 34
8.7. Severability 35
8.8. No Waiver; Successors 35
8.9. Time 35
8.10. Headings 35
8.11. Governing Law 35
8.12. Integration; Interpretation 35
8.13. Waiver of Allocation Rights 36
8.14. Usury Savings 36
8.15. Revival 36
8.16. Counterparts 37
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BRIDGE LOAN AGREEMENT
BRIDGE LOAN AGREEMENT (this "AGREEMENT") dated as of December 31,
1996 between Alliance Imaging, Inc., a Delaware corporation (the "BORROWER"),
and General Electric Company, a New York corporation acting through GE
Medical Systems (the "LENDER").
RECITALS
WHEREAS, Borrower has requested that Lender make a loan to Borrower
in a principal amount of $18,000,000, and Lender has agreed to make the
requested loan upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties agree as follows:
ARTICLE I. DEFINITIONS
1.1 DEFINED TERMS. The following capitalized terms generally used
in this Agreement shall have the meanings defined or referenced below.
Certain other capitalized terms used only in specific sections of this
Agreement are defined in such sections.
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly controls or is controlled by or is under common
control with such Person, and, with respect to the Borrower only, includes
any other Person with whom the Borrower has any joint venture, partnership,
or other shared investment interest. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to (i)
direct or cause the direction of management or policies of such Person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise) or (ii) vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person.
"AGREEMENT" is defined in the preamble hereto.
"APPLICABLE LAW" means, with respect to any Person, any federal, state
or local statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree or other
requirement of any Governmental Authority (including any Environmental Law)
applicable to such Person or any of its Affiliates or Plan Affiliates or any
of their respective properties, assets, officers, directors, employees,
consultants or agents.
"APPROVALS" is defined in Section 4.14(d).
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"BANKRUPTCY CODE" means Title 11 of the United States Code, as
amended from time to time, and any state law relating to creditor's rights,
reorganization or insolvency generally.
"BENEFIT ARRANGEMENT" means any material benefit arrangement that is
not an Employee Benefit Plan, including (i) each employment, consulting or
change of control agreement, (ii) each arrangement providing for fringe
benefits, insurance coverage or workers' compensation benefits, (iii) each
bonus, incentive, or performance pay or deferred bonus, incentive, or
performance pay arrangement, (iv) each arrangement providing any termination
allowance, severance or similar benefits, (v) each equity compensation plan,
(vi) each deferred compensation plan and (vii) each compensation policy and
practice maintained by the Borrower covering the employees, former employees,
officers, former officers, directors and former directors of the Borrower,
and the beneficiaries of any of them.
"BENEFIT PLAN" means an Employee Benefit Plan or Benefit
Arrangement.
"BORROWER" is defined in the preamble hereto.
"BUSINESS DAY" means a day of the week (other than any Saturday or
Sunday) on which banks are not authorized or required to close in the State
of California. Unless specifically referenced in this Agreement as a
Business Day, all references to "days" shall be to calendar days.
"BSC" is defined in Section 5.8(b).
"CAPITAL STOCK" means any and all shares, interests,
participations, or other equivalents (however designated) of capital stock
and any rights (other than debt securities convertible into capital stock),
warrants or options to acquire such capital stock.
"CHAMPUS" is defined in Section 4.32.
"CHANGE IN CONTROL" shall be deemed to have occurred (i) at such
time as any person (as defined in Section 13(d)(3) of the Securities and
Exchange Act of 1934) at any time shall directly or indirectly acquire more
than Forty Percent (40%) of the voting power of the Common Stock of the
Borrower, (ii) upon consummation of a merger or consolidation of the Borrower
into or with another corporation in which the shareholders of the Borrower
immediately prior to the consummation of such transaction shall own less than
Fifty Percent (50%) of the voting securities of the surviving corporation (or
the parent corporation of the surviving corporation where the surviving
corporation is wholly-owned by the parent corporation) immediately following
the consummation of such transaction or (iii) the sale, transfer or lease of
all or substantially all of the assets of the company; in any of cases (i),
(ii) and (iii), in a single transaction or series of transactions.
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"CHARTER DOCUMENTS" is defined in Section 4.13.
"CLAIMS" is defined in Section 8.1.
"CLOSING" means the consummation of the transactions contemplated
by this Agreement to be consummated on the Closing Date.
"CLOSING DATE" means the date upon which each of the conditions
precedent set forth in Section 3.1 hereof is satisfied or waived by Lender in
its sole and absolute discretion.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"COMMON STOCK" is defined in Section 4.2.
"CONTRACT" means all contracts and agreements, contract rights,
executory commitments, license agreements, purchase and sales orders, written
or oral, relating to the operation of the business of the Borrower or any
Subsidiary.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any
provision of any agreement or other instrument to which that Person is a
party or by which it or any of the properties owned or leased by it is bound
or otherwise subject.
"CONVERSION DATE" is defined in Section 7.1(a).
"CONVERSION NOTICE" is defined in Section 7.1(a).
"CONVERSION TRANSACTIONS" is defined in Section 7.1(b).
"CONVERSION STOCK" means the shares of Common Stock issuable upon
conversion of the shares of Series D Preferred Stock.
"CURRENT CUSTOMER" is defined in SECTION 4.10(a).
"DEFAULT" is defined in SECTION 6.1.
"DEFAULT RATE" is defined in SECTION 2.8.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined
in Section 3(3) of ERISA, that is sponsored or contributed to by the Borrower
or any ERISA Affiliate covering employees or former employees of the
Borrower, or with respect to which the Borrower or any ERISA Affiliate is a
party or is otherwise bound.
"EMPLOYEE PENSION BENEFIT PLAN" means any Employee Benefit Plan, as
defined in Section 3(2) of ERISA, that is regulated under Title IV of ERISA
or is subject to the funding requirements of Part III of Title I of ERISA or
Section 412
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of the Code, other than a Multiemployer Plan.
"EMPLOYMENT AGREEMENTS" is defined in Section 4.20(a).
"ENVIRONMENTAL LAW" means all laws, ordinances and regulations
regulating or otherwise concerning the environment or relating to Hazardous
Materials, including, without limitation, the Clean Air Act, as amended, 42
U.S.C. Section 7401 ET SEQ.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 ET SEQ.; the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 ET SEQ.; the
Comprehensive Environment Response, Compensation and Liability Act of 1980,
as amended (including the Superfund Amendments and Reauthorization Act of
1986, "CERCLA"), 42 U.S.C. Section 9601 ET SEQ.; the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 ET SEQ.; the Occupational Safety and
Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ.; the
Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 ET
SEQ.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f ET
seq.; and all comparable state and local laws, orders and regulations of
applicable jurisdictions.
"EXISTING PREFERRED STOCK" means, collectively, the Series A
Preferred Stock, the Series B Preferred Stock, and the Series C Preferred
Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" of the Borrower means any other Person that,
together with the Borrower as of the relevant measuring date under ERISA, was
or is required to be treated as a single employer under Section 414 of the
Code.
"FINANCIAL STATEMENTS" is defined in SECTION 4.7.
"GAAP" is defined in SECTION 4.7.
"GOVERNMENTAL AUTHORITY" means any federal, territorial, state or
local governmental authority, quasi-governmental authority, instrumentality,
court, government or self-regulatory organization, commission, tribunal or
organization or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of the foregoing,
in all such cases whether domestic or foreign.
"GROUP HEALTH PLAN" means any group health plan, as defined in
Section 5000(b)(1) of the Code.
"HAZARDOUS MATERIALS" means oil, flammable explosives, asbestos,
urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic
or contaminated substances or similar materials, including, without
limitation, any
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substances which are "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under any Environmental Laws.
"INTEREST PAYMENT DATE" shall have the meaning ascribed to such
term in the Senior Note.
"KNOWLEDGE" OR "KNOWLEDGE," with respect to any Person, means the
actual knowledge of such Person, after reasonable inquiry. For purposes
hereof, a Person shall be deemed to have actual knowledge of the contents of
all books and records with respect to which such Person has reasonable
access. Without limiting the generality of the foregoing, with respect to
any Person that is a corporation, partnership or other business entity,
actual knowledge shall be deemed to include the actual knowledge of all
principal employees of any such Person (which, for purposes of the Borrower,
shall include without limitation Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxx, Xxxxxxxx
X. Xxxxx, Xxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Ph.D., Xxxxxx X.
Xxxx, and Xxxxxxx X. Xxxxxxx) as well as the Chief Executive Officer,
President, Chief Financial Officer and all Vice Presidents in the case of
corporate Persons, and general partners in the case of general or limited
partnerships, as the case may be.
"LEASE AGREEMENTS" is defined in Section 4.19(b).
"LEASED REAL PROPERTY" means all real property leased, occupied,
operated or controlled by the Borrower or any Subsidiary or otherwise related
to or used in the business of the Borrower or any Subsidiary.
"LENDER" is defined in the preamble hereto.
"LIABILITY" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether
known or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and
whether or not the same is required to be accrued on the financial statements
of such Person.
"LIEN" means any lien, mortgage, pledge, security interest, charge,
or encumbrance of any kind (including any conditional sale or other title
retention agreement or any lease in the nature thereof) and any agreement to
give or refrain from giving any lien, mortgage, pledge, security interest,
charge, or other encumbrance of any kind.
"LOAN" means the Senior Loan.
"LOAN DOCUMENTS" means, collectively, this Agreement and the Senior
Note, as hereafter amended, supplemented, replaced or modified, each as
properly executed and in recordable form, if necessary.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person or
designated
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group of Persons, a change in, or effect on, or group of such changes in or
effects on, the operations, financial condition or results of operations,
prospects, assets or Liabilities of the Person or group of Persons, as the
case may be, taken as a whole, that results in a material adverse effect on,
or a material adverse change in, the operations, financial condition, results
of operations, prospects, assets or Liabilities of the Person or group of
Persons, as the case may be, taken as a whole, excluding adverse changes in
the general economy.
"MATERIAL CONTRACTS" is defined in Section 4.10(b).
"MATURITY DATE" means February 28, 1997; provided, however, that if
Lender exercises its option to extend the Maturity Date to March 31, 1997, as
set forth in Section 7.1, , or if Lender fails to timely deliver the
Conversion Notice to Borrower as provided in Section 7.2(c), then the
"Maturity Date" shall mean March 31, 1997.
"MAXIMUM AMOUNT" is defined in Section 8.14.
"MULTIEMPLOYER PLAN" means any multiemployer plan as defined in
either Section 3(37) or 4001(a)(3) of ERISA.
"MULTIPLE EMPLOYER PLAN" means any Employee Benefit Plan sponsored
by more than one employer, within the meaning of Sections 4063 or 4064 of
ERISA or Code Section 413(c).
"NOTE PURCHASE AGREEMENT" is defined in Section 5.7.
"OBLIGATIONS" means each and all of the obligations of Borrower
under or with respect to the Loan or the Loan Documents.
