EXHIBIT 10.17
FORM OF LOCKUP AGREEMENT
LOCKUP AGREEMENT, dated as of February , 2007, by and among InSight
Health Services Holdings Corp., a Delaware corporation (the "Company"), and the
undersigned beneficial owners (or investment managers or advisors for the
beneficial owners) of the Notes (as defined below) (for the avoidance of doubt
this does not include any Notes beneficially owned by non-affiliated customers
of the undersigned) identified on Schedule A to this Agreement (defined
hereinafter) on the date of this Agreement and each other beneficial owner (or
investment managers or advisors for the beneficial owners) of Notes that
executes a counterpart signature page to this Agreement after the date of this
Agreement as provided in Section 23 (collectively, the "Concurring Noteholders,"
and each, individually, a "Concurring Noteholder").
For purposes hereof, all references in this Agreement to Concurring
Noteholders or parties that are "signatories to this Agreement" shall mean, as
of any date of determination, those Noteholders or parties, as the case may be,
who executed and delivered this Agreement as an original signatory on or before
the date of this Agreement, together with those additional Noteholders or
parties, as the case may be, who after the date of this Agreement but, on or
before such date of determination, become party to this Agreement by executing
and delivering counterpart signature pages as provided in Section 23. After the
date of this Agreement, when Noteholders become signatories to this Agreement,
Schedule A shall be updated to include the Notes held by such Noteholder.
WHEREAS, the Company and the Concurring Noteholders have engaged in good
faith negotiations with the objective of restructuring the debt and equity
capital structures of the Company (the "Restructuring"), substantially as
reflected in the Term Sheet (as defined below) which sets forth the terms and
conditions of (i) the Exchange Offer, (ii) the Consent Solicitation and (iii)
the Prepackaged Plan (each as defined below); and
WHEREAS, the Company and the Concurring Noteholders desire that the Company
conduct the Exchange Offer and the Consent Solicitation as soon as practicable
on the terms described in the Term Sheet to accomplish the Restructuring, or, if
necessary under the terms of the Term Sheet, that the Company commence a case
under Chapter 11 of the Bankruptcy Code to accomplish the Restructuring through
the confirmation of the Prepackaged Plan (the "Prepackaged Proceeding").
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the parties
signatory to this Agreement hereby agrees as follows:
1. Definitions. The following terms shall have the following meanings:
"Ad Hoc Committee" means the informal committee of holders of Notes.
"Agreement" means this Lockup Agreement, including the Schedules,
Annexes and Exhibits hereto (including any agreements incorporated herein
or therein), all of which are incorporated by reference herein.
"Board" means the Board of Directors of the Company.
"Common Stock" means the common stock, par value $0.001 per share, of
the Company.
"Consent Solicitation" means the solicitation by the Company of the
consent of the Noteholders to amend certain of the terms of the Indenture
to remove substantially all material affirmative and negative covenants set
forth therein other than the obligation to pay principal and interest on
the Notes.
"Exchange Offer" means the offer by the Company to exchange 36,598,986
shares of Common Stock, which may be adjusted pursuant to a reverse stock
split, for the outstanding Notes, such consideration to be ratably adjusted
in the event the offer is not fully subscribed.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations of the Federal Trade
Commission promulgated thereunder.
"Indenture" means the Indenture (as amended, modified or supplemented
from time to time), dated as of October 30, 2001, among InSight, as issuer,
the Company and the subsidiaries listed in the preamble thereto, as
guarantors, and U.S. Bank Trust National Association, as trustee or any
successor trustee.
"Indenture Amendment" means an amendment to the Indenture, which,
among other things, deletes substantially all material affirmative and
negative covenants other than the obligation to pay principal and interest
on the Notes contained in the Indenture.
"InSight" means InSight Health Services Corp., a Delaware corporation
and a wholly-owned subsidiary of the Company.
"Material Adverse Change" means any change, event or effect that is
materially adverse to the operations or financial condition of the Company
and its subsidiaries (taken as a whole); provided that the filing of the
Prepackaged Proceeding shall not constitute a Material Adverse Change; and
provided further that a change shall not be considered to be a Material
Adverse Change if (x) its effect is not likely to last beyond the term of
this Agreement; or (y) it arises from actions required to be taken by the
Company pursuant to this Agreement.
