SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): JULY 11, 1996
HEICO CORPORATION
(Exact name of registrant as specified in charter)
FLORIDA 1-4604 65-0341002
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
(Address of principal executive offices)
Registrant's telephone number, including area code: (954) 987-6101
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 11, 1996, HEICO Corporation, a Florida corporation (the
"Registrant"), consummated the sale of all of the outstanding capital stock of
its wholly-owned subsidiary MediTek Health Corporation, a Florida corporation
("MediTek"), to U.S. Diagnostic Labs Inc., a Delaware corporation ("USDL"),
pursuant to a Stock Purchase Agreement, dated June 20, 1996 (the "Stock Purchase
Agreement"), among the Registrant, MediTek and USDL. In consideration of the
sale of such MediTek capital stock, USDL paid the Registrant $13,828,179 in cash
and issued the Registrant a five-year, 6-1/2% promissory note (the "Convertible
Note") in the principal amount of $10,000,000, which is convertible into
1,081,081 shares of USDL common stock (by virtue of a negotiated $9.25 per share
conversion price). The closing price per share of USDL common stock as reported
by NASDAQ on July 10, 1996 and July 19, 1996 was $11.25 and $10.625,
respectively.
In order to assure the Registrant liquidity with respect to the
Convertible Note and the USDL common stock into which it is convertible, USDL
(i) granted the Registrant demand and piggy-back registration rights with
respect to such shares of USDL common stock, and (ii) agreed to prepay the
Convertible Note at the Registrant's request at any time until such registration
is completed. The terms of such demand registration rights require USDL to use
its best efforts to cause a registration statement covering all of the USDL
common stock into which the Convertible Note is convertible to be declared
effective by the SEC by January 1, 1997. The terms of such piggy-back
registration rights give the Registrant rights to include such USDL common stock
in certain registration statements filed by USDL from January 1, 1997 until
January 1, 2000. Upon 15 days' prior written notice to the Registrant, USDL may
require the Registrant to convert the Convertible Note into USDL common stock at
any time beginning on the later of June 30, 1997 or the date that such shares of
USDL common stock have been registered, if the closing price of the USDL common
stock has averaged at least $9.25 per share for the immediately preceding ten
trading days. Also, beginning on June 30, 1997, USDL may prepay the Convertible
Note at any time upon 60 days' prior written notice.
The Stock Purchase Agreement also provides for Laurans A. Mendelson, the
Chairman of the Board, Chief Executive Officer and President of the Registrant,
to become a member of USDL's Board of Directors. Joseph A. Paul, the Executive
Vice President of MediTek, was appointed President of USDL, effective as of the
consummation of this transaction.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Pro forma financial information.
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The following unaudited pro forma consolidated condensed financial information
is furnished in accordance with Article 11 of Regulation S-X:
Introductory note to unaudited pro forma consolidated condensed financial
statements (page 6).
Unaudited pro forma consolidated condensed balance sheet as of April 30,
1996 (page 7).
Unaudited pro forma consolidated condensed statement of operations for the
six months ended April 30, 1996 (page 8).
Unaudited pro forma consolidated condensed statement of operations for the
year ended October 31, 1995 (page 9).
(c) Exhibits
2 Stock Purchase Agreement, dated June 20, 1996, by and among HEICO
Corporation, MediTek Health Corporation and U.S. Diagnostic Labs
Inc.
99.1 Press Release of HEICO Corporation, dated June 17, 1996.
99.2 Press Release of HEICO Corporation, dated July 11, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
HEICO CORPORATION
By: /s/ THOMAS S. IRWIN
---------------------------------
Name: Thomas S. Irwin
Title: Executive Vice President and
Chief Financial Officer
July 26, 1996
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FINANCIAL STATEMENT INDEX
Introductory note to unaudited pro forma consolidated condensed financial
statements (page 6).
Unaudited pro forma consolidated condensed balance sheet as of April 30, 1996
(page 7).
Unaudited pro forma consolidated condensed statement of operations for the six
months ended April 30, 1996 (page 8).
Unaudited pro forma consolidated condensed statement of operations for the year
ended October 31, 1995 (page 9).
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HEICO CORPORATION AND SUBSIDIARIES
INTRODUCTORY NOTE TO UNAUDITED
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed balance sheet and
statements of operations utilize the historical financial condition and results
of operations of HEICO Corporation and subsidiaries as of April 30, 1996 and for
the six months then ended and for the year ended October 31, 1995. The unaudited
pro forma consolidated condensed financial statements have been prepared on the
basis summarized below:
/bullet/ The unaudited pro forma consolidated condensed balance sheet as of
April 30, 1996 assumes that the Company's sale of all of the
outstanding capital stock of its wholly-owned subsidiary MediTek
Health Corporation had been consummated as of that date.
/bullet/ The unaudited pro forma consolidated condensed statement of
operations for the six months ended April 30, 1996 assumes that the
Company's sale of all of the outstanding capital stock of its
wholly-owned subsidiary MediTek Health Corporation had been
consummated as of the beginning of the six-month period ended April
30, 1996.
/bullet/ The unaudited pro forma consolidated condensed statements of
operations for the year ended October 31, 1995 assumes that the
Company's sale of all of the outstanding capital stock of its
wholly-owned subsidiary MediTek Health Corporation had been
consummated as of the beginning of the year ended October 31, 1995.
The unaudited pro forma consolidated condensed statements of operations are not
necessarily indicative of actual operating results had the sale been made at the
beginning of the periods presented or of future results of operations.
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
as of April 30, 1996
(unaudited)
HEICO MEDITEK
CORPORATION HEALTH PRO FORMA PRO FORMA
AS REPORTED(1) CORPORATION(2) ADJUSTMENTS AS ADJUSTED
-------------- -------------- ----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $9,117,000 ($713,000) $12,228,000(7) $20,632,000
Accounts receivable, net 7,317,000 (2,216,000) 5,101,000
Inventories 6,202,000 -- 6,202,000
Prepaid expenses and other
current assets 1,408,000 (677,000) 731,000
Deferred income taxes 2,065,000 (329,000) 1,736,000
----------- ------------ ----------- -----------
Total current assets 26,109,000 (3,935,000) 12,228,000 34,402,000
Note receivable from
U.S. Diagnostic Labs -- -- 10,000,000(8) 10,000,000
Property, plant and
equipment, net 8,960,000 (4,669,000) 4,291,000
Intangible assets, net 13,057,000 (11,144,000) 1,913,000
Investments in and advances to
unconsolidated partnerships 2,312,000 (2,312,000) --
Other assets 1,245,000 (278,000) 967,000
----------- ------------ ----------- -----------
Total assets $51,683,000 ($22,338,000) $22,228,000 $51,573,000
=========== ============ =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current maturities of
long-term debt and
capital leases $ 1,236,000 ($780,000) $456,000
Trade accounts payable 2,224,000 (654,000) 1,570,000
Accrued expenses and other
current liabilities 4,868,000 (920,000) 3,948,000
Income taxes payable 943,000 -- $1,178,000(9) 2,121,000
----------- ----------- ----------- -----------
Total current liabilities 9,271,000 (2,354,000) 1,178,000 8,095,000
Long-term debt and capital
leases, net of current
maturities 5,966,000 (3,359,000) 2,607,000
Deferred income taxes 1,697,000 (565,000) 1,132,000
Other non-current liabilities 1,102,000 -- 1,102,000
----------- ----------- ----------- -----------
Total liabilities 18,036,000 (6,278,000) 1,178,000 12,936,000
----------- ----------- ----------- -----------
Minority interests 119,000 (119,000) --
----------- ----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, none issued
Common stock 43,000 -- 43,000
Capital in excess of par 9,672,000 -- 9,672,000
Investment in and advances to
MediTek by HEICO -- (15,941,000) 15,941,000(10) --
Retained earnings 27,152,000 -- 5,109,000(11) 32,261,000
----------- ----------- ----------- -----------
36,867,000 (15,941,000) 21,050,000 41,976,000
Less: Note receivable from
employee savings and
investment plan (3,339,000) -- -- (3,339,000)
----------- ------------ ----------- -----------
Total shareholders' equity 33,528,000 (15,941,000) 21,050,000 38,637,000
----------- ------------ ----------- -----------
Total liabilities and
shareholders' equity $51,683,000 ($22,338,000) $22,228,000 $51,573,000
=========== ============ =========== ===========
See accompanying notes to unaudited pro forma consolidated financial statements
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the six months ended April 30, 1996
(unaudited)
HEICO MEDITEK
CORPORATION HEALTH PRO FORMA PRO FORMA
AS REPORTED(3) CORPORATION(4) ADJUSTMENTS AS ADJUSTED
-------------- -------------- ----------- -----------
Net sales $23,260,000 ($8,340,000) $14,920,000
----------- ----------- -----------
Operating costs and expenses:
Cost of products and services 16,033,000 (6,151,000) 9,882,000
Selling, general and
administrative expenses 4,441,000 (989,000) 3,452,000
Equity in (income) of
unconsolidated partnerships (341,000) 341,000 0
----------- ----------- -----------
Total operating costs
and expenses 20,133,000 (6,799,000) 13,334,000
----------- ----------- -----------
Income from operations 3,127,000 (1,541,000) 1,586,000
Interest expense (147,000) 60,000 (87,000)
Interest and other income 372,000 (14,000) $288,000(12) 971,000
325,000(13)
Minority interests in
consolidated partnerships (228,000) 228,000 0
----------- ----------- ---------- -----------
Income from continuing
operations before
income taxes 3,124,000 (1,267,000) 613,000 2,470,000
Income tax expenses 1,172,000 (516,000) 153,000(14) 809,000
----------- ----------- ---------- -----------
Net income from continuing
operations 1,952,000 (751,000) 460,000 1,661,000
Gain on sale of health care
services segment,
net of applicable income
taxes -- -- 5,109,000(15) 5,109,000
----------- ----------- ---------- -----------
Net income $ 1,952,000 ($751,000) $5,569,000 $ 6,770,000
=========== =========== ========== ===========
Net income per share from
continuing operations $0.38 $0.32
=========== ===========
Net income per share $0.38 $1.30
=========== ===========
Weighted average number of
common and common
equivalent shares
outstanding(16) 5,189,664 5,189,664
=========== ===========
See accompanying notes to unaudited pro forma consolidated financial statements
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the year ended October 31, 1995
(unaudited)
HEICO MEDITEK
CORPORATION HEALTH PRO FORMA PRO FORMA
AS REPORTED(5) CORPORATION(6) ADJUSTMENTS AS ADJUSTED
-------------- -------------- ----------- -----------
Net sales $40,379,000 ($14,766,000) $25,613,000
----------- ------------ -----------
Operating costs and expenses:
Cost of products and services 27,875,000 (10,378,000) 17,497,000
Selling, general and
administrative expenses 7,967,000 (1,562,000) 6,405,000
Equity in loss of
unconsolidated partnerships 331,000 (331,000) 0
----------- ------------ -----------
Total operating costs
and expenses 36,173,000 (12,271,000) 23,902,000
----------- ------------ -----------
Income from operations 4,206,000 (2,495,000) 1,711,000
Interest expense (375,000) 206,000 (169,000)
Interest and other income 673,000 (7,000) $530,000(12) 1,846,000
650,000(13)
Minority interests in
consolidated partnerships (144,000) 144,000 0
----------- ------------ ---------- -----------
Income from continuing
operations before
income taxes 4,360,000 (2,152,000) 1,180,000 3,388,000
Income tax expenses 1,665,000 (894,000) 412,000(14) 1,183,000
----------- ------------ ---------- -----------
Net income from
continuing operations 2,695,000 (1,258,000) 768,000 2,205,000
Gain on sale of health care
services segment,
net of applicable
income taxes -- -- 5,109,000(15) 5,109,000
----------- ------------ ---------- -----------
Net income $ 2,695,000 ($1,258,000) $5,877,000 $ 7,314,000
=========== ============ ========== ===========
Net income per share from
continuing operations $0.56 $0.46
=========== ===========
Net income per share $0.56 $1.52
=========== ===========
Weighted average number
of common and common
equivalent shares
outstanding(17) 4,820,336 4,820,336
=========== ===========
See accompanying notes to unaudited pro forma consolidated financial statements
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HEICO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. As disclosed in the Company's Quarterly Report on Form 10-Q as of April
30, 1996.
2. Represents MediTek Health Corporation's consolidated condensed balance
sheet as of April 30, 1996.
3. As disclosed in the Company's Quarterly Report on Form 10-Q for the six
months ended April 30, 1996.
4. Represents MediTek Health Corporation's consolidated condensed statement
of operations for the six months ended April 30, 1996.
5. As disclosed in the Company's Annual Report on Form 10-K for the year
ended October 31, 1995.
6. Represents MediTek Health Corporation's consolidated condensed statement
of operations for the year ended October 31, 1995.
The pro forma adjustments give effect to:
7. $13,828,000 cash proceeds from the sale of MediTek, less an estimated $1.6
million in expenses pertaining to the sale.
8. A $10 million, 6.50% convertible note receivable from the purchaser as
additional sale proceeds.
9. Increase in Federal and state income taxes payable on the gain on sale of
MediTek after utilizing a $4.6 million Federal capital loss carryforward.
10. Elimination of investment in and advances to MediTek by HEICO.
11. Gain on sale of MediTek, after applicable Federal and state income taxes,
as if consummated as of April 30, 1996.
12. Investment income for the period from the $11.1 million sale proceeds, net
of income taxes (see item 7 above).
13. 6.50% interest from the note receivable from the purchaser (see item 8
above).
14. Additional income tax expense after elimination of MediTek and giving
effect to the pro forma adjustments.
15. Gain on sale of MediTek, net of applicable Federal and state income taxes,
as if consummated as of April 30, 1996.
16. Weighted average number of common and common equivalent shares outstanding
have been adjusted from the originally reported amount to reflect a 10%
stock dividend payable July 26, 1996.
