EXHIBIT 10.2
AMENDED, RESTATED AND CONSOLIDATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED, RESTATED AND CONSOLIDATED LOAN AND SECURITY AGREEMENT
(this "Agreement") is made as of November 29, 2004 among Radnet Management,
Inc., a California corporation ("RMI"), Diagnostic Imaging Services, Inc., a
Delaware corporation ("DIS"), RadNet Sub, Inc., a California corporation
("Radnet Sub"), and Radnet Managed Imaging Services, Inc., a California
corporation ("Radnet Imaging") (RMI, DIS, Radnet Sub and Radnet Imaging are
collectively referred to herein as "Debtors" and individually as a "Debtor"),
the lenders that are now or hereafter at any time parties hereto and listed in
Schedule 2 attached hereto (or any amendment or supplement thereto) (each a
"Lender" and, collectively, the "Lenders") and Post Advisory Group, LLC ("Post
Advisory"), as collateral agent for the Lenders (together with its successors
and assigns, the "Collateral Agent"). Capitalized terms used and not defined
elsewhere in this Agreement are defined in Section 1 hereof.
R E C I T A L S
A. Radnet Sub and Radnet Imaging are jointly and severally obligated to
DVI Business Credit Receivable Corp. III corporation ("REC III"), as successor
to DVI Business Credit Corp., as debtor and debtor in possession ("DVIBC"), in
the amounts set forth on Schedule 1 hereto (as of the date hereof) as evidenced
by those loan agreements, loan and security agreements, schedules and promissory
notes set forth on Schedule 1 hereto, including that certain Forbearance and
Amendment Agreement dated as of September 27, 2004 (the "Forbearance/Amendment
Agreement") among Debtors, Primedex Health Systems, Inc., a New York corporation
("Parent"), REC III and U.S. Bank National Association, as trustee for certain
noteholders of REC III (the "REC III Trustee") and the Security Documents
(collectively, as any of the foregoing may have been amended, modified,
supplemented, extended or restated from time to time, the "Prior Financing
Documents"). The collateral securing the Radnet Loans includes the Receivables
which are to be deposited into a lockbox account (the "Lockbox Account") at
Wachovia Bank or another bank (the "Lockbox Bank") and applied to repay the
Loans evidenced by the Prior Financing Documents (the "REC III Loans") as
further provided in a lockbox agreement or other agreements (the "Lockbox
Agreement").
B. The Debtors anticipate that each of the Debtors, Parent, REC III and
the REC III Trustee will enter into a First Amendment to the
Forbearance/Amendment Agreement in the form annexed as Exhibit G hereto or as
otherwise agreed to by Required Lenders in their sole discretion (as amended,
modified or supplemented prior to the date hereof, the "Settlement Agreement")
which contemplates, among other things, that REC III and the REC III Trustee
will accept a payment of not more than $2,900,000 (the "Settlement Amount") in
settlement in full of all obligations, liabilities and claims of every nature
owing under the Prior Financing Documents (such obligations, liabilities and
claims, the "REC III Obligations") free of all liens, claims and interests
upon the satisfaction of the conditions set forth in the Settlement Agreement
(such transaction, the "REC III Loan Settlement"). As DVIBC and certain of
its affiliates are subject to bankruptcy proceedings and it is required that
the bankruptcy court for such proceedings (the "DVI Bankruptcy Court") approve
the Settlement Agreement and the transactions contemplated thereby, an order
of the DVI Bankruptcy Court satisfactory to the Debtors and Required Lenders
approving the transactions contemplated hereby in the form annexed to the REC
III Settlement Motion will need to be obtained (the "REC III Settlement
Order").
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C. The Debtors have requested that the Lenders make a Loan to the Debtors
in the aggregate principal amount of $4,000,000 upon satisfaction of the
conditions set forth in Section 17(a) hereof, $775,000 (minus certain closing
expenses) of which will be paid to RMI on behalf of the Lenders and used for the
general corporate purposes of the Debtors and $3,225,000 of which will be
deposited with Union Bank of California, N.A., as escrow agent (the "Escrow
Agent"), pursuant to the terms of the Escrow Agreement dated as of the date
hereof among RMI on behalf of the Debtors, the Collateral Agent on behalf of the
Lenders and the Escrow Agent (as amended from time to time, the "Escrow
Agreement"). The amount deposited in escrow (such amount, together with any
interest income thereon, the "Escrowed Funds") will, subject to the
satisfaction of the conditions set forth in Section 17(b) hereof and the
Escrow Agreement on or prior to December 31, 2004 or such later date agreed by
Required Lenders in their sole discretion (the "Escrow Termination Date"), be
applied to pay the Settlement Amount, or if such conditions are not satisfied
as of the Escrow Termination Date, at the election of Required Lenders in
their sole discretion, applied in accordance with Section 2(e)(iii) hereof to
repay the Loans.
D. The Loans will be secured by a first priority security interest in the
Escrowed Funds and the proceeds thereof unless and until such Escrowed Funds are
applied to pay the Settlement Amount and, immediately upon the payment of the
Settlement Amount, will be secured by a first priority security interest in the
Receivables and other Collateral securing the REC III Loans.
E. The Debtors acknowledge and agree that Debtors will be unconditionally
and irrevocably obligated to pay and perform the Obligations as provided
herein. In addition, in the event the REC III Loan Settlement occurs, this
Agreement shall amend, restate and consolidate the Prior Financing Documents
without interruption on the terms and conditions set forth herein.
F. Parent has agreed to guaranty the Obligations pursuant to the
Guaranty annexed as Exhibit B hereto (as amended, modified or supplemented
from time to time, the "Parent Guaranty").
▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ (collectively, "▇▇▇▇▇▇") and each
other holder of the Shareholder/Affiliate Notes (as defined herein) has
consented to this Agreement, the Post Equipment Loans and the transactions
contemplated hereby and thereby pursuant to a consent in the form of Exhibit
C-1 hereto (such consent, a "Shareholder/Affiliate Note Consent").
▇. ▇▇▇▇▇ Fargo Foothill, Inc. ("▇▇▇▇▇ Fargo Foothill"), as agent for the
other lenders party to the Credit Agreement dated as of July 30, 2004 (the "WF
Foothill Credit Agreement") among Parent, certain of its Subsidiaries, including
Debtors, and ▇▇▇▇▇ Fargo Foothill, as agent, has consented to this Agreement and
the transactions contemplated hereby pursuant to the consent annexed as Exhibit
C-2 hereto (such consent, the "WF Foothill Consent").
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NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS AND RELATED MATTERS. The following terms shall
have the following respective meanings:
"Affiliate" shall mean with respect to any Person, any other Person that is
directly or indirectly controlling, controlled by or under common control with
such Person or entity or any of its Subsidiaries, and the term "control"
(including the terms "controlled by" and "under common control with") means
having, directly or indirectly, the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise. Without limiting the foregoing, the
ownership of ten percent (10%) or more of the voting securities of a Person
shall be deemed to constitute control and, notwithstanding anything to the
contrary herein, each Loan Party and its Subsidiaries (other than Debtors), each
officer and director of any Loan Party (and their respective spouses and
descendants), ▇▇▇▇▇▇▇ Radiology Medical Group III and any other party to any
Management Agreement or conducting any Managed Practice and each Affiliate of
any of the foregoing Persons shall be deemed to be Affiliates of each Debtor.
"Collateral" shall mean all assets of Debtors now or hereafter securing the
Obligations, including, without limitation, (a) the Escrowed Funds, the
Settlement Agreement and all proceeds thereof and the other Collateral described
in Section 4(b) hereof and (b) in the event the REC III Loan Settlement occurs,
the Receivables and any other security interests that constitute Collateral and
all proceeds thereof, including the Collateral described in Section 4(a) hereof,
it being understood that the Collateral assigned pursuant to the REC III
Assignment shall not include any equity interests of Parent or its Subsidiaries.
"Collateral Agent" shall have the meaning assigned to such term in
the preamble hereto and any successor collateral agent provided for hereunder.
"Bankruptcy Code" means title 11 of the United States Code, as in effect
from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banking institutions in Los Angeles, California are authorized or
required by law to close.
"CMS" means the Centers for Medicare and Medicaid Services, which
administers the Medicare and Medicaid Program under the Department of Health and
Human Services.
"Default" shall mean any event or condition that, but for the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Event of Default" shall mean those events set forth in Section 10 hereof.
"Fiscal Year" or "fiscal year" shall mean each twelve month period ending
on October 31 of each year.
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"Governmental Account Debtor Sweep Agreement" shall mean any agreement
entered into by or on behalf of any Loan Party or any Managed Practice which
provides for governmental account debtors to make payments (whether by wire
transfer or otherwise) on their accounts to any deposit account owned by or in
the name of any Loan Party or any Managed Practice.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Health Care Laws" mean all federal, state and local laws relating to
health care providers and health care services, including, without limitation,
Section 1877(a) of the Social Security Act as amended by the Omnibus Budget
Reconciliation Act of 1993,42 U.S.C. section l395nn.
"Lien" shall mean any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, now owned or
hereafter acquired, whether such interest is based on common law, statute or
contract.
"Loan" shall have the meaning assigned to it in Section 2(b) hereof.
"Loan Documents" shall mean this Agreement, the Notes, the Settlement
Agreement, the Parent Guaranty, the Escrow Agreement and all other guarantees,
reaffirmation of guarantees, security agreements, notes, instruments and other
documents and agreements executed in connection with this Agreement or any other
Loan Document and/or otherwise securing or supporting the Obligations, it being
understood that, in the event the REC III Loan Settlement occurs, the Loan
Documents shall include the Prior Refinancing Documents, including the Security
Documents and the Lockbox Agreement.
"Loan Party" shall mean Parent, each Debtor and each of their respective
Subsidiaries that becomes party to any Loan Document.
"Maturity Date" shall mean the earlier of July 1, 2008 or such earlier date
on which the Loans shall be declared to be or shall otherwise become due
pursuant to this Agreement, including Section 11 hereof.
"Medicaid" means, collectively, the health care assistance program
established by Title XIX of the Social Security Act (42 U.S.C. xx.ss1396 et
seq.) and any statutes succeeding thereto, and all laws, rules, regulations,
manuals, orders, guidelines or requirements pertaining to such program,
including (a) all federal statutes (whether set forth in Title XIX of the Social
Security Act or elsewhere) affecting such program, (b) all state statutes
enacted and plans for medical assistance adopted and approved in connection with
such program and federal rules and regulations promulgated in connection with
such program, and (c) all applicable provisions of all rules, regulations,
manuals, orders and administrative, reimbursement, guidelines and requirements
of all government authorities promulgated in connection with such program
(whether or not having the force of law), in each case as the same may be
amended, supplemented or otherwise modified from time to time.
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"Medicaid Certification" means certification of a healthcare facility by
CMS or a state agency or entity under contract with CMS that such healthcare
facility fully complies with all the conditions of Medicaid.
"Medicaid Provider Agreement" means an agreement entered into between a
state agency or other entity administering Medicaid in such state and a health
care facility or physician under which the health care facility or physician
agrees to provide services or merchandise for Medicaid patients.
"Medicare" means, collectively, the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act (42 U.S.C.
ss.ss.1395 et seq.) and any statutes succeeding thereto, and all laws, rules,
regulations, manuals, orders or guidelines pertaining to such program, including
(a) all federal statutes (whether set forth in Title XVIII of the Social
Security Act or elsewhere) affecting such program, and (b) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, guidelines and requirements of all governmental authorities
promulgated in connection with such program (whether or to having the force of
law), in each case as the same may be amended, supplemented or otherwise
modified from time to time.
"Medicare Certification" means certification of a facility by CMB or a
state agency or entity under contract with CMS that such healthcare facility
fully complies with all conditions for such facility's participation in
Medicare.
"Medicare Provider Agreement" means an agreement entered into between a
state agency or other entity administering Medicare in such state and a
healthcare facility or physician under which the healthcare facility or
physician agrees to provide services or merchandise for Medicare patients.
"Obligations" shall mean all principal and interest in respect of the Loan,
all Secured Party Expenses and all additional amounts and other sums at any time
due and owing under this Agreement and any other Loan Documents and the
performance and observance of all covenants and conditions contained herein and
therein, whether or not for the payment of money, whether arising by reason of
an extension of credit, loan, guaranty, indemnification or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.
"Parent Indenture" means the Indenture, dated as of June 25, 1993, as
supplemented by the First Supplemental Indenture, dated as of October 2003,
among Parent and American Stock Transfer & Trust Company, as trustee under the
Parent Indenture, or any successor thereof.
"Parent Indenture Documents" means the Indenture, the Indenture Notes, and
all agreements, instruments and other documents delivered in connection with the
foregoing.
"Parent Indenture Notes" means the 11.5% Series A Convertible Subordinated
Debentures due June 30, 2008, issued by Parent pursuant to the Indenture.
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"Person" shall mean any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
"Post Equipment Documents" means the Loan Document (as defined in the Post
Equipment Loan Agreement).
"Post Equipment Loan Agreement" means the Second Amended, Restated and
Consolidated Loan and Security Agreement dated as of November 29, 2004 among
RMI, DIS, Post Advisory, as Collateral Agent, and the lenders party thereto, as
amended, modified or supplemented from time to time.
"Post Equipment Loans" means the loans evidenced and acquired pursuant to
the Post Equipment Documents in the principal amount of $15,200,000.
"Receivables" means all of the following relating to Tower I: all accounts,
contract rights, instruments, documents, chattel paper and obligations in any
form owing to Radnet Sub or any other Debtor arising out of the sale or lease of
goods or the rendition of services whether or not earned by performance
(including all accounts from Medicare, Medicaid, HMO/PPO commercial and
institutional payors, workers compensation lien and personal injury claims and
capitated contracts), 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 any Debtor and each Debtor's books relating to any
of the foregoing, and all products, proceeds and revenues of and from any of the
foregoing personal property.
"Required Lenders" means, at any time, Lenders holding a pro rata
percentage of the outstanding principal amount of the Loans aggregating at least
51% at such time.
"Restructuring Documents" means (a) the Master Amendment Agreement dated as
of July 29, 2004, among General Electric Capital Corporation, General Electric
Company, GE Healthcare Financial Services, RMI, and DIS, as amended, modified or
supplemented from time to time, (b) the WF Credit Agreement, and (c) each
agreement made as of June 30, 2004, among Lyon Financial Services, Inc.
affiliates thereof) and as agent for US Bank, N.A., as trustee, and one or more
Debtors or Affiliates of Debtors, as each such agreement is amended, modified or
supplemented from time to time.
