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Exhibit 10.66
SECURITY AGREEMENT
(SPRINGING LIEN B)
THIS SECURITY AGREEMENT (this "AGREEMENT") is entered into as of
November 8, 1999, by and between DVI BUSINESS CREDIT CORPORATION, a Delaware
corporation ("LENDER"), and those entities listed on EXHIBIT "A" attached hereto
(each a "GUARANTOR"), each of which is, directly or indirectly, a subsidiary of
US Diagnostic Inc., a Delaware corporation ("BORROWER").
SECTION 1
DEFINITIONS
SECTION 1.1. SPECIFIC DEFINITIONS. The following definitions apply:
"ACCOUNT DEBTORS" mean each Guarantor's customers, the insurance
companies or other payors responsible for their customers' obligations and all
other persons who are obligated or indebted to a Guarantor in any manner,
whether directly or indirectly, primarily or secondarily, contingently or
otherwise, with respect to Accounts.
"ACCOUNTS" mean all accounts, contract rights, instruments, documents,
general intangibles, chattel paper and obligations in any form owing to a
Guarantor arising out of the sale or lease of goods or the rendition of services
by a Guarantor whether or not earned by performance; all credit insurance,
guaranties, letters of credit, advises of credit and other security for any of
the above; all merchandise returned to or reclaimed by Guarantor; and each
Guarantor's Books relating to any of the foregoing.
"COLLATERAL" has the meaning specified in SECTION 3.1 hereof.
"EVENT OF DEFAULT" has the meaning specified in SECTION 10 hereof.
"GUARANTOR'S BOOKS" means all of each Guarantor's books and records
including but not limited to: minute books, ledgers; records indicating,
summarizing or evidencing a Guarantor's assets, liabilities and the Accounts;
all information relating to a Guarantor's business operations or financial
condition; and all computer programs, disk or tape files, printouts, runs and
other computer-prepared information and the equipment containing such
information; provided, however, that confidential patient records are not
included therein, except to the extent otherwise permitted by law.
"GUARANTY" means those certain Unconditional Continuing Guaranties
dated February 25, 1997, or June 29, 1999, as the case may be, given by each
Guarantor to Lender, as acknowledged and confirmed by that certain
Acknowledgement and Confirmation of Guaranties of even date herewith pursuant to
which Guarantors have unconditionally guaranteed Borrower's obligations under
the Loan Agreement.
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"LIEN" means any security interest, mortgage, pledge, assignment, lien
or other encumbrance of any kind, including any interest of a vendor under a
conditional sale contract or consignment and any interest of a lessor under a
capital lease.
"LOAN" means each loan or any other loan or loans made by Lender to
Borrower pursuant to the Loan Agreement.
"LOAN AGREEMENT" means the Loan and Security Agreement dated February
25, 1997, between Borrower and Lender, as amended, pursuant to which Lender has
agreed to extend Advances to Borrower in an aggregate amount not to exceed
Thirty-Five Million Dollars ($35,000,000.00).
"OBLIGATIONS" mean the due and punctual payment of all amounts due
under the Guaranty and the performance of all obligations of each Guarantor
thereunder.
"PERMITTED LIENS" means (i) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not yet due or is being
contested as permitted in this Agreement; (ii) Liens and priority claims
incidental to the conduct of business or the ownership of properties and assets
(including warehouse's and attorney's Liens and statutory landlord's Liens);
deposits, pledges or Liens to secure the performance of bids, tenders, or trade
contracts, or to secure statutory obligations; and surety or appeal bonds or
other Liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money; provided that in each case
the obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings; and further provided that any such
warehouse's or statutory landlord's Liens have been subordinated to the Liens of
Lender in a manner satisfactory to Lender; (iii) Liens granted to Lender or any
Affiliate of Lender and (iv) Liens existing on the date of this Agreement that
secure indebtedness outstanding on such date and that are disclosed on SCHEDULE
1.1 hereto.
SECTION 1.2. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND UNIFORM
COMMERCIAL CODE. All financial terms used in this Agreement other than those
defined in Section 1, have the meanings accorded to them under GAAP. All other
terms used in this Agreement, other than those defined in this SECTION 1, have
the meanings accorded to them in the Uniform Commercial Code as is enacted in
any applicable jurisdiction.
SECTION 1.3. CONSTRUCTION.
(a) Unless the context of this Agreement clearly requires otherwise,
the plural includes the singular, the singular includes the plural, the part
includes the whole, "including" is not limiting, and "or" has the inclusive
meaning of the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and other similar terms in this Agreement refer to this Agreement
as a whole and not exclusively to any particular provision of this Agreement.
(b) Neither this Agreement nor any uncertainty or ambiguity herein may
be construed or resolved against any party hereto, whether under any rule of
construction or
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otherwise. On the contrary, this Agreement has been reviewed by each of the
parties and their respective counsel and is entitled to be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish the purposes and intentions of all parties hereto fairly.
