1
EXHIBIT 10.10
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT ("Agreement") is made and entered
into as of May 17, 1995 among American Shared Hospital Services, a California
corporation, American Shared-CuraCare, a California general partnership,
CuraCare, Inc., a Delaware corporation (collectively, "Debtor"), DVI Financial
Services Inc. ("DVIFS") and DVI Business Credit Corporation ("DVIBC" and,
together with DVIFS, sometimes referred to herein, collectively, as "DVI") and
General Electric Company, a New York corporation acting through GE Medical
Systems ("GE").
RECITALS
A. CuraCare, Inc. ("CuraCare") and American Shared-CuraCare ("AS-C")
are presently indebted to GE pursuant to certain notes, loan and security
agreements and equipment leases, including, without limitation (1) a promissory
note in the principal amount of $2,000,000 from AS-C to GE (the "Deferral
Note"), (2) CuraCare's guaranty of the Deferral Note ("Guaranty"), and (3)
various equipment leases between (a) GE and CuraCare and (b) GE and AS-C (the
"GE Leases" and, together with the Deferral Note, sometimes referred to herein,
collectively, as the "GE Affected Debt"). As security for the payment and
performance of the Deferral Note and Guaranty, and each of them, CuraCare and
AS-C, and each of them, pursuant to Security Agreements dated as of November 1,
1994 (collectively the "Security Agreements") have granted to XX x xxxx and
security interest in certain assets of CuraCare and AS-C, including Accounts
(as defined in Section 1 of the Security Agreements), whether from third parties
of Debtor or affiliates of Debtor, and all rights of Debtor to receive monies
due and to become due under or pursuant to (a) such Accounts, (b) Contract
Rights (as defined in Section 1 of the Security Agreements), or (c) chattel
paper, documents, instruments and other obligations of any kind of Debtor, now
or hereafter existing (the "Accounts Receivable Collateral"), which lien is
currently of first priority.
B. DVI has been requested by Debtor to provide Debtor with loans,
secured by, among other collateral, the Accounts Receivable Collateral. Debtor
concurrently herewith has entered into certain Loan and Security Agreements with
DVIFS and DVIBC,
1
2
respectively, (the "Loan Agreements") pursuant to which DVI will extend credit
and make advances to Debtor.
C. GE has been requested by Debtor to provide Debtor with an additional
loan, secured by certain collateral, more particularly described as the
"UCSF Gamma Knife" (as defined in the loan and security documentation
between Debtor and GE).
D. GE represents and warrants that the Accounts Receivable Collateral
secures the Deferral Note and Guaranty only and does not secure any other GE
Debt, including the GE Leases or the loan secured by the UCSF Gamma Knife. GE
further represents and warrants that none of the GE Debt is cross-collateralized
with respect to the Accounts Receivable Collateral, including the Deferral Note,
GE Leases or the loan secured by the UCSF Gamma Knife.
E. DVI and GE wish to agree as to their respective liens upon and
security interests in the Accounts Receivable Collateral and the UCSF Gamma
Knife and as to certain other rights, priorities and interests.
NOW, THEREFORE, for value received and in consideration of the
mutual covenants herein, the parties hereto intend to be legally bound and
hereby do agree as follows:
AGREEMENT
1. For purposes of this Agreement, the following terms are
used as hereinafter defined:
(a) "Acceleration Date" shall mean the earliest date
of election specified in the notice provided by DVI or GE, as the case may be,
pursuant to Section 2(b) hereof.
(b) "DVI Debt" shall mean any and all indebtedness,
liabilities and obligations, in an aggregate amount, for the purposes of this
Agreement, up to, but not to exceed, the principal amount of Six Million Five
Hundred Thousand Dollars ($6,500,000) plus an amount not to exceed Five Hundred
Thousand Dollars ($500,000) for any other obligations including, but not limited
to, interest, late charges, taxes, attorneys' fees, court costs, indemnities,
and costs of repossession, transportation, storage, resale or re-lease, repair
or refurbishment of any collateral, owed by Debtor to DVIBC or DVIFS
2
3
due and payable under, and evidenced by, the Loan Agreements, and any extensions
or renewals thereof, and whether direct or indirect, absolute or contingent, now
existing or hereafter arising.