"Secured Party Expenses" means all (i) costs and expenses (including,
without limitation, taxes and insurance premiums) required to be paid by any
Debtor under this Agreement or under any of the other Loan Documents that are
paid or advanced by Collateral Agent or any Lender or any affiliate of
Collateral Agent or any Lender, including, without limitation, all costs and
expenses relating to the Escrow Agreement or the Lockbox Agreement, (ii) filing,
recording, publication and search fees paid or incurred by Collateral Agent or
any Lender in connection with Collateral Agent or any Lender's transactions with
Debtors, (iii) costs and expenses incurred by Collateral Agent or any Lender to
correct any Event of Default, enforce any provision of the Loan Documents or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling or preparing for sale or advertising to sell any Collateral, whether or
not a sale is consummated, after the occurrence and during the continuance of an
Event of Default, including, without limitation, attorneys' fees (including
allocated costs and internal counsel), fees, costs and expenses of accountants,
advisors and consultants and costs of settlement, incurred by Collateral Agent
and Lenders in enforcing any Obligations of or in collecting any payments due
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from Debtors hereunder or under the other Loan Documents or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings, (iv) costs and expenses of suit incurred by Collateral
Agent or any Lender in enforcing or defending the Loan Documents or any portion
thereof, (v) costs and expenses incurred by Collateral Agent or any Lender to
convert any data submitted to Collateral Agent or any Lender by Debtor to a form
reasonably acceptable to Collateral Agent or any Lender and (vi) Collateral
Agent or any Lender's reasonable attorney fees and expenses incurred (before or
after execution of this Agreement) in advising Collateral Agent or any Lender
with respect to, or in structuring, drafting, reviewing, negotiating, amending,
terminating, enforcing, defending or otherwise concerning, the Loan Documents or
any portion thereof, irrespective of whether suit is brought.
"Security Documents" means collectively, (i) that certain Loan and Security
Agreement dated as of December 19, 1994 between DVI BC, Radnet Sub and RMI, (ii)
that certain Loan and Security Agreement dated as of December 29, 1995 between
DVIBC, Radnet Sub and Radnet Imaging, (iii) that certain Loan and Security
Agreement dated as of March 21, 1996 between DVIBC, Radnet Sub and Radnet
Imaging and (iv) all other security agreements, pledge agreements, documents and
agreements granting DVI Financial or Collateral Agent a lien in any assets of
any Debtor, in each case as amended, restated, supplemented or otherwise
modified from time to time.
"Shareholder/Affiliate Notes" means (a) the promissory note(s) issued by
Radnet Management, Inc. and payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., (b) the
promissory note(s) issued by Parent and payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and (c) the
promissory note(s) issued by Parent and payable to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, each as
amended, modified, renewed, extended or supplemented from time to time, and (d)
any other notes or obligations owed by any Loan Party to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or to any other officer or director
(or Affiliate or any officer or director) of any Loan Party, each as amended,
modified, renewed, extended or supplemented from time to time.
"Subordinated Indebtedness" means (a) Indebtedness of Parent or any of its
Subsidiaries (including Indebtedness in respect of the Parent Indenture Notes)
which has been expressly subordinated in right of payment to any indebtedness of
Parent or such Subsidiary under the WF Foothill Credit Agreement or this
Agreement or the Post Equipment Documents, (b) any Shareholder/Affiliate Notes,
and (c) the Tower Litigation Note.
"Subsidiary" of any corporation shall mean any other corporation or limited
liability company of which the outstanding capital stock possessing a majority
of voting power in the election of directors (otherwise than as the result of a
default) is owned or controlled by such corporation directly or indirectly
through Subsidiaries.
"Tower Litigation Note" means the promissory note dated October 20, 2003
issued by Radnet Sub, Inc. to Tower Imaging Medical Group, Inc., in the
aggregate principal amount of $1,374,254.30, as amended, modified, renewed,
extended or supplemented from time to time.
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Whenever the context so requires, the singular number includes the plural
and vice versa. The words "hereof" "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not in any particular provision of this agreement, and references to section,
article, annex, schedule, exhibit and like references are references to this
Agreement unless otherwise specified. A Default or Event of Default shall
"continue" or be "continuing" until such Default or Event of Default has been
cured or waived by Required Lenders. References in this Agreement to any Persons
shall include such Persons, successors and permitted assigns.
2. DESCRIPTION OF LOANS.
(a) STATUS OF OBLIGATIONS. The Debtors acknowledge, agree,
represent and warrant that, as of the date hereof immediately prior to the
effectiveness hereof and at all times thereafter, (i) there exists an
outstanding amount of principal and interest as of November 15, 2004 of
approximately $3,225,000 of REC III Loans owing to REC III under the Prior
Financing Documents and no amounts are owed to any other Person under the Prior
Financing Documents, including any DVI Party, and no Liens granted thereunder
secure obligations owed to any Person other than REC III and the REC III
Trustee, including any DVI Party or lender to any DVI Party, (ii) REC III and
the REC III Trustee has the power and authority to enter into and perform the
Settlement Agreement without any approval or notice to any Person or
Governmental Authority other than as expressly set forth in the Settlement
Agreement and, upon consummation of the REC III Loan Settlement, all approvals
of all relevant Persons and Governmental Authorities will have been obtained,
(iii) the Debtors are not in default of their respective payment or other
obligations under the Prior Financing Documents, and (iv) no Debtor has any
right of offset, defense or counterclaim with respect to any amounts owing
under the Prior Financing Documents.
In furtherance but not in limitation of Debtor's obligations hereunder,
including under Section 15 hereof, each Debtor further agrees that each Debtor
shall assume any and all risks, obligations, liabilities and claims of every
nature arising in the event that any of the statements set forth in the
preceding sentence are not true and correct and each Debtor agrees that it shall
be obligated to pay the Obligations as provided herein notwithstanding the
existence of any such risk, obligation, liability or claim and whether or not
the REC III Loan Settlement actually occurs.
(b) ISSUANCE OF NOTES AND REC III LOAN SETTLEMENT. The Debtors have
duly authorized the issuance to Lenders of $4,000,000 in aggregate principal
amount of Senior Secured Notes Due 2008 evidencing the Loans (as defined below)
in the form of Exhibit A annexed hereby (including any such Notes issued in
substitution therefor pursuant to Section 20 hereof, the "Notes"). Upon
satisfaction of the conditions set forth in Section 17(a) hereof and as to
Collateral Agent and each Lender, in reliance upon each of the representations
and warranties of each Loan Party set forth herein and in the other Loan
Documents, the parties hereto agree that (i) the Debtors shall sell to
Lenders, and Lenders shall purchase from the Debtors, the Notes in the
aggregate principal amounts of $4,000,000 to be issued to each Lender in the
principal amounts set forth on Schedule 2 hereof (the "Loans"), (iv) as the
purchase price for the Loans and at the instruction of the Debtors, the
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Lenders severally agree (x) to pay to the Escrow Agent the amount of
$3,225,000 for deposit into the Escrow Account and (y) to pay to RMI on behalf
of Debtors the amount of $775,000 (minus certain expenses payable at closing
and identified on Schedule 2 hereof), such amount to be used for the general
corporate purposes of the Debtors and their respective Subsidiaries, and (v)
all Collateral of every nature securing the Obligations is hereby granted and
assigned to the Collateral Agent to be held by the Collateral Agent on behalf
of Lenders as provided herein.
Upon satisfaction of the conditions set forth in Section 17(b) hereof and
as to Collateral Agent and each Lender, in reliance upon each of the
representations and warranties of each Loan Party set forth herein and in the
other Loan Documents, the parties hereto agree that (i) in the event the REC III
Loan Settlement occurs, all the Prior Financing Documents shall be amended,
restated and consolidated into this Agreement, (ii) the amount of indebtedness
owed by Debtors under the Prior Financing Documents and outstanding as of the
date hereof shall be evidenced by this Agreement and (iii) all Collateral of
every nature securing the Obligations is hereby granted and assigned to the
Collateral Agent to be held by the Collateral Agent on behalf of Lenders as
provided herein; provided, however, that, for purposes hereof, the Prior Loan
Documents shall not include any guaranty of obligations thereunder by ▇▇▇▇▇▇.
Interest shall accrue on the outstanding amount of the Loan at a rate per
annum equal to twelve percent (12%) from and after the Closing Date, in each
case calculated on the basis of a 360 day year and actual days elapsed.
(c) REPAYMENT OF OBLIGATIONS. The Debtors, jointly and severally,
agree to repay the Loan and interest accrued thereon as follows ratably to each
Lender in proportion to the principal amount of the Loans held by such Lender:
(i) commencing on December 31, 2004 and on the last business day of each
month thereafter, monthly installments of all interest accrued on the Loan
shall be paid and (ii) on the Maturity Date, the entire outstanding principal
amount of the Loan, together with all accrued and unpaid interest thereon,
shall be due and payable and be paid. No portion of the Loan may be
reborrowed once repaid. All payments of the Obligations shall be made in
immediately available funds to Lenders per the wiring instructions set forth
on Schedule 2 hereto or pursuant to such other instructions as the relevant
Lender shall provide to RMI.
Notwithstanding anything herein to the contrary, unless otherwise agreed in
writing by Required Lenders, in no event shall any Loan Party or any of its
Affiliates be entitled to redeem, prepay or otherwise pay any principal amount
of the Loan other than pursuant to Section 2(e)(ii), 2(e)(iii) or 2(e)(iv)
hereof unless and until the Post Equipment Loans have been repaid in full, it
being understood that nothing in this paragraph shall constitute a subordination
of the Loans to the Post Equipment Loans or grant any rights to any Debtor or
other Person other than Required Lenders or otherwise limit or affect any right
or remedy of the Collateral Agent or the Lenders under any Loan Document.
(d) OPTIONAL PREPAYMENT. Subject to the terms of this Section 2(d),
the Debtors may prepay the outstanding principal amount of the Loans in whole at
any time on or after the later of (x) November 1, 2005 and (y) the repayment
in full of the Post Equipment Loans, but prior to the Maturity Date, at a
price equal to (i) all accrued interest thereon, to the date set for
prepayment, plus (ii) the principal amount of the Loan together with a
prepayment fee representing the amortization of certain of Lenders' costs
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incurred in connection with the purchase of the Notes equal to the principal
amount prepaid multiplied by the following percentage:
Date of Prepayment Premium
----------------- ---------
November 1, 2005 through 6%
January 31, 2006
February 1, 2006 through 5%
April 30, 2006
May 1, 2006 through 4%
July 31, 2006
August 1, 2006 through 3%
October 31, 2006
November 1, 2006 to but 0%
excluding the Maturity Date
If the Debtors shall elect to prepay the Loans pursuant to this Section
2(d) hereof, the Debtors shall give notice of such prepayment to Lenders not
less than ten (10) days or more than sixty (60) days prior to the date fixed for
prepayment, specifying (i) the date on which such prepayment is to be made, (ii)
the principal amount and prepayment fee required to be paid on such date, and
(iii) the accrued interest applicable to the prepayment. Such notice shall be
accompanied by a certificate of an executive officer of the Debtors that such
prepayment is being made in compliance with this Section 2(d). Notice of
prepayment having been so given, the aggregate principal amount of the Loans,
together with accrued interest thereon and the applicable prepayment fee shall
become due and payable on the prepayment date set forth in such notice, unless
such notice if withdrawn by the Debtors not less than five (5) days prior to
such date.
(e) MANDATORY PREPAYMENTS. The Loans shall be prepaid in the
amounts and under the circumstances set forth below, all such prepayments to be
applied as set forth below, together with all interest thereon as follows:
(i) If any Change of Control is to occur, then not less than
ten (10) days nor more than sixty (60) days prior to the occurrence of such
Change of Control, the Debtors will notify the Lenders and the Collateral Agent
of such pending Change of Control and the date upon which it is scheduled to
occur. The Debtors, jointly and severally, will prepay all of the Loans then
outstanding together with interest and premium thereon, as if such prepayment
were an optional prepayment, on the date upon which the Change of Control
occurs, unless the Required Lenders agree to a different date or agree
otherwise, and no prepayment required pursuant to this Section 2(e)(i) shall
be due unless a Change of Control shall occur. Each notice from the Debtors
pursuant to this Section 2(e)(i) shall make explicit reference to this Section
2(e)(i). For purposes hereof, "Change of Control" means that (a) Permitted
Holders fail to own and control directly or indirectly, 20% or more, of the
Stock of Parent having the right to vote for the election of members of the
Board of Directors of Parent, (b) any "person" or "group" (within the meaning
10
of Sections 13(d) and 14(d) of the Securities and Exchange Act, as amended
(the "Exchange Act")), other than Permitted Holders, becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 15%, or more, of the Stock of Parent having the right to vote
for the election of members of the Board of Directors of Parent, (c) a
majority of the members of the Board of Directors do not constitute Continuing
Directors, (d) (i) Parent shall cease to have beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act) of at least the percentage of the
aggregate voting power of the Stock of its Subsidiaries (other than ▇▇▇▇▇▇▇
Radiology Medical Group, Inc., Pronet Imaging Medical Group, Inc. and ▇▇▇▇▇▇▇
Radiology Medical Group III) that it beneficially owns as of the date of this
Agreement, or (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease to have beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) of at least 80% of the
aggregate voting power of the Stock of each of ▇▇▇▇▇▇▇ Radiology Medical
Group, Inc., Pronet Imaging Medical Group, Inc. and ▇▇▇▇▇▇▇ Radiology Medical
Group III, (e) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease to be involved in the day to day
operations and management of the business of Parent and each Debtor, and a
successor reasonably acceptable to Required Lenders is not appointed on terms
reasonably acceptable to Required Lenders within 30 days of such cessation of
involvement, or (f) a "Change of Control" (or any comparable term) shall occur
under any document evidencing or otherwise governing any other Indebtedness of
Debtors. For purposes hereof, "Continuing Director" means (a) any member of
the Board of Directors of Parent who was a director (or comparable manager) on
the date of this Agreement, and (b) any individual who becomes a member of the
Board of Directors after such date if such individual was appointed or
nominated for election to the Board of Directors by a majority of the
Continuing Directors, but excluding any such individual originally proposed
for election in opposition to the Board of Directors in office at such date in
an actual or threatened election contest relating to the election of the
directors (or comparable managers) of Parent and whose initial assumption of
office resulted from such contest or the settlement thereof. For purposes
hereof, "Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock,
or any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Exchange Act); and "Permitted Holders" means ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
(ii) PREPAYMENTS FROM ASSET SALES OR RECEIPT OF ANY PAYMENT IN
RESPECT OF THE COLLATERAL. In the event the REC III Loan Settlement occurs, if
a sale or other transfer of Collateral is to occur (a "Collateral Sale"), or,
if any Debtor or any of its Affiliates or the Collateral Agent receives a
payment that constitutes proceeds of any Collateral, including any payment of
Receivables into the Lock Box Account (a "Collateral Receipt"), then the
Debtors will notify Collateral Agent and Lenders of such prepayment and the
Debtors, jointly and severally, will prepay the principal amount of the Loans
then outstanding with the gross proceeds thereof on the date upon which the
Collateral Sale or Collateral Receipt occurs, unless the Debtor and the
Required Lenders agree to a different date, and no prepayment required
pursuant to this Section 2(e)(ii) shall be due unless the Collateral Sale or
Collateral Receipt shall occur. Each notice from the Debtors pursuant to this
Section 2(e)(iii) shall make explicit reference to this Section 2(e)(ii). No
premium shall be due in connection with a payment made pursuant to this
Section 2(e)(ii).
