FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated as of
November 17, 1997, is by and among InSight Health Services Corp. (the
"BORROWER"), the subsidiaries of the Borrower identified on the signature
pages hereto (the "GUARANTORS"), the several lenders identified on the
signature pages hereto (each a "LENDER" and, collectively, the "LENDERS") and
NationsBank, N.A., as agent for the Lenders (in such capacity, the "AGENT").
Capitalized terms used herein which are not defined herein and which are
defined in the Credit Agreement shall have the same meanings as therein
defined.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent entered
into that certain Credit Agreement dated as of October 14, 1997 (the
"EXISTING CREDIT AGREEMENT").
WHEREAS, the Borrower and the Guarantors have requested that the
Existing Credit Agreement be amended to allow InSight Health Corp. to
purchase certain assets of Mountain Diagnostics, Inc.
WHEREAS, the parties have agreed to amend the Existing Credit Agreement
as set forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
PART 1
DEFINITIONS
SUBPART 1.1 CERTAIN DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"AMENDED CREDIT AGREEMENT" means the Existing Credit Agreement as
amended hereby.
"AMENDMENT NO. 1 EFFECTIVE DATE" is defined in SUBPART 3.1.
SUBPART 1.2 OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.
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PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this PART 2. Except as so amended, the Existing Credit Agreement and
all other Credit Documents shall continue in full force and effect.
SUBPART 2.1 AMENDMENTS TO SECTION 1.1.
A. The following definitions are hereby added to Section 1.1 of the
Existing Credit Agreement in appropriate alphabetical order:
"GE EQUIPMENT" shall have the meaning assigned to such term in the
definition of "MD ASSETS".
"MD ASSETS" means (i) the assets of Mountain Diagnostics purchased or
acquired by InSight Health Corp. pursuant to the Order Confirming Sale of
Certain Assets of the Estate of Mountain Diagnostics, Inc. (Case No.
BK-S-96-2500-RCJ) entered by the Honorable R. Clive Jones of the United
States Bankruptcy Court for the District of Nevada on November 14, 1997
and (ii) the equipment described in Schedule attached hereto (the "GE
EQUIPMENT").
"MOUNTAIN DIAGNOSTICS" means Mountain Diagnostics, Inc., a Nevada
corporation.
B. The following definition is hereby amended in its entirety to
read as follows:
"PERMITTED ACQUISITION" means (a) an Acquisition by the Borrower or
any Wholly Owned Subsidiary of the Borrower for the fair market value of
the Capital Stock or Property acquired, PROVIDED that (i) the Capital Stock
or Property acquired in such Acquisition relates to a line of business
similar to the business of the Borrower or any of its Wholly Owned
Subsidiaries engaged in on the Closing Date, (ii) the Agent shall have
received all items in respect of the Capital Stock or Property acquired in
such Acquisition (and/or the seller thereof) required to be delivered by
the terms of Section 7.12 and/or Section 7.13, (iii) in the case of an
Acquisition of the Capital Stock of another Person, the board of directors
(or other comparable governing body) of such other Person shall have duly
approved such Acquisition, (iv) the Borrower shall have delivered to the
Agent a Pro Forma Compliance Certificate demonstrating that, upon giving
effect to such Acquisition on a Pro Forma Basis, the Credit Parties shall
be in compliance with all of the covenants set forth in Section 7.11, (v)
the representations and warranties made by the Credit Parties in any Credit
Document shall be true and correct in all material respects at and as if
made as of the date of such Acquisition (after giving effect thereto)
except to the extent such representations and warranties expressly relate
to an earlier date, (vi) if the aggregate
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consideration (including any assumption of liabilities (other than
current working capital liabilities not constituting Indebtedness), but
excluding consideration consisting of any Capital Stock of the Borrower)
for any such transaction is greater than $7,500,000, then the Required
Lenders shall have approved such transaction, (vii) if such transaction
involves the purchase of an interest in a partnership between the
Borrower (or a subsidiary of the Borrower) as a general partner and
entities unaffiliated with the Borrower as the other partners, such
transaction shall be effected by having such equity interest acquired by
a corporate holding company directly wholly-owned by the Borrower newly
formed for the sole purpose of effecting such transaction and (viii)
after giving effect to such Acquisition, the Revolving Committed Amount
shall be at least $5,000,000 greater than the sum of the Revolving Loans
outstanding PLUS LOC Obligations outstanding or (b) subject to the terms
of Section 7.13 and Section 7.16, the Acquisition by InSight Health
Corp. of the MD Assets on or before November 18, 1997.
