EXHIBIT 10.1
SECOND AMENDED, RESTATED AND CONSOLIDATED
LOAN AND SECURITY AGREEMENT
THIS SECOND 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"), ("Debtors" and each 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
WHEREAS, each of the Debtors is obligated to DVI Financial Services, Inc.,
as debtor and debtor-in-possession ("DVI Financial"), in the amounts set forth
on Schedule 1 hereto (as of the date hereof) as evidenced by those loan
agreements, loan and security agreements, master leases, schedules and
promissory notes set forth on Schedule 1 hereto, including that certain Amended,
Restated and Consolidated Loan Agreement dated as of July 1, 2004 (the "First
Consolidated Loan Agreement") among Debtors and DVI Financial (collectively, as
any of the foregoing may have been amended, modified, supplemented, extended or
restated from time to time, the "Prior Financing Documents");
WHEREAS, each of the Debtors, DVI Financial, DVI, Inc., as debtor and
debtor-in-possession ("DVI Inc."), and DVI Business Credit Corporation, as
debtor and debtor-in-possession ("DVI Business Credit", and, together with DVI
Financial and DVI Inc., the "DVI Parties"), have entered into that certain
Settlement and Mutual Release Agreement dated as of October 29, 2004 (as
amended, modified or supplemented prior to the date hereof, the "Settlement
Agreement") which contemplates, among other things, that DVI Financial and the
other DVI Parties will assign the Loans, the Collateral (as such terms are
defined herein) and the other Assigned Interests (as defined therein) to the
Lenders free of all liens, claims and interests upon entry by the DVI Bankruptcy
Court of the Supplemental Radnet Settlement Order (as such terms are defined in
the Settlement Agreement) and the satisfaction of the conditions set forth in
Section 1 of the Settlement Agreement);
WHEREAS, the DVI Bankruptcy Court has entered the Supplemental Radnet
Settlement Order, the Debtors have designated the Lenders as the Radnet Lender
as defined in the Settlement Agreement and have requested and instructed that
the Lenders collectively wire $11,000,000 to DVI Financial as contemplated by
the Settlement Agreement and this Agreement;
WHEREAS, the Debtors acknowledge and agree that Debtors will be
unconditionally and irrevocably obligated to pay and perform the Obligations
as provided herein and have agreed to amend, restate and consolidate the Prior
Financing Documents on the terms and conditions set forth herein;
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WHEREAS, Primedex Health Systems, Inc., a New York corporation ("Parent"),
has agreed to reaffirm and amend and restate its guaranty of the Obligations
pursuant to the Guaranty annexed as Exhibit B-1 hereto (as amended, modified or
supplemented from time to time, the "Parent Guaranty");
WHEREAS, Xxxxxx X. Xxxxxx and Xxxx Xxxxxx (collectively, "Xxxxxx") have
agreed to reaffirm and amend and restate their guaranty of the Obligations
pursuant to the Guaranty annexed as Exhibit B-2 hereto (the "Xxxxxx Guaranty")
and each holder of the Stockholder Notes (as defined herein) has consented to
this Agreement and the transactions contemplated hereby; and
WHEREAS, (a) Xxxxx Fargo Foothill, Inc. ("Xxxxx Fargo Foothill"), as agent
for the 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 Xxxxx Fargo Foothill, as agent, has consented to this
Agreement and the transactions contemplated hereby pursuant to the consent
annexed as Exhibit C-1 hereto, (b) General Electric Capital Corporation and
any other lenders party to the Master Amendment Agreement dated as of July 29,
2004 (the "GE Agreement") with Debtors have consented to this Agreement and the
transactions contemplated hereby pursuant to the consent annexed as Exhibit C-2
hereto and (c) U.S. Bank, N.A. as trustee and its affiliate (U.S. Bank
Portfolio Services), as servicer with respect to securitization trusts
established by DVI Financial or its Affiliates, have consented to this
Agreement and the transactions contemplated hereby pursuant to the consent
annexed as Exhibit C-3 hereto (such consents, collectively, the "Debtor
Consents");
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)
shall be deemed to be Affiliates of the Debtors.