11
(iii) PREPAYMENTS OF ESCROWED FUNDS IN THE EVENT THE REC III
LOAN ASSIGNMENT DOES NOT OCCUR. If the Escrow Termination Date has occurred and
either the REC III Loan Settlement has not occurred or any of the conditions
set forth in Section 17(b) hereof have not been satisfied to the satisfaction
of Required Lenders (or waived by Required Lenders) or the Settlement
Agreement has terminated for any reason, then at the election of Required
Lenders in the Required Lenders' sole discretion, the Debtors, jointly and
severally, will apply the Escrowed Funds to make a partial prepayment of the
principal amount of the Loans then outstanding together with a premium of 1.0%
of the principal amount so prepaid (in lieu of any other premiums hereunder)
and accrued and unpaid interest on the amount so repaid on the date designated
by the Required Lenders and RMI shall give the Escrow Agent the written
instructions in furtherance thereof requested by Required Lenders. Each
notice from the Debtors pursuant to this Section 2(e)(iii) shall make explicit
reference to this Section 2(e)(ii).
(iv) APPLICATIONS OF ESCROWED FUNDS IN THE EVENT THE REC III
LOAN SETTLEMENT OCCURS. If the REC III Loan Settlement occurs and the
conditions set forth in Section 17(b) hereof have been satisfied to the
satisfaction of Required Lenders (or waived by Required Lenders), then, the
Debtors, jointly and severally, will apply the balance of the Escrowed Funds
after payment of the Settlement Amount to pay any unpaid Secured Party Expenses
and, to the extent any amount remains, to make a partial prepayment of the
principal amount of the Loans then outstanding in an amount equal to any
collections in respect of the Receivables from the date hereof through the date
of the REC III Loan Settlement and, to the extent any amount remains to pay to
RMI on behalf of Debtors an amount equal to $3,225,000 minus the sum of (unpaid
Secured Party Expenses, the Settlement Amount and the amount of such
Receivable collections from the date hereof through the date the REC III Loan
Settlement), and RMI shall give the Escrow Agent the written instructions in
furtherance thereof requested by Required Lenders. Each notice from the
Debtors pursuant to this Section 2(e)(iv) shall make explicit reference to
this Section 2(e)(ii). No premium shall be due in connection with a payment
made pursuant to this Section 2(e)(iv).
(f) PAYMENTS TO LENDERS. The Debtors will pay all sums becoming
due on the Loan for principal, interest, premium and other amounts to Lenders
by the method and at the address specified for such purpose in Schedule 2, or
by such other method or at such other address as a relevant Lender shall have
from time to time specified to RMI in writing for such purpose, without the
presentation or surrender of such Note or other Loan Documents or the making
of any notation thereon, except that upon written request of RMI made
concurrently with or reasonably promptly after payment or prepayment in full
of the Loans, each holder of the Notes shall surrender its Note evidencing the
Loans for cancellation, reasonably promptly after such request, to RMI at its
principal executive office.
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary or mandatory payment (other than a payment or
prepayment of Loans made and applied in accordance with the terms of this
Agreement), by realization upon security, through the exercise of any right of
set-off or banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate amount of
principal or interest or premium then due and owing to that Lender hereunder
or under the other Loan Documents (collectively, the "Aggregate Amounts Due"
to such Lender) that is greater than the proportion received by any other
12
Lender in respect of the Aggregate Amounts Due to such other Lender, then the
Lender receiving such proportionately greater payment shall, unless such
proportionately greater payment is required by the terms of this Agreement,
(i) notify each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase assignments (which it shall be deemed to
have purchased from each seller of an assignment simultaneously upon the
receipt by such seller of its portion of such payment) of the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; PROVIDED that (A) if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered
from such Lender upon the bankruptcy or reorganization of any Debtor or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such assignments shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest and (B) the foregoing provisions
shall not apply to any payment obtained by a Lender as consideration for the
assignment of or the sale of a participation in any of its Obligations to any
Person pursuant to Section 20. Each Debtor expressly consents to the
foregoing arrangement and agrees that any purchaser of an assignment so
purchased may exercise any and all rights of a Lender as to such assignment as
fully as if that Lender had complied with the provisions of Section 20 with
respect to such assignment. In order to further evidence such assignment (and
without prejudice to the effectiveness of the assignment provisions set forth
above), each purchasing Lender and each selling Lender agree to enter into an
assignment agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.
(g) TAXES. Any and all payments by the Debtors hereunder or under
the Loans or other Loan Documents that are made to or for the benefit of Lenders
shall be made free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings and
penalties, interests and all other liabilities with respect thereto
(collectively, "Taxes"), excluding taxes, duties, assessments or fees imposed
on net income or capital and franchise taxes, duties, assessments or fees
imposed on any of them by the jurisdiction under the laws of which any of them
is organized or any political subdivision thereof (all such nonexcluded Taxes
being hereinafter referred to as "Covered Taxes"). If any of the Debtors
shall be required by law to deduct any Covered Taxes from or in respect of any
sum payable hereunder or under any Loan or other Loan Documents to Lenders,
the sum payable shall be increased as may be necessary so that after making
all required deductions of Covered Taxes (including deductions of Covered
Taxes applicable to additional sums payable under this paragraph), each Lender
receives an amount equal to the sum it would have received had no such
deductions been made. The Debtors shall make such deductions and the Debtors
shall pay the full amount so deducted to the relevant taxation authority or
other authority in accordance with applicable law. In addition, the Debtors
agree to pay any present or future stamp, documentary, excise, privilege,
intangible or similar levies that arise at any time or from time to time from
any payment made under any and all Loan Documents or from the execution or
delivery by the Loan Parties or from the filing or recording or maintenance
of, or otherwise with respect to the exercise by Collateral Agent or Lenders
of their respective rights under any and all Loan Documents (collectively,
"Other Taxes"). The Debtors will jointly and severally indemnify Lenders for
the full amount of Covered Taxes imposed on or with respect to amounts payable
hereunder and Other Taxes, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. Payment of this
indemnification shall be made within thirty (30) days from the date Requisite
Lenders provide RMI with a certificate certifying and setting forth in
reasonable detail the calculation thereof as to the amount and type of such
13
Taxes. Any such certificates submitted by Requisite Lenders in good faith to
RMI shall, absent manifest error, be final, conclusive and binding on all
parties. The obligation of the Debtors under this Section 2(g) shall survive
the payment of the Notes and the termination of this Agreement. Within thirty
(30) days after any Debtor having received a receipt for payment of Covered
Taxes and/or Other Taxes, the Debtors shall furnish to the Lenders, the
original or certified copy of a receipt evidencing payment thereof.
(h) INTEREST LIMITATION. This Agreement, the Notes and the other
Loan Documents are hereby limited by this Section 2(h). In no event, whether by
reason of acceleration of the maturity of the amounts due hereunder or
otherwise, shall interest and fees contracted for, charged, received, paid or
agreed to be paid to Lenders exceed the maximum amount permissible under such
applicable law. If, from any circumstance whatsoever, interest and fees would
otherwise be payable to Lenders in excess of the maximum amount permissible
under applicable law, the interest and fees shall be reduced to the maximum
amount permitted under applicable law. If from any circumstance, Lenders
shall have received anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excess of interest
shall be applied to the reduction of the principal amount of the Loans, in
such manner as may be determined by Lenders, and not to the payment of fees or
interest, or if such excessive interest exceeds the unpaid balance of the
principal amount of the Loans, such excess shall be refunded to RMI on behalf
of Debtors
3. INTEREST. At Required Lenders' option, interest (including,
without limitation, any post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) will accrue on the unpaid
portion of principal of the Loan hereof and all other sums due from Debtor
hereunder and under the Loan Documents following the occurrence and during the
continuance of an Event of Default until the date of payment in full of such
principal and all other sums due hereunder or under the Loan Documents at a
fixed rate of 16% per annum (the "Default Rate"). Interest at the Default
Rate will be collectible as part of any judgment hereunder and secured by the
Collateral. Debtors acknowledge and agree that the increase in the interest
rate after the occurrence and during the continuance of an Event of Default is
intended to compensate the Lenders for the added risks of maintaining a
defaulted loan and is not intended as a premium, penalty, liquidated damages or
reimbursement for internal or out-of-pocket costs associated therewith. Any
judgment obtained hereunder or under the Loan Documents will accrue interest at
the Default Rate until paid.
4. SECURITY INTEREST IN COLLATERAL.
(a) In the event that the REC III Loan Settlement occurs, the
provisions under the Prior Financing Documents granting liens and security
interests in the Collateral of Debtors will be and are reaffirmed and shall be
incorporated into this Section 4 of this Agreement by reference and such liens
and security interests in the Collateral described in such Prior Financing
Documents shall be deemed for all purposes to be held by the Collateral Agent
(as successor to and assignee of REC III and of DVIBC) on behalf of the Lenders
and shall secure the Obligations hereunder and the other Loan Documents without
interruption. Each Debtor party to any of the Security Documents hereby
reaffirms all the security grants and obligations of such Debtor under such
Security Documents which Security Documents shall continue to remain in effect
until all Obligations are paid in full and this Agreement is terminated. Each
Debtor party to any of the Security Documents agrees, acknowledges and
14
confirms with Collateral Agent and each Lender that upon the occurrence of the
REC III Loan Settlement, the term "DVI Indebtedness" as set forth in such
Security Documents shall include all Obligations under this Agreement, the
term "Collateral" as defined in such Security Documents shall secure the
Obligations under this Agreement, the Collateral Agent shall be deemed to be a
party to each Security Document as successor to and assignee of REC III, all
references to DVIBC or REC III in the Security Documents shall refer to the
Collateral Agent in its capacity as collateral agent hereunder and the
Collateral Agent and Required Lenders shall each be fully entitled to enforce
all rights and remedies under the Security Documents and the other Loan
Documents. In furtherance and not in limitation of the foregoing, the Debtors
will enter into or cause to be entered into all control or other agreements
requested by Collateral Agent or Required Lenders in order to assign to the
Collateral Agent all rights to the Receivables, the Lock Box Account and the
Lock Box Agreement and will pay all fees and expenses of the Lock Box Bank.
(b) In addition to the foregoing, each Debtor hereby grants and
assigns a security interest to the Collateral Agent and its successors and
assigns on behalf of the Lenders in all of the following whether now existing or
hereafter arising: (i) the Escrow Account and the Assignment Agreement, (ii)
all contract rights, claims and privileges in respect of the Escrow Account
and the Settlement Agreement, (iii) all cash, checks, money orders and other
items of value of Debtors now or hereafter paid, deposited, credited, held
(whether for collection, provisionally or otherwise) or otherwise in the
possession or under the control of, or in transit to, the Escrow Agent or any
agent, bailee or custodian thereof, and all proceeds of the foregoing and,
upon the occurrence of the REC III Loan Settlement, the Receivables, the Lock
Box and the other Collateral, including, without limitation, the property of
such Debtor described in Schedule 1 attached to this Agreement, and all
substitutions, renewals or replacements of and alterations, additions or
improvements, if any, to such Collateral together with in each and every case
all proceeds thereof. Each Debtor irrevocably authorizes the Collateral Agent
(or its agent) to file at any time and from time to time such financing
statements (including, in the event the REC III Loan Settlement occurs,
assignments of financing statements in favor of REC III to the Collateral
Agent) under the uniform commercial code of any jurisdiction with respect to
the Collateral as the Collateral Agent may require and any amendments,
continuations or assignments thereto, in each case naming any Debtor, as
debtor, and the Collateral Agent, as secured party, under such financing
statements, amendments, continuations or assignments.
(c) Each item of Collateral shall secure all the Obligations and all
other present and future indebtedness or obligations of Debtors to Collateral
Agent and Lenders of every kind and nature whatsoever. Each Debtor warrants
and agrees that the Collateral will be used primarily for business or
commercial purposes and that regardless of the manner of affixation the
Collateral shall remain personal property and shall not become part of the
real estate. Each Debtor agrees to keep the Collateral at the locations of
such Debtor set forth on Schedule 1 and will not make any change in the
location of the Collateral without the prior written consent of the Collateral
Agent.
5. TIME IS OF THE ESSENCE; LATE CHARGES. Time is of the essence in
this Agreement and if any scheduled installment is not paid within the ten (10)
days after the due date thereof, Required Lenders shall have the right to add
and collect, and Debtors, jointly and severally, agree to pay, a late charge
on and in addition to, such scheduled installment equal to five percent (5%)
of such scheduled installment or a lesser amount if established by any State
or Federal statute applicable thereto.
15
6. NO WARRANTIES. This Agreement is solely a financing agreement.
Each Debtor acknowledges that: The Collateral has been selected and acquired
solely by such Debtor for such Debtor's purposes; and NONE OF THE COLLATERAL
AGENT OR ANY LENDER HAS MADE OR MAKES ANY WARRANTY OR REPRESENTATION
WHATSOEVER, EITHER EXPRESS OR IMPLIED AS TO THE FITNESS, CONDITION,
MERCHANTABILITY, DESIGN OR OPERATION OF THE COLLATERAL, ITS FITNESS FOR ANY
PARTICULAR PURPOSE, THE VALUE OF THE COLLATERAL, OR ANY OTHER REPRESENTATION
OR WARRANTY WHATSOEVER.
7. INSURANCE AND RISK OF LOSS. All risk of loss of, damage to, or
destruction of the Collateral shall at all times be on Debtors. Each Debtor
will procure forthwith and maintain property and general liability insurance
with extended or combined additional coverage on the Collateral for the full
insurable value thereof for the life of this Agreement plus such other
insurance as Requisite Lenders may specify and promptly deliver each to
Collateral Agent with a standard long form endorsement attached showing loss
payable to Collateral Agent on behalf of the Lenders or assigns as respective
interests may appear. Such policies shall name each such Debtor as owner of
the Collateral and Collateral Agent on behalf of Lenders as insured or loss
payee as the case may be. Each Insurer shall agree by endorsement upon such
policy issued by it or by independent instrument furnished to Collateral Agent
and each such Debtor that it will give Collateral Agent and such Debtor thirty
(30) days written notice before the policy in question shall be materially
altered or cancelled. Collateral Agent's acceptance of policies in lesser
amounts or risks shall not be a waiver of Debtors' foregoing obligation.
8. DEBTORS' REPRESENTATIONS AND WARRANTIES. Each Debtor represents
and warrants to the Collateral Agent and the Lenders as follows:
(a) Each Debtor is a corporation fully organized and existing under
the laws of the State of its incorporation without limit as to the duration of
its existence and is authorized and in good standing to do business in said
State. Each Debtor has corporate powers and adequate authority, rights and
franchises to own its own property and to carry on its business as now
conducted, and is duly qualified and in good standing in each state in which
the character of the properties owned by it therein or the conduct of its
business makes such qualifications necessary; and each Debtor has the
corporate power and adequate authority to make and carry out this Agreement
and the other Loan Documents to which it is party.
