UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a-12
RADNET, INC.
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable
(2) Aggregate number of securities to which transaction applies:
Not applicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): Not
applicable
(4) Proposed maximum aggregate value of transaction: [_______]
(5) Total fee paid: [______]
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ___________________________________________
(2) Form, Schedule or Registration Statement No.: _____________________
(3) Filing Party: _____________________________________________________
(4) Date Filed: _______________________________________________________
RADNET, INC.
1510 COTNER AVE.
LOS ANGELES, CA 90025
April ___, 2008
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
RadNet, Inc. to be held at The Olympic Collection, 11301 Olympic Blvd., Los
Angeles, California on Monday, May 12, 2008, at 10:00 a.m. (Pacific time).
The attached notice of annual meeting and proxy statement include the
agenda for the stockholders' meeting, explain the matters that we will discuss
at the meeting and provide general information about our company.
Your vote is very important. We have provided a postage-paid envelope for
your convenience. If you plan to attend the annual meeting and prefer to vote in
person, you may still do so even if you have already given your proxy. If your
shares are registered in the name of a broker or other nominee, your nominee may
be participating in a program provided through Broadridge Financial Solutions,
Inc. (formerly ADP Investor Communication Services) that allows you to vote by
telephone or the Internet. If so, the voting form that your nominee sends you
will provide telephone and Internet instructions.
We look forward to seeing you at the annual meeting.
Sincerely,
Norman R. Hames
CORPORATE SECRETARY
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RADNET, INC.
1510 COTNER AVE.
LOS ANGELES, CA 90025
-----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 2008
-----------------------------
The annual meeting of stockholders of RadNet, Inc. will be held at The
Olympic Collection, 11301 Olympic Blvd., Los Angeles, California on Monday, May
12, 2008, at 10:00 a.m. (Pacific time) for the following purposes:
1. To elect seven directors;
2. To consider a proposal to approve the reincorporation of the Company
in the state of Delaware;
3. To ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2008;
and
4. To transact any other business that may properly come before the
meeting or any adjournment or postponement of the meeting.
The foregoing items of business are more fully described in the proxy
statement.
The board of directors has fixed the close of business on April 14, 2008
as the record date for the determination of stockholders entitled to notice of
and to vote at the annual meeting and at any adjournment or postponement
thereof. A list of stockholders entitled to vote at the meeting will be
available for inspection at our offices.
By order of the board of directors,
/s/ Norman R. Hames
Norman R. Hames
Dated: April 16, 2008 CORPORATE SECRETARY
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE TO ENSURE YOUR REPRESENTATION AT THE
MEETING. A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
STOCKHOLDERS HOLDING SHARES WITH A BROKER, BANK OR OTHER NOMINEE MAY ALSO BE
ELIGIBLE TO VOTE VIA THE INTERNET OR TO VOTE TELEPHONICALLY IF THEIR BROKER,
BANK OR OTHER NOMINEE PARTICIPATES IN THE PROXY VOTING PROGRAM PROVIDED BY
BROADRIDGE FINANCIAL SOLUTIONS, INC. (FORMERLY ADP INVESTOR COMMUNICATION
SERVICES). SEE "VOTING SHARES REGISTERED IN THE NAME OF A BROKER OR BANK" IN THE
PROXY STATEMENT FOR FURTHER DETAILS ON THE BROADRIDGE PROGRAM. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF A BROKER, BANK OR OTHER NOMINEE HOLDS YOUR SHARES OF
RECORD AND YOU WISH TO VOTE AT THE MEETING, THEN YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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RADNET, INC.
1510 COTNER AVE.
LOS ANGELES, CA 90025
---------------------------
2008 PROXY STATEMENT
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GENERAL INFORMATION
The board of directors of RadNet, Inc., a New York corporation, is
providing these proxy materials to you in connection with the solicitation of
proxies for use at our 2008 annual meeting of stockholders. The meeting will be
held at The Olympic Collection, 11301 Olympic Blvd., Los Angeles, California on
Monday, May 12, 2008, at 10:00 a.m. (Pacific time) or at any adjournment or
postponement thereof, for the purposes stated herein. This proxy statement
summarizes the information that you will need to know to vote in an informed
manner.
VOTING RIGHTS AND OUTSTANDING SHARES
We will begin mailing this proxy statement and the accompanying proxy card
on or about April 16, 2008 to all stockholders of record that are entitled to
vote. Only stockholders that owned our common stock at the close of business on
April 14, 2008, the record date, are entitled to vote at the annual meeting. On
the record date, 35,639,558 shares of our common stock were outstanding.
Each share of our common stock that you own entitles you to one vote on
all matters to be voted upon at the meeting. The proxy card indicates the number
of shares of our common stock that you own. We will have a quorum to conduct the
business of the annual meeting if holders of a majority of the shares of our
common stock are present in person or represented by proxy. Abstentions and
broker non-votes (i.e., shares of common stock held by a broker, bank or other
nominee that are represented at the meeting, but that the broker, bank or other
nominee is not empowered to vote on a particular proposal) will be counted in
determining whether a quorum is present at the meeting.
Directors will be elected by a plurality of votes cast by shares present
or represented at the meeting. Abstentions will have no impact on the election
of directors. The proposal to reincorporate the Company in Delaware must be
approved by two thirds of the Common Stock outstanding on April 14, 2008.
Abstentions, broker non-votes and withheld votes will not be considered as cast
votes. The proposal to ratify the appointment of our independent registered
public accounting firm must be approved by a majority of votes actually cast.
Abstentions and broker non-votes are not counted as votes for or against this
proposal, but the number of votes cast in favor of the proposal must be at least
a majority of the required quorum.
VOTING SHARES REGISTERED IN YOUR NAME
If you are a stockholder of record, you may vote in one of two ways:
o Attend the 2008 annual meeting and vote in person; or
o Complete, sign, date and return the enclosed proxy card.
VOTING SHARES REGISTERED IN THE NAME OF A BROKER, BANK OR OTHER NOMINEE
Most beneficial owners whose stock is held in street name will receive
instructions for voting their shares from their broker, bank or other nominee,
rather than our proxy card.
A number of brokers and banks participate in a program provided through
Broadridge Financial Solutions, Inc. (formerly ADP Investor Communication
Services) that allows stockholders to grant their proxy to vote shares by means
of the telephone or Internet. If your shares are held in an account with a
broker or bank participating in the Broadridge program, then you may vote your
shares telephonically by calling the telephone number shown on the instruction
form received from your broker or bank, or over the Internet at Broadridge's web
site at http://www.proxyvote.com.
If you wish to vote in person at the annual meeting, then you must obtain
a legal proxy issued in your name from the broker, bank or other nominee that
holds your shares of record.
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TABULATION OF VOTES
A representative from our transfer agent, American Stock Transfer & Trust
Company, will tabulate the votes. The shares of our common stock represented by
proxy will be voted in accordance with the instructions given on the proxy so
long as the proxy is properly executed and received by us prior to the close of
voting at the meeting or any adjournment or postponement of the meeting (or in
the case of proxies submitted by telephone or via the Internet, by the deadline
specified above). If no instruction is given, then the proxy will be voted for
the nominees for director, for the reincorporation in Delaware and for the
proposal to ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm. In addition, the individuals that we have
designated as proxies for the meeting will have discretionary authority to vote
for or against any other stockholder matter presented at the meeting.
REVOCABILITY OF PROXIES
As a stockholder of record, once you have submitted your proxy you may
revoke it at any time before it is voted at the meeting. You may revoke your
proxy in any one of three ways:
o You may grant another proxy marked with a later date (which
automatically revokes the earlier proxy) using any of the methods
described above (and until the applicable deadline for each method);
o You may notify our Corporate Secretary in writing that you wish to
revoke your proxy before it is voted at the annual meeting; or
o You may vote in person at the annual meeting.
SOLICITATION
This solicitation is made by our board of directors, and we will bear the
entire cost of soliciting proxies, including preparation, assembly, printing and
mailing of this proxy statement, the proxy card and any additional information
furnished to stockholders. We will provide copies of solicitation materials to
banks, brokerage houses, fiduciaries and custodians holding in their names
shares of our common stock that are beneficially owned by others for forwarding
to the beneficial owners. We may reimburse persons representing beneficial
owners of common stock for their costs of forwarding solicitation materials to
the beneficial owners. Solicitations will be made primarily through the mail,
but may be supplemented by telephone, telegram, facsimile, Internet or personal
solicitation by our directors, executive officers, employees or other agents. No
additional compensation will be paid to these individuals for these services.
STOCKHOLDER PROPOSALS FOR 2009
REQUIREMENTS FOR STOCKHOLDER PROPOSALS TO BE CONSIDERED FOR INCLUSION IN
RADNET, INC.'S PROXY MATERIALS. Stockholder proposals submitted pursuant to Rule
14a-8 under the Exchange Act and intended to be presented at our 2009 annual
meeting must be received by us not later than December 17, 2008, in order to be
considered for inclusion in our proxy materials for that meeting.
REQUIREMENTS FOR STOCKHOLDER PROPOSALS TO BE BROUGHT BEFORE AN ANNUAL
MEETING. Our bylaws provide that, for stockholder nominations to the board of
directors or other proposals to be considered at an annual meeting, the
stockholder must have given timely notice of the proposal or nomination in
writing to our Corporate Secretary. To be timely for the 2009 annual meeting, a
stockholder's notice must be delivered to or mailed and received by our
Corporate Secretary at our principal executive offices between January 17, 2009
and February 16, 2009. A stockholder's notice to the Corporate Secretary must
set forth, as to each matter the stockholder proposes to bring before the annual
meeting, the information required by our bylaws.
SEPARATE COPY OF ANNUAL REPORT OR PROXY MATERIALS
If you share an address with another stockholder, each stockholder may not
receive a separate copy of our annual report and proxy materials. Stockholders
who do not receive a separate copy of our annual report and proxy materials, and
who want to receive a separate copy, may request to receive a separate copy of
our annual report and proxy materials by writing to Investor Relations at
RadNet, Inc., 1510 Cotner Ave., Los Angeles, CA 90025 or by calling
310-445-2955. We will undertake to deliver promptly a copy of the annual report
or proxy materials, as applicable, upon the receipt of such request.
Stockholders who share an address and receive multiple copies of our annual
report and proxy materials may also request to receive a single copy following
the instructions above.
SHAREHOLDER COMMUNICATIONS TO THE BOARD
Shareholders who wish to send communications to our Board of Directors may
do so by sending them in care of our Secretary at the address on the cover page
of this Proxy Statement. The envelope containing such communication must contain
a clear notation indicating that the enclosed letter is a "Shareholder-Board
Communication" or "Shareholder-Director Communication" or similar statement that
clearly and unmistakably indicates the communication is intended for the Board.
All such communications must clearly indicate the author as a shareholder and
state whether the intended recipients are all members of the Board or just
certain specified directors. Our Secretary will have the discretion to screen
and not forward to directors communications which the Secretary determines in
his or her discretion are communications unrelated to our business or our
governance, commercial solicitations, or communications that are offensive,
obscene, or otherwise inappropriate. The Secretary will, however, compile all
shareholder communications which are not forwarded and such communications will
be available to any director.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information concerning the beneficial
ownership of the shares of our common stock as of January 31, 2008, by:
o each person we know to be the beneficial owner of 5% or more of our
outstanding shares of common stock,
o each of our named executive officers and directors, and
o all of our current executive officers and directors as a group.
Unless otherwise noted below, the address of each beneficial owner listed
in the table is c/o RadNet, Inc., 1510 Cotner Ave., Los Angeles, CA 90025.
We have determined beneficial ownership in accordance with the rules of
the SEC. Except as indicated by the footnotes below, we believe, based on the
information furnished to us, that the persons and entities named in the table
below have sole voting and investment power with respect to all shares of common
stock that they beneficially own, subject to applicable community property laws.
Applicable percentage ownership is based on 39,261,225 shares of common
stock outstanding on January 31, 2008. In computing the number of shares of
common stock beneficially owned by a person and the percentage ownership of that
person, we deemed as outstanding shares of common stock subject to options or
warrants held by that person that are currently exercisable or exercisable
within 60 days of January 31, 2008. We did not deem these shares outstanding,
however, for the purpose of computing the percentage ownership of any other
person.
SHARES
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1)
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NUMBER %
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5% OR GREATER STOCKHOLDERS:
Howard G. Berger, M.D. 6,507,500 15.9
Contrarian Capital Management, LLC 1,912,075 4.7
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Howard G. Berger, M.D.(2) 6,507,500 15.9
Marvin S. Cadwell 68,928(3) *
John V. Crues, III, M.D. 673,262 1.7
Norman R. Hames 1,476,237(5) 3.6
Lawrence L. Levitt 100,000(6) *
Michael L. Sherman, M.D. 105,315(7) *
David L. Swartz 135,000(8) *
Stephen M. Forthuber --- ---
Jeffrey L. Linden 835,000(9) 2.0
Mark D. Stolper 454,400(10) 1.1
All directors and executive officers
as a group (11 persons) 17,298,980(11) 24.3
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* Represents less than 1%.
(1) Subject to applicable community property statutes and except as otherwise
noted, each holder named in the table has sole voting and investment power with
respect to all shares of common stock shown as beneficially owned.
(2) As a result of his stock ownership and positions as president and director,
Dr. Berger may be deemed to be a controlling person of our company.
(3) Beneficial ownership includes 50,000 shares subject to options exercisable
within 60 days of January 31, 2008.
(4) Beneficial ownership includes 250,000 shares subject to options exercisable
within 60 days of January 31, 2008.
-6-
(5) Beneficial ownership includes 1,176,237 shares subject to options
exercisable within 60 days of January 31, 2008.
(6) Beneficial ownership includes 100,000 shares subject to options exercisable
within 60 days of January 31, 2008.
(7) Beneficial ownership includes 50,000 shares subject to options exercisable
within 60 days of January 31, 2008.
(8) Beneficial ownership includes 125,000 shares subject to options exercisable
within 60 days of January 31, 2008.
(9) Beneficial ownership includes 387,500 shares subject to options exercisable
within 60 days of January 31, 2008.
(10) Beneficial ownership includes 450,000 shares subject to options exercisable
within 60 days of January 31, 2008.
(11) Beneficial ownership includes 2,588,737 shares subject to options
exercisable within 60 days of January 31, 2008.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our board of directors, acting pursuant to our bylaws, has determined that
the number of directors constituting the full board of directors shall be seven
at the present time. The board of directors has, upon approval of the
independent directors, nominated Howard G. Berger, M.D., Marvin S. Cadwell, John
V. Crues, III, M.D., Norman R. Hames, Lawrence L. Levitt, Michael L. Sherman,
M.D. and David L. Swartz for reelection as members of the board of directors.
Each of the nominees is currently a director of our company. Each
newly-elected director will serve a one-year term until the next annual meeting
of stockholders or until his successor is duly qualified and elected. During the
course of a term, the board of directors may appoint a new director to fill any
vacant spot, including a vacancy caused by an increase in the size of the board
of directors. The new director will complete the term of the director he or she
replaced. Each person nominated for election has agreed to serve if elected, and
we have no reason to believe that any nominee will be unable to serve. However,
if any nominee cannot serve, then your proxy will be voted for another nominee
proposed by the board of directors, or if no nominee is proposed by the board of
directors, a vacancy will occur.
We, as a matter of policy, encourage our directors to attend meetings of
stockholders. There are no family relationships between any nominees or
executive officers of our company, and there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was or is selected as a director or nominee.
NOMINEES FOR DIRECTOR
You are being asked to vote on the seven director nominees listed below.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for these seven nominees. All of our nominees for director are current
members of our board of directors. The names of the director nominees, their
ages as of January 31, 2008 and other information about them are shown below.
NAME OF DIRECTOR NOMINEE AGE POSITION
------------------------ --- --------
Howard G. Berger, M.D. 63 President, Chief Executive Officer
and Chair of the Board of Directors
Marvin S. Cadwell 64 Director
John V. Crues, III, M.D. 58 Director
Norman R. Hames 51 Director
Lawrence L. Levitt 65 Director
Michael L. Sherman, M.D. 64 Director
David L. Swartz 64 Director
The following is a brief description of the business experience of each
director and executive officer during the past five years.
Howard G. Berger, M.D. has served as President and Chief Executive Officer
of our company and its predecessor entities since 1987. Dr. Berger is also the
president of the entities that own BRMG. Dr. Berger has over 25 years of
experience in the development and management of healthcare businesses. He began
his career in medicine at the University of Illinois Medical School, is Board
Certified in Nuclear Medicine and trained in an Internal Medicine residency, as
well as in a masters program in medical physics in the University of California
system.
Marvin S. Cadwell served as a director of Radiologix between June 2002 and
November 2006. He was appointed Chairman of the Board of Radiologix in December
2002 and served as Chairman of the Nominations and Governance Committee of the
Board. He was the Radiologix interim Chief Executive Officer from September 2004
until November 2004. From December 2001 until November 2002, Mr. Cadwell served
as Chief Executive Officer of SoftWatch, Ltd., an Israeli based company that
provided Internet software. Since 2003, he has served as a director of ChartOne,
Inc., a private company that provides patient chart management services to the
health industry.
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John V. Crues, III, M.D. is a world-renowned radiologist. Dr. Crues plays
a significant role as a musculoskeletal specialist for many of our patients as
well as a resource for physicians providing services at our facilities. Dr.
Crues received his M.D. at Harvard University, completed his internship at the
University of Southern California in Internal Medicine, and completed a
residency at Cedars-Sinai in Internal Medicine and Radiology. Dr. Crues has
authored numerous publications while continuing to actively participate in
radiological societies such as the Radiological Society of North America,
American College of Radiology, California Radiological Society, International
Society for Magnetic Resonance Medicine and the International Skeletal Society.
Norman R. Hames has served as our Chief Operating Officer since 1996 and
currently as our Executive Vice President and Chief Operating Officer - Western
Operations. Applying his 20 years of experience in the industry, Mr. Hames
oversees all aspects of facility operations. His management team, comprised of
regional directors, managers and sales managers, are responsible for responding
to all of the day-to-day concerns of our facilities, patients, payors and
referring physicians. Prior to joining our company, Mr. Hames was President and
Chief Executive Officer of his own company, Diagnostic Imaging Services, Inc.
(which we acquired), which owned and operated 14 multi-modality imaging
facilities throughout Southern California. Mr. Hames gained his initial
experience in operating imaging centers for American Medical International, or
AMI, and was responsible for the development of AMI's single and multi-modality
imaging centers.
Lawrence L. Levitt is a C.P.A. and since 1987 has been the President and
Chief Financial Officer of Canyon Management Company, a company which manages a
privately held investment fund. Mr. Levitt is also a director of River Downs
Management Company, operator of a thoroughbred racetrack in Ohio.
Michael L. Sherman, M.D., F.A.C. R., had been a Radiologix director since
1997. He served as President of Advanced Radiology, P.A., a 90-person radiology
practice located in Baltimore, Maryland, from 1995 to 2001, and subsequently as
its board chairman and a consultant until his retirement from active practice in
2005. Radiologix has a contractual relationship with Advanced Radiology, P.A.
Dr. Sherman has broad experience in the medical and business aspects of
radiology. In addition, Dr. Sherman was a director of MedStar Health, a
seven-hospital system in the Baltimore-Washington, D.C. market from 1998 until
2006. He continues to serve on the board of MedStar Health's captive insurance
company, Greenspring Financial Insurance Limited, Inc. Dr. Sherman is also a
Senior Advisor for healthcare at FOCUS Enterprises, a Washington, D.C.-based
investment banking firm.
David L. Swartz is a C.P.A. with thirty-five years of experience providing
accounting and advisory services to clients. Mr. Swartz served as the president
of the California State Board of Accountancy until January 1, 2008. Since 1993,
Mr. Swartz has been a partner of Good, Swartz, Brown & Berns. Prior to this, Mr.
Swartz served as managing partner and was on the national Board of Directors of
a 50 office international accounting firm. Mr. Swartz is also a former CFO of a
publicly held shopping center and development company.
None of the directors serves as a director of any other corporation with a
class of securities registered pursuant to Section 12 of the Exchange Act or
subject to the requirements of Section 15(d) of the Exchange Act. There are no
family relationships among any of the officers and directors. Furthermore, none
of the events described in Item 401(f) of Regulation S-K involve a director or
officer during the past five years.
VOTE REQUIRED
The nominees who receive the highest number of votes represented by shares
of common stock present or represented by proxy and entitled to vote at the
annual meeting will be elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
TO THE BOARD OF EACH OF THESE NOMINEES
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PROPOSAL NO. 2
APPROVAL OF THE CHANGE OF THE STATE OF INCORPORATION FROM NEW YORK TO DELAWARE
OVERVIEW
The Board has unanimously adopted and approved, and recommends that the
Company's shareholders adopt and approve, the change to the state of
incorporation of the Company from New York to Delaware through a merger
(referred to herein as the "Reincorporation") of the Company with and into its
newly-formed, wholly-owned subsidiary, RadNet, Inc., a Delaware corporation (the
"Subsidiary"), pursuant to a merger agreement by and between the Company and the
Subsidiary (the "Merger Agreement"). A copy of the Merger Agreement is attached
hereto as Exhibit A.
The Reincorporation and the transactions incident thereto will not result
in any change in the business or the assets, liabilities, or net worth of the
reincorporated entity. In addition, the directors and officers of the Surviving
Corporation (as defined below) will be the same as those of the Company. The
Reincorporation will provide the Company with the advantages of the corporate
laws of Delaware and will in connection therewith effect changes to the
Company's certificate of incorporation and bylaws as described below.
The Merger Agreement provides for a tax-free reorganization pursuant to
the provisions of Section 368 of the Internal Revenue Code of 1986, as amended
(the "Code"), whereby the Company will be merged with and into the Subsidiary,
the Company's separate corporate existence shall cease, and the Subsidiary shall
continue as the surviving corporation (the surviving Delaware corporation is
referred to herein after giving effect to the Reincorporation as the "Surviving
Corporation"). At the effective time of the Reincorporation, all issued and
outstanding shares of the Company common stock ("Common Stock") will
automatically be converted into shares of common stock of the Surviving
Corporation (the "Delaware Common Stock") with no action required on the part of
the shareholders of the Company.
The Merger Agreement in the form attached hereto has been adopted and
approved by the Board. The Merger Agreement provides, however, that the Board of
Directors may terminate the Merger Agreement and abandon the merger, even after
requisite shareholder approval thereof, if for any reason, the Board determines
that it is inadvisable to proceed with the merger.
As soon as practicable after receiving shareholder approval, we will file
a Certificate of Merger with the Secretary of State of the State of New York and
a Certificate of Ownership and Merger with the Secretary of State of the State
of Delaware, at which time the Reincorporation will be effective.
At the effective time of the Reincorporation, and without any additional
action by the shareholders, each issued and outstanding share of Common Stock
will be converted into one share of Delaware Common Stock resulting in all
shareholders automatically becoming shareholders of the Surviving Corporation.
After the effective time of the Reincorporation, shareholders of the
Surviving Corporation will not be required to exchange stock certificates that
represent Common Stock for stock certificates representing Delaware Common
Stock. As of the effective time of the Reincorporation, all stock certificates
representing shares of Common Stock will automatically be deemed to represent an
equal number of shares of Delaware Common Stock.
SHAREHOLDERS SHOULD NOT DESTROY STOCK CERTIFICATES REPRESENTING COMMON STOCK AND
SHOULD NOT SEND STOCK CERTIFICATES REPRESENTING COMMON STOCK TO THE COMPANY OR
THE COMPANY'S TRANSFER AGENT, EITHER BEFORE OR AFTER THE REINCORPORATION.
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After the Reincorporation, shareholders of the Surviving Corporation may
use stock certificates issued prior to the Reincorporation to sell or transfer
shares of Delaware Common Stock. New stock certificates representing shares of
Delaware Common Stock will be issued in connection with transfers of Delaware
Common Stock that take place after the Reincorporation. After the effective time
of the Reincorporation, on the written request of any shareholder of the
Surviving Corporation, the Surviving Corporation will cause its transfer agent
to issue to such shareholder a new stock certificate in exchange for a stock
certificate held by such shareholder issued prior to the time of the
Reincorporation subject to normal stock transfer requirements, which include
compliance with all applicable federal and state securities laws and
regulations, delivery of the original stock certificate with proper endorsement
and stock power, acceptable authorization for such transfer, and payment of
applicable taxes and transfer agent fees.
Shares of Common Stock that were freely tradable before the effective time
of the Reincorporation will be automatically converted into shares of freely
tradable Delaware Common Stock and shares of Common Stock with transfer
restrictions before the effective time of the Reincorporation will be
automatically converted into shares of Delaware Common Stock with the same
transfer restrictions. For purposes of Rule 144 under the Securities Act of
1933, as amended (the "Securities Act"), the Reincorporation on its own will not
affect the acquisition date of the shares of Common Stock converted into shares
of Delaware Common Stock. Immediately after the effective time of the
Reincorporation, all shares of Delaware Common Stock will be deemed, for Rule
144 purposes, to have been acquired on the date the shares of Common Stock were
acquired.
SUMMARY TERM SHEET
Companies: RadNet, Inc., a New York corporation incorporated in New York
on October 21, 1985. The Company owns, manages and operates
medical imaging centers.