"Collateral" shall mean any assets of Debtors now or hereafter securing
the Obligations; it being understood, however, that the Collateral shall not
include any capital stock or warrants to acquire capital stock 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.
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"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.
"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.
"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 Supplemental Radnet Settlement Order, the Parent Guaranty, the
Xxxxxx Guaranty, the Security Documents and other Prior Refinancing Documents
and all other guarantees, reaffirmation of guarantees, security agreements,
pledge agreements, notes, instruments and other documents and agreements
executed in connection with this Agreement or the Prior Loan Documents and/or
otherwise securing or supporting the Obligations; it being understood, however,
that the only guarantors of the Obligations other than the Debtors shall be
Parent and Xxxxxx and that the Collateral shall not include any capital stock
or warrants of Parent or any of its Subsidiaries.
"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 June 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.
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"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.
"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.
"Required Lenders" shall mean, at any time, Lenders holding a pro rata
percentage of the outstanding principal amount of the Loans aggregating at
least 51% at such 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, (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 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.
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"Security Documents" means collectively, (i) that certain Master
Security Agreement dated as of May 1, 2002 between RMI and DVI Financial,
(ii) that certain Master Security Agreement dated as of March 20, 2002
between DIS and DVI Financial, (iii) that certain Master Security Agreement
dated as of July 11, 2001 between RMI and DVI Financial, (iv) that certain
Securities Pledge Agreement dated as of Xxxxxxxx 00, 0000 xxxxxxx XXX xxx XXX
Financial and (v) 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.
"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 3a(1) of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under
the Exchange Act.
"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.
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, (i) there exists an outstanding amount of principal and interest of not
less than $15,200,000 owing to DVI Financial under the Prior Financing Documents
and no amounts are owed to any other Person under the Prior Financing Documents,
including any other DVI Party, and no Liens granted thereunder secure
obligations owed to any Person other than DVI Financial, including any other
DVI Party, (ii) the Debtors are not in default of their respective payment or
other obligations under the Prior Financing Documents and (iii) 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.
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(b) Issuance of Notes and Acquisition of Obligations. The Debtors have
duly authorized the issuance to Lenders of $15,200,000 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 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) all the Prior Financing Documents
shall be amended, restated and consolidated into this Agreement and all
Assigned Interests shall be assigned to the Lenders pursuant to the Settlement
Agreement and the Supplemental Radnet Settlement Order, (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 the
Notes and shall be in the principal amount of $15,200,000 (the "Loan"),
(iii) the Debtors shall sell to Lenders, and Lenders shall purchase from the
Debtors, the Notes in the aggregate principal amounts set forth on Schedule 2
hereof, (iv) as the purchase price for the Loans and at the instruction of the
Debtors, the Lenders severally agree to pay to DVI Financial the amounts set
forth in Schedule 2 hereof which are $11,000,000 in the aggregate, 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. Interest shall accrue on the outstanding amount
of the Loan at a rate per annum equal to nine percent (9%) for the period from
the date the Lenders make the payment to DVI Financial contemplated hereby
through and including, the last Business Day in December, 2004 and equal to
eleven percent (11%) thereafter, 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) on
the last business day of December, 2004, interest only on the Loan shall be
paid in arrears in the amount of $114,000 for December, 2004 plus, if the
Closing Date occurs on or prior to November 30, 2004, interest accrued from
and including the Closing Date through November 30, 2004, (ii) thereafter,
commencing on January 31, 2005 and on the last business day of each month
thereafter, monthly installments of all interest accrued on the Loan shall be
paid and (iii) 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.
(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 November 1, 2005, 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 designated below, it being understood that such
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principal amount is less than the outstanding principal of Loans as an agreed
upon incentive to facilitate prepayment of the Loans as provided in this
Section 2(d):
Principal Payment
Date of Prepayment Amount
------------------ ------------------
November 1, 2005 through $13,886,000
January 31, 2006
February 1, 2006 through $13,755,000
April 30, 2006
May 1, 2006 through $13,624,000
July 31, 2006
August 1, 2006 through $13,493,000
October 31, 2006
November 1, 2006 to but $13,100,000
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 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 shall become due and payable on the prepayment date
set forth in such notice, unless such notice is withdrawn by the Debtors not
less than five (5) days prior to such date.
