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Exhibit 10.29
PREFERRED STOCK ACQUISITION AGREEMENT
BY AND AMONG
AMERICAN HEALTH SERVICES CORP.,
A DELAWARE CORPORATION,
MAXUM HEALTH CORP.,
A DELAWARE CORPORATION,
INSIGHT HEALTH SERVICES CORP.,
A DELAWARE CORPORATION,
AND
GENERAL ELECTRIC COMPANY,
A NEW YORK CORPORATION
ACTING THROUGH
GE MEDICAL SYSTEMS
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PREFERRED STOCK ACQUISITION AGREEMENT
THIS PREFERRED STOCK ACQUISITION AGREEMENT (this "AGREEMENT") is dated
as of February 26, 1996, by and among InSight Health Services Corp., a Delaware
corporation ("INSIGHT"), American Health Services Corp., a Delaware corporation
("AHS"), Maxum Health Corp., a Delaware corporation ("MAXUM"), and General
Electric Company, a New York corporation acting though GE Medical Systems ("GE
MEDICAL").
RECITALS
WHEREAS, InSight has been formed in connection with the proposed
business combination of AHS and Maxum;
WHEREAS, simultaneously with the execution of this Agreement, AHS,
Maxum and InSight are executing and delivering an agreement contemplating the
merger of two newly-formed wholly-owned subsidiaries of InSight with and into
AHS and Maxum (the "MERGER"), respectively, after which AHS and Maxum will be
wholly-owned subsidiaries of InSight;
WHEREAS, the Merger shall be consummated pursuant to the Agreement and
Plan of Merger in the form attached hereto as EXHIBIT A (the "MERGER
AGREEMENT");
WHEREAS, concurrent with the consummation of the transactions
contemplated herein, GE Medical will agree to certain financial accommodations
(the "DEBT RESTRUCTURING"), in exchange for the issuance of preferred stock as
provided herein pursuant to certain debt restructuring agreements in
substantially the form attached hereto as EXHIBIT B (the "DEBT RESTRUCTURING
AGREEMENTS");
WHEREAS, the Boards of Directors of AHS, Maxum and InSight have
approved the Merger, the Merger Agreement, the Debt Restructuring, the Debt
Restructuring Agreements and GE Medical's acquisition of the preferred stock of
AHS and Maxum upon the terms and subject to the conditions set forth herein;
WHEREAS, in accordance with the terms, conditions and provisions of
this Agreement, AHS desires to sell to GE Medical,
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and GE Medical desires to acquire from AHS, an aggregate of 1,000,000 shares of
Series C Preferred Stock of AHS (the "AHS SHARES");
WHEREAS, in accordance with the terms, conditions and provisions of
this Agreement, Maxum desires to sell to GE Medical, and GE Medical desires to
acquire from Maxum, an aggregate of 15,000 shares of Series B Preferred Stock of
Maxum (the "MAXUM SHARES"); and
WHEREAS, in accordance with the terms, conditions and provisions of the
Merger Agreement, immediately after the consummation of the transactions
contemplated by this Agreement and the Debt Restructuring Agreements and as a
condition subsequent to GE Medical's acquisition of the AHS Shares and the Maxum
Shares hereunder and the consummation of the transactions contemplated by the
Debt Restructuring Agreements, the Merger will occur and the AHS Shares and the
Maxum Shares will be exchanged for an aggregate of 2,501,760 shares of Series A
Convertible Preferred Stock of InSight (the "INSIGHT PREFERRED SHARES"), which
shall constitute all of the issued and outstanding shares of preferred stock of
InSight.
AGREEMENT
NOW, THEREFORE, with reference to the foregoing and in consideration of
and subject to the conditions, representations, warranties, covenants and
agreements contained in this Agreement, AHS, Maxum, InSight and GE Medical
hereby agree as follows:
ARTICLE 1
ACQUISITION OF PREFERRED STOCK
1.1 ACQUISITION AND ACQUISITION PRICE.
(a) Subject to the terms and conditions of this Agreement, at the
Closing (as such term is defined in SECTION 2.1 hereof), AHS shall issue to GE
Medical, and GE Medical shall acquire from AHS, the AHS Shares, constituting in
the aggregate (i) all of the then-issued and outstanding shares of preferred
stock of AHS (other than the Series B Convertible Preferred Stock of AHS (the
"AHS SERIES B SHARES")), and 48 percent of the then-
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issued and outstanding shares of common stock of AHS (assuming the conversion of
the AHS Shares and the AHS Series B Shares into common stock of AHS), and (ii)
upon the Merger occurring immediately after such acquisition by GE Medical of
the AHS Shares, 50 percent of the then-issued and outstanding InSight Preferred
Shares and 24 percent of the then-issued and outstanding shares of common stock
of InSight (assuming the conversion of such InSight Preferred Shares into common
stock of InSight).
(b) Subject to the terms and conditions of this Agreement, at the
Closing, Maxum shall issue to GE Medical, and GE Medical shall acquire from
Maxum, the Maxum Shares, constituting in the aggregate as follows: (i) all of
the then-issued and outstanding shares of preferred stock of Maxum, and 48
percent of the then-issued and outstanding shares of common stock of Maxum
(assuming the conversion of the Maxum Shares into common stock of Maxum) and
(ii) upon the Merger occurring immediately after such acquisition by GE Medical
of the Maxum Shares, 50 percent of the then-issued and outstanding InSight
Preferred Shares, and 24 percent of the then-issued and outstanding shares of
common stock of InSight (assuming the conversion of the InSight Preferred Shares
into common stock of InSight).
1.2 CONSIDERATION.
(a) At the Closing, AHS agrees to issue the AHS Shares to GE
Medical, and GE Medical agrees to acquire from AHS the AHS Shares, in exchange
for GE Medical's agreement to the Debt Restructuring pursuant to the terms,
conditions and provisions set forth in the Debt Restructuring Agreements.
(b) At the Closing, Maxum agrees to issue the Maxum Shares to GE
Medical, and GE Medical agrees to acquire from Maxum the Maxum Shares, in
exchange for GE Medical's agreement to the Debt Restructuring pursuant to the
terms, conditions and provisions set forth in the Debt Restructuring Agreements.
1.3 RIGHTS, PREFERENCES AND PRIVILEGES OF PREFERRED STOCK.
(a) The rights, preferences and privileges of the AHS Shares are
set forth in the form of Certificate of
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Designation attached hereto as EXHIBIT C (the "AHS CERTIFICATE OF DESIGNATION").
(b) The rights, preferences and privileges of the Maxum Shares are
set forth in the form of Certificate of Designation attached hereto as EXHIBIT D
(the "MAXUM CERTIFICATE OF DESIGNATION").
(c) The rights, preferences and privileges of the InSight Preferred
Shares are set forth in the form of Certificate of Incorporation attached hereto
as EXHIBIT E (the "INSIGHT CERTIFICATE OF INCORPORATION").
ARTICLE 2
CLOSING
2.1 TIME AND PLACE.
(a) The consummation of the transactions described in ARTICLE 1
hereof (the "CLOSING") will be held at the offices of XxXxxxxxx, Will & Xxxxx,
located at 0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at 1:00
p.m. California time, as soon as practicable after the meetings of stockholders
of AHS and Maxum, respectively, referenced in SECTION 3.8, or at such other time
and place as shall be mutually agreed upon by AHS, Maxum, InSight and GE
Medical. The date of the Closing is referred to herein as the "CLOSING DATE".
The consummation of the transactions contemplated by SECTION 1.2 shall be deemed
to take place immediately prior to the effectiveness of the Merger.
(b) In the event that the Merger does not occur immediately after
the consummation of the transactions contemplated by this Agreement and the Debt
Restructuring Agreements and as a condition subsequent to GE Medical's
acquisition of the AHS Shares and the Maxum Shares, the transactions
contemplated by this Agreement and the Debt Restructuring Agreements shall be
automatically and immediately rescinded.
2.2 DELIVERIES. At the Closing, AHS, Maxum, InSight and GE Medical
shall deliver, or cause to be delivered, such instruments and other documents as
may be reasonably necessary to
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carry out the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger and the Merger
Agreement, and to comply with the terms hereof and thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING AHS
As used in this Agreement (I) the term "MATERIAL ADVERSE EFFECT" means,
with respect to a party, a material adverse effect on the business, assets,
results of operations, financial condition or prospects of such party and its
subsidiaries, taken as a whole, or in the ability of such party to perform its
obligations hereunder, and (II) the term "SUBSIDIARY" when used with respect to
any party means any corporation or other organization, whether incorporated or
unincorporated, of which such party or any other subsidiary of such party is a
general partner or of which at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporations or other organizations is directly or indirectly owned or
controlled by such party or by any one or more of such subsidiaries.
AHS represents and warrants to GE Medical that, with respect to itself
and each of its subsidiaries, the statements contained in this ARTICLE 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this ARTICLE 3),
except as set forth in AHS' disclosure schedule attached hereto as ANNEX I (the
"AHS DISCLOSURE SCHEDULE"). Nothing in the AHS Disclosure Schedule shall be
deemed adequate to disclose an exception to a specific representation or
warranty made herein, however, unless such exception is identified to the
specific representation and warranty to which such exception applies (and not
generally to all representations and warranties) in paragraphs corresponding to
the lettered and numbered Sections contained in this ARTICLE 3. Without limiting
the generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless
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the representation or warranty has to do with the existence of the document or
other item itself).
In accordance therewith, AHS represents and warrants to GE Medical,
with respect to itself and its subsidiaries, as follows:
3.1 ORGANIZATION. Each of AHS and its subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has the power to carry on its business as it
is now being conducted or presently proposed to be conducted and (c) is duly
qualified to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Material Adverse Effect.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital stock
of AHS consists of (a) 25,000,000 shares of common stock, par value $0.03 per
share, of which 9,713,647 shares are issued and outstanding, and (b) 5,000,000
shares of preferred stock, par value $0.03 per share, of which 37,837.83 shares
(designated as Series B Preferred Stock) are issued and outstanding. All of the
issued and outstanding shares of capital stock of AHS are validly issued, fully
paid and nonassessable and free of preemptive rights or similar rights created
by statute, the Certificate of Incorporation or Bylaws of AHS, or any agreement
by which AHS or any of its subsidiaries is a party or to which AHS or any of its
subsidiaries is bound. AHS has reserved 1,035,000 shares of its common stock for
issuance to directors, employees and consultants or other persons under stock
plans or arrangements, of which 1,015,000 shares are subject to outstanding
options as of the date hereof. Except as provided in this SECTION 3.2, there are
not any (a) shares of capital stock of AHS issued or outstanding or any options,
warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating AHS to issue, transfer or sell any shares
of its capital stock or (b) issued and outstanding bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which stockholders of
AHS may vote.