SUBPART 2.2. AMENDMENT TO SECTION 2.3. Section 2.3(a) of the Existing
Credit Agreement is amended in its entirety to read as follows:
(a) ACQUISITION LOAN COMMITMENT. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth
herein, each Lender severally agrees to make available to the Borrower such
Lender's Acquisition Loan Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("ACQUISITION LOANS") from time to
time from the Effective Date until October 14, 1999, or such earlier date
as the Acquisition Loan Commitments shall have been terminated as provided
herein for the purpose of financing the purchase price of, and fees and
expenses in connection with, Permitted Acquisitions and Permitted Capital
Expenditures; PROVIDED, HOWEVER, that the sum of the aggregate principal
amount of outstanding Acquisition Loans shall not exceed FIFTY MILLION
DOLLARS ($50,000,000) (as such aggregate maximum amount may be reduced or
increased from time to time as provided in Section 3.4, the "ACQUISITION
LOAN COMMITTED AMOUNT"); PROVIDED, FURTHER, (A) with regard to each Lender
individually, such Lender's outstanding Acquisition Loans shall not exceed
such Lender's Acquisition Loan Commitment Percentage of the Acquisition
Loan Committed Amount, and (B) the aggregate principal amount of
outstanding Acquisition Loans shall not exceed the Acquisition Loan
Committed Amount. Acquisition Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may request;
PROVIDED, HOWEVER, that no more than 16 Eurodollar Loans shall be
outstanding hereunder at any time. For purposes hereof, Eurodollar Loans
with different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings, extensions
and conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period. Acquisition Loans, other than any term
portion of the Acquisition Loans, hereunder may be repaid and reborrowed
in accordance with the provisions hereof.
SUBPART 2.3 AMENDMENTS TO SECTION 3.3(b)(vii). Section 3.3(b)(vii) of the
Existing Credit Agreement is amended in its entirety to read as follows:
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(b) (vii) APPLICATION OF MANDATORY PREPAYMENTS. All amounts
required to be paid pursuant to this Section 3.3(b) shall be applied
as follows: (A) with respect to all amounts prepaid pursuant to
Section 3.3(b)(i), to Revolving Loans and (after all Revolving Loans
have been repaid) to a cash collateral account in respect of LOC
Obligations, (B) with respect to all amounts prepaid pursuant to
Section 3.3(b)(ii), pro rata to the Tranche A Term Loan, the Tranche B
Term Loan and, if applicable, any term loan portion of the Acquisition
Loans (in each case ratably to the remaining Principal Amortization
Payments thereof), (C) with respect to all amounts prepaid pursuant to
Section 3.3(b)(iii) (other than in respect of any Asset Disposition
(x) involving Property described on SCHEDULE 3.3(b)(vii) or (y)
involving the Sale and Leaseback Transaction of the real property
portion of the MD Assets as permitted by Section 8.13), (iv) or (v),
pro rata to (1) Revolving Loans and (after all Revolving Loans have
been repaid) to a cash collateral account in respect of LOC
Obligations (with a corresponding reduction in the Revolving Committed
Amount in an amount equal to all amounts applied pursuant to this
clause (1)), (2) any term loan portion of the Acquisition Loans
(ratably to the remaining Principal Amortization Payments thereof),
(3) the Tranche A Term Loan (ratably to the remaining Principal
Amortization Payments thereof) and the Tranche B Term Loan (ratably to
the remaining Principal Amortization Payments thereof), (D) with
respect to all amounts prepaid pursuant to Section 3.3(b)(iii) in
respect of any Asset Disposition involving Property described on
SCHEDULE 3.3(b)(vii), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in respect of LOC