(c) "DVIBC Debt" shall mean any and all indebtedness,
liabilities and obligations, in an aggregate amount for the purposes of this
Agreement, up to but not to exceed the principal amount of Four Million Dollars
($4,000,000), owed by Debtor to DVIBC due and payable under, and evidenced by,
the Loan Agreements, and any extensions or renewals thereof, and whether direct
or indirect, absolute or contingent, now existing or hereafter arising.
(d) "DVIFS Debt" shall mean any and all indebtedness,
liabilities and obligations, in an aggregate amount, for the purposes of this
Agreement, up to but not to exceed the principal amount of Two Million Five
Hundred Thousand Dollars ($2,500,000), owed by Debtor to DVIFS due and payable
under, and evidenced by, the Loan Agreements, and any extensions or renewals
thereof, and whether direct or indirect, absolute or contingent, now existing or
hereafter arising.
(e) "GE Debt" shall mean any and all indebtedness,
liabilities and obligations owed by Debtor to GE, whether direct or indirect,
absolute or contingent, now existing or hereafter arising (including, without
limitation, the GE Affected Debt).
(f) "Liquidation" shall refer to the collection,
liquidation and disposition of the Accounts Receivable Collateral.
(g) "Second Lien Liquidation Proceeds" shall mean
proceeds, if any, from the Liquidation of Accounts Receivable Collateral, other
than such proceeds, if any, received or to be received by DVIBC in connection
with such Liquidation in respect of DVIBC's first priority lien and security
interest in the Accounts Receivable Collateral.
(h) "UCC" shall mean the California Uniform Commercial
Code.
3
4
2. Relative Priorities relating to Accounts Receivable
Collateral.
(a) The parties agree at all times, whether before,
during or after the pendency of any bankruptcy, reorganization or other
insolvency proceeding, and notwithstanding the time of granting or of perfection
of any security interest or lien or the time of filing or of recording of any
financing statements or any other documents, instruments or agreements under the
UCC or any other applicable law and as relates only to DVIBC Debt (i) DVIBC
shall have a first priority lien upon and security interest in the Accounts
Receivable Collateral superior to GE's security interest therein, and any
security interest of GE therein, whether now existing or hereafter acquired,
shall be subordinate to DVIBC's security interest therein; and (ii) each of GE
and DVIFS shall have a second and junior lien upon and security interest in the
Accounts Receivable Collateral ranking equally in priority.
(b) In the event that either of DVIBC or DVIFS elects
to accelerate any or all of Debtor's obligations pursuant to xxx XXX Xxxx, XXX
shall, forthwith upon such acceleration, notify GE in writing of such election
and the date thereof. In the event that GE elects to accelerate any or all of
Debtor's obligations pursuant to the GE Affected Debt, GE shall, forthwith upon
such acceleration, notify DVI in writing of such election and the date thereof.
The failure of either party to give the notice required by this section 2(b)
shall not affect the validity of the acceleration of the indebtedness with
respect to Debtor or create any claim or right on behalf of any third party. The
sending of such notice by either party shall not impose on the recipient thereof
any obligation to cure any default or Event of Default.
(c) GE and DVIFS (as related only to DVIFS Debt) shall
share in equal amounts and on an equal basis (pari passu) in all Second Lien
Liquidation Proceeds, if any, from any Liquidation of Accounts Receivable
Collateral.
(d) Irrespective of whether any Event of Default shall
have occurred under any agreements evidencing the DVI Debt or the GE Debt, and
notwithstanding any provisions of the UCC, so long as any DVI Debt remains
unpaid, and DVIBC retains a security interest in the Accounts Receivable
Collateral, GE shall not take
4
5
any action to foreclose or realize upon or enforce any of its rights with
respect to the Accounts Receivable Collateral, including but not limited to,
notifying any account debtor, without the prior written consent of DVI, and
shall hold all Accounts Receivable Collateral and proceeds thereof, which may
come into GE's possession in trust for DVI, and shall turn over any such
collateral to DVI upon request. This provision does not limit GE's exercise of
any rights and remedies it may have under the GE Leases.