"Minimum Tender Condition" means the condition to the consummation of
the Exchange Offer that there be validly tendered and not withdrawn not
less than 95% in aggregate principal amount of the Notes.
"Noteholder" means any beneficial owner of Notes.
"Notes" means the 9 7/8% Senior Subordinated Notes due 2011 in the
aggregate principal amount at maturity of $194.5 million, issued by InSight
pursuant to the Indenture.
"Person" means any individual, partnership, corporation, limited
liability company, association, trust, joint venture, unincorporated
organization, governmental unit or other entity.
"Prepackaged Plan" means a prepackaged plan of bankruptcy under
Chapter 11 of the United States Bankruptcy Code prepared by the Company to
be implemented in the event that insufficient tenders of Notes and consents
have been received from the Noteholders to satisfy or cause the Company to
waive the Minimum Tender Condition, but sufficient votes of an accepting
class under section 1126 of the United States Bankruptcy Code have been
received.
"Required Noteholders" means Concurring Noteholders holding a majority
in aggregate principal amount of and accrued interest on the Notes held by
all Concurring Noteholders.
"Securities Act" means the Securities Act of 1933, as amended.
"Term Sheet" means that certain Term Sheet attached hereto as Annex A
which sets forth the material terms and conditions of the Restructuring.
"Transfer" means to directly or indirectly (i) sell, pledge, assign,
encumber, grant an option with respect to, transfer or dispose of any
participation or interest (voting or otherwise) in or (ii) enter into an
agreement, commitment or other arrangement to sell, pledge, assign,
encumber, grant an option with respect to, transfer or dispose of any
participation or interest (voting or otherwise) in, or the act thereof.
2. Agreement to Complete the Restructuring. Subject to the terms and
conditions of this Agreement and so long as this Agreement remains in effect as
between the Company and a Concurring Noteholder, the Company and such Concurring
Noteholder agree to use commercially reasonable best efforts to complete the
Restructuring through the Exchange Offer and the Consent Solicitation, as each
is described in the Term Sheet; or, alternatively, if the Minimum Tender
Condition is not satisfied or waived or the Company is otherwise not able to
consummate the Exchange Offer but the required consents of holders of the Notes
are received to confirm the Prepackaged Plan, then through the Prepackaged Plan
in accordance with the terms of
the Term Sheet. The obligations of the parties hereunder are several and not
joint and no party hereto shall be responsible for the failure of any other
party hereto to perform its obligations hereunder.
3. The Company's Obligations to Support the Restructuring. (a) The Company
agrees to use its commercially reasonable best efforts to commence the Exchange
Offer and the Consent Solicitation as promptly as practicable, to do all things
reasonably necessary and appropriate in furtherance thereof, including filing
any related documents with the Securities and Exchange Commission (the
"Commission"), and to use its commercially reasonable best efforts to complete
the same within 120 days of the date of commencement of the Exchange Offer.
(b) If all of the conditions to the Exchange Offer are not satisfied
or waived by May 1, 2007, but the required consents of holders of the Notes
are received to confirm the Prepackaged Plan, then on such date (or such
earlier or later date as the Company may determine), the Company shall file
the Prepackaged Proceeding and seek confirmation of the Prepackaged Plan.
(c) Subject to the terms and conditions of this Agreement, the Company
shall use its best efforts to take all necessary action to effect a
restructuring of its board of directors concurrently and in connection with
and conditioned upon the consummation of the Restructuring on the terms set
forth in the Term Sheet.
(d) The Company further agrees that it will not object to, or
otherwise commence any proceeding to oppose the Restructuring and shall not
take any action that is inconsistent with, or that would unreasonably delay
the consummation of, the Restructuring.
(e) Nothing in this Agreement shall be deemed to prevent the Company
from taking, or failing to take, any action that it is obligated to take
(or fail to take) in the performance of any fiduciary or similar duty which
the Company owes to any other Person; it being understood and agreed that
if any such action (or failure to act) results in (i) an alteration of the
terms of the Restructuring not permitted by Section 6 or (ii) the Company
giving written notice of its intent to terminate this Agreement pursuant to
Section 7(v), this Agreement and all of the obligations and undertakings of
the parties set forth in this Agreement, other than the obligations of the
Company contained in Section 9, shall terminate and expire.