(e) PAYMENTS TO LENDERS. The Debtors will pay all sums becoming due on
the Loan for principal, interest 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 then
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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 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.
(f) 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
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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 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(f) 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.
(g) INTEREST LIMITATION. This Agreement, the Notes and the other Loan
Documents are hereby limited by this Section 2(g). 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.
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) The provisions under the Prior Financing Documents granting liens
and security interests in the Collateral of Debtors are hereby 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 DVI Financial) on behalf of
the Lenders and shall continue to 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
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agrees, acknowledges and confirms with Collateral Agent and each Lender that
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 DVI Financial, all references to DVI Financial
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.
(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 the equipment and other 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
assignments of financing statements in favor of DVI Financial 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 a 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.
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; none of the Collateral Agent
or any Lender is the manufacturer, dealer, vendor or supplier of said
collateral; the Collateral is of a size, design capacity, description and
manufacture selected by the Debtor; Debtor is satisfied that the Collateral is
10
suitable and fit for its 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, WORKMANSHIP IN THE COLLATERAL, OR ANY OTHER REPRESENTATION
OR WARRANTY WHATSOEVER. Each Debtor acknowledges and agrees that neither the
manufacturer, vendor, a dealer or supplier, nor any salesman, representative,
or other agent of the manufacturer, dealer, vendor or supplier, is an agent of
the Collateral Agent or any Lender. No salesman, representative or agent of
the manufacturer, dealer vendor or supplier is authorized to waive or alter
any term or condition of this agreement and no representation as to the
Collateral or any other matter by any manufacturer dealer, vendor or supplier
shall affect any Debtor's duty to pay the Loan and perform the other obligations
as set forth in this Agreement and the other Loan Documents.
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
11
each Debtor enforceable in accordance with their respective terms. Assuming
the accuracy of the representation of Lenders set forth in Section 20(b), 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.
(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
12
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.
(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.
13
(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 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.
(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.
14
(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 arising from an agreement or
alleged agreement of any Debtor or any of its Affiliates.
(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.
(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) That if a certificate of title is required or permitted by law, such
Debtor shall obtain such certificate with respect to the Collateral, showing
the security interests of Collateral Agent thereon and in any event do
everything necessary or expedient to preserve or perfect the security interest
of Collateral Agent.
15
(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.
(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) Xxxx 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.
16
(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), General Electric Capital
Corporation or Xxxxx Fargo Foothill (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) That it will continue to satisfy all claims of third parties
relating to any of the Prior Financing Documents which are unfunded.
(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.
(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 Distributions 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, (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
17
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.
(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
"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.
18
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 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, 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) Whenever Required Lenders, in good faith, believes the prospect of
payment or performance is impaired or in good faith believes the Collateral is
insecure;
(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 in excess of $100,000;
(h) If any Debtor or any other Loan Party is in default of the terms
and conditions of any Indebtedness or lease in excess of $100,000; or
(i) Parent shall own or otherwise permit to exist any Subsidiary that is
not a wholly-owned Subsidiary of RMI other than RMI.
19
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 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;
20
(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 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 IN COMPLIANCE WITH APPLICABLE
SECURITIES LAW. 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.
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15. NON-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 xxxxx 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), 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.
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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 reasonably 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 thirty (30) 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), which reports, Debtors' represent and warrant shall
fully and fairly represent the true financial condition of such Debtors, and
(ii) updated projections for Debtors and for each center.
(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.
(d) 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.
17. CONDITIONS PRECEDENT. 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:
(a) Lenders shall have received executed counterparts to this Agreement
and the Notes from each Debtor;
(b) Lenders shall have received the Parent Guaranty executed by Parent,
and the Xxxxxx Guaranty executed by Xxxxxx Xxxxxx and Xxxx Xxxxxx (limited to
$850,000 in the aggregate for both Xxxxxx Xxxxxx and Xxxx Xxxxxx);
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(c) Debtors shall have designated the Lenders as the "Radnet Lender"
under the Settlement Agreement, Lenders shall have received executed
counterparts to the Settlement Agreement and the Certificate designating
Lenders as the Radnet Lender thereunder, DVI Financial shall have delivered the
Prior Financing Documents and assignments of all related financing Statements
to Collateral Agent, the Supplemental Radnet Settlement Order shall have been
entered, be effective and shall be in form and substance satisfactory to Lenders
and all conditions thereunder to the assignment of the Assigned Interests to the
Lender shall have be satisfied except the payment of $11 million to DVI
Financial.