SECTION 1.4. LOAN AGREEMENT. Capitalized terms used but not otherwise
defined herein have the meaning given to them in the Loan Agreement.
SECTION 2
LOAN
SECTION 2.1. THE LOAN. Subject to the terms and conditions and relying
on the representations and warranties set forth in the Loan Agreement, Lender
has advanced, or will advance, to and for the benefit of Borrower and Borrower
has borrowed, or will borrow, from Lender one or more revolving loans in an
aggregate amount not to exceed Thirty-Five Million Dollars ($35,000,000). As a
condition of Amendment No. 4 to the Loan Agreement, Borrower was required to
deliver this Security Agreement signed by certain of its, directly or
indirectly, subsidiaries. Each Guarantor has had the opportunity to review the
Loan Agreement, as amended.
SECTION 2.2. ACCOUNT RECEIPTS.
(a) Borrower is, and will remain until such time as this Agreement is
terminated, a party to the Lock Box Agreements which provide for the receipt and
processing of Account payments. Each Guarantor shall irrevocably direct: (i) all
non-government payors to remit payment to the servicer's post office box in
Lender's name and control, and (ii) all government payors to remit payment to a
second post office box of such servicer in Borrower's name. The Lock Box
Agreements provide for the servicer to deposit daily all receipts of the post
office boxes into deposit accounts, with non-government payor receipts paid into
an account subject to Lender's control and, government payor receipts paid into
an account in Borrower's name. All government payor receipts will be immediately
transferred to an account in the name and control of Lender. Any receipts from
Accounts received by a Guarantor must be deposited in a deposit box account
promptly upon receipt.
(b) Lender will debit the lock box account at the end of each day in
payment of (i) all Lender and other fees, reimbursements, principal payments and
other amounts then due and payable; and (ii) on the first day of each month with
respect to interest accrued on the Loan during the preceding month. Lender shall
apply excess receipts remaining in the lock box account after the payment of
fees, interest, reimbursements and other amounts to the principal amount of the
Loan on a daily basis.
(c) Borrower shall bear all charges for establishing and maintaining
the post office box accounts and all bank charges for such deposit accounts.
Lender shall deduct from the deposit accounts all sums Borrower owes to it
hereunder, including fees, interest, reimbursements and principal payments.
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SECTION 3
SECURITY INTEREST
SECTION 3.1. GRANT OF SECURITY INTEREST. In order to secure prompt
payment and performance of the Obligations, each Guarantor hereby grants to
Lender a springing pledge and security interest in the Accounts owned by it
together with such third-party consents, lien waivers and estoppel certificates
as Lender reasonably requires (the "COLLATERAL"), whether now owned or existing
or hereafter acquired or arising and regardless of where located, subject only
to Permitted Liens. This security interest in the Collateral shall attach to all
Collateral, without further action on the part of Lender or any Guarantor, only
upon the termination of the obligations of Borrower under Note B and the release
by the holder of Note B, or its trustee or custodian, of its security interest
in, and lien on, the Loan B Collateral securing such Note B obligations.
SECTION 4
SPECIFIC REPRESENTATIONS
SECTION 4.1. NAME OF GUARANTOR. The exact name of each Guarantor and
the state in which it was formed is set forth on the attached SCHEDULE 4.1.
Except as set forth on SCHEDULE 4.1 each Guarantor has no previous legal name
use, no trade names and has used no other names in the past.
SECTION 4.2. CHANGE OF NAME OR IDENTITY. A Guarantor shall not change
its name, business structure, or identity or use any new trade name without
prior notification of Lender.
SECTION 4.3. CORPORATE STRUCTURE. Borrower, directly or indirectly,
owns that percentage interest of the equity of each Guarantor as set forth on
SCHEDULE 4.1 attached hereto.
SECTION 5
PROVISIONS CONCERNING ACCOUNTS
SECTION 5.1. OFFICE AND RECORDS OF GUARANTOR. Each Guarantor's chief
executive offices and the location at which it maintains all of its records with
respect to Accounts is listed on SCHEDULE 5.1. No Guarantor has at any time
within the past four (4) months maintained its chief executive office or its
records with respect to Accounts at any other location and may not do so
hereafter except with the prior written consent of Lender.
SECTION 5.2. REPRESENTATIONS. Each Guarantor represents and warrants
that each of its Accounts at the time of attachment of the security interest
granted pursuant to SECTION 3.1 hereof to Lender (a) will be owned solely by
Guarantor, (b) will be for a liquidated amount maturing as stated in Guarantor's
Books; (c) will be a bona fide existing obligation created by the rendition of
services to Account Debtors or their insured by Guarantor in the ordinary course
of
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its business; and (d) will not be subject to any known deduction, offset,
counterclaim, return privilege, or other condition, except as reflected on
Guarantor's Books. A Guarantor shall neither redate any invoices nor reissue new
invoices in full or partial satisfaction of old invoices. Allowances, if any, as
between a Guarantor and its customers will be on the same basis and in
accordance with the usual customary practices of a Guarantor as they exist on
the date of this Agreement.