RadNet, Inc., a Delaware corporation and wholly-owned subsidiary
of the Company that prior to the Reincorporation will not have
engaged in any activities except in connection with the
Reincorporation.
Approval: The Reincorporation and the terms of the Merger Agreement were
approved at a meeting of the Board of Directors held on March
12, 2008.
Transaction Structure: To effect the Reincorporation, the Company will merge with and
into the Subsidiary and thereafter the Company will cease to
exist as a separate entity. The Subsidiary will be the surviving
Delaware corporation.
Exchange of Common Stock: Shares of common stock of RadNet, Inc., the New York corporation
(the "Common Stock") will automatically be converted on a
one-for-one basis into shares of common stock of RadNet, Inc.,
the Delaware corporation (the "Delaware Common Stock") at the
effective time of the Reincorporation without any action required
by the shareholders.
Upon the effective time of the Reincorporation, the Surviving
Corporation shall assume and continue any and all stock option,
stock incentive and other equity-based award plans heretofore
adopted by RadNet, Inc. (individually, an "Equity Plan" and,
collectively, the "Equity Plans"), and shall reserve for
issuance under each Equity Plan a number of shares of Delaware
Common Stock equal to the number of shares of Common Stock so
reserved immediately prior to the effective time of the
Reincorporation. Each unexercised option or other right to
purchase Common Stock granted under and by virtue of any such
Equity Plan which is outstanding immediately prior to the effective
time of the Reincorporation shall, upon the effective time of the
Reincorporation, become an option or right to purchase Delaware
Common Stock on the basis of one share of Delaware Common Stock for
each share of Common Stock issuable pursuant to any such option or
stock purchase right, and otherwise on the same terms and conditions
and at an exercise or conversion price per share equal to the
exercise or conversion price per share applicable to any such
RadNet, Inc. option or stock purchase right. Each other equity-based
award relating to Common Stock granted or awarded under any of the
Equity Plans which is outstanding immediately prior to the effective
time of the Reincorporation shall, upon the effective time of the
Reincorporation, become an award relating to Delaware Common Stock
on the basis of one share of Delaware Common Stock for each share of
Common Stock to which such award relates and otherwise on the same
terms and conditions applicable to such award immediately prior to
the effective time of the Reincorporation.
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Purpose: The purpose of the Reincorporation is to change the Company's state
of incorporation from New York to Delaware and is intended to permit
the Company to be governed by the Delaware General Corporation Law
("Delaware Law") rather than by the New York Business Corporation
Law ("New York Law").
Effective Time: The Reincorporation will become effective on the filing of the
Certificate of Ownership and Merger with the Secretary of State of
Delaware and the Certificate of Merger with the Secretary of State
of New York. These filings are anticipated to be made as soon as
practicable after receiving the requisite shareholder approval and
as soon as permitted by the notice requirements of the Exchange Act
or as early as practicable thereafter.
Effect of Reincorporation: At the effective time of the Reincorporation:
o the Company will cease to exist as a separate entity;
o the shareholders of the Company will become shareholders of the
Surviving Corporation;
o the outstanding shares of Common Stock will automatically be
converted on a one-for-one basis into shares of Delaware Common
Stock;
o the Surviving Corporation shall possess all of the assets,
liabilities, rights, privileges, and powers of the Company and the
Subsidiary;
o the Surviving Corporation shall be governed by the applicable laws
of Delaware and the Certificate of Incorporation (the "Delaware
Certificate") and Bylaws (the "Delaware Bylaws") of the Subsidiary
in effect at the effective time of the Reincorporation;
o the officers and directors of the Company will be the officers
and directors of the Surviving Corporation; and
o the Surviving Corporation will continue to operate under the name
RadNet, Inc., and continue with a ticker symbol of "RDNT."
Tax Consequences: The Reincorporation is intended to qualify as a tax-free
reorganization for federal income tax purposes. If the
Reincorporation does so qualify, (i) no gain or loss would generally
be recognized by the shareholders of the Company upon conversion of
shares of Common Stock into shares of Delaware Common Stock, (ii)
each former holder of Common Stock will have the same basis in the
Delaware Common Stock received or deemed received by such person
pursuant to the Reincorporation as such holder had in the Common
Stock held by such person immediately prior to the consummation of
the Reincorporation, and such person's holding period with respect
to such Delaware Common Stock will include the period during which
such holder held the corresponding Common Stock, provided the latter
was held by such person as a capital asset immediately prior to the
consummation of the Reincorporation, and (iii) no gain or loss will
be recognized by the Company or the Subsidiary. State, local or
foreign income tax consequences may vary from the federal income tax
consequences described above. The Company has not requested a ruling
from the Internal Revenue Service, nor an opinion from its outside
legal counsel, with respect to the federal income tax consequences
of the Reincorporation under the Code, and we cannot assure you that
the Internal Revenue Service will conclude that the Reincorporation
qualifies as a reorganization under Section 368(a) of the Code. YOU
ARE URGED TO CONSULT YOUR OWN TAX ADVISOR FOR TAX IMPLICATIONS
RELATED TO YOUR PARTICULAR SITUATION.
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REASONS FOR THE REINCORPORATION
The purpose of the Reincorporation is to change the legal domicile of the
Company from New York to Delaware. The Board believes that this change in
domicile would be in the best interests of the shareholders of the Company for a
number of reasons.
Historically, Delaware has followed a policy of encouraging incorporation
in that state and, in furtherance of that policy, has adopted comprehensive,
modern, and flexible corporate laws that are updated and revised regularly in
response to the legal and business needs of corporations organized under its
laws. Because of these efforts, many corporations initially choose Delaware for
their domicile or subsequently reincorporate there in a manner similar to that
proposed by the Company. Because of Delaware's preeminence as the state of
incorporation for many major corporations, both Delaware's legislature and its
courts have demonstrated an ability and willingness to act quickly to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law,
and establishing public policies with respect to corporate legal affairs.
Delaware has a more highly developed body of corporate case law than does New
York, and this case law advantage gives Delaware corporate law an added measure
of predictability that is useful in a judicial system based largely on
precedent. These factors often provide the directors and management of Delaware
corporations with greater certainty and predictability in managing the affairs
of the corporation.
The Board believes that reincorporation from New York to Delaware will
enhance the Company's ability to attract potential business combination
candidates and to attract and retain qualified members to its Board.
MATERIAL TERMS OF MERGER AGREEMENT
The following discussion summarizes the material terms of the Merger
Agreement; however, such summary is not and does not purport to be a complete
statement of all of the terms and provisions of the Merger Agreement and is
qualified in its entirety by reference to the full text of the Merger Agreement,
a copy of which is attached to this Proxy Statement as Exhibit A. The
shareholders of the Company are urged to read the entire Merger Agreement
carefully as it is the legal document governing the Reincorporation.
To effect the Reincorporation, and subject to the terms and conditions of
the Merger Agreement, the Company will merge with and into the Subsidiary and,
immediately thereafter, the Company's separate legal existence shall cease and
the Subsidiary shall continue as the surviving Delaware corporation. The
Surviving Corporation shall be governed by the Delaware Law and succeed to all
rights, assets, liabilities, and obligations of the Company and the Subsidiary.
At the effective time of the Merger, the outstanding shares of Common
Stock will automatically be converted on a one-for-one basis into shares of
Delaware Common Stock.
The Merger Agreement provides that the Delaware Certificate and the
Delaware Bylaws will be the certificate of incorporation and bylaws of the
Surviving Corporation following the Reincorporation, which will result in
changes to the governance and operation of the Company. A summary of material
changes to the charter documents is provided below under the section entitled
Significant Differences in Charter Documents.
The Merger Agreement provides that the officers and directors of the
Company, as of the effective time of the Merger, shall remain as the officers
and directors of the Surviving Corporation after the Reincorporation who shall
serve as such until their successors are duly elected or appointed and
qualified.
Approval of the Reincorporation will also constitute approval of the form
of Merger Agreement, the Delaware Certificate and the Delaware Bylaws, which are
attached hereto as Exhibit A, Exhibit B, and Exhibit C, respectively. Approval
of the Merger Agreement, the Delaware Certificate and the Delaware Bylaws is
necessary as incidental to the Reincorporation. The discussion contained in and
information provided by this Proxy Statement is qualified in its entirety by
reference to the full text of the agreements and documents attached hereto as
Exhibits.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary of certain material federal income tax consequences
of the Reincorporation does not purport to be a complete discussion of all of
the possible federal income tax consequences, and is included for general
information only. This summary also assumes that shares of Common Stock are held
as "capital assets," as defined in the Code. Further, it does not address any
state, local, foreign, or other income tax consequences, nor does it address the
tax consequences to the shareholders of the Company that are subject to special
tax rules, such as banks, insurance companies, regulated investment companies,
personal holding companies, foreign entities, nonresident alien individuals,
broker-dealers, tax-exempt entities, shareholders who acquired shares of Common
Stock through the exercise of options or otherwise as compensation or through a
qualified retirement plan, and shareholders who hold their Common Stock as part
of a straddle, hedge, or conversion transaction. In addition, this summary does
not address the tax consequences of the Reincorporation to holders of options or
warrants to acquire Common Stock. The discussion is based on the existing
provisions of the Code, existing treasury regulations and current administrative
rulings and court decisions, all of which are subject to change. Any such
change, which may or may not be retroactively applied, could alter the tax
consequences to the Company, the Subsidiary or the shareholders as described
herein. The tax treatment of a shareholder may vary depending on the facts and
circumstances of such shareholder.
The Reincorporation is intended to qualify for federal income tax purposes
as a "reorganization" within the meaning of Section 368 of the Code. If it does
so qualify, the following tax consequences will result:
o No gain or loss will be recognized for federal income tax purposes
by the shareholders of the Company on the conversion of their Common
Stock into shares of Delaware Common Stock;
o The aggregate tax basis of the Delaware Common Stock received or
deemed received by shareholders in the Reincorporation will be the
same as the aggregate tax basis of the Common Stock surrendered or
deemed surrendered in exchange therefor;
o The holding period of the Delaware Common Stock received or deemed
received by each shareholder in the Reincorporation will include the
period for which the Common Stock surrendered or deemed surrendered
in exchange therefor was considered to be held; and
o Neither the Company nor the Subsidiary will recognize gain or loss
solely as a result of the Reincorporation.
The Company's views regarding the tax consequences of the Reincorporation
are not binding upon the Internal Revenue Service or the courts, and there is no
assurance that the Internal Revenue Service or the courts would accept the
positions expressed above. The Company has not requested a ruling from the
Internal Revenue Service, nor an opinion of outside legal counsel to the
Company, in connection with the federal income tax consequences of the
Reincorporation under the Code. Such an opinion from outside legal counsel
would, in any event, neither bind the Internal Revenue Service nor preclude it
from asserting a contrary position. If the Reincorporation does not qualify as a
reorganization described in Section 368(a) of the Code, then the shareholders
will recognize taxable gain or loss with respect to each share of Common Stock
surrendered or deemed surrendered equal to the difference between the
shareholder's basis in such share and the fair market value, as of the
consummation of the Reincorporation, of the Delaware Common Stock received or
deemed received in exchange therefor. In such event, the shareholder's aggregate
basis in the Delaware Common Stock so received or deemed received would equal
its fair market value as of the consummation of the Reincorporation, and the
shareholder's holding period for such stock would begin the day after the
Reincorporation.
The state and local tax consequences of the Reincorporation may vary
significantly as to each shareholder of the Company, depending on the state in
which such shareholder resides.
EACH SHAREHOLDER IS URGED TO CONSULT WITH SUCH SHAREHOLDER'S TAX ADVISOR WITH
RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REINCORPORATION, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
LAWS.
ACCOUNTING TREATMENT
The transaction is expected to be accounted for as a reverse acquisition
in which the Company is the accounting acquirer and the Subsidiary is the legal
acquirer. The management of the Company will be the management of the Surviving
Corporation. Because the Reincorporation is expected to be accounted for as a
reverse acquisition and not a business combination, no goodwill is expected to
be recorded in connection therewith and the costs incurred in connection with
the Reincorporation are expected to be accounted for as a reduction of
additional paid-in capital.
REGULATORY APPROVALS
The Company does not expect the Reincorporation to occur until it has all
required consents of governmental authorities, including the filing of a
Certificate of Ownership and Merger with the Secretary of State of the State of
Delaware, and the filing of a Certificate of Merger with the Secretary of State
of the State of New York, and satisfied applicable requirements of the NASDAQ
Global Market.
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INTERESTS OF CERTAIN PERSONS IN THE REINCORPORATION
No director, executive officer, associate of any director or executive
officer, or any other person has any substantial interest, direct or indirect,
by security holdings or otherwise, resulting from the Reincorporation, which is
not shared by all other shareholders of the Company pro rata, and in accordance
with their respective interests.
OPERATIONS FOLLOWING THE REINCORPORATION
The Company owns, manages and operates medical imaging centers. The
Surviving Corporation, will continue the business of the Company.
SIGNIFICANT CHANGES RESULTING FROM THE REINCORPORATION
OVERVIEW
Provided below is a discussion of certain changes that will result from
the Reincorporation, including significant differences between New York Law and
Delaware Law and between the charter documents of the Company and the
Subsidiary. Many provisions of Delaware Law and New York Law may be subject to
differing interpretations, and the interpretations offered in this Proxy
Statement may be incomplete in certain respects. The discussion is no substitute
for direct reference to the New York Law and Delaware Law themselves or for
professional guidance as to how to interpret such laws. In addition, the
discussion is qualified in its entirety by reference to Delaware Law, New York
Law, applicable case law, and the full text of the organizational documents of
each of the companies. The shareholders of the Company should read the following
discussion in conjunction with the rest of the information provided in this
Proxy Statement and the agreements and documents attached hereto as Exhibits,
and the New York Law and Delaware Law.
The Board has recommended that the Company's state of incorporation be
changed from New York to Delaware. Reincorporation in Delaware will not result
in any change in the business, management, assets, liabilities, or net worth of
the Company. Reincorporation in Delaware will allow the Company to take
advantage of certain provisions of the corporate laws of Delaware. The most
significant effects of the Reincorporation are summarized below.
Upon acceptance for filing of the appropriate certificates of merger by
the Secretary of State of Delaware and the Secretary of State of New York, the
Company will be merged with and into the Subsidiary pursuant to the Merger
Agreement, resulting in a change in the Company's state of incorporation. After
the effective time of the Merger, the Surviving Corporation will be subject to
the Delaware Law and the Delaware Certificate and Delaware Bylaws.
SIGNIFICANT DIFFERENCES IN CHARTER DOCUMENTS
The Surviving Corporation will be governed by the Delaware Certificate and
Delaware Bylaws. The Delaware Certificate and the Delaware Bylaws are
substantially similar to those currently governing the Company and the
shareholders of the Company. The following discussion summarizes some of the
most significant differences in the charter documents currently governing the
Company and the charter documents that will govern the Surviving Corporation
after the Reincorporation. The discussion does not purport to be a complete
statement of all differences between such charter documents or the changes that
may occur as a result of the Reincorporation to the rights of the Company
shareholders or the rights and obligations of the Company and such discussion is
qualified in its entirety by reference to the full text of the Delaware
Certificate and the Delaware Bylaws which are attached to this Proxy Statement
as Exhibits, the Certificate of Incorporation and Bylaws of the Company, which
are available in the public filings made by the Company with the SEC, and the
entire Delaware Law and New York Law. The Company shareholders are urged to read
and review the all such documents and laws carefully.
PAR VALUE
The par value of the Common Stock, consisting of 200 million shares, is
$0.0001 per share. The par value of the Preferred Stock, consisting of 30
million shares, is $0.0001 per share.
The par value of the Delaware Common Stock, also consisting of 200 million
shares, is $0.0001 per share. The par value of the Delaware Preferred Stock,
also consisting of 30 million shares, is $0.0001 per share.
MEETINGS OF THE BOARD OF DIRECTORS
The Bylaws of the Company provide that special meetings of the Board of
Directors require at least two (2) days prior written notice.
The Delaware Bylaws provide that regular meetings of the Board of
Directors may be held without notice at such time and place as determined by the
Board, and special meetings require at least one (l) day prior written notice.
Emergency meetings may also be held without notice if a quorum of directors
participates personally or by conference telephone. The reduced notice
requirements will help facilitate improved director communication and action for
the benefit of the Surviving Corporation.
-15-
NUMBER OF DIRECTORS
The Bylaws of the Company provide that the number of directors on the
Board shall not be less than three, and the number may be fixed from time to
time by a majority vote of the entire Board of Directors or shareholders holding
a majority of outstanding shares.
The Delaware Bylaws provide that the number of directors on the Board
shall not be less than three nor more than fifteen, as may be designated from
time to time by the Board.
FISCAL YEAR
The Bylaws of the Company provide that the fiscal year shall be fixed at
the discretion of the Board of Directors.
The Delaware Bylaws provide that the fiscal year shall begin on the first
of January and end on the thirty-first of December of every year. The fixing of
the fiscal year is intended to bring the Company in line with the accounting
practices of other corporations.
INDEMNIFICATION
The Bylaws of the Company provide that the Company shall indemnify a party
to any actual or threatened action or proceeding by reason of the fact that such
party is a director or officer of the Company. The Bylaws also expressly grant
the Company the power to enter into additional indemnification arrangements with
its officers and directors.
The Delaware charter documents provide a further condition to the
Surviving Corporation's indemnity obligations to the effect that a party's
actions give rise to the Company's indemnification responsibilities only when
such actions are taken in good faith and in a manner reasonably believed to be
in or not opposed to the best interest of the Company, or to the fullest extent
permitted by Delaware Law. The Delaware Bylaws further provide that the
Company's indemnification obligations continue as to a party who ceases to be a
director, officer, employee or agent of the Company.
LIMITATION OF LIABILITY
The Certificate of Incorporation of the Company provides that no director
shall be personally liable to the Company or its shareholders for damages for
any breach of duty in such capacity, provided the director's breach was not
judged to be in bad faith, for reasons of personal gain, or in violation of New
York Law.
The Delaware Certificate provides that no director shall be liable to the
Surviving Corporation or its shareholders for monetary damages for any breach of
fiduciary duty as a director to the fullest extent permitted by Delaware Law.
PURPOSE
The Certificate of Incorporation of the Company explicitly sets forth the
purposes for which the Company was formed and activities in which the Company
may engage.
The Delaware Certificate provides that the Company may engage in any
lawful activity for which corporations may be organized under Delaware Law. The
change from a specific to a general purpose clause affords the Company greater
flexibility in its actions without the requirement of amending its Certificate
of Incorporation for each new or different activity in which it intends on
engaging.
SIGNIFICANT DIFFERENCES BETWEEN NEW YORK LAW AND DELAWARE LAW
The Company is governed by New York Law. After the effective time of the
Reincorporation, the Surviving Corporation will be governed by the Delaware
Certificate, the Delaware Bylaws and Delaware Law. The change in application of
the law governing the Surviving Corporation will result in certain changes to
the Company's rights, governance and structure and changes in the rights and
obligations of the Company's shareholders. The following discussion summarizes
some of the most significant differences which will result after the effective
time of the Reincorporation as a result of the application of Delaware Law
versus New York Law. The discussion does not purport to be a complete discussion
of all differences between such laws or the changes that may occur as a result
of the Reincorporation to the rights of the Company's shareholders or the rights
and obligations of the Company and such discussion is qualified in its entirety
by reference to the full text of the Delaware Certificate and the Delaware
Bylaws which are attached to this Proxy Statement as Exhibits, the Certificate
of Incorporation and Bylaws of the Company which are available in the public
filings made by the Company with the SEC and the entire Delaware Law and New
York Law. The Company's shareholders are urged to read and review all such
documents and laws carefully.
-16-
REMOVAL OF DIRECTORS
Delaware Law provides for the removal of directors with or without cause
on the affirmative vote by holders representing a majority of the shares of
voting stock entitled to vote in an election of directors.
New York Law provides for the removal of directors only for cause on the
affirmative vote by holders representing a majority of the shares of voting
stock entitled to vote. A New York corporation's certificate of incorporation or
by-laws may grant the board of directors the power to remove a director for
cause, unless the director was elected by (i) cumulative voting, (ii) the
holders of the shares of any class or series or (iii) the holders of bonds
voting as a class.
SHAREHOLDER LISTS AND INSPECTION RIGHTS
Under Delaware Law, a shareholder may inspect the Delaware corporation's
stock ledger, list of shareholders and other books and records for any proper
purpose reasonably related to such person's interest as a shareholder. A list of
shareholders is to be open to the examination of any shareholder, for any
purpose germane to a meeting of shareholders, during ordinary business hours,
for a period of at least 10 days prior to such meeting. The list is also to be
produced and kept at the place of the meeting during the entire meeting, and may
be inspected by any shareholder who is present.
New York Law provides that a shareholder of record has a right to inspect
a New York corporation's shareholder minutes and record of shareholders, during
usual business hours, on at least five days' written demand. The examination of
the shareholder minutes and record of shareholders must be for a purpose
reasonably related to the person's interest as a shareholder.
CORPORATION'S BEST INTERESTS
Delaware Law does not include a specific provision regarding
constituencies other than shareholders and creditors to be considered by the
directors in determining the corporation's best interests.
Under New York Law, a director, in taking action, including any action
which may involve a change in control of the corporation, is entitled to
consider both the long-term and short-term interests of the corporation and its
shareholders and the effects that the corporation's actions may have in the
short-term or long-term upon any of the following:
o the prospects of growth, development, productivity and profitability
of the corporation,
o the corporation's current employees,
o the corporation's retired employees and others receiving or entitled
to receive retirement, welfare or similar benefits from or pursuant
to any plan sponsored, or agreement entered into, by the
corporation,
o the corporation's customers and creditors, and
o the ability of the corporation to provide, as a going concern,
goods, services, employment opportunities and employment benefits
and otherwise contribute to the communities in which it does
business.
AUTHORIZATION OF CERTAIN ACTIONS
Delaware Law requires the approval of the board of directors and at least
a majority of the corporation's outstanding shares entitled to vote to authorize
a merger or consolidation, except in certain cases where the corporation is the
surviving corporation and its securities being issued in the transaction do not
exceed 20% of the shares of common stock of the corporation outstanding
immediately prior to the effective date of the transaction. A sale of all or
substantially all of a Delaware corporation's assets or a voluntary dissolution
of a Delaware corporation requires the affirmative vote of the board of
directors and at least a majority of such corporation's outstanding shares
entitled to vote.
Under New York Law, the consummation of a merger, consolidation,
dissolution or disposition of substantially all of the assets of the New York
corporation requires the approval of the corporation's board of directors and
two-thirds of all outstanding shares of the corporation entitled to vote and, in
certain situations, the affirmative vote by the holders of a majority of all
outstanding shares of each class or series of shares.
INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
Delaware Law permits a Delaware corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than one by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, if such director or officer acted, in good faith, for a purpose
-17-
which such person reasonably believed to be in, or not opposed to, the best
interests of the corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that such conduct was unlawful.
Delaware Law permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting a director's liability to a
corporation or its shareholders for monetary damages for breaches of fiduciary
duty. Delaware Law provides, however, that liability for breaches of the duty of
loyalty, acts or omissions not in good faith or involving intentional
misconduct, or knowing violation of the law, and the unlawful purchase or
redemption of stock or payment of unlawful dividends or the receipt of improper
personal benefits cannot be eliminated or limited in this manner.
With certain limitations, New York Law permits a New York corporation to
indemnify its directors and officers made, or threatened to be made, a party to
an action or proceeding by reason of the fact that such person was a director or
officer of such corporation unless a judgment or other final adjudication
adverse to the director or officer establishes that his or her acts were
committed in bad faith or were the result of active and deliberative dishonesty
and were material to the cause of action so adjudicated, or that he or she
personally gained in fact financial profit or other advantage to which he or she
was not legally entitled. New York Law permits corporations to eliminate, or
limit, the personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity except
liability of a director (i) whose acts or omissions were in bad faith, involved
intentional misconduct or a knowing violation of law, (ii) who personally gained
a financial profit or other advantage to which he or she was not legally
entitled or (ii) whose acts violated certain other provisions of New York Law or
for acts or omissions prior to May 4, 1988.
DIVIDENDS
Delaware Law generally provides that the directors of a Delaware
corporation, subject to any restrictions contained in its certificate of
incorporation, may declare and pay dividends out of surplus or, when no surplus
exists, out of net profits for the fiscal year in which the dividend is declared
or the preceding fiscal year. Dividends may not be paid out of net profits if
the capital of the corporation is less than the amount of capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets.
New York Law generally provides that a New York corporation, subject to
any restrictions contained in its certificate of incorporation, may declare and
pay dividends on its outstanding shares, except when the corporation is
insolvent or would thereby be made insolvent. Dividends may be declared or paid
out of surplus only, so that net assets of the corporation after such
declaration or payment shall at least equal the amount of its stated capital.