Obligations (without any reduction in the Revolving Committed Amount)
(E) with respect to all amounts prepaid pursuant to Section
3.3(b)(iii) in respect of any Asset Disposition involving the Sale and
Leaseback Transaction of the real property portion of the MD Assets as
permitted by Section 8.13, to Acquisition Loans and (after all
Acquisition Loans have been repaid) as provided in (C) above and (F)
with respect to all amounts prepaid pursuant to Section 3.3(b)(vi),
first, to any revolving loan portion of the Acquisition Loans (ratably
to the remaining Principal Amortization Payments thereof) and then to
any term loan portion of the Acquisition Loans (ratably to the
remaining Principal Amortization Payments thereof). One or more
holders of the Tranche B Term Loans may decline to accept a mandatory
prepayment under Sections 3.3(b)(ii), (iii), (iv) or (v) to the extent
there are sufficient outstandings under the Tranche A Term Loans
and/or any term portion of the Acquisition Loans to be paid with such
prepayment, in which case such declined prepayments shall be allocated
pro rata the term loan portion(s) of the Acquisition Loans, the
Tranche A Term Loans and the Tranche B Term Loans held by Lenders
accepting such prepayments. Within the parameters of the applications
set forth above, prepayments shall be applied first to Base Rate Loans
and then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(b) shall be
subject to Section 3.12 and be accompanied by interest on the
principal amount prepaid through the date of prepayment.
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SUBPART 2.4 AMENDMENTS TO SECTION 7.16. Section 7.16 of the Existing
Credit Agreement is hereby amended by adding the following new subsection (c)
immediately following existing subsection (b) thereof:
7.16 FURTHER ASSURANCES.
* * * * * *
(c) On or before February 16, 1998, the Credit Parties shall deliver
to the Agent all documents and information of the types described in
Section 7.16(a) with respect to the real property portion of the MD Assets.
SUBPART 2.5 AMENDMENTS TO SECTION 8.13. Section 8.13 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
8.13 SALE LEASEBACKS.
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, become or remain liable as lessee or as guarantor or other
surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any Property (whether real, personal or mixed), whether now owned
or hereafter acquired, (a) which such Consolidated Party has sold or
transferred or is to sell or transfer to a Person which is not a
Consolidated Party or (b) which such Consolidated Party intends to use for
substantially the same purpose as any other Property which has been sold or
is to be sold or transferred by such Consolidated Party to another Person
which is not a Consolidated Party in connection with such lease; PROVIDED,
HOWEVER, notwithstanding the foregoing, following the Acquisition by
InSight Health Corp. of the MD Assets, InSight Health Corp. may, on or
before February 16, 1998, enter into a Sale and Leaseback Transaction with
respect to the real property portion of the MD Assets provided that the Net
Proceeds from the sale of such real property are applied to the prepayment
of the Loans in accordance with the terms of Section 3.3(b)(iii).
SUBPART 2.6 SCHEDULE 1.1D. The Credit Agreement is amended by adding new
Schedule 1.1D attached hereto as Exhibit A immediately following existing
Schedule 1.1C.
PART 3
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1 AMENDMENT NO. 1 EFFECTIVE DATE. This Amendment shall be and
become effective as of the date hereof (the "AMENDMENT NO. 1 EFFECTIVE DATE")
when all of the conditions set forth in this PART 3 shall have been satisfied,
and thereafter this Amendment shall be known, and may be referred to, as
"AMENDMENT NO. 1."