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3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. AHS has the corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by AHS and the
consummation by AHS of the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger and the Merger
Agreement have been duly authorized by the Board of Directors of AHS, and,
except for approval by the requisite votes cast by the stockholders of AHS with
respect to the Merger, no other corporate proceedings on the part of AHS are
necessary to approve this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby and thereby.
3.4 VALIDITY. This Agreement has been duly executed and delivered by
AHS and is the legal, valid and binding obligation of AHS, enforceable in
accordance with its terms.
3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or state
securities or blue sky laws, no filing with, and no permit, authorization,
consent or approval of, any governmental body or authority is necessary for the
consummation by AHS of the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, or the transactions contemplated hereby and thereby. Neither the
execution and delivery of this Agreement by AHS nor the consummation by AHS of
this Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the
Merger or the Merger Agreement, or the transactions contemplated hereby and
thereby will (a) result in any breach of the Certificate of Incorporation - or
Bylaws of AHS, (b) result in a violation or breach of, or - constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which AHS or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, except as would not have a Material Adverse Effect, or (c)
violate any - order, writ, injunction, decree, statute, rule or regulation
applicable to AHS, any of its subsidiaries or any of their
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properties or assets, except for violations, breaches or defaults that would
not have a Material Adverse Effect.
3.6 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1994, AHS has
filed all reports required to be filed by it with the Securities and Exchange
Commission (the "SEC") pursuant to the Exchange Act, including, without
limitation, an Annual Report on Form 10-K for the year ended December 31, 1994
(collectively and as amended through the Closing Date, the "AHS SEC REPORTS"),
and has previously furnished or made available to GE Medical true and complete
copies of all of the AHS SEC Reports. None of the AHS SEC Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the balance sheets (including the related notes)
included in the AHS SEC Reports fairly presents in all material respects the
consolidated financial position of AHS and its subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included therein fairly present in all material respects the results of
operations and cash flows of AHS and its subsidiaries for the respective periods
or as of the respective dates set forth therein, all in conformity with
generally accepted accounting principles ("GAAP"), except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein and
the absence of any notes thereto.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
neither AHS nor any of its subsidiaries has:
(a) Taken any of the actions set forth in clauses (E) through (O)
of SECTION 9.1;
(b) Incurred any liability material to AHS and its subsidiaries on
a consolidated basis, except in the ordinary course of its business,
consistent with past practices;
(c) Suffered a Material Adverse Effect; or
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(d) Conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
3.8 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT.
None of the information to be supplied by AHS to be included in (a) the
Registration Statement on Form S-4 to be filed with the SEC by InSight under the
Securities Act for the purpose of registering the common stock of InSight (and,
if required, the InSight Preferred Shares) to be issued in connection with the
consummation of the Merger (the "REGISTRATION STATEMENT") and (b) the joint
proxy statement to be distributed in connection with the meetings of
stockholders of AHS and Maxum to vote upon the Merger (the "PROXY STATEMENT"),
will:
(a) in the case of the Registration Statement, at the time it
becomes effective and at the Closing,
(b) in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement
and any amendments or supplements thereto, and
(c) in either case, at the time of the meeting of stockholders of
AHS to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated thereunder. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
3.9 LITIGATION. Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect:
(a) There is no action, suit, judicial or administrative
proceeding, arbitration or investigation pending or, to the knowledge of
AHS, threatened against or
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involving AHS or any of its subsidiaries, or any of their properties or
rights, before any court, arbitrator, or administrative or governmental
body;
(b) There is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency or instrumentality,
or arbitrator outstanding against AHS or any of its subsidiaries; and
(c) Neither AHS not its subsidiaries are in violation of any term
of any judgments, decrees, injunctions or orders outstanding against them.
(d) Included in the AHS Disclosure Schedule is a true and complete
description of all litigation, actions, suits, judicial and
administrative proceedings, arbitrations, investigations (as to which AHS
is aware), judgments, decrees, injunctions and orders pending or, to the
knowledge of AHS, threatened against or involving AHS or any of its
subsidiaries, or any of their respective properties or rights.
3.10 CONTRACTS. (a) Each of the contracts, instruments, mortgages,
notes, security agreements, leases, agreements and understandings, whether
written or oral, to which AHS or any of its subsidiaries is a party or that
relates to or affects the assets or operations of AHS or any of its subsidiaries
or to which AHS or any of its subsidiaries, or their respective assets or
operations may be bound or subject, is a valid and binding obligation of AHS and
in full force and effect (with respect to AHS or such subsidiary) in accordance
with its terms, except for where the failure to be in full force and effect
could not, in the aggregate, have a Material Adverse Effect. There are no
existing defaults by AHS or any of its subsidiaries thereunder or, to the
knowledge of AHS, by any other party thereto, which defaults, in the aggregate,
would have a Material Adverse Effect; and, no event of default has occurred, and
no event, condition or occurrence exists, that (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a default by AHS or any of its subsidiaries thereunder which default
would, in the aggregate, have a Material Adverse Effect.
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(b) Except for this Agreement, neither AHS nor any of its
subsidiaries is a party to any oral or written (i) consulting agreement with an
individual not terminable on less than 60 calendar days notice and involving the
payment of more than $50,000 per annum, (ii) joint venture agreement, (iii)
non-competition or similar agreement that restricts AHS or any of its
subsidiaries from engaging in one or more specified lines of business, except
for agreements entered into in the ordinary course of business which could not
have a Material Adverse Effect, (iv) agreement with any executive officer or
other employee of AHS, or any of its subsidiaries, the benefits of which are
contingent upon, or the terms of which may be materially altered by, the
occurrence of a transaction involving AHS of the nature contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement, or the transactions contemplated hereby and thereby,
and which provides for the payment of in excess of $50,000, (v) agreement with
respect to any executive officer of AHS or any of its subsidiaries providing any
term of employment beyond one year or compensation guaranty in excess of $50,000
per annum or (vi) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, the Debt Restructuring, the Debt Restructuring Agreements,
the Merger or the Merger Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement.
3.11 EMPLOYEE BENEFIT PLANS. (a) Included in the AHS Disclosure
Schedule is a true and complete list of each written or formal employee benefit
plan (including, without limitation, any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), policy or agreement that is maintained by AHS or any of its
subsidiaries (all of the foregoing, the "AHS BENEFIT PLANS"), or is or was
contributed to by AHS or pursuant to which AHS (or any trade or business,
whether or not incorporated (an "AHS ERISA AFFILIATE"), which together with AHS
would be deemed a "single employer" within the meaning of Section 4001 of ERISA)
is still potentially liable for
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payments, benefits or claims. A copy of each AHS Benefit Plan as currently in
effect and, if applicable, the most recent Annual Report, Actuarial Report or
Valuation, Summary Plan Description, Trust Agreement and a Determination Letter
issued by the IRS for each AHS Benefit Plan have heretofore been delivered to GE
Medical. No AHS Benefit Plan (including any "multiemployer plan," as defined in
Section 3(37) of ERISA) was or is subject to Title IV of ERISA or Section 412 of
the Internal Revenue Code of 1986, as amended (the "CODE").
(b) Each of the AHS Benefit Plans that is subject to ERISA is in
substantial compliance with ERISA. Each of the AHS Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified. No
event has occurred, and to the knowledge of AHS, no condition or set of
circumstances exists, in connection with which AHS or any AHS ERISA Affiliate is
or could be subject to liability (except liability for benefit claims and
funding obligations payable in the ordinary course of business) under ERISA, the
Code or any other applicable law with respect to any AHS Benefit Plan.
(c) All contributions and other amounts payable by AHS or any of
its subsidiaries through September 30, 1995, with respect to each AHS Benefit
Plan in respect of current or prior plan years have been either paid or accrued
on the most recent financial statements of AHS. Any contributions or other
amounts payable by AHS or any of its subsidiaries for periods between September
30, 1995, and the Closing with respect to each AHS Benefit Plan in respect of
current or prior plan years have been or will be either paid or accrued in the
normal course of business on the books and records of AHS at or prior to the
Closing. There are no pending, or, to the knowledge of AHS, threatened or
anticipated claims (other than routine claims for benefits which will not, in
the aggregate, have a Material Adverse Effect) by or on behalf of or against any
of the AHS Benefit Plans or any trusts or other funding vehicles related
thereto.
(d) No AHS Benefit Plan (other than general employment policies
and agreements) provides benefits, including without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees for periods extending beyond their retirement or other termination of
service (other than (i) coverage mandated by Part 6 of Subtitle B of
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Title I of ERISA, Section 4980B of the Code or any comparable state law, (ii)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of AHS or the AHS ERISA Affiliates, or (iv)
benefits the full cost of which is borne by the current or former employee or
his or her beneficiary).
3.12 TAXES. For the purposes of this SECTION 3.12, the term "TAX" shall
include all taxes, charges, withholdings, fees, levies, penalties, additions,
interest or other assessments imposed by any United States federal, state or
local authority or any other taxing authority on AHS or any of the AHS Tax
Affiliates (as defined in this SECTION 3.12) as to their respective income,
profit, franchise, gross receipts, payroll, sales, employment, worker's
compensation, use, property, withholding, excise, occupancy, environmental, and
other taxes, duties or assessments of any nature whatsoever. AHS has filed or
caused to be filed timely all material federal, state, local and foreign tax
returns required to be filed by AHS and any member of its consolidated,
combined, unitary or similar group (each such member, an "AHS TAX AFFILIATE").
Such returns, reports and other information are accurate and complete in all
material respects. AHS has paid or caused to be paid, or has made adequate
provision or set up an adequate accrual or reserve for the payment of, all taxes
shown to be due in respect of the periods for which returns are due, and has
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the period subsequent to the last of such periods in respect of
which any such accrual or reserve is required. Neither AHS nor any of the AHS
Tax Affiliates has any material liability for taxes in excess of the amount so
paid or accruals or reserves so established. Neither AHS nor any of the AHS Tax
Affiliates is delinquent in the payment of any tax in excess of the amount
reserved or provided therefor, and no deficiencies for any tax, assessment or
governmental charge in excess of the amount reserved or provided therefor have
been threatened, claimed, proposed or assessed. No waiver or extension of time
to assess any taxes has been given or requested.