SECTION 5.3. RETURNS AND REPOSSESSIONS. Each Guarantor shall notify
Lender within five (5) business days of the occurrence of all material claims
asserted by Account Debtors.
SECTION 5.4. LENDER'S RIGHTS. Any officer, employee or agent of Lender
has the right, at any time or times hereafter, in the name of Lender or its
nominee (including any Guarantor), with prior notice to a Guarantor, to verify
the validity, amount or any other matter relating to any Accounts by mail,
telephone or otherwise. Lender or its designee may at any time after an Event of
Default has occurred and is continuing notify customers or Account Debtors that
Accounts have been assigned to Lender or of Lender's security interest therein
and thereafter collect the same directly and charge all reasonable collection
costs and expenses to Guarantor's account.
SECTION 5.5. DISCLAIMER OF LIABILITY. Lender shall not be liable to a
Guarantor or any third person for the correctness, validity or genuineness of
any instruments or documents released or endorsed to a Guarantor by Lender
(which are automatically deemed to be without recourse to Lender in any event)
or for the existence, character, quantity, quality, condition, value or delivery
of any goods purporting to be represented by any such documents; and Lender, by
accepting a Lien on the Collateral or by releasing any Collateral to a
Guarantor, is not deemed to have assumed any obligation or liability to any
supplier or creditor of Guarantor or to any other third party. Each Guarantor
shall indemnify and defend Lender and hold it harmless in respect to any claim
or proceeding arising out of any matter referred to in this Section 5.5.
SECTION 5.6. POST DEFAULT RIGHTS. If an Event of Default has occurred
and is continuing, no discount, credit or allowance may be granted or permitted
by a Guarantor to any Account Debtor; provided, however, that, notwithstanding
the existence of an Event of Default, (i) each Guarantor may continue to invoice
and xxxx Account Debtors under discount, credit and allowance arrangements that
such Guarantor maintained in the ordinary course of business prior to such Event
of Default occurring, and (ii) Account Debtors may, during the continuance of an
Event of Default, utilize discount, credit and allowance arrangements that a
Guarantor extended to them in the ordinary course of business. Lender may, if an
Event of Default has occurred and is continuing, settle or adjust disputes and
claims directly with Account Debtors for amounts and upon terms that Lender
considers advisable.
SECTION 5.7. ACCOUNTS OWED BY FEDERAL GOVERNMENT. If any Accounts arise
out of a contract with the United States of America or any department, agency,
subdivision or instrumentality thereof, a Guarantor which owns such Account
shall promptly notify Lender thereof in writing and take all other action
reasonably requested by Lender to protect Lender's Lien on such Accounts under
the provisions of the federal laws on assignment of claims.
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SECTION 6
PROVISIONS CONCERNING GENERAL INTANGIBLES
(a) SCHEDULE 6.1. is a true and complete list of all radiology and
partnership agreements to which any Guarantor is a party and all contracts and
agreements listed in any filing by Borrower with the Securities and Exchange
Commission.
(b) A Guarantor may not amend, modify or supplement any contract or
agreement included in the Collateral or waive any provision thereof other than
in accordance with a Guarantor's standard business practice, nor may such
standard business practice be materially changed without Lender's consent, which
may not be unreasonably withheld.
(c) A Guarantor remains liable to perform all of its duties and
obligations under any contracts and agreements included in the Collateral to the
same extent as if this Agreement had not been executed. Lender does not have any
obligation or liability under such contracts and agreements by reason of this
Agreement or otherwise.
(d) A Guarantor need not pay any amount due under any contract or
agreement listed on SCHEDULE 6.1, nor otherwise perform any action required
under the terms of any such contract or agreement, if such payment or
performance is being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted, if Lender is notified in advance of such
contest, and if Guarantor establishes any reserve or other appropriate provision
required by GAAP.
SECTION 7
PROVISIONS CONCERNING COLLATERAL
SECTION 7.1. FURTHER ASSURANCES. Each Guarantor shall execute and
deliver to Lender, concurrent with Guarantor's execution of this Agreement and
at any time or times hereafter at the request of Lender, all financing
statements, continuation financing statements, security agreements, chattel
mortgages, assignments, endorsements of certificates of title, applications for
titles, affidavits, reports, notices, schedules of accounts, letters of
authority and all other documents Lender may reasonably request, in form
satisfactory to Lender, to perfect and maintain perfected Lender's Liens in the
Collateral and in order to consummate fully all of the transactions contemplated
under the Loan Documents. Each Guarantor hereby irrevocably makes, constitutes,
and appoints Lender (and any of Lender's officers, employees or agents
designated by Lender) as such Guarantor's true and lawful attorney with power to
sign the name of Guarantor on any of the above-described documents or on any
other similar documents that need to be executed, recorded, or filed in order to
perfect or continue perfected Lender's Liens in the Collateral. The appointment
of Lender as each Guarantor's attorney is irrevocable as long as any Obligations
are outstanding. Any person dealing with Lender is entitled to rely conclusively
on any written or oral statement of Lender that this power of attorney is in
effect.