SUBPART 3.2 EXECUTION OF COUNTERPARTS OF AMENDMENT. The Agent shall have
received counterparts (or other evidence of execution, including telephonic
message, satisfactory to the Agent) of this Amendment, which collectively shall
have been duly executed on behalf of each of the Borrower, the Guarantors and
the Required Lenders.
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SUBPART 3.3 PRIORITY OF LIENS. The Agent shall have received satisfactory
evidence (including without limitation payoff letters in form and substance
reasonably satisfactory to the Agent) that (i) the Agent, on behalf of the
Lenders, holds a perfected, first priority Lien on all Collateral (excluding the
real property portion of the MD Assets), and (ii) none of the Collateral is
subject to any other Liens other than Permitted Liens.
SUBPART 3.4 ORDER OF BANKRUPTCY COURT. The Agent shall have received in
form and substance reasonably satisfactory to it a copy of the final order of
the United States Bankruptcy Court for the Southern District of Nevada approving
the sale of the MD Assets (excluding the GE Equipment) by the bankruptcy trustee
to InSight Health Corp. for a total acquisition price of $9,035,000, such
conveyance being free and clear of all liens, encumbrances, security interests
and other restrictions. The Agent shall also have received in form and
substance reasonably satisfactory to it copies of bills of sale and trustee's
deeds from the bankruptcy trustee conveying the MD Assets (excluding the GE
Equipment) to InSight Health Corp.
SUBPART 3.5 BILL OF SALE. The Agent shall have received in form and
substance reasonably satisfactory to it a bill of sale executed by GE Medical
Systems in favor of InSight Health Corp. representing the conveyance of the GE
Equipment for a price of $1,215,000, such conveyance being free and clear of all
liens, encumbrances, security interests and other restrictions.
SUBPART 3.6 OTHER ITEMS. The Agent shall have received such other
documents, agreements or information which may be reasonably requested by the
Agent.
PART 4
MISCELLANEOUS
SUBPART 4.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants to the Agent and the Lenders that, after giving effect to this
Amendment, (a) no Default or Event of Default exists under the Credit Agreement
or any of the other Credit Documents and (b) the representations and warranties
set forth in Section 6 of the Existing Credit Agreement are, subject to the
limitations set forth therein, true and correct in all material respects as of
the date hereof (except for those which expressly relate to an earlier date).
SUBPART 4.2 REAFFIRMATION OF CREDIT PARTY OBLIGATIONS. Each Credit Party
hereby ratifies the Credit Agreement acknowledges and reaffirms (i) that it is
bound by all terms of the Credit Agreement and (ii) that it is responsible for
the observance and full performance of the Credit Party Obligations.
SUBPART 4.3 CROSS-REFERENCES. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
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SUBPART 4.4 INSTRUMENT PURSUANT TO EXISTING CREDIT AGREEMENT. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.
SUBPART 4.5 REFERENCES IN OTHER CREDIT DOCUMENTS. At such time as this
Amendment No. 1 shall become effective pursuant to the terms of SUBPART 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment No. 1.
SUBPART 4.6 COUNTERPARTS. This Amendment may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SUBPART 4.7 GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE NEW YORK.
SUBPART 4.8 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
[The remainder of this page has been left blank intentionally]
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IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly
executed on the date first above written.
BORROWER: INSIGHT HEALTH SERVICES CORP.
By:
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Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
GUARANTORS: INSIGHT HEALTH CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
RADIOLOGY SERVICES CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
OPEN MRI, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
RADIOSURGERY CENTERS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MTS ENTERPRISES, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
QUEST FINANCIAL SERVICES, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
DIAGNOSTEMPS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
DIAGNOSTIC SOLUTIONS CORP.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF NORTH TEXAS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF ARLINGTON, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
MAXUM HEALTH SERVICES
OF DALLAS, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
NORTH DALLAS DIAGNOSTIC CENTER, INC.
By:
----------------------------------
Name: Thomas V. Croal
Title: Executive Vice President,
Chief Financial Officer and Secretary
[Signatures Continued]
LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By:
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Name:
--------------------------------
Title:
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