(d) Lenders shall have received from Debtors reimbursement for all
Secured Party Expenses incurred in connection with this Agreement;
(e) 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;
(f) 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;
(g) RMI shall have satisfied all claims of third parties relating to any
of the Prior Financing Documents which are unfunded;
(h) Lenders shall have received the Lender Consents executed by each
party thereto;
(i) Lenders shall have received good standing certificates from the
State of California with respect to each Debtor;
(j) Lenders shall have received a favorable opinion of Debtors' in-house
counsel, in form and substance satisfactory to Lenders; and
(k) Debtors shall have delivered to Lenders an officer's certificate, in
form and substance satisfactory to Lenders, to that 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 have been satisfied as of the closing date.
(l) 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.
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
24
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 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.
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(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.
(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 $100,000 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
26
simultaneously deliver to such holder or its designee such new Notes, shall
xxxx 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 LOST 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.
(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.
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(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.
(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.
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(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.
22. AMENDMENT AND RESTATEMENT. This Agreement amends and restates the
provisions of the Prior Financing Agreements and, as of the date hereof, except
as expressly modified herein, all of the terms and provisions of the Prior
Financing Agreements shall continue to apply for the period prior to the date
hereof, including any determinations of payment dates, interest rates, Events
29
of Default or any amount that may be payable. The obligations and liabilities
of Debtors to Collateral Agent and Lenders under the Prior Financing Agreements
shall from and after the date hereof 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 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 Xxxxxxx Radiology Medical Group III
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
To Collateral Agent: Post Advisory Group, LLC
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx and Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To A Lender: At the address of such Lender as set forth
on Annex A hereto
30
With Copy to: O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
E-Mail: xxxxxxx@xxx.xxx
(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
Commonwealth of Pennsylvania without resort to principles of conflicts of laws.
Each Debtor agrees to submit to the jurisdiction of the State and/or Federal
Courts in the Commonwealth of Pennsylvania.
(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 OR PENNSYLVANIA
XXXXX XXXXX XX XXXXXXX XXXXX XX XXX XXXXXX XXXXXX OF AMERICA SITTING IN THE
STATE OF CALIFORNIA OR PENNSYLVANIA, 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 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
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
31
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT IN ANY CALIFORNIA OR PENNSYLVANIA 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; INDEPENDENCE 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.
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
32
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]
33
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 TOTAL RETURN FUND, L.P.
By: Post Advisory Group, LLC,
its General Partner
By:
-------------------------------
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
POST TOTAL RETURN OFFSHORE FUND, L.P.
By: Post Advisory Group, LLC,
its Authorized Agent
By:
-------------------------------
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
POST OPPORTUNITY FUND, L.P.
By: Post Advisory Group, LLC,
its General Partner
By:
-------------------------------
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
S-1
POST BALANCED FUND, L.P.
By: Post Advisory Group, LLC,
its General Partner
By: ___________________________
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
THE OPPORTUNITY FUND LLC
By: Post Advisory Group, LLC,
its Authorized Agent
By: ___________________________
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
SOUTH DAKOTA INVESTMENT COUNCIL
By: Post Advisory Group, LLC,
its Authorized Agent
By: ___________________________
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
HFR DS OPPORTUNITY MASTER TRUST
By: Post Advisory Group, LLC,
its Authorized Agent
By: ___________________________
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
S-2
SPHINX DISTRESSED (MW POST
OPPORTUNITY), SEGREGATED PORTFOLIO
By: Post Advisory Group, LLC,
its Authorized Agent
By: ___________________________
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
COLLATERAL AGENT:
POST ADVISORY GROUP, LLC
By: ___________________________
Name: Xxxxxxxx X. Post
Title: Chief Investment Officer
S-3
DEBTORS:
RADNET MANAGEMENT, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
DIAGNOSTIC IMAGING SERVICES, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
S-4