17. Weighted average number of common and common equivalent shares outstanding
have been adjusted from the originally reported amount to reflect a
three-for-two stock split paid in April 1996 and a 10% stock dividend
payable July 26, 1996.
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
2 Stock Purchase Agreement, dated June 20, 1996,
by and among HEICO Corporation, MediTek Health
Corporation and U.S. Diagnostic Labs Inc.
99.1 Press Release of HEICO Corporation, dated
June 17, 1996.
99.2 Press Release of HEICO Corporation, dated
July 11, 1996.
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EXHIBIT 2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 20, 1996, by and among
MEDITEK HEALTH CORPORATION, a Florida corporation, ("MediTek"), HEICO
CORPORATION, a Florida corporation and the stockholder of MediTek
("Stockholder"), and U.S. DIAGNOSTIC LABS INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
WHEREAS, MediTek is engaged in the business of operating diagnostic
imaging centers and radiology practice management (the "Business") in New
Jersey, Florida, Georgia and Alabama; and
WHEREAS, USDL is engaged, in part, in the business of acquiring, owning
and operating diagnostic imaging centers and desires to purchase all of the
outstanding capital stock of MediTek owned by Stockholder ("MediTek Stock"); and
WHEREAS, on the terms and conditions hereinafter set forth, Stockholder
desires to sell and Purchaser desires to purchase the MediTek Stock (the
"Acquisition");
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF MEDITEK STOCK
1.01. AGREEMENT TO PURCHASE. At the Closing, Purchaser shall purchase
the MediTek Stock from Stockholder, upon and subject to the terms and
conditions of this Agreement, in exchange for the Purchase Price (as defined in
Section 1.02 hereof).
1.02. PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties and agreements of the
Stockholder and MediTek contained herein, and in full and complete consideration
of the sale, assignment, transfer and delivery of the MediTek Stock, the
purchase price (the "Purchase Price") for the MediTek Stock shall be payable at
the Closing as follows:
(a) cash in the amount of $13,000,000 payable by wire transfer of
immediately available funds (the "Payment"); and
(b) a convertible note, in the principal amount of $10,000,000 (the
"Note") in the form attached hereto as Exhibit "A". The principal of the Note
will be due and payable on the fifth anniversary of the Closing Date. The Note
will bear interest at a rate of 6 1/2% and shall be payable quarterly. The Note
shall be convertible at the option of Stockholder into Common Stock of Purchaser
("USDL Common Stock") at any time for the duration of the term of the Note. The
Note can be redeemed by Purchaser at any time after the first year. The number
of shares of USDL Common Stock to be issued upon
conversion of the Note shall be calculated using the average "bid" price of such
common stock on the Nasdaq National Market for the period commencing on April
30, 1996 to (i) the first public disclosure of either a preliminary or a
definitive acquisition agreement between Purchaser and Stockholder or (ii) the
date of closing, whichever average share price shall be lower, provided that the
price used for such calculation shall be no lower than $7.25 and no higher than
$9.25 notwithstanding the actual price. The USDL Common Stock shall be subject
to the Registration and Sale Rights Agreement substantially in the form of
Exhibit "B" hereto (the "Registration Agreement").
1.03. CLOSING. The Closing of the transactions contemplated by
this Agreement will take place at the offices of the Company, 777 S. Flagler
Drive, West Palm Beach, Florida 3340 on July 1, 1996 at 10:00 A.M., or at such
other place, date and time as the parties may agree in writing. The Closing
shall be effective as 12:01 A.M. on July 1, 1996. The date of the Closing is
herein referred to as the "Closing Date."
1.04. FURTHER ASSURANCES. After the Closing, the Stockholder shall
from time to time, at the request of Purchaser and without further cost or
expense to Stockholder, execute and deliver such other instruments of conveyance
and transfer and take such other actions as Purchaser may reasonably request, in
order to more effectively consummate the transaction contemplated hereby and to
vest in Purchaser good and marketable title to the MediTek Stock being
transferred hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MEDITEK AND STOCKHOLDER
Each of MediTek and the Stockholder, hereby represents, covenants and
warrants to Purchaser as follows:
2.01. ORGANIZATION; GOOD STANDING. MediTek is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has full corporate power and authority to carry on its business as
it is now being conducted and to own the properties and assets it now owns. The
copies of the charter documents of MediTek attached hereto as Schedule 2.01 are
complete and correct copies of such instruments as presently in effect.
2.02. CAPITALIZATION; SUBSIDIARIES. (a) The authorized capital stock of
MediTek consists of 10,000 shares of common stock, $.01 par value, of which 800
shares are outstanding. All issued and outstanding shares of capital stock of
MediTek are duly and validly authorized, issued, fully paid and nonassessable.
There are no outstanding (a) securities convertible into or exchangeable for
MediTek's capital stock; (b) options, warrants or other rights to purchase or
subscribe to capital stock of MediTek or securities convertible into or
exchangeable for capital stock of MediTek; or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any capital stock of the MediTek, any such convertible or exchangeable
securities or any such options, warrants or rights. The Stockholder owns the
MediTek Stock free and clear of all liens, security interests and encumbrances
and upon delivery of the certificates in accordance with this Agreement,
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Purchaser will receive good and marketable title to the MediTek Stock, free and
clear of all security interests, liens and encumbrances.
(b) MediTek does not own any capital stock or other equity securities
of any corporation, partnership, or other entity or any rights to acquire any
equity or ownership interest in any business other than the companies listed on
Schedule 2.02 (the "Subsidiaries").
2.03. AUTHORIZATION, ETC. MediTek has full corporate power and
authority, and Stockholder has full power and authority, to enter into this
Agreement and the Registration Agreement and to carry out the transactions
contemplated hereby. MediTek has taken all action required by law, its charter
documents, or otherwise to be taken by it to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, and this Agreement is a valid and binding agreement of MediTek and
Stockholder enforceable in accordance with its terms.
2.04. NO VIOLATION. Subject to obtaining the consents and waivers
described in Schedule 2.04 and the satisfaction of the repayment and payment
obligations set forth therein (which shall be completed on or prior to the
Closing Date), neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any provision
of the charter documents of MediTek, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the maturity of any debt
or obligation pursuant to, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
MediTek or Stockholder under, any agreement or commitment to which MediTek or
Stockholder is party or by which MediTek or Stockholder is bound, or to which
the property of MediTek or Stockholder is subject, or violate any statute or law
of any judgment, decree, order, regulation or rule of any court or governmental
authority.
2.05. FINANCIAL STATEMENTS. At least two business days prior to the
Closing, Stockholder will deliver to Purchaser audited consolidated financial
statements of MediTek as of and for the fiscal year ended October 31, 1995 and
audited consolidated balance sheet, as of April 30, 1996 (the "Financial
Statements"). Stockholder shall deliver a draft of the Financial Statements to
Purchaser at least five business days prior to the Closing. Such Financial
Statements and the notes thereto will be true, complete and accurate and fairly
present the assets, liabilities, financial condition and results of operations
of MediTek as at the respective dates thereof, all in accordance with generally
accepted accounting principles ("GAAP") consistently applied throughout the
periods involved. The revenues, net income and cash flow set forth in the
Financial Statements will not differ in any material respect from those
delivered by Stockholder to Purchaser prior to the date of this Agreement.
2.06. NO UNDISCLOSED LIABILITIES; ETC. MediTek has no liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) which
were not fully reflected or reserved against in the Financial Statements as of
April 30, 1996 in accordance with GAAP, except for liabilities and obligations
disclosed on any of the Schedules to this Agreement and incurred in the
ordinary course of business and consistent with past practice since the date
thereof; and the reserves reflected in such Financial Statements are
appropriate and reasonable in accordance with GAAP.
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2.07. ACCOUNTS RECEIVABLE. All accounts receivable of MediTek, whether
reflected in the Financial Statements or otherwise, represent revenues actually
made in the ordinary course of business. The reserves for doubtful accounts
shown on the Financial Statements were calculated in accordance with GAAP,
consistent with past practice.
2.08. ABSENCE OF CERTAIN CHANGES. Except as and to the extent set
forth in Schedule 2.08, since April 30, 1996, neither MediTek nor any Subsidiary
has taken or agreed to take any of the following actions:
(a) Suffered any material adverse change in its working capital,
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects;
(b) Incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise) except non-material items incurred in the ordinary
course of business and consistent with past practice, none of which exceeds
$100,000 (counting obligations or liabilities arising from one transaction or a
series of similar transactions, and all periodic installments or payments under
any lease or other agreement providing for periodic installments or payments, as
a single obligation or liability), or increased, or experienced any change in
any assumptions underlying or methods of calculating, any bad debt, contingency
or other reserves;
(c) Paid, discharged or satisfied any claim, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice or liabilities and obligations reflected or reserved against in the
April 30, 1996 Financial Statements or incurred in the ordinary course of
business and consistent with past practice since April 30, 1996;
(d) Permitted or allowed any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, except for
liens for current taxes not yet due;
(e) Become aware of any fact or event which materially adversely
affects or may in the future materially adversely affect the financial
condition, results of operations, business, properties, assets, liabilities, or
future prospects of MediTek;
(f) Cancelled any debts or waived any claims or rights of substantial
value;
(g) Sold, transferred, or otherwise disposed of any of its properties
or assets (real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practice;
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(h) Granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee except in the ordinary course of
business and consistent with past practice;
(i) Declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any capital stock or other securities of
MediTek;
(j) Made any material change in any method of accounting or accounting
practice; or
(k) Paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of its
officers or directors or any affiliate or associate of any of its officers or
directors.
2.09. LITIGATION. Except as set forth in Schedule 2.09, there is no
pending or, to the knowledge of MediTek or Stockholder, threatened action, suit,
inquiry, proceeding or investigation by or before any court or governmental or
other regulatory or administrative agency or commission pending or threatened
against or involving MediTek or any Subsidiary, or which questions or challenges
the validity of this Agreement or any action taken or to be taken by MediTek or
Stockholder pursuant to this Agreement or in connection with the transactions
contemplated hereby; nor is there any valid basis for any such action,
proceeding or investigation. To the best knowledge of MediTek and Stockholder,
MediTek is not in default under or in violation of, nor is there any valid basis
for any claim of default under or violation of, any contract, commitment or
restriction to which it is a party or by which it is bound. Neither MediTek nor
any Subsidiary is in violation of, or in default with respect to, any law, rule,
regulations, order, judgment, or decree; nor is MediTek or any Subsidiary
required to take any action in order to avoid such violation or default. Neither
MediTek nor any Subsidiary is subject to any judgment, order or decree entered
in any lawsuit or proceeding which may have an adverse effect on its business
practices or on its ability to acquire any property or conduct its business in
any area. References in this Agreement to the phrase "to the best of
Stockholder's or MediTek's knowledge" or to the "knowledge of stockholder or
MediTek", or words of similar import, mean the actual (as opposed to imputed or
constructive) knowledge of the executive officers of Stockholder or MediTek, as
the case may be, and not to the knowledge of any other employee or agent of such
party.
2.10. TITLE TO PROPERTIES; ENCUMBRANCES. MediTek has good, valid and
marketable title to all the properties and assets which it purports to own
(real, personal and mixed, tangible and intangible) (except such properties and
assets as are held pursuant to leases or licenses described in Schedule 2.10),
free and clear of all liens, mortgages, security interests, pledges, charges and
encumbrances ("Encumbrances") (except as may be described in such Schedule 2.10
or in any other schedule to this Agreement or disclosed in the Financial
Statements).
2.11. CONTRACTS AND COMMITMENTS. Schedule 2.11 contains a true,
complete and accurate list of all material contracts, agreements instruments,
leases, licenses, arrangements, or understandings (whether written or oral) to
which MediTek or a Subsidiary is a party or by which any of its assets or
properties are bound. MediTek has furnished to the Purchaser (a) true and
correct copies of all contracts, agreements and instruments referred to in
Schedule 2.11; (b) true and correct copies of all leases and licenses referred
to in Schedule 2.10; and (c) true and correct written descriptions of all
supply, distribution, financing, or other arrangements or understandings
referred in Schedule 2.11. All contracts, agreements, plans, leases, policies
and licenses referred to in Schedule 2.11 are valid and in
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full force and effect, and true copies thereof have been heretofore made
available to Purchaser. Except as set forth in such Schedule 2.11 or in any
other schedule to this Agreement or disclosed in the Financial Statements,
neither MediTek or any Subsidiary:
(a) has any agreements, contracts, commitments or restrictions
which are material to its business, operations or prospects or which require the
making of any charitable contribution;
(b) has any purchase contracts or commitments that continue for a
period of more than 12 months and are in excess of the normal, ordinary and
usual requirements of business or at any excessive price;
(c) has any outstanding contracts with officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or dealers
that are not cancelable by it on notice of not longer than 30 days and without
liability, penalty or premium or any agreement or arrangement providing for the
payment of any bonus or commission based on sales or earnings;
(d) has any employment agreement, or any other agreement that
contains any severance or termination pay liabilities or obligations;
(e) has any collective bargaining or union contracts or
agreements;
(f) is in default, nor is there any basis for any valid claim of
default, under any contract made or obligation owed by it;
(g) has any debt obligation for borrowed money, including
guarantees of or agreements to acquire any such debt obligation of others;
(h) has any outstanding loan to any person other than loans or
advances to wholly-owned Subsidiaries; and
(i) has any power of attorney outstanding or any obligations or
liabilities (whether absolute, accrued, contingent or otherwise), as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect to the
obligation of any person, corporation, partnership, joint venture, association,
organization or other entity.