"PERMITTED ENCUMBRANCES" means: (i) Liens for taxes, assessments or
charges for claims that are not yet due and payable or being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with of GAAP; (ii) statutory Liens of carriers, warehousemen, mechanics,
materialmen, bankers and other Liens imposed by law and created in the
ordinary course of business for amounts that are not material, and that are
not yet due and payable or that are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP; (iii)
Liens incurred and deposits made in the ordinary course of business to secure
the performance (including by way of surety bonds or appeal bonds) of
tenders, bids, leases, contracts, statutory obligations or similar
obligations or arising as a result of progress payments under contracts, in
each case in the ordinary course of business and not relating to the
repayment of debt; (iv) easements, rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges,
encumbrances; (v) building restrictions, zoning laws and other statutes,
laws, rules, regulations, ordinances and restrictions; (vi) leases or
subleases approved by, or deemed
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approved by Lender; (vii) any attachment or judgment Lien, not otherwise
constituting a Default hereunder, in existence less than thirty (30) days
after the entry thereof or with respect to which (A) execution has been
stayed, (B) payment is covered in full by insurance to which Lender has been
made the loss payable party, or (C) Borrower is in good faith prosecuting an
appeal or other appropriate proceedings for review and has set aside on its
books and granted to Lender a priority perfected security interest in such
reserves as may be required by GAAP with respect to such judgment or award;
and (viii) Liens with respect to purchase money security interests (including
refinancings thereof) granted in the ordinary course of the Borrower's
business, consistent with past practice.
"PERSON" means an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or any
other entity or organization, including a government or any agency or
political subdivision thereof and, for the purpose of the definition of
"ERISA Affiliate" a trade or business.
"PLAN AFFILIATE" means, with respect to any Person, any employee
benefit plan or arrangement sponsored by, maintained by or contributed to
such Person, and with respect to any employee benefit plan or arrangement,
any Person sponsoring, maintaining or contributing to such plan or
arrangement.
"PROHIBITED TRANSACTION" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.
"REFINANCING AGREEMENTS" means the Assignment and Amended &
Restated Standstill Agreement between the Borrower, on the one hand, and
Northwestern Mutual Life Insurance Company, The Travelers Insurance Company,
The Travelers Indemnity Company, the Travelers Life and Annuity Company, The
Lincoln National Life Insurance Company and Bedrock Asset Trust I, on the
other hand, dated as of December 31, 1996.
"REFINANCING TRANSACTIONS" means the transactions contemplated by
the Refinancing Agreements, including without limitation (i) the repurchase
by the Borrower of the Subordinated Debentures for the face amount thereof
plus accrued and unpaid interest through the date of such repurchase, and
(ii) the repurchase by the Borrower of all outstanding shares of its Series A
Preferred Stock for an aggregate of $6,830,000 plus accrued and unpaid
dividends through the closing date of such repurchase.
"SEC DOCUMENTS" is defined in Section 4.29.
"SECURITIES" means, collectively, the Series D Preferred Stock, the
Conversion Stock, the Series E Preferred Stock, and the Series E Conversion
Stock.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any
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similar federal statute and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"SENIOR LOAN" means the Senior Loan made by Lender to Borrower
pursuant to Section 2.1 in the principal amount not to exceed Eighteen
Million Dollars ($18,000,000), all pursuant to the terms and conditions of
this Agreement.
"SENIOR NOTE" means a note in the form of the Senior Note attached
hereto as EXHIBIT A, as hereafter amended, supplemented, replaced or modified.
"SERIES A PREFERRED STOCK" means the Borrower's Series A 6.0%
Cumulative Preferred Stock.
"SERIES B PREFERRED STOCK" means the Borrower's Series B Cumulative
Preferred Stock.
"SERIES C PREFERRED STOCK" means the Borrower's Series C
Convertible Preferred Stock.
"SERIES D CERTIFICATE OF DESIGNATION" means the Certificate of
Designation, Preferences and Rights of Series D 4% Cumulative Redeemable
Convertible Preferred Stock in the form set forth as EXHIBIT B hereto.
"SERIES D PREFERRED STOCK" means the Series D 4% Cumulative
Redeemable Convertible Preferred Stock, with the rights, preferences and
privileges set forth in the Series D Certificate of Designation.
"SERIES E CERTIFICATE OF DESIGNATION" means the Certificate of
Designation, Preferences and Rights of Series E 4% Cumulative Redeemable
Convertible Preferred Stock in the form set forth as EXHIBIT C hereto.
"SERIES E CONVERSION STOCK" means the shares of Common Stock
issuable, upon certain conditions, by the Borrower to the Lender in respect
of the Series E Preferred Stock.
"SERIES E PREFERRED STOCK" means the Series E 4% Cumulative
Redeemable Convertible Preferred Stock, with the rights, preferences and
privileges set forth in the Series E Certificate of Designation.
"STATE HEALTH CARE PROGRAM" is defined in Section 4.33.
"SUBORDINATED DEBENTURES" means the Borrower s 7.50% Senior
Subordinated Debentures due 2005.
"SUBSIDIARY" is defined in Section 4.3.
"TAX" OR "TAXES" means any tax or other similar Liability imposed or
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collected by any Governmental Authority, including all federal, state,
county, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, occupation, property, excise, value added,
withholding and other taxes, duties or assessments (including the recapture
of any tax items such as investment tax credits), together with any related
interest, penalties and additions and shall include any transferee or
secondary Liability for a Tax and any Liability arising as a result of being
(or ceasing to be) a member of any affiliated, consolidated, combined, or
unitary group or being included (or required to be included) in any Tax
Return relating thereto.
"TAX AGREEMENT" means any sharing, allocation, indemnity or other
agreement or arrangement (written or unwritten) relating to Taxes (other than
this Agreement).
"TAX RETURN" means any return, report, information return or other
documents (including any related or supporting schedules, statements or
information) filed or required to be filed with any Tax authority or
Governmental Authority in connection with the determination, assessment or
collection of any Taxes of any Person or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
1.2 EXHIBITS AND SCHEDULES INCORPORATED. All Exhibits and
Schedules attached hereto are hereby incorporated into this Agreement.
ARTICLE II. SENIOR LOAN
2.1 SENIOR LOAN. Upon the terms of, and subject to the conditions
set forth in, this Agreement, Lender agrees to make a loan (the "SENIOR
LOAN") to Borrower in the principal amount of Eighteen Million Dollars. The
Senior Loan, or any portion thereof, once repaid, cannot be reborrowed.
2.2 SENIOR NOTE. The Senior Loan shall be evidenced by the Senior
Note. The date and amount of each payment made on account of the principal
of the Senior Loan, and interest thereon, shall be recorded by Lender on its
books and records, which books and records shall constitute prima facie
evidence of the accuracy of the information contained therein, but the
failure of Lender to make any such notation shall not affect the obligations
of Borrower hereunder or under the Senior Note.
2.3 INTEREST; PAYMENTS. Interest shall accrue upon the
outstanding principal amount of the Senior Loan at the rate provided in the
Senior Note, and such interest shall be payable as required therein.
Interest on the Loan shall be computed on the basis of actual days elapsed in
a year of 360 days (including the first day but excluding the last day)
occurring in the period for which it is payable.
2.4 PREPAYMENTS. Borrower shall not have the right to prepay the
Loan at any time.
2.5 MATURITY DATE. On the Maturity Date, the Senior Loan shall
mature
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and be repaid in full, and all sums due and owing under this Agreement
and the other Loan Documents shall be paid in full. All payments due to
Lender under this Agreement, whether at the Maturity Date or otherwise, shall
be paid in immediately available funds.
2.6 DEFAULT INTEREST. After the occurrence and during the
continuance of a Default, all amounts outstanding under any Loan Document,
including without limitation the outstanding principal balance of the Senior
Loan, shall, at the option of the Lender, bear interest at the rate of
interest applicable to overdue payments of principal and interest under the
Senior Note (the "DEFAULT RATE").
2.7 PAYMENTS ON NON-BUSINESS DAYS; CALCULATIONS. If any payment
to be made under any Loan Document shall be stated to be due on a day which
is not a Business Day, then the date for payment thereof shall be extended to
the next following Business Day.
2.8 STAMP TAXES, ETC. The Borrower shall pay any Taxes on the
issuance, execution and delivery of the Loan Documents, any stamp or other
taxes levied by any jurisdiction on the execution, delivery, filing,
recording, performance and enforcement of the Loan Documents, and all Taxes
levied by any jurisdiction by reason or in respect of any payments under the
Senior Note, hereunder or under any other Loan Document (other than any tax
on, or measured by, the net income of Lender by the jurisdiction in which it
is organized or maintains its principal office).
2.9 COSTS OF CLOSING. Whether or not the Closing occurs, Borrower
will reimburse Lender for all reasonable legal fees and expenses, and all
other costs incurred by Lender or its counsel in connection with this
Agreement and the transactions contemplated hereby, including without
limitation the Loan, provided that Borrower's maximum responsibility
therefore shall be $81,000. Such reimbursement shall be due on the Closing
Date or, if the Closing does not occur, promptly upon Borrower's receipt from
the Lender of a xxxx for such costs and expenses.
2.10 USE OF PROCEEDS. The proceeds of the Loan shall be used by
the Borrower solely (i) to make payments due from it to the holders of the
Series A Preferred Stock and the Subordinated Debentures pursuant to the
Refinancing Agreements, (ii) to make payments with respect to the transaction
costs referred to in Section 2.9 and (iii) to the extent any proceeds remain
after the payments set forth in items (i) and (ii) above, for general working
capital purposes, all in accordance with the Funds Flow Memorandum attached
hereto as Exhibit D. All Persons receiving proceeds under clause (i) above
shall acknowledge receipt of such amounts and that such amounts shall
represent payment in full of the amounts owed to such Persons under the
instruments or agreements evidencing such obligations of the Borrower.
ARTICLE III. CONDITIONS PRECEDENT TO CLOSING AND LOANS
3.1 CONDITIONS PRECEDENT TO CLOSING. The Lender's obligation to
make the Senior Loan, and the occurrence of the Closing Date, shall be
subject to satisfaction
Page 15
or waiver, in Lender's sole and absolute discretion, of each of the following
conditions precedent on or prior to December 31, 1996:
(a) COMPLIANCE. There shall be no Default and each of the
representations and warranties contained in Article 4 hereof shall be true
and correct on and as of the Closing Date.
(b) SENIOR NOTE. The Borrower shall have delivered to the Lender
the Senior Note, in form and substance satisfactory to the Lender in its sole
and absolute discretion, duly executed by the Borrower.
(c) CORPORATE DOCUMENTS. The Lender shall have received true and
complete copies of the following documents from the applicable Governmental
Authority, dated a recent date prior to the Closing, for the Borrower: (i)
tax status certificates, if available, showing no unpaid tax Liabilities; and
(ii) a good standing certificate from the jurisdiction in which the Borrower
is organized.
(d) CORPORATE PROCEEDINGS. The Lender shall have received a copy
of the resolutions, in form and substance satisfactory to the Lender, of the
Board of Directors of Borrower, authorizing the execution, delivery and
performance of the Loan Documents and the transactions contemplated thereby,
as well as the adoption of the Series D Certificate of Designation and the
Series E Certificate of Designation.
(e) FEES AND EXPENSES. The Lender shall have received evidence
(including, without limitation payment instructions given by the Borrower)
that all fees and expenses payable to the Lender have been paid in full.
(f) CERTIFICATES OF DESIGNATION. The Borrower shall have adopted
and duly filed with the Secretary of State of Delaware the Series D
Certificate of Designation and the Series E Certificate of Designation.
(g) REFINANCING. The Refinancing Agreements shall have been
executed by the parties thereto. On the Closing Date, the Refinancing
Transactions shall have been consummated.
(h) OPINION OF BORROWER S COUNSEL. The Lender shall have received
the legal opinion of Irell & Xxxxxxx LLP, counsel to the Borrower, in the
form set forth as Exhibit E hereto.