(b) The execution, delivery and performance of this Agreement and
the other Loan Documents are duly authorized and do not, to the best of each
Debtor's knowledge, require the consent or approval of any governmental body or
other regulatory authority; are not in the contravention of or in conflict
with any law or regulation or any term or provision of its articles or
certificate of incorporation, bylaws and this Agreement and the other Loan
Documents to which it is party is the valid, binding and legally enforceable
obligation of each Debtor enforceable in accordance with their respective
terms. The offer, sale or issuance of any of the Notes hereunder do not
require registration under the Securities Act or any applicable state
securities laws.
16
(c) The execution, delivery and performance of this Agreement and
the other Loan Documents will not contravene or conflict with any agreement,
indenture or undertaking to which any Debtor or any of its Affiliates is a
party or by which it or any of its property or the property of any of its
Affiliates may be bound by or affected, and will not cause any lien, charge or
other encumbrance to be created or imposed upon any such property by reason
thereof. The Obligations constitute Senior Indebtedness (as defined in the
Parent Indenture). As such, all of the Obligations (and Collateral Agent and
the Lenders) are entitled to the benefits of each of the subordination and
other provisions contained in the Parent Indenture which are available in
respect of Senior Indebtedness (and to the holders thereof), and each of such
subordination and other provisions is in full force and effect and enforceable
in accordance with its terms.
(d) Each Debtor has good and valid title to its Collateral which is
free from, and will be kept free from, all Liens, except for the security
interests granted in favor of Collateral Agent on behalf of the Lenders.
(e) No financing statement covering the Collateral listed on
Schedule 1 hereto or any proceeds thereof is on file in favor of anyone other
than the Collateral Agent.
(f) All necessary action, including the filing of UCC-1 Financing
Statements, has been taken in order to provide the Collateral Agent with a
perfected security interest in the Collateral.
(g) Each Debtor (i) has obtained all material permits, licenses and
other authorizations that are required under Health Care Laws applicable to such
Debtor, (ii) is in compliance in all material respects with all terms and
conditions of such required permits, licenses and authorizations and (c) is 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. Each Management Agreement, and
each of the transactions contemplated thereunder, does not and will not
violate any applicable rule or regulation: (a) relating to the eligibility of
a Managed Practice to receive payment and to participate as an accredited and
certified provider of health care services under Medicaid, Medicare or any
other Third Party Payor program, (b) applicable to such Person as a result of
its participation in such programs, (c) relating to the licenses and permits
required therein in connection therewith, or (d) relating to the practice of
medicine or the sharing of fees generated in connection therewith. For
purposes hereof, "Managed Practice" means, any radiologist, professional
corporation, professional association, partnership or similar Person that
pursuant to a Management Agreement provides radiology or other related
professional medical services at a medical office, clinic or other facility
operated by Parent or any of its Subsidiaries; and "Management Agreement"
means an agreement between Parent or any of its Subsidiaries and any Managed
Practice pursuant to which Parent or such Subsidiary agrees to provide or
arrange for comprehensive management, administrative and other non-medical
support services to such Managed Parties in exchange for the payment by the
Managed Practice to Parent or such Subsidiary of a management or other similar
fee. For purposes hereof, "Third Party Payor" means Medicare, Medicaid, Blue
Cross/Blue Shield or any private insurance company, health maintenance
organization, preferred provider organization, alternative delivery system,
managed care system, government contracting agency, self-insured employer or
other similar entity that is obligated to make payments on behalf of any
Account Debtor of any Person.
17
(h) The Debtors have delivered to Lenders copies of its and Parent's
audited consolidated year-end financial statements for and as of the end of
the fiscal years ended October 31, 2003 and October 31, 2002 (the "Annual
Statements") and its and Parent's unaudited interim consolidated balance sheet
dated July 31, 2004 and the related unaudited consolidated statements of
income and cash flows for the 9 months then ended (the "Interim Statements").
The Annual Statements and Interim Statements were compiled from the books and
records maintained by Debtors' and Parent's management, as the case may be,
are, in all material respects, correct and complete and fairly represent the
consolidated financial condition of Debtors and Parent, respectively as of
their dates and the results of operations for the fiscal periods then ended
and have been prepared in accordance with generally accepted accounting
principles consistently applied (subject to year-end and audit adjustments and
the absence of footnotes in the case of the Interim Statements). The Debtors
do not have, on a consolidated basis, any material liabilities, contingent or
otherwise, or forward or long-term commitments that are not disclosed in the
Annual Statements or in the notes thereto and would need to be disclosed on
financial statements in accordance with generally accepted accounting
principles, and except as disclosed therein, there are no unrealized or
anticipated losses from any commitments of the Debtors that may cause a
Material Adverse Effect. Since October 31, 2003, there has been no event or
occurrence that is likely to have a material adverse effect on the business,
properties, assets, liabilities or condition (financial or otherwise) of the
Debtors, taken as a whole (a "Material Adverse Effect"). All factual
information furnished by or on behalf of the Debtors to Lenders for purposes
of or in connection with this Agreement is, and all other such factual
information hereafter furnished by or on behalf of the Debtors will be, true
and accurate in all material respects on the date as of which such information
is furnished and not incomplete by omitting to state any fact necessary to
make such information not materially misleading at such time in light of the
circumstances under which such information was provided.
(i) As of the date hereof, the authorized capital stock of each of
Parent and its Subsidiaries, including the Debtors, and the number and ownership
of all outstanding capital stock of each of the Subsidiaries of the Parent is as
set forth on Schedule 8(i) annexed hereto. As of the date hereof, none of the
Parent or any of its Subsidiaries will be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock, except as set forth on Schedule 8(i) annexed
hereto. There are no agreements among Parent's or any Subsidiary of the
Parent's stockholders with respect to the voting or transfer of Parent's or any
of its Subsidiaries' capital stock other than as set forth in Schedule 8(i).
None of the Parent or any of its Subsidiaries owns, or hold any rights to
acquire, any shares of stock or any other security or interest in any other
Person, and the Parent has no Subsidiaries, except in each case as set forth
on Schedule 8(i) annexed hereto. Parent does not and will not have any
directly owned Subsidiary other than RMI.
(j) There are no actions, suits or proceedings at law or in equity
or by or before any arbitrator or any governmental authority now pending or, to
the best knowledge of the Debtors' management after due inquiry, threatened
against or filed by or affecting any of the Loan Parties or any of their
respective Affiliates or any of their directors or officers or the businesses,
assets or rights of any of the Loan Parties or any of their respective
Affiliates that, if adversely determined, could reasonably be expected to have
a Material Adverse Effect and the Litigation Schedule attached as Schedule
8.1(j) identifies all actions, suits or proceedings at law or in equity or by
or before any arbitrator or any governmental Authority now pending or, to the
18
best knowledge of the Debtors' management after due inquiry, threatened
against or filed by or affecting any Loan Party or any of their respective
Affiliates, including any Debtor, or any of their respective directors or
officers or the business, assets or rights of any of them. The Debtors and
their directors or officers shall promptly provide Lenders with a copy of all
pleadings of all lawsuits filed against others where the amount at issue is
greater than $50,000 or otherwise may be material to the business of any Loan
Party or any of their respective Affiliates, including any Debtor, and, in the
case of other actions where the amount at issue is greater than $50,000 or
otherwise may be material to the business of any Loan Party or any of their
respective Affiliates including any Debtor, a letter stating the nature of
such suits and a copy of all pleadings.
(k) None of the Loan Parties or any of their respective Affiliates
are in violation in any respect of any applicable Law, except to the extent that
any such violation could not reasonably be expected to have a Material Adverse
Effect. None of the Loan Parties or any of their respective Affiliates are in
default with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any Governmental Authority. None of the Loan Parties or any of
their respective Affiliates are in, and the consummation of the transactions
contemplated hereby will not cause any, default concerning any judgment,
order, writ, injunction or decree of any Governmental Authority, and there is
no investigation, enforcement action or regulatory action pending or, to the
Debtors' knowledge, threatened against or affecting any Loan Party or any of
their respective Affiliates by any Governmental Authority, except as set forth
on the Litigation Schedule. Except as set forth in the Litigation Schedule,
there is no remedial or other corrective action that any of the Loan Parties
or any of their respective Affiliates is required to take to remain in
compliance with any judgment, order, writ, injunction or decree of any
Governmental Authority or to maintain any material permits, approvals or
licenses granted by any Governmental Authority in full force and effect.
(l) Each Loan Party and each Subsidiary of each Loan Party has filed
or caused to be filed all Federal, state and local tax returns that are required
to be filed by it, and has paid or caused to be paid all taxes shown to be due
and payable on such returns or on any assessments received by it, including
payroll taxes.
(m) After giving effect to the transactions contemplated hereby,
(i) the aggregate fair value of the assets of the Debtors, at a fair valuation,
will exceed their consolidated debts and liabilities, subordinated, contingent
or otherwise, (ii) the present aggregate fair saleable value of the property of
the Debtors will be greater than the amount that will be required to pay the
probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured, (iii) the Debtors will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, and (iv) the Debtors will not have unreasonably small
capital with which to conduct the business in which they are engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.
(n) No Debtor or any Affiliate of any Debtor or any director,
officer or employee of any Debtor or any of their Affiliates, respectively, has
entered into, as of the date hereof, any side agreement, either oral or written,
with any individual or business, pursuant to which the director, officer,
employee, Debtor or Affiliate agreed to do anything beyond the requirements of
the formal, written contracts executed by the Loan Parties and disclosed to
Lender and Collateral Agent pursuant to this Agreement.
19
(o) No broker's or finder's or placement fee or commission will be
payable to any broker or agent engaged by the Debtors or any of its Affiliates
or any of their respective officers, directors or agents with respect to the
issue of the Notes or the transactions contemplated by this Agreement, except
as disclosed to Collateral Agent prior to the date hereof. The Debtors agree
to indemnify Collateral Agent and Lenders and hold them harmless from against
any claim, demand or liability for broker's or finder's or placement fees or
similar commissions, whether or not payable by the Debtors, alleged to have
been incurred in connection with such transactions.
(p) Set forth on Schedule 8(p) is a true and complete list of all
Indebtedness of Parent and each Subsidiary of Parent outstanding immediately
prior to the date hereof other than the Obligations and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness (such
Indebtedness, the "Other Indebtedness" and the documentation evidencing such
Indebtedness, the "Other Debt Documents"). Lenders have received complete
copies of the Prior Loan Documents and the Other Debt Documents (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof. None of
such documents and agreements has been amended or supplemented, nor have any
of the provisions thereon been waived, except pursuant to a written agreement
or instrument which has heretofore been delivered to Lenders. The assignment
of the Assigned Interests has occurred and all other transactions contemplated
by the Settlement Agreement and the Supplemental Radnet Settlement Orders has
been consummated in accordance with the terms thereof.
9. DEBTORS' AGREEMENTS. Each Debtor covenants and agrees that, until
payment in full of all of the Loans and other Obligations, unless Required
Lenders shall otherwise give prior written consent, each Debtor shall perform,
and shall cause each of its Subsidiaries to perform, all covenants in this
Section 9.
(a) To defend at such Debtor's own cost and expense any action,
proceeding or claim affecting the Collateral.
(b) To promptly pay all Secured Party Expenses upon demand by
Collateral Agent or Required Lenders, including all fees and expenses relating
to the Escrow Agreement and the Lockbox Agreement.
(c) To pay promptly all taxes, assessments, license fees and other
public or private charges when levied or assessed against the Collateral or this
Agreement or any other Loan Document and this obligation shall survive the
termination of this Agreement.
(d) To use its best efforts to cause the Settlement Agreement to be
entered into as soon as possible after the date hereof and to cause the REC
III Loan Settlement to occur.
(e) That such Debtor will not misuse, fail to keep in good repair,
secrete, or without the prior written consent of Required Lenders and
notwithstanding the Collateral Agent's and Lender's claim to proceeds, sell,
rent, lend, encumber or transfer any of the Collateral.
20
(f) That Collateral Agent or a Lender may enter upon such Debtor's
premises or wherever the Collateral may be located at any reasonable time to
inspect the Collateral and such Debtor's books and records pertaining to the
Collateral and such Debtor shall assist Secured Party in making such
inspection.
(g) That the security interest granted by such Debtor to Collateral
Agent on behalf of Lenders shall continue effective irrespective of the payment
of the Obligations, so long as there are any obligations of any kind, including
obligations under guaranties or assignments, owed by any Debtor to Collateral
Agent or any Lender.
(h) ▇▇▇▇ and identify the Collateral with all information and such
manner as Collateral Agent or Required Lenders may request from time-to-time and
replace promptly any such markings or identification which are removed, de
laced or destroyed.
(i) Indemnify and hold Collateral Agent and each Lender harmless from
and against all claims, losses liabilities (including negligence, tort and
strict liability), damages, judgments, suits and all legal proceedings and any
and all costs and expense in connection therewith (including attorney's fees)
arising out of or in any manner connected with the manufacture, purchase,
financing, ownership, delivery, rejection, nondelivery, possession use,
transportation storage operation, maintenance, repair, return or other
disposition of the Collateral or with this Agreement or any other Loan
Documents including, without limitation, claims for injury to, or death of,
persons and for damage, to property, and give Collateral Agent and each Lender
prompt notice of such claim or liability.
(j) No Debtor will sell, assign, transfer, dispose of or otherwise
part with possession or control or suffer or allow to pass out of its possession
or control items of Collateral listed on Schedule 1 without the prior written
consent of Required Lenders.
(k) That such Debtor shall not ASSIGN OR IN ANY WAY DISPOSE OF ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR SELL, LEASE OR
TRANSFER OR PLEDGE OR HYPOTHECATE ANY PART OF THE COLLATERAL. EACH DEBTOR'S
INTEREST IN THIS AGREEMENT AND THE COLLATERAL IS NOT ASSIGNABLE AND WILL NOT
BE ASSIGNED OR TRANSFERRED BY OPERATION OF LAW. CONSENT TO ANY OF THE
FOREGOING PROHIBITED ACTS APPLIES ONLY IN THE GIVEN INSTANCE AND IS NOT
CONSENT TO SUBSEQUENT LIKE ACT BY A DEBTOR OR ANOTHER ENTITY.
(l) To (i) comply in all material respects with, and will obtain,
maintain and preserve all permits, licenses, authorizations, approvals,
entitlements and accreditations required by or which are necessary or useful
under, all Health Care Laws and other laws applicable to Debtors and each of
their Subsidiaries and each Managed Practice, (ii) promptly furnish to Lenders
a copy of any communication from any Governmental Authority concerning any
material violation of any Health Care Laws or other laws and (iii) comply, and
cause each of its Subsidiaries and each Managed Practice to comply, in all
material respects, with the terms of each Management Agreement to which it is
a party.
