ALLIANCE IMAGING, INC.
NINTH AMENDMENT
TO NOTE PURCHASE AGREEMENT
This NINTH AMENDMENT TO NOTE PURCHASE AGREEMENT (this "NINTH AMENDMENT")
is dated as of April 15, 1996 and entered into by and among Alliance Imaging,
Inc., a Delaware corporation (the "COMPANY") and each of the holders listed
on the signature page hereto (the "HOLDERS"), and is made with reference to
that certain Note Purchase Agreement dated as of April 14, 1989, as amended
by that certain First Amendment to Note Purchase Agreement dated as of
September 20, 1990, that certain Second Amendment to Note Purchase Agreement
dated as of June 3, 1991, that certain Third Amendment to Note Purchase
Agreement dated as of December 1, 1991, that certain Fourth Amendment to Note
Purchase Agreement dated as of December 31, 1992, that certain Fifth
Amendment to Note Purchase Agreement dated as of June 30, 1993, that certain
Sixth Amendment to Note Purchase Agreement dated as of March 18, 1994, that
certain Seventh Amendment to Note Purchase Agreement dated as of December 31,
1994, and that certain Eighth Amendment to Note Purchase Agreement dated as
of December 31, 1994 (as so amended, the "PURCHASE AGREEMENT"), by and among
the Company and the Holders. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Purchase Agreement.
RECITALS
WHEREAS, the Company and the Holders desire to amend the Purchase
Agreement to (i) amend certain covenants contained in the Purchase Agreement,
and (ii) make certain other amendments as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS TO THE PURCHASE AGREEMENT
.1 MANDATORY PREPAYMENTS.
Section 6.02 of the Purchase Agreement is amended to add at the end
thereof the following additional provisions:
"In addition to the foregoing, the Company shall prepay
the aggregate principal amount of the Notes in the
amounts set forth below, at 100% of the aggregate principal
amount then outstanding, plus accrued interest (collectively,
the "Supplemental Mandatory Principal Prepayments"):
(i) The amount of each Excess Cash Cap Ex Payment (as
defined in Section 10.08). Each prepayment pursuant to this
Section 6.02(i) shall be made in four equal quarterly
installments commencing with the last day of the quarter in
which the applicable Excess Cap Ex Payment is made;
(ii) The amount of all cash dividends on Preferred Stock or
Series C Preferred Stock (as defined in Section 10.05) made
after April 30, 1996. Each prepayment pursuant to this
Section 6.02(ii) shall be made simultaneously with the
applicable payment of such cash dividends; and
(iii) One Million Dollars ($1,000,000) upon the closing of
the acquisition by the Company or a Subsidiary thereof of
Royal Medical Health Services, Inc., a Pennsylvania
corporation, whether by acquisition of stock, merger or
consolidation, purchase of assets or otherwise. The
prepayment pursuant to this Section 6.02(iii) shall be made
simultaneously with the closing of such acquisition.
The payment of Supplemental Mandatory Principal Prepayments
shall be applied first against the last remaining unpaid
mandatory prepayment described in the first sentence of this
Section 6.02, then to the second to last remaining unpaid
mandatory prepayment, and so on (i.e., such payments will be
applied in reverse order of maturity)."
.2 DEBT INCURRENCE.
Section 10.03(d)(ii) of the Purchase Agreement is amended by changing
the figures under the column "Minimum Ratio of Consolidated Operating Income
Before Depreciation to Pro Forma Debt Service" for the years indicated as
follows:
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1996 1.10:1.00
1997 1.15:1.00
1998 1.20:1.00
1999 1.20:1.00
2000 1.20:1.00.
and thereafter
.3 REFINANCINGS.
Section 10.03(h) of the Purchase Agreement is amended and restated to
read in full as follows: "Indebtedness which is a renewal, extension or
replacement of existing Indebtedness permitted under this Section 10.03;
provided that (A) in the case of such Indebtedness which is a renewal,
extension or replacement of existing Indebtedness incurred to acquire
equipment subject to Liens permitted under any of Sections 10.02(e), 10.02(i)
and 10.02(j) (hereinafter "Refinanced Equipment Indebtedness"), (i) the
periodic debt payment with respect to such Refinanced Equipment Indebtedness
is less than or equal to the periodic debt payment currently payable with
respect to the existing Indebtedness being renewed, extended or replaced,
(ii) the term of such Refinanced Equipment Indebtedness does not exceed five
years and (iii) the aggregate amount by which all such Refinanced Equipment
Indebtedness entered into after the date of the Ninth Amendment which is in
excess of the existing Indebtedness which is being renewed, extended or
replaced does not exceed $2,000,000 plus the aggregate amount of Supplemental
Mandatory Principal Prepayments made prior to the incurrence of any such
Refinanced Equipment Indebtedness, and (B) in the case of such Indebtedness
other than Refinanced Equipment Indebtedness, the principal amount of such
Indebtedness is less than or equal to the principal amount outstanding
immediately prior to such renewal, extension or replacement and the periodic
debt payment with respect thereto is less than or equal to the periodic debt
payment currently payable with respect to such Indebtedness."