BUSINESS COMBINATIONS
In general, Delaware Law prohibits an interested shareholder (generally
defined as a person who owns 15% or more of a corporation's outstanding voting
stock) from engaging in a business combination with that corporation for three
years following the date he or she became an interested shareholder. The
three-year moratorium is not applicable when: (i) prior to the date the
shareholder became an interested shareholder, the board of directors of the
corporation approved the business combination or the transaction that resulted
in the shareholder becoming an interested shareholder, (ii) upon consummation of
the transaction which resulted in the shareholder becoming an interested
shareholder, he or she owned at least 85% of the outstanding voting stock of the
corporation (excluding shares owned by directors who are also officers of the
corporation and by certain employee stock plans), or (iii) at or subsequent to
such time, the business combination is approved by the board of directors of the
corporation and by the shareholder affirmative vote at a meeting of shareholders
of at least two-thirds of the outstanding voting stock entitled to vote thereon,
excluding shares owned by the interested shareholder. These restrictions of
Delaware Law generally do not apply to business combinations with an interested
shareholder that are proposed subsequent to the public announcement of, and
prior to the consummation or abandonment of, certain mergers, sales of 50% or
more of a corporation's assets or tender offers for 50% or more of a
corporation's voting stock.
New York Law prohibits certain business combinations between a New York
corporation and an interested shareholder for five years after the date that the
interested shareholder becomes an interested shareholder unless, prior to that
date, the board of directors of the corporation approved the business
combination or the transaction that resulted in the interested shareholder
becoming an interested shareholder. After five years, such business combination
is permitted only if (1) it is approved by a majority of the shares not owned by
the interested shareholder or (2) certain statutory fair price requirements are
met. An "interested shareholder" is any person who beneficially owns, directly
or indirectly, 20% or more of the outstanding voting shares of the corporation.
SHAREHOLDER MEETINGS AND ACTION BY WRITTEN CONSENT
Unless the certificate of incorporation provides otherwise, Delaware Law
generally permits shareholders to take action by written consent with the same
percentage of voting power (generally, a majority) that would be required for
action at a shareholders' meeting, assuming the presence of all shareholders
entitled to vote.
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New York Law requires unanimous written consent of shareholders to act by
written consent in lieu of a meeting unless the certificate of incorporation
specifies a lesser percentage within certain parameters set out in such law.
ISSUANCE OF EQUITY TO DIRECTORS, OFFICERS AND EMPLOYEES
New York Law requires that the issuance of options or rights to purchase
stock to directors, officers or employees of a corporation, as an incentive to
service or continued service with the corporation, must be authorized as
required by the policies of the stock exchange or automated quotation system on
which the corporation's shares are listed or authorized for trading; or if the
corporation's shares are not so listed or authorized, by a majority of the votes
validly cast at a shareholders meeting or by and consistent with a plan adopted
with the vote of a majority of shareholders.
Delaware Law does not require shareholder approval of such transactions.
CONSIDERATION RECEIVED FOR EQUITY
Under Delaware Law, a corporation can receive cash, services, personal or
real property, leases of real property or any combination of these as payment in
full or in part for the issuance of shares. A purchaser of shares under Delaware
Law may pay an amount equal to or greater than the par value of those shares if
the corporation receives a binding obligation of the purchaser to pay the
balance of the purchase price.
Under New York Law, consideration for the issuance of shares may consist
of money or other property, labor or services actually received, a binding
obligation to pay the purchase price in cash or other property, a binding
obligation to perform services, or any combination of the above. Stock
certificates may not be issued until the amount of consideration determined to
be stated capital has been paid in the form of cash, personal or real property,
services actually rendered or any combination of these, plus consideration for
any balance, which may include, in addition, binding obligations described in
the preceding sentence.
APPRAISAL RIGHTS
Generally, "appraisal rights" entitle dissenting shareholders to receive
the fair value of their shares in a merger or consolidation of a corporation or
in a sale of all or substantially all its assets.
Under Delaware Law, appraisal rights are not available to a shareholder
if, among other things: (i) the corporation's shares are listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.; (ii) held of record by more than 2,000 shareholders; or (iii) the
corporation will be the surviving corporation in a merger that does not require
the approval of such corporation's shareholders. However, regardless of the
foregoing, a dissenting shareholder in a merger or consolidation has appraisal
rights under Delaware Law if the transaction requires the exchange of shares for
anything of value other than one or more of the following:
1. shares of stock of the surviving corporation or of a new corporation
that results from the merger or consolidation;
2. shares of another corporation that will be listed on a national
securities exchange, designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc., or held of record by more than 2,000
shareholders after the merger or consolidation occurs; or
3. cash instead of fractional shares of the surviving corporation or
another corporation.
New York Law extends appraisal rights to an exchange of a corporation's
shares as well. New York Law provides that dissenting shareholders have no
appraisal rights if their shares are listed on the New York Stock Exchange or
another national securities exchange or designated as a market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. Where shares are not listed on an exchange, appraisal rights under
New York Law allow a voting and dissenting shareholder of a New York
corporation, with various exceptions, to receive fair value for its shares in
such transactions. One exception is a merger between a parent corporation and
its subsidiary when the parent owns at least 90% of the subsidiary. In this
case, a shareholder of the parent corporation has no appraisal rights. On the
other hand, appraisal rights are available to shareholders who are not allowed
to vote on a merger or consolidation and whose shares will be cancelled or
exchanged for something of value other than shares of the surviving corporation
or another corporation. When appraisal rights are available, the shareholder may
have to request the appraisal and follow other required procedures.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors believes that a vote in favor of the change of the
state of incorporation from New York to Delaware is in the best interests of the
Company for the reasons set forth above. The affirmative vote of two thirds of
the outstanding shares entitled to vote thereon is required for approval of this
proposal. Shares represented at the meeting by proxy which are not voted because
the shareholder has elected to abstain will be counted in determining the
presence of a quorum but will not be counted as "for" the election. Shares
represented at the meeting by proxy for which the proxy cards have been left
blank will be counted as "for" the election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE CHANGE OF THE
STATE OF INCORPORATION FROM NEW YORK TO DELAWARE.
-19-
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We are asking you to ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2008. Ernst & Young LLP has audited our financial statements
annually since January 1, 2007. Representatives of Ernst & Young LLP are
expected to be at the annual meeting to answer any questions and make a
statement should they choose to do so.
Although our bylaws do not require that our stockholders approve the
appointment of our independent registered public accounting firm, our board of
directors is submitting the selection of Ernst & Young LLP to our stockholders
for ratification as a matter of good corporate practice. If our stockholders
vote against the ratification of Ernst & Young LLP, our board of directors will
reconsider whether or not to retain the firm. Even if our stockholders ratify
the appointment, our board of directors may choose to appoint a different
independent registered public accounting firm at any time during the year if our
board of directors determines that such a change would be in the best interests
of our company and our stockholders.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
The following table presents fees for professional audit and other
services rendered by Ernst & Young LLP for the audit of our annual financial
statements as of and for the fiscal year ended December 31, 2007 and fees billed
for other services rendered by Ernst & Young LLP during that period.
2007
----
Audit Fees (1) $1,024,183
Audit-Related Fees (2) ---
Tax Fees (3) ---
All Other Fees (4) ---
Total $1,024,183
---------------------------
(1) Audit Fees consist of fees billed for professional services rendered
for the audit of our consolidated annual financial statements and
review of the interim consolidated financial statements included in
quarterly reports and services that are normally provided by Ernst &
Young LLP in connection with statutory and regulatory filings or
engagements.
(2) Audit-Related Fees consist of fees billed for assurance and related
services that are reasonably related to the performance of the audit
or review of our consolidated financial statements and are not
reported under Audit Fees.
(3) Tax fees consist of fees billed for professional services rendered
for tax compliance, tax advice and tax planning. These services
include assistance regarding federal and state tax compliance,
acquisitions and tax planning.
(4) All Other Fees consist of fees for products and services other than
the services reported above. During the fiscal year 2007 there were
no such services rendered to us by Ernst & Young LLP.
PRE-APPROVAL POLICIES AND PROCEDURES
As a matter of policy, all audit and non-audit services provided by our
independent registered public accounting firm are approved in advance by the
Audit Committee, which considers whether the provision of non-audit services is
compatible with maintaining such firm's independence. All services provided by
Ernst & Young LLP during the fiscal year 2007 were pre-approved by the Audit
Committee. The Audit Committee has considered the role of Ernst & Young LLP in
providing services to us for the fiscal year ended December 31, 2007 and has
concluded that such services are compatible with their independence as our
auditors.
VOTE REQUIRED
Ratification of Ernst & Young LLP as our independent registered public
accounting firm requires the affirmative vote of the holders of a majority of
the shares casting votes present in person or represented by proxy on this
proposal at the annual meeting. The number of votes cast in favor of this
proposal must also be at least a majority of the required quorum. The presence
in person or representation by proxy of the persons entitled to vote a majority
of shares of our common stock will constitute a quorum under our bylaws.
Abstentions will be counted towards the tabulation of votes cast on this
proposal. Broker non-votes are counted towards a quorum, but are not counted for
any purpose in determining whether this matter has been approved.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION
OF ERNST & YOUNG LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-20-
CORPORATE GOVERNANCE
DIRECTOR INDEPENDENCE
Our board of directors has determined that Marvin S. Cadwell, Lawrence L.
Levitt, Michael L. Sherman, M.D. and David Swartz meet the independence
requirements under NASDAQ Marketplace Rule 4200(a)(15). Howard G. Berger, M.D.,
John V. Crues, III, M.D., and Norman R. Hames do not meet the independence
requirements under NASDAQ Marketplace Rule 4200(a)(15) for the following
reasons: (1) Howard G. Berger, M.D. is our President and Chief Executive
Officer; (2) John V. Crues, III, M.D. is our Vice President and Medical
Director; and (3) Norman R. Hames is our Executive Vice President and Chief
Operating Officer-Western Operations.
BOARD COMMITTEES
We have an audit committee and compensation committee. Our board and audit
committees generally meet at least quarterly. Our compensation committee meets
at least once each year. Each of the board committees has the composition and
responsibilities described below. The charters of the audit committee and the
compensation committee, which have been adopted by the board of directors, are
publicly available on our website at www.radnet.com under Investor Relations -
Corporate Governance. The Board does not presently have a standing nominating
committee because in its view nominations which are subject to the approval of
the independent members of the board, Messrs. Cadwell, Levitt, Sherman and
Shwartz, is sufficient.
AUDIT COMMITTEE. Our audit committee consists of three directors, Marvin
S. Cadwell, Lawrence L. Levitt and David L. Swartz, all of whom our board of
directors determined to be independent under SEC Rule 10A-3(b)(1) and NASDAQ
Marketplace Rule 4200(a)(15). The audit committee held seven meetings in fiscal
2007. The chair of the audit committee is David L. Swartz. David L. Swartz
qualifies as an audit committee financial expert under the NASDAQ rules and the
rules of the SEC. The functions of this committee include:
o selecting and overseeing the engagement of a firm to serve as an
independent registered public accounting firm to audit our financial
statements,
o helping to ensure the independence of our independent registered
public accounting firm,
o discussing the scope and results of the audit with our independent
registered public accounting firm,
o developing procedures for employees to anonymously submit concerns
about questionable accounting or audit matters,
o meeting with our independent registered public accounting firm and
our management to consider the adequacy of our internal accounting
controls and audit procedures, and
o approving all audit and non-audit services to be performed by our
independent registered public accounting firm.
We believe that the composition of our audit committee meets the criteria
for independence under, and the functioning of our audit committee will comply
with the applicable requirements of, the Sarbanes Oxley Act of 2002 and the
NASDAQ and SEC rules, including the requirement that the audit committee have at
least one qualified financial expert.
COMPENSATION COMMITTEE. Our compensation committee consists of three
directors, Lawrence L. Levitt, Michael Sherman, M.D. and David Swartz, all of
whom our board of directors determined to be independent under NASDAQ
Marketplace Rule 4200(a)(15). The compensation committee held three meetings in
fiscal 2007. The chair of the compensation committee is Lawrence L. Levitt. The
functions of this committee include:
o determining or recommending to the board of directors the
compensation of our executive officers,
o administering our stock and equity incentive plans,
o reviewing and, as it deems appropriate, recommending to our board of
directors, policies, practices, and procedures relating to the
compensation of our directors, officers, and other managerial
employees and the establishment and administration of our employee
benefit plans, and
o advising and consulting with our officers regarding managerial
personnel and development.
We believe that the composition of our compensation committee meets the
criteria for independence under, and the functioning of our compensation
committee will comply with the applicable requirements of, the Sarbanes Oxley
Act of 2002 and NASDAQ and SEC rules. In accordance with NASDAQ Marketplace Rule
4350(a)(5), we intend that all members of our compensation committee are
independent, as defined in NASDAQ Marketplace Rule 4200(a)(15).
-21-
MEETINGS OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES
During fiscal 2007, our board of directors held eight meetings and each
director attended at least 75% of all meetings of the board of directors and
applicable committees, during the periods that he served.
CODE OF ETHICS
We have adopted a written code of financial ethics applicable to our
directors, officers and employees in accordance with the rules of NASDAQ and the
SEC. Our code of ethics is designed to deter wrongdoing and to promote:
o honest and ethical conduct,
o full, fair, accurate, timely and understandable disclosure in
reports and documents that we file with the SEC and in our other
public communications,
o compliance with applicable laws, rules and regulations, including
insider trading compliance, and
o accountability for adherence to the code and prompt internal
reporting of violations of the code, including illegal or unethical
behavior regarding accounting or auditing practices.
The audit committee of our board of directors will review our code of
ethics periodically and may propose or adopt additions or amendments as it
determines are required or appropriate. Our financial code of ethics is posted
on our website at WWW.RADNET.COM under Investor Relations-Corporate Governance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of our company (1) served as a member of the
compensation committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served on our Company's
compensation committee, (2) served as a director of another entity, one of whose
executive officers served on our Company's compensation committee, or (3) served
as a member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served as a
director of our Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and beneficial owners of more than 10% of our common stock to file
reports of ownership and changes in ownership with the SEC. Based solely on
copies of these reports provided to us and written representations that no other
reports were required, we believe that these persons met all of the applicable
Section 16(a) filing requirements during fiscal 2007.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The names of our current executive officers, their ages as of January 31,
2008, and their positions are shown below. Biographical summaries of each of our
executive officers who are not also members of our board of directors are
included below.
NAME AGE POSITION HELD
---- --- -------------
Howard G. Berger, M.D. 63 President and Chief Executive Officer
John V. Crues, III, M.D. 58 Vice President and Medical Director
Stephen M. Forthuber 46 Executive Vice President and Chief Operating Officer-Eastern
Operations
Norman R. Hames 51 Executive Vice President and Chief Operating Officer-Western
Operations
Michael N. Murdock 53 Executive Vice President - Chief Development Officer
Jeffrey L. Linden 65 Executive Vice President and General Counsel
Mark D. Stolper 36 Executive Vice President and Chief Financial Officer
Stephen M. Forthuber became our Executive Vice President and Chief
Operating Officer for Eastern Operations subsequent to the Radiologix
acquisition. He joined Radiologix in January 2000 as Regional Director of
Operations, Northeast. From July 2002 until January 2005 he served as Regional
Vice President of Operations, Northeast and from February until December 2005 he
was Senior Vice President and Chief Development Officer for Radiologix. Prior to
working at Radiologix, Mr. Forthuber was employed from 1982 until 1999 by Per-Se
Technologies, Inc. and its predecessor companies, where he had significant
physician practice management and radiology operations responsibilities.
-22-
Michael Murdock was appointed Executive Vice President and Chief
Development Officer of RadNet in 2007. Mr. Murdock has spent the majority of his
career in senior financial positions with health care companies, ranging in size
from venture-backed startups to multi-billion dollar corporations, including
positions with American Medical International ("AMI") and its successor American
Medical Holding, Inc. ("AMH"), a $2.4 billion in revenue publicly traded owner
and operator of acute care facilities, that was acquired by National Medical
Enterprises, now Tenet Healthcare. From 1999 through 2004, Mr. Murdock served as
Chief Financial Officer of Dental One, a venture capital-backed owner and
operator of 48 dental practices in Texas, Arizona, Colorado and Utah. From 2005
to 2006, Mr. Murdock served as Chief Financial Officer of Radiologix, Inc.
Radiologix, Inc. was acquired by us in November 2006. Mr. Murdock began his
career in 1978 as an auditor with Arthur Andersen after receiving a B.S. degree
from California State University, Northridge.
Jeffrey L. Linden joined us in 2001 and currently serves as our Executive
Vice President and General Counsel. He is also associated with Cohen & Lord, a
professional corporation, outside general counsel to us. Prior to joining us,
Mr. Linden had been engaged in the private practice of law. He has lectured
before numerous organizations on various topics, including the California State
Bar, American Society of Therapeutic Radiation Oncologists, California
Radiological Association, and National Radiology Business Managers Association.
Mark D. Stolper had diverse experiences in investment banking, private
equity, venture capital investing and operations prior to joining us. Mr.
Stolper began his career as a member of the corporate finance group at Dillon,
Read and Co., Inc., executing mergers and acquisitions, public and private
financings and private equity investments with Saratoga Partners LLP, an
affiliated principal investment group of Dillon Read. After Dillon Read, Mr.
Stolper joined Archon Capital Partners, backed by the Milken Family and
NewsCorp, which made private equity investments in media and entertainment
companies. Mr. Stolper received his operating experience with Eastman Kodak,
where he was responsible for business development for Kodak's Entertainment
Imaging subsidiary ($1.5 billion in sales). Mr. Stolper was also co-founder of
Broadstream Capital Partners, a Los Angeles-based investment banking firm
focused on advising middle market companies engaged in financing and merger and
acquisition transactions.
There are no family relationships among any of the officers and directors.
Furthermore, none of the events described in Item 401(f) of Regulation S-K
involve an officer during the past five years. The officers are elected annually
and serve at the discretion of the Board of Directors.
-23-
COMPENSATION DISCUSSION AND ANALYSIS
OVERVIEW
Early in the year ended December 31, 2007 our Board of Directors initially
reviewed and approved the salaries and equity awards of our executive officers
as well as all grants of options and warrants to purchase shares of Common Stock
and other equity-based compensation awards. In January 2007 the board formed a
Compensation Committee to determine the salaries and incentive compensation for
our employees and consultants composed of Lawrence L. Levitt, Michael L.
Sherman, M.D. and David L. Swartz.
COMMITTEE MEETINGS
Our Compensation Committee meets as often as necessary to perform its
duties and responsibilities. In fiscal 2007 the Committee met twice. The
Committee meets with the Chief Executive Officer to establish the meeting agenda
and where appropriate with the General Counsel and outside advisors. The
Committee meets in executive session without management.
ROLE OF COMMITTEE
The committee operates under a written charter adopted by the Board. A
copy of the charter is available at WWW.RADNET.COM under Investor Relations -
Corporate Governance. The fundamental responsibilities of our Committee are:
1. annually review and approve corporate goals and objectives relevant
to the chief executive officer compensation, evaluate the chief
executive officer's performance in light of those goals and
objectives, and recommend to the Board the chief executive officer's
compensation levels based on this evaluation. In determining the
long-term incentive component of our chief executive officer's
compensation, the Committee will consider our performance and
relative stockholder return, the value of similar incentive awards
to chief executive officers at peer group companies, and the awards
given the chief executive officer in past years and other such
matters deemed relevant.
2. annually review and make recommendations to the Board with respect
to the compensation of executive officers and certain other members
of senior management.
3. review matters relating to management succession, including, but not
limited to, compensation.
4. if appropriate, hire experts in the field of executive compensation
to assist the Committee with its evaluation of the chief executive
officer or senior executive compensation. The Committee shall have
the sole authority to retain and to terminate such experts, and to
approve the expert's fees and other retention terms. The Committee
shall also have the authority to obtain advice and assistance from
internal or external legal, accounting, human resources, or other
advisors.
5. make recommendations to the board with respect to
incentive-compensation plans and equity-based plans and interpret
and administer such plans, including but not limited to determining
eligibility, the number and type of equity awards available for
grant, and the terms of such grants.
6. appoint, monitor and terminate plan trustees, and monitor, adopt,
amend and terminate our qualified and non-qualified pension plans.
7. form and delegate authority to subcommittees when appropriate.
8. make regular reports to the board.
9. produce the required annual report on executive compensation for
inclusion in our proxy statement.
10. annually evaluate its own performance .
11. fulfill such other duties and responsibilities as may be assigned to
the Committee, from time-to-time, by the board and/or chairman of
the board.
12. review and reassess the adequacy of the Committee Charter annually
and recommend any proposed changes to the board for approval.
13. oversee our compensation philosophy and strategy.
-24-
The Committee receives and reviews materials in advance of each meeting.
These materials include information that management believes will be helpful to
the Committee as well as materials that the Committee has specifically
requested. Depending on the agenda for the particular meeting, these materials
may include:
o financial reports on year-to-date performance versus budget and
compared to prior year performance;
o calculations and reports on levels of achievement of individual and
corporate performance objectives;
o reports on RadNet's strategic objectives and budget for future
periods;
o reports on RadNet's five-year performance and current year
performance versus a peer group of companies;
o information on the executive officers' stock ownership and option
holdings; and
o information regarding equity compensation plan dilution; tally
sheets setting forth the total compensation of the Named Executive
Officers, including base salary, cash incentives, equity awards,
perquisites and other compensation and any amounts payable to the
executives upon voluntary or involuntary termination, early or
normal retirement or following a change-in-control of RadNet.
A CONTINUING PROCESS
Our compensation planning process neither begins nor ends with any
particular Committee meeting. Compensation decisions are designed to promote our
fundamental business objectives and strategy. Business and succession planning,
evaluation of management performance and consideration of the business
environment are year-round processes.
MANAGEMENT'S ROLE IN THE COMPENSATION-SETTING PROCESS
Management plays a significant role in the compensation-setting process.
The most significant aspects of management's role are:
o evaluating employee performance;
o establishing business performance targets and objectives; and
o recommending salary levels and option awards.
The Chief Executive Officer works with the Compensation Committee in
establishing the agenda for Committee meetings. Management also prepares meeting
information for each Compensation Committee meeting.
The Chief Executive Officer also participates in Committee meetings at the
Committee's request to provide:
o background information regarding RadNet's strategic objectives;
o his evaluation of the performance of the senior executive officers;
and
o compensation recommendations as to senior executive officers (other
than himself).
COMMITTEE ADVISORS
The Compensation Committee Charter is granted, where appropriate, the
authority to hire and fire advisors and compensation consultants. RadNet is
obligated to pay our advisors and consultants. These advisors will report
directly to the Compensation Committee.
ANNUAL EVALUATION
The Committee meets in executive session each year to evaluate the
performance of the Named Executive Officers, to determine if there will be
changes in their annual compensation, to establish annual performance objectives
for the current fiscal year, and to consider and approve any grants to them of
equity incentive compensation.
PERFORMANCE OBJECTIVES
Our process begins with establishing individual and corporate performance
objectives for senior executive officers in each fiscal year. We intend to
engage in an active dialogue with the Chief Executive Officer concerning
strategic objectives and performance targets. We will review the appropriateness
of the financial measures used in incentive plans and the degree of difficulty
in achieving specific performance targets. Corporate performance objectives
typically are established on the basis of a targeted return on capital employed
for RadNet or a particular business unit.
-25-
BENCHMARKING
We do not believe that it is appropriate to establish compensation levels
primarily based on benchmarking. We believe that information regarding pay
practices at other companies is useful in two respects, however. First, we
recognize that our compensation practices must be competitive in the
marketplace. Second, this marketplace information is one of the many factors
that we consider in assessing the reasonableness of compensation.
COMMITTEE EFFECTIVENESS
We review, on an annual basis, the performance of our Committee and the
effectiveness of our compensation program in obtaining desired results.
COMPENSATION PHILOSOPHY
Our executive compensation program is designed with one fundamental
objective: to support RadNet's core values and strategic objectives. Our
compensation philosophy is intended to align the interests of management with
those of our shareholders. The following principles influence and guide our
compensation decisions:
WE FOCUS ON RESULTS AND STRATEGIC OBJECTIVES
Our compensation analysis begins with an examination of RadNet's business
plan and strategic objectives. We intend that our compensation decisions will
attract and retain leaders and reward them for achieving RadNet's strategic
initiatives and objective measures of success.
WE BELIEVE IN A PAY FOR PERFORMANCE CULTURE
At the core of our compensation philosophy is our guiding belief that pay
should be directly linked to performance.
o A substantial portion of executive officer compensation is
contingent on, and variable with, achievement of objective corporate
and/or individual performance objectives.
o Our stock option plan prohibits discounted stock options, reload
stock options and re-pricing of stock options.
COMPENSATION AND PERFORMANCE PAY SHOULD REFLECT POSITION AND RESPONSIBILITY
Total compensation and accountability should generally increase with
position and responsibility. Consistent with this philosophy:
o Total compensation is higher for individuals with greater
responsibility and greater ability to influence RadNet's achievement
of targeted results and strategic initiatives.
o As position and responsibility increases, a greater portion of the
executive officer's total compensation is performance-based pay
contingent on the achievement of performance objectives.
o Equity-based compensation is higher for persons with higher levels
of responsibility, making a significant portion of their total
compensation dependent on long-term stock appreciation.
COMPENSATION DECISIONS SHOULD PROMOTE THE INTERESTS OF SHAREHOLDERS
Compensation should focus management on achieving strong short-term
(annual) performance in a manner that supports and ensures our long-term success
and profitability. We believe that stock options create long-term incentives
that align the interest of management with the long-term interest of
shareholders.
-26-
COMPENSATION SHOULD BE REASONABLE AND RESPONSIBLE
It is essential that our overall compensation levels be sufficiently
competitive to attract talented leaders and motivate those leaders to achieve
superior results. At the same time, we believe that compensation should be set
at responsible levels. Our executive compensation programs are intended to be
consistent with our constant focus on controlling costs.