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SECTION 7.2. LENDER'S DUTY OF CARE. Lender has no duty of care with
respect to the Collateral except that Lender shall exercise reasonable care with
respect to the Collateral in Lender's custody. Lender will be deemed to have
exercised reasonable care if such property is accorded treatment substantially
equal to that which Lender accords its own property or if Lender takes such
action with respect to the Collateral as a Guarantor requests or agrees to in
writing, provided that no failure to comply with any such request nor any
omission to do any such act requested by Guarantor may be deemed a failure to
exercise reasonable care. Lender's failure to take steps to preserve rights
against any parties or property may not be deemed to be failure to exercise
reasonable care with respect to the Collateral in Lender's custody. All risk,
loss, damage or destruction of the Collateral is borne by each Guarantor.
SECTION 7.3. REINSTATEMENT OF LIENS. If, at any time after payment in
full of all Obligations and termination of Lender's Liens, any payments on
Obligations previously made by a Guarantor or any other Person must be disgorged
by Lender for any reason whatsoever (including, the insolvency, bankruptcy, or
reorganization of a Guarantor or such other Person), this Agreement and Lender's
Liens granted hereunder are reinstated as to all disgorged payments as though
such payments had not been made, and a Guarantor shall sign and deliver to
Lender all documents and things necessary to perfect all terminated Liens.
SECTION 7.4. LENDER EXPENSES. If a Guarantor fails to pay any moneys
(whether taxes, assessments, insurance premiums or otherwise) due to third
persons or entities, fails to make any deposits or furnish any required proof of
payment or deposit or fails to discharge any Lien not permitted hereby, all as
required under the terms of this Agreement, then Lender may, to the extent that
it determines that such failure by a Guarantor could have a material adverse
effect on Lender's interest in the Collateral, in its discretion and without
prior notice to such Guarantor, make payment of the same or any part thereof.
Any amounts paid or deposited by Lender constitute Advances, become part of the
Obligations, and are secured by the Collateral. Any payments made by Lender do
not constitute (a) an agreement by Lender to make similar payments in the future
or (b) a waiver by Lender of any Event of Default under this Agreement. Lender
need not inquire as to, or contest the validity of, any such expense, tax,
security interest, encumbrance or Lien, and the receipt of the usual official
notice for the payment of moneys to a governmental entity is conclusive evidence
that the same was validly due and owing. Each Guarantor hereby authorizes and
approves all advances and payments by Lender for items constituting Lender
Expenses.
SECTION 7.5. INSPECTION OF COLLATERAL AND RECORDS. During usual
business hours, Lender may inspect and examine the Collateral and check and test
the same as to quality, quantity, value and condition. Lender also has the right
at any time or times hereafter, during usual business hours to inspect and
verify each Guarantor's Books in order to verify the amount or condition of, or
any other matter relating to, the Collateral and to copy and make extracts
therefrom. Each Guarantor waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Lender pursuant to this Agreement.
Lender may directly contact any such accounting firm or service bureau in order
to obtain such information.
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SECTION 7.6. WAIVERS. Except as specifically provided for herein, each
Guarantor waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper, and
guaranties at any time held by Lender on which a Guarantor may in any way be
liable.
SECTION 8
REPRESENTATIONS AND WARRANTIES
Each Guarantor each hereby warrants and represents to Lender the
following with respect to itself:
SECTION 8.1. STATUS. Guarantor is an entity validly existing and in
good standing under the laws of the state of its incorporation, is qualified and
licensed to do business and is in good standing in any state in which the
conduct of its business or its ownership of property requires that it be so
qualified or licensed, and has the power and authority (corporate and otherwise)
to execute and carry out the terms of the Loan Documents to which it is a party,
to own its assets and to carry on its business as currently conducted.
SECTION 8.2. AUTHORIZATION. The execution, delivery, and performance by
Guarantor of this Agreement and each Loan Document have been duly authorized by
all necessary action of the equity holders of such Guarantor. Guarantor, has
duly executed and delivered this Agreement and each Loan Document to which they
are a party, and each of them constitutes a valid and binding obligation of
Guarantor.
SECTION 8.3. NO BREACH. The execution, delivery and performance by
Guarantor, of this Agreement and each Loan Document to which they are a party
(a) will not contravene any law or any governmental rule or order binding on
Collateral owned by it; (b) will not violate any provision of the formation
document of Guarantor; (c) will not violate any agreement or instrument by which
Guarantor or its assets, is bound; (d) do not require any notice to consent by
any Governmental Authority; and (e) will not result in the creation of a Lien on
any assets of Guarantor except the Lien to Lender granted herein.
SECTION 8.4. TAXES. All assessments and taxes, whether real, personal
or otherwise, due or payable by or imposed, levied or assessed against
Guarantor, or its property have been paid in full before delinquency or before
the expiration of any extension period; and Guarantor has made due and timely
payment or deposit of all federal, state, and local taxes, assessments, or
contributions required of it by law, except only for items that Guarantor are
currently contesting diligently and in good faith and that have been fully
disclosed in writing to Lender.