(i) OTHER DOCUMENTS. The Lender shall have received such other
documents, instruments, agreements, certificates, forms of evidence and other
materials relating to the transactions contemplated hereby as the Lender may
reasonably require.
(j) COMPLETION OF REVIEW OF BORROWER. The Lender shall have
completed and been satisfied in its sole discretion with its review of the
business, operations, properties, assets, liabilities, prospects and
condition, financial and
Page 16
otherwise, of the Borrower and its Subsidiaries.
3.2 CLOSING MECHANICS. Upon the satisfaction (or waiver in the
Lender's sole and absolute discretion) of each of the conditions precedent
set forth in SECTION 3.1, the Lender shall disburse the proceeds of the Loan
by making the payments set forth in the Flow of Funds Memo. The Senior Loan
shall be deemed made, and interest shall begin to accrue, upon disbursement
thereof.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BORROWER
As a material inducement to Lender's entry into this Agreement,
Borrower represents and warrants to Lender as of the date hereof and
continuing thereafter that, except as set forth in Schedule 4 attached hereto
(the "BORROWER DISCLOSURE SCHEDULE"):
4.1 ORGANIZATION, POWERS AND GOOD STANDING. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as now conducted and as proposed to be conducted. The Borrower is
duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify, either alone or together
with all other such failures, would have a Material Adverse Effect on the
Borrower. Schedule 4.1 includes true and complete copies of the Borrower's
Certificate of Incorporation and Bylaws currently in effect and a list of all
states or other jurisdictions in which the Borrower is qualified to do
business. All of the terms and provisions of the Certificate of
Incorporation and Bylaws are legal, valid and enforceable.
4.2 CAPITALIZATION.
(a) The authorized capital of the Borrower consists of: (i)
Twenty-Five Million (25,000,000) shares of common stock ("COMMON STOCK"),
10,913,388 shares of which are issued and outstanding as of the date hereof
and shall be issued and outstanding as of the Closing; (ii) One Million
(1,000,000) shares of Preferred Stock, of which (A) 155,000 shares of Series
A Preferred Stock have been designated and authorized, 155,000 shares of
which are issued and outstanding as of the date hereof (all of which will be
repurchased by the Borrower as part of the Refinancing Transactions); (B)
125,000 shares of Series B Preferred Stock have been designated and
authorized, no shares of which are issued and outstanding as of the date
hereof; and (C) 4,000 shares of Series C Preferred Stock have been designated
and authorized, 3,876 shares of which are issued and outstanding as of the
date hereof. The outstanding shares of Common Stock and Existing Preferred
Stock are fully paid, non assessable, free and clear of all encumbrances and
have been issued in compliance with all state and federal securities laws.
None of such shares is subject to any preemptive rights.
(b) Upon the consummation of the Refinancing Transactions and the
Page 17
transactions contemplated by this Agreement, the authorized capital of the
Borrower will consist of: (i) Twenty-Five Million (25,000,000) shares of
Common Stock, 10,913,388 shares of which will be issued and outstanding
immediately after the Closing Date; (ii) One Million (1,000,000) shares of
Preferred Stock, of which (A) no shares of Series A Preferred Stock or Series
B Preferred Stock will have been designated and authorized, (B) 4,000 shares
of Series C Preferred Stock will have been designated and authorized, 3,876
shares of which will be issued and outstanding immediately after the Closing
Date; (C) Eighteen Thousand (18,000) shares of Series D Preferred Stock will
have been designated and authorized, no shares of which will be issued and
outstanding immediately after the Closing Date; and (D) Nine Thousand (9,000)
shares of Series E Preferred Stock will have been designated and authorized,
none of which will be issued and outstanding immediately after the Closing
Date.
(c) The rights, preferences, privileges and restrictions of the
Series D Preferred Stock are as stated in the Series D Certificate of
Designation. The rights, preferences, privileges and restrictions of the
Series E Preferred Stock are as stated in the Series E Certificate of
Designation.
(d) Except (i) as otherwise contemplated by this Agreement, (ii)
for the issuance, sale or grant of rights to purchase (including options and
warrants) aggregating up to 990,983 shares of Common Stock to key employees
and directors of the Borrower outstanding on the date hereof, (iii) for
warrants relating to an aggregate of 328,900 shares of Common Stock
outstanding on the date hereof, and (iv) for 77,520 shares of Common Stock
currently issuable upon conversion of the Company's outstanding Series C
Preferred Stock, the Borrower has not become subject to any commitment or
obligation, either absolute or conditional, to issue, deliver or sell, or
cause to be issued, delivered or sold, under offers, stock option agreements,
stock bonus agreements, stock purchase plans, incentive compensation plans,
warrants, options, calls, conversion rights or otherwise, any shares of the
Capital Stock of the Borrower. Except as provided in this Agreement, the
Borrower is not a party or subject to any agreement or understanding, and, to
the Borrower's Knowledge, there is no agreement or understanding between any
persons and/or entities, that affects or relates to the voting or giving of
written consents with respect to any of the Borrower's voting securities.
4.3 SUBSIDIARIES. SCHEDULE 4.3 sets forth a correct and complete
list of: (i) the name, number of shares, partnership interests or other
equity interests held, and percentage ownership by the Borrower in each
corporation, partnership, joint venture or other entity in which the Borrower
has, directly or indirectly, any equity interest in the capital stock
thereof, any partnership interest, or any other equity interest therein
(individually a "SUBSIDIARY" and collectively "SUBSIDIARIES".) Except as
specifically set forth in SCHEDULE 4.3, the Borrower owns of record and
beneficially all of the outstanding capital stock of each of the Subsidiaries
free and clear of all Liens. Each of the Subsidiaries is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, is entitled to own, lease or operate the properties and assets
it now owns, leases or operates, and is qualified to do business, is in good
standing and has all required and appropriate licenses in each jurisdiction
in which its
Page 18
failure to obtain or maintain such qualification, good standing or licensing,
or group of the foregoing, would have a Material Adverse Effect on such
Subsidiary. The shares of capital stock of each Subsidiary shown in SCHEDULE
4.3 to be issued and outstanding have been validly authorized and issued and
are validly outstanding, fully paid and non assessable. No Subsidiary holds
shares of its capital stock in its treasury, and there are not outstanding
(i) any options, warrants or other rights with respect to the capital stock
of any of the Subsidiaries, (ii) any securities convertible into or
exchangeable for shares of such stock or (iii) any other commitments of any
kind for the issuance of additional shares of capital stock or options,
warrants or other securities of any of them. The Borrower has provided or
made available to the Lender copies of the certificates of incorporation,
articles of incorporation, partnership agreements, limited liability company
operating agreements, joint venture agreements, or other governing documents
with respect to each Subsidiary.
4.4 AUTHORIZATION.
(a) The Borrower has all corporate and other requisite authority
to execute, deliver and carry out and perform its obligations under the terms
of the Loan Documents and the other agreements referred to herein, and all of
the transactions contemplated hereunder and thereunder, including the sale
and issuance of the Securities. The execution and delivery of the Loan
Documents, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary action on the part of the
Borrower and, except as set forth herein, no other approval is required for
the performance by the Borrower of its obligations hereunder, or thereunder.
The Loan Documents and the other agreements referred to herein have been, and
at Closing will be, duly executed and delivered by the Borrower.
(b) The Loan Documents and the other agreements referred to
herein, when executed and delivered by the Borrower, will constitute valid
and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
(c) The Board of Directors of the Borrower, by a unanimous written
consent, has in light of and subject to the terms and conditions set forth
herein, (i) determined that the Loan Documents, the other agreements referred
to herein, and the transactions contemplated hereby and thereby, taken
together, are in the best interest of the Borrower and its shareholders and
(ii) approved the Loan Documents, the other agreements referred to herein,
and the transactions contemplated hereby and thereby. All required notices
to, and approvals and consents of, the Borrower's shareholders for the Loan
Documents and the other agreements referred to herein, and the consummation
of the transactions contemplated hereby and thereby, have been validly given
and obtained.
4.5 GOVERNMENTAL AND OTHER CONSENTS; NO VIOLATION. No consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority or any
other Person is required on the part of the Borrower in connection with the
Borrower's valid execution, delivery or performance
Page 19
of the Loan Documents or the other agreements referred to herein. The
execution, delivery and performance by Borrower of each Loan Document to
which it is party, and the consummation of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Borrower's
Certificate of Incorporation or Bylaws as currently in effect, (b) conflict
with, result in a breach of, or constitute (or, with the giving of notice or
lapse of time or both, would constitute) a default under, or, except for
consents that have been obtained and are in full force and effect, require
the approval or consent of any Person pursuant to, any Contractual Obligation
of Borrower, or (c) result in the creation or imposition of any Lien upon any
asset of Borrower.
4.6 LITIGATION. There is no action, suit, claim, arbitration,
litigation, legal, administrative or other proceeding, or investigation (by
any Governmental Authority or otherwise) pending against or affecting the
Borrower, any Subsidiary or the assets, products or business of any of them
or, to the Knowledge of the Borrower, any reasonable basis therefor or threat
thereof, other than disputes and claims arising in the ordinary course of the
Borrower's business that could not in the aggregate have a Material Adverse
Effect on the Borrower and its Subsidiaries. Neither the Borrower nor any
Subsidiary is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or other Governmental Authority.
There is no action, suit, claim, arbitration, litigation, legal,
administrative or other proceeding, or investigation by the Borrower or any
Subsidiary currently pending or that the Borrower or any Subsidiary currently
intends to initiate. There are no judicial or administrative actions,
proceedings or investigations pending or, to the Borrower's Knowledge,
threatened, against the Borrower, any Subsidiary or any of their respective
businesses, assets or products that seek to enjoin, question the validity of,
or rescind the transactions contemplated by this Agreement or any of the
other agreements referred to herein or otherwise prevent the Borrower from
complying with the terms and provisions of this Agreement or any of such
other agreements.
4.7 FINANCIAL STATEMENTS AND REPORTS.
(a) The financial statements contained in the SEC Documents
(collectively, the "FINANCIAL STATEMENTS") have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated and with each other (except
that the Financial Statements may not contain all footnotes required by GAAP)
and fairly present the consolidated financial condition of the Borrower and
the Subsidiaries and the consolidated results of operations as of such dates
and for such periods indicated. Since September 30, 1996, there has not been
any material adverse change to the financial condition of the Borrower or any
Subsidiary as set forth in the Financial Statements. There are no
Liabilities required by GAAP to be disclosed in the Financial Statements that
are not disclosed in the Financial Statements. Except as reflected in the
Financial Statements, neither the Borrower nor any Subsidiary is a guarantor
or indemnitor of any indebtedness of any other Person. The Borrower
maintains a standard system of accounting established and administered in
accordance with GAAP. The Borrower's accounting policies relating to revenue
recognition, reserves, capitalization expense, depreciation and amortization
are administered in accordance
Page 20
with GAAP. The general ledger, accounts receivable, accounts payable, bank
reconciliations and payroll records of the Borrower have been maintained in
the ordinary course and contain a correct and complete record of the matters
typically contained in records of such nature.
(b) SCHEDULE 4.7(b) lists all management letters and all other
letters (other than audit letters included in the SEC Documents) delivered to
the Borrower by the Borrower's independent auditing firm(s) relating to the
results of operations, financial statements or internal controls of the
Borrower or any Subsidiary insofar as the same may pertain to the business or
assets of the Borrower and any Subsidiary during any period from and after
January 1, 1994.