4. Concurring Noteholders' Obligations to Support the
Restructuring. Subject to the terms and conditions of this Agreement and so
long as this Agreement remains in effect as between the Company and a Concurring
Noteholder:
(a) Concurring Noteholder agrees, in connection with and conditioned
upon consummation of the Restructuring upon the terms set forth in the Term
Sheet, to: (i) tender its Notes pursuant to and in accordance with the
Exchange Offer and the other terms and conditions of the Term Sheet within
ten business days following the commencement of the Exchange Offer; (ii)
grant its consent pursuant to the Consent Solicitation and agree to the
Indenture Amendment; (iii) vote to accept the Prepackaged Plan within ten
business days following the commencement of the Exchange Offer; (iv) vote
to reject any plan of reorganization for the Company that does not contain
the terms of the Restructuring substantially as set forth in the Term
Sheet; and (v) subject to the terms of the Term Sheet, not to withdraw or
revoke any of the foregoing unless and until this Agreement is terminated
in accordance with its terms. Each Concurring Noteholder acknowledges that
by tendering its Notes in the Exchange Offer, it will be deemed to have
delivered the consents required in the Consent Solicitation for the
Indenture Amendment.
(b) Each Concurring Noteholder agrees, so long as this Agreement
remains in effect, not to Transfer any of the Notes held by it, in whole or
in part, unless the Transferee agrees in writing to be bound by the terms
of this Agreement. In the event that any Concurring Noteholder Transfers
any of the Notes, as a condition precedent to such Transfer, such
Concurring Noteholder agrees to cause the Transferee to execute and deliver
a joinder agreement in customary form confirming the agreement of such
Transferee to be bound by the terms of this Agreement for so long as this
Agreement shall remain in effect. In the event that the Company's consent
is required for any Transfer of the Notes, the Company hereby agrees to
grant such consent promptly in accordance with the requirements of this
Agreement. Any Transfer of the Notes in violation of the foregoing shall be
deemed ineffective to Transfer any right to accept or
reject the Exchange Offer, to consent to or reject the Indenture Amendment,
or to accept or reject the Prepackaged Plan, which right shall remain with
and be exercised only by the purported transferor.
(c) Each Concurring Noteholder agrees that it will (i) not vote for,
consent to, provide any support for, participate in the formulation of, or
solicit or encourage others to formulate any other tender offer, settlement
offer, or exchange offer for the Notes other than the Exchange Offer; and
(ii) permit public disclosure, including in a press release, of the
contents of this Agreement, including, but not limited to, the commitments
contained in this Section 4 and the Term Sheet, but not including
information with respect to such Concurring Noteholder's specific ownership
of Notes.
(d) Each Concurring Noteholder further agrees that it will not object
to, or otherwise commence any proceeding to oppose, the Restructuring and
shall not take any action that is materially inconsistent with, or that
would unreasonably delay the consummation of, the Restructuring in
accordance with the terms of the Term Sheet. Accordingly, so long as this
Agreement is in effect, each Concurring Noteholder agrees that it shall not
(i) object to confirmation of the Prepackaged Plan or otherwise commence
any action or proceeding to alter, oppose or add any other provision to the
Prepackaged Plan or any other documents or agreements consistent with the
Prepackaged Plan; (ii) object to the approval of any disclosure statement
that describes the Prepackaged Plan; (iii) vote for, consent to, support,
intentionally induce or participate directly or indirectly in the formation
of any other plan of reorganization or liquidation proposed or filed, or to
be proposed or filed, in any Chapter 11 case for the Company; (iv) commence
or support any action or proceeding to shorten or terminate the period
during which only the Company may propose and/or seek confirmation of a
plan of reorganization for the Company; (v) directly or indirectly seek,
solicit, support or encourage any other plan, sale, proposal or offer of
winding up, liquidation, reorganization, merger, consolidation, dissolution
or restructuring of the Company; or (vi) commence or support any action
filed by the Company or any other party in interest to appoint a trustee,
conservator, receiver or examiner for the Company, or to dismiss any
Chapter 11 case, or to convert such Chapter 11 case to one under Chapter 7.