3.13 COMPLIANCE WITH APPLICABLE LAW. AHS and each of its subsidiaries
holds all licenses, franchises, permits, variances, exemptions, orders,
approvals and authorizations necessary for the lawful conduct of its business
under and
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pursuant to, and the business of AHS and its subsidiaries is not being conducted
in violation of, any provision of any federal, state, local or foreign statute,
law, ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit or license or other governmental authorization or approval
applicable to AHS or any of its subsidiaries, except to the extent that the
failure to hold any such licenses, franchises, permits or authorizations, or any
such violation, would not, in the aggregate, have a Material Adverse Effect.
3.14 SUBSIDIARIES. Exhibit 22.1 to the most recent Form 10-K included
in the AHS SEC Reports lists all the subsidiaries of AHS and indicates for each
subsidiary of AHS as of such date the jurisdiction of incorporation or
organization thereof. All of the outstanding shares of capital stock or other
equity interests of each of the subsidiaries of AHS are (a) held by AHS or one
of its wholly-owned subsidiaries, (b) fully paid and nonassessable, and (c)
owned by AHS or one of its wholly-owned subsidiaries free and clear of any
claim, lien or encumbrance.
3.15 LABOR AND EMPLOYMENT MATTERS. AHS and each of its subsidiaries (a)
are and have been in compliance in all material respects with all applicable
laws respecting employment and employment practices and terms and conditions of
employment and wages and hours (including, without limitation, the Immigration
Reform and Control Act, the Worker Adjustment and Retraining Notification Act
and such laws respecting employment discrimination, equal opportunity,
affirmative action, worker's compensation, occupational safety and health
requirements and unemployment insurance and related matters) and (b) are not
engaged in and have not engaged in any unfair labor practice. No investigation
or review by or before any governmental entity concerning any violation of any
such law is pending or, to the knowledge of AHS, threatened or has occurred
during the last three years, and no governmental entity has provided any notice
to AHS or any of its subsidiaries or otherwise asserted an intention to conduct
any such investigation. There is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against AHS or any of its subsidiaries. No union
representation question or union organizational activity exists respecting the
employees of AHS or any of its subsidiaries. No collective bargaining agreement
exists which is binding on AHS or any of its subsidiaries. Neither AHS nor any
of its subsidiaries
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has experienced any material work stoppage or other material labor difficulty.
In the event of termination of the employment of any of the current officers,
directors, employees or agents of AHS or any of its subsidiaries, neither AHS
nor any of its subsidiaries will, pursuant to any agreement or by reason of
anything done prior to the Closing be liable to any of such officers, directors,
employees or agents for so-called "severance pay" or any other similar payments
or benefits, including, without limitation, post-employment health care benefits
(other than pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985 ("COBRA")) or insurance benefits.
3.16 INSURANCE. AHS and each of its subsidiaries are insured by
insurers reasonably believed by AHS to be of recognized financial responsibility
against such losses and risks and in such amounts as are customary in the
businesses in which they are engaged. All material policies of insurance and
fidelity or surety bonds insuring AHS or any of its subsidiaries or their
respective businesses, assets, employees, officers and directors are in full
force and effect. There are no material claims by AHS or any of its subsidiaries
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause.
3.17 CONTRACTS WITH PHYSICIANS, HOSPITALS, HMOS AND THIRD PARTY
PROVIDERS. AHS has made available to representatives of GE Medical copies (or in
the case where no written documentation exists, a summary) of all outstanding
contracts, partnerships, joint ventures and other arrangements or understandings
(written or oral) between (a) AHS or any of its subsidiaries and (b) any
physician, hospital, health maintenance organization or other managed care
organization, or other third-party provider relating to the provision of medical
or consulting services, treatments, patient referrals or similar activities.
3.18 ABSENCE OF UNDISCLOSED LIABILITIES. Neither AHS nor any of its
subsidiaries is obligated under or subject to any indebtedness, duty,
responsibility, liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, other than (a) in the ordinary course of
business on terms and conditions and in amounts consistent with past practices
of AHS and in no event on terms atypical to those of other companies in the same
or a similar industry or (b) as disclosed in the financial statements included
in the AHS SEC Reports.
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3.19 ENVIRONMENTAL MATTERS. Except as could not have a Material Adverse
Effect, the ownership, use and operation by AHS and its subsidiaries, and each
of their predecessors, of each facility used by AHS in the operation of its
business has been and is in compliance with all federal, state and local
environmental and anti-pollution laws and regulations, including (a) the
Resource Conservation and Recovery Act, as amended, and its implementing
regulations and all applicable state hazardous waste laws and regulations, (b)
the Clean Water Act, as amended, and its implementing regulations and all
applicable state effluent discharge laws and regulations, (c) the Clean Air Act,
as amended, and its implementing regulations and all applicable state air
emission laws and regulations and (d) all such laws and regulations concerning
particulate emissions, hazard communication, surface water pollution,
groundwater pollution, air pollution, solid wastes, hazardous wastes, storage,
handling, treatment, transportation, spills or other releases, or disposal of
any substance, material or waste, or exposure to or notification regarding any
substance, material or waste. No action, suit, proceeding, investigation,
complaint or charge exists for violation of any such laws, rules or regulations
and there is no meritorious basis therefor.
3.20 DISCLOSURE. The representations and warranties of AHS contained in
this Agreement and each certificate or other written statement delivered
pursuant to this Agreement, the Debt Restructuring, the Debt Restructuring
Agreements, the Merger or the Merger Agreement and the transactions contemplated
hereby and thereby, are accurate, correct and complete, do not contain any
untrue statement of a material fact or, considered in the context in which
presented, omit to state a material fact necessary in order to make the
statements and information contained herein or therein not misleading. AHS is
not aware of any material information necessary to enable GE Medical to make an
informed investment decision to purchase the AHS Shares which has not been
expressly disclosed to GE Medical in writing. There is no fact which would have,
or in the future may have (so far as AHS can now foresee), a Material Adverse
Effect which has not been set forth or described in this Agreement or in a
certificate, exhibit or other written statement furnished to GE Medical in
connection herewith.
ARTICLE 4
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REPRESENTATIONS AND WARRANTIES REGARDING MAXUM
Maxum represents and warrants to GE Medical that, with respect to
itself and each of its subsidiaries, the statements contained in this ARTICLE 4
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
ARTICLE 4), except as set forth in Maxum's disclosure schedule attached hereto
as ANNEX II (the "MAXUM DISCLOSURE SCHEDULE"). Nothing in the Maxum Disclosure
Schedule shall be deemed adequate to disclose an exception to a specific
representation or warranty made herein, however, unless such exception is
identified to the specific representation and warranty to which such exception
applies (and not generally to all representations and warranties) in paragraphs
corresponding to the lettered and numbered Sections contained in this ARTICLE 4.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself).
In accordance therewith, Maxum represents and warrants to GE Medical,
with respect to itself and its subsidiaries, as follows:
4.1 ORGANIZATION. Each of Maxum and its subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has the power to carry on its business as it
is now being conducted or presently proposed to be conducted and (c) is duly
qualified to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Material Adverse Effect.
4.2 CAPITALIZATION. As of the date hereof, the authorized capital stock
of Maxum consists of (a) 10,000,000 shares of common stock, par value $0.01 per
share, 2,273,555 shares of which are issued and outstanding, and (b) 56,000
shares of preferred stock, par value $0.01 per share, none of which are issued
and outstanding. All of the issued and outstanding shares
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of capital stock of Maxum are validly issued, fully paid and nonassessable and
free of preemptive rights or similar rights created by statute, the Certificate
of Incorporation or Bylaws of Maxum, or any agreement by which Maxum or any of
its subsidiaries is a party or to which Maxum or any of its subsidiaries is
bound. Maxum has reserved 1,037,500 shares of its common stock for issuance to
directors, employees and consultants or other persons under stock plans or
arrangements, of which 416,250 shares are subject to outstanding options as of
the date hereof. Except as provided in this SECTION 4.2, there are not any (a)
shares of capital stock of Maxum issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Maxum to issue, transfer or sell any shares of its
capital stock or (b) issued and outstanding bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exercisable for
securities having the right to vote) on any matters on which stockholders of
Maxum may vote.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Maxum has the corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by Maxum and the
consummation by Maxum of the transactions contemplated by this Agreement, the
Debt Restructuring, the Debt Restructuring Agreements, the Merger and the Merger
Agreement have been duly authorized by the Board of Directors of Maxum, and,
except for approval by the requisite votes cast by the stockholders of Maxum
with respect to the Merger, no other corporate proceedings on the part of Maxum
are necessary to approve this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby and thereby.
4.4 VALIDITY. This Agreement has been duly executed and delivered by
Maxum and is the legal, valid and binding obligation of Maxum, enforceable in
accordance with its terms.
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Securities Act, the Exchange Act, or state securities or
blue sky laws, no filing with, and no permit, authorization, consent or approval
of, any governmental body or authority is necessary for the consummation by
Maxum of the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or
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the Merger Agreement, or the transactions contemplated hereby and thereby.
Neither the execution and delivery of this Agreement by Maxum nor the
consummation by Maxum of this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby and thereby will (a) result in any breach of
the Certificate of Incorporation or Bylaws of Maxum, (b) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which Maxum or any of its subsidiaries is a party or by which any
of them or any of their properties or assets may be bound, except as would not
have a Material Adverse Effect, or (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Maxum, any of its subsidiaries
or any of their properties or assets, except for violations, breaches or
defaults that would not have a Material Adverse Effect.
4.6 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1994, Maxum has
filed all reports required to be filed by it with the SEC pursuant to the
Exchange Act, including, without limitation, an Annual Report on Form 10-K for
the year ended December 31, 1994 (collectively and as amended through the
Closing Date, the "MAXUM SEC REPORTS"), and has previously furnished or made
available to GE Medical true and complete copies of all of the Maxum SEC
Reports. None of the Maxum SEC Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the balance sheets (including the related notes) included in the Maxum SEC
Reports fairly presents in all material respects the consolidated financial
position of Maxum and its subsidiaries as of the respective dates thereof, and
the other related statements (including the related notes) included therein
fairly present in all material respects the results of operations and cash flows
of Maxum and its subsidiaries for the respective periods or as of the respective
dates set forth therein, all in conformity with GAAP, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and
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any other adjustments described therein and the absence of any notes thereto.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
neither Maxum nor any of its subsidiaries has:
(a) Taken any of the actions set forth in clauses (E) through (O)
of SECTION 9.1;
(b) Incurred any liability material to Maxum and its subsidiaries
on a consolidated basis, except in the ordinary course of its business,
consistent with past practices;
(c) Suffered a Material Adverse Effect; or
(d) Conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
4.8 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT.