SECTION 8.5. DEFERRED COMPENSATION PLANS. Guarantor has made all
required contributions to all deferred compensation plans to which such person
is required to contribute, and Guarantor has no liability for any unfunded
benefits of any single-employer or multi-
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employer plans. Guarantor is not nor at any time has been a sponsor of,
provided, or maintained for any employees any defined benefit plan.
SECTION 8.6. LITIGATION AND PROCEEDINGS. Except as set forth on
SCHEDULE 8.6 attached hereto, there are no outstanding judgments against
Guarantor or its assets and there are no actions or proceedings pending by or
against Guarantor before any court or administrative agency. Guarantor has no
knowledge of any pending, threatened, or imminent litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving
Guarantor, except for ongoing collection matters in which Guarantor is the
plaintiff and except as set forth in SCHEDULE 8.6 hereto.
SECTION 8.7. BUSINESS. Guarantor has all franchises, authorizations,
patents, trademarks, copyrights and other rights necessary to advantageously
conduct its business. They are all in full force and effect and are not in known
conflict with the rights of others. Guarantor is not a party to or subject to
any agreement or restriction that is so unusual or burdensome that it might have
a material adverse effect on Guarantor's business, properties or prospects.
SECTION 8.8. LAWS AND AGREEMENTS. Guarantor is in compliance with all
material contracts and agreements applicable to it, including obligations to
contribute to any employee benefit plan or pension plan regulated by ERISA.
Guarantor is in material compliance with all laws applicable to it.
SECTION 8.9. OWNERSHIP OF ACCOUNTS. Prior to the Lender making any
Advance, Guarantor is the sole owner of, and has good and marketable title to
the Accounts pledged by it as security for such Loan.
SECTION 8.10. SECURITY INTEREST. After giving effect to Advances Lender
will be the holder of a valid perfected first priority security interest in the
Accounts pledged by the Guarantor. Accounts pledged to the Lender in connection
with any Loan will be free and clear of all liens other than Permitted Liens.
SECTION 8.11. NO DEFAULTS. As of the date on which an Eligible Account
is pledged to the Lender pursuant to the terms hereof there has been no default
under such Account.
SECTION 8.12. ORIGINATION. Each Account has been originated by
Guarantor in the ordinary course of its business in accordance with Guarantor's
regular credit approval process and does not contravene any laws, rules or
regulations applicable thereto.
SECTION 8.13. LEGALITY. No Eligible Account will have been originated
in, or be subject to the laws of, any jurisdiction whose laws would make the
terms hereof or any transaction contemplated hereby unlawful.
SECTION 8.14. CONSENTS. Except as set forth on SCHEDULE 8.14, no
consent or approval is required for the pledging of any Accounts to the Lender
pursuant to the terms of this Agreement, except for such consents or approvals
as have been obtained prior to the Closing Date.
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SECTION 8.15. HEALTH CARE LAWS.
(a) Guarantor has obtained all permits, licenses and other
authorizations that are required under Health Care Laws applicable to Guarantor
and is in compliance in all material respects with all terms and conditions of
the required permits, licenses and authorizations, and are also in compliance in
all material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in such Health Care Laws.
(b) Guarantor is not aware of, and has not received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans that may interfere with or prevent
compliance or continued compliance in any material respect with Health Care
Laws.
(c) There is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or threatened against Guarantor, relating in any way to
Health Care Laws.
SECTION 8.16. CUMULATIVE REPRESENTATIONS. The warranties,
representations and agreements set forth herein are cumulative and in addition
to any and all other warranties, representations and agreements that Guarantor
gives, or cause to be given, to Lender, either now or hereafter.
SECTION 8.17. FULL DISCLOSURE. No representation, warranty or statement
by Guarantor contained in this Agreement, any Schedule or any document,
instrument or certificate furnished by or on behalf of them pursuant to this
Agreement contains any untrue, incorrect, incomplete or misleading statement of
material fact, or knowingly omits to state a material fact necessary to make the
statements contained therein not misleading.
SECTION 8.18. GUARANTOR SOLVENCY.
(a) Immediately following the execution of this Agreement and the Loan
Documents, and the completion of the transactions contemplated thereby,
Guarantor will be solvent, able to pay its debts as they mature, will have
capital sufficient to carry on its business and all businesses in which it is
about to engage, and will have assets which will have a present fair salable
value greater than the amount of its Indebtedness.
(b) Guarantor does not intend to incur debts beyond its ability to pay
them as they mature and the aggregate of Guarantor's property at a fair
valuation is sufficient in amount to pay its debts.
(c) Guarantor is not contemplating filing a petition in bankruptcy or
for an arrangement or reorganization under the Bankruptcy Code, nor is there any
threatened bankruptcy or insolvency proceedings against any Guarantor.