.4 RESTRICTED PAYMENTS.
Clause (a) of Section 10.05 of the Purchase Agreement, beginning with
the first word of that clause and ending immediately prior to the first
instance of "(i)" therein, is amended and restated to read as follows:
"payments made by the Company to pay cash dividends on Preferred Stock issued
to the holders of the Subordinated Debentures on the Seventh Amendment
Effective Date and to pay cash dividends on the Series C 5% Cumulative
Convertible Redeemable Preferred Stock of the Company (the "Series C
Preferred Stock"), provided that
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in the case of such Series C Preferred Stock the amount of cash dividends
shall not exceed $20,000 per year, and provided further that any such
dividend payments shall be made". Section 10.05(a) is also hereby amended to
add thereto as two new final sentences the following: "The Company shall be
required to make mandatory prepayments on the Notes in connection with the
making of cash dividends on the Series C Preferred Stock, as indicated in
Section 6.02 of this Agreement. In addition to the foregoing exceptions, the
Company shall be permitted to make cash payments in lieu of issuing
fractional shares in connection with a recapitalization of its Common Stock
(including a reverse stock split thereof) or any similar event, provided that
the aggregate amount expended therefor from and after the date of this Ninth
Amendment and prior to the repayment in full of the Senior Notes shall not
exceed the lesser of $25,000 and the actual amount expended to effect the
first such recapitalization or similar event."
.5 FIXED PAYMENT AND FIXED CHARGE COVERAGE RATIOS.
Section 10.07 of the Purchase Agreement is amended by changing the
figures under the columns "Minimum Fixed Payment Ratio" and "Fixed Charge
Coverage Ratio" for the indicated years as follows:
Minimum Fixed Fixed Charge
Payment Ratio Coverage Ratio
--------------- ----------------
1996 1.10 2.50
1997 1.15 2.75
1998 1.15 2.75
1999 1.20 2.75
2000 1.20 2.75
2001 1.20 2.75
and thereafter
In addition, the following new sentence is added at the end of Section 10.07:
"The amount of Supplemental Mandatory Principal Prepayments (as defined in
Section 6.02) shall be excluded from the computation of the Minimum Fixed
Payment Ratio for purposes of this Section 10.07."
.6 CAPITAL EXPENDITURES.
The first sentence of Section 10.08 of the Purchase Agreement is amended
to add the phrase "Except as set forth in the next sentence," to the
beginning of such sentence. Two new sentences, placed after the existing
first sentence, of Section 10.08 are added as follows: "During the two
Fiscal Years
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beginning January 1, 1996 and ending December 31, 1997 (the
"Special Cap Ex Period"), the Company may make Capital Expenditures and cash
payments in respect of Capital Expenditures in excess of the amounts provided
in the immediately preceding sentence, provided that the aggregate amount of
such excess Capital Expenditures shall not exceed $14,000,000 during the
Special Cap Ex Period, and provided further that the aggregate amount of such
excess cash payments made in respect of Capital Expenditures shall not exceed
$3,500,000 during the Special Cap Ex Period (each cash payment made in
reliance on this sentence is referred to herein as an "Excess Cash Cap Ex
Payment"). The Company shall be required to make mandatory prepayments on
the Notes in connection with each Excess Cash Cap Ex Payment, as indicated in
Section 6.02 of this Agreement."
.7 LIMITATION ON LEASES.
The first sentence of Section 10.14 of the Purchase Agreement is amended
to add the phrase "Except as set forth in the next sentence," to the
beginning of such sentence. The reference to "$1,500,000" at the end of such
sentence is stricken and in lieu thereof the following text is inserted:
"the applicable amount set forth below based upon the
Fiscal Year in which such Long-Term Lease is proposed
to be entered into:
1996 $2,700,000
1997 2,500,000
1998 2,200,000
1999 1,750,000
Thereafter 1,500,000."
In addition, a new second sentence is added to Section 10.14, reading in full
as follows: "Notwithstanding the foregoing, there shall be excluded from the
calculation of Consolidated Rental Obligations pursuant to the preceding
sentence any and all variable lease payments (i.e., payments made pursuant to
a Long-Term Lease or otherwise that are based solely upon usage or other
operating criteria rather than being fixed in amount and as to which there
are no minimum and no guaranteed periodic payment obligations)."
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SECTION 2. CONSIDERATION FOR NINTH AMENDMENT
In consideration of their agreement to enter into this Ninth Amendment,
the Company agrees to pay the holders of the Notes an aggregate cash fee of
$75,000, such amount to be paid to such holders pro rata in accordance with
the respective remaining unpaid principal amounts of the Notes held by each
of such holders as of the date of this Ninth Amendment ("Pro Rata"). Such
payment will be made on the earliest date that all of the parties to this
Ninth Amendment have executed and delivered it. In addition, in
consideration of their agreement to enter into this Ninth Amendment, on the
same date referred to in the preceding sentence, the Company shall issue to
the holders of the Notes warrants to purchase an aggregate of 11,200 shares
of Common Stock of the Company at an exercise price of $3.9375 per share,
such warrants to be issued to such holders Pro Rata. The warrants will be
evidenced by warrant certificates substantially in the form attached to this
Ninth Amendment as Exhibit A. Notwithstanding the foregoing, any holder
entitled to receive warrants may elect in lieu thereof (by written notice to
the Company prior to the execution and delivery of this Ninth Agreement by
such holder) to receive an additional cash payment calculated at the rate of
$1.875 for each warrant to purchase one share of Common Stock foregone.