3. Relative Priorities Relating to UCSF Gamma Knife.
(a) The parties agree, at all times, whether before,
during or after the pendency of any bankruptcy, reorganization or other
insolvency proceeding, and notwithstanding the time of granting or of perfection
of any security interest or lien or the time of filing or of recording of any
financing statements or any other documents, instruments or agreements under the
UCC or any other applicable law that GE shall have a first priority lien upon
and security interest in the UCSF Gamma Knife superior to DVI's security
interest therein, and any security interest of DVI therein, whether now existing
or hereafter acquired, shall be subordinate to GE's security interest therein.
(b) Irrespective of whether any Event of Default shall
have occurred under the terms of any agreements evidencing the GE Debt or the
DVI Debt, and notwithstanding any provisions of the UCC, so long as any of the
GE Debt remains unpaid, and GE retains a security interest in the UCSF Gamma
Knife, DVI shall not take any action to foreclose or realize upon or enforce any
of its rights with respect to the UCSF Gamma Knife without the prior written
consent of GE, and shall hold all collateral and proceeds thereof, which may
come into DVI's possession in trust for GE, and shall turn over any such
proceeds to GE upon request.
(c) All proceeds realized from any disposition of the
UCSF Gamma Knife shall be allocated between, and shared by, GE and DVI in
conformity with their respective lien priorities.
4. Waivers and Consents. DVI and GE, and each of them, may at
any time, and from time to time, without notice to, or consent of the other
party, and without affecting or impairing
5
6
the priority, subordination, rights and obligations under this Agreement, do any
of the following:
(a) Modify, (as permitted by Section 4(h) with respect
to the DVI Debt) renew or extend any DVI Debt or GE Debt respectively;
(b) Accept partial payment of any DVI Debt or GE Debt,
respectively;
(c) Settle, release (by operation of law or
otherwise), compound, compromise, collect or liquidate any DVI Debt or GE Debt,
respectively, and the collateral therefor in any manner;
(d) Consent to the transfer or sale of any collateral
securing any DVI Debt or GE Debt, respectively; or
(e) Bid and purchase at any sale of any sale of any
collateral securing any DVI Debt or GE Debt, respectively.
(f) Except for the notices required by Section 2(b) of
this Agreement, DVI and GE, and each of them, waive all notices, protests and
demands, including, but not limited to, notice of (i) default or (ii) payment or
in performance or observance of any of the terms, provisions, covenants or
conditions contained in any agreement or instrument with Debtor evidencing any
senior DVI Debt or senior GE Debt, respectively.
(g) DVI and GE, and each of them, agree that the
validity of this Agreement and the subordination, priority, rights and
obligations of DVI and GE, and each of them, shall not be terminated, affected
or impaired by reason of the waiving, delaying, exercising or non-exercising of
either party's rights relating to its debt or as a result of the substitution,
release, repossession, sale, disposition or destruction of any collateral, or by
either party's failure or delay to perfect or continue the perfection of any
security interest in any Collateral or to perfect the Collateral securing the
indebtedness owed to either party by Debtor.
(h) DVIBC may at any time, and from time to time,
without notice to, or consent of GE, and without affecting or impairing the
priority, subordination, rights and obligations
6
7
under this Agreement, and with respect to the DVIBC Debt only, subject to the
limitations set forth in Section 1(c) above, increase or reduce the amount of
the DVIBC Debt, modify any formula or requirements for determining Eligible
Accounts, modify the Net Collectible Value or Net Collectible Percentage of the
Accounts, and modify the amounts of, and formula for determining, Advances and
Advance Percentages. All capitalized terms in this Subsection 4(h) shall have
the meanings set forth in the Loan Agreement between DVIBC and Debtor.
5. Debtor Repayment. GE hereby agrees that, at any time a
payment with respect to the GE Debt is made thereto by Debtor and DVI has
provided written notice to GE within thirty (30) days of such payment that
amounts are then due and payable to DVI under the DVI Debt, GE shall pay over to
DVI the amount then due and payable to DVI pursuant to the DVI Debt (including
any balloon payments but excluding any amounts which have been accelerated by
DVI), in each case as of the date of receipt of such notice by GE, provided,
however, that any such payment by GE to DVI shall not exceed the amount of such
payment by Debtor to GE. Debtor acknowledges that any such payment by GE to DVI
will be deemed to reduce the amount of any such payment by Debtor with respect
to such portion of the Affected GE Debt, as determined by GE, and that Debtor
will therefore be in default with respect to such Affected GE Debt. Debtor
agrees, on the date of payment, to notify DVI in writing of the date and amount
of any payment made to GE with respect to the GE Debt.