None of the information to be supplied by Maxum to be included in the
Registration Statement and the Proxy Statement, will:
(a) in the case of the Registration Statement, at the time it
becomes effective and at the Closing,
(b) in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement
and any amendments or supplements thereto, and
(c) in either case, at the time of the meeting of stockholders of
Maxum to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will
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comply as to form in all material respects with the provisions of the Securities
Act, and the rules and regulations promulgated thereunder. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder.
4.9 LITIGATION. Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect:
(a) There is no action, suit, judicial or administrative
proceeding, arbitration or investigation pending or, to the knowledge of
Maxum, threatened against or involving Maxum or any of its subsidiaries,
or any of their properties or rights, before any court, arbitrator, or
administrative or governmental body;
(b) There is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency or instrumentality, or
arbitrator outstanding against Maxum or any of its subsidiaries; and
(c) Neither Maxum not its subsidiaries are in violation of any term
of any judgments, decrees, injunctions or orders outstanding against them.
(d) Included in the Maxum Disclosure Schedule is a true and
complete description of all litigation, actions, suits, judicial and
administrative proceedings, arbitrations, investigations (as to which
Maxum is aware), judgments, decrees, injunctions and orders pending, or,
to the knowledge of Maxum, threatened against or involving Maxum or any of
its subsidiaries, or any of their respective properties or rights.
4.10 CONTRACTS.
(a) Each of the contracts, instruments, mortgages, notes, security
agreements, leases, agreements and understandings, whether written or oral, to
which Maxum or any of its subsidiaries is a party or that relates to or affects
the assets or operations of Maxum or any of its subsidiaries or to which Maxum
or any of its subsidiaries or their respective assets or operations may be bound
or subject, is a valid and binding obligation of Maxum and in full force and
effect (with respect to Maxum or such subsidiary) in accordance with its terms,
except for where the failure to be in full force and effect could not,
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in the aggregate, have a Material Adverse Effect. There are no existing defaults
by Maxum or any of its subsidiaries thereunder or, to the knowledge of Maxum, by
any other party thereto, which defaults, in the aggregate, would have a Material
Adverse Effect; and, no event of default has occurred, and no event, condition
or occurrence exists, that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default by Maxum
or any of its subsidiaries thereunder which default would, in the aggregate,
have a Material Adverse Effect.
(b) Except for this Agreement, neither Maxum nor any of its
subsidiaries is a party to any oral or written (i) consulting agreement with an
individual not terminable on 60 calendar days or less notice involving the
payment of more than $50,000 per annum, in the case of any such agreement, (ii)
joint venture agreement, (iii) non-competition or similar agreement that
restricts Maxum or its subsidiaries from engaging in a line of business, except
for agreements entered into in the ordinary course of business which could not
have a Material Adverse Effect, (iv) agreement with any executive officer or
other employee of Maxum, or any of its subsidiaries, the benefits of which are
contingent upon, or the terms of which are materially altered by, the occurrence
of a transaction involving Maxum of the nature contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger or the
Merger Agreement, or the transactions contemplated hereby and thereby, and which
provides for the payment of in excess of $50,000, (v) agreement with respect to
any executive officer of Maxum or any of its subsidiaries providing any term of
employment beyond one year or compensation guaranty in excess of $50,000 per
annum, or (vi) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, the Debt Restructuring, the Debt Restructuring Agreements,
the Merger or the Merger Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement.
4.11 EMPLOYEE BENEFIT PLANS.
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(a) Included in the Maxum Disclosure Schedule is a true and
complete list of each written or formal employee benefit plan (including,
without limitation, any "employee benefit plan" as defined in Section 3(3) of
ERISA), policy or agreement that is maintained by Maxum or any of its
subsidiaries (all of the foregoing, the "MAXUM BENEFIT PLANS"), or is or was
contributed to by Maxum or pursuant to which Maxum (or any trade or business,
whether or not incorporated (a "MAXUM ERISA AFFILIATE"), which together with
Maxum would be deemed a "single employer" within the meaning of Section 4001 of
ERISA) is still potentially liable for payments, benefits or claims. A copy of
each Maxum Benefit Plan as currently in effect and, if applicable, the most
recent Annual Report, Actuarial Report or Valuation, Summary Plan Description,
Trust Agreement and a Determination Letter issued by the IRS for each Maxum
Benefit Plan have heretofore been delivered to GE Medical. No Maxum Benefit Plan
(including any "multiemployer plan," as defined in Section 3(37) of ERISA) was
or is subject to Title IV of ERISA or Section 412 of the Code.
(b) Each of the Maxum Benefit Plans that is subject to ERISA is in
substantial compliance with ERISA. Each of the Maxum Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code is so qualified.
No event has occurred, and to the knowledge of Maxum, no condition or set of
circumstances exists, in connection with which Maxum or any Maxum ERISA
Affiliate is or could be subject to liability (except liability for benefit
claims and funding obligations payable in the ordinary course of business) under
ERISA, the Code or any other applicable law with respect to any Maxum Benefit
Plan.
(c) All contributions and other amounts payable by Maxum or any of
its subsidiaries through September 30, 1995, with respect to each Maxum Benefit
Plan in respect of current or prior plan years have been either paid or accrued
on the most recent financial statements of Maxum. Any contributions or other
amounts payable by Maxum or any of its subsidiaries for periods between
September 30, 1995, and the Closing with respect to each Maxum Benefit Plan in
respect of current or prior plan years have been or will be either paid or
accrued in the normal course of business on the books and records of Maxum at or
prior to the Closing. There are no pending, or, to the knowledge of Maxum,
threatened or anticipated claims (other than routine claims for benefits which
will not, in the aggregate, have a Material
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Adverse Effect) by or on behalf of or against any of the Maxum Benefit Plans or
any trusts or other funding vehicles related thereto.
(d) No Maxum Benefit Plan (other than general employment policies
and agreements) provides benefits, including without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees for periods extending beyond their retirement or other termination of
service (other than (i) coverage mandated by Part 6 of Subtitle B of Title I of
ERISA, Section 4980B of the Code or any comparable state law, (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of Maxum or the Maxum ERISA Affiliates, or
(iv) benefits the full cost of which is borne by the current or former employee
or his or her beneficiary).
4.12 TAXES. For the purposes of this SECTION 4.12, the term "TAX" shall
include all taxes, charges, withholdings, fees, levies, penalties, additions,
interest or other assessments imposed by any United States federal, state or
local authority or any other taxing authority on Maxum or any of the Maxum Tax
Affiliates (as defined in this SECTION 4.12) as to their respective income,
profit, franchise, gross receipts, payroll, sales, employment, worker's
compensation, use, property, withholding, excise, occupancy, environmental, and
other taxes, duties or assessments of any nature whatsoever. Maxum has filed or
caused to be filed timely all material federal, state, local and foreign tax
returns required to be filed by Maxum and any member of its consolidated,
combined, unitary or similar group (each such member, a "MAXUM TAX AFFILIATE").
Such returns, reports and other information are accurate and complete in all
material respects. Maxum has paid or caused to be paid or has made adequate
provision or set up an adequate accrual or reserve for the payment of, all taxes
shown to be due in respect of the periods for which returns are due, and has
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the period subsequent to the last of such periods in respect of
which any such accrual or reserve is required. Neither Maxum nor any of the
Maxum Tax Affiliates has any material liability for taxes in excess of the
amount so paid or accruals or reserves so established. Neither Maxum nor any of
the Maxum Tax Affiliates is delinquent in the payment of any tax
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in excess of the amount reserved or provided therefor, and no deficiencies for
any tax, assessment or governmental charge in excess of the amount reserved or
provided therefor have been threatened, claimed, proposed or assessed. No waiver
or extension of time to assess any taxes has been given or requested.
4.13 COMPLIANCE WITH APPLICABLE LAW. Maxum and each of its subsidiaries
holds all licenses, franchises, permits, variances, exemptions, orders,
approvals and authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of Maxum and its subsidiaries is not
being conducted in violation of, any provision of any federal, state, local or
foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to Maxum or any of its subsidiaries, except
to the extent that the failure to hold any such licenses, franchises, permits or
authorizations, or any such violation, would not, in the aggregate, have a
Material Adverse Effect.
4.14 SUBSIDIARIES. Exhibit 22.1 to the most recent Form 10-K included
in the Maxum SEC Reports lists all the subsidiaries of Maxum and indicates for
each subsidiary of Maxum as of such date the jurisdiction of incorporation or
organization thereof. All of the outstanding shares of capital stock or other
equity interests of each of the subsidiaries of Maxum are (a) held by Maxum or
one of its wholly-owned subsidiaries, (b) fully paid and nonassessable, and (c)
owned by Maxum or one of its wholly-owned subsidiaries free and clear of any
claim, lien or encumbrance.
4.15 LABOR AND EMPLOYMENT MATTERS. Maxum and its subsidiaries (a) are
and have been in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including, without limitation, the Immigration
Reform and Control Act, the Worker Adjustment and Retraining Notification Act,
and such laws respecting employment discrimination, equal opportunity,
affirmative action, worker's compensation, occupational safety and health
requirements and unemployment insurance and related matters, and (b) are not
engaged in and have not engaged in any unfair labor practice. No investigation
or review by or before any governmental entity
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concerning any violation of any such law is pending or, to the knowledge of
Maxum, threatened, nor has any such investigation occurred during the last three
years, and no governmental entity has provided any notice to Maxum or any of its
subsidiaries or otherwise asserted an intention to conduct any such
investigation. There is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against Maxum or any of its subsidiaries. No union
representation question or union organizational activity exists respecting the
employees of Maxum or any of its subsidiaries. No collective bargaining
agreement exists which is binding on Maxum or any of its subsidiaries. Neither
Maxum nor any of its subsidiaries has experienced any material work stoppage or
other material labor difficulty. In the event of termination of the employment
of any of the current officers, directors, employees or agents of Maxum or any
of its subsidiaries, neither Maxum nor any of its subsidiaries will, pursuant to
any agreement or by reason of anything done prior to the Closing be liable to
any of such officers, directors, employees or agents for so-called "severance
pay" or any other similar payments or benefits, including, without limitation,
post-employment health care benefits (other than pursuant to COBRA) or insurance
benefits.
4.16 INSURANCE. Maxum and each of its subsidiaries are insured by
insurers reasonably believed by Maxum to be of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged. All material policies of
insurance and fidelity or surety bonds insuring Maxum or any of its subsidiaries
or their respective businesses, assets, employees, officers and directors are in
full force and effect. There are no material claims by Maxum or any of its
subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
4.17 CONTRACTS WITH PHYSICIANS, HOSPITALS, HMOS AND THIRD PARTY
PROVIDERS. Maxum has made available to representatives of GE Medical copies (or
in the case where no written documentation exists, a summary) of all outstanding
contracts, partnerships, joint ventures and other arrangements or understandings
(written or oral) between (a) Maxum or any of its subsidiaries and (b) any
physician, hospital, health maintenance organization or other managed care
organization, or other third-
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party provider relating to the provision of medical or consulting services,
treatments, patient referrals or similar activities.