2.12. FACILITIES. Except as set forth on Schedule 2.12, to the
best of its knowledge, the facilities and equipment of MediTek and its
subsidiaries are structurally sound with no defects and are in good operating
condition and repair and are adequate for the uses to which they are being put;
and to the best of its knowledge, none of such facilities or equipment is in
need of maintenance and repairs which are material in nature or cost. Neither
MediTek nor any Subsidiary has received any notification that it is in violation
of any applicable building, zoning, anti-pollution, health or other law,
ordinance or regulation in respect of its Business or structures or their
operations and to the best of its knowledge, no such violation exists. There are
no laws, statutes or ordinances, or building or use restrictions
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applicable to the building, structures and appurtenances owned or leased by
MediTek or any Subsidiary which might prohibit or impair the uses presently
being made thereof in any material respect.
2.13. LEASES. Schedule 2.13 contains an accurate and complete list of
the terms of all leases pursuant to which MediTek or any Subsidiary leases real
or personal property, other than leases of office equipment (including, without
limitation, furniture, computer equipment, telephone systems, photocopiers and
postage meters) and leases which provide for annual rentals of less than
$10,000. All such leases are valid, binding and enforceable in accordance with
their terms, and are in full force and effect; there are no existing defaults by
MediTek or any Subsidiary thereunder.
2.14. TAXES. Stockholder has duly filed all tax reports and returns
required to be filed by it relating to MediTek (the "Tax Returns") and has duly
paid all taxes and other charges due or claimed to be due from it relating to
MediTek by federal, state or local taxing authorities (including, without
limitation, those due in respect of the properties, income, franchises,
licenses, sales or payrolls of any of them); the reserves for taxes reflected in
the Financial Statements are adequate; and there are no tax liens upon any
property or assets of MediTek except liens for current taxes not yet due. No
state of facts exists or has existed which would constitute ground for the
assessment of any tax liability against MediTek by the Internal Revenue Service.
All taxes that MediTek or any Subsidiary is or was required by law to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper governmental body or other person. To the best of
stockholder's and MediTek's knowledge, there is no claim, audit, action, suit,
proceeding or investigation with respect to taxes due or claimed to be due from
MediTek or any Tax Return filed or required to be filed by or relating to
MediTek pending or to the best of Stockholder's and MediTek's knowledge,
threatened against or with respect to MediTek.
2.15. INSURANCE. Schedule 2.15 contains an accurate and complete list
of all material policies of fire, liability (including malpractice), workmen's
compensation and other forms of insurance owned or held by MediTek or any
Subsidiary. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, and no notice of cancellation or termination has been received with
respect to any such policy. To the best of Stockholder's and MediTek's
knowledge, such policies are sufficient for compliance with all requirements of
law and all agreements to which MediTek or any Subsidiary is a party; are valid,
outstanding and enforceable policies. Except as set forth in Schedule 2.15, such
policies will remain in full force and effect through the respective dates set
forth in Schedule 2.15 without the payment of additional premiums; and will not
in any way be affected by or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Schedule 2.15 identifies all risks which MediTek
or any Subsidiary has designated as being self-insured. Neither MediTek nor any
Subsidiary has been refused any insurance with respect to its assets or
operations, nor has its coverage been limited, by any insurance carrier to which
it has applied for any such insurance or with which it has carried insurance
during the last two years.
2.16. LABOR DIFFICULTIES. (a) To the best of Stockholder's and
MediTek's knowledge, MediTek and each Subsidiary is in compliance in all
material respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and
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is not engaged in any unfair labor practice; (b) there is no unfair labor
practice complaint against MediTek or any Subsidiary pending before the National
Labor Relations Board; (c) there is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against or affecting MediTek or any
Subsidiary; (d) no representation question exists respecting the employees of
MediTek or any Subsidiary; (e) no grievance or any arbitration proceeding
arising out of or under collective bargaining agreements is pending and no claim
therefor exists; and (f) MediTek has never experienced any work stoppage or
other labor difficulty.
2.17. EMPLOYEE BENEFIT PLANS. Schedule 2.17 sets forth a complete and
accurate list of all bonus, deferred compensation, pension, profit-sharing,
retirement, insurance, stock purchase, stock option or any other fringe benefit
plans, arrangement or practice, and all other employee benefit plans, as defined
in section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), whether formal or informal (collectively, the "Plans")
currently in effect with respect to current or former employees of MediTek and
its Subsidiaries. Schedule 2.17 sets forth the annual cost of providing benefits
pursuant to each of the Plans. MediTek has performed and complied in all
material respects with all of its obligations under or with respect to such
Plans and such Plans have operated substantially in accordance with their terms.
MediTek has no commitment, whether formal or informal and whether legally
binding or not, to create any additional Plan.
2.18. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES AND OTHERS.
To the best of Stockholder's and MediTek's knowledge, no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required of Stockholder or MediTek in connection with
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby. Except as disclosed in any schedule to
this Agreement, no consent of any other person is necessary to the consummation
of the transactions contemplated hereby.
2.19. COMPLIANCE WITH LAW. To the best of Stockholder's and MediTek's
knowledge, the Business of MediTek has been conducted in accordance with all
applicable laws, regulations and other requirements of all national governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over MediTek and its Subsidiaries,
including, without limitation, all such laws, regulations and requirements
relating to consumer protection, equal opportunity, health, occupational safety,
pension and securities matters in each case where the failure to comply with
such laws, regulations or other requirements would have a material adverse
effect on the Business, assets or prospects of MediTek. Neither MediTek nor any
Subsidiary has received any notification of any asserted present or past failure
by MediTek or any Subsidiary to comply with such laws, rules or regulations.
2.20. ENVIRONMENTAL PROTECTION. MediTek and its Subsidiaries have
obtained all permits, licenses and other authorizations which are required under
federal, state and local laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes. To the best of Stockholder's and MediTek's knowledge,
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MediTek and its Subsidiaries are in full compliance with all terms and
conditions of the required permits, licenses and authorizations, and is also in
full compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder.
MediTek and Stockholder are not aware of, nor has MediTek or any Subsidiary
received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste.
2.21. BROKERS AND FINDERS. Except for TM Capital Corp. and E.G.S.
Securities Corp., whose fees will be paid by Stockholder (except as provided in
Section 13.03), neither Stockholder nor MediTek nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
2.22. MALPRACTICE LIABILITY. Except as disclosed on Schedule 2.22,
there is no action, suit, inquiry, proceeding or investigation by or before any
court or governmental or other regulatory or administrative agency or commission
pending or, to the best of Stockholder's or MediTek's knowledge, threatened
against or involving MediTek or any Subsidiary relating to any service performed
by MediTek or any Subsidiary or any of their employees and alleged to have
resulted in any medical malpractice, nor is there any valid basis for any such
action, proceeding or investigation.
2.23 NEW IMAGING CENTERS. Stockholder has no present intention to
open or purchase diagnostic imaging centers after the Closing Date.
2.24. DISCLOSURE. No representations or warranties made by MediTek in
this Agreement and no statement contained in any document (including, without
limitation, the Financial Statements and the Schedules), certificate, or other
writing furnished or to be furnished by MediTek or Stockholder to Purchaser or
any of its representatives pursuant to the provisions hereof or in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, in order to
make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Stockholder as follows:
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3.01. CORPORATE ORGANIZATION; ETC. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the power and authority to carry on its business as now being
conducted and to own the properties and assets it now owns.
3.02. AUTHORIZATION, ETC. Purchaser has full corporate power and
authority to enter into this Agreement, the Note and the Registration Agreement
(collectively, the "Acquisition Documents") and to carry out the transactions
and perform its obligations contemplated hereby and thereby. Purchaser has taken
all action required by law, its Certificate of Incorporation and By-Laws or
otherwise to authorize the execution and delivery of the Acquisition Documents
and the transactions contemplated hereby and thereby, and each of the
Acquisition Documents is a valid and binding agreement of Purchaser enforceable
in accordance with its terms. The USDL Common Stock has been duly authorized,
and when issued upon conversion of the Note, will be validly issued, fully paid
and nonassessable.
3.03. NO VIOLATION. Neither the execution and delivery of this
Agreement or the other Acquisition Documents nor the consummation of the
transactions contemplated hereby or thereby will violate any provisions of the
Certificate of Incorporation or By-Laws of Purchaser, or violate, or be in
conflict with, or constitute a default (or any event which, with notice or lapse
of time or both, would constitute a default) under, or cause the acceleration of
the maturity of any debt or obligation pursuant to any agreement or commitment
to which Purchaser is a party or by which Purchaser is bound, or violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority.
3.04. SEC REPORTS. Purchaser has delivered to Seller copies of its
Annual Report on Form 10-KSB for the year ended December 31, 1995 and its
Quarterly Report on Form 10-QSB for the three months ended March 31, 1996 (the
"Reports"). The Reports do not contain any untrue statement of a material fact
or omit 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. The financial statements in such Reports, together with
the notes thereto, present fairly the consolidated financial position of
Purchaser and its subsidiaries as of the respective dates indicated and the
consolidated results of operations, consolidated changes in stockholders' equity
(to the extent included in the Reports) and statements of cash flow of Purchaser
and its subsidiaries for the respective periods indicated in the Reports and
such financial statements have been prepared in conformity with GAAP applied on
a consistent basis.
3.05 ABSENCE OF MATERIAL CHANGE. Subsequent to March 31, 1996,
except as disclosed in the Reports or otherwise publicly disclosed by Purchaser,
neither Purchaser nor any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, not in the ordinary course of business, or
entered into any transaction not in the ordinary course of business, which is
material to the business of Purchaser and its subsidiaries, and there has not
been any incurrence of short-term or long-term debt by Purchaser or any
subsidiary or any material adverse change in its condition (financial or other),
net worth, results of operations, business or properties.
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3.06 LICENSES AND PERMITS. Purchaser and its subsidiaries have
sufficient licenses, permits and other governmental authorizations as are
required for the conduct of their businesses or the ownership of their
properties and are in all material respects complying therewith except where the
failure to obtain or comply with such permits would not have a material
adversely affect the financial condition, results of operations, business or
properties of Purchaser and its subsidiaries taken as a whole.
3.07. LITIGATION. There is no pending or threatened action, suit,
inquiry, proceeding or investigation by or before any court or governmental or
other regulatory or administrative agency or commission pending or threatened
against or involving Purchaser or its subsidiaries, or which questions or
challenges the validity of this Agreement or any action taken or to be taken by
Purchaser or its subsidiaries pursuant to this Agreement or in connection with
the transactions contemplated hereby; nor is there any valid basis for any such
action, proceeding or investigation.
3.08. BROKERS AND FINDERS. Neither Purchaser nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
3.09. DISCLOSURE. No representations or warranties made by Purchaser in
this Agreement and no statement contained in any document (including, without
limitation, the Reports), certificate, or other writing furnished or to be
furnished by Purchaser to Stockholder or any of its representatives pursuant to
the provisions hereof or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of material fact or omits
or will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
COVENANTS
4.01 MediTek and Stockholder hereby covenant and agree with
Purchaser:
(a) CONSENTS. MediTek will obtain, prior to the Closing, all consents
necessary to the consummation of the transactions contemplated hereby,
including, without limitation, (i) if required, the consent of each person
holding a mortgage or lien on real property or personal property, owned or
leased by MediTek, to the Acquisition; and (ii) use its best efforts to assist
Purchaser in obtaining all necessary approvals from any governmental agencies or
departments as may be necessary or desirable in connection with the Acquisition.
All such consents will be in writing and executed counterparts thereof will be
delivered to Purchaser prior to the Closing.
(b) SUPPLEMENTS TO SCHEDULES. From time to time prior to the Closing,
Stockholder and MediTek will promptly supplement or amend any Schedule hereto
with respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in any such Schedule. No supplement or amendment of any such Schedule
made pursuant to this Section shall be deemed to cure any breach of any
representation or warranty made in
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this Agreement unless Purchaser specifically agrees thereto in writing. If
Purchaser expressly agrees in writing to any supplement or amendment to any such
Schedule, the existence of any such express amendment or supplement will not be
a basis for the Purchaser's refusing to close the transaction contemplated by
this Agreement or a basis for Purchaser's claim for, or entitlement to, damages
occasioned by such breach or misrepresentation or for indemnification under
Article X hereof in respect thereof. If Purchaser does not agree in writing to
any such supplement or amendment, its sole recourse and remedy for such breach
of warranty or misrepresentation shall be to be relieved of its obligation to
close the transactions contemplated hereunder. If, in spite of being relieved of
its obligations to close, Purchaser nevertheless proceeds with the closing
hereunder, Purchaser shall be deemed to have waived any right or claim for
damages or indemnification by reason of (i) such breach of misrepresentation or
(ii) any fact or circumstance which is disclosed to Purchaser in any such
supplement or amendment (notwithstanding Purchaser's unwillingness to agree
thereto) prior to the Closing hereunder.
(c) OTHER TRANSACTIONS. Except as hereinafter provided, neither MediTek
nor Stockholder shall enter into any discussions concerning, or approve or
recommend any merger, consolidation, disposition of all or substantially all of
the business, properties or assets (other than pursuant to this Agreement),
acquisition or other business combination, or proposal therefor, or furnish or
cause to be furnished any information concerning the business, properties or
assets of MediTek to any party in connection with any MediTek transaction
involving the acquisition of MediTek or all or any substantial part of its
assets by any person other than Purchaser. If Stockholder or MediTek receives
any offer or proposal, written or otherwise, of the type referred to in the
immediately preceding sentence (a "Competing Transaction"), Stockholder shall
promptly inform Purchaser of such offer or proposal and furnish Purchaser with a
copy thereof if such offer or proposal is in writing. Nothing contained in this
section, however, shall prohibit the Board of Directors of Stockholder from
furnishing information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide proposal by
such person or entity to enter into a Competing Transaction if, and only to the
extent that (A) the Board of Directors of Stockholder after consultation with
and based upon the advice of independent legal counsel (which may include its
regularly engaged independent legal counsel), determines in good faith that such
action is required for the Board of Directors of Stockholder to comply with its
fiduciary duties to stockholders and (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
Stockholder (x) provides written notice to Purchaser to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form. Notwithstanding the
foregoing, Stockholder and MediTek shall give Purchaser the right to match the
terms of any Competing Transaction prior to entering into a binding agreement
with respect thereto.