21
Keep, and cause each of its Subsidiaries and each Managed Practice to
keep, itself fully licensed with all licenses required to operate such Person's
business under applicable law, maintain such Person's qualification to practice
medicine in the manner contemplated under the applicable Management Agreement
and for participation in, and payment under Medicaid, Medicare and any other
Third Party Payor program providing for payment or reimbursement for services
rendered by such Person; and promptly furnish or cause to be furnished to agent
copies of all reports and correspondence it or any of its Subsidiaries delivers
to or receives from any Person relating to any loss or revocation (or threatened
loss or revocation) of any qualification described in this Section or any
material claim, audit or complaint received by Parent or its Subsidiaries or any
Managed Practice (excluding malpractice claims, routine or random audits and
routine license and certification surveys, unless such surveys include a
recommendation that the Government Reimbursement Program certification or
license of a facility should be terminated, revoked or suspended) by or on
behalf of a Government Reimbursement Program or other Person relating to the
delivery of medical services and payment therefore or billing procedures.
Cause ▇▇▇▇▇▇▇ Radiology Medical Group and each Managed Practice to:
(i) provide professional services to its patients in compliance with ethical
standards, laws, rules and regulations applicable to the operations of such
Managed Practice; (ii) assure that each physician employee of such Managed
Practice has all required licenses, credentials, approvals and other
certifications to perform his or her duties and services for such Managed
Practice; and (iii) maintain all licenses required to operate such Managed
Practices' business under applicable law.
Promptly provide Agent with true and complete copies of any and all
material documents delivered to any Person pursuant to, or in connection with,
any Parent Indenture Document, Management Agreement or any other Material
Contract.
(m) That it will not agree or consent to any amendments or
modifications to any agreement between any Debtor or Parent and U.S. Bank
(as trustee and its affiliate (U.S. Bank Portfolio Services), as servicer with
respect to securitization trusts established by DVI Financial or affiliates of
DVI Financial but excluding DVI Receivables Corp. III) or General Electric
Capital Corporation (or any other financing which replaces such financing
containing terms (including, but not limited to, increasing interest rates,
accelerating the principal amortization or maturity, new or more stringent
defaults, additional collateral, and new remedies provisions) that would be more
onerous to any debtor or that would adversely impact or affect any Lender with
respect to the terms of this Agreement.
(n) Intentionally Omitted.
(o) That it will not change its legal name, legal entity status or
chief executive office from that set forth on Schedule 9(o) hereto. No Debtor
shall merge into or consolidate or combine with any other Person. No Debtor or
any of its Subsidiaries shall purchase, lease or otherwise acquire (in one
transaction or a series of related transactions) all or any part of the property
or assets of any Person other than purchases or other acquisitions of inventory,
materials, leases, property and equipment in the ordinary course of business and
Permitted Acquisitions or sell, transfer or otherwise dispose of any of its
assets (or agree to do any of the foregoing at any future time) except Permitted
Dispositions.
22
For purposes hereof, "Permitted Acquisition" means an acquisition by any
Debtor of all or substantially all of the assets or Stock of any Person which
satisfies each of the following conditions:
(1) any Indebtedness or Liens assumed or issued in connection with
such acquisition are otherwise permitted under Section 9 (u) or 9 (v) as the
case may be;
(2) at the time of such acquisition, no Default and no Event of
Default exists, or would exist upon the consummation thereof, both on an actual
and a pro forma basis;
(3) RMI shall have delivered to Lenders evidence in form and
substance reasonably acceptable to Required Lenders that Borrowers are in
compliance with the financial covenants set forth in Sections 9(q), 9(r), 9(s)
and 9(t) hereof for the most recent fiscal period measured hereunder,
recalculated as if the acquisition were consummated on the last day of such
fiscal period;
(4) such acquisition shall be consensual and shall have been
approved by the board of directors of the Person whose Stock or assets are
proposed to be acquired;
(5) not less than 30 days prior to the consummation of the
acquisition, RMI shall have delivered to Lenders, in form and substance
reasonably satisfactory to Required Lenders, a pro forma consolidated balance
sheet, income statement and cash flow statement of Parent and its
Subsidiaries, based on recent financial statements, which shall be complete
and shall fairly present in all material respects the assets, liabilities,
financial condition and results of operations of Parent and its Subsidiaries
in accordance with GAAP consistently applied (in the case of interim financial
statements, except for the lack of footnotes and subject to year-end audit
adjustments), but taking into account such proposed acquisition and the
funding of all Indebtedness in connection therewith;
(6) Debtors shall have updated the schedules thereto and to each of
the other Loan Documents, as applicable, provided, that in no event may any
schedule be updated in a manner that would reflect or evidence a Default or
Event of Default;
(7) RMI shall have delivered (a) projections for the Person whose
Stock or assets are proposed to be acquired and (b) updated pro forma
Projections for Parent and its Subsidiaries, in each case in form and consent
reasonably acceptable to Required Lenders;
(8) the acquisition shall be related to the same line of business
conducted by Parent and its Subsidiaries as of the Closing Date;
(9) the acquisition shall be in compliance with the WF Foothill
Credit Agreement; and
23
(10) the purchase price of such acquisition shall not exceed
$4,000,000 and the aggregate purchase price for all such Permitted
Acquisitions together with all the Permitted Acquisitions (as defined under
the WF Credit Agreement), after giving effect to such acquisition, shall not
exceed $12,000,000 during the term of the Agreement.
For purposes hereof, "Permitted Dispositions" means (a) sales or other
dispositions of Equipment that is substantially worn, damaged, or obsolete in
the ordinary course of business, (b) sales of Inventory to buyers in the
ordinary course of business, (c) the use or transfer of money or cash
equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents, (d) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business, and (e) trade-in of Equipment in connection with
upgrades of such Equipment.
(p) That it will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make any distribution or declare or pay any dividends
(in cash or other property, other than common stock) on, or purchase, acquire,
redeem, retire or make any acquisition for value, of, any of the Debtor's
Stock, of any class, whether now or hereafter outstanding (collectively, a
"Distribution"); provided, however, that so long as no Event of Default shall
have occurred and be continuing immediately prior to or after giving effect to
any such payment, (a) the Debtors may make dividends to the Parent (1) in
amounts necessary to pay customary expenses of Parent in the ordinary course
of its business as a public holding company (including salaries and related
reasonable and customary expenses incurred by employees of Parent) in an
aggregate amount not to exceed $750,000 in any fiscal year, (2) in amounts
necessary to enable Parent to pay taxes when due and owing by it in the
ordinary course of its business as a holding company, and (3) in amounts
necessary to enable Parent to pay interest on the Parent Indenture Notes, and
(b) Parent may make Distributions in the form of common stock.
(q) Commencing April 30, 2005, that the Debtors shall not permit the
Fixed Charge Coverage Ratio, (a) to be less than 1.0:1.0 as of the end of each
April, July, October and January (each, a "Fiscal Quarter") ending prior to
January 1, 2007, and (b) to be less than 1.05:1 as of the last day of each
Fiscal Quarter ending thereafter. "Fixed Charge Coverage Ratio" means for any
twelve month period ending on the last day of the relevant Fiscal Quarter, the
ratio of (i) EBITDA for such period minus cash capital expenditures made (to
the extent not already incurred in a prior period) or incurred during such
period, to (ii) the sum of (a) interest expense, (b) principal payments
required to be paid during such period in respect of indebtedness, and (c) all
federal, state, and local income taxes accrued, all as determined for the
twelve months ending on the last day of the relevant Fiscal Quarter for RMI
and its subsidiaries on a consolidated basis without duplication and in
accordance with generally accepted accounting principles consistently
applied. "EBITDA" means, with respect to any fiscal period, RMI and its
subsidiaries' consolidated net earnings (or loss), minus extraordinary gains
and interest income, plus interest expense, income taxes, and depreciation and
amortization for such period, all as determined for the twelve months ending
on the determination date for RMI and its subsidiaries on a consolidated basis
without duplication and in accordance with generally accepted accounting
principles consistently applied.
24
(r) That it shall not permit the Leverage Ratio, as determined as of
the end of each Fiscal Quarter, commencing April 30, 2005, to be greater than
the amount set forth in the following table for the Fiscal Quarters ending in
the period set forth opposite thereto:
Leverage Ratio Period
-------------- -------------------
4.50:1.0 04/30/05 - 10/30/05
4.30:1.0 10/31/05 - 10/30/06
4.00:1.0 10/31/06 - 10/30/07
3.85:1.0 10/31/07 - 10/30/08 or thereafter
"Leverage Ratio" means, at any date of determination, the ratio of
(a) Total Debt at such date to (b) EBITDA for the applicable twelve month period
ending on such date. "Total Debt" means, as of any date of determination,
without duplication, the sum of (a) the outstanding aggregate amount of the
obligations for borrowed money, (b) the outstanding principal amount of capital
leases, (c) the outstanding principal amount of purchase money indebtedness,
(d) the outstanding principal amount of funded debt, and (e) the outstanding
principal amount of all obligations owing to Lenders, General Electric Capital
Corporation (and its affiliates) and U.S. Bank (and its affiliates); all as
determined for RMI and its subsidiaries on a consolidated basis without
duplication and in accordance with generally accepted accounting principles
consistently applied.
(s) That it shall not permit the EBITDA Margin to be less than 25% as
of the end of any Fiscal Quarter ending on or after April 30, 2005. "EBITDA
MARGIN" means for any twelve month period ending on the last day of the relevant
Fiscal Quarter, the ratio of (a) EBITDA for such period, to (b) net revenues
(excluding the professional service fee component of radiology services) for
such period, all as determined for the twelve months ending on the determination
date for RMI and its subsidiaries on a consolidated basis without duplication
and in accordance with generally accepted accounting principles consistently
applied.
(t) That it shall not permit the Receivable Days to exceed 65 days as
of the end of any Fiscal Quarter ending on or after April 30, 2005. "RECEIVABLE
DAYS" means for any twelve month period ending on the last day of the relevant
Fiscal Quarter, a number equal to (a) 365 divided by (b) the result of (i) net
revenues for such period divided by (ii) net receivables for such period, all as
determined for the twelve months ending on the determination date for RMI and
its subsidiaries on a consolidated basis without duplication and in accordance
with generally accepted accounting principles consistently applied.
(u) None of the Debtors or any of their respective Subsidiaries shall
create, incur, assume guarantee or be or remain liable for, contingently or
otherwise, or suffer to exist any Indebtedness, except:
(i) Indebtedness under this Agreement and the other Loan
Documents;
(ii) Indebtedness listed on Schedule 9 (u) hereof;
25
(iii) Permitted Purchase Money Indebtedness;
(iv) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (ii) and (iii) of this Section 9(u) (and
continuance or renewal of any Permitted Liens associated therewith) so
long as: (i) the terms and conditions of such refinancings, renewals, or
extensions do not, in Required Lenders' reasonable judgment, materially
impair the prospects of repayment of the Obligations by Debtors or
materially impair Debtors' creditworthiness, (ii) such refinancings,
renewals, or extensions do not result in an increase in the principal
amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended or add one or more Persons as liable with
respect thereto if such additional Persons were not liable with respect to
the original Indebtedness, (iii) such refinancings, renewals, or extensions
do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Person, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to
the Obligations, then the terms and conditions of the refinancing, renewal,
or extension Indebtedness must include subordination terms and conditions
that are at least as favorable to the Lender's as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and
(v) the Indebtedness that is refinanced, renewed, or extended is not
recourse to any person that is liable on account of the Obligations other
than those Persons which were obligated with respect to the Indebtedness
that was refinanced, renewed, or extended;
(v) Indebtedness issued in connection with any Permitted
Acquisition so long as (i) the incurrence of such Indebtedness would not,
on a pro forma basis, after giving effect to any such incurrence of
Indebtedness, cause Parent and Borrowers to fail to be in compliance with
Section 9(q), 9(r), 9(s) or 9(t) if such covenants were tested at such
time, (ii) no Default or Event of Default shall have occurred and be
continuing, both before and immediately after giving effect to the
incurrence of such Indebtedness, and (iii) such Indebtedness (other than
Indebtedness secured solely by Equipment at the time of such Permitted
Acquisition ) is subordinated to the Obligations hereunder on terms and
conditions reasonably satisfactory to Required Lenders; and
(vi) endorsement of instruments or other payment items for
deposit.
For purposes hereof, "Indebtedness" means (a) all obligations for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes,
or other similar instruments and all reimbursement or other obligations in
respect of letters of credit, bankers acceptances, interest rate swaps,
▇▇▇▇▇▇, derivatives, or other financial products, (c) all obligations as a
lessee under capital leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
26
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (f) above. For
purposes hereof, (a) "Permitted Purchase Money Indebtedness" means, as of
any date of determination, Purchase Money Indebtedness incurred after the
Closing Date in an aggregate principal amount outstanding at any one time
not in excess of an amount that would, on a pro forma basis, after giving
effect to any such incurrence of Permitted Purchase Money Indebtedness,
cause Parent and Borrowers to fail to be in compliance with Section 9(q),
9(r), 9(s) or 9(t) if such covenants were tested at such time; and
(b) "Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for
the purpose of financing all or any part of the acquisition cost thereof.
In the event that any Shareholder/Affiliate Note is issued or otherwise
outstanding after the date hereof and the holder thereof has not executed
a Shareholder/Affiliate Note Consent, the Loan Parties shall cause such
holder to execute a Shareholder/Affiliate Note Consent in the form annexed
as Exhibit C-1 hereto and deliver an executed original thereof to the
Collateral Agent and Lenders.
(v) None of the Debtors or any of their respective
Subsidiaries shall not create, incur, assume or suffer to exist any Lien of
any kind on any of their properties or assets of any kind, except for
Permitted Liens (including Liens that are replacement of Permitted Liens to
the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 9(v)(iv) and so long as the replacement Liens only
encumber those assets that secured the refinanced, renewed, or extended
Indebtedness). For purposes hereof, "Permitted Liens" means (a) Liens held
by Agent to secure the Obligations, (b) Liens for unpaid taxes,
assessments, or other governmental charges or levies that either (i) are
not yet delinquent, or (ii) do not have priority over the Agent's Liens
and the underlying taxes, assessments, or charges or levies are the subject
of Permitted Protests, (c) judgment Liens and do not constitute an Event of
Default under Section 7.7 of the Agreement, (d) Liens set forth on
Schedule 9(v) hereto, (e) the interests of lessors under operating leases,
(f) purchase money Liens or the interests of lessors under Capital Leases
to the extent that such Liens or interests secure Permitted Purchase Money
Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (g) Liens arising by operation of law
in favor or warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of Borrowers'
business and not in connection with the borrowing of money and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of
Permitted Protests, (h) Liens on amounts deposited in connection with
obtaining worker's compensation or other unemployment insurance, (i) Liens
on amounts deposited in connection with the making or entering into of
bids, tenders, or leases in the ordinary course of business and not in
connection with the borrowing of money, (j) Liens on amounts deposited as
security for surety or appeal bonds in connection with obtaining such bonds
in the ordinary course of business, and (k) with respect to any Real
Property, easements, rights of way, and zoning restrictions that (i) do not
materially interfere with or impair the use or operation thereof and
(ii) are not Environmental Liens.