COMPENSATION DISCLOSURES SHOULD BE CLEAR AND COMPLETE
We believe that all aspects of executive compensation should be clear,
comprehensible and promptly disclosed in plain English. We believe that
compensation disclosures should provide all of the information necessary to
permit shareholders to understand our compensation philosophy, our
compensation-setting process and how and how much our executives are paid.
ELEMENTS OF EXECUTIVE COMPENSATION
BASE SALARY
Base pay is a critical element of executive compensation because it
provides executives with a base level of monthly income. In determining base
salaries, we consider the executive's qualifications and experience, scope of
responsibilities and future potential, the goals and objectives established for
the executive, the executive's past performance, competitive salary practices at
similar companies, internal pay equity and the tax deductibility of base salary.
Finally, for our most senior executives (our Chief Executive Officer,
Executive Vice Presidents and Chief Financial Officer), we establish base
salaries at a level so that a significant portion of the total compensation that
such executives can earn is performance-based pay.
EQUITY BASED COMPENSATION
We believe that equity compensation is the most effective means of
creating a long-term link between the compensation provided to officers and
other key management personnel with gains realized by the shareholders. We have
elected to use stock options and warrants as the equity compensation vehicle.
All stock options and warrants incorporate the following features:
o the term of the grant does not exceed 10 years;
o the grant price is not less than the market price on the date of
grant;
o grants do not include "reload" provisions;
o repricing of options is prohibited, unless approved by the
shareholders; and
o options generally vest over a term of years (5 to 7 years) beginning
with the first anniversary of the date of grant.
We continue to use stock options and warrants as a long-term incentive
vehicle because:
o Stock options and warrants align the interests of executives with
those of the shareholders, support a pay-for-performance culture,
foster employee stock ownership and focus the management team on
increasing value for the shareholders.
o The vesting period encourages executive retention and the
preservation of shareholder value.
In determining the number of options or warrants to be granted to senior
executive officers, we take into account the individual's position, scope of
responsibility, ability to affect profits and shareholder value and the
individual's historic and recent performance and the value of stock options and
warrants in relation to other elements of total compensation.
ADDITIONAL BENEFITS
Executive officers participate in other employee benefit plans generally
available to all employees on the same terms as similarly situated employees.
INTERNAL PAY EQUITY
We believe that internal equity is an important factor to be considered in
establishing compensation for the officers. We have not established a policy
regarding the ratio of total compensation of the Chief Executive Officer to that
of the other officers, but we do review compensation levels to ensure that
appropriate equity exists. We intend to continue to review internal compensation
equity and may adopt a formal policy in the future, if we deem such a policy to
be appropriate.
-27-
EQUITY COMPENSATION
We believe that long-term performance is achieved through an ownership
culture that encourages such performance by our Named Executive Officers through
the use of stock and stock based awards. Our stock compensation plans have been
established to provide certain of our employees, including our Named Executive
Officers, with incentives to help align those employees' interests with the
interests of our stockholders. Our compensation committee believes the use of
stock and stock based awards offers the best approach to achieving this goal. We
intend to develop and adopt stock ownership requirements or guidelines. Our
stock compensation plans have provided the principal method for our Named
Executive Officers to acquire equity or equity linked interests in our company.
We sponsor a 2006 Equity Incentive Plan (2006 Plan). Upon the adoption of
the 2006 Plan our prior plans no longer were available for new awards. For more
information about the 2006 Plan, please read "Compensation of Directors and
Executive Officers--Stock Incentive Plans" below. The 2006 Plan is currently
administered by our compensation committee. In the case of awards intended to
qualify as "performance based compensation" excludable from the deduction
limitation under Section 162(m) of the Internal Revenue Code, the administrator
of the 2006 Plan will consist of two or more "outside directors" within the
meaning of Section 162(m).
CHANGE IN CONTROL AND SEVERANCE PAYMENTS
The employment agreements of some of our Named Executive Officers provide
them benefits if their employment is terminated (other than for misconduct),
including termination following a change in control. The details and amount of
this benefit are set forth below under "Compensation of Directors and Executive
Officers - Severance Agreements - Change-in-Control Arrangements."
TAX AND ACCOUNTING IMPLICATIONS
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Our compensation committee reviews and considers the deductibility of
executive compensation under Section 162(m) of the Internal Revenue Code, which
provides that we may not deduct compensation of more than $1,000,000 that is
paid to certain individuals. In as much as no executive is currently paid an
amount near the threshold our compensation committee believes that compensation
paid to our Named Executive Officers is generally fully deductible for federal
income tax purposes. However, in certain situations, certain of the independent
members of our compensation committee may approve compensation that will not
meet these requirements in order to ensure competitive levels of total
compensation of our Named Executive Officers.
ACCOUNTING FOR STOCK BASED COMPENSATION
Effective January 1, 2006, we began accounting for stock based payments in
accordance with the requirements of FASB Statement No. 123(R).
CONCLUSION
Our compensation practices are designed to retain and motivate our Named
Executive Officers and to ultimately reward them for outstanding performance.
COMPENSATION COMMITTEE REPORT
We, the compensation committee of the Board of Directors of RadNet, Inc.,
have reviewed and discussed the Compensation Discussion and Analysis (set forth
above) with the management of the company, and, based on such review and
discussion, have recommended to the Board of Directors inclusion of the
Compensation Discussion and Analysis in this proxy statement.
Compensation Committee:
Lawrence L. Levitt
Michael L. Sherman, M.D.
David L. Swartz
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation paid or earned by our
principal executive officer, principal financial officer and each of our three
other most highly compensated executive officers for the fiscal years ended
December 31, 2005, 2006 and 2007 ("Named Executive Officers").
ANNUAL COMPENSATION
-------------------
SALARY BONUS STOCK OPTION AWARDS TOTALS
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) AWARDS($) ($)(2) (#)
--------------------------- ---- ------ --- --------- ------ ---
Howard G. Berger, M.D., 2005 200,000(5) -- -- -- --
Principal Executive Officer 2006 50,000(3)(5) -- -- -- --
2007 415,000(5) -- -- -- --
Stephen M. Forthuber 2005(4) -- -- -- -- --
Executive Vice President and 2006 31,250(4) -- -- 31,250
Chief Operating Officer - 2007 375,000(4) -- -- -- --
Eastern Operations
John V. Crues, III, M.D., 2005 440,000(5)
Medical Director 2006 453,000(5) -- -- -- 450,000
2007 558,000(5) -- -- -- --
Jeffrey L. Linden, 2005 350,000
Executive Vice President and 2006 350,000(6) -- -- 472,419 822,419
General Counsel 2007 400,000(6) -- -- -- --
Mark D. Stolper, 2005 215,000 124,902
Executive Vice President and 2006 250,000 -- -- 205,714 455,714
Principal Financial Officer 2007 300,000 -- -- -- --
-----------------------
(1) The dollar value of perquisites and other personal benefits, if any, for
each of the Named Executive Officers was less than $10,000 or 10% of
salary and bonus, the reporting thresholds established by the SEC.
(2) The amounts listed in this column represent the dollar amount we
recognized for financial statement reporting purposes with respect to
fiscal 2007 (for awards made both in and before fiscal 2007), disregarding
an estimate of forfeitures related to service-based vesting conditions,
under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123(R), "Share-Based Payment," or SFAS No.
123(R). For a more detailed discussion on the valuation model and
assumptions used to calculate the fair value of these awards, see Note 11
to the consolidated financial statements included in our annual report on
Form 10-K for the year ended December 31, 2007.
(3) In October 2006, Dr. Berger returned the majority of his annual
compensation to assist us with cash flow requirements.
(4) Upon commencement of his employment, November 15, 2006, Mr. Forthuber
received annual compensation of $250,000 and because he continued to be
employed by us on November 15, 2007, a bonus of $125,000.
(5) Received from BRMG.
(6) Cohen & Lord, a professional corporation, a law firm with which Mr. Linden
is associated, received $428,312 in fees from us during the year ended
December 31, 2006 and $411,859 for the year ended December 31, 2007. Mr.
Linden has specifically waived any interest in our fees paid to Cohen &
Lord since becoming an officer.
GRANTS OF PLAN-BASED AWARDS
The following table sets forth certain information with respect to grants
of awards to our Named Executive Officers under our equity incentive plans
during fiscal 2006 and 2007.
ALL OTHER OPTION
AWARDS: NUMBER EXERCISE OR BASE GRANT DATE FAIR VALUE
OF SECURITIES PRICE OF OPTION OF STOCK AND OPTION
NAME GRANT DATE UNDERLYING OPTIONS (#) AWARDS ($/SH)(1) AWARDS(2)
---- ---------- ---------------------- ---------------- ---------
Norman R. Hames 03/27/06 1,500,000 1.12(3) $1,351,765
Jeffrey L. Linden 04/28/06 250,000 2.52 $472,419
Mark D. Stolper 07/11/06 100,000 3.10 $205,714
Stephen M. Forthuber 04/03/07 250,000(4) 5.88 $1,067,758
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-----------------
(1) Exercise prices reflect the closing public market price on the date of
grant.
(2) For discussion regarding the valuation model and assumptions used to
calculate the fair value of these option awards, see Note 11 to the
consolidated financial statements included in our annual report on Form
10-K for the year ended December 31, 2007.
(3) We have agreed to advance to Mr. Hames $0.40 per share at the time of
exercise.
(4) Vest over a five year term.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The table below summarizes outstanding equity awards held by our Named
Executive Officers at December 31, 2007.
NUMBER OF
SECURITIES NUMBER OF SECURITIES
UNDERLYING UNDERLYING
UNEXERCISED OPTIONS UNEXERCISED OPTIONS
(#) (#) OPTION EXERCISE OPTION EXPIRATION
NAME EXERCISABLE UNEXERCISABLE PRICE ($) DATE
-------------------------
Norman R. Hames 1,500,000 --- 1.12 05/01/2013
John V. Crues, III, M.D. 250,000 --- .72 06/07/2010
Jeffrey L. Linden 250,000 --- 2.52 04/28/2012
37,500 --- .92 08/12/2011
100,000 --- .60 07/30/2009
Mark D. Stolper 100,000 --- 3.10 07/11/2011
325,000 --- .60 07/30/2009
25,000 --- 1.20 03/01/2009
Stephen M. Forthuber --- 250,000(1) 5.77 04/13/2013
All information in this table relates to nonqualified warrants.
(1) Vests over a term of five years.
OPTION EXERCISES AND STOCK VESTED
There were no option exercises in the fiscal years ended December 31, 2006
and December 31, 2007 by the Named Executive Officers except as follows:
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED (1) YEAR
------------------------- ----------- ------------- --------
John V. Crues, III, M.D. 160,344 $372,000 2006
Jeffrey L. Linden 250,000 $215,000 2006
John V. Crues, III, M.D. 150,000 $820,000 2007
---------------
(1) The value realized equals the fair market value of the common stock
acquired on the date of exercise minus the exercise price.
PENSION BENEFITS, NONQUALIFIED DEFINED CONTRIBUTION AND OTHER DEFERRED
COMPENSATION PLANS
We do not have any tax-qualified defined benefit plans or supplemental
executive retirement plans that provide for payments or other benefits to our
Named Executive Officers in connection with their retirement. We also do not
have any non-qualified defined contribution plan or other deferred compensation
plans that provide for payments or other benefits to our Named Executive
Officers.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
PAYMENTS MADE UPON TERMINATION AND RETIREMENT
Regardless of the manner in which the employment of a Named Executive
Officer is terminated, he is entitled to receive amounts earned during his term
of employment. Such amounts include:
o non-equity incentive compensation earned, to the extent vested;
o equity awarded pursuant to our 2006 Equity Incentive Plan, to the
extent vested; and
o unused vacation pay.
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PAYMENTS MADE UPON DEATH OR DISABILITY
In the event of the death or disability of a Named Executive Officer, no
additional benefits other than those listed under the heading "Payments Made
Upon Termination and Retirement" above, will be paid to our Named Executive
Officers.
SEVERANCE AGREEMENTS
None of our Named Executive Officers have any arrangements that provide
for the payment of severance benefits except upon termination of the employment
of (i) Norman Hames, he is entitled to receive an amount equal to three times
his then annual compensation; (ii) upon termination of the employment of Stephen
Forthuber by us prior to November 15, 2008 he shall receive an amount equal to
two times his annual compensation and anytime after November 15, 2008 an amount
equal to one year's compensation; and (iii) upon termination of the employment
of Jeffrey Linden, he shall receive an amount equal to five times his then
annual compensation.
CHANGE-IN-CONTROL ARRANGEMENTS
None of our Named Executive Officers are entitled to payment of any
benefits upon a change-in-control of RadNet, however Messrs. Hames and Linden
have the right at any time to terminate their employment and receive their
severance payment as provided above.
OVERVIEW OF DIRECTOR COMPENSATION
We use cash and stock based incentive compensation to attract and retain
qualified candidates to serve on our Board. In setting director compensation, we
consider the significant amount of time that our directors expend in fulfilling
their duties to our Company as well as the skill level required by the members
of our board.
CASH COMPENSATION PAID TO BOARD MEMBERS
For the fiscal year ended December 31, 2007 members of our board who were
not employees of the Company received annual compensation of $25,000. Commencing
in July 2007, we determined that members of our board who were not employees of
the Company were entitled to receive an attendance fee for board meetings of
$1,000 per meeting and committee meetings of $750 per meeting. Our Chairman of
the Audit Committee receives $10,000 per year for serving in such capacity and
our Chairman of the Compensation Committee receives $5,000 per year for serving
in such capacity. Directors who were our employees received no additional
compensation for their services as directors.
STOCK BASED INCENTIVE COMPENSATION
For the fiscal year ended December 31, 2007, members of our board who were
not employees of the Company each received options to purchase 25,000 shares of
common stock exercisable at the closing price of the Company's common stock in
the public market on the date of issuance.
DIRECTOR COMPENSATION
The table below summarizes the compensation we paid to directors who are
not employees of our company for the fiscal year ended December 31, 2007.
FEES EARNED OPTION ALL OTHER
OR PAID IN AWARDS COMPENSATION
NAME(1) CASH ($) ($)(2) (3) ($) TOTAL ($)
-------- -------- ---------- ------------ ---------
Marvin S. Cadwell 20,750 25,000 --- 20,750
Lawrence L. Levitt 28,750 25,000 --- 28,750
Michael L. Sherman, M.D. 20,750 25,000 --- 20,750
David L. Swartz 30,000 25,000 --- 30,000
--------------------
(1) Howard G. Berger, M.D., our President and Chief Executive Officer, is not
included in this table because he is an employee of the company and thus
receives no additional compensation for his services as a director. Norman R.
Hames and John v. Crues, III, M.D. also do not appear because they are also
employees. The compensation received by these persons as an employee of the
Company is shown in the Summary Compensation Table above.
(2) On February 27, 2007, each of the named individuals was granted 25,000
stock warrants with a fair value of $283,968 calculated under SFAS No. 123(R).
On March 26, 2006, we granted to Lawrence L. Levitt and David L. Swartz 25,000
stock warrants with a fair value of $29,050 calculated under SFAS No. 123(R). As
of December 31, 2007, each director has the following number of options fully
vested and outstanding: Marvin S. Cadwell: 25,000 (exercise price of $5.99 per
share); Lawrence L. Levitt: 75,000 (exercise prices of $0.64 per share, $1.00
per share and $5.99 per share, each as to 25,000 share increments); David L.
Swartz: 100,000 (exercise prices of $1.20 per share, $0.64 per share, $1.00 per
share and $5.99 per share, each as to 25,000 share increments).
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(3) The amounts listed in this column represent the dollar amount we
recognized for financial statement reporting purposes with respect to fiscal
2007 (for awards made both in and before fiscal 2007), disregarding an estimate
of forfeitures related to service-based vesting conditions, under Financial
Accounting Standards Board Statement of Financial Accounting Standards No.
123(R), "Share-Based Payment," or SFAS No. 123(R). For a more detailed
discussion on the valuation model and assumptions used to calculate the fair
value of these awards, see Note 11 to the consolidated financial statements
included in our annual report on Form 10-K for the year ended December 31, 2007.
STOCK INCENTIVE PLANS
We have two stock incentive plans: our 2000 Long-Term Incentive Plan and
our 2006 Equity Incentive Plan.
THE 2000 LONG-TERM INCENTIVE PLAN
We have reserved 1,000,000 shares of common stock for issuance under our
2000 Long-Term Incentive Plan, or the 2000 Plan. The material features of the
2000 Plan are as follows:
ADMINISTRATION
The 2000 Plan is presently administered by our compensation committee
which consists of three non-employee Directors. Subject to the terms of the 2000
Plan, the compensation committee has full authority to administer the 2000 Plan
in all respects, including: (i) selecting the individuals who are to receive
awards under the 2000 Plan; (ii) determining the specific form of any award; and
(iii) setting the specific terms and conditions of each award. Our senior legal
and human resources representatives are also authorized to take ministerial
actions as necessary to implement the 2000 Plan and awards issued under the 2000
Plan.
ELIGIBILITY
Employees, directors and other individuals who provide services to us, our
affiliates and subsidiaries who, in the opinion of the Board, or the
compensation committee, if applicable, are in a position to make a significant
contribution to our success or the success of our affiliates and subsidiaries
are eligible for awards under the 2000 Plan.
AMOUNT OF AWARDS
The value of shares or other awards to be granted to any recipient under
the 2000 Plan are not presently determinable. However, the 2000 Plan restricts
the number of shares and the value of awards not based on shares that may be
granted to any individual during a calendar year or performance period. In order
to facilitate our compliance with Section 162(m) of the Internal Revenue Code of
1986, as amended, or the Code, which deals with the deductibility of
compensation for any of the chief executive officer and the four other most
highly-paid executive officers, the 2000 Plan limits to 500,000 the number of
shares for which options, stock appreciation rights or other stock awards may be
granted to an individual in a calendar year and limits to $1,000,000 the value
of non-stock-based awards that may be paid to an individual with respect to a
performance period. These restrictions were adopted by the Board of Directors as
a means of complying with Code Section 162(m) and are not indicative of
historical or contemplated awards made or to be made to any individual under the
2000 Plan.
STOCK OPTIONS
The 2000 Plan authorizes the grant of options to purchase shares of common
stock, including options to employees intended to qualify as incentive stock
options within the meaning of Section 422 of the Code, as well as non-statutory
options. The term of each option will not exceed ten years and each option will
be exercisable at a price per share not less than 100% of the fair market value
of a share of common stock on the date of the grant. Generally, optionees will
pay the exercise price of an option in cash or by check, although the Board, and
the compensation committee, if established, may permit other forms of payment
including payment through the delivery of shares of common stock. Options
granted under the 2000 Plan are generally not transferable, except at death or
as gifts to certain Family Members, as defined in the 2000 Plan. At the time of
grant or thereafter, the Board, and the compensation committee, if established,
may determine the conditions under which stock options vest and remain
exercisable.
Unless otherwise determined by the Board, and the compensation committee,
if established, unexercised options will terminate if the holder ceases for any
reason to be associated with us, our affiliates or our subsidiaries. Options
generally remain exercisable for a specified period following termination for
reasons other than for Cause, as defined in the 2000 Plan, particularly in
circumstances of death, Disability and Retirement, as defined in the 2000 Plan.
In the event of a Change in Control or Covered Transaction, as defined in the
2000 Plan, of our company, options become immediately exercisable and/or are
converted into options for securities of the surviving party as determined by
the Board, and the compensation committee, if established.
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OTHER AWARDS
The Board, and the compensation committee, if established, may grant stock
appreciation rights which pay, in cash or common stock, an amount generally
equal to the difference between the fair market values of the common stock at
the time of exercise of the right and at the time of grant of the right. In
addition, the Board, and the compensation committee, if established, may grant
awards of shares of common stock at a purchase price less than fair market value
at the date of issuance, including zero. A recipient's right to retain these
shares may be subject to conditions established by the Board, and the
compensation committee, if established, if any, such as the performance of
services for a specified period or the achievement of individual or company
performance targets. The Board, and the compensation committee, if established,
may also issue shares of common stock or authorize cash or other payments under
the 2000 Plan in recognition of the achievement of certain performance
objectives or in connection with annual bonus arrangements.
PERFORMANCE CRITERIA
The Board, and the compensation committee, if established, may condition
the exercisability, vesting or full enjoyment of an award on specified
Performance Criteria. For purposes of Performance Awards, as defined in the 2000
Plan, that are intended to qualify for the performance-based compensation
exception under Code Section 162(m), Performance Criteria means an objectively
determinable measure of performance relating to any of the following as
specified by the Board, and the compensation committee, if established,
determined either on a consolidated basis or, as the context permits, on a
divisional, subsidiary, line of business, project or geographical basis or in
combinations thereof: (i) sales; revenue; assets; liabilities; costs; expenses;
earnings before or after deduction for all or any portion of interest, taxes,
depreciation, amortization or other items, whether or not on a continuing
operations or an aggregate or per share basis; return on equity, investment,
capital or assets; one or more operating ratios; borrowing levels, leverage
ratios or credit rating; market share; capital expenditures; cash flow; working
capital requirements; stock price; stockholder return; sales, contribution or
gross margin, of particular products or services; particular operating or
financial ratios; customer acquisition, expansion and retention; or any
combination of the foregoing; or (ii) acquisitions and divestitures, in whole or
in part; joint ventures and strategic alliances; spin-offs, split-ups and the
like; reorganizations; recapitalizations, restructurings, financings of debt or
equity and refinancings; transactions that would constitute a change of control;
or any combination of the foregoing. Performance Criteria measures and targets
determined by the Board, and the compensation committee, if established, need
not be based upon an increase, a positive or improved result or avoidance of
loss.
AMENDMENTS
The Board, and the compensation committee, if established, may amend the
2000 Plan or any outstanding award for any purpose permitted by law, or may at
any time terminate the 2000 Plan as to future grants of awards. The Board, and
the compensation committee, if established, may not, however, increase the
maximum number of shares of common stock issuable under the 2000 Plan or change
the description of the individuals eligible to receive awards. In addition, no
termination of or amendment to the 2000 Plan may adversely affect the rights of
a participant with respect to any award previously granted under the 2000 Plan
without the participant's consent, unless the compensation committee expressly
reserves the right to do so in writing at the time the award is made. To the
extent the Board, and the compensation committee, if established, desires the
2000 Plan to qualify under the Code, certain amendments may require stockholder
approval.
Our stockholders adopted our Incentive Stock Option Plan, or the Incentive
Plan. The Incentive Plan was designed to qualify as an "incentive stock option
plan" under Section 422A of the Code. Under the Incentive Plan, options to
purchase up to 1,600,000 shares of common stock were authorized for grant to key
employees, including officers and directors.
In May 1992, our Board of Directors authorized amendments to the Incentive
Plan, subject to stockholder approval, increasing the number of shares reserved
under the Incentive Plan to 2,000,000 shares of our common stock and amending
the Incentive Plan in accordance with changes adopted in 1986 to the Code. These
proposed amendments to the Incentive Plan were adopted by stockholders at the
annual meeting of stockholders held on November 17, 1992.
Under the Incentive Plan, as amended, except for options granted to
holders of 10% or more of our outstanding stock, the exercise price of an option
must be at least 100% of the fair market value of the common stock on the
effective date of grant. Options granted under the Incentive Plan to
stockholders possessing more than 10% of our outstanding stock must be at an
exercise price equal to not less than 110% of such fair market value. We are not
issuing any additional options under the Incentive Plan because the Incentive
Plan terminated in 2002. All options granted must be exercised within 10 years
of date of grant. The aggregate fair market value of our common stock with
respect to which options are exercisable for the first time by a grantee under
the Incentive Plan during any calendar year may not exceed $100,000. Options
must be exercised by an optionee, if at all, within three months after the
termination of such optionee's employment for any reason other than for cause,
and within one year after termination of employment due to death or permanent
disability, unless by its terms the option expires sooner.
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THE 2006 EQUITY INCENTIVE PLAN:
ELIGIBLE PARTICIPANTS
Awards may be granted under the 2006 Plan to any of our employees,
officers, directors, or consultants or those of our affiliates. An incentive
stock option may be granted under the 2006 Plan only to a person who, at the
time of the grant, is an employee of Radnet or a related corporation. The 2006
Plan was approved by our Board on October 11, 2006 and by our stockholders at
our special meeting held on November 15, 2006.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE
A total of 2,500,000 new shares of our common stock have been reserved for
issuance under the 2006 Plan. The maximum aggregate number of shares that may be
issued under the 2006 Plan through the exercise of incentive stock options is
2,500,000. If an award is cancelled, terminates, expires, or lapses for any
reason without having been fully exercised or vested, or is settled for less
than the full number of shares of common stock represented by such award
actually being issued, the unvested, cancelled, or unissued shares of common
stock generally will be returned to the available pool of shares reserved for
issuance under the 2006 Plan. In addition, if we experience a stock dividend,
reorganization, or other change in our capital structure, the administrator may,
in its discretion, adjust the number of shares available for issuance under the
2006 Plan and any outstanding awards as appropriate to reflect the stock
dividend or other change. The share number limitations included in the 2006 Plan
will also adjust appropriately upon such event.