(c) Since January 1, 1994, there has been no material disagreement
(within the meaning of Item 304(a)(1)(iv) of Regulation S-K under the
Securities Act between the Borrower and its independent auditing firm(s)
concerning any aspect of the manner in which the Borrower has reported upon
the financial condition and results of operations of the business or assets
of the Borrower since such date, that has not been resolved to the
satisfaction of the relevant independent auditing firm.
4.8 PROPRIETARY INFORMATION. To the Borrower's Knowledge (which
for purposes hereof shall not include the knowledge of the applicable
officer, director or employee), none of the officers, directors or employees
of the Borrower or any of its Subsidiaries is in violation of any agreement
regarding proprietary information and inventions. To the Borrower's
Knowledge (which for purposes hereof shall not include the knowledge of the
applicable officer or employee), none of the officers or employees of the
Borrower or any of its Subsidiaries is in violation of any prior employment
contract or proprietary information agreement with any Person.
4.9 REGISTRATION RIGHTS. Neither the Borrower nor any Subsidiary
is a party to any agreement or commitment that obligates the Borrower to
register under the Securities Act any of its presently outstanding securities
or any of its securities that may hereafter be issued.
4.10 CONTRACTS.
(a) "CURRENT CUSTOMER" means any Person from whom the Borrower or
any Subsidiary has recognized revenue since January 1, 1995 through the date
hereof or to whom the Borrower or any Subsidiary has any obligation to
complete work or honor any contractual warranty or has any obligation or
Liabilities. Since January 1, 1996 no Current Customers of the business have
canceled or terminated their Contracts, or notified the Borrower or any
Subsidiary in writing or, to the Knowledge of the Borrower or any Subsidiary,
orally, of their specific intent to cancel or terminate their contract,
except any such cancellations, terminations or notifications that in the
aggregate could not have a Material Adverse Effect (taking into account
revenue generated from replacement customers) on the Borrower and its
Subsidiaries.
(b) SCHEDULE 4.10(b) contains a correct and complete list of all
Page 21
agreements, contracts, indebtedness, liabilities and other obligations to
which the Borrower or any Subsidiary is a party or by which it is bound that
are material to the conduct and operations of its business and properties,
which provide for payments to or by the Borrower or any Subsidiary in excess
of $500,000 annually or $2,000,000 in the aggregate, which obligate the
Borrower or any Subsidiary to share, license or develop any product or
technology, or which involve transactions or proposed transactions between
the Borrower and any Subsidiary on the one hand, and the officers, directors,
Affiliates or any Affiliate of the Borrower or any Subsidiary, on the other
hand (collectively, the "MATERIAL CONTRACTS"), excluding any such Material
Contracts that are contracts with Current Customers.
(c) The Borrower and the Subsidiaries have in all material
respects performed, and are now performing in all material respects, the
obligations under, and are not in default (or to the Borrower's Knowledge,
would by the lapse of time and/or the giving of notice or otherwise be in
default) in respect of, any of the Material Contracts. To the Borrower's
Knowledge, each of the Material Contracts is in full force and effect and is
a valid and enforceable obligation against the Borrower or a Subsidiary, as
applicable, and the other party thereto, in accordance with its terms.
4.11 ABSENCE OF CHANGES. Since January 1, 1996, except as
reflected in the Financial Statements or the SEC Documents, neither the
Borrower nor any Subsidiary has (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or
series of its capital stock; (ii) incurred any indebtedness for money
borrowed other than in the ordinary course or any other Liabilities other
than in the ordinary course; (iii) made any loans or advances to any Person
(other than advances for business or travel expenses) or guaranteed the
obligations of any Person; (iv) sold, exchanged or otherwise disposed of any
of its assets or rights, other than the sale, exchange or other disposition
of its equipment and services in the ordinary course of business consistent
with past practice; (v) incurred any change in the assets, Liabilities,
financial condition, operating results, prospects or business of the Borrower
from that reflected in the Financial Statements, except changes in the
ordinary course of business consistent with past practice that have not been,
in the aggregate, materially adverse; (vi) suffered any damage, destruction
or loss, whether or not covered by insurance, materially and adversely
affecting the assets, properties, financial condition, operating results,
prospects or business of the Borrower (as such business is presently
conducted and as it is proposed to be conducted); (vii) waived a valuable
right or a debt owed to it, except in the ordinary course of business
consistent with past practice; (viii) satisfied or discharged any Lien, claim
or encumbrance or payment of any obligation, except in the ordinary course of
business consistent with past practice and that is not material to the
assets, properties, financial condition, operating results, prospects or
business of the Borrower or any Subsidiary (as such business is presently
conducted and as it is proposed to be conducted); (ix) agreed to or made any
material change or amendment to any Material Contract, except in the ordinary
course of business consistent with past practice; (x) made any material
change in any compensation arrangement or agreement with any employee; (xi)
permitted or allowed any of its assets to be subjected to any material Lien,
other than Liens on equipment in the ordinary course of business consistent
with past practice; (xii)
Page 22
written up the value of any inventory, notes or accounts receivable, or
other assets; (xiii) licensed, sold, transferred, pledged, modified,
disclosed, disposed of or permitted to lapse any right to the use of any
Intellectual Property Right; (xiv) made any change in any method of
accounting or accounting practice or any change in depreciation or
amortization policies or rates previously adopted; (xv) paid, lent or
advanced any amount to, or sold, transferred or leased any assets to, or
entered into any agreement or arrangement with, any of its Affiliates, except
for directors' fees, and employment compensation to officers; (xvi) made
capital expenditures or commitments therefor, other than such capital
expenditures or commitments made in the ordinary course consistent with past
practice and not exceeding, in the aggregate, $22,000,000 for the period from
September 30, 1996 through the Closing Date and (xvii) to the Borrower's
Knowledge, incurred or suffered any other event or condition of any character
that could reasonably be expected to result in a Material Adverse Effect on
the Borrower or any Subsidiary.
4.12 INTELLECTUAL PROPERTY.. The Borrower and each of the
Subsidiaries owns or possesses adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, technology, software,
trade secrets, know-how and licenses necessary for the conduct of their
respective businesses and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice of
any claim of conflict with, any such rights of others.
4.13 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Borrower nor
any Subsidiary is in violation or default of any provisions of its Charter or
Bylaws (the "CHARTER DOCUMENTS"), or of any provision of Applicable Law.
Neither the Borrower nor any Subsidiary is in violation or default of any
instrument, judgment, order, writ, decree or oral or written contract or
other agreement to which it is a party or by which it is bound, except with
respect to any such defaults which could not have a Material Adverse Effect
on the Borrower or the relevant Subsidiary, as the case may be. The
execution, delivery and performance of the Loan Documents and the other
agreements referred to in this Agreement, and the consummation of the
transactions contemplated hereby and thereby, will not result in any such
violation or be in conflict with any provision of the Charter Documents or
Applicable Law, or any instrument, judgment, order, writ, decree, contract or
other agreement, and will not be an event that results in the creation of any
Lien upon any assets of the Borrower or any Subsidiary or constitute a
default under or give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit to which the Borrower or any
Subsidiary is entitled, under any contract or any license, franchise, permit
or similar authorization relating to the Borrower or any Subsidiary or by
which its business or assets may be bound.
4.14 COMPLIANCE WITH LAW; APPROVALS.
(a) The operations of the Borrower and its Affiliates have been
and will continue to be conducted in accordance with all Applicable Laws,
including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, third party reimbursement (including
Page 23
Medicare and Medicaid), environmental protection, fire, zoning and building
and occupational safety matters, except for violations that individually or
in the aggregate would not and, insofar as may reasonably be foreseen, in the
future will not, have a Material Adverse Effect on the Borrower or any
Subsidiary.
(b) Neither the Borrower nor any Affiliate has received notice of
any violation (or of any investigation, inspection, audit, or other
proceeding by any Governmental Authority involving allegations of any
violation ) of any Applicable Law, or is in material default with respect to
any Applicable Law, and to the best Knowledge of the Borrower and all
Affiliates, no investigation, inspection, audit, or other proceeding by any
Governmental Authority involving allegations of violation of any Applicable
Law is threatened or contemplated.
(c) Neither the Borrower nor any Affiliate has any Knowledge of
any proposed change in any Applicable Law that would materially adversely
affect the transactions contemplated by this Agreement or all or any material
part of the assets or business of the Borrower or any Affiliate.
(d) Each of the Borrower and its Affiliates has, and all
professional employees or agents of each of the Borrower and its Affiliates
have, all licenses, franchises, permits, authorizations, including
certificates of need, or approvals from all Governmental Authorities
("APPROVALS") required for the conduct of the business of each of the
Borrower and its Affiliates and the occupancy and operation, for its present
uses, of the real and personal property which each of the Borrower and its
Affiliates owns or leases, except where the failure to have such Approvals
would not, individually or in the aggregate, have a Material Adverse Effect
on any of the Borrower or any Affiliate, and neither the Borrower nor any
Affiliate or the professional employees or agents of either is in violation
of any such Approval or any terms or conditions thereof, except for such
violations as would not, individually or in the aggregate, have a Material
Adverse Effect on any of the Borrower or any Affiliate. Each of the Borrower
and its Affiliates has all Approvals required for the conduct of the business
of each of the Borrower and its Affiliates and the occupancy and operation,
for its present uses, of the real and personal property which each of the
Borrower and its Affiliates owns or leases, and neither the Borrower nor any
Affiliate is in violation of any such Approval or the terms or conditions
thereof.
(e) SCHEDULE 4.14(e) sets forth a true and complete list of all
Approvals issued or granted to each of the Borrower and any Affiliate
(excluding any licenses granted to any natural person); such list contains a
summary description of each such item and, where applicable, specifies the
date issued, granted or applied for, the expiration date and the current
status thereof.
(f) All such Approvals are in full force and effect, have been
issued to and fully paid for by the holder thereof and, to the Knowledge of
each of the Borrower and its Affiliates, no suspension or cancellation
thereof has been threatened.
(g) No such Approvals will in any way be affected by, or terminate
or
Page 24
lapse by reason of, the transactions contemplated by this Agreement.
4.15 TITLE TO ASSETS. The Borrower and the Subsidiaries
have good and valid title to or a valid leasehold interest in all of the
material tangible assets owned or leased by them, or otherwise used in or
pertaining to the business of the Borrower and the Subsidiaries as presently
conducted, including all material tangible assets reflected in the Borrower's
most recent balance sheet included in the Financial Statements and all
material tangible assets purchased or otherwise acquired by the Borrower or
any Subsidiary since the date of such balance sheet (except for properties
and assets sold since such date in the ordinary course consistent with past
practice). None of such material tangible assets is subject to any material
Lien except for Permitted Encumbrances.
4.16 PLANT, PROPERTY, AND EQUIPMENT. To the Borrower's
Knowledge, the Leased Real Property, and other plant, property, equipment,
leasehold improvements and other material tangible assets of the business,
conform in all material respects with Applicable Law; are structurally sound
with no material defects; are in good operating condition and repair
(ordinary wear and tear excepted); and are adequate in all material respects
for the purposes for which they are being used.