4.18 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Maxum nor any of its
subsidiaries is obligated under or subject to any indebtedness, duty,
responsibility, liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, other than (a) in the ordinary course of
business on terms and conditions and in amounts consistent with past practices
of Maxum and in no event on terms atypical to those of other companies in the
same or a similar industry or (b) as disclosed in the financial statements
included in the Maxum SEC Reports.
4.19 ENVIRONMENTAL MATTERS. Except as would not have a Material Adverse
Effect, the ownership, use and operation by Maxum and its subsidiaries, and each
of their predecessors, of each facility used by Maxum in the operation of its
business has been and is in compliance with all federal, state and local
environmental and anti-pollution laws and regulations, including (a) the
Resource Conservation and Recovery Act, as amended, and its implementing
regulations and all applicable state hazardous waste laws and regulations, (b)
the Clean Water Act, as amended, and its implementing regulations and all
applicable state effluent discharge laws and regulations, (c) the Clean Air Act,
as amended, and its implementing regulations, and (d) all applicable state air
emission laws and regulations; and all such laws and regulations concerning
particulate emissions, hazard communication, surface water pollution,
groundwater pollution, air pollution, solid wastes, hazardous wastes, storage,
handling, treatment, transportation, spills or other releases, or disposal of
any substance, material or waste, or exposure to or notification regarding any
substance, material or waste. No action, suit, proceeding, investigation,
complaint or charge exists for violation of any such laws, rules or regulations
and there is no meritorious basis therefor.
4.20 DISCLOSURE. The representations and warranties of Maxum contained
in this Agreement and each certificate or other written statement delivered
pursuant to this Agreement, the Debt Restructuring, the Debt Restructuring
Agreements, the Merger or the Merger Agreement and the transactions contemplated
hereby and thereby, are accurate, correct and complete, do not contain any
untrue statement of a material fact or, considered in the
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context in which presented, omit to state a material fact necessary in order to
make the statements and information contained herein or therein not misleading.
Maxum is not aware of any material information necessary to enable GE Medical to
make an informed investment decision to purchase the Maxum Shares which has not
been expressly disclosed to GE Medical in writing. There is no fact which would
have, or in the future may have (so far as Maxum can now foresee), a Material
Adverse Effect which has not been set forth or described in this Agreement or in
a certificate, exhibit or other written statement furnished to GE Medical in
connection herewith.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES REGARDING INSIGHT
AHS, Maxum and InSight (collectively, the "INSIGHT PARTIES"), jointly
and severally, represent and warrant to GE Medical as follows:
5.1 ORGANIZATION. Each of InSight and its subsidiaries (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) has the corporate power to carry on its business
as it is now being conducted or presently proposed to be conducted and (c) is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified will not have a Material Adverse Effect.
5.2 CAPITALIZATION. The authorized capital stock of InSight consists of
(a) 25,000,000 shares of common stock, par value $0.001 per share, 1,000 of
which are issued and outstanding, and (b) 3,500,000 shares of preferred stock,
par value $0.001 per share, of which 2,501,760 shares have been designated
Series A Convertible Preferred Stock and none of which are issued and
outstanding. InSight has reserved (a) 1,303,000 shares of its common stock for
issuance to directors, employees and consultants or other persons under stock
plans or arrangements, of which an aggregate of 350,566.51 shares are subject to
outstanding options granted by AHS and Maxum which will be assumed by InSight in
connection with the consummation of
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the Merger and (b) an aggregate of 70,000 shares of its common stock for
issuance upon exercise of warrants issued or issuable to certain stockholders of
AHS. Except as provided in this SECTION 5.2, there are not (a) any shares of
capital stock of InSight issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating InSight to issue, transfer or sell any shares of its
capital stock or (b) any issued and outstanding bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which stockholders of
InSight may vote.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. InSight has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by InSight
and the consummation by InSight of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
and the Merger Agreements have been duly authorized by the Board of Directors of
InSight, and, except for approval by the requisite vote of the stockholders of
InSight with respect to the Merger, no other corporate proceedings on the part
of InSight are necessary to approve this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby or thereby.
5.4 VALIDITY. This Agreement has been duly executed and delivered by
InSight and is the legal, valid and binding obligation of InSight, enforceable
in accordance with its terms.
5.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, no filing with, and no permit, authorization, consent or approval of,
any governmental body or authority is necessary for the consummation by InSight
of the transactions contemplated by this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger, the Merger Agreement or the
transactions contemplated hereby or thereby. Neither the execution and delivery
of this Agreement by InSight nor the consummation by InSight of this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger the Merger
Agreement or the transactions contemplated hereby or thereby, will (a) result in
any breach of the Certificate of
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Incorporation or Bylaws of InSight, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which InSight
or any of its subsidiaries is a party or by which InSight or any of its
subsidiaries or any of their respective properties or assets may be bound,
except as would not have a Material Adverse Effect, or (c) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to InSight or
any of its subsidiaries or any of their respective properties or assets, except
for violations, breaches and defaults that would not, in the aggregate, have a
Material Adverse Effect.
5.6 SUBSIDIARIES. All of the outstanding shares of capital stock and
other equity interests of each of the subsidiaries of InSight are (a) held by
InSight, (b) fully paid and nonassessable, and (c) owned by InSight free and
clear of any claim, lien or encumbrance.
5.7 NO ASSETS; NO ACTIVITIES. InSight has no material assets or
liabilities and has not engaged in any activities except in connection with and
furtherance of the transactions contemplated by this Agreement, the Merger
Agreement and the Debt Restructuring Agreements.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Neither InSight nor any of
its subsidiaries has conducted any business or operations, except with respect
to the consummation of the Merger and the transactions related thereto.
5.9 DISCLOSURE. The representations and warranties of InSight contained
in this Agreement and each certificate and other written statement delivered in
connection with this Agreement, the Debt Restructuring, the Debt Restructuring
Agreements, the Merger and the Merger Agreement, and the transactions
contemplated hereby and thereby (a) are accurate, correct and complete and (b)
do not contain any untrue statement of a material fact or, considered in the
context in which presented, omit to state a material fact necessary in order to
make the statements and information contained herein or therein not misleading.
InSight is not aware of any material information
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necessary to enable GE Medical to make an informed investment decision to
acquire the AHS Shares and the Maxum Shares which has not been expressly
disclosed to GE Medical in writing. There is no fact which would have, or in the
future may have (so far as InSight can now foresee), a Material Adverse Effect
which has not been set forth or described in this Agreement or in a certificate,
exhibit or other written statement furnished to GE Medical in connection
herewith.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF GE MEDICAL
GE Medical represents and warrants to the InSight Parties as follows:
6.1 AUTHORITY RELATIVE TO THIS AGREEMENT. GE Medical has the power and
authority to enter into this Agreement and to carry out its obligations
hereunder.
6.2 VALIDITY. This Agreement has been duly executed and delivered by GE
Medical and is the legal, valid and binding obligation of GE Medical,
enforceable in accordance with its terms.
6.3 AUTHORITY. GE Medical has full legal right, power and authority,
without the consent of any other person, to execute and deliver this Agreement
and to carry out the transactions contemplated hereby. All actions required to
be taken by GE Medical to authorize the execution, delivery and performance of
this Agreement and all transactions contemplated hereby have been duly and
properly taken.
6.4 INVESTMENT EXPERIENCE. GE Medical acknowledges that it can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the AHS Shares and the Maxum Shares.
6.5 RESTRICTED SECURITIES. GE Medical understands that the AHS Shares
and Maxum Shares may be characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from AHS and Maxum,
respectively, in a transaction not involving a public offering,
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and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act only in certain limited
circumstances.
6.6 LEGENDS. GE Medical understands that the certificates evidencing
the AHS Shares and the Maxum Shares may bear any legend required by applicable
state securities laws and the following legend:
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"These securities have not been registered under the Securities Act
of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of
counsel satisfactory to the Company that such registration is not
required or unless sold pursuant to Rule 144 of such Act."
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF GE MEDICAL
The obligations of GE Medical to consummate the transactions
contemplated by this Agreement are subject to fulfillment prior to or at the
Closing, as the case may be, of the following conditions:
7.1 ACCURACY OF WARRANTIES; PERFORMANCE OF COVENANTS. The
representations and warranties of the InSight Parties contained herein shall be
accurate in all material respects as if made on and as of the Closing Date. Each
InSight Party shall have performed all of the obligations and complied with all
of the covenants required to be performed or complied with on or prior to the
Closing.
7.2 NO PENDING ACTION. No action or proceeding before any court or
governmental body shall be pending or threatened, seeking to, or under which an
unfavorable judgment, decree or order would (a) prevent the carrying out of this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement or the transactions contemplated hereby and thereby, (b)
declare unlawful the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, (c) cause such transactions to be rescinded, or (d) affect the right
of GE Medical to own or control the AHS Shares, the Maxum Shares or the InSight
Preferred Shares.
7.3 CONSENTS. Except as could not have a Material Adverse Effect, all
consents by third parties that are required for the transfer of the AHS Shares
and the Maxum Shares, for the consummation of the transactions contemplated
hereby, or in order
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to prevent a breach of or a default under or a termination of any agreement to
which any of the InSight Parties is a party or to which any portion of the
property of any of the InSight Parties is subject, will have been obtained or
provided for. For purposes of this SECTION 7.3, the consents described on
SCHEDULE 7.3 attached hereto are hereby deemed to be required to have been
obtained.
7.4 CONDITION OF BUSINESS AND ASSETS. There shall have been no change
which would have a Material Adverse Effect upon any of the InSight Parties.