ADMINISTRATION OF THE 2006 PLAN
The 2006 Plan will be administered by the board of directors or one or
more committees of the board of directors, which we refer to as the Committee.
The RadNet board has appointed the Compensation Committee as the Committee
referred to in the 2006 Plan. In the case of awards intended to qualify as
"performance-based-compensation" excludable from the deduction limitation under
Section 162(m) of the Code, the Committee will consist of two or more "outside
directors" within the meaning of Section 162(m).
The administrator has the authority to, among other things, select the
individuals to whom awards will be granted and to determine the type of award to
grant; determine the terms of the awards, including the exercise price, the
number of shares subject to each award, the exercisability of the awards, and
the form of consideration payable upon exercise; to provide for a right to
dividends or dividend equivalents; and to interpret the 2006 Plan and adopt
rules and procedures relating to administration of the 2006 Plan. Except to the
extent prohibited by any applicable law, the administrator may delegate to one
or more individuals the day-to-day administration of the 2006 Plan.
AWARD TYPES
OPTIONS
A stock option is the right to purchase shares of RadNet's common stock at
a fixed exercise price for a fixed period. An option under the 2006 Plan may be
an incentive stock option or a nonstatutory stock option. The exercise price of
an option granted under the 2006 Plan must be at least equal to the fair market
value of RadNet's common stock on the date of grant. In addition, the exercise
price for any incentive stock option granted to any employee owning more than
ten percent of our common stock may not be less than 110 percent of the fair
market value of RadNet's common stock on the date of grant.
Unless the administrator determines to use another method, the fair market
value of our common stock on the date of grant will be determined as the closing
sales price for our common stock on the date the option is granted (or if no
sales are reported that day, the closing price on the last preceding day on
which a sale occurred), using a reporting source selected by the administrator.
The administrator determines the acceptable form of consideration for exercising
an option, including the method of payment, either through the terms of the
option agreement or at the time of exercise of an option, provided that
consideration must have a value of not less than the par value of the shares to
be issued and must be actually received before issuing any shares. The 2006 Plan
permits payment in the form of cash, check or wire transfer, other shares of
common stock of RadNet, cashless exercises, any other form of consideration and
method of payment permitted by applicable laws, or any combination thereof.
An option granted under the 2006 Plan cannot be exercised until it becomes
vested. The administrator establishes the vesting schedule of each option at the
time of grant and the option will expire at the time established by the
administrator. After termination of the optionee's service, he or she may
exercise his or her option for the period stated in the option agreement, to the
extent the option is vested on the date of termination. If termination is due to
death or disability, the option usually will remain exercisable for twelve
months following such termination. In all other cases, the option generally will
remain exercisable for three months. Nevertheless, an option may never be
exercised later than the expiration of its term. The term of any stock option
may not exceed ten years, except that with respect to any participant who owns
ten percent or more of the voting power of all classes of RadNet's outstanding
capital stock, the term for incentive stock options must not exceed five years.
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STOCK AWARDS
Stock awards are awards or issuances of shares of our common stock that
vest in accordance with terms and conditions established by the administrator.
Stock awards include stock units, which are bookkeeping entries representing an
amount equivalent to the fair market value of a share of common stock, payable
in cash, property, or other shares of stock. The administrator may determine the
number of shares to be granted, and impose whatever conditions to vesting it
determines to be appropriate, including performance criteria and level of
achievement versus the criteria that the administrator determines. The criteria
may be based on financial performance, personal performance evaluations, and
completion of service by the participant. Unless the administrator determines
otherwise, shares that do not vest typically will be subject to forfeiture or to
a right of repurchase of the unvested portion of such shares at the original
price paid by the participant, which RadNet may exercise upon the voluntary or
involuntary termination of the awardee's service with RadNet for any reason,
including death or disability.
For stock awards intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Code, the measures established by
the administrator must be qualifying performance criteria. Qualifying
performance criteria under the 2006 Plan include any of the following
performance criteria, individually or in combination:
o cash flow o earnings (including gross margin, earnings
before interest and taxes, earnings before taxes,
and net earnings)
o earnings per share o growth in earnings or earnings per share
o stock price o return on equity or average stockholders'
equity
o total stockholder return o return on capital
o return on assets or net assets o return on investment
o revenue o income or net income
o operating income or net operating income o operating profit or net operating profit
o operating margin o return on operating revenue
o market share o contract awards or backlog
o overhead or other expense reduction o growth in stockholder value relative to the
moving average of the S&P 500 Index or a peer
group index
o credit rating o strategic plan development and implementation
o improvement in workforce diversity o EBITDA
o any other similar criteria
Qualifying performance criteria may be applied either to RadNet as a whole
or to a business unit, affiliate, or business segment, individually or in any
combination. Qualifying performance criteria may be measured either annually or
cumulatively over a period of years, and may be measured on an absolute basis or
relative to a pre-established target, to previous years' results, or to a
designated comparison group, in each case as specified by the administrator in
writing in the award.
STOCK APPRECIATION RIGHTS
A stock appreciation right is the right to receive the appreciation in the
fair market value of our common stock in an amount equal to the difference
between (a) the fair market value of a share of our common stock on the date of
exercise, and (b) the exercise price. This amount will be paid, as determined by
the administrator, in shares of our common stock with equivalent value, cash, or
a combination of both. The exercise price must be at least equal to the fair
market value of our common stock on the date of grant. Subject to these
limitations, the administrator determines the exercise price, term, vesting
schedule, and other terms and conditions of stock appreciation rights, except
that stock appreciation rights terminate under the same rules that apply to
stock options.
-35-
CASH AWARDS
Cash awards confer upon the participant the opportunity to earn future
cash payments tied to the level of achievement with respect to one or more
performance criteria established by the administrator for a performance period.
The administrator will establish the performance criteria and level of
achievement versus these criteria, which will determine the target and the
minimum and maximum amount payable under a cash award. The criteria may be based
on financial performance or personal performance evaluations, or both. For cash
awards intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Code, the measures established by the
administrator must be specified in writing.
OTHER PROVISIONS OF THE 2006 PLAN
TRANSFERABILITY OF AWARDS
Unless the administrator determines otherwise, the 2006 Plan does not
permit the transfer of awards other than by beneficiary designation, will, or by
the laws of descent or distribution, and only the participant may exercise an
award during his or her lifetime.
PREEMPTIVE RIGHTS
The 2006 Plan provides that no shares will be issued in violation of any
preemptive rights held by any stockholder of RadNet.
ADJUSTMENTS UPON MERGER OR CHANGE IN CONTROL
The 2006 Plan provides that in the event of a merger with or into another
corporation in which RadNet is not the surviving entity or RadNet's "change in
control," including the sale of all or substantially all of RadNet 's assets,
and various other events, RadNet 's Board or the Committee may, in its
discretion, provide for the assumption or substitution of, or adjustment to,
each outstanding award; accelerate the vesting of options and stock appreciation
rights, and terminate any restrictions on stock awards or cash awards; provide
for the cancellation of awards in exchange for a cash payment to the
participant; or provide for the cancellation of awards that have not been
exercised or redeemed as of the relevant event.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The audit committee of the board of directors is comprised entirely of
independent directors who meet the independence requirements of The Nasdaq Stock
Market and the Securities and Exchange Commission. The audit committee operates
pursuant to a charter that is available on our website under Investor Relations
- Corporate Governance.
The audit committee oversees our financial reporting process on behalf of
the board of directors. Management is responsible for the preparation,
presentation and integrity of the financial statements, including establishing
accounting and financial reporting principles and designing systems of internal
control over financial reporting. Our independent registered public accounting
firm is responsible for expressing an opinion as to the conformity of our
consolidated financial statements with generally accepted accounting principles.
In performing its responsibilities, the audit committee has reviewed and
discussed, with management and Ernst & Young LLP, our independent registered
public accounting firm, the audited consolidated financial statements in our
annual report on Form 10-K for the year ended December 31, 2007. The audit
committee has also discussed with Ernst & Young LLP matters required to be
discussed by Statement on Auditing Standards 61, "Communications with Audit
Committees."
Pursuant to Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," the audit committee received written
disclosures and the letter from Ernst & Young LLP, and discussed with Ernst &
Young LLP their independence.
Based on the reviews and discussions referred to above, the audit
committee recommended to the board of directors that the audited consolidated
financial statements of RadNet, Inc. be included in the company's annual report
on Form 10-K for the year ended December 31, 2007.
Audit Committee:
Marvin S. Cadwell
Lawrence L. Levitt
David L. Swartz
-36-
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Howard G. Berger, M.D. is our President and Chief Executive, chair of our
Board of Directors, and owns approximately 16% of our outstanding common stock.
Dr. Berger also owns, indirectly, 99% of the equity interests in BRMG. BRMG
provides all of the professional medical services at most of our California
facilities under a management agreement and contracts with various other
independent physicians and physician groups to provide all of the professional
medical services at most of our other California facilities. We obtain
professional medical services from BRMG in California, rather than providing
such services directly or through subsidiaries, in order to comply with
California's prohibition against the corporate practice of medicine. However, as
a result of this close relationship with Dr. Berger and BRMG, we believe that we
are able to better ensure that professional medical services are provided at our
California facilities in a manner consistent with our needs and expectations and
those of our referring physicians, patients and payors than if we obtained these
services from unaffiliated practice groups.
Under our management agreement with BRMG, which expires on January 1,
2014, BRMG pays us, as compensation for the use of our facilities and equipment
and for our services, a percentage of the gross amounts collected for the
professional services it renders. The percentage, which was 79% at December 31,
2007, is adjusted annually, if necessary, to ensure that the parties receive
fair value for the services they render. In operation and historically, the
annual revenue of BRMG from all sources closely approximates its expenses,
including Dr. Berger's compensation, fees payable to us and amounts payable to
third parties. For administrative convenience and in order to avoid
inconveniencing and confusing our payors, a single bill is prepared for both the
professional medical services provided by the radiologists and our non-medical,
or technical, services, generating a receivable for BRMG. BRMG maintains a $55
million revolving credit facility with General Electric Capital Corporation from
which we may obtain funds by utilizing our accounts receivable for working
capital purposes, if needed. We repay or offsets these advances with periodic
payments from BRMG to us under the management agreement. We guarantee BRMG's
obligations under this working capital facility.
John V. Crues, III, M.D. agreed to continue his employment and leadership
roles with us in consideration of our agreement in June 2005, to issue to him
our five year warrant to purchase 250,000 shares of our common stock at an
exercise price of $0.72 per share (the price of our common stock on the date of
the agreement in the public market in which it trades).
Both Dr. Berger and Dr. Crues receive all or a portion of their salary
from BRMG.
At October 31, 2005, we owed Jeffrey L. Linden $61,151 in connection with
our acquisition of his interest in DIS. This obligation was paid in March 2006.
In the acquisition transaction, we issued to Mr. Linden warrants to purchase
98,682 shares of common stock at a price of $1.20 per share expiring June 30,
2004. In connection with an agreement to extend our obligation to Mr. Linden, we
issued to him warrants to purchase 150,000 shares of common stock at a price of
$0.38 per share that he exercised in June 2005. On July 30, 2004, we issued to
Mr. Linden a five year warrant to purchase 100,000 shares of our common stock at
an exercise price of $0.60 per share in consideration of Mr. Linden's agreement
to subordinate our obligation to him to our debt with our revolving line of
credit. In April 2006, in order to induce Mr. Linden to continue his employment
we issued to him a six year warrant to purchase 250,000 shares of common stock
at a price of $2.52, the price of our common stock on the date of the
transaction in the public market in which it trades, vesting over the six year
period.
Cohen & Lord, a professional corporation, a law firm with which Mr. Linden
is associated, received $428,312 in fees from us during the year ended December
31, 2006 and $411,859 during the year ended December 31, 2007. Mr. Linden has
specifically waived any interest in our fees since becoming an officer of
Radnet.
-37-
In consideration of the continued employment by Norman Hames, our
Executive Vice Pr8esident and Chief Operating Officer - Western Operations and a
director in March 2006 we extended the warrant originally issued to him in
connection with the acquisition of DIS by reissuing to Mr. Hames a seven year
warrant to purchase 1,500,000 shares at an exercise price of $1.12 per share,
the price of our common stock on the date of the reissuance in the public market
in which it trades, vesting over the seven year period. We have agreed to
provide to Mr. Hames a bonus of $.040 per share for each share exercised.
In recognition of our chief financial officer, Mark D. Stolper's services
to RadNet on July 11, 2006, RadNet issued to Mr. Stolper a five-year warrant to
purchase 100,000 shares of RadNet common stock at $3.10 per share, the price of
our common stock on the date of the transaction in the public market in which it
trades.
As a matter of policy, which we do not maintain in writing, the Board
reviews any transaction in which we are proposed to be a party, directly or
indirectly, and any of the following persons or entities is or is entitled to be
a party, directly or indirectly, to the transaction or any director has a
material financial interest in the transaction: (i) any of our executive
officers or any related person of any such officer or a director, (ii) any
person or entity of which the executive officer or director or any related
person is the owner of more than 5% of the securities, (iii) any person or
entity that controls one or more of the persons specified in subparagraph (ii)
or a person that is controlled by, or is under common control with one or more
of the persons specified in subparagraph (ii), or (iv) an individual who is a
general partner, principal or employer of a director. Additionally, any
transaction which would be required to be disclosed pursuant to Item 404 by
Regulation S-K of the Regulations of the SEC is reviewed by the Board.
INDEMNIFICATION AGREEMENTS
We have indemnification agreements with each of our directors and certain
officers which are reflected in our certificate of incorporation and bylaws
which require us to indemnify our directors and officers to the fullest extent
permitted by New York law.
OTHER MATTERS
We know of no other matters to be submitted at the annual meeting. If any
other matters are properly brought before the annual meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
that they represent in accordance with their judgment.
For further information about RadNet, Inc., please refer to our annual
report on Form 10-K for the fiscal year ended December 31, 2007 which
accompanies this proxy statement. Our annual report on Form 10-K was filed with
the SEC on April 1, 2008, as amended on April 2, 2008, and is publicly available
on our website at www.radnet.com. You may also obtain a copy by sending a
written request to Investor Relations, RadNet, Inc., 1510 Cotner Ave., Los
Angeles, CA 90025.
By order of the board of directors,
Norman R. Hames
Corporate Secretary
-38-
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "MERGER AGREEMENT"), dated as of
________________, 2008, is made and entered into by and between RadNet, Inc., a
New York corporation (the "COMPANY") and RadNet, Inc., a Delaware corporation
and wholly owned subsidiary of the Company (the "SUBSIDIARY").
RECITALS
WHEREAS, the Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York with authorized capital
stock consisting of 200,000,000 shares of common stock, $0.0001 par value per
share ("NEW YORK COMMON Stock"), and 30,000,000 shares of Preferred Stock, par
value $0.0001 per share;
WHEREAS, the Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with authorized capital
stock consisting of 200,000,000 shares of common stock, $0.0001 par value per
share ("DELAWARE COMMON STOCK"), and 30,000,000 shares of Preferred Stock, par
value $0.0001 per share;
WHEREAS, the Board of Directors of the Company has determined that, for
purposes of effecting the reincorporation of the Company in the State of
Delaware, it is advisable and in the best interests of the Company and the
holders of shares of the New York Common Stock (the "COMPANY SHAREHOLDERS") for
the Company to merge with and into the Subsidiary upon the terms and conditions
set forth herein;
WHEREAS, the respective Boards of Directors of the Company and the
Subsidiary have authorized and approved the merger of the Company with and into
the Subsidiary (the "MERGER") subject to and upon the terms and conditions of
this Merger Agreement, and have approved the terms of this Merger Agreement and
directed that it be executed by the undersigned officers and submitted to the
Company Shareholders and the stockholder of the Subsidiary for their approval;
and
WHEREAS, it is the intention of the Company and the Subsidiary that the
merger be a tax-free reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, for and in consideration of the mutual premises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 MERGER OF THE COMPANY INTO SUBSIDIARY. At the Effective
Time (as defined in SECTION 2.1), the Company shall merge with and into the
Subsidiary in accordance with the New York Business Corporation Law (the "NEW
YORK LAW") and the General Corporation Law of the State of Delaware (the
-1-
"DELAWARE LAW"). The separate existence of the Company shall thereupon cease and
the Subsidiary shall be the surviving corporation (hereinafter referred to as
the "SURVIVING CORPORATION") and shall possess all the rights, privileges,
powers and franchises of a public as well as of a private nature, and be subject
to all the restrictions, disabilities and duties of each of the Company and the
Subsidiary (together referred to as the "CONSTITUENT CORPORATIONS"); and all the
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations, on whatever account, as well as for
stock subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they had been of the several and respective Constituent
Corporations, and the title to any real estate vested by deed or otherwise,
under the laws of the State of Delaware, in either of such Constituent
Corporations shall not revert or be in any way impaired by reason of the
Delaware Law; but all rights of creditors and all liens upon any property of any
of the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the respective Constituent Corporations shall
thereafter attach to the Surviving Corporation and may be enforced against it to
the same extent as if those debts, liabilities and duties had been incurred or
contracted by it. All corporate acts, plans, policies, agreements, arrangements,
approvals and authorizations of the Company, the Company Shareholders, the Board
of Directors of the Company and committees thereof, and the officers and agents
thereof, which were valid and effective immediately prior to the Effective Time,
shall be taken for all purposes as acts, plans, policies, agreements,
arrangements, approvals and authorizations of the Surviving Corporation and
shall be as effective and binding thereon as the same were with respect to the
Company. The employees and agents of the Company shall become the employees and
agents of the Subsidiary and continue to be entitled to the same rights and
benefits which they enjoyed as employees and agents of the Company. The
requirements of any plans or agreements of the Company involving the issuance or
purchase by the Company of certain shares of its capital stock shall be
satisfied by the issuance or purchase of a like number of shares of the
Surviving Corporation. The subsidiaries of the Company shall become the
subsidiaries of the Surviving Corporation.
ARTICLE II
EFFECTIVE TIME; EFFECT OF MERGER
SECTION 2.1 EFFECTIVE TIME. The Merger shall become effective on the
date the Certificate of Merger is filed with the Department of State of the
State of New York, or the date a Certificate of Ownership and Merger is filed
with the Secretary of State of the State of Delaware, whichever filing occurs
last (the "EFFECTIVE TIME").
SECTION 2.2 EFFECTS OF THE MERGER. At the Effective Time, the Merger
shall have the effects specified in the New York Law, the Delaware Law and this
Merger Agreement.
SECTION 2.3 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective
Time, the Certificate of Incorporation and the Bylaws of Subsidiary, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
-2-
SECTION 2.4 DIRECTORS AND OFFICERS. At the Effective Time, the
directors and officers of the Company in office at the Effective Time shall
retain their positions as the directors and officers, respectively, of the
Surviving Corporation, each of such directors and officers to hold office,
subject to the applicable provisions of the Certificate of Incorporation and
Bylaws of the Surviving Corporation and the Delaware Law, until his or her
successor is duly elected or appointed and shall qualify, or until his or her
earlier death, resignation or removal.
SECTION 2.5 NAME OF SURVIVING CORPORATION. At the Effective Time,
"RadNet, Inc.", the name set forth in Paragraph First of the Subsidiary's
Certificate of Incorporation, shall be the name of the Surviving Corporation.
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
SECTION 3.1 CONVERSION.
(a) SHARES. At the Effective Time, each share of New York Common
Stock issued and outstanding immediately prior to the Effective Time
shall, by virtue of the merger and without any action on the part of the
holder thereof, be converted into and become one share of Delaware Common
Stock.
(b) CANCELLATION. At the Effective Time, each share of the
Delaware Common Stock issued and outstanding immediately prior to the
Effective Time and held by the Company shall be canceled without any
consideration being issued or paid therefor.
(c) EQUITY PLANS. Upon the Effective Time, the Surviving
Corporation shall assume and continue any and all stock option, stock
incentive and other equity-based award plans heretofore adopted by the
Company (individually, an "EQUITY PLAN" and collectively, the "EQUITY
PLANS"), and shall reserve for issuance under each Equity Plan a number of
shares of Delaware Common Stock equal to the number of shares of stock so
reserved by the Company immediately prior to the Effective Time. Each
unexercised option or other right to purchase New York Common Stock
granted under and by virtue of any such Equity Plan which is outstanding
immediately prior to the Effective Time shall, upon the Effective Time,
become an option or right to purchase Delaware Common Stock on the basis
of one share of Delaware Common Stock for each share of New York Common
Stock issuable pursuant to any such option or stock purchase right, and
otherwise on the same terms and conditions and at an exercise or
conversion price per share equal to the exercise or conversion price per
share applicable to the Company option or stock purchase right. Each
equity-based award relating to New York Common Stock granted or awarded
under any of the Equity Plans which is outstanding immediately prior to
the Effective Time shall, upon the Effective Time, become an award
relating to Delaware Common Stock on the basis of one share of Delaware
Common Stock for each share of New York Common Stock to which such award
relates and otherwise on the same terms and conditions applicable to such
award immediately prior to the Effective Time.
-3-
SECTION 3.2 EXCHANGE OF CERTIFICATES. At the Effective Time, stock
certificates representing New York Common Stock will automatically represent an
equal number of shares of Delaware Common Stock. At any time after the Effective
Time, the holders of Delaware Common Stock represented by certificates issued
prior to the Effective Time, will be entitled, upon request, and surrender of
such certificates, to the Surviving Corporation, to receive in exchange therefor
a new stock certificate evidencing ownership of the same number of shares of
Delaware Common Stock. If any new certificate is to be issued in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that the certificate
or other writing so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall pay
to the Surviving Corporation or its transfer agent any transfer or other taxes
required by reason of the issuance of a certificate representing shares of
Delaware Common Stock in any name other than that of the registered holder of
the certificate surrendered, or otherwise required, or shall establish to the
satisfaction of the transfer agent that such tax has been paid or is not
payable.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 AMENDMENT. This Merger Agreement may be amended, modified
or supplemented, in whole or in part, at any time prior to the Effective Time
with the mutual consent of the respective Boards of Directors of the Company and
the Subsidiary to the full extent permitted under applicable law.
SECTION 4.2 NOTICES. All communication hereunder shall be in writing
and, sent by mail, or by facsimile as set forth below:
If to the Company:
RadNet, Inc.
1510 Cotner Avenue
Los Angeles, CA 90025
Attention: Jeffery L. Linden, Esq.
If to the Subsidiary:
RadNet, Inc.
1510 Cotner Avenue
Los Angeles, CA 90025
Attention: Jeffery L. Linden, Esq.
SECTION 4.3 ABANDONMENT; POSTPONEMENT. At any time prior to the
Effective Time, this Merger Agreement may be terminated and the Merger may be
abandoned by the respective Boards of Directors of the Company or the
Subsidiary, or the consummation of the Merger may be postponed for a reasonable
period of time, without any action of the Company Shareholders or stockholders
of the Subsidiary, notwithstanding the approval of this Merger Agreement by the
Company Shareholders or Board of Directors of either the Company or the
Subsidiary.
-4-
SECTION 4.4 FURTHER ASSURANCES. If at any time after the Effective Time
of the Merger, the Surviving Corporation shall consider that any assignments,
transfers, deeds or other assurances in law are necessary or desirable to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to any property or rights of the Company, the Company and its directors and
officers holding office at the Effective Time shall execute and deliver such
documents and do all things necessary and proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation, and the officers
and directors of the Surviving Corporation are fully authorized in the name of
the Company or otherwise to take any and all such action.
SECTION 4.5 COUNTERPARTS. This Merger Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument. In the
event that any signature is delivered by facsimile or other means of electronic
image transmission, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or electronically transmitted
signature page were an original thereof.
SECTION 4.6 GOVERNING LAW. This Merger Agreement shall be construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws of such state.
[SIGNATURE PAGE FOLLOWS]
-5-
IN WITNESS WHEREOF, the parties to this Merger Agreement have executed
this Merger Agreement on and as of the day first written above.
RADNET, INC., a New York corporation
By:_________________________________
Name: Howard G. Berger, M.D.
Title: President and Chief Executive
Officer
RADNET, INC., a Delaware corporation
By:_________________________________
Name: Howard G. Berger, M.D.
Title: President and Chief Executive
Officer
[Signature Page to Reincorporation Merger Agreement]
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
RADNET, INC.
FIRST: NAME. The name of this corporation is: RADNET, INC.
SECOND: REGISTERED OFFICE. The address of the registered office of the
Corporation in the State of Delaware is 40 E. Division Street, Suite A, Dover,
Kent County, Delaware 19901, and the name of its registered agent at that
address is Paracorp Inc.
THIRD: PURPOSE. The purpose of the Corporation is to engage in any
lawful activity for which corporations may be organized under the Delaware
General Corporation Law (the "DGCL").
FOURTH: AUTHORIZED CAPITAL STOCK. The Corporation shall be authorized
to issue two classes of shares of stock to be designated, respectively,
"Preferred Stock" and "Common Stock." The total number of shares that the
Corporation shall have authority to issue is Two Hundred Thirty Million
(230,000,000).
A. COMMON STOCK. The total number of shares of common stock the
Corporation shall have authority to issue shall be Two Hundred Million
(200,000,000), par value $.0001 per share (the "COMMON Stock"). The Common Stock
shall have the powers, preferences, rights and restrictions as provided for
under the DGCL.