(d) FULL ACCESS. Stockholder and MediTek have heretofore afforded to
Purchaser, its counsel, accountants and other representatives full access to the
facilities, properties, books and records of MediTek to enable Purchaser to make
such investigations as it shall desire to make of the affairs of MediTek and
Purchaser has substantially completed such investigations. MediTek will cause
its officers and accountants to furnish to Purchaser the audited and unaudited
Financial Statements of April 30, 1996, together with such additional financial
and operating data and other information as Purchaser shall from time to time
reasonably request.
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(d) REMEDIES. Subject to the limitations contained in Section 4.01(b),
in the event of the breach or threatened breach by MediTek or Stockholder of any
of the terms and conditions of this Agreement, then Purchaser shall be entitled,
if it so elects, to institute and prosecute any proceedings in any court of
competent jurisdiction either at law or in equity, for such relief as it deems
appropriate including, without limiting the generality of the foregoing
proceedings, to obtain damages for any breach of this Agreement or to enforce
the specific performance thereof by MediTek or Stockholder. If, in any such
action, Purchaser is successful in whole or in part, Stockholder shall further,
as an element of Purchaser's damages, be liable for the attorney's fees of
Purchaser in the prosecution of such action or proceeding.
4.02 Purchaser hereby covenants and agrees with Stockholder that
(a) TAX RETURNS. Purchaser will cooperate with Stockholder with respect
to the filing and auditing of tax returns with respect to MediTek for all
periods prior to the Closing Date, will keep copies of all tax returns filed
with respect to MediTek for a period of eight years from the Closing and shall
give Stockholder such access to such returns as Stockholder reasonably requires
with respect to preparation of its tax returns.
(b) REMEDIES. In the event of the breach or threatened breach by
Purchaser of any of the terms and conditions of this Agreement, then Stockholder
shall be entitled, if it so elects, to institute and prosecute any proceedings
in any court of competent jurisdiction either at law or in equity, for such
relief as it deems appropriate including, without limiting the generality of the
foregoing proceedings, to obtain damages for any breach of this Agreement or to
enforce the specific performance thereof by Purchaser. If, in any such action,
Stockholder is successful in whole or in part, Purchaser shall further, as an
element of Stockholder's damages, be liable for the attorney's fees of
Stockholder in the prosecution of such action or proceeding.
ARTICLE V
CONDITIONS TO MEDITEK'S AND STOCKHOLDER'S OBLIGATIONS
Each and every obligation of MediTek and Stockholder under this
Agreement to be performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions,
unless waived in writing by MediTek and Stockholder:
5.01. REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Purchaser contained herein shall be in all material respects true,
complete and accurate as of the date when made and at and as of the Closing as
though such representations and warranties were made at and as of such date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
5.02. PERFORMANCE. Purchaser shall have performed and complied with
all agreements, obligations and conditions required by this Agreement to be
performed or complied with by them at or prior to the Closing.
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5.03. APPROVALS. All consents from third parties and government
agencies required to consummate the transactions contemplated hereby shall have
been obtained.
5.04. NO INJUNCTION. On the Closing Date there shall be no
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or imposing
any conditions on the consummation of the transactions contemplated hereby which
the Purchaser deems unacceptable in its sole discretion.
5.05. MATERIAL CHANGE. From the date of this Agreement to the
Closing Date, Purchaser shall not have suffered any material adverse change in
its business, prospects, financial condition, working capital, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves or
operations.
5.06 ITEMS TO BE DELIVERED AT CLOSING BY PURCHASER. At the Closing,
Purchaser shall deliver to Stockholder the Payment, an executed Note, the
Registration Agreement executed by Purchaser and such other documents as
Stockholder shall reasonably request.
5.07. OPINION OF THE PURCHASER'S COUNSEL. The Purchaser shall have
delivered to Stockholder an opinion of Bachner, Tally, Polevoy & Misher LLP,
counsel to the Purchaser, dated as of the Closing Date, in form and substance
reasonably satisfactory to Stockholder, to the effect that:
(a) Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) Purchaser has the corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns, and the Purchaser has full power and authority to enter into this
Agreement, the Note and the Registration Agreement and to consummate the
transactions contemplated hereby and thereby;
(c) the authorized capital stock of Purchaser consists of 5,000,000
shares of preferred stock, $.01 par value and 50,000,000 shares of common stock,
$.01 par value, of which shares are outstanding. All issued and outstanding
shares of capital stock of Purchaser are duly and validly authorized, issued,
fully paid and nonassessable;
(d) all action by Purchaser required in order to authorize the
transactions contemplated hereby has been duly and validly taken; and this
Agreement, the Note and the Registration Agreement have been duly executed and
delivered by the Purchaser, and, subject to customary remedies exceptions, is
the valid and binding obligation of Purchaser enforceable in accordance with its
terms; PROVIDED, HOWEVER, that no opinion will be required with respect to
Article XI hereof or the voting provisions of the Registration Agreement; and
(e) the Purchaser Common Stock has been duly authorized, and when
issued upon conversion of the Note, will be validly issued, fully paid and
nonassessable.
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(f) neither the execution and delivery of this Agreement by
Purchaser nor the consummation of the transactions contemplated hereby will
violate the charter documents of Purchaser, or to such counsel's knowledge, will
violate, conflict with, or constitute a default under, or cause the acceleration
of maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien or other encumbrance upon any property
or assets of Purchaser under, any contract, commitment, agreement, trust,
understanding, arrangement or restriction of any kind to which Purchaser is a
party or by which Purchaser is bound or to such counsel's knowledge, violate any
statute or law, or any judgment, decree, order, regulation or rule of any court
or governmental authority;
(g) to such counsel's knowledge, Purchaser is not engaged in, or
threatened with, any legal action or other proceeding or has incurred or been
charged with or is under investigation with respect to, any violation of any
federal, state or local law or administrative regulation which if adversely
determined might materially and adversely affect or impair the condition,
financial or otherwise, of Purchaser; and
(h) to such counsel's knowledge, no consent of any governmental
body, nor of any other person, is required for the consummation by Purchaser of
the transactions contemplated hereby, except consents the need for which is
disclosed in any of the Schedules attached hereto, all of which have been duly
and validly obtained; PROVIDED, HOWEVER, that no opinion by such counsel shall
be required with respect to healthcare regulatory matters.
In rendering such opinion, such counsel may rely as to all matters of
law other than the law of the United States or of the State of New York upon
opinions of counsel satisfactory to MediTek and Stcokholder.
5.08 MISCELLANEOUS CLOSING DOCUMENTS. At the Closing, Purchaser
shall deliver to MediTek and Stockholder:
(i) Certificate of Purchaser that the representations and
warranties contained in Article III of this Agreement are true and correct and
that Purchaser has complied with all conditions set forth in Article V in all
material respects at and as of the Closing Date, except for representations and
warranties specifically relating to a time or times other than the Closing Date,
which shall be true and correct in all material respects at such time or times;
(ii) Good Standing certificate dated within ten days
prior to the Closing Date from the Secretary of State of Delaware for Purchaser;
and
(iii) Such other certificates as Stockholder shall
reasonably request.
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ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS
Each and every obligation of Purchaser under this Agreement to be
performed on or before the Closing shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions, unless waived in
writing by Purchaser:
6.01. REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties contained of MediTek and Stockholder shall be in all material
respects true, complete and accurate as of the date when made and at and as of
the Closing Date as though such representations and warranties were made at and
as of such date, except for changes expressly permitted or contemplated by the
terms of this Agreement.
6.02. PERFORMANCE. MediTek and Stockholder shall have performed
and complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by them at or prior to the Closing.
6.03. APPROVALS. All consents from third parties and government
agencies required to consummate the transactions contemplated hereby shall have
been obtained.
6.04. NO INJUNCTION. On the Closing Date there shall be no injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby which the Purchaser deems
unacceptable in its sole discretion.
6.05. MATERIAL CHANGE. From the date of this Agreement to the Closing
Date, MediTek shall not have suffered any material adverse change (whether or
not such change is referred to or described in any supplement to the Schedules)
in its business, prospects, financial condition, working capital, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves or
operations.
6.06. OPINION OF MEDITEK COUNSEL. (a) MediTek and Stockholder shall
have delivered to Purchaser an opinion of Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A., counsel to MediTek and Stockholder, dated as of the
Closing Date, in form and substance reasonably satisfactory to Purchaser, to
the effect that:
(i) MediTek is a corporation duly organized and validly existing
under the laws of the State of Florida and its status is active; MediTek has the
power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns, and MediTek and Stockholder each has
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby;
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(ii) the authorized capital stock of MediTek consists of 10,000 shares
of common stock, $.01 par value, of which 800 shares are outstanding. All issued
and outstanding shares of capital stock of MediTek are duly and validly
authorized, issued, fully paid and nonassessable; and to such counsel's
knowledge, there are no outstanding options, warrants or other rights to
purchase or acquire any capital stock of MediTek;
(iii) Stockholder has complete and unrestricted corporate power to
sell, convey, assign, transfer and deliver to Purchaser the MediTek Stock; the
delivery of certificates representing the MediTek Stock to Purchaser and the
performance by MediTek, Stockholder and Purchaser under this Agreement will
result in Purchaser being the record and beneficial owner of the MediTek Stock
free and clear of all security interests, liens and encumbrances, assuming for
this purpose that Purchaser does note have knowledge of any adverse claims to
such MediTek Stock;
(iv) all action by MediTek required in order to authorize the
transactions contemplated hereby has been duly and validly taken; and this
Agreement has been duly executed and delivered by MediTek and Stockholder and,
subject to customary remedies exceptions, is the valid and binding obligation of
MediTek and Stockholder enforceable in accordance with its terms; provided,
however, that no opinion will be required with respect to Article XI hereof or
the voting provisions of the Registration Agreement;
(v) neither the execution and delivery of this Agreement by MediTek and
Stockholder nor the consummation of the transactions contemplated hereby will
violate the charter documents of MediTek, or to such counsel's knowledge, will
violate, conflict with, or constitute a default under, or cause the acceleration
of maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien or other encumbrance upon any property
or assets of MediTek under, any contract, commitment, agreement, trust,
understanding, arrangement or restriction of any kind to which MediTek is a
party or by which MediTek is bound or to such counsel's knowledge, violate any
statute or law, or any judgment, decree, order, regulation or rule of any court
or governmental authority;
(vi) to such counsel's knowledge, MediTek is not engaged in, or
threatened with, any legal action or other proceeding or has incurred or been
charged with or is under investigation with respect to, any violation of any
federal, state or local law or administrative regulation which if adversely
determined might materially and adversely affect or impair the condition,
financial or otherwise, of MediTek; and
(vii) to such counsel's knowledge, no consent of any governmental body,
nor of any other person, is required for the consummation by MediTek of the
transactions contemplated hereby, except consents the need for which is
disclosed in any of the Schedules attached hereto, all of which have been duly
and validly obtained; provided, however, that no opinion by such counsel shall
be required with respect to healthcare regulatory matters.
6.09. MISCELLANEOUS CLOSING DOCUMENTS. At the Closing, MediTek and
Stockholder shall deliver to the Purchaser:
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(i) Certificates representing the MediTek Stock;
(ii) Certificate of MediTek and Stockholder that the representations
and warranties contained in Article II of this Agreement are true and correct
and that MediTek and Stockholder have complied with all conditions set forth in
Article VI in all material respects at and as of the Closing Date, except for
representations and warranties specifically relating to a time or times other
than the Closing Date, which shall be true and correct in all material respects
at such time or times;
(iii) Certificate of Status dated within ten days prior to the
Closing Date from the Secretary of State of Florida for MediTek and the
Subsidiaries; and
(iv) Such other certificates as Purchaser shall reasonably request.
6.11 RESIGNATIONS. On or prior to the Closing Date, MediTek shall
have received the written resignations of all officers and directors requested
by Purchaser.
ARTICLE VII
CONDUCT OF THE COMPANY'S BUSINESS PENDING THE CLOSING
Pending the Closing and except as otherwise expressly consented to or
approved by Purchaser in writing:
7.01. CONDUCT OF BUSINESS. MediTek will carry on its business
diligently and substantially in the same manner as heretofore conducted. Until
the Closing, MediTek will use its best efforts to preserve its business, to keep
available the services of its present personnel, to preserve in full force and
effect the contracts, agreements, instruments, leases, licenses, arrangements,
and understandings of MediTek, and to preserve the good will of its suppliers,
customers, and others having business relations with MediTek. Until the Closing,
MediTek will conduct its business and operations in all respects only in the
ordinary course.
7.02. AMENDMENTS. No change or amendment shall be made in the
charter documents of MediTek.
7.03. CAPITAL CHANGES; DIVIDENDS; REDEMPTIONS. MediTek will not
issue or sell any additional shares of its capital stock or other securities,
acquire directly or indirectly, by redemption or otherwise, any such shares or
split-up any such capital stock, declare or pay any dividends thereon in cash,
securities or other property or make any other distribution with respect
thereto, or grant or enter into any options, warrants, calls or commitments of
any kind with respect thereto.
7.04. SUBSIDIARIES. MediTek will not organize any new subsidiary,
acquire any capital stock or other equity securities of any corporation,
partnership, or other entity or acquire any equity or ownership interest in any
business.
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7.05. ACCESS TO INFORMATION. MediTek shall give to Purchaser's
officers, employees, counsel, accountants and other representatives free and
full access to and the right to inspect, during normal business hours, all of
the premises, properties, assets, records, contracts and other documents
relating to its business and shall permit them to consult with the officers,
employees, accountants, counsel and agents of MediTek for the purpose of making
such investigation of MediTek as Purchaser shall desire to make, provided that
such investigation shall not unreasonably interfere with MediTek's business
operations. Furthermore, MediTek shall furnish to Purchaser all such documents
and copies of documents and records and information and copies of any working
papers relating to it as Purchaser shall from time to time reasonably request
and shall permit Purchaser and its agents to make such inspections of the Assets
as Purchaser may request from time to time unless disclosure of same would
result in the loss to MediTek or its subsidiaries or to Stockholder of the
attorney-client privilege.