(e) Nothing in this Agreement shall be deemed to prevent any
Concurring Noteholder from taking, or failing to take, any action that it
is obligated to take (or fail to take) in the performance of any fiduciary
or similar duty which the Concurring Noteholder owes to any other Person,
including any duties that may arise as a result of any Concurring
Noteholder's appointment to any committee in the Prepackaged Proceeding or
any other bankruptcy or insolvency proceeding.
(f) Each Concurring Noteholder further agrees that any Notes acquired
by such Concurring Noteholder following the date of this Agreement shall be
subject to the terms and conditions of this Agreement and shall be subject
to the same treatment in the Restructuring as the Notes held by such
Concurring Noteholder as of the date hereof. For the avoidance of doubt,
this shall not include any acquired Notes beneficially owned by non-
affiliated customers of the undersigned Concurring Noteholder.
(g) Subject to Section 2 of this Agreement, each Concurring Noteholder
agrees that so long as it is the legal owner or beneficial owner of all or
any portion of either a referenced "claim" or referenced "interest" within
the meaning of 11 U.S.C. sec.sec. 101, et seq. (each a "Claim"), it will:
(i) take all reasonable steps to support the Prepackaged Plan, use its
commercially reasonable best efforts to defend the adequacy of pre-petition
disclosure and solicitation procedures in connection with the Prepackaged
Plan and the Exchange Offer and, to the extent necessary, support the
adequacy of any post-petition disclosure statement that may be required by
the bankruptcy court and circulated in connection herewith or therewith;
(ii) from and after the date hereof, not agree to, consent to, provide any
support to, participate in the formulation of, or vote for any plan of
reorganization or liquidation of the Company, other than the Prepackaged
Plan; and (iii) agree to permit disclosure in the Prepackaged Plan or any
document ancillary thereto (hereinafter a "Reorganization Document") or any
necessary filings by the Company with the Commission of the contents of
this Agreement (excluding information with respect to any Concurring
Noteholder's specific ownership of Notes, except to the extent such
information is required to be included in any filings with the Commission).
(h) Each Concurring Noteholder agrees that so long as it is a holder
of all or any portion of a Claim, it shall not object to, or otherwise
commence any proceeding to oppose or alter, the Prepackaged Plan or any
other Reorganization Document and shall not take any action which is
inconsistent with, or that would unreasonably delay or impede approval or
confirmation of the Prepackaged Plan or any of the Reorganization
Documents. Without limiting the generality of the foregoing, no Concurring
Noteholder may directly or indirectly seek, solicit, support or encourage
any other plan, sale, proposal or offer of dissolution, winding up,
liquidation, reorganization, merger, consolidation, liquidation or
restructuring of the Company that could reasonably be expected to prevent,
delay or impede the confirmation of the Prepackaged Plan or approval of any
Reorganization Document.
(i) Each of the Concurring Noteholders agrees to waive its respective
rights and remedies under the Indenture and related documents or applicable
law in respect of or arising out of any "Default" (as defined in such
documents) or "Event of Default" (as defined in such documents) arising
under the Indenture, until this Agreement is terminated as provided in
Section 7. If this Agreement is terminated as provided in Section 7, the
agreement of the Concurring Noteholders to waive shall automatically and
without further action terminate and be of no force and effect, it being
expressly agreed that the effect of such termination shall be to permit
each of them to exercise any rights and remedies immediately; provided that
nothing herein shall be construed as a waiver by the Company of any right
it may have as a "debtor" under the Prepackaged Proceeding or other
bankruptcy proceeding or by any Noteholder to seek adequate protection
retroactive to the date of filing of the Prepackaged Proceeding or other
bankruptcy proceeding.
5. Effectiveness of this Agreement. The effectiveness of this Agreement,
and the respective obligations of the parties under this Agreement, are
conditioned upon the receipt of the consent and signature hereto of the Company
and Noteholders holding a majority of the aggregate principal amount at maturity
of the Notes.