"Permitted Protest" means the right of Debtors or any of their respective
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
27
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on such Debtor's or Subsidiary's
books and records in such amount as is required under generally accepted
accounting principles, (b) any such protest is instituted promptly and
prosecuted diligently by such Debtor or Subsidiary, as applicable, in good
faith, and (c) Required Lenders are satisfied that, while any such protest is
pending, there will be no impairment of the enforceability, validity, or
priority of any of the Collateral Agent's Liens.
(w) None of the Debtors or any of their respective Subsidiaries shall
make any loan or advance to any director, officer or employee of the Loan
Parties or any Affiliate, or enter into or be a party to any transaction or
arrangement with any Affiliate of the Loan Parties, including, without
limitation, the purchase from, sale to or exchange of property with, any merger
or consolidation with or into, or the rendering of any service by or for, any
Affiliate, except pursuant to the reasonable requirements of the Loan Parties'
business and upon fair and reasonable terms no less favorable to the Loan
Parties than would be obtained in a comparable arm's-length transaction with a
Person other than an Affiliate.
(x) Modify or change their fiscal year or their method of accounting
(other than as may be required to conform to generally accepted accounting
principles) or enter into, modify, or terminate any agreement currently
existing, or at any time hereafter entered into with any third party accounting
firm or service bureau for the preparation or storage of Parent's or its
Subsidiaries' accounting records without said accounting firm or service bureau
agreeing to provide Lenders information regarding Loan Parties' and their
Subsidiaries' financial condition.
(y) Except in connection with a refinancing permitted by
Section 9(u)(i):
(i) optionally prepay, redeem, defease, purchase, or otherwise
acquire (collectively, a "Prepayment") any Indebtedness of Parent or any
Subsidiary of Parent, other than (i) the obligations in accordance with the
WF Foothill Credit Agreement, (ii) in accordance with the Restructuring
Documents as in effect on the Closing Date without any modification or
amendment thereof, and (iii) additional Prepayments in an amount not to
exceed $750,000 (or $1,000,000 if the sum of Borrowers' excess Availability
plus Qualified Cash (as such terms are defined in the WF Foothill Credit
Agreement as in effect on the date hereof) shall be equal to at least
$5,000,000, both immediately prior to and immediately after giving effect
to any such Prepayment) for any individual Prepayment or in any calendar
year or $3,000,000 in the aggregate over the term of this Agreement so long
as (A) no Default or Event of Default shall have occurred and be continuing
under the WF Credit Agreement or this Agreement and (B) the sum of
Borrowers' Excess Availability plus Qualified Cash (as such terms are
defined in the WF Foothill Credit Agreement as in effect on the date
hereof) shall be equal to at least $4,000,000, in each case both
immediately prior to and immediately after giving effect to any such
Prepayment and Debtors shall have delivered a written certificate to the
Collateral Agent to such effect prior to any such Prepayment,
(ii) make any payment on account of any Subordinated
Indebtedness, (i) so long as no Default or Event of Default shall have
occurred and be continuing under the WF Foothill Credit Agreement or this
Agreement immediately prior to or after giving effect to any such payment,
(A) interest (but not including any default interest) due and payable on
28
the Parent Indenture Notes (as in effect on the Closing Date without any
modification or amendment thereof) and (B) payments due and payable on the
Tower Litigation Note (as in effect on the Closing Date without any
modification or amendment thereof), (ii) payments permitted to ▇▇▇▇▇▇ ▇▇▇▇▇
in respect of the ▇▇▇▇▇▇ ▇▇▇▇▇ Shareholder Note solely to the extent
permitted under the ▇▇▇▇▇▇ ▇▇▇▇▇ Subordination Agreement attached as
Exhibit E hereof and (iii) payments permitted to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in respect
of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Note solely to the extent permitted under
the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Subordination Agreement attached as Exhibit F hereof,
(iii) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Section 9(u)(ii) (other than amendments, modifications or
changes to Indebtedness evidenced by, or any instrument or agreement
constituting, a Parent Document, which shall be governed by clause (iv)
below), or
(iv) agree to (i) any amendment or other change to or waiver of
any of its rights under any Parent Indenture Document that is adverse to
the Lenders or (ii) any material amendment or other material change to or
material waiver of any of its rights under any Management Agreement,
Restructuring Document or other Material Contract (including the GE Master
Lease Agreement) that is adverse to the Lenders.
10. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an Event of Default hereunder:
(a) Default in payment of any installment of the principal or
interest in respect of the Loans when the same shall become due and payable,
whether at the due date thereof, or at the date fixed for prepayment or by
acceleration or otherwise;
(b) Default in the due observance or performance by any Debtor or any
other Loan Party of any covenant or agreement to be observed or performed by
such Debtor or any other Loan Party under this Agreement or under any other
Loan Document;
(c) Any representation or warranty made by any Debtor herein or in
any other Loan Document or in any report, certificate financial or other
statement furnished in connection with this Agreement or any other Loan Document
shall prove to be false or misleading in any material respect;
(d) Any Debtor or any other Loan Party or Subsidiary thereof shall
(i) be adjudicated insolvent or a bankrupt, or cease, be unable or admit in
writing its inability to pay its debts as they mature or make a general
assignment for the benefit of, or enter into any composition or arrangement
with, creditors; (ii) apply for or consent to the appointment of a receiver,
trustee or liquidator of it or of a substantial part of its property, or
authorize such application or consent, or proceedings seeking such appointment
shall be instituted against it without such authorization, consent or
application and shall continue undismissed for a period of 60 calendar days;
(iii) authorize or file a voluntary petition in bankruptcy or apply for or
consent to the application of any bankruptcy, reorganization in bankruptcy,
29
arrangement, readjustments of debts, insolvency, dissolution, moratorium or
other similar law of any jurisdiction, or authorize such application or consent,
or proceedings to such end shall be instituted against it without such
authorization application or consent and such proceeding instituted against it
shall continue undismissed for a period of 60 calendar days;
(e) Intentionally Omitted;
(f) Any Loan Document or any provision thereof, for any reason other
than the satisfaction in full of all Obligations, shall cease to be in full
force and effect (other than in accordance with its terms) or shall be declared
to be null and void, or any Loan Party shall contest the validity or
enforceability of any Loan Document or any provision thereof in writing or
deny in writing that it has any further liability, under any Loan Document or
any provision thereof to which it is a party;
(g) If a judgment for the payment of money on any claim is rendered
against any Debtor or any other Loan Party or Subsidiary thereof in excess of
$100,000;
(h) If any Debtor or any other Loan Party or Subsidiary thereof is in
default of the terms and conditions of any Indebtedness or lease in excess of
$100,000;
(i) Parent shall own or otherwise permit to exist any Subsidiary that
is not a wholly-owned Subsidiary of RMI other than RMI;
(j) If any material portion of Parent's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any third Person and the same is
not discharged before the earlier of 30 days after the date it first arises or
5 days prior to the date on which such property or asset is subject to
forfeiture by Parent or the applicable Subsidiary;
(k) If Parent or any Subsidiary of Parent is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
(l) If any Loan Document that purports to create a Lien, shall, for
any reason, fail or cease to create a valid and perfected and, except to the
extent permitted by the terms hereof or thereof, first priority Lien on or
security interest in the Collateral covered hereby or thereby, except as a
result of a disposition of the applicable Collateral in a transaction
permitted under this Agreement;
(m) a Change of Control shall occur;
(n) The occurrence of (a) any cancellation, revocation, suspension or
termination of any Medicare Certification, Medicare Provider Agreement,
Medicaid Certification or Medicaid Provider Agreement affecting Parent or any
of its Subsidiaries or any Managed Practice, or (b) the loss of any other
Permit of Parent or any of its Subsidiaries or any Managed Practice from any
Governmental Authority or Third Party Payor or termination of any contract of
Parent or any of its Subsidiaries or any Managed Practice with any
Governmental Authority or Third Party Payor, in either case, which could
reasonably be expected to have a Material Adverse Change;
30
(o) The introduction of, or any change in, any law or regulation
governing or affecting a physician practice, a physician practice management
company or any practice or practice group managed thereby or a facility
providing radiology technical services or any practice or practice group
managed thereby, including any Healthcare Laws, which could reasonably be
expected to have a Material Adverse Change;
(p) Any default or breach shall occur under any Management Agreement,
any Restructuring Document or any other Material Contracts (including the GE
Master Lease Agreement) and such default or breach, individually or when
aggregated with all such defaults or breaches, could reasonably be expected to
have a Material Adverse Change; or
(q) The revocation by Parent or any of its Subsidiaries of any
Governmental Account Debtor Sweep Agreement.
11. REMEDIES. Each Debtor agrees that when an Event of Default has
occurred and is continuing, Collateral Agent and Lenders shall have the
rights, options, duties and remedies of a secured party and Debtors shall have
the rights and duties of a debtor under the Uniform Commercial Code in effect
in each jurisdiction where the Collateral or any part thereof is located and,
without limiting the foregoing, Collateral Agent and Lenders may exercise one
or more or all, and in any order, of the remedies hereinafter set forth:
(a) Required Lenders may declare the entire unpaid principal balance
of the Loan to be immediately due and payable; and thereupon all such unpaid
balances, together with all accrued an a unpaid interest thereon and all other
Obligations, shall be immediately due and payable;
(b) At the instruction of Required Lenders, Collateral Agent
personally, or by agents or attorneys, shall have the right (subject to
compliance with any applicable mandatory legal requirements) to take immediate
possession of the Collateral or any portion thereof and for that purpose may
pursue the same wherever it may be found and may enter any of the premises of
any Debtor with or without notice, demand, process of law or legal procedure,
and search for, take possession of, remove, keep and store the same, or use,
operate, or lease the same until sold and may otherwise exercise any and all of
the rights and powers of any Debtor in respect thereof;
(c) At the instruction of Required Lenders, Collateral Agent, may if
at the time such action may be lawful (and always subject to compliance with any
mandatory legal requirements), either with or without taking possession,
either before or after taking possession, and without instituting any legal
proceedings whatsoever having first given notice of such sale by mail to the
applicable Debtor once at least 10 calendar days prior to the date of such
sales and any other notice of such sale which may be required by law if said
notice is sufficient, sell and dispose of the Collateral or any part thereof
at public auction(s) to the highest bidder, or at a private sale(s) in one lot
as an entirety or in several lots, and either for cash or for credit and on
such terms as Required Lenders may determine and at any place (whether or not
it is the location of the Collateral or any part thereof) designated in the
notice above referred to. Any such sale or sales may be adjourned from time
to time by announcement of the time and place appointed for such sale or
31
sales, or for such adjourned sales or sales without further notice, and, with
the consent of Required Lenders, Collateral Agent or any Lender may bid and
become the purchaser at any such sale;
(d) With the consent of Required Lenders, Collateral Agent or any
Lender may proceed to, protect, and enforce this Agreement and any other Loan
Documents by suit or suits or proceedings in equity, at law or in bankruptcy,
and whether for the specific performance of any covenant or agreement herein
contained or execution or aid of any power herein granted, or for foreclosure
hereunder, or for the appointment of a receiver or receivers for the
Collateral, or any party thereof, or for the enforcement of any proper, legal
or equitable remedy available under applicable law;
(e) Collateral Agent may require any Debtor to assemble the
Collateral and return it to Collateral Agent at a place to be designated by
Collateral Agent which is reasonably convenient to both parties;
(f) Debtors, jointly and severally, agree to pay the Collateral Agent
or other Lender acting at the instruction of Required Lenders, all expenses of
retaking, holding, preparing for sale and/or selling the Collateral in
addition to attorneys' fees as above set forth; and
(g) Without limiting the rights of Collateral Agent or any Lender
under applicable law, Collateral Agent and each Lender has and may exercise a
right of set-off, a lien against and a security interest in all property of any
Debtor now or at any time in such person's or any affiliate of such person's
possession in any capacity whatsoever, as security for all of the
Obligations. At any time and from time to time following the occurrence of an
Event of Default, Collateral Agent or any Lender may without notice or demand,
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by Collateral Agent or any Lender any affiliate of Collateral Agent or
any Lender or for the credit of any Debtor against any or all of the
Obligations.
12. ACCELERATION CLAUSE. In case of any sale of the Collateral, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Agreement, the
outstanding principal due, the interest accrued thereon and all other sums
required to be paid by Debtors pursuant to this Agreement shall at once become
and be immediately due and payable.
13. EXERCISE OF RIGHTS. No delay or omission of Collateral Agent or any
Lender in the exercise of any right or power arising from any default shall
exhaust or impair any such right or power or prevent its exercise during the
continuance of such default. No waiver by Collateral Agent or any Lender of
any such default, whether such waiver be full or partial, shall extend to or
be taken to affect any subsequent default or to impair the rights resulting
therefrom except as may be otherwise provided therein. The giving, taking or
enforcement of any other or additional security collateral, or guarantee for
the payment of the Obligations shall not operate to prejudice waive, or affect
the security of this Agreement or any rights, powers, or remedies hereunder,
and none of the Collateral Agent or any Lender shall be required to look first
to enforce or exhaust such other additional security, collateral or
guarantees. All rights, remedies, and options of Collateral Agent and each
32
Lender hereunder, or by law shall be cumulative. The Debtors unconditionally
waive (i) any rights to presentment, demand, protest or (except as expressly
required hereby) notice of any kind, and (ii) any rights of rescission,
setoff, counterclaim or defense to payment under the Loan or otherwise that
the Debtors may have or claim against any Lender, the Collateral Agent, any
DVI Party or any prior holder of any of the Obligations
14. ASSIGNMENT BY LENDERS. LENDERS MAY ASSIGN OR TRANSFER THIS
AGREEMENT, ANY AND ALL OTHER LOAN DOCUMENTS, AND/OR SUCH LENDERS INTEREST IN
ANY OF THE COLLATERAL WITHOUT NOTICE TO ANY DEBTOR. Any assignee of a Lender
shall have all of the rights but none of the obligations of such predecessor
Lender under this Agreement, and each Debtor agrees that it will not assert
against any assignee of a Lender any defense, counterclaim or offset that any
Debtor may have against such predecessor Lender.
15. N0N-TERMINABLE AGREEMENT; OBLIGATIONS UNCONDITIONAL; INDEMNIFICATION.
This Agreement cannot be cancelled or terminated except as expressly provided
herein. This Agreement and the obligations of Debtors hereunder shall terminate
upon payment in full of all the Obligations; provided that to the extent any
Lender is required to return any of the Obligations to a Debtor or other person
as result of bankruptcy proceeding, application of fraudulent conveyance laws or
otherwise, then this Agreement and all liens granted by Debtors described herein
shall be reinstated. Each Debtor hereby agrees that its obligation to pay all
Obligations shall be absolute and unconditional and such Debtor will not be
entitled to any abatement of payments due under this Agreement or any reduction
thereof under circumstances or for any reason whatsoever. Each Debtor hereby
waives any and all existing and future claims, as offsets, against any payments
due under this Agreement as and when due regardless of any offset or claim which
may be asserted by such Debtor or on its behalf. The obligations and
liabilities of Debtors hereunder will survive the termination of this Agreement.