7.5 DELIVERIES AT CLOSING. GE Medical shall have received from one or
more of the InSight Parties, the following:
(a) Stock certificates, evidencing all of the AHS Shares and the
Maxum Shares (which, immediately after the Closing, shall be converted
into the right to receive the InSight Preferred Shares as provided in the
Merger Agreement);
(b) A copy of the AHS Certificate of Designation, certified by the
Secretary of State of the State of Delaware as of the Closing Date;
(c) A copy of the Maxum Certificate of Designation, certified by
the Secretary of State of the State of Delaware as of the Closing Date;
(d) A copy of the InSight Certificate of Incorporation, certified
by the Secretary of State of the State of Delaware as of the Closing Date;
(e) A certificate of the secretary of AHS, certifying copies of the
AHS Certificate of Designation, the Bylaws of AHS and the resolutions of
the Board of Directors of AHS authorizing the transactions contemplated by
this Agreement, the Debt Restructuring, the Debt Restructuring Agreements,
the Merger and the Merger Agreement;
(f) A certificate of the secretary of Maxum, certifying copies of
the Maxum Certificate of Designation, the Bylaws of Maxum and the
resolutions of the Board of Directors of Maxum authorizing the
transactions contemplated
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by this Agreement, the Debt Restructuring, the Debt Restructuring
Agreements, the Merger and the Merger Agreement;
(g) A certificate of the secretary of InSight, certifying copies of
the InSight Certificate of Incorporation, the Bylaws of InSight and the
resolutions of the Board of Directors of InSight authorizing the
transactions contemplated by this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger and the Merger Agreement;
(h) The opinion of Arent Fox Xxxxxx Xxxxxxx & Xxxx, AHS's legal
counsel, in substantially the form attached hereto as EXHIBIT F;
(i) The opinion of Storey Xxxxxxxxx Xxxxxx & Xxxxxx, Maxum's legal
counsel, in substantially the form attached hereto as EXHIBIT G;
(j) Duly executed copies of the Debt Restructuring Agreements;
(k) A duly executed Registration Rights Agreement in the form
attached hereto as EXHIBIT H; and
(l) Such other instruments or documents as may be reasonably
necessary to carry out the transactions contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger and
the Merger Agreement.
7.6 CONSUMMATION OF TRANSACTIONS. The transactions contemplated by the
Debt Restructuring, the Debt Restructuring Agreements (all closing conditions
thereunder to GE Medical's obligations thereunder having been satisfied or
waived), the Merger, the Merger Agreement (all closing conditions thereunder
having been satisfied) and the execution and delivery of that certain Master
Service Agreement Addendum (substantially in the form attached hereto as EXHIBIT
I) shall have been consummated concurrent with or immediately after, as the case
may be, the consummation of the transactions contemplated by this Agreement. The
Merger Agreement shall be in full force and effect without modification.
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7.7 COMFORT LETTERS. Each of the InSight Parties shall have received a
"comfort letter," in a form reasonably acceptable to GE Medical, of such InSight
Party's independent auditors with respect to the financial statements and other
information of such InSight Party included in the Registration Statement, each
such letter dated a date within two business days before the date on which the
Registration Statement shall become effective.
7.8 AFFILIATE AGREEMENTS. Each officer and director of each InSight
Party shall have delivered to InSight a written "affiliate agreement," in a form
reasonably acceptable to GE Medical, restricting the disposition by such person
of any shares of common stock of InSight to be received by such person in the
Merger, as contemplated by Rule 145 under the Securities Act and as required
under Section 351 of the Code.
7.9 1996 MANAGEMENT STOCK OPTION PLAN. InSight shall have adopted its
1996 Directors' Stock Option Plan and its 1996 Employee Stock Option Plan, in
the form attached hereto as EXHIBIT J-1 and EXHIBIT J-2, respectively
(collectively, the "INSIGHT STOCK PLANS").
7.10 EMPLOYMENT AGREEMENTS. InSight shall have entered into employment
agreements, in the form previously delivered to GE Medical (collectively, the
"INSIGHT EMPLOYMENT AGREEMENTS"), with the executive officers listed on SCHEDULE
7.10 attached hereto, and such Insight Employment Agreements shall be in full
force and effect without modification. All severance and other related
provisions set forth in all written agreements between either AHS or Maxum, and
its employees, shall have been waived in writing to the extent the transactions
contemplated by the Debt Restructuring, the Debt Restructuring Agreements, the
Merger and the Merger Agreement shall give effect to such severance and other
related provisions, such waivers to be in such form as reasonably acceptable to
GE Medical.
7.11 FAIRNESS OPINIONS. Each of AHS and Maxum shall have received an
expert opinion (a copy of which, and any "bring-down" thereof, shall have been
delivered to GE Medical) that the Merger and the transactions contemplated in
connection therewith are fair from a financial point of view to it and its
stockholders, and such opinions shall not have been withdrawn.
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7.12 SETTLEMENT OF LITIGATION. The settlement of the civil action filed
in the United States District Court of the District of Puerto Rico styled
P.R.F., Inc. d/b/a San Xxxx Health Centre, Inc., et. al. v. Philips Credit
Corporation, American Health Services Corporation, et. al., 92 Civ. 2266, and
the civil action filed in the United States District Court of the Southern
District of New York styled In re Maxum Health Corp. Securities Litigation, 93
Civ. 3287, and all claims related thereto or asserted therein, shall have been
effected on terms satisfactory to GE Medical and, with respect to such Maxum
litigation, a final judgment of dismissal shall have been entered and shall
encompass all plaintiffs and potential plaintiffs to such Maxum litigation.
7.13 AGREEMENT WITH HOLDERS OF AHS SERIES B SHARES. Those certain
Agreements by and among InSight, AHS and each of the holders of the AHS Series B
Shares, attached hereto as EXHIBIT L, shall be in full force and effect without
modification.
7.14 LOCATION OF PRINCIPAL EXECUTIVE OFFICE. The InSight Parties shall
have used such reasonable efforts, to the satisfaction of GE Medical, to make
all arrangements necessary to consolidate the principal executive offices and
administration functions of the InSight Parties at one location.
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ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF AHS, MAXUM AND INSIGHT
The obligations of the InSight Parties to consummate the transactions
contemplated by this Agreement are subject to fulfillment prior to or at the
Closing of the following conditions:
8.1 ACCURACY OF WARRANTIES; PERFORMANCE OF COVENANTS. The
representations and warranties of GE Medical contained herein shall be accurate
in all material respects as if made on and as of the Closing Date. GE Medical
shall have performed all of the obligations and complied with each and all of
the covenants required to be performed or complied with on or prior to the
Closing.
8.2 NO PENDING ACTION. No action or proceeding before any court or
governmental body will be pending or threatened, seeking to, or under which an
unfavorable judgment, decree or order would (a) prevent the carrying out of this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement or the transactions contemplated hereby and thereby, (b)
declare unlawful the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, (c) cause such transactions to be rescinded.
8.3 CONSENTS. Except as could not have a Material Adverse Effect, all
consents by third parties that are required for the transfer of the AHS Shares
and the Maxum Shares or otherwise, for the consummation of the transactions
contemplated hereby, or in order to prevent a breach of or a default under or a
termination of any agreement to which any of the InSight Parties is a party or
to which any portion of the property of the InSight Parties is subject, will
have been obtained or provided for. For purposes of this SECTION 8.3, the
consents described on SCHEDULE 7.3 attached hereto are hereby deemed to be
required to have been obtained.
8.4 DELIVERIES AT CLOSING. AHS, Maxum or InSight, as the case may be,
shall have received from GE Medical the following:
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(a) Duly executed copies of the Debt Restructuring Agreements
(including that certain Master Service Agreement Addendum referred to in
SECTION 7.6); and
(b) Such other instruments or documents as may be reasonably
necessary to carry out the transactions contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger and
the Merger Agreement.
8.5 STOCKHOLDER APPROVAL. Each of AHS and Maxum shall have received the
approval by the requisite votes cast by the stockholders of AHS and Maxum,
respectively, with respect to the Merger.
ARTICLE 9
PRE-CLOSING COVENANTS OF THE INSIGHT PARTIES
Each of the InSight Parties hereby agrees, from the date hereof until
the Closing, to keep, perform and fully discharge the following covenants and
agreements:
9.1 INTERIM CONDUCT OF BUSINESS. Such InSight Party shall preserve,
protect and maintain its business and operate its businesses as a going concern
consistent with prior practice and not other than in the ordinary course of
business (except as may be expressly authorized pursuant to this Agreement).
Without limiting the generality of the foregoing, from the date hereof until the
Closing, except for transactions expressly approved in writing by GE Medical,
such InSight Party shall:
(a) Maintain inventories at current levels, except for sales in the
ordinary course of business, and maintain the properties and assets of
their respective businesses in good repair, order and condition,
reasonable wear and tear excepted;
(b) Maintain and keep in full force and effect all insurance on
assets and property or for the benefit of employees of its business, all
liability and other casualty insurance, and all bonds on personnel,
presently carried;
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(c) Preserve intact the organization of its business and to keep
available the services of the present executives, employees and agents of
its business and preserve the good will of suppliers, customers and others
having business relationships with its business;
(d) Maintain its books, accounts and records in the usual, regular
and ordinary manner on a basis consistent with prior years;
(e) Not enter into or amend any employment, bonus, severance or
retirement contract or arrangement (other than an InSight Employment
Agreement with Xxxxx Xxxx), nor increase any salary or other form of
compensation payable or to become payable to any executives or employees
whose annual compensation is in excess of $60,000 (other than for
customary year-end raises and bonuses consistent with past practices and
in the ordinary and regular course of business and which do not (i) in any
individual employee case (other than executives), exceed an increase of
ten percent, or (ii) with respect to all employees (including executives),
exceed an increase of five percent in the aggregate, over previous annual
compensation);
(f) Not enter into or agree to enter into any lease, contract,
purchase or sale order or other commitment (other than in the ordinary
and regular course of business) which involves an expenditure, obligation,
purchase or sale of more than $2,000,000 or which cannot be fully
performed or terminated without premium or penalty within one year from
the date thereof;
(g) Not extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary and regular course of
business;
(h) Not purchase, lease or otherwise acquire any real estate or any
interest therein other than leases which involve rental and other payment
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commitments not exceeding $250,000 per year, in the aggregate;
(i) Not declare, set aside or pay any dividend or make any other
distribution with respect to its capital stock which is not normal and
not determined in relation to its earnings during the relevant period and
in accordance with its previous dividend policies and records;
(j) Not merge or consolidate with or agree to merge or consolidate
with, nor purchase or agree to purchase all or substantially all of the
assets of, nor otherwise acquire, any corporation, partnership, or other
business organization or division thereof, except as contemplated pursuant
to this Agreement, the Merger and the Merger Agreement;
(k) Not sell, lease or otherwise dispose of or agree to sell, lease
or otherwise dispose of any of its assets, properties, rights or claims,
except in the ordinary course of business;
(l) Not authorize for issuance, issue, sell or deliver any
additional shares of its capital stock of any class or any securities or
obligations convertible into shares of its capital stock of any class or
issue or grant any option, warrant or other right to purchase any shares
of its capital stock of any class, other than with respect to (i) the
authorization for issuance of shares of the capital stock of InSight
issuable under the InSight Stock Plans and (ii) shares of the capital
stock of AHS and Maxum issuable upon the exercise of the stock options and
warrants listed in Section 3.2 of the AHS Disclosure Schedule and Section
4.2 of the Maxum Disclosure Schedule;
(m) Not split, combine or reclassify any shares of its capital
stock of any class or redeem or otherwise acquire, directly or indirectly,
any shares of its capital stock of any class;
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(n) Not incur or become subject to, nor agree to incur or become
subject to, any debt, obligation or liability, contingent or otherwise,
except current liabilities and contractual obligations in the regular and
ordinary course of business; and
(o) Not terminate or make or permit, or agree to make or permit,
any material amendment of, any material contract, mortgage, lease,
license, agreement or other instrument to which it is a party or by which
any of its properties or assets is bound.