4.17 ACCOUNTS AND NOTES RECEIVABLE. Except to the extent of
applicable reserves for doubtful accounts and contract reserves shown on the
Borrower's most recent balance sheet included in the Financial Statements,
all of the accounts, notes and other receivables owed to the Borrower or any
Subsidiary as of the date hereof or thereafter acquired or arising prior to
the Closing Date, constitute, and as of the Closing Date will constitute,
valid and enforceable claims (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and similar
laws affecting creditors' rights, and, with respect to the remedy of specific
performance, equitable doctrines applicable thereto) arising from bona fide
transactions on the part of the Borrower and the Subsidiaries and, to the
Borrower's Knowledge, bona fide transactions for parties other than the
Borrower and the Subsidiary in the ordinary course, and there are no claims,
refusals to pay or other rights of set-off against any thereof (other than
ordinary course disputes that could not in the aggregate have a Material
Adverse Effect on the Borrower and its Subsidiaries, taken as a whole). None
of such accounts is pledged to any third party. The reserve for doubtful
accounts shown on the Borrower's most recent balance sheet included in the
Financial Statements is in accordance with GAAP.
4.18 INDEBTEDNESS. SCHEDULE 4.18 sets forth a true and
complete list of all indebtedness of the Borrower or any Subsidiary for
borrowed money as of December 1, 1996.
4.19 REAL PROPERTY.
(a) NO OWNED REAL PROPERTY. Neither the Borrower nor any
Subsidiary has or has ever had any fee or other direct or indirect ownership
interest in any real property.
Page 25
(b) LEASED REAL PROPERTY AGREEMENTS. SCHEDULE 4.19(b) sets
forth a true and complete list of all Leased Real Property and a list of all
of the agreements (as amended) to which the Borrower or any Subsidiary is a
party relating thereto (the "LEASE AGREEMENTS"). To the Borrower's
Knowledge, all the Lease Agreements are in full force and effect and are
valid and enforceable against the other parties thereto in accordance with
their terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
creditors' rights, and, with respect to the remedy of specific performance,
equitable doctrines applicable thereto). Neither the Borrower nor any
Subsidiary is in default under any of the Lease Agreements. To the
Borrower's Knowledge, no other Person party to the Lease Agreements is in
default under any of the Lease Agreements. There are no other agreements
that concern any right, title or interest in or to the Leased Real Property
or grant to a third party the right to occupy the premises used in the
business, other than Permitted Liens. The Closing will not affect the rights
to the continued use and possession of the Leased Real Property on the terms
and conditions specified in the Lease Agreements for the purposes for which
such property is now used in the business.
(c) LEASES OF REAL PROPERTY TO OTHERS. To the Borrower's
Knowledge, no Leased Real Property is subject to any lease or other right of
use of possession by any Person other than the Borrower or a Subsidiary.
(d) LEGAL PROCEEDINGS AFFECTING PROPERTY. To the Borrower's
Knowledge, there is not: (i) any planned public improvement that will result
in any charge being levied or assessed against any Leased Real Property or
that would create any encumbrance upon such property, (ii) any condemnation
proceeding with respect to any Leased Real Property, (iii) any proposal by a
tax authority to change materially the assessed value or assessment rates of
any Leased Real Property, or (iv) any other claim, suit, proceeding, order or
demand of any Governmental Authority or any Persons that could have a
material adverse impact on the value, right to develop, use or condition of
any Leased Real Property.
(e) DISPUTES. There is no currently pending material claim,
dispute or controversy with respect to any of the Lease Agreements. To the
Borrower's Knowledge, no Person has raised any material claim, dispute or
controversy with respect to any of the Lease Agreements since January 1, 1995.
4.20 EMPLOYEE PLANS AND ARRANGEMENTS.
(a) There are no employment, consulting, change of control,
severance pay, continuation pay, termination pay, loans, guarantees or
indemnification agreements or other similar agreements of any nature
whatsoever (collectively, "EMPLOYMENT AGREEMENTS") between the Borrower, on
the one hand, and any current or former shareholder, officer, director,
employee or Affiliate of the Borrower or any consultant or agent of the
Borrower, on the other hand, that, as a direct result of the transactions
contemplated by this Agreement, (i) will require any payment by the Borrower
or any consent or waiver from any shareholder, officer, director, employee or
Affiliate of the Borrower or any
Page 26
consultant or agent of the Borrower, or (ii) will result in any change in the
nature of any rights of any shareholder, officer, director, employee or
Affiliate of the Borrower or any consultant or agent of the Borrower under
any such Employment Agreement or other similar agreement (including, without
limitation, any accelerated payments, deemed satisfaction of goals or
conditions, new or increased benefits, or additional or accelerated vesting).
(b) SCHEDULE 4.20(b) sets forth all Employee Benefit Plans and
Benefit Arrangements of the Borrower and each Subsidiary that are currently
in effect.
(c) Neither the Borrower nor any of its ERISA Affiliates
sponsors or has sponsored, maintained, contributed to, or incurred an
obligation to contribute to, any Employee Pension Benefit Plan (whether or
not terminated).
(d) Neither the Borrower nor any of its ERISA Affiliates
sponsors or has sponsored, maintained, contributed to, or incurred an
obligation to contribute to any Multiemployer Plan or Multiple Employer Plan
(whether or not terminated).
(e) No agreement, commitment or obligation exists to increase
benefits under any Benefit Plan or to adopt any new Benefit Plan. Further,
no individual will accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Benefit Plan, including
the right to receive any parachute payment, as defined in Section 280G of the
Code, or become entitled to severance, termination allowance or similar
payments as a result of the transactions contemplated by this Agreement, and
the Borrower is not a party to any agreement or arrangement that could result
in the payment of any such benefits or payments.
(f) No Employee Benefit Plan has participated in, engaged in
or been a party to any Prohibited Transaction, and neither the Borrower nor
any of its ERISA Affiliates has had asserted against it any claim for any
excise tax or penalty imposed under ERISA or the Code with respect to any
Employee Benefit Plan nor, to the knowledge of the Borrower, is there a basis
for any such claim. No officer, director or employee of the Borrower or any
ERISA Affiliate has committed a material breach of any responsibility or
obligation imposed upon fiduciaries by Title I of ERISA with respect to any
Employee Benefit Plan, with respect to which breach the Borrower is or could
be directly or indirectly liable.
(g) Other than routine uncontested claims for benefits, there
is no claim pending involving any Benefit Plan by any Person against such
plan or the Borrower or any ERISA Affiliate, nor, to the knowledge of the
Borrower, is any such claim threatened. There is no pending or to the
knowledge of the Borrower, threatened, Proceeding involving any Employee
Benefit Plan before the Internal Revenue Service, the United States
Department of Labor or any other Governmental Authority.
(h) There is no material violation of any reporting or
disclosure requirement imposed by ERISA or the Code with respect to any
Employee Benefit Plan.
Page 27
(i) Each Benefit Plan has been maintained in all material
respects, by its terms and in operation, in accordance with both its plan
documents and with ERISA, the Code and all other Applicable Laws. The
Borrower and its ERISA Affiliates have made full and timely payment of all
amounts required to be contributed under the terms of each Benefit Plan and
Applicable Law or required to be paid as expenses or benefits under such
Benefit Plan, and has made adequate provision for reserves to satisfy
contributions and payments not yet made because they are not yet due under
the terms of the Benefit Plan or Applicable Law. Each Employee Benefit Plan
that is intended to be qualified under Section 401(a) of the Code is and has
always been so qualified, and either has received a favorable determination
letter with respect to such qualified status from the IRS or has filed a
request for such a determination letter with the IRS within the remedial
amendment period such that such determination of qualified status will apply
from and after the effective date of any such Employee Benefit Plan.
(j) With respect to any Group Health Plans maintained by the
Borrower or its ERISA Affiliates, whether or not for the benefit of the
Borrower's employees, the Borrower and its ERISA Affiliates have complied in
all material respects with the provisions of COBRA. The Borrower is not
obligated to provide health care benefits of any kind to its retired or
former employees or their dependents pursuant to any agreement or
understanding.
(k) Except pursuant to the provisions of COBRA, neither the
Borrower nor any ERISA Affiliate maintains any Employee Benefit Plan that
provides benefits described in Section 3(1) of ERISA to any former employees
or retirees, or the beneficiaries of any of them, of the Borrower or its
ERISA Affiliates.
(l) The Borrower has made available to the Lender a copy of
(i) the three (3) most recently filed Federal Form 5500 series and
accountant's opinion, if applicable, for each Employee Benefit Plan other
than Multiemployer Plans. All information provided by the Borrower, as
applicable, to any individual in connection with the preparation of any such
opinion or report was true, correct and complete in all respects.
(m) Each Benefit Plan can be amended or terminated at any time
without approval from any Person, without advance notice, and without any
liability other than for benefits accrued prior to such amendment or
termination.
(n) In connection with any Employee Pension Benefit Plan
currently maintained by the Borrower or any ERISA Affiliate, (i) there have
been no accumulated funding deficiencies (within the meaning of Code Section
412), whether or not waived, (ii) there have been no reportable events
(within the meaning of ERISA Section 4043(b)), and (iii) no circumstances
exist that would warrant a termination of any such plan by the Pension
Benefit Guaranty Corporation pursuant to ERISA Section 4042. No Employee
Pension Benefit Plan has been terminated within the last five years in other
than a standard termination under Section 4041(b) of ERISA and all
liabilities under such plans have been adequately and properly discharged.
Page 28
4.21 EMPLOYEES.
(a) Neither the Borrower nor any Subsidiary has or has ever
had any employees represented by collective bargaining agents.
(b) The Borrower and each Subsidiary has complied in all
material respects with all Applicable Laws respecting employment and
employment practices, terms and conditions of employment, and wages and
hours. Neither the Borrower nor any Subsidiary has or could reasonably be
expected to have any material Liability to any former employee or individual
who provided services to the Borrower in a capacity other than as an employee
in circumstances where such Liability arises or would arise under the express
terms of a Benefit Plan. No charges of employment or labor law violations
exist or, to the Borrower's Knowledge, are threatened, before any
Governmental Authority concerning any current, prospective or former
employees or independent contractors of the Borrower or any Subsidiary, and
no valid basis exists for any such charge.
(c) There is no strike, labor dispute, work slowdown or work
stoppage actually pending or, to the Knowledge of the Borrower, threatened,
against the Borrower or any of its Subsidiaries or, to the Knowledge of the
Borrower, any of its key subcontractors or suppliers. No collective
bargaining representation petition is pending or, to the Knowledge of
Borrower, threatened against the Borrower or any Subsidiary.
4.22 INSURANCE. Each of the Borrower and each Subsidiary has
in full force and effect and will maintain (i) insurance on its assets and
activities of a type customarily insured, covering property damage and loss
of income by fire or other casualty, in amounts customary for companies
similarly situated as the Borrower or the Subsidiary, as the case may be, and
(ii) insurance protection against all Liabilities, claims and risks against
which, and in such amounts as, are customary for companies similarly situated
as the Borrower to insure.
4.23 ENVIRONMENTAL COMPLIANCE.
(a) The Borrower and each Subsidiary has obtained all
approvals, authorizations, certificates, consents, licenses, orders and
permits or other similar authorizations of any Governmental Authority, or
from any other Person, that are required under any Environmental Law and
relate to its business, its assets or its products. SCHEDULE 4.23(a) sets
forth (i) all permits, licenses and other authorizations issued under any
Environmental Law to the Borrower or any Subsidiary relating to its business,
its assets or its products and (ii) a description and good faith estimate by
the Borrower of the costs of all capital expenditures that may be necessary
to maintain or continue to be qualified for each such permit, license or
other authorization.