In addition to the payment of Secured Party Expenses, whether or not the
transactions contemplated hereby shall be consummated, each Debtor agrees to
defend (subject to Indemnitees' selection of counsel), indemnify, pay and hold
harmless Collateral Agent and Lenders, and the officers, directors, trustees,
employees, agents, advisors and Affiliates of Collateral Agent and Lenders
(collectively called the "Indemnitees"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction. As used herein,
"Indemnified Liabilities" means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
actions, judgments, suits, claims, costs (including the costs of any
investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up or
▇▇▇▇▇ any releases or activity in violation of any environmental law), expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for Indemnitees (including allocated costs of
internal counsel) in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or a potential party thereto, and
any fees or expenses incurred by Indemnitees in enforcing this indemnity),
33
whether direct, indirect or consequential and whether based on any federal,
state or foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules of regulations and environmental laws), on
common law or equitable cause or on contact or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
acquire the Loans hereunder or the use or intended use of the proceeds thereof,
or any enforcement of any of the Loan Documents), (ii) the statements contained
in any commitment letter delivered by any Lender to any Debtor with respect
thereto, or (iii) any claim relating to or arising from, directly or indirectly,
any past or present activity, operation, land ownership, or practice of any Loan
Party or any of its Subsidiaries or Affiliates. To the extent that the
undertakings to defend, indemnify, pay and hold harmless set forth in this
Section 15 may be unenforceable in whole or in part because they are violative
of any law or public policy, each Debtor shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.
16. ADDITIONAL DOCUMENTS AND OTHER MATTERS. In connection with and in
order for effective evidence of the security interest in the Collateral
granted secured party under this Agreement, each Debtor will execute and
deliver to Collateral Agent such financing statements and similar documents as
Collateral Agent or Required Lenders request. Each Debtor authorizes
Collateral Agent or Required Lenders where permitted by law to make filings of
such financing statements without Debtor's signature. Each Debtor further
agrees to furnish each Lender:
(a) (i) Within forty five (45) days after the end of fiscal
quarter of Debtors and within ninety (90) days after the end of each fiscal year
of Debtors, Debtors' consolidated, consolidating and on a center by center
basis, financial statements, including Debtors' balance sheet (not on a center
by center basis), income and cash flow statements, prepared in accordance with
generally accepted accounting principles (and audited in the case of fiscal
year end financial statements without any going concern or other
qualification), which reports, Debtors' represent and warrant shall fully and
fairly represent the true financial condition of such Debtors, (ii) updated
projections for Debtors and for each center and (iii) together with any
financial statements delivered pursuant to clause (i) a Compliance Certificate
in the form of Exhibit D hereof (a "Compliance Certificate") with respect to
Debtor's compliance with Section 9 hereof.
(b) Any other financial information normally provided by such Debtor
(or the Parent) to the public, including but not limited to annual and quarterly
financial statements; and
(c) Such other financial data or information relative to this
Agreement and the Collateral, including, without limitation, listings of serial
numbers or other identification data and confirmations of such information, as
Collateral Agent or Required Lenders may time-to-time reasonably request.
Each Debtor will procure and/or execute, have executed, have acknowledged, and
or deliver to Collateral Agent, record and file such other documents and
notices as Collateral Agent or Required Lenders deems necessary or desirable
to protect its interest in and rights under this Agreement and Collateral.
Debtors will, jointly and severally, pay for all filings, searches, title
reports, legal and other fees incurred by Collateral Agent or Required Lenders
in connection with any documents to be provided by Debtors pursuant to this
Agreement and any other similar documents Collateral Agent may procure.
34
(d) Give Lenders prompt written notice of the following:
(i) The issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of any loan or
the initiation of any litigation or similar proceeding seeking any such
injunction, order or other restraint.
(ii) The notice, filing or commencement of any litigation or
governmental investigation or proceeding involving (u) amounts in excess of
$50,000 not fully covered by insurance, (v) any substantial claim or
dispute between any Loan Party or any of their respective Subsidiaries or
Affiliates and any Person, (w) any labor controversy resulting in or
threatening to result in a strike against any Loan Party or any of their
respective Subsidiaries or Affiliates, (x) any proposal by any public
authority to acquire a material portion of the assets or business of any
Loan Party or any of their respective Subsidiaries or Affiliates, (y) with
respect to any Indebtedness of any Loan Party or any of their respective
Subsidiaries or Affiliates with an outstanding principal balance of $50,000
or greater or (z) with respect to any Loan Document.
(iii) Any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) that is proposed to be taken with
respect thereto.
(iv) Any development in the business or affairs of any Loan
Party or any of their respective Subsidiaries or Affiliates that could have
a Material Adverse Effect.
(v) The creation, establishment or acquisition of any
Subsidiary by any Loan Party.
(vi) The hiring, termination or departure of the president or
the chief executive officer of any Loan Party or any of their respective
Subsidiaries or Affiliates; or the receipt of notice from any president or
the chief executive officer of any Loan Party or any of their respective
Subsidiaries or Affiliates of his or her resignation.
(vii) Upon request, copies of any documents delivered pursuant
to any Indebtedness of Parent or any of its Subsidiaries.
(e) Maintain financial records in accordance with generally accepted
practices and, upon reasonable prior notice, at all reasonable times and as
often as any Lender may reasonably request (and at any time after the occurrence
and during the continuation of a Default or Event of Default), permit any
authorized representative designated by any Lender to visit and inspect the
properties and financial records of any Loan Party and to make extracts from
such financial records, all at the Debtors' expense, and permit any authorized
representative designated by any Lender to discuss the affairs, finances and
conditions of any Loan Parties with its chief financial officer and such other
officers as such Loan Party shall deem appropriate, and such Loan Party
independent public accountants.
(f) FURTHER ASSURANCES. Promptly upon request by the Collateral Agent
or Required Lenders, the Debtors shall (and shall cause any of its Subsidiaries
and Affiliates to) take such additional actions as the Collateral Agent or
Required Lenders may reasonably require from time to time in order to carry out
more effectively the purposes of this Agreement or any other Loan Documents.
36
17. CONDITIONS PRECEDENT TO LOANS AND CONDITIONS PRECEDENT TO REC III
LOAN ASSIGNMENT.
(a) CONDITIONS PRECEDENT TO LOANS. This Agreement shall become
effective on the date hereof so long as each of the following conditions
precedent has been satisfied in form, substance and manner satisfactory to
Collateral Agent and Lenders:
(i) Lenders shall have received executed counterparts to this
Agreement and the Notes from each Debtor and to the Escrow Agreement from
RMI and the Escrow Agent;
(ii) Lenders shall have received the Parent Guaranty executed
by Parent;
(iii) Lenders shall have received from Debtors reimbursement for
all Secured Party Expenses incurred in connection with this Agreement;
(iv) Lenders shall have received an acknowledgement from Parent
that the obligations under the Parent Guaranty in favor of Collateral Agent
and Lenders constitutes "Senior Debt" under the Parent Indenture Documents;
(v) Lenders shall have received the WF Foothill Consent
executed by each party thereto and shall receive a Shareholder/Affiliate
Consent from each holder of any Shareholder/Affiliate Note;
(vi) Lenders shall have received good standing certificates
from the State of California and the jurisdiction of organization with
respect to each Debtor and Parent;
(vii) Lenders shall have received a favorable opinion of
Parent's and Debtors' inhouse counsel, in form and substance satisfactory
to Lenders;
(viii) Debtors shall have delivered to Lenders an officer's
certificate, in form and substance satisfactory to Lenders, to the effect
that all representations and warranties of the Loan Parties under the Loan
Documents are true and correct as of the date hereof, no Default or
Event of Default has occurred or will occur as of the date hereof and each
of the conditions set forth in this Section 17(a) have been satisfied as of
the closing date;
(ix) arrangements satisfactory to Lenders shall have been made
for the payment of the Escrow Account to the Escrow Agent; and
36
(x) All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by Lenders and their
counsel shall be satisfactory in form and substance to Lenders and such
counsel, and Lenders and such counsel shall have received all such
counterpart originals or certified copies of such documents as any Lenders
may reasonably request.
(b) CONDITIONS PRECEDENT TO REC III LOAN SETTLEMENT. The Escrowed
Funds shall not be applied to pay the Settlement Amount unless and until the
following conditions precedent has been satisfied in form, substance and
manner satisfactory to Collateral Agent and Lenders are satisfied on or prior
to the Escrow Termination Date:
(i) The Debtors shall have delivered the Prior Financing
Documents in its possession to Collateral Agent (which shall include,
however, the Lock Box Agreement and all other related agreements) and
assignments of all related financing statements to Collateral Agent, a
Settlement Agreement in form and substance satisfactory to Required Lenders
shall have been entered into and delivered to Collateral Agent, the REC III
Settlement Order shall have been entered, be effective and shall be in form
and substance satisfactory to Lenders, all of the rights to the Lock Box
Account and the Lock Box Agreement shall be satisfactory to the Lenders and
shall have been assigned to Collateral Agent in a manner acceptable to the
Collateral Agent and all conditions thereunder shall have be satisfied
except the payment of the Settlement Amount to REC III;
(ii) Lenders shall have received from Debtors reimbursement for
all Secured Party Expenses incurred in connection with this Agreement;
(iii) Lenders shall have received evidence that all liens
(except for liens in favor of Lenders) on the Collateral set forth or
Schedule 1 hereto have been released in a manner satisfactory to Collateral
Agent in Collateral Agent's sole discretion;
(iv) Lenders shall have received a favorable opinion of
Parent's and Debtors' inhouse counsel, in form and substance satisfactory
to Lenders;
(v) Debtors shall have delivered to Lenders an officer's
certificate, in form and substance satisfactory to Lenders, to the effect
that all representations and warranties of the Loan Parties under the Loan
Documents are true and correct as of the date hereof, no Default or Event
of Default has occurred or will occur as of the date hereof and each of the
conditions set forth in this Section 17(b) have been satisfied as of the
closing date;
(vi) No Default or Event of Default shall have occurred and
Loan Parties shall be in compliance with all of their respective
obligations under the Loan Documents; and
(vii) All corporate and other proceedings taken or to be taken
in connection with the Assignment Agreement and transactions contemplated
thereby and hereby and all documents incidental thereto not previously
found acceptable by Lenders and their counsel shall be satisfactory in form
and substance to Lenders and such counsel, and Lenders and such counsel
shall have received all such counterpart originals or certified copies of
such documents as any Lenders may reasonably request.
37
18. RELEASE. In consideration of the terms and conditions provided by
Collateral Agent and each Lender hereunder, each Debtor, on behalf of itself
and its stockholders and other affiliates and their successors and assigns
(collectively, "Releasors"), hereby forever waive, release and discharge to
the fullest extent permitted by law any and all claims (including, without
limitation, crossclaims, counterclaims, rights of set-off and recoupment),
causes of action, demands, suits, costs, expenses and damages (collectively,
the "Claims"), that any Releasor now has or hereafter may have, of whatsoever
nature and kind, whether known or unknown, whether now existing or hereafter
arising, whether arising at law or in equity, against Collateral Agent, each
Lender and their respective affiliates, shareholders and "controlling persons"
(within the meaning of the federal securities laws), and their respective
successors and assigns and each and all of the officers, directors, employees,
agents, attorneys and other representatives of each of the foregoing
(collectively, the "Releasees"), based in whole or in part on facts, whether
or not now known, existing on or before the execution of this Agreement. The
release of claims set forth in this Section 18 shall apply to all Claims
arising under the Prior Financing Agreements.
19. JOINT AND SEVERAL LIABILITY.
(a) Each of the Debtors shall be jointly and severally liable
hereunder and under each of the other Loan Documents with respect to all
Obligations, regardless of which of the Debtors actually received the proceeds
of the Loan or the benefit of any other extensions of credit from any Lender, or
the manner in which the Debtors or any Lender account therefor in their
respective books and records. Neither the joint and several liability of, nor
the liens granted to the Collateral Agent or any Lender under the Loan Documents
by, any of the Debtors shall be impaired or released by (i) the failure of the
Collateral Agent or any Lender or any successors or assigns thereof, or any
holder of any of the Obligations to assert any claim or demand or to exercise
or enforce any right, power or remedy against any Debtor, any guarantor, the
Collateral or otherwise; (ii) any extension or renewal for any period (whether
or not longer than the original period) or exchange of any of the Obligations
or the release or compromise of any obligation of any nature of any Debtor
with respect thereto; (iii) the surrender, release or exchange of all or any
part of any property (including without limitation the Collateral) securing
payment, performance and/or observance of any of the Obligations or the
compromise or extension or renewal for any period (whether or not longer than
the original period) of any obligations of any nature of any Debtor with
respect to any such property; (iv) any action or inaction on the part of the
Collateral Agent or any Lender, or any other event or condition with respect
to any other Debtor, including any such action or inaction or other event or
condition, which might otherwise constitute a defense available to, or a
discharge of, such Debtor or of the Obligations; and (v) any other act, matter
or thing (other than payment or performance of the Obligations) which would or
might, in the absence of this provision, operate to release, discharge or
otherwise prejudicially affect the obligations of such Debtor or any other
Debtor.
(b) To the extent that any Debtor shall make a payment under this
SECTION 19 of all or any of the Obligations (other than that portion of the Loan
made to that Debtor for which it is primarily liable) (a "GUARANTOR PAYMENT")
that, taking into account all other Guarantor Payments then previously or
38
concurrently made by any other Debtor, exceeds the amount that such Debtor would
otherwise have paid if each Debtor had paid the aggregate Obligations satisfied
by such Guarantor Payment in the same proportion that such Debtor's "Allocable
Amount" (as defined below) (as determined immediately prior to such Guarantor
Payment) bore to the aggregate Allocable Amounts of each of the Debtor as
determined immediately prior to the making of such Guarantor Payment, then,
following indefeasible payment in full in cash of the Obligations and
termination of this Agreement, such Debtor shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Debtor for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
(c) As of any date of determination, the "Allocable Amount" of any
Debtor shall be equal to the maximum amount of the claim that could then be
recovered from such Debtor under this Section 19 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(d) This Section 19 is intended only to define the relative rights of
Debtors and nothing set forth in this Section 19 is intended to or shall impair
the obligations of Debtors, jointly and severally, to pay any amounts as and
when the same shall become due and payable in accordance with the terms of this
Agreement.
(e) The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets of the Debtors to which
such contribution and indemnification is owing.
(f) The rights of the indemnifying Debtors against other Debtors
under this Section 19 shall be exercisable upon the full and indefeasible
payment of the Obligations and the termination of this Agreement.
20. ASSIGNMENT OF NOTES.
(a) RESTRICTED SECURITIES. Lenders acknowledge that the Notes have
not been registered under the Securities Act or 1933 (the "Securities Act") and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, and that the Issuers are
not required to register the Notes.