7.06. CERTAIN CHANGES. MediTek will not, except as maybe required
or contemplated by any agreement or instrument disclosed on any schedule to this
Agreement, and except in the ordinary course of business and consistent with
past practice:
(a) Borrow or agree to borrow any funds or incur, or assume or
become subject to, whether directly or by way of guarantee or otherwise, any
obligation or liability (absolute or contingent), except obligations and
liabilities incurred ;
(b) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise),
(c) Prepay any obligation having a fixed maturity of more than 90
days from the date such obligation was issued or incurred;
(d) Permit or allow any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien or
encumbrance which does not exist on the date hereof;
(e) Write off as uncollectible any notes or accounts receivable;
(f) Cancel any debts or waive any claims or rights of substantial
value or sell, transfer, or otherwise dispose of any of its properties or
assets;
(g) Grant any general increase in the compensation of its officers
or employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employees;
(h) Except as contemplated by this Agreement, pay, loan or advance
any amount to, or sell transfer or lease any properties or assets to, or enter
into any agreement or arrangement with, Stockholder, officers or any affiliates;
(j) Agree, whether in writing or otherwise, to do any of the
foregoing.
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7.07. CONTRACTS. No contract or commitment will be entered into, and
no purchase of raw material or supplies and no sale of assets will be made, by
or on behalf of MediTek, except (i) normal contracts or commitments for the
purchase of, and normal purchases of, inventory or supplies, made in the
ordinary course of business an consistent with past practice, and (ii) other
contracts, commitments, purchases or sales in the ordinary course of business
and consistent with past practice not in excess of $50,000 in the aggregate.
7.08. INSURANCE; PROPERTY. MediTek shall maintain its insurance on all
property, real, personal and mixed, owned or leased by MediTek, against all
insurable risks presently covered; and all such property shall be used,
operated, maintained and repaired in a careful and reasonably efficient manner
in accordance with past practice.
7.09. NO DEFAULT. MediTek shall not do any act or omit to do any
act, or permit any action or omission to act, which will cause a breach of any
material contract or commitment of MediTek.
7.10. COMPLIANCE WITH LAWS. MediTek shall duly comply with all
laws applicable to it and its properties, operations, Business and employees in
any case where the failure to do so would have a material adverse effect on the
Business, operations or such properties.
7.11. MATERIAL DEVELOPMENTS. MediTek shall promptly notify
Purchaser of the occurrence of any and all events which have, or may have, a
material adverse effect upon the Business or financial condition of MediTek.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.01. INVESTIGATIONS; SURVIVAL OF WARRANTIES. The representations,
warranties and agreements of MediTek, Stockholder and Purchaser contained
herein including any supplement or amendment delivered pursuant to section 4.02
hereof and agreed to by Purchaser) or in any certificates delivered or at the
Closing shall survive the Closing for a period of eighteen (18) months and not
be deemed waived or otherwise affected by any investigation made by any party
hereto; provided, however, that if any representation, warranty, covenant or
agreement of any party hereto shall be breached or not complied with as of the
Closing and any other party hereto has knowledge of such breach or
non-compliance at or prior to the Closing and nevertheless proceeds with the
Closing, such other party shall be deemed to have waived any right to damages or
indemnification hereunder in respect of such breach or non-compliance.
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ARTICLE IX
TERMINATION AND ABANDONMENT
9.01. METHODS OF TERMINATION. The transactions contemplated herein
may be terminated and/or abandoned at any time but not later than the Closing:
(a) By mutual and joint consent of the Purchaser and the
Stockholder; or
(b) By Purchaser, (A) at any time if the representations and warranties
of MediTek or Stockholder contained in Article III hereof were incorrect in any
material respect when made or, subject to Section 4.02 hereof, at any time
thereafter, or (B) upon written notice to MediTek and Stockholder given at any
time prior to the Closing Date if all of the conditions precedent to the
obligations of Purchaser set forth in this Agreement are not fulfilled; or
(c) By the Stockholder, (A) at any time if the representations and
warranties of Purchaser contained in this Agreement were incorrect in any
material respect when made or at any time thereafter, or (B) upon written notice
to Purchaser given at any time prior to the Closing Date if all of the
conditions precedent to the obligations of MediTek set forth in this Agreement
are not fulfilled.
(d) By Stockholder, if Stockholder receives, and Stockholder's Board of
Directors accepts or recommends or resolves to accept or recommend to
Stockholder's stockholders in accordance with its fiduciary duties, a Competing
Transaction which, after consultation with its outside counsel and financial
advisers, Stockholder's Board of Directors determine in good faith to be more
favorable to Stockholder than the transactions contemplated by this Agreement
from a financial point of view and Purchaser does not match the terms of such
Competing Transaction;
9.02. PROCEDURE UPON TERMINATION. In the event of termination and
abandonment by either Purchaser or Stockholder pursuant to Section 9.01 hereof,
notice thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated and/or abandoned, without
further action by Purchaser or Stockholder. If the transactions contemplated by
this Agreement are terminated and/or abandoned as provided herein:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) All confidential information received by any party hereto with
respect to the business of any other party shall be treated in accordance with
Section 13.12 hereof; and
(c) No party hereto shall have any liability or further obligation to
any other party to this Agreement except as stated in subparagraphs (a), (b) and
(c) of this Section 9.02, PROVIDED, HOWEVER, that if such termination and/or
abandonment is a result of the failure of any condition set forth in Article V
or VI hereof, the nonbreaching party shall be entitled to recover from the
breaching party all
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out-of-pocket costs which the nonbreaching party has incurred (including
reasonable attorney's fees and expenses) up to a maximum of $50,000, plus, in
the case of a termination by Stockholder, the cost to Stockholder of the audit
of MediTek's Consolidated Financial Statements as of October 31, 1995 and April
30, 1996, provided, further, that if such termination or abandonment is a result
of any reason other than the failure of the nonbreaching party to satisfy any
conditions set forth in Article V or VI hereof or termination pursuant to
Section 9.01(d), as the case may be, by the breaching party, the breaching party
shall be obligated to pay the nonbreaching party a break-up fee of $500,000.
ARTICLE X
INDEMNIFICATION
10.01. INDEMNIFICATION BY STOCKHOLDER. (a) In the event that the
transactions contemplated by this Agreement are consummated, Stockholder shall
indemnify Purchaser and hold Purchaser harmless from, against and in respect of
and shall on demand reimburse Purchaser for: (i) all its losses, liabilities,
damages, costs and expenses arising from any misrepresentation or breach of any
representation, warranty, covenant or agreement on the part of Stockholder or
MediTek under this Agreement; (ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against Purchaser that relate to MediTek or the Business in which the principal
event giving rise thereto occurred before the Closing Date or which result from
or arise out of any action or inaction before the Closing Date of Stockholder,
MediTek or any employee, agent, representative or subcontractor of MediTek in
each case, where such event or action or inaction is not disclosed in this
Agreement, any schedule hereto or the Financial Statements; and (iii) any and
all actions, suits, proceedings, demands, assessments, judgments, costs and
expenses, including without limitation, reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting to
avoid same or to oppose the imposition thereof, or in enforcing this indemnity
(collectively, "Losses"). Notwithstanding the foregoing in the event that a
court of competent jurisdiction having final adjudicative authority and from
which no appeal is available shall determine that Purchaser is not entitled to
indemnification then Purchaser shall not be entitled to recover its legal fees,
costs or expenses with respect to such claim from the Stockholder.
(b) Stockholder shall not be required to indemnify the Purchaser under
Section 10.01(a) unless the amount of any Loss for which the Purchaser seeks
indemnification under Section 10.01(a), when aggregated with all other such
Losses, exceeds $250,000 after the adjustment in the final sentence of this
paragraph. Stockholder's maximum liability hereunder shall not exceed $3,000,000
in the aggregate. For purposes of the calculation under this Section 10.01(b),
there shall be an offset against Losses of an amount equal to the sum of (i) the
value of any net tax benefit actually realized by Purchaser (by reason of a tax
deduction, basis reduction, credits or otherwise) and (ii) the amount of any
cash payment actually received by Purchaser or MediTek after the Closing Date
covering any such any Loss from any insurance policy.
10.02. INDEMNIFICATION BY PURCHASER. In the event that the
transactions contemplated by this Agreement are consummated, the Purchaser shall
indemnify Stockholder and hold it harmless from, against and in respect of and
shall on demand reimburse Stockholder for: (i) all its losses, liabilities,
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damages, costs and expenses arising from or in connection with any
misrepresentation or breach of any representation, warranty, covenant or
agreement on the part of the Purchaser under this Agreement; (ii) any and all
actions, suits, claims, or legal, administrative, arbitration, governmental
or other proceedings or investigations against Stockholder that relate to
Purchaser or the business in which the principal event giving rise thereto
occurred after the Closing Date or which result from or arise out of any action
or inaction after the Closing Date of Purchaser or any officer, employee, agent,
representative or subcontractor of Purchaser; and (iii) any and all actions,
suits, proceedings, demands, assessments, judgments, costs and expenses,
including without limitation, reasonable legal fees and expenses, incident to
any of the foregoing or incurred in investigating or attempting to avoid same
or to oppose the imposition thereof, or in enforcing this indemnity.
Notwithstanding the foregoing in the event that a court of competent
jurisdiction having final adjudicative authority and from which no appeal is
available shall determine that Stockholder is not entitled to indemnification
then Stockholder shall not be entitled to recover its legal fees with respect
to such claim from the Purchaser.
10.03. PROCEDURES FOR INDEMNIFICATION. Promptly after receipt by an
indemnified party under Section 10.01 or 10.02 of notice of the commencement
of any action for which indemnification may be available under Section 10.01 or
10.02 such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall elect, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
section for any fees of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation and costs and expenses of
legal counsel, if the indemnified party and the indemnifying party are both
parties to the action and the indemnified party has been advised by counsel that
there may be one or more defenses available to it and not available to the
indemnifying party. If an indemnifying party assumes the defense of such an
action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's consent (which shall not be
unreasonably withheld) unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect on
any other claims that may be made against the indemnified party and (ii) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party and (b) the indemnifying party shall have no liability with
respect to any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld). If notice is given to an
indemnifying part of the commencement of any action and it does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense thereof, the
indemnifying party shall be bound by any determination made in such action or
any compromise or settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines in good faith
that there is a reasonable probability that an action may materially and
adversely affect it or its affiliates other than as a result of monetary
damages, such indemnified party
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may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such action, but the indemnifying party shall have
the right to participate in such action and not be bound by any determination of
an action so defended or any compromise or settlement thereof effected without
its consent (which shall not be unreasonably withheld).
10.04. SATISFACTION OF INDEMNIFICATION CLAIMS. All indemnification
obligations pursuant to Article X shall be paid within a reasonable period of
time after a claim for indemnification has been made and its validity finally
determined. In the event that Purchaser is entitled to indemnification from
Stockholder under this Article X, Stockholder shall have the right to satisfy
its indemnification obligation in any one or more of the following ways which
Stockholder shall elect by written notice to Purchaser (a "Satisfaction Notice")
given at any time prior to the time required for the first payment of such
obligation:
(a) By a cash payment to Purchaser;
(b) By exchanging the Note for a new Note of Purchaser in a
principal amount equal to $10,000,000 LESS any prepayments of principal
theretofore made thereon by Purchaser LESS the amount of Stockholder's
indemnification obligation specified by Stockholder in the Satisfaction
Notice LESS any payments of interest theretofore made on the Note which
payments are attributable to the reduction in principal amount
specified in the Satisfaction Notice; and/or
(c) By assigning and delivering, contemporaneously with its
giving the Satisfaction Notice, a number of shares USDL Common Stock
(or any stock or other securities into which such Common Stock may be
converted by reason of the anti-dilution provisions of the Note) which
have an aggregate Market Value (as hereinafter defined) equal to the
amount of Stockholder's indemnification obligation specified in the
Satisfaction Notice. For purposes hereof, the "Market Value" of a share
of USDL Common Stock shall mean the average closing price of such share
on the principal securities market on which USDL Common Stock is then
actively traded for the thirty (30) days immediately preceding the date
the Satisfaction Notice is given to Purchaser.
If Stockholder does not timely give the Satisfaction Notice, Stockholder shall
be deemed to have elected to satisfy its indemnification by making payment
thereof in cash.
10.05 LIMITATION ON CLAIMS. All claims for indemnification under this
Article X must be brought within eighteen (18) months of the Closing Date.
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ARTICLE XI
RESTRICTIVE COVENANTS
In consideration of Purchaser's purchase of the MediTek Stock and
Purchaser's payment of the Purchase Price, a portion of which is allocated to
the covenants included in this Article XI in accordance with this Agreement, and
such other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Stockholder covenants and agrees with the Purchaser
as follows:
11.01. NON-COMPETITION. Stockholder agrees that for a period of five
(5) years following the Closing Date, it will not, directly or indirectly,
become or remain interested in, associated with, an owner, officer, director,
partner, shareholder, employee, agent, advisor or consultant in or indebted to
(other than as a recipient of service provided by any person, firm, corporation,
association, entity or organization) any person, firm, corporation, association,
entity or organization (collectively "Organization") (other than Purchaser or
its affiliates), that is engaged in the operation of diagnostic imaging
facilities or any other business similar to that of the businesses of Purchaser
on the Closing Date and/or any of the Purchaser's affiliates on the Closing
Date, that is operating in any form, manner or fashion, directly or indirectly,
within a radius of fifty (50) miles from a diagnostic imaging center facility
operated, or radiology facility managed, by Purchaser; PROVIDED, HOWEVER, that
nothing herein shall require Stockholder or its affiliates to cease operating
any such facility if the same, at the time it was organized or acquired by
Stockholder or such affiliate, was located more than 50 miles from any similar
facility operated or radiology facility managed, by Purchaser. Stockholder
acknowledges that a violation of this covenant will cause irreparable injury to
the Purchaser and its affiliates.