B. PREFERRED STOCK. The total number of shares of Preferred Stock that
the Corporation shall have authority to issue shall be Thirty Million
(30,000,000), par value $.0001 per share (the "PREFERRED Stock"). The shares of
Preferred Stock may be issued from time to time in one or more series. The Board
of Directors of the Corporation (the "BOARD OF DIRECTORS") is hereby vested with
authority to fix by resolution or resolutions prior to the issuances thereof,
the designations and the powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, including, without limitation, the dividend rate,
conversion or exchange rights, redemption price and liquidation preference, of
any series of shares of Preferred Stock, and to fix the number of shares
constituting any such series, and to increase or decrease the number of shares
of any such series (but not below the number of shares thereof then
outstanding). In case the number of shares of any such series shall be so
decreased, the shares constituting such decrease shall resume the status that
they had prior to the adoption of the resolution or resolutions originally
fixing the number of shares of such series.
C. RESTRICTIONS ON TRANSFERS.
1. DEFINITIONS. As used in this Article FOURTH, the following
capitalized terms have the following meanings when used herein with initial
capital letters (and any references to any portions of Treasury Regulation ss.
1.382-2T shall include any successor provisions):
"5% TRANSACTION" means any Transfer described in clause (a) or (b) of
Section 2.
"AGENT" has the meaning set forth in Section 6.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CORPORATION SECURITIES" means (i) shares of Common Stock, (ii) shares of
Preferred Stock (other than preferred stock described in Section 1504(a)(4) of
the Code), (iii) warrants, rights, or options (including options within the
meaning of Treasury Regulation ss. 1.382-2T(h)(4)(v)) to purchase Securities of
the Corporation, and (iv) any Stock.
"EXCESS SECURITIES" has the meaning given such term in Section 5.
"EXPIRATION DATE" means the beginning of the taxable year of the
Corporation to which the Board of Directors determines that no Tax Benefits may
be carried forward, unless the Board of Directors shall fix an earlier date in
accordance with Section 11.
"FIVE-PERCENT STOCKHOLDER" means a Person or group of Persons that is a
"5-percent stockholder" of the Corporation pursuant to Treasury Regulation ss.
1.382-2T(g).
"PERCENTAGE STOCK OWNERSHIP" means the percentage Stock Ownership interest
of any Person or group (as the context may require) for purposes of Section 382
of the Code as determined in accordance with Treasury Regulation ss.
1.382-2T(g), (h), (j) and (k) or any successor provision.
"PERSON" means any individual, firm, corporation or other legal entity,
and includes any successor (by merger or otherwise) of such entity.
"PRE-EXISTING 5% STOCKHOLDER" means (i) any Person that (A) has filed a
Schedule 13D or 13G with respect to the Corporation on or before August 21, 2006
or (B) on or before the thirtieth day after the effectiveness of the Certificate
of Incorporation, establishes to the satisfaction of the Board of Directors that
such Person was a direct Five-Percent Stockholder or a "first tier entity" of
the Corporation within the meaning of Treasury Regulation ss. 1.382-2T(f)(9) on
August 21, 2006 and (ii) any "5-percent owner" or "higher tier entity" of any
Person described in clause (i) within the meaning of Treasury Regulation ss.
1.382-2T(f)(10) and 1.382-2T(f)(14).
"PROHIBITED DISTRIBUTION" has the meaning given such term in Section 6.
"PROHIBITED TRANSFER" means any purported Transfer of Corporation
Securities to the extent that such Transfer is prohibited and/or void under this
Article FOURTH.
"PUBLIC GROUP" has the meaning set forth in Treasury Regulation ss.
1.382-2T(f)(13).
"PURPORTED TRANSFEREE" has the meaning set forth in Section 5.
"SECURITIES" and "SECURITY" each has the meaning set forth in Section 8.
-2-
"STOCK" means any interest that would be treated as "stock" of the
Corporation pursuant to Treasury Regulation ss. 1.382-2T(f)(18).
"STOCK OWNERSHIP" means any direct or indirect ownership of Stock,
including any ownership by virtue of application of constructive ownership
rules, with such direct, indirect, and constructive ownership determined under
the provisions of Code Section 382 and the regulations thereunder.
"TAX BENEFIT" means the net operating loss carryovers, capital loss
carryovers, general business credit carryovers, alternative minimum tax credit
carryovers and foreign tax credit carryovers, as well as any loss or deduction
attributable to a "net unrealized built-in loss" within the meaning of Section
382, of the Corporation or any direct or indirect subsidiary thereof.
"TRANSFER" means any direct or indirect sale, transfer, assignment,
conveyance, pledge or other disposition or other action taken by a person, other
than the Corporation, that alters the Percentage Stock Ownership of any Person
or group. A Transfer also shall include the creation or grant of an option
(including an option within the meaning of Treasury Regulation ss.
1.382-2T(h)(4)(v)). For the avoidance of doubt, a Transfer shall not include the
creation or grant of an option by the Corporation, nor shall a Transfer include
the issuance of Stock by the Corporation.
2. RESTRICTIONS ON TRANSFERS. Any attempted Transfer of
Corporation Securities prior to the Expiration Date and any attempted Transfer
of Corporation Securities pursuant to an agreement entered into prior to the
Expiration Date, shall be prohibited and void AB INITIO (a) if the transferee is
a Five-Percent Stockholder or (b) to the extent that, as a result of such
Transfer (or any series of Transfers of which such Transfer is a part), either
(i) any Person or group of Persons would become a Five-Percent Stockholder or
(ii) the Percentage Stock Ownership in the Corporation of any Five-Percent
Stockholder would be increased.
3. EXCEPTIONS.
(a) Notwithstanding anything to the contrary herein, if a
Transfer by (but not to) a Pre-existing 5% Stockholder otherwise would be
prohibited by Section 2, such Transfer shall not be prohibited under Section 2
if both of the following conditions are met: (i) such Transfer does not increase
the Percentage Stock Ownership of any Five-Percent Stockholder other than a
Public Group (including a new Public Group created under Treasury Regulation ss.
1.382-2T(j)(3)(i)), and (ii) the Stock that is the subject of the Transfer was
owned by such Pre-existing 5% Stockholder on August 21, 2006.
(b) The restrictions set forth in Section 2 shall not apply
to an attempted Transfer that is a 5% Transaction if the transferor or the
transferee obtains the prior written approval of the Board of Directors or a
duly authorized committee thereof. As a condition to granting its approval
pursuant to Section 3, the Board of Directors may, in its discretion, require
(at the expense of the transferor and/or transferee) an opinion of counsel
selected by the Board of Directors that the Transfer shall not result in the
application of any Section 382 limitation on the use of the Tax Benefits. The
Board of Directors may exercise the authority granted by this Article FOURTH
through duly authorized officers or agents of the Corporation. Nothing in this
Section 3 shall be construed to limit or restrict the Board of Directors in the
exercise of its fiduciary duties under applicable law.
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4. LEGEND. Each certificate representing shares of Common Stock
issued by the Corporation shall conspicuously bear the following legend:
"THE CERTIFICATE OF INCORPORATION (THE "CERTIFICATE OF INCORPORATION") OF
THE CORPORATION CONTAINS RESTRICTIONS PROHIBITING THE TRANSFER (AS DEFINED
IN THE CORPORATION'S CERTIFICATE OF INCORPORATION) OF ANY STOCK OF THE
CORPORATION (INCLUDING THE CREATION OR GRANT OF CERTAIN OPTIONS) WITHOUT
THE PRIOR AUTHORIZATION OF THE BOARD OF DIRECTORS OF THE CORPORATION (THE
"BOARD OF DIRECTORS") IF SUCH TRANSFER AFFECTS THE PERCENTAGE OF STOCK OF
THE CORPORATION (WITHIN THE MEANING OF SECTION 382 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE") AND THE TREASURY REGULATIONS
PROMULGATED THEREUNDER), THAT IS TREATED AS OWNED BY A FIVE PERCENT
STOCKHOLDER UNDER THE CODE AND SUCH REGULATIONS. IF THE TRANSFER
RESTRICTIONS ARE VIOLATED, THEN THE TRANSFER WILL BE VOID AB INITIO AND
THE PURPORTED TRANSFEREE OF THE STOCK WILL BE REQUIRED TO TRANSFER EXCESS
SECURITIES (AS DEFINED IN THE CERTIFICATE OF INCORPORATION) TO THE
CORPORATION'S AGENT. IN THE EVENT OF A TRANSFER WHICH DOES NOT INVOLVE
SECURITIES OF THE CORPORATION WITHIN THE MEANING OF DELAWARE GENERAL
CORPORATION LAW ("SECURITIES") BUT WHICH WOULD VIOLATE THE TRANSFER
RESTRICTIONS, THE PURPORTED TRANSFEREE (OR THE RECORD OWNER) OF THE
SECURITIES WILL BE REQUIRED TO TRANSFER SUFFICIENT SECURITIES PURSUANT TO
THE TERMS PROVIDED FOR IN THE CORPORATION'S CERTIFICATE OF INCORPORATION
TO CAUSE THE FIVE PERCENT STOCKHOLDER TO NO LONGER BE IN VIOLATION OF THE
TRANSFER RESTRICTIONS. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO THE
HOLDER OF RECORD OF THIS CERTIFICATE A COPY OF THE CERTIFICATE OF
INCORPORATION, CONTAINING THE ABOVE-REFERENCED TRANSFER RESTRICTIONS, UPON
WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS."
5. EXCESS SECURITIES.
(a) No employee or agent of the Corporation shall record any
Prohibited Transfer, and the purported transferee of such a Prohibited Transfer
(the "PURPORTED TRANSFEREE") shall not be recognized as a stockholder of the
Corporation for any purpose whatsoever in respect of the Corporation Securities
which are the subject of the Prohibited Transfer (the "EXCESS SECURITIES").
Until the Excess Securities are acquired by another person in a Transfer that is
not a Prohibited Transfer, the Purported Transferee shall not be entitled with
respect to such Excess Securities to any rights of stockholders of the
Corporation, including, without limitation, the right to vote such Excess
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Securities and to receive dividends or distributions, whether liquidating or
otherwise, in respect thereof, if any. After the Excess Securities have been
acquired in a Transfer that is not a Prohibited Transfer, the Corporation
Securities shall cease to be Excess Securities. For this purpose, any Transfer
of Excess Securities not in accordance with the provisions of this Section 5 or
Section 6 shall also be a Prohibited Transfer.
(b) The Corporation may require as a condition to the
registration of the Transfer of any Corporation Securities or the payment of any
distribution on any Corporation Securities that the proposed Transferee or payee
furnish to the Corporation all information reasonably requested by the
Corporation with respect to all the direct or indirect ownership interests in
such Corporation Securities. The Corporation may make such arrangements or issue
such instructions to its stock transfer agent as may be determined by the Board
of Directors to be necessary or advisable to implement this Article FOURTH,
including, without limitation, authorizing such transfer agent to require an
affidavit from a purported transferee regarding such Person's actual and
constructive ownership of stock and other evidence that a Transfer will not be
prohibited by this Article FOURTH as a condition to registering any transfer.
6. TRANSFER TO AGENT. If the Board of Directors determines that a
Transfer of Corporation Securities constitutes a Prohibited Transfer then, upon
written demand by the Corporation sent within thirty days of the date on which
the Board of Directors determines that the attempted Transfer would result in
Excess Securities, the Purported Transferee shall transfer or cause to be
transferred any certificate or other evidence of ownership of the Excess
Securities within the Purported Transferee's possession or control, together
with any dividends or other distributions that were received by the Purported
Transferee from the Corporation with respect to the Excess Securities
("PROHIBITED DISTRIBUTIONS"), to an agent designated by the Board of Directors
(the "AGENT"). The Agent shall thereupon sell to a buyer or buyers, which may
include the Corporation, the Excess Securities transferred to it in one or more
arm's-length transactions (on the public securities market on which such Excess
Securities are traded, if possible, or otherwise privately); PROVIDED, HOWEVER,
that the Agent shall effect such sale or sales in an orderly fashion and shall
not be required to effect any such sale within any specific time frame if, in
the Agent's discretion, such sale or sales would disrupt the market for the
Corporation Securities or otherwise would adversely affect the value of the
Corporation Securities. If the Purported Transferee has resold the Excess
Securities before receiving the Corporation's demand to surrender Excess
Securities to the Agent, the Purported Transferee shall be deemed to have sold
the Excess Securities for the Agent, and shall be required to transfer to the
Agent any Prohibited Distributions and proceeds of such sale, except to the
extent that the Corporation grants written permission to the Purported
Transferee to retain a portion of such sales proceeds not exceeding the amount
that the Purported Transferee would have received from the Agent pursuant to
Section 7 if the Agent rather than the Purported Transferee had resold the
Excess Securities.
7. APPLICATION OF PROCEEDS AND PROHIBITED DISTRIBUTIONS. The
Agent shall apply any proceeds of a sale by it of Excess Securities and, if the
Purported Transferee has previously resold the Excess Securities, any amounts
received by it from a Purported Transferee, together, in either case, with any
Prohibited Distributions, as follows: (a) first, such amounts shall be paid to
the Agent to the extent necessary to cover its costs and expenses incurred in
connection with its duties hereunder; (b) second, any remaining amounts shall be
paid to the Purported Transferee, up to the amount paid by the Purported
Transferee for the Excess Securities (or the fair market value at the time of
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the Transfer, in the event the purported Transfer of the Excess Securities was,
in whole or in part, a gift, inheritance or similar Transfer) which amount shall
be determined at the discretion of the Board of Directors; and (c) third, any
remaining amounts shall be paid to one or more organizations qualifying under
Section 501(c)(3) of the Code (or any comparable successor provision) selected
by the Board of Directors. The Purported Transferee of Excess Securities shall
have no claim, cause of action or any other recourse whatsoever against any
transferor of Excess Securities. The Purported Transferee's sole right with
respect to such shares shall be limited to the amount payable to the Purported
Transferee pursuant to this Section 7. In no event shall the proceeds of any
sale of Excess Securities pursuant to this Section 7 inure to the benefit of the
Corporation.
8. MODIFICATION OF REMEDIES FOR CERTAIN INDIRECT TRANSFERS. In
the event of any Transfer which does not involve a transfer of securities of the
Corporation within the meaning of DGCL ("SECURITIES," and individually, a
"SECURITY") but which would cause a Five-Percent Stockholder to violate a
restriction on Transfers provided for in this Article FOURTH, the application of
Section 6 and Section 7 shall be modified as described in this Section 8. In
such case, no such Five-Percent Stockholder shall be required to dispose of any
interest that is not a Security, but such Five-Percent Stockholder and/or any
Person whose ownership of Securities is attributed to such Five-Percent
Stockholder shall be deemed to have disposed of and shall be required to dispose
of sufficient Securities (which Securities shall be disposed of in the inverse
order in which the were acquired) to cause such Five-Percent Stockholder,
following such disposition, not to be in violation of this Article FOURTH. Such
disposition shall be deemed to occur simultaneously with the Transfer giving
rise to the application of this provision, and such number of Securities that
are deemed to be disposed of shall be considered Excess Securities and shall be
disposed of through the Agent as provided in Sections 6 and 7, except that the
maximum aggregate amount payable either to such Five-Percent Stockholder or to
such other Person that was the direct holder of such Excess Securities, in
connection with such sale shall be the fair market value of such Excess
Securities at the time of the purported Transfer. All expenses incurred by the
Agent in disposing of such Excess Stock shall be paid out of any amounts due
such Five-Percent Stockholder or such other Person. The purpose of this Section
8 is to extend the restrictions in Sections 2 and 6 to situations in which there
is a 5% Transaction without a direct Transfer of Securities, and this Section 8,
along with the other provisions of this Article FOURTH, shall be interpreted to
produce the same results, with differences as the context requires, as a direct
Transfer of Corporation Securities.
9. LEGAL PROCEEDINGS. If the Purported Transferee fails to
surrender the Excess Securities or the proceeds of a sale thereof to the Agent
within thirty days from the date on which the Corporation makes a written demand
pursuant to Section 6 (whether or not made within the time specified in Section
6), then the Corporation shall use its best efforts to enforce the provisions
hereof, including the institution of legal proceedings to compel the surrender.
Nothing in this Section 9 shall (a) be deemed inconsistent with any Transfer of
the Excess Securities provided in this Article FOURTH being void AB INITIO, (b)
preclude the Corporation in its discretion from immediately bringing legal
proceedings without a prior demand or (c) cause any failure of the Corporation
to act within the time periods set forth in Section 6 to constitute a waiver or
loss of any right of the Corporation under this Article FOURTH.
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10. DAMAGES. Any stockholder subject to the provisions of this
Article FOURTH who knowingly violates the provisions of this Article FOURTH and
any Persons controlling, controlled by or under common control with such
stockholder shall be jointly and severally liable to the Corporation for, and
shall indemnify and hold the Corporation harmless against, any and all damages
suffered as a result of such violation, including but not limited to damages
resulting from a reduction in, or elimination of, the Corporation's ability to
utilize its Tax Benefits, and attorneys' and auditors' fees incurred in
connection with such violation.
11. BOARD AUTHORITY.
(a) The Board of Directors of the Corporation shall have the
power to determine all matters necessary for assessing compliance with this
Article FOURTH, including, without limitation, (i) the identification of
Five-Percent Stockholders, (ii) whether a Transfer is a 5% Transaction or a
Prohibited Transfer, (iii) the Percentage Stock Ownership in the Corporation of
any Five-Percent Stockholder, (iv) whether an instrument constitutes a
Corporation Security, (v) the amount (or fair market value) due to a Purported
Transferee pursuant to Section 7, and (vi) any other matters which the Board of
Directors determines to be relevant; and the good faith determination of the
Board of Directors on such matters shall be conclusive and binding for all the
purposes of this Article FOURTH. In addition, the Board of Directors may, to the
extent permitted by law, from time to time establish, modify, amend or rescind
Bylaws, regulations and procedures of the Corporation not inconsistent with the
provisions of this Article FOURTH for purposes of determining whether any
Transfer of Corporation Securities would jeopardize the Corporation's ability to
preserve and use the Tax Benefits and for the orderly application,
administration and implementation of this Article FOURTH. The Board of Directors
may delegate all or any portion of its duties and powers under this Article
FOURTH to a committee of the Board of Directors as it deems necessary or
advisable.
(b) Nothing contained in this Article FOURTH shall limit the
authority of the Board of Directors to take such other action to the extent
permitted by law as it deems necessary or advisable to protect the Corporation
and its stockholders in preserving the Tax Benefits. Without limiting the
generality of the foregoing, in the event of a change in law making one or more
of the following actions necessary or desirable, the Board of Directors may, by
adopting a written resolution, (i) accelerate or extend the Expiration Date,
(ii) modify the ownership interest percentage in the Corporation or the Persons
or groups covered by this Article FOURTH, (iii) modify the definitions of any
terms set forth in this Article FOURTH or (iv) modify the terms of this Article
FOURTH as appropriate to prevent an ownership change for purposes of Section 382
of the Code as a result of any changes in applicable Treasury Regulations or
otherwise; PROVIDED, HOWEVER, that the Board of Directors shall not cause there
to be such acceleration, extension, change or modification unless it concludes
in writing that such action is reasonably necessary or advisable to preserve the
Tax Benefits or that the continuation of these restrictions is no longer
reasonably necessary for the preservation of the Tax Benefits, and its
conclusion is based upon a written opinion of tax counsel to the Corporation.
Such written conclusion of the Board of Directors shall be filed with the
Secretary of the Corporation and shall be mailed by the Secretary to all
stockholders of the Corporation within 10 days after the date of such
conclusion.
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12. RELIANCE. The Corporation and the members of the Board of
Directors shall be fully protected in relying in good faith upon the
information, opinions, reports or statements of the chief executive officer, the
chief financial officer or the chief accounting officer of the Corporation or of
the Corporation's legal counsel, independent auditors, transfer agent,
investment bankers or other employees and agents in making the determinations
and findings contemplated by this Article FOURTH, and the members of the Board
of Directors shall not be responsible for any good faith errors made in
connection therewith. For purposes of determining the existence and identity of,
and the amount of any Corporation Securities owned by any stockholder, the
Corporation is entitled to rely conclusively on (a) the existence and absence of
filings of Schedule 13D or 13G under the Securities and Exchange Act of 1934, as
amended (or similar schedules), as of any date and (b) its actual knowledge of
the ownership of Corporation Securities.
13. GENERAL AUTHORIZATION. The purpose of this Article FOURTH is
to facilitate the Corporation's ability to maintain or preserve its Tax
Benefits. If any provision of this Article FOURTH or any application of any
provision thereunder is determined to be invalid, the validity of the remaining
provisions shall be unaffected and application of such provision shall be
affected only to the extent necessary to comply with such determination.
FIFTH: ANNUAL MEETING OF STOCKHOLDERS. The annual meeting of
stockholders shall be held at such time, on such date and at such place (within
or without the State of Delaware) as provided in the Bylaws of the Corporation.
Subject to any requirement of applicable law, the books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the Bylaws of the
Corporation.
SIXTH: CALL OF SPECIAL MEETING OF STOCKHOLDERS. Special meetings of
stockholders of the Corporation for any purpose or purposes may be called at any
time (i) by a majority of the members of the Board of Directors or (ii) by a
committee of the Board of Directors that has been duly designated by the Board
of Directors and whose power and authority, as provided in a resolution by the
Board of Directors or in the Bylaws of the Corporation, includes the power to
call such meetings, but such special meetings of stockholders of the Corporation
may not be called by any other person or persons or in any other manner;
PROVIDED, HOWEVER, that if and to the extent that any special meeting of
stockholders may be called by any other person or persons specified in any
certificate of designations filed under Section 151(g) of the DGCL (or its
successor statute as in effect from time to time), then such special meeting may
also be called by the person or persons, in the manner, at the times and for the
purposes so specified.
SEVENTH: STOCKHOLDER ACTION BY WRITTEN CONSENT. Any election of
directors or other action by the stockholders of the Corporation that can be
effected at an annual or special meeting of stockholders can be affected by
written consent without a meeting so long as such written consent is signed by
the holders of at least the number of shares required to approve such action at
a duly held annual or special stockholders meeting at which all shares entitled
to vote thereon were present and voted.
EIGHT: ELECTION OF DIRECTORS.
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A. BALLOT. Elections of directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide.
B. STOCKHOLDER NOMINEES. Nominations by stockholders of persons for
election to the Board of Directors shall be made only in accordance with the
procedures set forth in the Bylaws of the Corporation.
C. REMOVAL. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, or the entire Board, may be
removed from office with or without cause, at any time, and only by the
affirmative vote of the holders of a majority of the shares of voting stock then
outstanding.
NINTH: LIABILITY AND INDEMNIFICATION. A director of the Corporation
shall not be liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director to the fullest extent permitted by
the DGCL. The Corporation shall indemnify, in the manner and to the fullest
extent permitted by the DGCL, any person (or the estate of any person) who is or
was a party to, or is threatened to be made a party to, any threatened, pending
or completed action, suit or proceeding, whether or not by or in the right of
the Corporation, and whether civil, criminal, administrative, investigative or
otherwise, by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise. The Corporation may indemnify, in the manner
and to the fullest extent permitted by the DGCL, any person (or the estate of
any person) who is or was a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Corporation, and whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was an employee or agent of the Corporation, or is or was serving
at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. Expense
incurred by any such director, officer, employee or agent in defending any such
action, suit or proceeding may be advanced by the Corporation prior to the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he or she is not entitled to be
indemnified as authorized by the DGCL and this Article NINTH. The Corporation
may, to the fullest extent permitted by the DGCL, purchase and maintain
insurance on behalf of any such director, officer, employee or agent against any
liability which may be asserted against such person. To the fullest extent
permitted by the DGCL, the indemnification provided herein shall include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement and, in the manner provided by the DGCL, any such expenses may be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding. The indemnification provided herein shall not be deemed to limit
the right of the Corporation to indemnify any other person for any such expenses
to the fullest extent permitted by the DGCL, nor shall it be deemed exclusive
for any other rights to which any person seeking indemnification from the
Corporation may be entitled under any agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
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No repeal or modification of the forgoing paragraph shall adversely affect
any right or protection of a director of the Corporation existing by virtue of
the foregoing paragraph at the time of such repeal or modification.
TENTH: AMENDMENT. The Corporation reserves the right to amend this
Certificate of Incorporation in any manner permitted by the DGCL and, except as
otherwise provided in Article NINTH, all rights and powers conferred herein on
stockholders, directors and officers, if any, are subject to this reserved
power.
IN WITNESS WHEREOF, the Certificate of Incorporation has been executed by
the sole incorporator on this __ day of April, 2008.
By:
-------------------------------
Name: Jeffrey L. Linden
Title: Sole Incorporator
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EXHIBIT C
BYLAWS
OF
RADNET, INC.,
A DELAWARE CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1: LOCATION OF MEETINGS; REMOTE COMMUNICATION.
Meetings of stockholders may be held at such place, either within or
without the State of Delaware, as determined by the Board of Directors. The
Board of Directors may, in its sole discretion, determine that the meeting shall
not be held at any place, but may instead be held solely by means of remote
communication.