6. Amendments to the Restructuring. The Company shall not alter the terms
of the Restructuring in a manner that adversely affects any Concurring
Noteholder without the prior written consent of such Noteholder, which consent
shall not be unreasonably withheld, of the inconsistently adversely affected
Concurring Noteholder. Notwithstanding the foregoing, the Company may extend the
expiration date of the Exchange Offer to any date not later than September 30,
2007 if at the time of any such extension, the conditions to closing set forth
in the Exchange Offer shall not have been satisfied or waived as provided in
this Agreement, provided, however, that no such extension of the Expiration Date
shall impair or limit the otherwise applicable rights of a Concurring Noteholder
to withdraw from and terminate this Agreement pursuant to the terms of Section 7
(b) of this Agreement.
7. Termination of Agreement. Notwithstanding anything to the contrary set
forth in this Agreement:
(a) Unless the Restructuring has been consummated as provided in this
Agreement, this Agreement and all of the obligations and undertakings of
the parties set forth in this Agreement shall terminate and expire upon the
earliest to occur of:
(i) May 31, 2007, (provided that if a Prepackaged Proceeding is
filed as set forth in Section 3(b), such date shall be September 30,
2007), unless extended pursuant to Section 6;
(ii) receipt of written notice from the Required Noteholders of
their intent to terminate this Agreement upon the occurrence of a
Material Adverse Change;
(iii) a material alteration by the Company of the terms of the
Restructuring not permitted under Section 6;
(iv) receipt by the Company of written notice from the Required
Noteholders of their intent to terminate this Agreement upon the
occurrence of a material breach by the Company of its obligations,
representations or warranties under this Agreement that is incurable
or that is curable and is not cured within 30 days after notice of
such breach;
(v) receipt by each Concurring Noteholder and the Ad Hoc
Committee of written notice from the Company of its intent to
terminate this Agreement upon a determination by the Board that such
termination is in the best interests of the Company;
(vi) the sixtieth day following the filing of any involuntary
bankruptcy or other insolvency proceeding involving the Company, other
than the Prepackaged Proceeding contemplated by this Agreement, if
such proceeding has not been dismissed by such day;
(vii) the Prepackaged Proceeding being dismissed or converted to
chapter 7; and
(viii) receipt by the Company of written notice from the Required
Noteholders to terminate this Agreement due to the Company's failure
to pay the fees and expenses incurred by the parties hereto in
connection with the Restructuring;
(b) Any individual Concurring Noteholder shall have the right to
withdraw from and terminate this Agreement as between said Concurring
Noteholder and the Company upon the occurrence of any one of the following
events or circumstances by giving written notice to the Company of its
election to withdraw and terminate at any time following the occurrence of
any said event or circumstance:
(i) the failure of the condition specified in Section 5 of this
Agreement to be satisfied on or before March 20, 2007;
(ii) the failure of the Company to receive executed Lockup
Agreements and/or consents to the Exchange Offer and the Prepackaged
Plan from holders of Notes representing at least two-thirds in
principal amount of total outstanding Notes on or before May 1, 2007;
and
(iii) the failure of the Company to commence the Prepackaged
Proceeding on or before May 31, 2007 in the event it receives executed
Lockup Agreements and/or consents to the Exchange Offer and the
Prepackaged Plan from holders of Notes representing at least two-
thirds in principal amount of total outstanding Notes but does not
satisfy the Minimum Tender Condition as of said date
provided however that the obligations of the Company contained in Section 9
shall survive any termination pursuant to this Section 7.
8. Representations and Warranties. (a) Each of the signatories to this
Agreement represents and warrants to the other signatories to this Agreement
that:
(i) if an entity, it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite corporate, partnership or other power and authority to enter into
this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement;
(ii) the execution and delivery of this Agreement and the performance
of its obligations hereunder have been duly authorized by all necessary
corporate, partnership or other action on its part; (iii) the execution,
delivery and performance by it of this Agreement do not and shall not (A)
violate any provision of law, rule or regulation applicable to it or any of
its affiliates or its certificate of incorporation or bylaws or other
organizational documents or those of any of its subsidiaries or (B)
conflict with, result in the breach of or constitute (with due notice or
lapse of time or both) a default under any material contractual obligations
to which it or any of its affiliates is a party or under its certificate of
incorporation, bylaws or other governing instruments;
(iv) the execution, delivery and performance by it of this Agreement
do not and shall not require any registration or filing with, the consent
or approval of, notice to, or any other action with respect to, any
Federal, state or other governmental authority or regulatory body, except
for (A) the registration under the Securities Act of the shares of the
Common Stock to be issued in the Exchange Offer and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the state securities or Blue Sky laws in connection with the
issuance of those shares, (B) such other filings as may be necessary or
required by the Commission, and (C) any filings required under the HSR Act;
(v) in the case of each of the Concurring Noteholders, assuming the
execution and delivery of this Agreement by the Company, and in the case of
the Company, assuming the due execution and delivery of this Agreement by
each of the Concurring Noteholders, this Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its
terms; and
(vi) it has been represented by counsel in connection with this
Agreement and the transactions contemplated by this Agreement.