6. Parties Intended to be Benefitted. All of the
understandings, covenants and agreements contained herein are solely for the
benefit of DVI and GE, and there are no other parties (including Debtor or any
of its creditors, successors or assigns) which are intended to be benefitted, in
any way, by this Agreement.
7. No Limitation Intended. Nothing contained in this Agreement
is intended to or shall affect or limit, in any way, the rights that DVI and GE
have with respect to Debtor or any third parties pursuant to any written
agreement or otherwise. DVI and GE hereby specifically reserve all of their
respective rights against Debtor and all other third parties. DVI shall be
entitled to deal with Debtor free from interference by GE, and GE shall be
entitled to deal with Debtor free from interference by DVI. Nothing contained in
this Agreement, nor any action taken
7
8
by any of the parties hereto, is intended to constitute or shall be deemed to
xxxxxxxxxx XXX and GE as a partnership, association, joint venture or other
entity.
8. Waiver of Marshalling. GE specifically waives and renounces
any right, under any applicable law, including California Civil Code Section
3433 or any analogous statute, which it may have, whether at law or in equity,
to require DVI to xxxxxxxx the collateral unless it has been granted a security
interest by Debtor, or any portion thereof, or to otherwise seek satisfaction
from any particular assets of Debtor or from any third party.
9. Term. This Agreement shall have a term expiring upon the
later of (a) the repayment, performance and satisfaction in full of the DVI Debt
and the release by DVIBC and DVIFS of their respective security interests in the
Accounts Receivable Collateral, or (b) the repayment, performance and
satisfaction in full of the GE Debt and the release by GE of its respective
security interest in the UCSF Gamma Knife.
10. Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties hereto, or whenever any of the
parties desires to give or serve upon the others communications with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be delivered
either in person, with receipt acknowledged, or by regular, registered, or
certified United States mail, postage prepaid, or by telefacsimile, addressed as
follows:
(a) If to DVIBC or DVIFS, at:
DVI Financial Services, Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. X'Xxxxxx
Telefacsimile Number: (000) 000-0000
8
9
(b) If to GE, at:
GE Medical Systems
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Manager - Financial Services
Telefacsimile Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. Giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, or actually received via telefacsimile transmission,
or three (3) days after the same shall have been deposited in the United States
mail.
11. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which shall together constitute one and the same Agreement.
12. THE CONSTRUCTION, INTERPRETATION, VALIDITY AND
ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS
OF THE STATE OF CALIFORNIA. In any action, suit, arbitration or mediation
relating to the enforcement of this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including reasonable attorneys'
fees.
13. This Agreement shall become effective upon the execution
of the Loan Agreements by and between DVIFS and DVIBC, and each of them and
Debtor, the form of which shall be reasonably acceptable to GE in its good faith
judgment.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
DEBTOR:
AMERICAN SHARED HOSPITAL SERVICES,
a California corporation
9
10
By: ___________________________________________________
Title:_____________________________________________
AMERICAN SHARED-CURACARE, a California
general partnership
By: AMERICAN SHARED HOSPITAL SERVICES
Its: General Partner
By: __________________________________________
Xxxxxx X. Xxxxx, M.D.
Chief Executive Officer
CURACARE, INC., a Delaware corporation
By: _________________________________________________
Xxxxxx X. Xxxxx, M.D.
Chief Executive Officer
DVI:
DVI FINANCIAL SERVICES INC.
By: _________________________________________________
Title:___________________________________________
DVI BUSINESS CREDIT CORPORATION
By: _________________________________________________
Title:___________________________________________
10
11
GE:
GENERAL ELECTRIC COMPANY, a New York
corporation acting through GE MEDICAL
SYSTEMS
By: ________________________________________________
Title:__________________________________________
11