11.02. NONSOLICITATION OF CUSTOMERS OR CLIENTS. Notwithstanding any
other provisions hereof, Stockholder shall not, for a period of five (5) years
following the Closing Date, at any time or in any manner, either directly or
indirectly, for its own behalf or for or on behalf of any Organization (other
than the Purchaser or its affiliates), solicit or attempt to solicit any
business similar to the Business from any customers or clients of MediTek and/or
Purchaser (as of the date of Closing). A "customer" or "client" shall mean any
Organization with which any of the foregoing have dealt or provided products or
services to.
11.03. NONSOLICITATION OF EMPLOYEES. Except to the extent provided in
the existing terms of an employment agreement between Joseph Paul and Purchaser,
notwithstanding any other provision of this Agreement, Stockholder shall not for
a period of five (5) years following the Closing Date, either on its own behalf
or for or on behalf of any Organization (other than the Purchaser or its
affiliates), directly or indirectly, solicit, divert or otherwise encourage or
attempt to solicit, divert or otherwise encourage employees or agents of
MediTek, the Purchaser and/or any of their affiliates to enter into any
employment, consulting or advisory arrangement or contract with or to perform
any services for or on behalf of any Organization (other than the Purchaser
and/or any of its affiliates), or to enter into any kind of business, including
without limitation any business similar to either of the Business.
11.04. REASONABLENESS. Stockholder has carefully read and considered
the provisions of this Article XI and, having done so, agrees that the
restrictions set forth herein (including without limitation,
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the time period of restriction and the geographical areas of restriction) are
fair and reasonable and are reasonably required for the protection of the
interests of the Purchaser and its affiliates and to prevent irreparable harm to
the foregoing.
11.05. INJUNCTIVE RELIEF. The parties agree that the covenants of
Stockholder herein are material parts of the consideration received by the
Purchaser for entering into this Agreement and purchasing the MediTek Stock and
that any breach of this Article XI by Stockholder will result in irreparable
injury to the Purchaser and/or its affiliates. For that reason and because the
actual damages that might be sustained by the Purchaser and/or its affiliates
might be difficult, if not impossible, to ascertain and may not be adequate to
redress any injuries, the Purchaser and/or its affiliates shall, in addition to
any and all other remedies provided by law or otherwise, be entitled to an
injunction to prevent a breach or contemplated breach of any covenant of
Stockholder contained in this Article XI.
11.06. SEVERABILITY. Each of the covenants in this Article XI is
independent and severable. Each such covenant shall remain in full force and
effect regardless of the enforceability of any other covenant herein, or of the
breach thereof by either party. If it shall be determined at any time by any
court of competent jurisdiction that any provision of this Article XI or any
portion thereof is unenforceable, or that any provision relating to the time
period or area of restriction exceeds the maximum time period or areas such
court deems reasonable, then such portions as shall have been determined to be
unreasonably restrictive or unenforceable or to exceed the maximum reasonable
time period or area of restriction shall thereupon be deemed to be so amended as
to make such restrictions reasonable in the determination of such court or to
become and thereafter be the maximum time period and/or areas which such court
deems reasonable and enforceable and the provision, as so amended, shall be
enforceable between the parties to the same extent as if such amendment had been
made prior to the date of any alleged breach of such provision.
ARTICLE XII
OTHER AGREEMENTS
12.01 REPRESENTATION ON PURCHASER'S BOARD OF DIRECTORS. (a) As soon as
practical but in no event later than 30 days after the Closing Date, Purchaser
shall cause Laurans A. Mendelson or such other person designated by Stockholder
to be elected to the Board of Directors of Purchaser, to serve until the
conclusion of the next annual meeting of stockholders in accordance with the
By-Laws of Purchaser. After the first one-year term, the obligations hereunder
shall be that Purchaser shall cause Mendelson or such designee to be nominated
for election to Purchaser's Board of Directors as part of the management slate
and to recommend to the stockholders his election to the Board of Directors of
Purchaser for a period of two (2) successive one-year terms after the original
one-year term.
(b) Notwithstanding anything to the contrary contained in
subsection (a) hereof, a director designated by Stockholder other than Laurans
A. Mendelson shall be subject to the approval of Purchaser's management, which
will not unreasonably be withheld. Promptly after first proposing a candidate,
Stockholder shall furnish to Purchaser such information as may be requested by
Purchaser about Stockholder's designee (i) that is required to be included in a
Registration Statement under the
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Securities Act or a Proxy Statement under the Exchange Act and (ii) that would
be required to be included in a Schedule 13D under the Exchange Act by Item 2
thereof if filed by the candidate with respect to ownership of Purchaser's
securities.
(c) Purchaser has applied for and will purchase a directors' and
officers' liability insurance policy which will cover each of its directors.
Such policy will be furnished to Stockholder prior to the appointment of
Stockholder's designee to the Board.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01. AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of
Stockholder and Purchaser with respect to any of the terms contained herein.
13.02. WAIVER OF COMPLIANCE. Any failure of MediTek and Stockholder, on
the one hand, or Purchaser, on the other, to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in writing by
the Chairman of the Board or President of Purchaser or the Stockholder, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
13.03. EXPENSES; TRANSFER TAXES, ETC. Whether or not the transactions
contemplated by this Agreement shall be consummated, MediTek and Stockholder
agree that all fees and expenses incurred by them in connection with this
Agreement shall be borne by them, and Purchaser agrees that all fees and
expenses incurred by it in connection with this Agreement shall be borne by it,
including, without limitation as to Stockholder or Purchaser, all fees of
counsel and accountants; provided that Purchaser shall reimburse Stockholder for
the out-of-pocket cost of the audit of the MediTek Balance Sheet as of April 30,
1996 and the additional out-of-pocket cost of preparing audited consolidated
financial statements of MediTek and its Subsidiaries as of and for the fiscal
year ended October 31, 1995. Purchaser and Stockholder agree that each will pay
50% of all stock transfer, documentary startup or other taxes (other than taxes
on or measured by income) which may be payable in connection with the sale and
transfer of the MediTek Stock to Purchaser this Agreement. At the Closing,
Purchaser will either pay or reimburse Stockholder for up to $80,179 for any of
Stockholder's or MediTek's out-of pocket expenses paid prior to the Closing Date
to unaffiliated third parties for finder's fees, due diligence expenses and
other similar expenses incurred in connection with acquisition of Ft. Lauderdale
Regional MRI. Purchaser shall also pay $100,000 of the fee owed to TM Capital
Corp. with respect to the Acquisition at the time of the closing of the the Ft.
Lauderdale Regional MRI transaction.
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13.04. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered upon personal delivery, 48 hours after deposit in
the United States certified or registered mail, return receipt requested, or 24
hours after delivery to an overnight courier that guarantees next-day delivery:
(a) If to Stockholder, to:
Laurans A. Mendelson
Chairman, CEO and President
Heico Corporation
3000 Taft Street
Hollywood, Florida 33021
Fax: (954) 987-8228
with a copy to:
Stuart D. Ames, Esq.
Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
Suite 2200 Museum Tower
150 West Flagler Street
Miami, Florida 33130
Fax: (305) 789-3395
or to such other person or address as or Stockholder shall furnish to Purchaser
in writing.
(b) If to Purchaser, to:
Jeffrey A. Goffman, Chairman
U.S. Diagnostic Labs Inc.
777 South Flagler Drive
West Tower Suite 1006
West Palm Beach, Florida 33401
Fax: (407) 833-8391
with a copy to:
Michael D. Karsch, Esq.
Bachner, Tally, Polevoy & Misher
380 Madison Avenue
New York, New York 10017
Fax: (212) 682-5729
or to such other person or address as Purchaser shall furnish to Stockholder in
writing.
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13.05. ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties hereto.
13.06. PUBLICITY. The parties agree to cooperate in issuing any press
release or other public announcement (including any filings made with the
Securities and Exchange Commission) concerning this Agreement or the
transactions contemplated hereby. Nothing contained herein shall prevent any
party from at any time furnishing any information to any governmental or
regulatory authority which it is by law or otherwise so obligated to disclose or
from making any disclosure which its counsel deems necessary or advisable in
order to fulfill such party's disclosure obligations under applicable law or the
rules of the American Stock Exchange or the National Association of Securities
Dealers.
13.07. GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Florida, without regard to its conflicts of law doctrine.
13.08. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
13.09. HEADINGS. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
13.10. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto; and the other documents and certificates delivered pursuant to
the terms hereof, set forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersede
all prior agreements, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto.
13.11. THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation other than the parties hereto
and their successors or assigns, any rights or remedies under or by reason of
this Agreement.
13.12. CONFIDENTIALITY. Each party hereto will hold and will cause
its consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other party furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the party to which it was furnished, or (ii) later lawfully acquired from other
sources by the party to which it was furnished), and each party will not release
or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other
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consultants and advisors in connection with this Agreement. If the transactions
contemplated by this Agreement are not consummated, such confidence shall be
maintained except to the extent such information comes into the public domain
through no fault of the party required to hold it in confidence, and such
information shall not be used to the detriment of, or in relation to any
investment in, the other party and all such documents (including copies thereof)
shall be returned to the other party immediately upon the written request of
such other party. Each party shall be deemed to have satisfied its obligation to
hold confidential information concerning or supplied by the other party if it
exercises the same care as it takes to preserve confidentiality for its own
similar information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
U.S. DIAGNOSTIC LABS INC.
By:
--------------------------------------------
Jeffrey A. Goffman, Chairman
HEICO CORPORATION
By:
---------------------------------------------
Laurans A. Mendelson, Chairman of the Board,
CEO and President
MEDITEK HEALTH CORPORATION
By:
---------------------------------------------
Laurans A. Mendelson, President
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EXHIBIT A
REGISTRATION AND SALE RIGHTS AGREEMENT
THIS REGISTRATION AND SALE RIGHTS AGREEMENT is made as of July 1,
1996, by and among U.S. Diagnostic Labs Inc. a Delaware corporation ("USDL" or
the "Company") and HEICO Corporation, a Florida corporation (the "Holder").
RECITALS
WHEREAS, the Company and the Holder are parties to the Stock Purchase
Agreement of even date herewith (the "Purchase Agreement") relating to the
purchase by the Company of the stock of MediTek Health Corporation, the
consideration of which consists in part of a note (the "Note") convertible into
Common Stock, $.01 par value, of the Company ("USDL Common Stock" such
definition to include any other stock or equity securities issuable by reason of
the anti-dilution provisions of the Note);
WHEREAS, in order to induce the Holder to enter into the Purchase
Agreement and to induce the Company to purchase such stock pursuant to the
Purchase Agreement, the Holder and the Company hereby agree that this Agreement
shall govern (i) the rights of the Holder to cause the Company to register
shares of the USDL Common Stock issuable to the Holder upon the conversion of
the Note, (ii) the terms of the voting proxy granted by the Holder and (iii)
certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees with
respect to the USDL Common Stock issuable upon conversion of the Note, as
follows:
1.1 DEFINITIONS. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as amended,
or any successor act.
(b) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
this Agreement.
(c) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended, or any successor act.
(d) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document under the Act, and the declaration or order of effectiveness of
such registration statement or document.
(e) The term "Registrable Securities" means the USDL Common Stock
issuable upon conversion of the Note, excluding (i) any Registrable Securities
sold by a person in a transaction in which his rights under this Section 1 are
not assigned or are assigned in violation of this Agreement and (ii) any
Registrable Securities that have already been registered under the Act or which
are freely transferable without registration under the Act due to the lapse of
time or otherwise and which are not subject to any sales volume limitation under
Rule 144 promulgated by the SEC under the Act ("Rule 144") based on the Holder's
holding's of Registrable Securities.
(f) The number of shares of "Registrable Securities then outstanding"
for the Company shall be determined by the number of shares of USDL Common
Stock outstanding which are, and the number of shares of USDL Common Stock
issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 REQUIRED REGISTRATION.
(a) The Company shall file with and use its best efforts to cause to be
declared effective by, the SEC on or before January 1, 1997 a registration
statement on Form S-3 under the Act or such other form that is available to the
Company covering the registration of the Registrable Securities.
(b) Notwithstanding the foregoing, the Company shall be permitted to
postpone the filing of any registration pursuant to this Section 1.2 if during
the period from November 1, 1996 to January 31, 1997, the Company is engaged, or
has fixed plans to engage prior to February 28, 1997, in a registered public
offering in which Registrable Securities will not be included, or is engaged, or
has fixed plans to engage within sixty (60) days of January 1, 1997, in a
material acquisition or any other activity that, in the good faith determination
of the Board of Directors of the Company, would require premature disclosure of
such activity to the material detriment of the Company, then the Company may at
its option direct that such filing be delayed for a period not in excess of
sixty (60) days from the effective date of such offering, or the date of
commencement of such other material activity, as the case may be, provided in
any case that the effective date of such registration statement shall not be
later than March 1, 1997.