(b) Each of the Concurring Noteholders further represents and warrants to
the other signatories to this Agreement that:
(i) as of the date of this Agreement, such Concurring Noteholder is
the beneficial owner of, or the investment adviser or manager for the
beneficial owners of, the principal amount at maturity of the Notes, set
forth opposite such Concurring Noteholder's name on Schedule B hereto, with
the power and authority to vote and dispose of such Notes;
(ii) such Concurring Noteholder has reviewed, or has had the
opportunity to review, with the assistance of professional and legal
advisors of its choosing, sufficient information necessary for such
Concurring Noteholder to decide to tender its Notes pursuant to the
Exchange Offer and to accept the proposed terms of the Prepackaged Plan as
set forth in the Term Sheet; and
(iii) as of the date of this Agreement, such Concurring Noteholder is
not aware of any event that, due to any fiduciary or similar duty to any
other Person, would prevent it from taking any action required of it under
this Agreement.
9. Payment of Expenses. The Company hereby agrees to, or to cause InSight
to, reimburse the Ad Hoc Committee for all reasonable out-of-pocket fees and
expenses incurred in connection with the Restructuring, including but not
limited to fees and disbursements of one counsel to the Ad Hoc Committee,
pursuant to the terms of (i) that certain letter agreement dated January 29,
2007 between InSight and Xxxxx Xxxxxxx Xxxxxxx Israels LLP and (ii) that certain
letter agreement dated February 6, 2007 between the Company and Xxxxxxxxx &
Company, Inc.
10. Preparation of Restructuring Documents. Notwithstanding anything to
the contrary contained in this Agreement, the obligations of the signatories to
this Agreement shall be subject to the preparation of definitive documents (in
form and substance reasonably satisfactory to each of the parties hereto and
their respective counsel) relating to the transactions contemplated by this
Agreement, including, without limitation, the documents relating to the Exchange
Offer, the Prepackaged Plan, the Consent Solicitation and each Reorganization
Document, which documents shall be in all respects materially consistent with
this Agreement (including the Term Sheet) and shall include appropriate
releases.
11. Good Faith. Each of the signatories to this Agreement agrees to
cooperate in good faith with each other to facilitate the performance by the
parties of their respective obligations hereunder and the purposes of this
Agreement. Each of the signatories to this Agreement further agrees to review
and comment upon the definitive documents in good faith and, in any event, in
all respects consistent with the Term Sheet.
12. Amendments and Modifications. Except as otherwise expressly provided
in this Agreement, this Agreement shall not be amended, modified or
supplemented, except in writing signed by the Company and the Required
Noteholders.
13. No Waiver. Each of the signatories to this Agreement expressly
acknowledges and agrees that, except as expressly provided in this Agreement,
nothing in this Agreement is intended to, or does, in any manner waive, limit,
impair or restrict the ability of any party to this Agreement to protect and
preserve all of its rights, remedies and interests, including, without
limitation, with respect to its claims against and interests in the Company.
14. Further Assurances. Each of the signatories to this Agreement hereby
further covenants and agrees to execute and deliver all further documents and
agreements and take all further action that may be reasonably
necessary or desirable in order to enforce and effectively implement the terms
and conditions of this Agreement.
15. Complete Agreement. This Agreement, including the Schedules and
Annexes hereto, constitutes the complete agreement between the signatories to
this Agreement with respect to the subject matter hereof and supersedes all
prior and contemporaneous negotiations, agreements and understandings with
respect to the subject matter hereof. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the intent of the signatories to
this Agreement.
16. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be (a) transmitted by
hand delivery, or (b) mailed by first class, registered or certified mail,
postage prepaid, or (c) transmitted by overnight courier, or (d) transmitted by
telecopy, and in each case, if to the Company, at the address set forth below:
InSight Health Services Holdings Corp.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: General Counsel
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
if to a Noteholder, to the address set forth on the signature pages to this
Agreement, with a copy to:
Xxxxx Xxxxxxx Xxxxxxx Israels LLP
Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
if to the Ad Hoc Committee, to:
Xxxxx Xxxxxxx Xxxxxxx Israels LLP
Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Notices mailed or transmitted in accordance with the foregoing shall be deemed
to have been given upon receipt.
17. Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York, except to the extent such law is preempted by the
Federal Bankruptcy Code.
18. Jurisdiction. By its execution and delivery of this Agreement, each of
the signatories to this Agreement irrevocably and unconditionally agrees that
any legal action, suit or proceeding against it with respect to any matter under
or arising out of or in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding,
shall be brought (a) in the United States Bankruptcy Court for the district in
which the Company has commenced a case under Chapter 11 of the Bankruptcy Code
or (b) in a federal or state court of competent jurisdiction in the State of New
York, located in the Borough of Manhattan if the Company has not commenced a
case under Chapter 11 of the Bankruptcy Code. By its execution and delivery of
this Agreement, each of the signatories to this Agreement irrevocably accepts
and submits itself to the jurisdiction of the United States Bankruptcy Court for
the district in which the Company has commenced a case under Chapter 11 of the
Bankruptcy Code, or a court of
competent jurisdiction in the State of New York, as applicable under the
preceding sentence, with respect to any such action, suit or proceeding.
19. Consent to Service of Process. Each of the signatories to this
Agreement irrevocably consents to service of process by mail at the address
listed with the signature of each such party on the signature pages to this
Agreement. Each of the signatories to this Agreement agrees that its submission
to jurisdiction and consent to service of process by mail is made for the
express benefit of each of the other signatories to this Agreement.
20. Specific Performance. It is understood and agreed by each of the
signatories to this Agreement that money damages would not be a sufficient
remedy for any breach of this Agreement by any party and each non-breaching
party shall be entitled to specific performance, injunctive, rescissionary or
other equitable relief as remedy for any such breach.
21. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
22. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of the signatories to this Agreement and their respective
successors, permitted assigns, heirs, executors, administrators and
representatives. The agreements, representations and obligations of the
undersigned parties under this Agreement are, in all respects, several and not
joint.
23. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page by facsimile shall be effective as delivery of a manually
executed counterpart. Any Noteholder may become party to this Agreement on or
after the date of this Agreement by executing a signature page to this
Agreement.
24. No Third-Party Beneficiaries. Unless expressly stated in this
Agreement, this Agreement shall be solely for the benefit of the signatories to
this Agreement, and no other Person or entity shall be a third-party beneficiary
hereof.
25. No Solicitations. This Agreement is not intended to be, and each
signatory to this Agreement acknowledges that it is not, a solicitation of the
acceptance or rejection of any prepackaged plan of reorganization for the
Company pursuant to Section 1125 of the Bankruptcy Code.
26. Consideration. It is hereby acknowledged by each of the signatories to
this Agreement that no consideration (other than the obligations of the other
parties under this Agreement) shall be due or paid to the parties for their
agreement to support the Prepackaged Plan in accordance with the terms and
conditions of this Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed and delivered by its duly authorized officers as of the date first
written above.
INSIGHT HEALTH SERVICES HOLDINGS CORP.
By: ------------------------------
SIGNATURE PAGE TO LOCKUP AGREEMENT DATED AS OF
SCHEDULE A
NOTEHOLDERS AND AGGREGATE PRINCIPAL AMOUNT OF NOTES HELD
AGGREGATE PRINCIPAL
AMOUNT OF SENIOR
SUBORDINATED NOTES HELD
BY NOTEHOLDERS:
SCHEDULE B
ANNEX A
SUMMARY OF TERMS AND CONDITIONS
This term sheet (the "Term Sheet") contains the material terms of the
proposed financial restructuring of InSight Health Services Corp. and its
affiliates (together, the "Company"). This Term Sheet does not constitute an
offer to sell or a solicitation of an offer to buy any securities. This Term
Sheet contemplates that the Company will negotiate with a committee of
Noteholders and their advisors (the "Committee").