(b) The Borrower and each Subsidiary is in compliance in all
material respects with all terms and conditions of all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of any Governmental Authority (and all other Persons)
required under all Environmental Laws
Page 29
and used in its business or that relate to its assets, and is also in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required or
imposed under all Environmental Laws.
(c) There is no pending or, to the Borrower's Knowledge,
threatened, proceeding, citation or notice of violation under any
Environmental Law relating to the Borrower or any Subsidiary, or any of the
equipment, business or assets of the Borrower or any Subsidiary.
(d) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions, omissions or plans
that may interfere with or prevent continued compliance by the Borrower or
any Subsidiary with any Environmental Law, or that may give rise to any
Liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation (1) under any Environmental Law,
(2) based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission,
discharge, release or threatened release of any Hazardous Material, or (3)
resulting from exposure to workplace hazards.
(e) Neither the Borrower nor any Subsidiary is required to
make any capital or other expenditures to comply with any Environmental Law
nor is there any reasonable basis on which any Governmental Authority could
take any action that would require any such capital expenditures.
4.24 NO UNDISCLOSED LIABILITIES. There are no Liabilities of
the Borrower or any Subsidiary required to be reflected on a balance sheet
prepared in accordance with GAAP except: (a) Liabilities accrued or reserved
on the Financial Statements; and (b) Liabilities incurred in the ordinary
course of business since the most recent Financial Statement that are not
individually or in the aggregate material to the Borrower or any Subsidiary.
4.25 TAXES.
(a) All Borrower Tax Returns have been properly and timely
filed and all such Tax Returns are correct and complete in all material
respects. Each affiliated group with which any of the Borrower and its
Subsidiaries files a consolidated or combined Tax Return has filed all such
Tax Returns that it was required to file for each taxable period during which
any of the Borrower and its Subsidiaries was a member of the group. All such
consolidated and combined Tax Returns were correct and complete in all
material respects.
(b) All Taxes due and payable by the Borrower and/or its
Subsidiaries (whether or not shown on any Tax Return) have been timely paid
in full. All income Taxes owed by any affiliated group with which any of the
Borrower and its Subsidiaries files a consolidated or combined Tax Return
(whether or not shown on any Tax Return) have been paid for each taxable
period during which any of the Borrower and the Subsidiaries was a member of
the group.
Page 30
(c) There is no (nor is there any pending request for an)
agreement, waiver or consent providing for an extension of time with respect
to the assessment or collection of, or statute of limitations regarding, any
Taxes or the filing of any Tax Returns that is currently in effect and no
power of attorney granted by or with respect to the Borrower or any
Subsidiary with respect to any Tax matter is currently in force.
(d) There is no pending audit, examination or investigation
with respect to any Borrower Tax Returns, nor is there pending any notice of
the initiation thereof; there is no action, suit, proceeding (administrative
or court), claim, demand, deficiency or additional assessment pending or, to
the Knowledge of Borrower, threatened with respect to any Borrower Tax
Returns.
(e) The Borrower and its Subsidiaries have withheld all Taxes
required to have been withheld and paid by them on their behalf in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, and such withheld Taxes have either been
duly paid to the proper Governmental Authority or set aside in accounts for
such purpose.
(f) None of the Borrower and its Subsidiaries (A) has been a
member of any affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which is the Borrower) and
(B) has any liability for the Taxes of any person as defined in Section
7701(a)(1) of the Code (other than the Borrower and its Subsidiaries) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign tax), as a transferee or successor, by contract, or otherwise.
(g) The charges, accruals and reserves for Taxes (including
deferred Taxes) currently reflected on the Financial Statements in accordance
with GAAP are adequate to cover all unpaid Taxes accruing or payable by the
Borrower and its Subsidiaries in respect of taxable periods that end on or
before the Closing Date and for any taxable periods that begin before the
Closing Date and end thereafter to the extent such Taxes are attributable to
the portion of such period ending on the Closing Date (determined under the
closing of the books method of allocation).
(h) Neither the Borrower nor any Subsidiary has agreed,
requested, or been requested to make, or is required to make, any adjustment
to taxable income for any taxable period after the Closing under Section
481(a) or 263A of the Code or any comparable provision of state or foreign
tax laws by reasons of a change in accounting method or otherwise.
(i) There are no encumbrances (other than Permitted
Encumbrances) on any asset or property of the Borrower or any Subsidiary
arising out of, connected with, or related to any Tax imposed on the
Borrower, its Subsidiaries, or any of their businesses or properties.
(j) The Borrower is not a party to, is not bound by, and has no
obligation (or potential obligation) under any Tax Agreement.
Page 31
(k) Neither the Borrower nor any Subsidiary is a party to any
agreement with an Affiliate relating to a foreign sales corporation or "FSC"
within the meaning of Section 922 of the Code; or a domestic international
sales corporation or "DISC" within the meaning of Section 992 of the Code.
(l) All Tax years (or periods) with respect to the Federal
income Tax Liabilities of the Borrower, and its assets or operations are
closed.
(m) Other than the elections made in the Tax Returns provided
to or made available to the Lender, no agreement, consent, or election for
foreign, Federal, state or local tax purposes that would affect or be binding
on the Borrower or any Subsidiary after the Closing has been filed or entered
into by the Borrower or any Subsidiary. No consent has been filed with
respect to the Borrower or any Subsidiary under Section 341(f) of the Code.
(n) SCHEDULE 4.25 lists all federal, state, local, and foreign
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit, other than (i) Tax Returns relating to
closed years, and (ii) Tax Returns that have been audited, where such audit
did not result in any material change in any tax due from Borrower or any
Subsidiary to any Governmental Authority. Correct and complete copies of all
federal Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Borrower or any of its Subsidiaries
since January 1, 1995 have been delivered or made available to Lender.
4.26 NO RESEARCH GRANTS. Neither the Borrower nor any of its
Subsidiaries since inception has provided any research, educational or study
grants or other financial support of any kind to any hospital, physician, or
health care provider.
4.27 CERTAIN REGULATORY MATTERS. To the Borrower's Knowledge,
neither the Borrower nor any of its Subsidiaries since inception has been the
subject of any investigative proceeding before any Governmental Authority or
the agent of any such authority, including without limitation federal and
state health authorities.
4.28 TRANSACTIONS WITH AFFILIATES. Except for regular salary
payments and fringe benefits under an individual's compensation package with
the Borrower or any Subsidiary, none of the officers, employees, directors or
other Affiliates of the Borrower or any Subsidiary or members of their
families is a party to any agreements, understandings, indebtedness or
proposed transactions with the Borrower or any Subsidiary or is directly
interested in any Contract with the Borrower or any Subsidiary. Neither the
Borrower nor any Subsidiary has guaranteed or assumed any obligations of
their respective officers, directors, employees or other Affiliates, or
members of any of their families. To the Borrower's Knowledge, none of such
persons has any direct or indirect ownership interest in any firm or entity
with which the Borrower or any Subsidiary is affiliated or with which the
Borrower or any Subsidiary has a business relationship, or any entity that
competes with the Borrower or any Subsidiary, other than publicly traded
companies that may compete with the Borrower or any Subsidiary.
Page 32
4.29 REPORTS; SEC DOCUMENTS. All material reports, documents
and notices required to be filed, maintained or furnished with or to any
Governmental Authority by the Borrower or any Subsidiary have been so filed,
maintained or furnished. All such reports, documents and notices were
complete and correct in all material respects on the date filed (or were
corrected in or superseded by a subsequent filing such that no Liabilities
exist with respect to the original filing, maintenance or furnishing
thereof). The Borrower has heretofore furnished to or made available to the
Lender complete copies of all registration statements, reports and proxy
statements, including amendments thereto, filed with the Securities and
Exchange Commission (the "SEC") since January 1, 1995 and prior to the date
of this Agreement (collectively, the "SEC DOCUMENTS"). None of the SEC
Documents contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained therein not
misleading.
4.30 DISCLOSURE. Neither this Agreement nor the other
agreements referred to in this Agreement nor any other statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they are made, not misleading.
4.31 BROKERS. Neither the Borrower nor any Subsidiary has
dealt with, or incurred liability for a fee to, any finder, broker,
investment banker or financial advisor in connection with any of the
transactions contemplated by this Agreement or the negotiations looking
toward the consummation of such transactions.
4.32 CERTAIN ADDITIONAL REGULATORY MATTERS. Neither the
Borrower nor any Affiliate, nor the officers, directors, employees or agents
of any of the Borrower or any Affiliate, and none of the persons who provide
professional services under agreements with any of the Borrower or any
Affiliate as agents of such entities have engaged in any activities which are
prohibited, or are cause for civil penalties or mandatory or permissive
exclusion 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 or which are prohibited by any
private accrediting organization from which the Borrower or any of its
Affiliates seeks accreditation or by generally recognized professional
standards of care or conduct, including but not limited to 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 representation of a material fact for use in determining
rights to any benefit or payment;
Page 33
(c) presenting or causing to be presented a claim for
reimbursement under CHAMPUS, Medicare, Medicaid or any other state health
care program 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 other state health care program, or (iii) 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 party by CHAMPUS, Medicare or
Medicaid or any other state 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)
or 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 (ii)
information required to be provided under Section 1124(A) of the Social
Security Act ("SSA") (42 U.S.C. Section 1320a-3).
4.33 MEDICARE/MEDICAID PARTICIPATION. (i) Neither the Borrower
nor any other Person who after the Closing will have a direct or indirect
ownership interest (as those terms are defined in 42 C.F.R. Section
1001.1001(a)(2)) in the Borrower or any Affiliate of 5% or more (other than
Lender), or who will have an ownership or control interest (as defined in SSA
Section 1124(a)(3), or any regulations promulgated thereunder) in the
Borrower or any Affiliate (other than Lender), or who will 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 Borrower or any Affiliate and (ii) to the best
Knowledge of the Borrower and any Affiliate, no person or entity with any
relationship with such entity (including without limitation a parent company
or shareholder of, or partner in an Affiliate) who after the Closing will
have an indirect ownership interest (as that term is defined in 42 C.F.R.
Section 1001.1001(a)(2)) in the Borrower or any Affiliate of 5% or more
(other than Lender): (1) has had a civil monetary penalty assessed against it
under Section 1128A of the SSA or any regulations promulgated thereunder; (2)
has 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 (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:
Page 34
(a) criminal offenses relating to the delivery of an item or
service under Medicare or any State Health Care Program;
(b) 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;
(c) 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;
(d) federal or state laws relating to the interference with or
obstruction of any investigation into any criminal offense described in (a)
through (c) above; or
(e) criminal offenses under federal or state law relating to
the unlawful manufacture, distribution, prescription or dispensing of a
controlled substance.
ARTICLE V. COVENANTS OF BORROWER
The Borrower covenants that until indefeasible payment and
performance of all Obligations:
5.1 CORPORATE EXISTENCE, ETC. The Borrower shall, at all times
preserve and keep in full force and effect its corporate existence and all
material rights and franchises.
5.2 PAYMENT OF TAXES. The Borrower shall pay and discharge all
Taxes imposed upon it or any of its properties or in respect of any of its
franchises, business, income or property before any penalty shall be incurred
with respect to such Taxes, provided, however, that, unless and until
foreclosure, distraint, levy, sale or similar proceedings shall have
commenced, the Borrower need not pay or discharge any such Tax so long as the
validity or amount thereof is being contested in good faith and by
appropriate proceedings and so long as any reserves or other appropriate
provisions as may be required by GAAP shall have been made therefor.