1.3 "PIGGY-BACK" REGISTRATION RIGHTS. If (but without any obligation
to do so), during the three (3) year period commencing on January 1, 1997, the
Company proposes to register any of its Common Stock under the Act (a) in
connection with a public offering by the Company solely for cash or (b) on
behalf of stockholders other than the Holder in an underwritten offering (other
than a registration on Form S-8 or S-4 or relating solely to the sale of
securities to participants in a Company stock plan, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given
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within twenty (20) business days after mailing of such notice by the Company,
the Company shall, subject to the limitations set forth in this Agreement
(including the limitations of Section 1.7), include in the Company's
registration statement under the Act all of the Registrable Securities that each
such Holder has requested to be registered; PROVIDED, HOWEVER, that (i) the
Company shall not be obligated to effect any registration pursuant to this
Section 1.3 after the Company has effected two (2) such registrations in which
Registrable Securities are included and each such registration has been declared
or ordered effective, (ii) the Company need not include any Registrable
Securities in any registration statement relating to an underwritten offering if
such Registrable Securities are included in a then current registration
statement, and (iii) nothing in this Section 1.3 shall prevent the Company from
at any time abandoning or delaying any such registration without obligation to
any Holder, provided that such abandoned registration shall not be considered
one of the registrations referred to in clause (i) of this sentence.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities or to include
Registrable Securities in a registration statement, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of two years or such shorter
period as required until the distribution contemplated in the Registration
Statement has been completed; PROVIDED, HOWEVER, that such period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; PROVIDED that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.
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(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Company are then listed.
(h) The Company covenants and agrees to: (i) make and keep available
adequate current public information as such is understood and defined in Rule
144 under the Act; and (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1934 Act.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Holder's Registrable Securities.
1.6 EXPENSES OF REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1 for each Holder, including all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto, but excluding
underwriting discounts and commissions relating to Registrable Securities;
PROVIDED, HOWEVER, that the Company shall not bear the cost of any professional
fees or costs of accounting, financial or legal advisors to the Holder.
Notwithstanding the foregoing, Holder shall pay all registration expenses which
such Holder is required to pay under applicable law.
1.7 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of USDL Common Stock, the Company shall not be
required under Section 1.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by
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stockholders to be included in such offering exceeds the amount of securities to
be offered, other than by the Company, that the underwriters determine in their
sole discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, if any, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders, provided that no
other stockholder shall be permitted to include a greater proportion of their
shares of USDL Common Stock in such registration statement than Holder desires
to include therein).
1.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, each of Holder's directors and officers, any underwriter
(as defined in the Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Act or the 1934 Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Act, or the 1934 Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, or any rule or regulation promulgated under
the Act, and the Company will pay to each such Holder, underwriter or
controlling person any reasonable legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability, or action; PROVIDED, HOWEVER, that the indemnity agreement contained
in this subsection 1.8(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
information furnished for use in connection with such registration by any such
Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of the Company's directors, each of the
Company's officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become
-5-
subject, under the Act, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with information furnished by such Holder for
use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.8(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this subsection 1.8(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld); PROVIDED, that, in no
event shall the aggregate liability for indemnification by any Holder under this
subsection 1.8(b) exceed the gross proceeds from the offering relating to
securities sold by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.8 of notice of the commencement of any action (including any governmental
action), such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose approval shall
not be unreasonably withheld); PROVIDED, HOWEVER, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section 1.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or
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by the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 1.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
2. OTHER AGREEMENTS.
2.1 VOTING AGREEMENT AND PROXY. The Holder hereby grants to Jeffrey A.
Goffman, Chairman of the Board of the Company, an irrevocable proxy (the
"Proxy") to vote the Registrable Securities in the election of directors of the
Company and in any vote of stockholders involving proposed changes of control,
mergers and other similar extraordinary transactions. The Proxy will be voted at
the direction of a majority of the Board of Directors of the Company, but in any
event will be voted for the election of HEICO Corporation's designee on the
Company's Board of Directors. The Company shall also cause (to the extent
permitted by law) each of its officers and directors and each of the Company's
officers' and directors' designees to vote any securities over which they have
authority to vote (whether by proxy, voting trust or otherwise) for the election
of the HEICO Corporation's designee on the Company's Board of Directors during
the term of the Proxy. The Proxy shall have a term of three years, but subject
to Section 2.2, shall automatically terminate upon the sale of such shares by
Holder to an unaffiliated third party. Holder agrees to execute any documents
necessary to enforce the provisions of this section.
2.2 RESTRICTION ON TRANSFER. Until January 1, 1997, the Holder agrees
not to directly or indirectly sell, offer to sell, contract to sell (including,
without limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of any Registrable Securities held by it except (i) in a
private transaction in which the transferee agrees to be bound by the Proxy, or
(ii) in a pro-rata distribution by Holder to its stockholders in a transaction
that would not require registration of such shares under the Act prior to the
filing required to be made pursuant to Section 1.2 hereof. Thereafter until June
30, 1998, Holder shall be permitted to sell the greater of one-quarter (1/4) of
the Registrable Securities during each calendar month on a noncumulative basis
or the number of shares which, but for the absence of the required holding
period, the Holder would be entitled to sell pursuant to Rule 144 (provided
always that such sale is pursuant to an effective registration statement under
the Act or qualifies for an exemption under the Act). This Section 2.2 shall be
binding upon any transferee of the Registrable Securities and the certificates
shall bear a legend to such effect. In addition, prior to a distribution by
Holder to its stockholders, if any, any person which shall be entitled to
receive shares of USDL Common Stock constituting two percent (2%) or more of
USDL Common Stock outstanding at such time shall
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agree in writing (a) not to sell in any month more than the amount which Holder
could sell pursuant to the preceding sentence, and (b) to the terms of the Proxy
described in Section 2.1. In order to enforce the foregoing covenants, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period.
2.3 SELLING AGENT; BLOCK TRADES. If a Holder desires to sell any
Registrable Securities in an open market transaction prior to June 30, 1998,
such shares shall be made through a broker-dealer reasonably acceptable to the
Company and the Holder (a "Sales Agent"). Prior to the appointment of a Sales
Agent, such Sales Agent shall agree, if requested by the Company, to execute any
such sales in a manner which does not have a material adverse impact on the
market for the USDL Common Stock. Any such sales shall be on terms to be
negotiated between the Sales Agent and the Holder. Notwithstanding the
foregoing, privately negotiated "block" trades (i.e., a sale of at least 50,000
shares) shall be permitted to be made without the Sales Agent; provided that
such transfer is made subject to the Proxy and the provisions of the second
sentence of Section 2.2.
2.4 SALES TO QIB'S. Notwithstanding anything to the contrary contained
in this Agreement, the restrictions on transfer and proxy/voting provisions of
this Agreement, including without limitation the provisions of Section 2.1, 2.2
and 2.3, shall not apply to any transfer of USDL Common Stock by a Holder to a
"Qualified Institutional Buyer", as such term is defined in Rule 144A of the SEC
under the Act.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in Section
3.2 below and elsewhere herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
3.2 TRANSFER OF RIGHTS. The rights granted to the Holder pursuant to
Section 1 may not be transferred or assigned except (a) in connection with the
transfer or assignment of the Note, (b) to a transferee or assignee of at least
25% of the Registrable Securities or (c) to a Qualified Institutional Buyer.
3.3 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Florida as applied to agreements among Florida
residents entered into and to be performed entirely within Florida without
regard to principles of conflicts of law.
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3.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.6 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly delivered upon personal delivery, 48 hours after deposit in the United
States mail, certified or registered mail, return receipt requested, or 24 hours
after delivery to an overnight courier that guarantees next-day delivery:
(a) If to Holder, to:
Laurans A. Mendelson
Chairman, CEO and President
Heico Corporation
3000 Taft Street
Hollywood, Florida 33021
Fax: (954) 987-8228
with a copy to:
Stuart D. Ames, Esq.
Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
Suite 2200 Museum Tower
150 West Flagler Street
Miami, Florida 33130
Fax: (305) 789-3395
or to such other person or address as the Holder shall furnish to the Company
in writing.
(b) If to the Company, to:
Jeffrey A. Goffman, Chairman
U.S. Diagnostic Labs Inc.
777 South Flagler Drive
West Tower, Suite 1006
West Palm Beach, Florida 33401
Fax: (407) 833-8391
or to such other person or address as the Company shall furnish to the Holders
in writing.
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3.7 EXPENSES. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
3.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of any
Registrable Securities then outstanding, each future Holder of all such
Registrable Securities, and the Company.
3.9 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms. The parties hereto shall endeavor to replace any such unenforceable
provision or provisions with a valid and enforceable provision or provisions
which shall have substantially the same economic effect as the unenforceable
provision or provisions.
3.10 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
U.S. DIAGNOSTIC LABS INC.
By: ________________________________________
Jeffrey A. Goffman
Chairman
HEICO CORPORATION
By: ________________________________________
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Laurans A. Mendelson, Chairman of the Board,
CEO and President
-11-
EXHIBIT B
THIS NOTE AND THE SHARES OF COMMON STOCK OF U.S. DIAGNOSTIC LABS INC. (THE
"COMPANY") INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE
PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
STATE SECURITIES LAW OR (ii) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
HOLDER OF SUCH NOTE OR COMMON STOCK REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH SHARES OR NOTE MAY BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE SECURITIES LAWS.
U.S. DIAGNOSTIC LABS INC.
6 1/2% CONVERTIBLE NEGOTIABLE NOTE
DUE JUNE 30, 2001
New York, New York
$10,000,000.00 July 1, 1996
FOR VALUE RECEIVED, U.S. Diagnostic Labs Inc., a Delaware
corporation (the "Company"), with its principal office at 777 S. Flagler Street,
West Palm Beach, Florida 33401, promises to pay to the order of Heico
Corporation, or assigns (the "Payee" or "the holder of this Note"), the
principal amount of Ten Million Dollars ($10,000,000.00), with interest from the
date hereof payable quarterly at the rate of six and one-half percent (6 1/2%)
per annum. The principal of this Note shall be due and payable in full on June
30, 2001. Quarterly payments of accrued interest shall commence September 30,
1996 and continue until the principal is paid or converted in full. Accrued and
unpaid interest on any portion of the Note that is converted pursuant to the
terms of Section 2 hereof will be payable through the date of the Notice of
Conversion on the principal amount converted. Interest shall be computed based
on the premise that a year contains twelve (12) thirty (30) day months and 360
days and shall be charged on a per diem basis.
This Note is issued pursuant to a Stock Purchase Agreement dated
as of June 20, 1996, among the Company, Heico Corporation and MediTek Health
Corporation (the "Purchase Agreement"), a copy of which agreement is available
for inspection at the Company's principal office. Notwithstanding any provision
to the contrary contained herein, this Note is subject and entitled to certain
terms, conditions, covenants and agreements contained in the Purchase Agreement.
Any transferee or transferees of the Note, by their acceptance hereof, assume
the obligations of the Payee in the Purchase Agreement with respect to the
conditions and procedures for transfer of the Note.
1. EVENTS OF DEFAULT. If one or more of the following
events (herein called "Events of Default") shall have occurred and be
continuing, that is to say:
(a) If the Company shall default in the payment of the principal
and accrued interest on this Note after the principal or accrued interest shall
become due and payable; or
(b) If (i) the Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, dissolution, liquidation, winding-up, composition or
any other relief under the Bankruptcy Act, as amended, or under any other
insolvency, reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or any other similar act or law, of any jurisdiction,
domestic or foreign, now or hereafter existing; or (ii) the Company shall admit
the material allegations of any petition or pleading in connection with any such
proceeding; or (iii) the Company applies for, or consents or acquiesces to, the
appointment of a receiver, conservator, trustee or similar officer for it or for
all or a substantial part of its property; or (iv) the Company makes a general
assignment for the benefit of creditors; or (v) the Company is unable or admits
in writing that it is unable to pay its debts as they mature; or
(c) (i) Commencement of any proceedings or in the taking of any
other action against the Company in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law of any
jurisdiction, domestic or foreign, now or hereafter existing and the continuance
of any of such events for twenty (20) days undismissed, unbonded or
undischarged; or (ii) the appointment of a receiver, conservator, trustee or
similar officer for the Company or for all or substantially all of its property
and the continuance of any of such events for twenty (20) days undismissed,
unbonded or undisclosed; or (iii) the issuance of a warrant of attachment,
execution or similar process against substantially all of the property of the
Company and the continuance of such event for thirty (30) days undismissed,
unbonded and undischarged; or
(d) Upon a material breach by the Company of its obligations
under the Purchase Agreement or the Registration and Sale Rights Agreement
referred to therein;
then the principal amount of, and all accrued interest on, this Note shall be
accelerated and become immediately due and payable in full. The Events of
Default listed herein are solely for the purpose of protecting the interests of
the holder of this Note.
2. CONVERSION OF NOTE.
(a) The Payee shall have the right, by written notice to the
Company as provided herein at any time following the issuance of this Note and
prior to or on the Maturity Date, to convert all or a portion of the unpaid
principal amount of this Note plus all accrued interest thereon, into Common
Stock, $.01 par value, of the Company ("Common Stock"), at a conversion price of
$9.25 per share, subject to adjustment as hereinafter provided.
(b) The Payee desiring to exercise its option to convert this
Note pursuant to clause (a) hereof, shall deliver the Note to the Company at its
principal executive office, accompanied by a signed "Notice of Conversion" in
the form attached as Exhibit A hereto, specifying the number of shares of Common
Stock to be acquired, the principal amount to be converted and the name or
names, address and social security or tax ID number in which the certificate or
certificates for shares of Common Stock are to be issued. The foregoing
notwithstanding, no holder of this Note shall be entitled to transfer this Note
by conversion without first complying with all applicable restrictions on the
transfer of this Note. The conversion will be deemed to have occurred upon the
date of delivery of this Notice and the Notice of Conversion and the person
entitled to receive share certificates for Common Stock shall be regarded for
all corporate purposes from and after such date as the record holder of the
number of shares of Common Stock to which it is entitled upon the conversion.
The Company may rely on record ownership of this
-2-
Note for all corporate purposes, notwithstanding any contrary notice. Upon
receipt of the Notice of Conversion, the Company shall promptly issue a stock
certificate for the shares of Common Stock issuable upon conversion of the Note
and shall promptly pay all accrued interest on the portion of the Note that has
been converted.