If authorized by the Board of Directors in its sole discretion, and
subject to such guidelines and procedures as the Board of Directors may adopt,
stockholders and proxy holders not physically present at a meeting of
stockholders may, by means of remote communication: (1) participate in a meeting
of stockholders; and (2) be deemed present in person and vote at a meeting of
stockholders, whether such meeting is to be held at a designated place or solely
by means of remote communication, provided that (A) the Corporation shall
implement reasonable measures to verify that each person deemed present and
permitted to vote at the meeting by means of remote communication is a
stockholder or proxy holder, (B) the Corporation shall implement reasonable
measures to provide such stockholders and proxy holders a reasonable opportunity
to participate in the meeting and to vote on matters submitted to the
stockholders, including an opportunity to read or hear the proceedings of the
meeting substantially concurrently with such proceedings, and (C) if any
stockholder or proxy holder votes or takes other action at the meeting by means
of remote communication, a record of such vote or other action shall be
maintained by the Corporation.
SECTION 2: ANNUAL MEETING.
Unless Directors are elected by written consent in lieu of an annual
meeting, the Board of Directors shall fix a date for the annual meeting of
stockholders for the election of Directors on a date and at a time designated by
or in the manner provided in these Bylaws, provided that the date of the annual
meeting shall be within 13 months following the date of the last annual meeting
or the last action by written consent to elect Directors in lieu of an annual
meeting (or if no such meeting has been held or if no such consent has been
signed, within 13 months of the date of incorporation). Stockholders may, unless
the Certificate of Incorporation otherwise provides, act by written consent to
elect Directors; provided, however, that, if such consent is less than
unanimous, such action by written consent may be in lieu of holding an annual
meeting only if all of the Directorships to which Directors could be elected at
an annual meeting held at the effective time of such action are vacant and are
filled by such action. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be: (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder.
SECTION 3: SPECIAL MEETINGS.
Special meetings of the stockholders may be called by the Board of
Directors or the Chief Executive Officer and shall be held at such place, on
such date, and at such time as they or he or she shall fix.
SECTION 4: NOTICE OF MEETINGS AND ADJOURNED MEETINGS.
Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
place, if any, date and hour of the meeting, the means of remote communications,
if any, by which stockholders and proxy holders may be deemed to be present in
person and vote at such meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called.
Unless otherwise required by the Delaware General Corporation Law (the
"DGCL"), the written notice of any meeting shall be given not less than 10 nor
more than 60 days before the date of the meeting to each stockholder entitled to
vote at such meeting.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time, place, if any, thereof, and the
means of remote communications, if any, by which stockholders and proxy holders
may be deemed to be present in person and vote at such adjourned meeting are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
SECTION 5: VOTING, QUORUM AND REQUIRED VOTE.
Unless otherwise provided in the Certificate of Incorporation and subject
to ARTICLE V, Section 9, each stockholder shall be entitled to one vote for each
share of capital stock held by such stockholder. If the Certificate of
Incorporation provides for more or less than one vote for any share, on any
matter, every reference in these Bylaws to a majority or other proportion of
stock, voting stock or shares shall refer to such majority or other proportion
of the votes of such stock, voting stock or shares.
Subject to the DGCL in respect of the vote that shall be required for a
specified action:
(1) a majority of the shares entitled to vote, present in person or
represented by proxy, shall constitute a quorum at a meeting of stockholders;
(2) in all matters other than the election of Directors, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders;
(3) Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of Directors; and
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(4) where a separate vote by a class or series or classes or series is
required, a majority of the outstanding shares of such class or series or
classes or series, present in person or represented by proxy, shall constitute a
quorum entitled to take action with respect to that vote on that matter and the
affirmative vote of the majority of shares of such class or series or classes or
series present in person or represented by proxy at the meeting shall be the act
of such class or series or classes or series.
All elections of Directors shall be by written ballot unless otherwise
provided in the Certificate of Incorporation. If authorized by the Board of
Directors, such requirement of a written ballot shall be satisfied by a ballot
submitted by electronic transmission, provided that any such electronic
transmission must either set forth or be submitted with information from which
it can be determined that the electronic transmission was authorized by the
stockholder or proxy holder.
In the absence of a quorum, any meeting of stockholders may be adjourned,
from time to time, either by the chairman of the meeting or by vote of the
holders of a majority of the shares represented thereat, but no other business
shall be transacted at such meeting.
SECTION 6: PROXIES.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy, but no
such proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period.
Without limiting the manner in which a stockholder may authorize another
person or persons to act for such stockholder as proxy, the following shall
constitute a valid means by which a stockholder may grant such authority: (1) a
stockholder may execute a writing authorizing another person or persons to act
for such stockholder as proxy (execution may be accomplished by the stockholder
or such stockholder's authorized officer, director, employee or agent signing
such writing or causing such person's signature to be affixed to such writing by
any reasonable means including, but not limited to, by facsimile signature); or
(2) a stockholder may authorize another person or persons to act for such
stockholder as proxy by transmitting or authorizing the transmission of a
telegram, cablegram, or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be the
holder of the proxy to receive such transmission, provided that any such
telegram, cablegram or other means of electronic transmission must either set
forth or be submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by the
stockholder (if it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making that determination shall specify the
information upon which they relied). Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission created pursuant to
the preceding sentence may be substituted or used in lieu of the original
writing or transmission for any and all purposes for which the original writing
or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
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SECTION 7: VOTING RIGHTS OF FIDUCIARIES, PLEDGORS AND JOINT OWNERS OF
STOCK.
Persons holding stock in a fiduciary capacity shall be entitled to vote
the shares so held. Persons whose stock is pledged shall be entitled to vote,
unless in the transfer by the pledgor on the books of the Corporation such
person has expressly empowered the pledgee to vote thereon, in which case only
the pledgee, or such pledgee's proxy, may represent such stock and vote thereon.
If shares or other securities having voting power stand of record in the
names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or if
two or more persons have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect: (1) if only one votes, such person's
act binds all; (2) if more than one vote, the act of the majority so voting
binds all; (3) if more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if any, may
apply to the Court of Chancery or such other court as may have jurisdiction to
appoint an additional person to act with the persons so voting the shares, which
shall then be voted as determined by a majority of such persons and the person
appointed by the Court. If the instrument so filed shows that any such tenancy
is held in unequal interests, a majority or even split for the purpose of this
subsection shall be a majority or even split in interest.
SECTION 8: ORGANIZATION AND CONDUCT OF BUSINESS AT STOCKHOLDER MEETINGS.
At every meeting of stockholders, the Chairman of the Board of Directors,
or in the absence of the Chairman of the Board of Directors, the Chief Executive
Officer, or in the absence of the Chief Executive Officer, the President, or in
the absence of the President, a chairman of the meeting chosen by a majority of
the stockholders present, shall preside over the meeting. The Secretary, or in
the absence of the Secretary, an Assistant Secretary, or in the absence of an
Assistant Secretary, a secretary of the meeting chosen by a majority of the
stockholders present, shall act as secretary of the meeting and take the minutes
thereof.
The Board of Directors of the Corporation shall be entitled to make such
rules or regulations for the conduct of meetings of stockholders as it shall
deem necessary, appropriate or convenient. Subject to such rules and regulations
of the Board of Directors, if any, the chairman of the meeting shall have the
right and authority to prescribe such rules, regulations and procedures and to
do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the Corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
SECTION 9: VOTING PROCEDURES AND INSPECTORS.
If the Corporation has a class of voting stock that is: (1) listed on a
national securities exchange; (2) authorized for quotation on an interdealer
quotation system of a registered national securities association; or (3) held of
record by more than 2,000 stockholders, the procedures set forth in this ARTICLE
I, Section 9 shall apply to any meeting of stockholders:
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The Corporation shall, in advance of any meeting of stockholders, appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Corporation may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate is able to
act at a meeting of stockholders, the person presiding at the meeting shall
appoint one or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of the duties of inspector, shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality and
according to the best of such inspector's ability.
The inspectors shall: (1) ascertain the number of shares outstanding and
the voting power of each; (2) determine the shares represented at a meeting and
the validity of proxies and ballots; (3) count all votes and ballots; (4)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors; and (5) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery upon application by a stockholder shall determine
otherwise.
SECTION 10: LIST OF STOCKHOLDERS ENTITLED TO VOTE.
The officer who has charge of the stock ledger of the Corporation shall
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. The Corporation is not
required to include electronic mail addresses or other electronic contact
information on such list. Such list shall be open to the examination of any
stockholder for any purpose germane to the meeting for a period of at least 10
days prior to the meeting: (1) on a reasonably accessible electronic network,
provided that the information required to gain access to such list is provided
with the notice of the meeting, or (2) during ordinary business hours, at the
principal place of business of the Corporation. In the event that the
Corporation determines to make the list available on an electronic network, the
Corporation may take reasonable steps to ensure that such information is
available only to stockholders of the Corporation. If the meeting is to be held
at a place, then the list shall be produced and kept at the time and place of
the meeting during the whole time thereof and may be inspected by any
stockholder who is present. If the meeting is to be held solely by means of
remote communication, then the list shall also be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible
electronic network, and the information required to access such list shall be
provided with the notice of the meeting.
The stock ledger shall be the only evidence considered in determining
which stockholders are entitled to examine the list of stockholders or to vote
in person or by proxy at any meeting of stockholders.
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SECTION 11: CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
Unless otherwise provided in the Certificate of Incorporation, any action
required by the DGCL to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation by
delivery to its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded.
Every written consent shall bear the date of signature of each stockholder
who signs the consent, and no written consent shall be effective to take the
corporate action referred to therein unless, within 60 days of the earliest
dated consent delivered in the manner required by this section to the
Corporation, written consents signed by a sufficient number of holders or
members to take action are delivered to the Corporation by delivery to its
principal place of business or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders or members
are recorded.
A telegram, cablegram or other electronic transmission consenting to an
action to be taken and transmitted by a stockholder or proxy holder, or by a
person or persons authorized to act for a stockholder or proxy holder, shall be
deemed to be written, signed and dated for the purposes of this section,
provided that any such telegram, cablegram or other electronic transmission sets
forth or is delivered with information from which the Corporation can determine
(A) that the telegram, cablegram or other electronic transmission was
transmitted by the stockholder or proxy holder or by a person or persons
authorized to act for the stockholder or proxy holder and (B) the date on which
such stockholder or proxy holder or authorized person or persons transmitted
such telegram, cablegram or electronic transmission. The date on which such
telegram, cablegram or electronic transmission is transmitted shall be deemed to
be the date on which such consent was signed. No consent given by telegram,
cablegram or other electronic transmission shall be deemed to have been
delivered until such consent is reproduced in paper form and until such paper
form shall be delivered to the Corporation by delivery to its principal place of
business or an officer or agent of the Corporation having custody of the book in
which proceedings of meetings of stockholders or members are recorded.
Notwithstanding the foregoing limitations on delivery, consents given by
telegram, cablegram or other electronic transmission, may be otherwise delivered
to the principal place of business of the Corporation or to an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders or members are recorded if, to the extent and in the manner
provided by resolution of the Board of Directors or governing body of the
Corporation.
Any copy, facsimile or other reliable reproduction of a consent in writing
may be substituted or used in lieu of the original writing for any and all
purposes for which the original writing could be used, provided that such copy,
facsimile or other reproduction shall be a complete reproduction of the entire
original writing.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing and who, if the action had been taken at a
meeting, would have been entitled to notice of the meeting if the record date
for such meeting had been the date that written consents signed by a sufficient
number of holders to take the action were delivered to the Corporation as
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provided in this section. If the action which is consented to is such as would
have required the filing of a certificate under any other section of this title,
if such action had been voted on by stockholders or by members at a meeting
thereof, the certificate filed under such other section shall state, in lieu of
any statement required by such section concerning any vote of stockholders or
members, that written consent has been given in accordance with this section.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1: POWERS.
The powers of the Corporation shall be exercised, its business conducted
and its property controlled by the Board of Directors, except as may be
otherwise provided by statute or by the Certificate of Incorporation.
SECTION 2: NUMBER AND TERM OF OFFICE.
Subject to any limitations imposed by the Certificate of Incorporation,
the authorized number of Directors of the Corporation shall be not be less than
three nor more than fifteen, as may be designated from time to time by the Board
of Directors by a resolution duly adopted by the Board of Directors. Each
Director shall hold office until such Director's successor is elected and
qualified or until such Director's earlier resignation or removal. Directors
need not be stockholders of the Corporation.
Whenever the authorized number of Directors is increased between annual
meetings of the stockholders, a majority of the Directors then in office shall
have the power to elect such new Directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of Directors shall not become effective until the expiration of the term
of the Directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the decrease. No
person entitled to vote at an election for Directors may cumulate votes.
SECTION 3: VACANCIES.
Unless otherwise provided in the Certificate of Incorporation: (1)
vacancies and newly created directorships resulting from any increase in the
authorized number of Directors elected by all of the stockholders having the
right to vote as a single class may be filled by a majority of the Directors
then in office, although less than a quorum, or by a sole remaining Director;
and (2) whenever the holders of any class or classes of stock or series thereof
are entitled to elect one or more Directors by the Certificate of Incorporation,
vacancies and newly created Directorships of such class or classes or series may
be filled by a majority of the Directors elected by such class or classes or
series thereof then in office, or by a sole remaining Director so elected.
If at any time, by reason of death or resignation or other cause, the
Corporation should have no Directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the Certificate of Incorporation or the Bylaws, or may apply to the Court of
Chancery for a decree summarily ordering an election as provided in Section 211
of the DGCL.
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If, at the time of filling any vacancy or any newly created Directorship,
the Directors then in office shall constitute less than a majority of the whole
Board of Directors (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least 10 percent of the voting stock at the time outstanding having
the right to vote for such Directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
Directors chosen by the Directors then in office as aforesaid, which election
shall be governed by Section 211 of the DGCL as far as applicable.
Unless otherwise provided in the Certificate of Incorporation, when one or
more Directors shall resign from the board, effective at a future date, a
majority of the Directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
Director so chosen shall hold office as provided in this section in the filling
of other vacancies.
SECTION 4: RESIGNATION.
Any Director may resign at any time upon notice given in writing or by
electronic transmission to the Corporation.
SECTION 5: REMOVAL.
Any Director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of Directors, except as follows: (1) unless the Certificate of
Incorporation otherwise provides, if the Corporation has a classified board as
provided in Section 141(d) of the DGCL, stockholders may effect such removal
only for cause; or (2) in the case of the Corporation having cumulative voting,
if less than the entire board is to be removed, no Director may be removed
without cause if the votes cast against such Director's removal would be
sufficient to elect such Director if then cumulatively voted at an election of
the entire Board of Directors, or, if there be classes of Directors, at an
election of the class of Directors of which such Director is a part.
Whenever the holders of any class or series are entitled to elect one or
more Directors by the Certificate of Incorporation, this provision shall apply
in respect to the removal without cause of a Director or Directors so elected,
to the vote of the holders of the outstanding shares of that class or series and
not to the vote of the outstanding shares as a whole.
SECTION 6: LOCATION OF MEETINGS; PARTICIPATION BY CONFERENCE TELEPHONE
OR ELECTRONIC VIDEO SCREEN COMMUNICATION.
The Board of Directors of the Corporation may hold its meetings, and have
an office or offices, within or without the State of Delaware. Members of the
Board of Directors of the Corporation, or any committee designated by the board,
may participate in a meeting of such board or committee by means of conference
telephone or electronic video screen communication or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this ARTICLE II, Section
6 shall constitute presence in person at the meeting.
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SECTION 7: REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all Directors. A
notice of each regular meeting shall not be required.
SECTION 8: SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by one-third
(1/3) of the Directors then in office (rounded up to the nearest whole number)
or by the Chief Executive Officer and shall be held at such place, on such date,
and at such time as they or he or she shall fix. Written notice of the place,
date, and time of each such special meeting shall be given to each Director by
whom it is not waived (1) by mailing written notice not less than three (3) days
before the meeting or (2) by electronic transmission of the same not less than
one (1) day before the meeting. In the event of an emergency which, in the
judgment of the Chairman of the Board or President, requires immediate action, a
special meeting may be convened without notice, if a quorum of directors are
immediately available to participate personally or by conference telephone.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting. A Director shall be deemed to waive notice of a
special meeting if that Director attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to that Director.
SECTION 9: QUORUM.
A majority of the total number of Directors shall constitute a quorum for
the transaction of business. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors. If a quorum shall fail to attend any meeting a majority of those
present may adjourn the meeting to another place, date, or time, without further
notice or waiver thereof.
SECTION 10: ACTION BY UNANIMOUS WRITTEN CONSENT.
Any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting if all
members of the Board of Directors or committee, as the case may be, consent
thereto in writing, or by electronic transmission and the writing or writings or
electronic transmission or transmissions are filed with the minutes of
proceedings of the Board of Directors, or committee. Such filing shall be in
paper form if the minutes are maintained in paper form and shall be in
electronic form if the minutes are maintained in electronic form.
SECTION 11: ORGANIZATION.
At every meeting of the Directors, the Chairman of the Board of Directors,
or in the absence of the Chairman of the Board of Directors, a chairman of the
meeting chosen by a majority of the Directors present, shall preside over the
meeting. The Secretary, or in the absence of the Secretary, an Assistant
Secretary, or in the absence of an Assistant Secretary, a secretary of the
meeting chosen by a majority of the Directors present, shall act as secretary of
the meeting and take the minutes thereof.
To promote the free exchange of ideas and candid discussions, only
Directors are entitled to be present at meetings of the Board of Directors,
provided that the Board of Directors may invite non-Directors to attend such
meetings. Any non-Director shall be excluded from a meeting of the Board of
Directors at any time by a majority vote of the Directors present at the
meeting.
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SECTION 12: COMPENSATION OF DIRECTORS.
The Board of Directors shall have the authority to fix the compensation of
Directors. Directors, as such, may receive, pursuant to resolution of the Board
of Directors, fixed fees and other compensation for their services as Directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III
COMMITTEES
SECTION 1: COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors may designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation. The
board may designate one or more Directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to the following
matter: (1) approving or adopting, or recommending to the stockholders, any
action or matter (other than the election or removal of Directors) expressly
required by the DGCL to be submitted to stockholders for approval or (2)
adopting, amending or repealing any bylaw of the Corporation.
A committee may create one or more subcommittees, each subcommittee to
consist of one or more members of the committee, and delegate to a subcommittee
any or all of the powers and authority of the committee.
SECTION 2: ORGANIZATION.
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
To promote the free exchange of ideas and candid discussions, only
committee members are entitled to be present at committee meetings, provided
that the committee may invite non-committee members to attend such meetings. Any
non-committee member shall be excluded from a meeting of the committee at any
time by a majority vote of the committee members present at the meeting.
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ARTICLE IV
OFFICERS
SECTION 1: GENERALLY.
The officers of the Corporation shall consist of a Chief Executive
Officer, a President, a Secretary, and a Chief Financial Officer. The Board of
Directors may also appoint one or more Vice Presidents, Assistant Secretaries,
Assistant Financial Officers, and such other officers and agents with such
powers and duties as it shall deem necessary. Officers shall be elected by the
Board of Directors, which shall consider that subject at its first meeting after
every annual meeting of stockholders. Each officer shall hold office until his
or her successor is elected and qualified or until his or her earlier
resignation or removal. Any number of offices may be held by the same person.
SECTION 2: CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer shall, subject to the direction of the Board
of Directors, have general and active control of the affairs and business of the
corporation and general supervision of its officers, officials, employees and
agents. If there is no Chairman of the Board, the Chief Executive Officer shall
preside at all meetings of the shareholders and at all meetings of the Board of
Directors and any committee thereof of which he is a member, unless the Board of
Directors or such committee shall have chosen another chairman. He shall see
that all orders and resolutions of the Board of Directors are carried into
effect, and in addition he shall have all the powers and perform all the duties
generally appertaining to the office of the Chief Executive Officer of a
corporation. The Chief Executive Officer shall designate the person or persons
who shall exercise his powers and perform his duties in his absence or
disability and the absence or disability of the President.
SECTION 3: CHAIRMAN OF THE BOARD.
The Chairman of the Board shall have the power to preside at all meetings
of the Board of Directors and shall have such other powers and duties as the
Board of Directors may from time to time prescribe.
SECTION 4: PRESIDENT.
The President shall be the Chief Executive Officer of the Corporation
unless the Board of Directors shall have designated another officer as the Chief
Executive Officer of the Corporation. Subject to the provisions of these Bylaws
and to the direction of the Board of Directors, and subject to the supervisory
powers of the Chief Executive Officer (if the Chief Executive Officer is an
officer other than the President), he or she shall have the responsibility for
the general management and control of the business and affairs of the
Corporation and the general supervision and direction of all of the officers,
employees and agents of the Corporation (other than the Chief Executive Officer,
if the Chief Executive Officer is an officer other than the President) and shall
perform all duties and have all powers that are commonly incident to the office
of President or that are delegated to the President by the Board of Directors.
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SECTION 5: VICE PRESIDENT.
Each Vice President shall have such powers and duties as may be delegated
to him or her by the Board of Directors. One Vice President shall be designated
by the Board to perform the duties and exercise the powers of the President in
the event of the President's absence or disability.
SECTION 6: CHIEF FINANCIAL OFFICER.
The Chief Financial Officer shall have the responsibility for maintaining
the financial records of the Corporation. He or she shall make such
disbursements of the funds of the Corporation as are authorized and shall render
from time to time an account of all such transactions and of the financial
condition of the Corporation. The Chief Financial Officer shall also perform
such other duties as the Board of Directors may from time to time prescribe. The
Chief Financial Officer shall be deemed to perform all of the functions of the
"Treasurer" contemplated by the DGCL.
SECTION 7: SECRETARY.
The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He or
she shall have charge of the corporate books and shall perform such other duties
as the Board of Directors may from time to time prescribe.
SECTION 8: DELEGATION OF AUTHORITY.
The Board of Directors may from time to time delegate the powers or duties
of any officer to any other officers or agents, notwithstanding any provision
hereof
SECTION 9: REMOVAL.
Any officer of the Corporation may be removed at any time, with or without
cause, by the Board of Directors.
SECTION 10: ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the Chief Executive
Officer or any officer of the Corporation authorized by the Chief Executive
Officer shall have power to vote and otherwise act on behalf of the Corporation,
in person or by proxy, at any meeting of Stockholders of or with respect to any
action of stockholders of any other corporation in which this Corporation may
hold securities and otherwise to exercise any and all rights and powers which
this Corporation may possess by reason of its ownership of securities in such
other corporation.
ARTICLE V
STOCK
SECTION 1: STOCK CERTIFICATES.
The shares of the Corporation shall be represented by certificates,
provided that the Board of Directors of the Corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
Corporation. Every holder of stock represented by certificates shall be entitled
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to have a certificate signed by, or in the name of the Corporation by the
Chairman of the Board of Directors, or the President or Vice-President, and by
the Chief Financial Officer, or the Secretary or an Assistant Secretary of the
Corporation representing the number of shares registered in certificate form.
Any or all the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue. The Corporation shall not have
power to issue a certificate in bearer form.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in ARTICLE V, Section 5, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to this section or Sections 4, 5 and 6 of this ARTICLE V,
with respect to this section a statement that the Corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
SECTION 2: CONSIDERATION FOR STOCK.
Shares of stock with par value may be issued for such consideration,
having a value not less than the par value thereof, as determined from time to
time by the Board of Directors. Shares of stock without par value may be issued
for such consideration as is determined from time to time by the Board of
Directors. Treasury shares may be disposed of by the Corporation for such
consideration as may be determined from time to time by the Board of Directors.
SECTION 3: ISSUANCE OF STOCK; LAWFUL CONSIDERATION.
Subject to ARTICLE V, Section 2, the consideration for subscriptions to,
or the purchase of, the capital stock to be issued by the Corporation shall be
paid in such form and in such manner as the Board of Directors shall determine.
The Board of Directors may authorize capital stock to be issued for
consideration consisting of cash, any tangible or intangible property or any
benefit to the Corporation, or any combination thereof. In the absence of actual
fraud in the transaction, the judgment of the Directors as to the value of such
consideration shall be conclusive. The capital stock so issued shall be deemed
to be fully paid and nonassessable stock upon receipt by the Corporation of such
consideration; provided, however, nothing contained herein shall prevent the
Board of Directors from issuing partly paid shares under in accordance with
ARTICLE V, Section 4.
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SECTION 4: PARTLY PAID STOCK.
The Corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the Corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the Corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
SECTION 5: RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SECURITIES.
A written restriction or restrictions on the transfer or registration of
transfer of a security of the Corporation, or on the amount of the Corporation's
securities that may be owned by any person or group of persons, if permitted by
the DGCL and noted conspicuously on the certificate or certificates representing
the security or securities so restricted or, in the case of uncertificated
shares, contained in the notice or notices sent pursuant to ARTICLE V, Section
1, may be enforced against the holder of the restricted security or securities
or any successor or transferee of the holder including an executor,
administrator, trustee, guardian or other fiduciary entrusted with like
responsibility for the person or estate of the holder. Unless noted
conspicuously on the certificate or certificates representing the security or
securities so restricted or, in the case of uncertificated shares, contained in
the notice or notices sent pursuant to ARTICLE V, Section 1, a restriction, even
though permitted by this section, is ineffective except against a person with
actual knowledge of the restriction.
SECTION 6: VOTING TRUSTS AND VOTING AGREEMENTS.