THE EXISTING NOTES: $194.5 million 9.875% Senior Subordinated Notes due
2011 (the "Notes").
THE TRANSACTION: On the effective date (the "Effective Date"), the
holders of the outstanding principal amount of the
Notes (the "Noteholders") will receive newly-issued
shares of common stock ("Common Stock") of InSight
Health Services Holdings Corp. ("Holdings")
representing 87% of all issued and outstanding shares
of New Common Stock as of the Effective Date in
exchange for their Notes (assuming 100%
participation) in a registered exchange offer subject
to dilution resulting from the issuance of equity
under the Management Incentive Plan. To the extent
that less than 100% of the Notes are tendered, the
aggregate amount of shares allocable to the
Noteholders shall be reduced by the percentage of the
Notes that are not tendered. The Company's Board and
Existing Equity Holders (as defined below) will adopt
the necessary resolutions and amend Holdings'
Certificate of Incorporation to increase the
authorized share capital of Holdings and to issue and
allot the new Common Stock to the Noteholders.
On the Effective Date, the holders of existing shares
of Common Stock of Holdings (the "Existing Equity
Holders") will retain their existing equity
representing 13% of all issued and outstanding shares
of Common Stock as of the Effective Date subject to
dilution resulting from the issuance of equity under
the Management Incentive Plan.
The Company will take necessary actions to comply
with applicable public company requirements,
including exchange listing requirements.
EXIT CONSENTS: Noteholders exchanging the Notes shall be deemed to
have agreed to certain to-be-determined modifications
and amendments to the Notes and the indenture
governing the Notes.
MANAGEMENT INCENTIVE
PLAN: A management incentive plan will be implemented by
the Company to provide equity incentives to its
management. Any equity issued under the Management
Incentive Plan will dilute all holders of Common
Stock, including the Noteholders and the Existing
Equity Holders, on a pro rata basis.
CONDITIONS: Closing of the transaction shall be conditioned upon,
among other things, (i) a minimum acceptance
threshold requirement of 95% of the outstanding Notes
subject to the Company's ability to change the
threshold at its discretion, (ii) confirmation that
the proposed Transaction does not create any
materially adverse tax consequences for the Company,
and (iii) there not having occurred an
event or condition that has had or reasonably could
have a material adverse effect on the business,
assets or financial performance of the Company.
PROFESSIONAL FEES: The Company will pay the reasonable fees and expenses
of professional advisors to the Committee in
accordance with fee reimbursement letter agreements
to be negotiated.
BOARD OF DIRECTORS: Composition of the board of directors (the "Board")
of Holdings to be as follows upon the Effective Date:
(i) four (4) directors designated by the Committee,
(ii) two (2) directors designated by the Existing
Equity Holders and (iii) one (1) management-appointed
director. The directors designated by the Committee
shall be reasonably acceptable to the current Board
and shall comply with the director independence
requirements that are imposed on public companies.
LOCKUP AGREEMENTS: Upon agreement among the Company and the Committee
regarding the terms of this Term Sheet, each member
of the Committee will enter into a formal Lockup
Agreement, which will (i) indicate Noteholder support
for the transaction, the principal terms of which
shall be incorporated into the Lockup Agreement, (ii)
indicate Noteholder consent for a prepackaged plan of
reorganization under chapter 11 of the United States
Bankruptcy Code as an alternative if the requisite
consents to the transaction are not obtained and
(iii) ensure that if a Note is sold or conveyed in
any way (a "Sale Transaction"), the Sale Transaction
will be conditioned upon the assumption of the Lockup
Agreement by the transferee of the Note.
REGISTRATION RIGHTS: Existing Equity Holders will have usual and customary
Registration Rights.
EXISTING OPTIONS: Existing options are currently out-of-the-money and
are expected to remain outstanding.
MANAGEMENT EQUITY
INCENTIVE: Usual and customary for comparable transactions.
RELEASES: Usual and customary for comparable transactions.
INDEMNIFICATION: Usual and customary for comparable transactions.
D & O INSURANCE: Usual and customary for comparable transactions.