(c) The Conversion Price in effect at any time and the number and
kind of securities purchasable upon the conversion of this Note shall be subject
to adjustment from time to time upon the happening of certain events as follows:
(i) In case the Company shall (x) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares
of Common Stock, (y) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, or (z)
combine or reclassify its outstanding shares of Common Stock into
a smaller number of shares, the Conversion Price in effect at the
time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price by a
fraction, the denominator of which shall be the number of shares
of Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed
above shall occur.
(ii) In the case of any reclassification, capital reorganization
or other change of outstanding shares of Common Stock of the
Company, or in the case of any consolidation or merger of the
Company with or into another corporation or the conveyance of all
or substantially all of the assets of the Company to another
corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which does
not result in any reclassification, capital reorganization or
other change of outstanding shares of Common Stock of the class
issuable upon conversion of this Note), this Note shall
thereafter be convertible at the Conversion Price in effect on
the day immediately preceding such reclassification,
reorganization, merger or consolidation into the number of shares
of stock or other securities or property to which a holder of the
number of shares of Common Stock of the Company deliverable upon
conversion of this Note would have been entitled upon such
reclassification, change, consolidation, merger or conveyance;
and, in any such case, appropriate adjustment (as determined by
the Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interests thereafter of the holder of this Note, to the end that
the provisions set forth herein (including provisions with
respect to changes in and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of this Note. The
foregoing provisions of this subsection (c)(2) shall similarly
apply to successive reclassification, capital reorganizations and
changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(d) No fractional shares of Common Stock shall be issued upon
conversion of this Note. In the event that the principal amount stated in the
aforesaid notice to be converted would result in the issuance of a fractional
share of Common Stock, the Company shall pay a cash adjustment in lieu of such
-3-
fractional share to the holder of this Note based upon the closing price of a
share of Common Stock on the principal securities exchange (including the Nasdaq
National Market) on which such Common Stock is trading on the Date of
Conversion.
(e) In case at any time:
(i) The Company shall declare any dividend upon, or other
distribution in respect of, its Common Stock; or
(ii) There shall be any capital reorganization or
reclassification of the capital stock of the Company, or a sale
of all or substantially all of the assets of the Company, or a
consolidation or merger of the Company with another corporation
(other than a merger with a subsidiary in which merger the
Company is the continuing corporation and which does not result
in any reclassification), or change of then outstanding shares of
Common Stock or other capital stock issuable upon the conversion
of this Note (other than a change in par value, or from par value
to no par value, or from no par value to par value or as a result
of subdivision or combination or conversion of outstanding
options and warrants currently outstanding); or
(iii) There shall be a voluntary or involuntary dissolution;
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall cause to be mailed to
the registered holder of this Note at the earliest practicable time (and, in any
event not less than 10 business days before any record date or other date set
for definitive action), written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or such reorganization, reclassification, sale, consolidation, merger or
dissolution, liquidation or winding-up shall take place, as the case may be.
Such notice shall also set forth such facts as shall indicate the effect of such
action (to the extent such effect may be known or can reasonably be approximated
at the date of such notice) on the Conversion Rate and the kind and amount of
the shares of stock and other securities and property deliverable upon the
conversion of this Note. Such notice shall also specify the date as of which the
holders of the Common Stock of record shall participate in said dividend,
distribution or shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification, sale,
consolidation, merger or dissolution, liquidation or winding-up, as the case may
be.
(f) All shares of Common Stock which may be issued upon
conversion of this Note will, upon issuance by the Company in accordance with
the terms of this Note be validly issued and, subject to the payment in full, in
an amount equal to the Conversion Rate of such shares multiplied by the number
of shares so issued, fully paid and non-assessable.
3. REQUIRED CONVERSION. At any time commencing on the later of
June 30, 1997 or the date that that the shares of Common Stock into which this
Note are convertible are registered for resale by the Holder under the
Securities Act of 1933, as amended (such time being herein called the "Required
Conversion Date"), if the last sale price of the Common Stock averages at least
$9.25 per share for the ten (10) trading days immediately preceding the Required
Conversion Date, then upon written notice from the
-4-
Company given within fifteen (15) days following the Required Conversion Date,
the Payee shall convert this Note at the then applicable Conversion Rate.
4. PREPAYMENT. This Note may be prepaid in whole or in
part any time after June 30, 1997, upon sixty (60) days written notice by the
Company to the Holder. The Holder shall be permitted to convert this Note at any
time prior to the date of prepayment set forth in such notice.
5. REDEMPTION AT THE OPTION OF HOLDER. Until such time that
the shares of Common Stock into which this Note are convertible are registered
for resale by the Holder under the Securities Act of 1933, as amended, the
Holder may require the Company to redeem this Note for cash upon written notice
by Holder to the Company.
6. RESERVATION OF SHARES. The Company covenants and agrees that,
during the period within which the conversion rights contained in this Note may
be exercised, the Company will at all times have authorized and reserved, solely
for the purpose of such possible conversion, out of its authorized but unissued
shares, a sufficient number of shares of its Common Stock (and such other
securities, if any, which become issuable upon conversion hereof by reason of
the antidilution provisions of this Note) to provide for the exercise in full of
the conversion rights contained in this Note.
7. LOST DOCUMENTS. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note or
any Note exchanged for it, and (in the case of loss, theft or destruction) of
indemnity reasonably satisfactory to it, and upon reimbursement to the Company
of all reasonable expenses incidental thereto, and upon surrender and
cancellation of such Note, if mutilated, the Company will make and deliver in
lieu of such Note a new Note of like tenor and unpaid principal amount and dated
as of the original date of the Note.
8. MISCELLANEOUS.
(a) PARTIES IN INTEREST. All covenants, agreements and
undertakings in this Note by and on behalf of the Company shall bind and inure
to the benefit of the respective permitted successors and assigns of the parties
hereto whether so expressed or not.
(b) NOTICES. All notices, requests, consents and demands shall be
made to the Company or to the holder of this Note in the manner provided in
Section 13.04 of the Purchase Agreement.
(c) CONSTRUCTION. The Company, for itself and its successors and
assigns, expressly waives presentment for payment, demand, protest and notice of
demand, notice of dishonor and notice of nonpayment and all other notices not
specifically provided for in this Note.
(d) COSTS OF COLLECTION; APPLICATION OF PAYMENTS. In the event
that this Note shall at any time after maturity be placed with an attorney for
collection, then the Company agrees to pay, in addition to the entire unpaid
principal balance and interest due hereunder, all collection costs, including
attorneys' fees and expenses, incurred by the Holder in collecting the
indebtedness due hereunder. All payments made hereunder prior to an Event of
Default shall first be applied to interest and then to principal; and all
-5-
payments made hereunder after an Event of Default shall first be applied to the
above-referenced costs of collection, then to interest and then to principal.
(e) GOVERNING LAW; JURISDICTION AND VENUE. THIS NOTE SHALL BE
INTERPRETED. AND THE RIGHTS AND LIABILITIES OF THE COMPANY AND THE HOLDER
DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF FLORIDA. AS PART OF THE CONSIDERATION FOR NEW VALUE
THIS DAY RECEIVED, THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN DADE COUNTY, STATE OF FLORIDA, AND CONSENTS THAT
ALL SERVICE OF PROCESS BE MADE AT THE ADDRESS STATED IN, AND PURSUANT TO THE
TERMS OF, SECTION 13.04 OF THE PURCHASE AGREEMENT. THE COMPANY WAIVES ANY
OBJECTION WHICH THE COMPANY MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER
VENUE OR FORUM NON CONVENIENS TO ANY SUIT OR PROCEEDING INSTITUTED BY THE HOLDER
UNDER THIS NOTE IN ANY STATE OR FEDERAL COURT LOCATED WITHIN DADE COUNTY,
FLORIDA AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
HOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE HOLDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH HAS JURISDICTION OVER THE
COMPANY OR ITS PROPERTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER
TO ENTER INTO THE PURCHASE AGREEMENT AND THE OTHER AGREEMENTS REFERRED TO
THEREIN AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREUNDER.
(f) SECTION HEADINGS. The section headings contained in this
Note are for convenience of reference only and shall not affect the meaning or
interpretation of this Note.
IN WITNESS WHEREOF, this Note has been executed and delivered on
the date first specified above by the duly authorized representative of the
Company.
U.S. DIAGNOSTIC LABS INC.
By:
---------------------------
Jeffrey A. Goffman, Chairman
Exhibit A
NOTICE OF CONVERSION
The undersigned hereby irrevocably exercises the option to
convert this Note, or the portion below designated, into shares of Common Stock
of U.S. DIAGNOSTIC LABS INC. in accordance with the terms of the Note, and
direct that the shares issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned registered Holder hereof, unless a different name
has been indicated below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
Portion of this Note
to be converted: $________________
If shares of Common Stock are to be issued and registered in the name of a
person other than the undersigned, please print the name and address, including
zip code, and social security or other taxpayer identification number of such
person below.
------------------------
------------------------
------------------------
Your Name: _________________________
(exactly as your name appears
on the face of this Note)
By:__________________________________
Title:_________________________________
Date:_________________________________
EXHIBIT 99.1
HEICO NEWS
HEICO Corporation, 3000 Taft Street, Hollywood, Florida 33021 - 954-987-6101
FOR IMMEDIATE RELEASE
Date: June 17, 1996
Contact: Thomas S. Irwin or Victor H. Mendelson
HEICO ANNOUNCES SALE OF ITS MEDITEK HEALTH CORP. SUBSIDIARY
"PLANS FOCUS ON GROWTH AND ACQUISITIONS IN AEROSPACE BUSINESS"
HOLLYWOOD, FL -- HEICO CORPORATION (ASE:HEI), today announced that it has
reached an agreement to sell its Miami, FL-based MediTek Health Corporation
subsidiary to U.S. Diagnostic Labs, Inc. (NASDAQ symbol: USDL) for approximately
$23 million. Both MediTek and USDL are leading providers of medical diagnostic
imaging services through their outpatient facilities which offer Magnetic
Resonance Imaging (MRI), Computed Arial Tomography (CAT), Nuclear Medicine,
Ultrasound, Mammography and X-Ray services.
The MediTek divestiture reflects HEICO's decision to focus on its historical
and rapidly-growing aerospace businesses.
Laurans A. Mendelson, HEICO's Chairman, President and Chief Executive Officer,
stated, "HEICO intends to aggressively pursue further acquisition opportunities,
paying particular attention to the growing aerospace industry where we have had
great success."
HEICO announced earlier this month that it had entered into a letter of intent
to acquire Trilectron Industries, Inc., a leading designer and manufacturer of
aircraft ground support equipment.
Mr. Mendelson added, "We believe there are numerous opportunities whereby we
can acquire manufacturers in segments, such as aircraft parts and aircraft
ground support equipment manufacturing, allowing HEICO to achieve substantial
operating synergies by combining entities and creating a significant industry
market force in the same manner as it did with MediTek."
Consideration for the MediTek transaction consists of $13 million in cash and a
$10 million face value five-year note bearing interest at 6.5% per annum
convertible into 1,081,081 USDL common shares.
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The agreement calls for Mr. Mendelson to join USDL's Board of Directors. As part
of the transaction, Joseph A. Paul, MediTek's President, will become President
of USDL and most of MediTek's senior management will join USDL. USDL said that
it does not presently anticipate employment changes at MediTek's facilities.
The transaction is anticipated to result in an after-tax gain of approximately
$5 million, (or $1.00 per share), during HEICO's third quarter of fiscal 1996
and is expected to close by July 1, 1996. In addition, the convertible nature of
the note will provide HEICO the opportunity to continue to participate in
upside growth in the medical imaging industry. Closing is subject to execution
of a definitive purchase agreement, which is expected within the next week, and
customary closing conditions.
Mr. Mendelson commented, "During the past six months, HEICO has considered
numerous partnership and acquisition possibilities for MediTek, but concluded
that today's sale to USDL offered HEICO and its shareholders a superior return
on its investment. We are impressed with USDL's management and its operating
strategies and believe that it will soon become this country's dominant
diagnostic imaging provider."
HEICO Corporation is engaged in the aerospace industry through its Hollywood,
FL-based HEICO Aerospace Corp. subsidiary and in the health care industry
through its Miami, FL-based MediTek Health Corp. subsidiary.
For more information concerning HEICO, please see out site on the World Wide
Web at: http//www.stockprofile.com/hei/
EXHIBIT 99.2
HEICO NEWS
HEICO Corporation, 3000 Taft Street, Hollywood, Florida 33021 - 954-987-6101
FOR IMMEDIATE RELEASE
Date: July 11, 1996
Contact: Thomas S. Irwin or Victor H. Mendelson
HEICO COMPLETES PREVIOUSLY ANNOUNCED SALE OF MEDITEK SUBSIDIARY FOR
CONSIDERATION CURRENTLY VALUED IN EXCESS OF $25 MILLION
HOLLYWOOD, FL -- HEICO CORPORATION (ASE Symbol: HEI) today announced it has
completed the sale of its Miami, FL-based MediTek Health Corp. subsidiary to
West Palm Beach, FL-based U.S. Diagnostic Labs, Inc. (NASDAQ Symbol: USDL).
HEICO announced last month that it had entered into a definitive agreement for
the acquisition of MediTek by U.S. Diagnostic Labs.
Under the transaction, HEICO received approximately $14 million in cash and a
$10 million note bearing interest at the rate of 6.25% per annum convertible
into 1,081,081 shares of USDL common stock at $9.25 per USDL share. At USDL's
recent share price of $11.125, the market value of those shares exceeds $12
million, bringing the current market value of the transaction to in excess of
$25 million.
HEICO Corporation is engaged in the aerospace industry through its Hollywood,
FL-based HEICO Aerospace Corp. subsidiary. In addition, the Company has
entered into a previously reported letter of intent to acquire Trilectron
Industries, Inc. a Palmetto, FL-based manufacturer of aircraft ground support
equipment.
For more information concerning HEICO, please see out site on the World Wide
Web at: http//www.stockprofile.com/hei/