One stockholder or two or more stockholders may by agreement in writing
deposit capital stock of an original issue with or transfer capital stock to any
person or persons, or entity or entities authorized to act as trustee, for the
purpose of vesting in such person or persons, entity or entities, who may be
designated voting trustee, or voting trustees, the right to vote thereon for any
period of time determined by such agreement, upon the terms and conditions
stated in such agreement.
The agreement may contain any other lawful provisions not inconsistent
with such purpose. After the filing of a copy of the agreement in the registered
office of the Corporation in the State of Delaware, which copy shall be open to
the inspection of any stockholder of the Corporation or any beneficiary of the
trust under the agreement daily during business hours, certificates of stock or
uncertificated stock shall be issued to the voting trustee or trustees to
represent any stock of an original issue so deposited with such voting trustee
or trustees, and any certificates of stock or uncertificated stock so
transferred to the voting trustee or trustees shall be surrendered and cancelled
and new certificates or uncertificated stock shall be issued therefore to the
voting trustee or trustees. In the certificate so issued, if any, it shall be
stated that it is issued pursuant to such agreement, and that fact shall also be
stated in the stock ledger of the Corporation.
The voting trustee or trustees may vote the stock so issued or transferred
during the period specified in the agreement. Stock standing in the name of the
voting trustee or trustees may be voted either in person or by proxy, and in
voting the stock, the voting trustee or trustees shall incur no responsibility
as stockholder, trustee or otherwise, except for their own individual
malfeasance. In any case where two or more persons or entities are designated as
voting trustees, and the right and method of voting any stock standing in their
names at any meeting of the Corporation are not fixed by the agreement
appointing the trustees, the right to vote the stock and the manner of voting it
at the meeting shall be determined by a majority of the trustees, or if they be
equally divided as to the right and manner of voting the stock in any particular
case, the vote of the stock in such case shall be divided equally among the
trustees.
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SECTION 7: TRANSFERS OF STOCK.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except for a
certificate issued in accordance with ARTICLE V, Section 8, an outstanding
certificate for the number of shares involved shall be surrendered for
cancellation before a new certificate is issued therefor. The issue, transfer,
conversion and registration of certificates of stock shall be governed by such
other regulations as the Board of Directors may establish.
SECTION 8: LOST, STOLEN OR DESTROYED CERTIFICATES.
The Corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or such owner's legal representative to
give the Corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate or uncertificated
shares.
SECTION 9: FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than 60 nor less
than 10 days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the DGCL, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
the DGCL, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolution taking such
prior action.
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In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than 60 days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
ARTICLE VI
NOTICES
SECTION 1: NOTICES IN WRITING.
Except as otherwise specifically provided herein or required by the DGCL,
all notices required to be given under these Bylaws shall be in writing and may
in every instance be effectively given by hand delivery to the recipient
thereof, by depositing such notice in the mails, postage paid, or by sending
such notice by electronic transmission.
SECTION 2: NOTICE BY HAND DELIVERY; NOTICE BY MAIL.
Notice given by hand delivery will be deemed given when actually received
by the recipient. Notice given by mail shall be deemed given when deposited in
the United States mail, postage prepaid, directed to the recipient at such
recipient's address as it appears on the records of the Corporation.
SECTION 3: NOTICE BY ELECTRONIC TRANSMISSION.
Notice may also be given by a form of electronic transmission consented to
by the recipient to whom the notice is given; and any such consent shall be
revoked if (1) the Corporation is unable to deliver by electronic transmission
two consecutive notices given by the Corporation in accordance with such consent
and (2) such inability becomes known to the Secretary or an Assistant Secretary
of the Corporation or to the transfer agent, or other person responsible for the
giving of notice; provided, however, the inadvertent failure to treat such
inability as a revocation shall not invalidate any meeting or other action.
Notice given pursuant to the preceding sentence shall be deemed given: (1) if by
facsimile telecommunication, when directed to a number at which the recipient
has consented to receive notice; (2) if by electronic mail, when directed to an
electronic mail address at which the recipient has consented to receive notice;
(3) if by a posting on an electronic network together with separate notice to
the recipient of such specific posting, upon the later of (A) such posting and
(B) the giving of such separate notice; and (4) if by any other form of
electronic transmission, when directed to the recipient. An affidavit of the
Secretary or an Assistant Secretary or of the transfer agent or other agent of
the Corporation that the notice has been given by a form of electronic
transmission shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
SECTION 4: DEFINITION OF ELECTRONIC TRANSMISSION.
For purposes of these Bylaws, "electronic transmission" means any form of
communication, not directly involving the physical transmission of paper, that
creates a record that may be retained, retrieved and reviewed by a recipient
thereof, and that may be directly reproduced in paper form by such a recipient
through an automated process.
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SECTION 5: NOTICE TO STOCKHOLDERS SHARING AN ADDRESS.
Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation
under any provision of the DGCL, the Certificate of Incorporation, or these
Bylaws shall be effective if given by a single written notice to stockholders
who share an address if consented to by the stockholders at that address to whom
such notice is given. Any such consent shall be revocable by the stockholder by
written notice to the Corporation. Any stockholder who fails to object in
writing to the Corporation, within 60 days of having been given written notice
by the Corporation of its intention to send the single notice described in the
preceding sentence, shall be deemed to have consented to receiving such single
written notice.
SECTION 6: WAIVERS OF NOTICE.
Whenever notice is required to be given under any provision of the DGCL or
the Certificate of Incorporation or these Bylaws, a written waiver, signed by
the person entitled to notice, or a waiver by electronic transmission by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, Directors or members of a
committee of Directors need be specified in any written waiver of notice or any
waiver by electronic transmission unless so required by the Certificate of
Incorporation or these Bylaws.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
SECTION 1: INDEMNIFICATION - THIRD PARTY PROCEEDINGS.
The Corporation shall indemnify any person (the "Indemnitee") who is or
was a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Corporation to procure a judgment in its favor)
by reason of the fact that Indemnitee is or was a Director or officer of the
Corporation, or any subsidiary of the Corporation, and the Corporation may
indemnify a person who is or was a party or is threatened to be made a party to
any proceeding (other than an action by or in the right of the Corporation to
procure a judgment in its favor) by reason of the fact that such person is or
was an employee or other agent of the Corporation (the "Indemnitee Agent") by
reason of any action or inaction on the part of Indemnitee or Indemnitee Agent
while an officer, Director or agent or by reason of the fact that Indemnitee or
Indemnitee Agent is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including subject to
ARTICLE VII, Section 19, attorneys' fees and any expenses of establishing a
right to indemnification pursuant to this ARTICLE VII or under the DGCL),
judgments, fines, settlements (if such settlement is approved in advance by the
Corporation, which approval shall not be unreasonably withheld) and other
amounts actually and reasonably incurred by Indemnitee or Indemnitee Agent in
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connection with such proceeding if Indemnitee or Indemnitee Agent acted in good
faith and in a manner Indemnitee or Indemnitee Agent reasonably believed to be
in or not opposed to the best interests of the Corporation, or to the fullest
extent permitted by the DGCL. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that Indemnitee or
Indemnitee Agent did not act in good faith and in a manner which Indemnitee or
Indemnitee Agent reasonably believed to be in or not opposed to the best
interests of the Corporation.
SECTION 2: INDEMNIFICATION - PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION.
The Corporation shall indemnify Indemnitee and may indemnify Indemnitee
Agent if Indemnitee, or Indemnitee Agent, as the case may be, was or is a party
or is threatened to be made a party to any threatened, pending or completed
action by or in the right of the Corporation or any subsidiary of the
Corporation to procure a judgment in its favor by reason of the fact that
Indemnitee or Indemnitee Agent is or was a Director, officer, employee or other
agent of the Corporation, or any subsidiary of the Corporation, by reason of any
action or inaction on the part of Indemnitee or Indemnitee Agent while an
officer, Director or agent or by reason of the fact that Indemnitee or
Indemnitee Agent is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including subject to
ARTICLE VII, Section 19, attorneys' fees and any expenses of establishing a
right to indemnification pursuant to this ARTICLE VII or under the DGCL) and, to
the fullest extent permitted by law, amounts paid in settlement, in each case to
the extent actually and reasonably incurred by Indemnitee or Indemnitee Agent in
connection with the defense or settlement of the proceeding if Indemnitee or
Indemnitee Agent acted in good faith and in a manner Indemnitee or Indemnitee
Agent believed to be in or not opposed to the best interests of the Corporation
and its stockholders, except that no indemnification shall be made with respect
to any claim, issue or matter to which Indemnitee or Indemnitee Agent shall have
been adjudged to have been liable to the Corporation in the performance of
Indemnitee's or Indemnitee Agent's duty to the Corporation and its stockholders,
unless and only to the extent that the court in which such proceeding is or was
pending shall determine upon application that, in view of all the circumstances
of the case, Indemnitee or Indemnitee Agent is fairly and reasonably entitled to
indemnity for expenses and then only to the extent that the court shall
determine.
SECTION 3: SUCCESSFUL DEFENSE ON MERITS.
To the extent that Indemnitee or Indemnitee Agent without limitation has
been successful on the merits in defense of any proceeding referred to in
ARTICLE VII, Sections 1 or 2 above, or in defense of any claim, issue or matter
therein, the Corporation shall indemnify Indemnitee or Indemnitee Agent against
expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee or Indemnitee Agent in connection therewith.
SECTION 4: CERTAIN TERMS DEFINED.
For purposes of this ARTICLE VII, references to "other enterprises" shall
include employee benefit plans, references to "fines" shall include any excise
taxes assessed on Indemnitee or Indemnitee Agent with respect to an employee
benefit plan, and references to "proceeding" shall include any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative. References to "Corporation" include all
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation, so that any person who is or was a director,
officer, employee, or other agent of such a constituent corporation or who,
being or having been such a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this ARTICLE VII with respect
to the resulting or surviving corporation as such person would if he or she had
served the resulting or surviving corporation in the same capacity.
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SECTION 5: ADVANCEMENT OF EXPENSES.
The Corporation shall advance all expenses incurred by Indemnitee and may
advance all or any expenses incurred by Indemnitee Agent in connection with the
investigation, defense, settlement (excluding amounts actually paid in
settlement of any action, suit or proceeding) or appeal of any civil or criminal
action, suit or proceeding referenced in ARTICLE VII, Sections 1 or 2 above;
PROVIDED, HOWEVER, that, to the extent required by law, such advancement of
expenses shall be made only upon receipt of an undertaking by the Indemnitee or
Indemnitee Agent to repay all amounts advanced if, and to the extent that, it
shall be determined ultimately that Indemnitee or Indemnitee Agent is not
entitled to be indemnified by the Corporation as authorized hereby. The advances
to be made hereunder shall be paid by the Corporation (i) to Indemnitee within
30 days following delivery of a written request therefor by Indemnitee to the
Corporation; and (ii) to Indemnitee Agent within 30 days following the later of
a written request therefor by Indemnitee Agent to the Corporation and
determination by the Corporation to advance expenses to Indemnitee Agent
pursuant to the Corporation's discretionary authority hereunder.
SECTION 6: NOTICE OF CLAIM.
Indemnitee shall, as a condition precedent to his or her right to be
indemnified under this ARTICLE VII, and Indemnitee Agent shall, as a condition
precedent to his or her ability to be indemnified under this ARTICLE VII, give
the Corporation notice in writing as soon as practicable of any claim made
against Indemnitee or Indemnitee Agent, as the case may be, for which
indemnification will or could be sought under this ARTICLE VII. Notice to the
Corporation shall be given by hand delivery or by mail and shall be directed to
the Secretary of the Corporation at the principal business office of the
Corporation (or such other address as the Corporation shall designate in writing
to Indemnitee). In addition, Indemnitee or Indemnitee Agent shall give the
Corporation such information and cooperation as it may reasonably require and as
shall be within Indemnitee's or Indemnitee Agent's power.
SECTION 7: ENFORCEMENT RIGHTS.
Any indemnification provided for in ARTICLE VII, Sections 1, 2 or 3 shall
be made no later than 60 days after receipt of the written request of
Indemnitee. If a claim or request under this ARTICLE VII, under any statute, or
under any provision of the Certificate of Incorporation providing for
indemnification is not paid by the Corporation, or on its behalf, within 60 days
after written request for payment thereof has been received by the Corporation,
Indemnitee may, but need not, at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim or request, and subject to
ARTICLE VII, Section 19, Indemnitee shall also be entitled to be paid for the
expenses (including attorneys' fees) of bringing such action. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in connection with any action, suit or proceeding in advance
of its final disposition) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Corporation to indemnify
Indemnitee for the amount claimed, but the burden of proving such defense shall
be on the Corporation, and Indemnitee shall be entitled to receive interim
payments of expenses pursuant to ARTICLE VII, Section 5 unless and until such
defense may be finally adjudicated by court order or judgment for which no
further right of appeal exists. The parties hereto intend that if the
Corporation contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be a decision for the court, and no
presumption regarding whether the applicable standard has been met will arise
based on any determination or lack of determination of such by the Corporation
(including its Board or any subgroup thereof, independent legal counsel or its
stockholders). The Board of Directors may, in its discretion, provide by
resolution for similar or identical enforcement rights for any Indemnitee Agent.
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SECTION 8: ASSUMPTION OF DEFENSE.
In the event the Corporation shall be obligated to pay the expenses of any
proceeding against the Indemnitee or Indemnitee Agent, as the case may be, the
Corporation, if appropriate, shall be entitled to assume the defense of such
proceeding with counsel approved by Indemnitee or Indemnitee Agent, which
approval shall not be unreasonably withheld, upon the delivery to Indemnitee or
Indemnitee Agent of written notice of its election so to do. After delivery of
such notice, approval of such counsel by Indemnitee or Indemnitee Agent and the
retention of such counsel by the Corporation, the Corporation will not be liable
to Indemnitee or Indemnitee Agent under this ARTICLE VII for any fees of counsel
subsequently incurred by Indemnitee or Indemnitee Agent with respect to the same
proceeding, unless (1) the employment of counsel by Indemnitee or Indemnitee
Agent is authorized by the Corporation, (2) Indemnitee or Indemnitee Agent shall
have reasonably concluded that there may be a conflict of interest of such
counsel retained by the Corporation between the Corporation and Indemnitee or
Indemnitee Agent in the conduct of such defense, or (3) the Corporation ceases
or terminates the employment of such counsel with respect to the defense of such
proceeding, in any of which events then the fees and expenses of Indemnitee's or
Indemnitee Agent's counsel shall be at the expense of the Corporation. At all
times, Indemnitee or Indemnitee Agent shall have the right to employ other
counsel in any such proceeding at Indemnitee's or Indemnitee Agent's expense.
SECTION 9: APPROVAL OF EXPENSES.
No expenses for which indemnity shall be sought under this ARTICLE VII,
other than those in respect of judgments and verdicts actually rendered, shall
be incurred without the prior consent of the Corporation, which consent shall
not be unreasonably withheld.
SECTION 10: SUBROGRATION.
In the event of payment under this ARTICLE VII, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Indemnitee or Indemnitee Agent, who shall do all things that may be necessary to
secure such rights, including the execution of such documents necessary to
enable the Corporation effectively to bring suit to enforce such rights.
SECTION 11: EXCEPTIONS.
Notwithstanding any other provision herein to the contrary, the
Corporation shall not be obligated pursuant to this ARTICLE VII:
(a) EXCLUDED ACTS. To indemnify Indemnitee (i) as to
circumstances in which indemnity is expressly prohibited pursuant to the
DGCL, or (ii) for any acts or omissions or transactions from which a
Director may not be relieved of liability pursuant to the DGCL; or
(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this ARTICLE VII or any other statute or law or as
otherwise required under the DGCL, but such indemnification or advancement
of expenses may be provided by the Corporation in specific cases if the
Board of Directors has approved the initiation or bringing of such suit;
or
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(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding
instituted by Indemnitee to enforce or interpret this ARTICLE VII, if a
court of competent jurisdiction determines that such proceeding was not
made in good faith or was frivolous; or
(d) INSURED CLAIMS. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to Indemnitee by an insurance
carrier under a policy of officers' and directors' liability insurance
maintained by the Corporation; or
(e) CLAIMS UNDER SECTION 16(B). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
SECTION 12: PARTIAL INDEMNIFICATION.
If Indemnitee is entitled under any provision of this ARTICLE VII to
indemnification by the Corporation for some or a portion of the expenses,
judgments, fines or penalties actually or reasonably incurred by the Indemnitee
in the investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
SECTION 13: COVERAGE.
This ARTICLE VII shall, to the extent permitted by law, apply to acts or
omissions of (1) Indemnitee which occurred prior to the adoption of this ARTICLE
VII if Indemnitee was a Director or officer of the Corporation or was serving at
the request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, at the time such act or
omission occurred; and (2) Indemnitee Agent which occurred prior to the adoption
of this ARTICLE VII if Indemnitee Agent was an employee or other agent of the
Corporation or was serving at the request of the Corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise at the time such act or omission occurred. All rights to
indemnification under this ARTICLE VII shall be deemed to be provided by a
contract between the Corporation and the Indemnitee in which the Corporation
hereby agrees to indemnify Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by the
Certificate of Incorporation, these Bylaws or by statute. Any repeal or
modification of these Bylaws, the DGCL, or any other applicable law shall not
affect any rights or obligations then existing under this ARTICLE VII. The
provisions of this ARTICLE VII shall continue as to Indemnitee and Indemnitee
Agent for any action taken or not taken while serving in an indemnified capacity
even though the Indemnitee or Indemnitee Agent may have ceased to serve in such
capacity at the time of any action, suit or other covered proceeding. This
ARTICLE VII shall be binding upon the Corporation and its successors and assigns
and shall inure to the benefit of Indemnitee and Indemnitee Agent and
Indemnitee's and Indemnitee Agent's estate, heirs, legal representatives and
assigns.
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SECTION 14: NON-EXCLUSIVITY.
Nothing herein shall be deemed to diminish or otherwise restrict any
rights to which Indemnitee or Indemnitee Agent may be entitled under the
Certificate of Incorporation, these Bylaws, any agreement, any vote of
stockholders or disinterested Directors, or under the laws of the State of
Delaware.
SECTION 15: SEVERABILITY.
Nothing in this ARTICLE VII is intended to require or shall be construed
as requiring the Corporation to do or fail to do any act in violation of
applicable law. If this ARTICLE VII or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify Indemnitee or Indemnitee Agent to the fullest extent
permitted by any applicable portion of this ARTICLE VII that shall not have been
invalidated.
SECTION 16: MUTUAL ACKNOWLEDGEMENT.
Both the Corporation and Indemnitee acknowledge that in certain instances,
federal law or applicable public policy may prohibit the Corporation from
indemnifying its Directors and officers under this ARTICLE VII or otherwise.
Indemnitee understands and acknowledges that the Corporation has undertaken or
may be required in the future to undertake with the Securities and Exchange
Commission to submit the question of indemnification to a court in certain
circumstances for a determination of the Corporation's right under public policy
to indemnify Indemnitee.
SECTION 17: OFFICER AND DIRECTOR LIABILITY INSURANCE.
The Corporation shall, from time to time, make the good faith
determination whether or not it is practicable for the Corporation to obtain and
maintain a policy or policies of insurance with reputable insurance companies
providing the officers and Directors of the Corporation with coverage for losses
from wrongful acts, or to ensure the Corporation's performance of its
indemnification obligations under this ARTICLE VII. Among other considerations,
the Corporation will weigh the costs of obtaining such insurance coverage
against the protection afforded by such coverage. Notwithstanding the foregoing,
the Corporation shall have no obligation to obtain or maintain such insurance if
the Corporation determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Corporation.
SECTION 18: NOTICE TO INSURERS.
If, at the time of the receipt of a notice of a claim pursuant to ARTICLE
VII, Section 6 hereof, the Corporation has director and officer liability
insurance in effect, the Corporation shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Corporation shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such policies.
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SECTION 19: ATTORNEYS' FEES.
In the event that any action is instituted by Indemnitee under this
ARTICLE VII to enforce or interpret any of the terms hereof, Indemnitee shall be
entitled to be paid all court costs and expenses, including reasonable
attorneys' fees, incurred by Indemnitee with respect to such action, unless as a
part of such action, the court of competent jurisdiction determines that the
action was not instituted in good faith or was frivolous. In the event of an
action instituted by or in the name of the Corporation under this ARTICLE VII,
or to enforce or interpret any of the terms of this ARTICLE VII, Indemnitee
shall be entitled to be paid all court costs and expenses, including attorneys'
fees, incurred by Indemnitee in defense of such action (including with respect
to Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that Indemnitee's defenses to such
action were not made in good faith or were frivolous. The Board of Directors
may, in its discretion, provide by resolution for payment of such attorneys'
fees to any Indemnitee Agent.
ARTICLE VIII
MISCELLANEOUS
SECTION 1: FORM OF RECORDS.
Any records maintained by the Corporation in the regular course of its
business, including its stock ledger, books of account, and minute books, may be
kept on, or by means of, or be in the form of, any information storage device,
or method provided that the records so kept can be converted into clearly
legible paper form within a reasonable time. The Corporation shall so convert
any records so kept upon the request of any person entitled to inspect such
records under the DGCL.
SECTION 2: RELIANCE UPON BOOKS, REPORTS AND RECORDS.
A member of the Board of Directors, or a member of any committee
designated by the Board of Directors, shall, in the performance of such member's
duties, be fully protected in relying in good faith upon the records of the
Corporation and upon such information, opinions, reports or statements presented
to the Corporation by any of the Corporation's officers or employees, or
committees of the Board of Directors, or by any other person as to matters the
member reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation.
SECTION 3: FACSIMILE SIGNATURES.
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
SECTION 4: CORPORATE SEAL.
The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Chief Financial Officer or by an Assistant
Secretary or Assistant Financial Officer.
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SECTION 5: FISCAL YEAR.
The fiscal year of the Corporation shall begin on the first of January and
end on the thirty-first of December of every year.
SECTION 6: TIME PERIODS.
In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
SECTION 7: AMENDMENTS.
These Bylaws may be amended or repealed by the Board of Directors at any
meeting or by the stockholders at any meeting.
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DETACH HERE
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PROXY
RADNET, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 2008
The undersigned hereby appoints Mark Stolper and Jeffrey Linden, or any one of
them, and each with full power of substitution, to act as attorneys and proxies
for the undersigned to attend the Annual Meeting of Stockholders of the Company
to be held at The Olympic Collection, 11301 Olympic Blvd., Los Angeles,
California on May 12, 2008 at 10:00 a.m., Pacific Coast Time, and any
adjournments or postponements thereof to cast on behalf of the undersigned all
votes that the undersigned is entitled to cast at such meeting and otherwise to
represent the undersigned at the meeting with all powers possessed by the
undersigned if personally at the meeting. The undersigned acknowledges receipt
from the Company prior to the execution of this proxy of a Notice of Annual
Meeting of Stockholders and a Proxy Statement, the terms of which are
incorporated herein by reference, and revokes any proxy heretofore given in
respect to such meeting.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED
HEREIN. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE VOTES
ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" PROPOSALS 1, 2 AND 3.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN THE DISCRETION
OF THE PROXY HOLDER ON ANY OTHER MATTER, INCLUDING A MOTION TO ADJOURN OR
POSTPONE THE MEETING TO ANOTHER TIME AND/OR PLACE FOR THE PURPOSE OF SOLICITING
ADDITIONAL PROXIES, THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
OR POSTPONEMENT THEREOF. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Please consider the issues discussed in the proxy statement and cast your vote
by completing, dating, signing and mailing the proxy card in the postage-paid
envelope included with the proxy statement.
Stockholders holding shares with a broker, bank or other nominee may also be
eligible to vote via the Internet or to vote telephonically if their broker,
bank or other nominee participates in the proxy voting program provided by
Broadridge Financial Solutions, Inc. (formerly ADP Investor Communication
Services). Please consult the instruction form received from your broker or
bank.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
RADNET, INC.
--------------------------------------
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YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
ANNUAL MEETING OF STOCKHOLDERS OF RADNET, INC.
MAY 12, 2008
DETACH HERE
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|X| PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NO. 1, 2 AND 3.
1. To elect the following seven persons (except as marked to FOR ALL WITHHOLD ALL FOR ALL EXCEPT
the contrary) as directors of the Company for a one-year / / / / / /
term, or until their successors are duly elected and
qualified:
Howard G. Berger, M.D. Marvin S. Cadwell
John V. Crues, III, M.D. Norman R. Hames
Lawrence L. Levitt Michael L. Sherman, M.D.
David L. Swartz
To withhold authority to vote for any nominee mark "For All Except" and write the nominee's name on the line below.
---------------------------------
2. To approve the change of the state of incorporation from FOR AGAINST ABSTAIN
New York to Delaware. / / / / / /
3. To ratify the selection of Ernst & Young LLP as the FOR AGAINST ABSTAIN
Company's independent registered public accounting firm / / / / / /
for the year ending December 31, 2008.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT / /
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; where no choice is specified, it will be voted FOR
proposals 1, 2 and 3 and in the discretion of the proxies with respect to the matters as may properly come before the meeting or any
adjournment or postponement thereof.
IMPORTANT: Please sign your name(s) exactly as shown hereon and date your proxy in the blank provided. For joint accounts, each
joint owner should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as
such. If the signer is a corporation or partnership, please sign in full corporate or partnership name by a duly authorized officer
of partner.
Signature: ______________________________________ Date:__________ Signature: ______________________________________ Date:__________