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SECTION 9
COVENANTS
SECTION 9.1. ENCUMBRANCE OF COLLATERAL. Each Guarantor shall not
create, incur, assume or permit to exist any Lien on any Collateral now owned or
hereafter acquired by such Guarantor, except for Liens to Lender and Permitted
Liens.
SECTION 9.2. BUSINESS. Each Guarantor shall engage primarily in
business of the same general character as that now conducted by such Guarantor.
SECTION 9.3. TAXES. Each Guarantor shall pay all taxes, assessments and
other governmental charges imposed upon it or any of its assets or in respect of
any of its franchises, business, income or profits before any penalty or
interest accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or might become a Lien or charge upon any of its
assets, provided that (unless any material item or property would be lost,
forfeited or materially impaired as a result thereof) no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted, if Lender is notified in advance of
such contest, and if a Guarantor establishes any reserve or other appropriate
provision required by GAAP. Each Guarantor shall make timely payment or deposit
of all FICA payments and withholding taxes required of it by applicable laws and
will, upon request, furnish Lender with proof satisfactory to Lender indicating
that a Guarantor has made such payments or deposits.
SECTION 9.4. ACCOUNTING SYSTEM. Each Guarantor at all times hereafter
shall maintain a standard and modern system of accounting in accordance with
generally accepted accounting principles consistently applied, with ledger and
account cards or computer tapes, disks, printouts, and records that contain
information pertaining to the Collateral that may from time to time be requested
by Lender. A Guarantor shall not modify or change its method of accounting or
enter into any agreement hereafter with any third-party accounting firm or
service bureau for the preparation or storage of such Guarantor's accounting
records without the accounting firm's or service bureau's agreeing to provide to
Lender information regarding the Collateral and such Guarantor's financial
condition.
SECTION 9.5. RESTRICTIONS ON MERGER, CONSOLIDATION, SALE OF ASSETS,
ISSUANCE OF STOCK, ETC. Unless authorized by Lender, a Guarantor may not:
(a) merge or consolidate with any Person unless Guarantor is the
surviving entity or the surviving entity becomes a Subsidiary of Borrower;
(b) sell, lease or otherwise dispose of its assets in any transaction
or series of related transactions (other than sales in the ordinary course of
business);
(c) liquidate, dissolve or effect a recapitalization or reorganization
in any form of transaction;
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(d) become subject to any agreement or instrument which by its terms
would restrict Guarantor's right or ability to perform any of its obligations to
Lender pursuant to the terms of the Loan Documents; or
(e) authorize or issue any additional stock or equity interest.
SECTION 9.6. HEALTH CARE COVENANTS.
(a) Each Guarantor shall comply in all material respects with, and will
obtain all permits required by, all Health Care Laws applicable to them.
(b) Each Guarantor shall promptly furnish to Lender a copy of any
communication from any governmental authority concerning any possible violation
of any Health Care Laws or any occurrence of which Guarantor would be required
to notify any Governmental Authority with jurisdiction over Health Care Laws.
SECTION 10
EVENTS OF DEFAULT
An Event of Default is deemed to exist if an Event of Default has
occurred and is continuing under the Loan Agreement.
SECTION 11
REMEDIES
SECTION 11.1. SPECIFIC REMEDIES. After the attachment of the security
interest granted hereunder pursuant to the provisions of SECTION 3.1 and upon
the occurrence of any Event of Default with respect to each Guarantor, Lender
may:
(a) declare all Obligations to be due and payable immediately,
whereupon they immediately become due and payable without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly waived by
Guarantor;
(b) set off against the Obligations all Collateral, balances, credits,
deposits, accounts, or moneys of Guarantor then or thereafter held with Lender,
including amounts represented by certificates of deposit;
(c) pay, purchase, contest, or compromise any encumbrance, charge or
Lien that, in the opinion of Lender, appears to be prior or superior to its Lien
and pay all reasonable expenses incurred in connection therewith;
(d) (i) notify Account Debtors to make payment on Account directly to
Lender; (ii) settle, adjust, compromise, extend or renew Accounts, whether
before or after legal
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proceedings to collect such Accounts have commenced; (iii) prepare and file any
bankruptcy proofs of claim or similar documents against any Account Debtor; (iv)
prepare and file any notice, assignment, satisfaction, or release of Lien, UCC
termination statement or any similar document; (v) sell or assign Accounts,
individually or in bulk, upon such terms, for such amounts, and at such time or
times as Lender deems advisable; and (vi) complete the performance required of a
Guarantor under any contract or agreement to which Guarantor is a party and out
of which Accounts arise or may arise; and
(e) (i) endorse Guarantor's name on all checks, notes, drafts, money
orders or other forms of payment of or security for Accounts or other
Collateral; (ii) sign Guarantor's name on drafts drawn on Account Debtors or
issuers of letters of credit; and (iii) notify the postal authorities in
Guarantor's name to change the address for delivery of Guarantor's mail to an
address designated by Lender, receive and open all mail addressed to Guarantor,
copy all mail, return all mail relating to Collateral, and hold all other mail
available for pickup by Guarantor.