(b) LEGENDS; PURCHASER'S REPRESENTATIONS. Each of the Lenders hereby
represents and warrants to the Debtors that it is an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act and is acquiring the
Loans for investment for its own account, with no present intention of dividing
its participation with others (except for a potential transfer or transfers of
the Loans to an affiliate or affiliates of any Lender) or reselling or otherwise
distributing the same in violation of the Securities Act or any applicable state
securities laws. The Debtors may place an appropriate legend on the Notes owned
by Lenders concerning the restrictions set forth in this Section 20. Upon the
assignment or transfer by any Lender or any of its successors or assignees of
all or any part of the Loans, the term "Lender" as used herein shall thereafter
include, to the extent thereof, the then holder or holders of such Loans, or
portion thereof.
39
(c) TRANSFER OF NOTES. Subject to Section 20(b) hereof, a holder of
a Note may transfer such Note to a new holder, or may exchange such Note for
Notes of different denominations (but in no event of denominations of less than
$50,000 in original principal amount), by surrendering such Note to the Debtors
duly endorsed for transfer or accompanied by a duly executed instrument of
transfer naming the new holder (or the current holder if submitted for exchange
only), together with written instructions for the issuance of one or more new
Notes specifying the respective principal amounts of each new Note and the name
of each new holder and each address therefor. The Debtors shall simultaneously
deliver to such holder or its designee such new Notes, shall ▇▇▇▇ the
surrendered Notes as canceled and shall provide notice of such transfer to
Lender. In lieu of the foregoing procedures, a holder may assign a Note (in
whole but not in part) to a new holder by sending written notice to the Debtors
and Lenders of such assignment specifying the new holder's name and address; in
such case, the Debtors shall promptly acknowledge such assignment in writing to
both the old and new holder.
(d) REPLACEMENT OF LOTS SECURITIES. Upon receipt of evidence
reasonably satisfactory to the Debtors of the mutilation, destruction, loss or
theft of any Notes and the ownership thereof, the Debtors shall, upon the
written request of the holder of such Notes, execute and deliver in replacement
thereof new Notes in the same form, in the same original principal amount and
dated the same date as the Notes so mutilated, destroyed, lost or stolen; and
such Notes so mutilated, destroyed, lost or stolen shall then be deemed no
longer outstanding hereunder. If the Notes being replaced have been mutilated,
they shall be surrendered to the Issuers; and if such replaced Notes have been
destroyed, lost or stolen, such holder shall furnish the Issuers with an
indemnity in writing to save it harmless in respect of such replaced Note.
(e) NO OTHER REPRESENTATIONS AFFECTED. Nothing contained in this
Section 20 shall limit the full force or effect of any representation, agreement
or warranty made herein or in connection herewith to Collateral Agent or any
Lender.
21. THE COLLATERAL AGENT.
(a) AUTHORIZATION AND ACTION. Each Lender and each subsequent holder
of any Note by its acceptance thereof, hereby designates and appoints Post
Advisory as Collateral Agent hereunder and authorizes Post Advisory to take such
actions as agent on its behalf and to exercise such powers as are delegated to
Collateral Agent by the terms of this Agreement and the other Loan Documents,
together with such powers as are reasonably incidental thereto. Collateral Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of
Collateral Agent shall be read into this Agreement or otherwise exist for
Collateral Agent. In performing its functions and duties hereunder, Collateral
Agent shall act solely as agent for Lenders and does not assume, nor shall be
deemed to have assumed, any obligation or relationship of trust or agency with
or for Loan Party or any of their Subsidiaries or Affiliates or respective
successors or assigns. Collateral Agent shall not be required to take any action
that exposes Collateral Agent to personal liability or that is contrary to this
Agreement or applicable Laws. The appointment and authority of Collateral Agent
hereunder shall terminate at the indefeasible payment in full of the Loans and
related obligations.
40
(b) DELEGATION OF DUTIES. Collateral Agent may execute any of its
duties under any Loan Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. Collateral Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
(c) EXCULPATORY PROVISIONS. Neither Collateral Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
the Loan Documents (except for its, their or such Person's own gross negligence
or willful misconduct or, in the case of Collateral Agent, the breach of its
obligations expressly set forth in this Agreement, unless such action was taken
or omitted to be taken by Collateral Agent at the direction of the Required
Lenders), or (ii) responsible in any manner to any of Lenders for any recitals,
statements, representations or warranties made by any Loan Party contained in
any Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, any
Loan Document for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any Loan Document or any other document
furnished in connection herewith, or for any failure of any of the Loan Parties
to perform their respective obligations hereunder, or for the satisfaction of
any condition specified in Section 17. Collateral Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, any Loan Document, or to inspect the properties, books or records of any of
the Loan Parties.
(d) RELIANCE. Collateral Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Loan Party), independent
accountants and other experts selected by Collateral Agent. Collateral Agent
shall in all cases be fully justified in failing or refusing to take any action
under any Loan Document or any other document furnished in connection herewith
unless it shall first receive such advice or concurrence of the Required Lenders
or all of Lenders, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by Lenders; provided, that, unless and until
Collateral Agent shall have received such advice, Collateral Agent may take or
refrain from taking any action, as Collateral Agent shall deem advisable and in
the best interests of Lenders. Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, in accordance with a request
of the Required Purchasers or all of Lenders, as applicable, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all Lenders.
(e) NON-RELIANCE ON COLLATERAL AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that neither Collateral Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by Collateral Agent or
hereafter taken, including, without limitation, any review of the affairs of any
Loan Party, shall be deemed to constitute any representation or warranty by
Collateral Agent. Each Lender represents and warrants to Collateral Agent that
it has and will, independently and without reliance upon Collateral Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Loan Parties and made its own decision to enter into
this Agreement.
41
(f) COLLATERAL AGENT IN ITS INDIVIDUAL CAPACITY. Collateral Agent,
and each of its Affiliates may make loans to, purchase securities from, provide
services to, accept deposits from and generally engage in any kind of business
with any Loan Party or any Affiliate of any Loan Party as though Collateral
Agent were not Collateral Agent hereunder.
(g) SUCCESSOR COLLATERAL AGENT. Collateral Agent may, upon
forty-five (45) days' notice to the Loan Parties and Lender, and Collateral
Agent will, upon the direction of the Required Lenders (other than Collateral
Agent, in its individual capacity), resign as Collateral Agent. If Collateral
Agent shall resign, then the Required Lenders during such fifteen-day period
shall appoint a successor Collateral Agent and if the Required Lenders direct
Collateral Agent to resign, such direction shall include an appointment of a
successor Collateral Agent. If for any reason no successor Collateral Agent is
appointed by the Required Lenders during such fifteen-day period, then effective
upon the expiration of such fifteen-day period, Lenders shall perform all of the
duties of Collateral Agent hereunder and for all purposes shall deal directly
with Lenders. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 21 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Collateral
Agent under this Agreement.
(h) COLLECTIONS AND OTHER MATTERS. Collateral Agent will have the
right to collect and receive all Secured Party Expenses due to Collateral Agent
under this Agreement and the other Loan Documents with regard to the Notes.
Collateral Agent may treat the payees of any Note as the holder thereof until
written notice of the transfer thereof shall have been received by Collateral
Agent in accordance with Section 20.
(i) RIGHT TO INDEMNITY. Each Lender, in proportion to its pro rata
share of the Loans, severally agrees to indemnify Collateral Agent and its
officers, directors, employees, agents, attorneys, professional advisors and
Affiliates, to the extent that any such Person shall not have been reimbursed
by Debtors, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements and fees and disbursements of any financial
advisor engaged by Collateral Agent) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Collateral
Agent or such other Person in exercising the powers, rights and remedies or
Collateral Agent or performing the duties of Collateral Agent in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from Collateral Agent's gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction. If any indemnity furnished to Collateral Agent, be
insufficient or become impaired, Collateral Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
(j) THIS ARTICLE NOT APPLICABLE TO LOAN PARTIES. This Section 21 is
included in this Agreement solely for the purpose of determining certain rights
as between Collateral Agent and Lenders and does not create, nor shall it give
rise to, any rights in or obligations on the part of any Debtor and all rights
and obligations of the Debtors (other than as specifically set forth herein)
under this Agreement shall be determined by reference to the provisions of this
Agreement other than this Section 21.
42
22. PRIOR FINANCING DOCUMENTS. The obligations and liabilities of
Debtors under the Prior Financing Agreements shall from and after the date of
the REC III Loan Settlement be deemed to continue under this Agreement as the
Obligations of Debtors to Collateral Agent and Lenders and shall continue to be
secured by the Collateral in all cases subject to the terms and conditions of
this Agreement. The security interests and liens in the Collateral securing
the obligations and liabilities of the Debtors under the Prior Financing
Agreements shall as of the date of the REC III Loan Settlement, continue as
security interests and liens in the Collateral securing the Obligations
hereunder.
23. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such parties, and all the covenants, promises and agreements in this
Agreement contained by or on behalf of Debtors, Collateral Agent or Lenders
shall bind and inure to the benefit of the respective successors and assigns of
each party whether so expressed or not.
(b) PARTIAL INVALIDITY. The enforceability or invalidity of any
provision(s) of this Agreement shall not render any other provision(s) herein
contained unenforceable or invalid.
(c) NOTICES. All notices, requests and other communications made or
given in connection with this Agreement or any of the other Loan Documents will
be in writing and will be deemed to be received (i) upon personal delivery to
the individual or division or department to whose attention notices to a party
are to be addressed by private carrier, (ii) three (3) business days after being
sent by registered or certified mail, return receipt requested or (iii) upon
confirmed receipt by telecopy or e-mail with the original forwarded by
first-class mail, in all cases, with charges prepaid, addressed to any Debtor,
at the address set forth below, and to Collateral Agent and Lenders, at the
addresses set forth below or at such other address as shall be designated by
such Person in a written notice delivered to Debtors and Collateral Agent:
To Debtors: c/o ▇▇▇▇▇▇▇ Radiology Medical Group III
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Collateral Agent: Post Advisory Group, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
43
With copy to: O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
To a Lender: At the address of such Lender as set forth on
Schedule 2 hereto
With copy to: O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
(d) COUNTERPART; GOVERNING LAW. This Agreement may be executed,
acknowledged, and delivered in any number of counterparts, each of such
counterparts constituting an original but all together only one Agreement. This
Agreement and any other Loan Document (unless expressly set forth therein) shall
be construed and enforced in accordance with and governed by the laws of the
State of California without resort to principles of conflicts of laws.
(e) SURVIVAL. All representations, warranties, covenants and
agreements of the Debtors contained herein or made in writing in connection
herewith shall survive the execution and delivery of this Agreement and the
purchase of the Notes and shall continue in full force and effect so long as any
Loan is outstanding and until payment in full of all of the Debtors' obligations
hereunder or thereunder. All obligations relating to indemnification hereunder
shall survive any termination of this Agreement and shall continue for the
length of any applicable statute of limitations.
(f) JURISDICTION, CONSENT TO SERVICE OF PROCESS. THE LOAN PARTIES
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY CALIFORNIA STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE STATE OF
CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
PURCHASE DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
44
OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT
ANY RIGHT THAT COLLATERAL AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN
DOCUMENT AGAINST THE LOAN PARTIES OR THEIR PROPERTIES IN THE COURTS OF ANY
JURISDICTION. THE LOAN PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO
THE FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT IN ANY CALIFORNIA OR FEDERAL COURT. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT. EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 23(C) HEREOF. NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(g) JURY TRIAL WAIVER. THE DEBTORS HEREBY IRREVOCABLY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR (II) ARISING FROM ANY
DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT AND
AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
(h) SEVERABILITY; INDEPENDENT OF COVENANTS. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law in any
jurisdiction, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating any other provision of this
Agreement. All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of
a Default or Event of Default if such action is taken or condition exists.
(i) HEADINGS. Article, section and subsection headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(j) ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
constitutes the entire understanding or agreement between Collateral Agent,
Lenders and Debtors and there is no understanding or agreement, oral or written,
which is not set forth herein.
45
No amendment, modification, termination or waiver of any
provision of this Agreement or any other Loan Document to which any Debtor is
party and no consent to any departure by any Debtor therefrom, shall in any
event be effective without the written concurrence of Required Lenders; PROVIDED
that any such amendment, modification, termination, waiver or consent that:
reduces the principal amount of any of the Loans; changes in any manner the
definition of "Required Lenders"; changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders; postpones the scheduled final maturity date of any of the Loans;
postpones the date on which any interest is payable; decreases the interest rate
borne by any of the Loans (other than any waiver of any increase in the interest
rate applicable to any of the Loans pursuant to Section 3; or changes in any
manner the provisions contained in Section 10(a) or this paragraph shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders.
In addition, no amendment, modification, termination or waiver of any provision
(i) of any Note shall be effective without the written concurrence of the Lender
that is the holder of that Note, and (iii) of Section 21 or of any other
provision of this Agreement which, by its terms, expressly requires the approval
or concurrence of Collateral Agent shall be effective without the written
concurrence of Collateral Agent. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section shall be binding upon
each Lender at the time outstanding, each future Lender and, if signed by
Debtor, on such Debtor.
(k) CONSTRUCTION OF AGREEMENT; NATURE OF RELATIONSHIP. Each of the
parties hereto acknowledges that (i) it has been represented by counsel in the
negotiation and documentation of the terms of this Agreement, (ii) it has had
full and fair opportunity to review and revise the terms of this Agreement,
(iii) this Agreement has been drafted jointly by all of the parties hereto, and
(iv) neither Collateral Agent nor any Lender has any fiduciary relationship with
or duty to any Loan Party arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between Collateral Agent
and Lenders, on one hand, and each Loan Party, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor. Accordingly, each
of the parties hereto acknowledges and agrees that the terms of this Agreement
shall not be construed against or in favor of another party.
[Signature pages follow]
46
IN WITNESS WHEREOF, Debtors, Collateral Agent and Lenders have caused
this Agreement to be duly executed as of the day and year first above written.
LENDERS:
POST OPPORTUNITY FUND, L.P.
By: Post Advisory Group, LLC, its
General Partner
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Post
Title:Chief Investment Officer
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
POST BALANCED FUND, L.P.
By: Post Advisory Group, LC, its
General Partner
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Post
Title:Chief Investment Officer
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
S-1
THE OPPORTUNITY FUND LLC
By: Post Advisory Group, LC, its
Authorized Agent
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Post
Title:Chief Investment Officer
Address: c/o Post Advisory Group, LLC,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SOUTH DAKOTA INVESTMENT COUNCIL
By: Post Advisory Group, LC, its
Authorized Agent
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Post
Title:Chief Investment Officer
Address: c/o Post Advisory Group, LLC,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
COLLATERAL AGENT:
POST ADVISORY GROUP, LLC
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Post
Title:Chief Investment Officer
S-2
DEBTORS:
RADNET MANAGEMENT, INC.
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
DIAGNOSTIC IMAGING SERVICES, INC.
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
RADNET SUB, INC.
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
RADNET MANAGED IMAGING SERVICES, INC.
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
S-3