9.2 NON-SOLICITATION. Unless and until this Agreement is terminated in
accordance with ARTICLE 13, such InSight Party shall not take any action to
seek, encourage, solicit or support any inquiry, proposal, expression of
interest or offer from any other person or entity with respect to an
acquisition, combination or similar transaction involving such InSight Party or
its business, or any property, assets or securities related thereto (except as
contemplated pursuant to this Agreement, the Merger and the Merger Agreement),
and such InSight Party shall promptly upon receipt thereof inform GE Medical of
the existence of any such inquiry, proposal, expression of interest or offer and
shall not furnish any information to, or participate in any discussions or
negotiations with, any other person or entity with respect thereto.
9.3 CONSENTS. Such InSight Party shall use its best efforts to obtain
all consents (including the consents described on SCHEDULE 7.3) by third parties
that are required for the transfer of the AHS Shares and the Maxum Shares or
otherwise, for the consummation of the transactions contemplated hereby, or in
order to prevent a material breach of or a default under or a termination of any
agreement to which any of the InSight Parties is a party or to which any portion
of the property of the InSight Parties is subject.
ARTICLE 10
ADDITIONAL COVENANTS OF THE INSIGHT PARTIES
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Each of the InSight Parties hereby agrees, from and after the date
hereof (including following the Closing), to keep, perform and fully discharge
the following covenants and agreements:
10.1 ACCESS. Each of the InSight Parties shall give GE Medical and its
representatives full and free access to all properties, books, contracts,
commitments and records and shall furnish GE Medical with all financial and
operating data and other information regarding their respective businesses and
the properties and assets of the InSight Parties as GE Medical may from time to
time reasonably request. Each of the InSight Parties shall promptly notify GE
Medical of any change in the normal course of business or prospects of such
InSight Party or its business and shall keep GE Medical fully informed with
respect thereto.
10.2 ADDITIONAL COVENANTS. Except for transactions expressly approved
in writing by GE Medical, each of the InSight Parties agrees as follows:
(a) Each of the InSight Parties will promptly pay and discharge,
or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges and levies imposed upon the
income, profits, property, or business of such InSight Party or any
subsidiary thereof; provided, however, that no such tax, assessment,
charge or levy need be paid by an InSight Party if the validity thereof
shall currently be contested in good faith by appropriate proceedings and
if such InSight Party shall have set aside on its books adequate reserves
with respect thereto (unless such tax, assessment, charge, or levy has
given rise to the commencement of proceedings to foreclose any lien that
may have attached as security therefor). Each of the InSight Parties will
promptly pay or cause to be paid when due, or in conformance with
customary trade terms, all other indebtedness incident to the operations
of such InSight Party;
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(b) Each of the InSight Parties will keep its properties in good
repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and, each of the InSight
Parties will at all times comply with the provisions of all material
leases to which such InSight Party is a party or under which such InSight
Party occupies property so as to prevent any loss or forfeiture thereof or
thereunder;
(c) Each of the InSight Parties will keep its assets that are of
an insurable character insured by financially sound and reputable insurers
against loss or damage by fire and maintain extended coverage insurance
in amounts customary for companies in similar businesses and each of the
InSight Parties will maintain, with financially sound and reputable
insurers, insurance against other hazards, risks and liabilities to
persons and property to the extent and in the manner customary for
companies in similar businesses;
(d) Each of the InSight Parties will keep true records and books
of account in which full, true and correct entries will be made of all
dealings or transactions relating to its business and affairs in
accordance with GAAP;
(e) Each of the InSight Parties shall duly observe and conform to
all valid requirements of governmental authorities relating to the
conduct of such InSight Party's businesses or to such InSight Party's
property or assets;
(f) Each of the InSight Parties shall maintain in full force and
effect its corporate existence, rights and franchises and all licenses
and other rights to use patents, processes, licenses, trademarks, trade
names and copyrights owned or possessed thereby and deemed to be
necessary to the conduct of its business;
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(g) In the event the services of the independent public
accountants hereafter employed by the InSight Parties are terminated,
the InSight Parties will (i) promptly thereafter notify GE Medical by
letter setting forth the reasons for the termination of such services and
(ii) request the firm of independent public accountants whose services are
terminated to deliver to GE Medical a letter from such firm setting forth
the reasons for the termination of their services. In the event of such
termination, the InSight Parties will promptly thereafter engage another
firm of independent public accountants. In its notice to GE Medical, the
InSight Parties shall state whether the change of accountants was
recommended or approved by the InSight Parties' Board of Directors;
(h) Each of the InSight Parties will cause each person now or
hereafter employed thereby in a management position with access to
confidential information to enter into a proprietary information agreement
substantially in the form approved by such InSight Party's Board of
Directors.
10.3 MAINTENANCE OF SINGLE LOCATION OF PRINCIPAL EXECUTIVE OFFICE. Each
of the InSight Parties shall use its best efforts to establish and maintain the
principal executive offices and principal administration functions of the
InSight Parties at one location.
10.4 ADOPTION OF STOCK OPTION GUIDELINES. InSight shall not, without
first obtaining the approval of GE Medical, establish, adopt or approve (a)
guidelines with respect to the granting and vesting of stock options or shares
issued under the Insight Stock Plans or (b) the specific terms, conditions and
provisions of stock options or shares issued under the Insight Stock Plans which
could result in the issuance of more than 882,434 shares, in the aggregate,
under such Insight Stock Plans.
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ARTICLE 11
COVENANTS OF ALL PARTIES
Each party hereto hereby agrees to keep, perform and fully discharge
the following covenants and agreements:
11.1 CONFIDENTIALITY. (a) Each party hereto shall treat all information
regarding the other parties hereto obtained in connection with the negotiation
and consummation of the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger and the Merger
Agreement as confidential and shall not use any such information in any manner
other than in furtherance of such transactions; provided, however, that such
confidentiality obligation shall not apply to information disclosed or used by
any party (the "DISCLOSING PARTY") with respect to any other party hereto (the
"SUBJECT PARTY") that (i) is or becomes generally available to the public other
than as a result of a disclosure by the Disclosing Party, (ii) was available to
the Disclosing Party on a nonconfidential basis prior to the disclosure by the
Subject Party or (iii) becomes available to the Disclosing Party on a
nonconfidential basis from a person or entity (other than the Subject Party)
which is not otherwise bound by a confidentiality agreement with the Subject
Party.
(b) Unless otherwise required by law, none of the parties hereto
shall, without the prior written consent of the other parties hereto, disclose
to any person or entity (other than those actively and directly participating in
the transactions contemplated by this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger and the Merger Agreement) the terms,
conditions or acts relating to the transactions contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger and the
Merger Agreement (including the fact that discussions are taking place with
respect to such transactions or the status thereof), or the fact that
confidential information has been made available thereto. In the event that any
of the parties hereto is required by law to make any disclosure otherwise
prohibited under this SECTION
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11.1(b), such party shall provide to the other parties hereto advance written
notice of such required disclosure (including with such advance written notice
the text of such required disclosure) at least two business days prior to such
required disclosure.
11.2 EXPENSES. Notwithstanding SECTION 2.1(b), each of AHS and Maxum
shall reimburse to GE Medical an amount equal to 40 percent of the legal costs
incurred by GE Medical in connection with the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
and the Merger Agreement from and after July 1, 1995. Such payments shall be
made by AHS and Maxum within 30 days of the receipt by AHS or Maxum, as the case
may be, of GE Medical's invoice with respect to such legal costs, whether or not
such transactions are consummated.
11.3 FURTHER ASSURANCES. Each party hereto shall execute and deliver
such instruments and take such other actions as the other parties hereto may
reasonably require in order to carry out the transactions contemplated by this
Agreement.
ARTICLE 12
SURVIVAL AND INDEMNIFICATION
12.1 SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement or in any document delivered pursuant
hereto shall be deemed to be material and to have been relied upon by the
parties hereto and shall survive the Closing and shall be fully effective and
enforceable for a period of two years following the Closing Date (unless a
different period is specifically assigned thereto), but shall thereafter be of
no further force or effect, except as they relate to claims for indemnification
timely made pursuant to this ARTICLE 12. The representations and warranties set
forth in this Agreement shall not be affected by any investigation, verification
or examination by any party hereto or by any person or entity on behalf of any
such party except as specifically set forth in an Exhibit, Schedule or document
delivered pursuant to this Agreement.
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The indemnification provisions set forth in this Agreement are nonexclusive and
shall not affect any other remedy which may be available under common law or
otherwise.
12.2 INDEMNIFICATION BY AHS. AHS shall indemnify and hold harmless GE
Medical from and against any and all loss, damage, expense, claim, liability or
obligation, including court costs, reasonable attorneys' fees and other expenses
for investigating or defending any actions or threatened actions (collectively,
"LOSSES"), related to, caused by or arising from any misrepresentation, breach
of warranty or failure to fulfill any covenant or agreement of AHS contained
herein, together with interest thereon at a floating interest rate (equal at all
times to the rate of interest published by the Wall Street Journal from time to
time as the "prime rate" (the "ANNOUNCED RATE")) from the date upon which such
loss, damage, expense or liability was incurred to the date of payment (but in
no event higher than the highest rate then permissible under law); provided,
however, that nothing herein shall be construed to entitle GE Medical as
indemnitee under this Section to recover interest on Losses, in excess of the
interest that would be payable if the Announced Rate is applied to Losses
(exclusive of any interest component thereof) from the date such Losses were
incurred until the date that such Losses are paid to GE Medical.
12.3 INDEMNIFICATION BY MAXUM. Maxum shall indemnify and hold harmless
GE Medical from and against any and all Losses related to, caused by or arising
from any misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement of Maxum contained herein, together with interest thereon
at the Announced Rate, subject to the limitation on payment of interest set
forth in the proviso to SECTION 12.2.