SECTION 11.2. POWER OF ATTORNEY. Each Guarantor hereby appoints Lender
(and any of Lender's officers, employees, or agents designated by Lender) as
such Guarantor's attorney, with power whether before or after the occurrence of
an Event of Default: (a) to endorse Guarantor's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into Lender's possession; (b) to sign Guarantor's name on drafts against
Account Debtors, on schedules and assignments of Accounts, on verifications of
Accounts, and on notices to Account Debtors; (c) to notify the post office
authorities to change the address for delivery of Guarantor's mail to an address
designated by Lender, to receive and open all mail addressed to Guarantor and to
retain all mail relating to the Collateral and forward all other mail to
Guarantor; (d) to send requests for verification of Accounts; (e) to execute UCC
Financing Statements; and (f) to do all things necessary to carry out this
Agreement. The appointment of Lender as each Guarantor's attorney and each and
every one of Lender's rights and powers, being coupled with an interest, are
irrevocable as long as any Obligations are outstanding. Lender may not exercise
the power granted in clauses 11.2(a) through 11.2(c) unless an Event of Default
has occurred and is continuing and may not exercise the power granted in clause
11.2(d) prior to notification of a Guarantor of its intent to do so, but such
limitations do not limit the effectiveness of such power of attorney at any
time. Any person dealing with Lender is entitled to rely conclusively on any
written or oral statement of Lender that this power of attorney is in effect.
Lender may also use each Guarantor's stationery in connection with exercising
its rights and remedies and performing the Obligations of a Guarantor.
SECTION 11.3. EXPENSES SECURED. All expenses, including attorney fees,
incurred by Lender in the exercise of its rights and remedies provided in this
Agreement or by law are payable by each Guarantor to Lender, are part of the
Obligations, and are secured by the Collateral.
SECTION 11.4. EQUITABLE RELIEF. Each Guarantor recognizes that in the
event such Guarantor fails to perform, observe, or discharge any of its
Obligations or liabilities under this Agreement, no remedy of law will provide
adequate relief to Lender, and Lender is entitled
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to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
SECTION 11.5. REMEDIES ARE CUMULATIVE. No remedy set forth herein is
exclusive of any other available remedy or remedies, but each is cumulative and
in addition to every other right or remedy given under this Agreement or under
any other agreement between Lender and a Guarantor or Borrower or any other
Guarantor or now or hereafter existing at law or in equity or by statute. Lender
may pursue its rights and remedies concurrently or in any sequence, and no
exercise of one right or remedy may be deemed to be an election. No delay by
Lender constitutes a waiver, election, or acquiescence by it. Each Guarantor on
its behalf waives any rights to require Lender to proceed against Borrower or
any other Guarantor or any other party; or proceed against or exhaust any
security held from Borrower or any other Guarantor. Lender may at any time and
from time to time, without notice to, or consent of, a Guarantor, and without
affecting or impairing the obligation of Guarantor hereunder do any of the
following: (i) renew or extend any obligations of Borrower or any other
Guarantor, or of any other party at any time directly or contingently liable for
payment of any of the obligations of Borrower or any other Guarantor; (ii)
accept partial payments of the obligations of Borrower or any other Guarantor;
(iii) settle, release (by operation of law or otherwise), compound, compromise,
collect or liquidate any of the obligations of Borrower or any other Guarantor
and the security therefor in any manner; (iv) consent to the transfer or sale of
any security or bid and purchase at any sale of any security of either Borrower
or any other Guarantor. The validity of this Agreement and the Obligations of a
Guarantor are not terminated, affected or impaired by reason of the waiving,
delaying, exercising or non-exercising, of any of Lender's rights against
Borrower or any other Guarantor or as a result of the substitution, release,
repossession, sale, disposition or destruction of any Collateral securing any
obligations of Borrower or any other Guarantor. A Guarantor is not released or
discharged, either in whole or in part, by Lender's failure or delay to perfect
or continue the perfection of any security interest in any Collateral which
secures the obligations of Borrower or any other Guarantor or to protect the
property covered by such security interest.
SECTION 12
MISCELLANEOUS
SECTION 12.1. DELAY AND WAIVER. No delay or omission to exercise any
right impairs any such right or be a waiver thereof, but any such right may be
exercised from time to time and as often as may be deemed expedient. A waiver on
one occasion is limited to that particular occasion.
SECTION 12.2. COMPLETE AGREEMENT. This Agreement, the Schedules and the
other Loan Documents are the complete agreement of the parties hereto and
supersede all previous understandings relating to the subject matter hereof.
This Agreement may be amended only by an instrument in writing that explicitly
states that it amends this Agreement and is signed by the party against whom
enforcement of the amendment is sought. This Agreement may be executed in
counterparts, each of which will be an original and all of which will constitute
a single agreement.
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SECTION 12.3. SEVERABILITY; HEADINGS. If any part of this Agreement or
the application thereof to any person or circumstance is held invalid, the
remainder of this Agreement is unaffected thereby. The section headings herein
are included for convenience only and may not be deemed to be a part of this
Agreement.