SECTION 3. APPROVAL OF ROYAL TRANSACTION
In consideration of the Company's agreements in this Ninth Amendment,
the holders of the Notes by their execution below do hereby consent to the
acquisition (substantially on the terms and conditions set forth in the
Summary of Principal Terms dated February 9, 1996 previously provided to the
Holders) by the Company or a Subsidiary thereof of the capital stock of Royal
Medical Health Services, Inc., a Pennsylvania corporation, and the creation
of a Subsidiary in order to accomplish such acquisition, for purposes of
Section 10.17 of the Purchase Agreement. The Company agrees that, not later
than the closing of such acquisition, the Subsidiary created or acquired as a
result of such acquisition or surviving any merger to accomplish such
acquisition will execute and deliver to each of the holders of Notes a
Guaranty. Simultaneously with the execution and delivery of this Ninth
Amendment by the Company, the Company shall provide or cause to be provided
to the Holders certified resolutions of the Board of Directors of the entity
providing such Guaranty approving such acquisition and authorizing the
execution and delivery of such Guaranty and a legal opinion of Irell &
Manella LLP as to the enforceability of such Guaranty against such entity in
form and substance reasonably satisfactory to the Holders.
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SECTION 4. MISCELLANEOUS
.1 REFERENCE TO AND EFFECT ON THE PURCHASE AGREEMENT.
(i) On and after the date of this Ninth Amendment, each reference in
the Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Purchase Agreement,
and each reference in any other related documents to the "Purchase
Agreement", "thereunder", "thereof" or words of like import referring to
the Purchase Agreement shall mean and be a reference to the Agreement as
amended to give effect to the Ninth Amendment.
(ii) Except as specifically amended by this Ninth Amendment, the
Purchase Agreement shall remain in full force and effect and is hereby
ratified and confirmed.
(iii) The execution, delivery and performance of this Ninth
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power or
remedy of the Holders under, the Purchase Agreement.
.2 HEADINGS. Section and subsection headings in this Ninth Amendment
are included herein for convenience of reference only and shall not
constitute a part of this Ninth Amendment for any other purpose or be given
any substantive effect.
.3 APPLICABLE LAW. THIS NINTH AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
.4 COUNTERPARTS; EFFECTIVENESS. This Ninth Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Ninth Amendment shall
become effective upon the completion or satisfaction of each of the
following, which shall constitute conditions precedent to the effectiveness
of this Ninth Amendment: (i) the execution of a counterpart hereof by each
of the parties hereto and receipt by the Company and the Holders of written
or telephonic notification of such execution and authorization of delivery
thereof; (ii) execution and delivery by each of the holders of Subordinated
Debentures of
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the instrument referred to in Section 4.5 below (with evidence of the same
having been provided to the Holders); (iii) receipt by each of the Holders of
the consideration referred to in Section 2 above; and (iv) the accuracy of
the representation and warranty of the Company set forth in Section 4.6 below.
4.5 CONSENT TO SUBORDINATED DEBENTURES AMENDMENTS. Each of the
undersigned Holders does hereby consent to an amendment to the terms of the
Subordinated Debentures pursuant to an instrument substantially in the form
attached hereto as Exhibit B.
4.6 NO DEFAULTS. By its execution hereof, the Company represents and
warrants that, after giving effect to the amendments contained in this Ninth
Amendment, no Default or Event of Default exists under the Purchase
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Ninth Amendment
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
"COMPANY" ALLIANCE IMAGING, INC.
By:__________________________________
Title:________________________________
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"HOLDERS" * CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
BY CIGNA INVESTMENTS, INC.
By:__________________________________
Title:________________________________
* CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY,
BY CIGNA INVESTMENTS, INC.
By:__________________________________
Title:________________________________
* INSURANCE COMPANY OF NORTH AMERICA,
BY CIGNA INVESTMENTS, INC.
By:__________________________________
Title:________________________________
* LIFE INSURANCE COMPANY OF NORTH AMERICA,
BY CIGNA INVESTMENTS, INC.
By:__________________________________
Title:________________________________
*THIS ENTITY IS EITHER THE REGISTERED OWNER OF
ONE OR MORE OF THE SECURITIES PERTAINING HERETO
OR IS A BENEFICIAL OWNER OF ONE OR MORE OF SUCH
SECURITIES OWNED BY AND REGISTERED IN THE NAME
OF A NOMINEE FOR THAT ENTITY.
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