5.3 MAINTENANCE OF PROPERTIES. The Borrower shall maintain or
cause to be maintained in good repair, working order and condition (ordinary
wear and tear excepted), all properties and other assets useful or necessary
to its business, and from time to time Borrower shall make or cause to be
made all appropriate repairs, renewals and replacements thereto.
5.4 MAINTENANCE OF INSURANCE. The Borrower shall maintain
insurance in at least such amounts, of such character and against at least
such risks as is maintained by companies of established repute engaged in the
same or a similar business in the same general area as the Borrower. Such
insurance shall include all-risk property insurance, public liability,
property damage and flood insurance (if such
Page 35
insurance is required under applicable law).
5.5 EXPENSES. Borrower shall immediately pay Lender upon
demand all reasonable costs and expenses incurred by Lender in connection
with: (a) the preparation of this Agreement (and all Exhibits and Schedules
thereto), the Senior Note, the Series D Certificate of Designation, and the
Series E Certificate of Designation; PROVIDED, HOWEVER, that the Borrower's
maximum responsibility therefore shall be $81,000; and (b) following a
Default, the enforcement or satisfaction by Lender of any of Borrower's
obligations under this Agreement or the Senior Note.
5.6 CONVERSION STOCK. The Borrower shall at all times keep
available out of its authorized but unissued shares of Common Stock, for the
purpose of effecting the conversion of the shares of Series D Preferred Stock
and the shares of Series E Preferred Stock, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the shares of Series D Preferred Stock and Series E Preferred
Stock from time to time outstanding. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the then outstanding shares of Series D Preferred Stock and
Series E Preferred Stock, the Borrower shall forthwith take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
5.7 COMPLIANCE WITH NOTE PURCHASE AGREEMENT. So long as any
portion of the Obligations has not been indefeasibly satisfied in full,
Borrower shall comply in all respects with the terms of the Note Purchase
Agreement dated as of April 14, 1989, as amended to the date hereof (the
"NOTE PURCHASE AGREEMENT"). Without limiting the foregoing, the Borrower
shall comply with all affirmative and negative covenants contained in the
Note Purchase Agreement.
5.8 CERTAIN REGULATORY MATTERS.
(a) The operations of the Borrower and its Affiliates will be
conducted in accordance with all Applicable Laws, including, without
limitation, all such laws, regulations, orders and requirements promulgated
by or relating to consumer protection, equal opportunity, health, third party
reimbursement (including Medicare and Medicaid), environmental protection,
fire, zoning and building and occupational safety matters, except for
violations that individually or in the aggregate would not and, insofar as
may reasonably be foreseen, in the future will not, have a Material Adverse
Effect on the Borrower or any Subsidiary.
(b) Without limiting the generality of the foregoing, the
Borrower and all Affiliates shall comply in all material respects with all
directives, orders, instructions, bulletins and other announcements received
from third party payors and their agents (including without limitation
Medicare carriers and fiscal intermediaries) regarding participation in third
party payment programs, and including without limitation preparation and
submission of claims for reimbursement. Without limiting the generality of
the foregoing, the Borrower and all Affiliates shall follow instructions
recently received
Page 36
in a bulletin from Blue Shield of California ("BSC") limiting reimbursement
of the services of independent physiological laboratories to Medicare
beneficiaries in BSC's region to cardiovascular studies, diagnostic
ultrasound studies, and non-invasive vascular studies, all conducted
according to the common procedural terminology ("CPT") codes listed in the
most recent version of the CPT codebook for such studies, and shall refrain
from submitting claims for Medicare reimbursement for MRI or CT studies to
BSC until and unless written approval to submit such claims is received from
the medical director of BSC, unless the Borrower or any Affiliate identifies
an alternative proper resolution of such matter that is acceptable to the
Lender, in its sole discretion. Nothing in this Section 5.8 shall be
construed as or is intended to create any third party beneficiaries.
ARTICLE VI. DEFAULTS AND REMEDIES
6.1 DEFAULT. The occurrence of any one or more of the
following shall constitute an event of default (hereinafter, "DEFAULT") under
this Agreement and the other Loan Documents:
(a) Borrower (i) shall fail to pay as and when due any
scheduled installment of principal due hereunder or under the
Senior Note; or (ii) shall fail to pay within one day after the
due date thereof any interest, any fees or any other amount
payable hereunder or under the Senior Note; or
(b) Borrower shall fail to perform or observe any agreement
or covenant in any Section of Article V, including without
limitation the covenants incorporated by reference to the Note
Purchase Agreement in Section 5.7 (provided, however, that with
respect to the covenants incorporated by reference in Section 5.7,
no Default shall be deemed to have occurred until the expiration
of any grace or cure period provided for in the Note Purchase
Agreement with respect to such covenant); or
(c) Borrower shall fail to perform any other obligation
under any of the Loan Documents (other than those referred to in
Sections 6.1(a) and 6.1(b) above) for a period of thirty (30) days
after receipt of written notice of such failure (or, if delivery
of such notice is stayed or prohibited by applicable law, for a
period of thirty (30) days after such failure to perform); or
(d) the failure of any representation or warranty of
Borrower in any of the Loan Documents to be true on each date made
or deemed made; or
(e) (i) the filing of a petition by Borrower for relief
under the Bankruptcy Code, or under any other present or future
state or federal law regarding bankruptcy, reorganization or other
debtor relief law; (ii) the filing of any pleading or an answer by
Borrower in any involuntary proceeding under the Bankruptcy Code
or other debtor relief law which admits the jurisdiction of the
court or the petition's material allegations regarding Borrower's
insolvency; (iii) a general assignment by Borrower for the benefit
of creditors; or (iv) Borrower applying for,
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or the appointment of, a receiver, trustee, custodian or liquidator
of Borrower or any of its assets; or
(f) the failure of Borrower to effect a full dismissal of
any involuntary petition under the Bankruptcy Code or under any
other debtor relief law that is filed against Borrower or in any
way restrains or limits Borrower or Lender regarding the Loan
prior to the earlier of (i) the entry of any court order granting
relief sought in such involuntary petition or (ii) thirty (30)
days after the date of filing of such involuntary petition;
(g) there shall occur any default or event of default under
the Note Purchase Agreement; or
(h) there shall occur any Change in Control.
6.2 ACCELERATION UPON DEFAULT. Upon the occurrence and during
the continuance of a Default specified in Section 6.1(e) or (f), all sums
owing to Lender under the Loan Documents immediately shall be due and
payable. Upon the occurrence and during the continuance of any Default
specified in this Article VII (other than those referred to in the
immediately preceding sentence), Lender may, at its sole option, declare all
sums owing to Lender under the Loan Documents immediately due and payable.
6.3 REPAYMENT OF FUNDS ADVANCED. Any funds expended by Lender
in the exercise of its rights or remedies under this Agreement and the other
Loan Documents shall be payable to Lender upon demand, together with interest
at the rate applicable to the principal balance of the Senior Note from the
date the funds were expended.
6.4 RIGHTS CUMULATIVE, NO WAIVER. All Lender's rights and
remedies provided in this Agreement and the other Loan Documents, together
with those granted by law or at equity, are cumulative and may be exercised
by Lender at any time. Lender's exercise of any right or remedy shall not
constitute a cure of any Default unless all sums then due and payable to
Lender under the Loan Documents are repaid and Borrower has cured all other
Defaults. No waiver shall be implied from any failure of Lender to take, or
any delay by Lender in taking, action concerning any Default or failure of
condition under the Loan Documents, or from any previous waiver of any
similar or unrelated Default or failure of condition. Any waiver or approval
under any of the Loan Documents must be in writing and shall be limited to
its specific terms.
ARTICLE VII. LENDER'S OPTION TO EXTEND MATURITY DATE;
OPTIONAL CONVERSION OF SENIOR LOAN
7.1 LENDER'S OPTION TO EXTEND MATURITY DATE. At any time prior
to the original Maturity Date, Lender shall have the option to extend the
Maturity Date to March 31, 1997. If Lender determines, in its sole
discretion, to extend the Maturity Date to March 31, 1997, Lender shall
deliver written notice of such election to Borrower no later than ten (10)
Business Days prior to the original Maturity Date. Upon delivery of such
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notice, the Maturity Date for all purposes under this Agreement (including
without limitation, with respect to Sections 7.2, 7.3, 7.4, and 7.5) shall be
deemed to be March 31, 1997.
7.2 CONVERSION OF SENIOR LOAN PRIOR TO MATURITY DATE. At any
time at or prior to the Maturity Date, Lender shall have the option, in its
sole discretion, to convert the Senior Loan into shares of Series D Preferred
Stock, and to enter into certain transactions with Borrower related thereto,
as further provided in this Section 7.2.
(a) If Lender determines, in its sole discretion, to convert
the Senior Loan into shares of Series D Preferred Stock, and to enter into
the other Conversion Transactions (as defined below), Lender shall deliver
written notice of such election to Borrower no later than two (2) Business
Days prior to the Maturity Date in substantially the form set forth as
EXHIBIT F hereto (the "CONVERSION NOTICE"); PROVIDED, HOWEVER, that a
Conversion Notice delivered after February 26, 1997 will not be effective if
the Maturity Date is extended to March 31, 1997 solely as a result of the
Lender's not delivering the Conversion Notice prior to the original Maturity
Date (rather than the Lender's exercise of its extension election under
Section 7.1 above). The Conversion Notice shall set forth the effective date
of the Conversion Transactions (as defined below) (the "CONVERSION DATE"),
which date shall not be earlier than five (5) nor later than ten (10)
Business Days following the date of the Conversion Notice.
(b) If Lender timely delivers the Conversion Notice to
Borrower, then Lender and Borrower shall consummate the following
transactions (collectively, the "CONVERSION TRANSACTIONS") as soon as
practicable after the date of the Conversion Notice, but in any event no
later than the Conversion Date:
(i) Lender and Borrower shall enter into a Series D
Preferred Stock Purchase Agreement substantially in the form
attached hereto as EXHIBIT G (with all Exhibits and Schedules
thereto, and all documents to be delivered thereunder (including
without limitation any legal opinions), to be satisfactory to
Lender, in its sole discretion), and Lender and Borrower shall
consummate the transactions contemplated thereby;
(ii) Borrower shall pay to Lender on the Conversion
Date all accrued interest on the Senior Loan in cash (including
without limitation any interest accrued at the Default Rate);
(iii) Borrower and Lender shall enter into an Eleventh
Amendment to the Note Purchase Agreement, substantially in the form
attached hereto as EXHIBIT H, and Lender and Borrower shall
consummate the transactions contemplated thereby.
(c) If Lender does not timely deliver the Conversion Notice to
Borrower pursuant to this Section 7.2, then the Maturity Date shall be
extended automatically to March 31, 1997, and the Maturity Date for all
purposes under this Agreement (including without limitation, with respect to
Sections 7.2, 7.3, 7.4, and 7.5) shall be deemed to be March 31, 1997.
Page 39
7.3 CONVERSION OF SENIOR LOAN AFTER MATURITY DATE. If for any
reason all or part of the Senior Loan is still outstanding after the Maturity
Date, then Lender shall have the option, in its sole discretion, to convert
the Senior Loan into shares of Series D Preferred Stock, and to enter into
the other Conversion Transactions, as further provided in this Section 7.3.