SECTION 12.4. BINDING EFFECT. This Agreement is binding upon and inures
to the benefit of the respective legal representatives, successors and assigns
of the parties hereto; provided however, a Guarantor may not assign any of its
rights or delegate any of its Obligations hereunder. Lender (and any subsequent
assignee) may transfer and assign this Agreement and deliver the Collateral to
the assignee, who thereupon has all of the rights of Lender; and Lender (or such
subsequent assignee who in turn assigns as aforesaid) is then relieved and
discharged of any responsibility or liability with respect to this Agreement and
said Collateral.
SECTION 12.5. NOTICES. Any notices under or pursuant to this Agreement
are deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, or when delivered by courier or when
transmitted by telex, telecopy, or similar electronic medium to the following
addresses:
To Guarantor: c/o US Diagnostic Inc.
000 X. Xxxxxxx Xxxxx, 00xx Xxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copies to: Xxxxxxxxx Xxxxxxx, P.A.
000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000 Xxxx
Xxxx Xxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Lender: DVI Business Credit Corporation
0000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Copies to: DVI Business Credit Corporation
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change such address by sending notice of the change to
the other parties; such change of address is effective only upon actual receipt
of the notice by the other parties.
SECTION 12.6. GOVERNING LAW. ALL ACTS AND TRANSACTIONS HEREUNDER AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED, CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF CALIFORNIA (WITHOUT GIVING EFFECT
TO ANY PRINCIPLES OF CONFLICTS OF LAW).
SECTION 12.7. WAIVER OF TRIAL BY JURY. LENDER AND GUARANTOR HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
ANY OF THE SECURITY DOCUMENTS OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER
AND GUARANTOR.
SECTION 12.8. SUBMISSION TO JURISDICTION.
(a) GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
CALIFORNIA OR FEDERAL COURT SITTING IN ORANGE COUNTY, CALIFORNIA, OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. GUARANTOR
HEREBY AGREES THAT SERVICE OF COPIES OF SUMMONS AND COMPLAINTS AND ANY OTHER
PROCESS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING ARISING HEREUNDER MAY BE
MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH AT THE BEGINNING OF
THIS AGREEMENT.
(b) NOTHING IN THIS SECTION 12.8 SHALL AFFECT THE RIGHT OF LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ANY OF ITS
PROPERTIES IN THE COURTS OF OTHER JURISDICTIONS TO THE EXTENT OTHERWISE
PERMITTED BY LAW.
(c) TO THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE (i) ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OF CALIFORNIA OR ANY FEDERAL COURT
SITTING IN ORANGE COUNTY, CALIFORNIA OR FROM ANY LEGAL PROCESS OUT OF ANY SUCH
COURT
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(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, OR (ii) ANY OBJECTION TO THE LAYING OF THE VENUE OR OF AN INCONVENIENT
FORUM OF ANY SUIT, ACTION OR PROCEEDING, IF BROUGHT IN CALIFORNIA OR FEDERAL
COURT SITTING IN ORANGE COUNTY, CALIFORNIA UNDER PROCESS SERVED IN ACCORDANCE
WITH SUBPARAGRAPH (a) ABOVE, BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY OR
OBJECTION IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE LOANS.
IN WITNESS WHEREOF, each Guarantor and Lender have executed this
Agreement by their duly authorized officers as of the date first above written.
AH IMAGING, INC. BRIDGETON MRI CENTER, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
MR OF KANSAS CITY, X.X. XXXXXXXX MRI CENTER, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
OUTPATIENT RADIOLOGY CENTER DI IMAGING CENTER, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
LB IMAGING, INC. COMMUNITY RADIOLOGY OF
VIRGINIA, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
USDL PITTSBURGH, INC. MEDITEK - CHATHAM
INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
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HEIGHTS IMAGING CENTER, INC. MEDICAL MARKETING
DEVELOPMENT, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
SANTA FE IMAGING CENTER, INC. AFFILIATED MEDICAL IMAGING
NETWORK, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
USD DAYTON, INC. WESTLAKE DIAGNOSTIC CENTER,
INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
MICA IMAGING, INC. DVI BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: Vice President
---------------------------- -----------------------------
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GUARANTORS
MR of Kansas City, L.P.
Outpatient Radiology Center
Community Radiology of Virginia, Inc.
USDL Pittsburgh, Inc.
MediTek - Chatham Industries, Inc.
Heights Imaging Center, Inc.
Medical Marketing Development, Inc.
Santa Fe Imaging Center, Inc.
Affiliated Medical Imaging Network, Inc.
USD Dayton, Inc.
Westlake Diagnostic Center, Inc.
MICA Imaging, Inc.
Bridgeton MRI Center, Inc.
Kirkwood MRI Center, Inc.
AH Imaging, Inc.
DI Imaging Center, Inc.
LB Imaging, Inc.
EXHIBIT "A"
to
SECURITY AGREEMENT
19