12.4 INDEMNIFICATION BY THE INSIGHT PARTIES. The InSight Parties shall,
jointly and severally, indemnify and hold harmless GE Medical from and against
any and all Losses related to, caused by or arising from any misrepresentation,
breach of warranty or failure to fulfill any covenant or agreement of the
InSight Parties contained herein, together with interest thereon at the
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Announced Rate, (subject to the limitation on payment of interest set forth in
the proviso to SECTION 12.2).
12.5 NOTICE. Any party seeking indemnification pursuant to this ARTICLE
12 (an "INDEMNIFIED PARTY") shall give prompt written notice to the indemnifying
party (the "INDEMNIFYING PARTY") of the facts and circumstances giving rise to
the claim (the "NOTICE"). Any claim for indemnification asserted in writing
before the second anniversary of the Closing Date shall survive until resolved
or judicially determined. Upon receipt of the Notice, the Indemnifying Party
receiving the Notice shall have the option to protest any claim or demand
referred to in the Notice, at the Indemnifying Party's own cost and expense. In
addition, each Indemnified Party may also participate at such party's expense in
such contest or defense. Such option shall be exercised by the giving of notice
by the Indemnifying Party to each Indemnified Party within 30 calendar days of
receipt of the Notice. Any claim for indemnification which is not protested by
the 30th day following receipt of notice thereof shall be deemed valid and shall
be due and payable in full on the 31st day following such receipt.
ARTICLE 13
TERMINATION
13.1 TERMINATION. This Agreement may be terminated at any time prior to
the consummation of the Merger, and the transactions related thereto:
(a) by mutual consent of GE Medical and the InSight Parties;
(b) by either GE Medical or the InSight Parties if the Merger
shall not have been consummated on or before September 30, 1996 despite
the good faith effort of such party to effect such consummation (unless
the failure to so consummate the Merger by such date shall be due to the
breach of this Agreement or the Merger Agreement by the party seeking to
terminate this Agreement);
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(c) by GE Medical if (i)(A) there are inaccuracies in the
representations and warranties of any of the InSight Parties that would
have a Material Adverse Effect on any of the InSight Parties, (B) there
has been a material breach on the part of any of the InSight Parties in
the covenants of such InSight Party set forth herein, or any failure on
the part of any of the InSight Parties to comply with its material
obligations hereunder, or any other events or circumstances shall have
occurred, such that, in any such case, any of the InSight Parties could
not satisfy, on or prior to September 30, 1996, any of the conditions to
the Closing set forth herein or (ii) AHS and Maxum shall not have received
the approval by the requisite votes cast by the stockholders of AHS and
Maxum, respectively, with respect to the Merger or any other transaction
contemplated in connection therewith or herewith;
(d) by the InSight Parties if (i)(A) there are inaccuracies in the
representations and warranties of GE Medical having a Material Adverse
Effect on its ability to consummate the transaction contemplated hereby or
(B) there has been any failure on the part of GE Medical to comply with
its material obligations hereunder, or any other events or circumstances
shall have occurred, such that, in any such case, GE Medical could not
satisfy on or prior to September 30, 1996, any of the conditions to the
Closing set forth in Article 7 of this Agreement, (ii) AHS and Maxum shall
not have received the approval by the requisite votes cast by the
stockholders of AHS and Maxum, respectively, with respect to the Merger,
or (iii) prior to the approval of the Merger by the stockholders of AHS
and Maxum, (A) either AHS or Maxum receives a firm offer with respect to
any transaction (other than the Merger) involving any disposition or other
change of ownership of its stock or material assets (an "ACQUISITION
TRANSACTION") that is reasonably capable of being financed, (B) in the
good faith determination of its Board of Directors after consultation with
its financial advisors, such Acquisition Transaction is financially
superior to
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the Merger and (C) its Board of Directors, after consulting with its
outside legal counsel, determines in good faith that to proceed with the
Merger would violate its fiduciary duties under applicable law.
13.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either the InSight Parties or GE Medical as provided in SECTION
13.1, this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of GE Medical or the InSight Parties or their
respective officers or directors (other than as provided in SECTION 11.2 and
except for breach of the confidentiality provisions of SECTION 11.1, and except
to the extent that such termination results from the breach by a party hereto of
any of its representations, warranties, covenants or agreements set forth in
this Agreement).
ARTICLE 14
GENERAL
14.1 EXPENSES. Except as otherwise provided in SECTION 11.2, each party
to this Agreement shall pay its own costs and expenses in connection with the
transactions contemplated hereby.
14.2 AMENDMENT. This Agreement cannot be altered, amended, or modified,
in any respect, except by a writing duly executed by all of the parties hereto.
14.3 ENTIRE AGREEMENT. This Agreement is the entire agreement between
the parties with respect to the subject matter hereof and all prior agreements,
understandings, oral agreements and writings are expressly superseded hereby.
14.4 SEVERABILITY. The provisions of this Agreement are severable. If a
court of competent jurisdiction rules that any provision of this Agreement is
invalid or unenforceable, the court's ruling will not effect the validity and
enforceability of the other provisions of this Agreement.
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14.5 CONSTRUCTION. The parties agree that this Agreement shall be
construed without regard to the draftsman thereof and shall be construed as
though all parties to this Agreement equally participated in its drafting so as
to fairly accomplish the purpose and intentions of the parties hereto and shall
not be construed for or against any party. Each of the parties acknowledges that
it has been represented by legal counsel of its own choice in connection with
the preparation, review and execution of this Agreement, and that this Agreement
has been executed by the parties with the consent of and on advice of such
counsel.
14.6 ATTORNEYS' FEES. In the event any party brings an action to
enforce any of the provisions of this Agreement or the rights of the parties
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs.
14.7 STRICT PERFORMANCE. The failure of any party to this Agreement to
insist upon strict performance of any of the terms or conditions of this
Agreement, or to exercise any right or remedy, shall not be construed as waiving
subsequent strict performance of any such terms, covenants, conditions, or any
such rights or remedies.
14.8 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the internal laws
of the State of Delaware, without giving effect to principles of conflicts of
laws.
14.9 INTERPRETATION. Whenever used in this Agreement, the word "PERSON"
includes, without any limitation, natural persons, corporations, partnerships,
associations, organizations, joint ventures, government entities, and any and
every other entity. The title of the various paragraphs in this Agreement are
intended solely for convenience of reference, and are not intended and shall not
be deemed for any purpose whatsoever to modify, explain or place any
construction upon any of the provisions of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
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14.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and assigns, as applicable. Notwithstanding the forgoing, this Agreement may not
be assigned by AHS, Maxum or InSight without the prior written consent of GE
Medical.
14.11 INJUNCTIVE RELIEF. InSight acknowledges that GE Medical would be
irreparably harmed in the event of any breach or violation by InSight of any of
the terms of this Agreement and that remedies at law would be inadequate. In the
event of any breach or threatened breach of such terms, GE Medical shall be
entitled to obtain, without posting bond, a temporary restraining order and
temporary and permanent injunctive relief restraining and enjoining any such
breach or threatened breach. The remedies provided for in this SECTION 14.11
shall be in addition to any and all other rights and remedies that may be
available to GE Medical at law, in equity and under this Agreement, all of which
are expressly reserved.
14.12 ATTORNEYS' FEES. In the event any party brings an action to
enforce any of the provisions of this Agreement or the rights of the parties
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs.
14.13 ARBITRATION. Any dispute arising out of, relating to or in
connection with this Agreement shall be resolved by binding arbitration. The
arbitration shall consist of a panel of three arbitrators from the JAMS panel of
retired judges and shall take place in Milwaukee, Wisconsin, at a place
designated by the parties (or, failing agreement, by the arbitrators) and shall
commence as soon as practicable on a date mutually agreed upon by counsel for
the parties (or the party if a party does not have counsel) and the arbitrators.
The arbitration proceeding shall be conducted confidentially and the parties
shall take the necessary actions to assure the confidentiality of the
arbitration proceeding. The arbitration proceeding shall be in accordance with
the then-current rules for arbitration established by JAMS, insofar as such
rules are not inconsistent with the
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provisions of this Agreement. The party desiring to institute arbitration shall
serve written notice to the other party (with copies to all parties to this
Agreement). InSight shall name one arbitrator and GE Medical shall name a second
arbitrator and the two arbitrators so named shall name a third arbitrator. The
names of the two arbitrators named by GE Medical and InSight shall be submitted
within 45 days of the notice instituting arbitration. When such arbitrators have
chosen the third arbitrator, such three arbitrators shall proceed with the
arbitration. The prevailing party in any such arbitration proceeding (or legal
or equitable action instituted as authorized elsewhere in this Agreement) shall
be entitled to an award of attorneys' fees and costs in addition to any other
relief awarded. Any award rendered in such an arbitration proceeding shall be
final and binding on the parties and may be entered in any court having
jurisdiction over the parties and/or the subject matter thereof. The arbitrators
shall have no jurisdiction or authority to add to, detract from, or alter in any
way the provisions of this Agreement, but shall limit their considerations and
decision to the interpretation and application of this Agreement to the subject
matter presented to them. Nothing contained in this SECTION 14.13 shall restrict
GE Medical's right to institute and prosecute any legal or equitable action in
court for temporary restraining orders and temporary and permanent injunctive
relief or otherwise as deemed appropriate by GE Medical.
14.14 NOTICES. All notices or demands by any party relating to this
Agreement shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or by
telefacsimile, or telegram to the parties at their addresses set forth below:
If to AHS
or InSight: American Health Services Corp.
0000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
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with a
copy to: Xxxxxx X. Xxxxxx, Esq.
c/o American Health Services Corp.
0000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
If to Maxum
or InSight: Maxum Health Corp.
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxx
Fax No.: (000) 000-0000
with a
copy to: Storey Xxxxxxxxx Xxxxxx & Xxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
If to GE
Medical: General Electric Company
00000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
with a
copy to: XxXxxxxxx, Will & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
parties. All notices or demands sent in accordance with this paragraph, shall be
deemed to have been duly given (a) on the date of service if served personally
on the party to whom notice is to be given or if transmitted via telefacsimile
or (b) three (3) calendar days if mailed to the party to whom
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notice is to be given by first class or air mail, postage prepaid.
14.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have entered into and executed
this Preferred Stock Acquisition Agreement as of the date indicated above.
AMERICAN HEALTH SERVICES CORP.
By: _____________________________
Title: _____________________________
MAXUM HEALTH CORP.
By: _____________________________
Title: _____________________________
INSIGHT HEALTH SERVICES CORP.
By: _____________________________
Title: _____________________________
GENERAL ELECTRIC COMPANY
By: _____________________________
Title: _____________________________