(a) If Lender determines, in its sole discretion, to convert
the Senior Loan into shares of Series D Preferred Stock, and to enter into
the other Conversion Transactions, after the Maturity Date, Lender may
deliver a Conversion Notice at any such time to Borrower. The Conversion
Notice shall set forth the Conversion Date.
(b) After delivery of the Conversion Notice to Borrower,
Lender and Borrower shall consummate the Conversion Transactions as soon as
practicable after the date of the Conversion Notice, but in any event no
later than the Conversion Date.
7.4 ACKNOWLEDGEMENT. Lender and Borrower acknowledge and agree
that Lender shall under no circumstances be under any obligation to exercise
its right to elect to enter into the Conversion Transactions contemplated by
this Article 7, that notwithstanding the provisions of this Article 7, if
Lender does not deliver the Conversion Notice, Lender shall have the absolute
right at and at any time after the Maturity Date to repayment of the Senior
Loan and all other amounts due and payable to Lender from Borrower under the
Loan Documents.
ARTICLE VIII. MISCELLANEOUS PROVISIONS
8.1 INDEMNITY. Borrower hereby agrees to defend, indemnify
and hold harmless Lender, and its directors, officers, employees, agents,
successors and assigns from and against any and all losses, damages,
liabilities, claims, actions, judgments, costs and reasonable legal or other
expenses (including, without limitation, reasonable attorneys' fees and
expenses) ("CLAIMS") such indemnified party may incur as a direct or indirect
consequence of: (a) the transactions contemplated hereby; (b) the purpose to
which Borrower applies the proceeds of the Loan; (c) the failure of Borrower
to perform any obligations as and when required by this Agreement or any of
the other Loan Documents; or (d) any failure at any time of any of Borrower's
representations or warranties to be true and correct. Borrower shall
immediately pay to Lender upon demand any amounts owing under this indemnity,
together with interest from the date the indebtedness arises until paid at
the rate of interest applicable to the principal balance of the Senior Note.
BORROWER'S DUTY TO INDEMNIFY LENDER HEREUNDER SHALL SURVIVE THE REPAYMENT OF
THE LOAN.
8.2 NOTICES. All notices, demands, or other communications
under this Agreement and the other Loan Documents shall be in writing and
shall be delivered via confirmed facsimile, overnight courier, by hand
delivery or by certified mail, return receipt requested, to the appropriate
party at the address set forth on the signature page of this Agreement
(subject to change from time to time by written notice to all other parties
to this Agreement). All communications shall be deemed served upon delivery
Page 40
of, or if mailed, upon the first to occur of receipt or the expiration of
three (3) days after the deposit in the United States Postal Service mail,
postage prepaid and addressed to the address of Borrower or Lender at the
address specified or, if transmitted via facsimile, upon electronic
confirmation of receipt; PROVIDED, HOWEVER, that non-receipt of any
communication as the result of any change of address or facsimile number of
which the sending party was not notified or as the result of a refusal to
accept delivery shall be deemed receipt of such communication.
8.3 ATTORNEYS' FEES AND EXPENSES; ENFORCEMENT. If any
attorney is engaged by Lender to interpret, administer, enforce or defend any
provision of this Agreement or any of the other Loan Documents, or as a
consequence of any Default under the Loan Documents, with or without the
filing of any legal action or proceeding, Borrower shall immediately pay to
Lender, upon demand, the amount of all reasonable attorneys' fees and
expenses and all costs incurred by Lender in connection therewith, together
with interest thereon from the date of such demand until paid at the rate of
interest applicable to the principal balance of the Senior Note as specified
therein.
8.4 IMMEDIATELY AVAILABLE FUNDS. Unless otherwise expressly
provided for in this Agreement, all amounts payable by Borrower to Lender
shall be payable only in United States currency, immediately available funds.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Borrower may not assign or transfer any
interest hereunder without the prior written consent of Lender.
8.6 PARTICIPATIONS. Lender may, at any time, sell, assign or
grant participations in all or any portion of its rights and obligations
under the Loan Documents to one or more Affiliates of Lender, with Borrower's
consent and approval (which consent and approval will not be unreasonably
withheld, conditioned or delayed). Borrower further agrees that, in
connection with any such sale, assignment or participation, Lender may
disseminate to any such actual or potential servicer(s), purchaser(s),
assignee(s) or participant(s) all documents and information (including,
without limitation, all financial information) which has been or is hereafter
provided to or known to Lender with respect to: (a) any Property and its
operation; (b) any party connected with the Loan (including, without
limitation, Borrower; and/or (c) any relationship other than the Loan which
Lender may have with any party connected with the Loan. Borrower shall
supply to Lender all reasonably requested information and execute and deliver
all such instruments and take all such further action Lender may reasonably
request in connection with any such sale, assignment or participation. In
the event of any such sale, assignment or participation, Lender and the
parties to such transaction shall share in the rights and obligations of
Lender as set forth in the Loan Documents only as and to the extent they
agree among themselves. In connection with any such sale, assignment or
participation, Borrower further agrees that the Loan Documents shall be
sufficient evidence of the obligations of Borrower to each purchaser,
assignee, or participant, and upon written request by Lender, Borrower shall
enter into such amendments or modifications to the Loan Documents as may be
Page 41
reasonably required in order to evidence any such sale, assignment or
participation. The indemnity obligations of Borrower under the Loan
Documents shall also apply with respect to any purchaser, assignee or
participant.
8.7 SEVERABILITY. If any provision or obligation under this
Agreement and the other Loan Documents shall be determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable, that
provision shall be deemed severed from the Loan Documents and the validity,
legality and enforceability of the remaining provisions or obligations shall
remain in full force as though the invalid, illegal, or unenforceable
provision had never been a part of the Loan Documents, PROVIDED, HOWEVER,
that if the rate of interest or any other amount payable under the Senior
Note or this Agreement or any other Loan Document, or the right of
collectability therefore, are declared to be or become invalid, illegal or
unenforceable, Lender's obligations to make advances under the Loan Documents
shall not be enforceable by Borrower.
8.8 NO WAIVER; SUCCESSORS. No waiver shall be implied from
any failure of Lender to take, or any delay by Lender in taking, action
concerning any Default or failure of condition, or from any previous waiver
of any similar or unrelated Default or failure of condition. Any waiver or
approval hereunder must be in writing and shall be limited to its specific
terms. No amendment of any provision of this Agreement or any other Loan
Document (including a waiver thereof or consent relating thereto) shall be
effective unless the same shall be in writing and signed by Borrower and
Lender.
8.9 TIME. Time is of the essence of each and every term of
this Agreement.
8.10 HEADINGS. All article, section or other headings
appearing in this Agreement and any of the other Loan Documents are for
convenience of reference only and shall be disregarded in construing this
Agreement and any of the other Loan Documents.
8.11 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of New York.
Borrower and all persons and entities in any manner obligated to Lender under
the Loan Documents consent to the jurisdiction of any Federal or State Court
within the State of New York and also consent to service of process by any
means authorized by New York or Federal Law.
8.12 INTEGRATION; INTERPRETATION. The Loan Documents contain
or expressly incorporate by reference the entire agreement of the parties
with respect to the matters contemplated therein and supersede all prior
negotiations or agreements, written or oral. Any reference to the Loan
Documents includes any amendments, renewals or extensions now or hereafter
approved by Lender in writing.
8.13 WAIVER OF ALLOCATION RIGHTS. Borrower hereby irrevocably
waives, disclaims and renounces any right to designate the portion of the
Obligations satisfied, or deemed to be satisfied, upon payment of any of the
Obligations by any guarantor or surety of all or any portion of the
Obligations, it being the understanding and agreement
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of Borrower, Lender and any such guarantor or surety that Lender may allocate
any and all payments on the Obligations so as to maximize Lender's recovery
against Borrower and all guarantors or sureties.
8.14 USURY SAVINGS. It is the intention of the parties hereto
to conform strictly to the usury and other laws relating to interest from
time to time in force, and all agreements between Borrower and Lender,
whether now existing or hereafter arising and whether oral or written, are
hereby expressly limited so that in no contingency or event whatsoever,
whether by acceleration or maturity or otherwise, shall the amount paid or
agreed to be paid to Lender, or collected by Lender for the use, forbearance
or detention of the money to be loaned under the Senior Note, this Agreement
or otherwise, or for the payment or performance of any covenant or obligation
contained herein or in any of the other Loan Documents or in any other
security agreement given to secure the Loan or in any other document
evidencing, securing or pertaining to the Loan, exceed the maximum amount of
interest allowable under applicable law (the "MAXIMUM AMOUNT"). If under any
circumstances whatsoever fulfillment of any provision hereof or any other
Loan Document, at the time performance of such provision shall be due, shall
involve transcending the Maximum Amount, then IPSO FACTO, the obligation to
be fulfilled shall be reduced to the Maximum Amount. For the purposes of
calculating the actual amount of interest paid and or payable, in respect of
laws pertaining to usury or such other laws, all sums paid or agreed to be
paid to the holder of the Senior Note for the use, forbearance or detention
of the Loan shall, to the extent permitted by applicable law, be amortized,
allocated and spread from the date of disbursement of the proceeds of the
Loan until payment in full of the Loan, so that the actual rate of interest
on account of the Loan is uniform throughout the term hereof. If under any
circumstances Lender shall ever receive an amount deemed interest by
applicable law, which would exceed the Maximum Amount, such amount that would
be excessive interest under applicable usury laws shall be deemed a payment
in reduction of the principal amount owing under the Senior Note and shall be
so applied to principal and not to the payment of interest, or if such
excessive interest exceeds the outstanding principal balance of the Loan,
such excessive interest shall be deemed to have been a payment made by
mistake and shall be refunded to Borrower or to any other person making such
payment on Borrower's behalf.
8.15 REVIVAL. To the extent Borrower makes a payment to
Lender, which payment or the proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other party having requisite
authority under the Bankruptcy Code or any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligation hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received.
Page 43
8.16 COUNTERPARTS. This Agreement, any of the other Loan
Documents (except for the Senior Note), and any subsequent modifications,
amendments, waivers, consents or supplements thereof, if any, may be executed
in any number of counterparts, each of which when executed and delivered
shall be deemed to be an original and all such counterparts together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have executed this
Agreement as of the date appearing on the first page of this Agreement.
"Lender" "Borrower"
GENERAL ELECTRIC COMPANY, a ALLIANCE IMAGING, INC., a Delaware
New York corporation acting through corporation
GE Medical Systems
By: By:
Title: Title:
Page 44
LIST OF SCHEDULES AND EXHIBITS
EXHIBITS
Exhibit A Senior Note
Exhibit B Series D Certificate of Designation
Exhibit C Series E Certificate of Designation
Exhibit D Funds Flow Memorandum
Exhibit E Form of Opinion of Counsel to Borrower
Exhibit F Form of Conversion Notice
Exhibit G Series D Preferred Stock Purchase Agreement
Exhibit H Eleventh Amendment to Note Purchase Agreement
SCHEDULES
Schedule 4 Borrower Disclosure Schedule
Schedule 4.1 Certificate and Bylaws; Jurisdictions
Schedule 4.3 Subsidiaries
Schedule 4.7(b) Accountant Letters
Schedule 4.10(b) Material Contracts
Schedule 4.14(e) Approvals
Schedule 4.18 Indebtedness
Schedule 4.19(b) Lease Agreements
Schedule 4.20(b) Employee Benefit Plans
Schedule 4.23(a) Environmental Permits
Schedule 4.25 Tax Returns
