Sample Contracts - Master Debt Restructuring Agreement - General Electric Co., General Electric Capital Corp., InSight Health Services Corp., American Health Services Corp. and Maxum Health Corp.

Sample Business Contracts

MASTER DEBT RESTRUCTURING AGREEMENT by and among GENERAL ELECTRIC COMPANY, a New York corporation acting through GE MEDICAL SYSTEMS, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, and INSIGHT HEALTH SERVICES CORP., a Delaware corporation, AMERICAN HEALTH SERVICES CORP., a Delaware corporation, and MAXUM HEALTH CORP., a Delaware corporation, and Certain of Its Subsidiaries <PAGE> TABLE OF CONTENTS ----------------- Page ---- RECITALS........................................................................... 1 ARTICLE 1 GENERAL DEFINITIONS AND RULES OF CONSTRUCTION....................... 3 1.1 "Affiliate"......................................................... 3 1.2 "AHS Amended and Restated Term Note"................................ 3 1.3 "AHS Chicago Loop Equipment"........................................ 3 1.4 "AHS Chicago Loop Obligations"...................................... 3 1.5 "AHS Collateral".................................................... 3 1.6 "AHS Deferred Obligations".......................................... 3 1.7 "AHS Financing Agreements".......................................... 4 1.8 "AHS Guaranty"...................................................... 4 1.9 "AHS Litigation".................................................... 4 1.10 "AHS Location Obligations".......................................... 4 1.11 "AHS Prepayment Amount"............................................. 4 1.12 "AHS Shares"........................................................ 4 1.13 "AHS Warrant"....................................................... 4 1.14 "Amended AHS Agreement"............................................. 4 1.15 "Amended Maxum Agreement"........................................... 4 1.16 "Amended Maxum Security Agreement".................................. 4 1.17 "Automatic Drafting Agreement"...................................... 4 1.18 "Bankruptcy Code"................................................... 4 1.19 "Business Day"...................................................... 4 1.20 "Closing Date"...................................................... 4 1.21 "Consolidated Depreciation Expense"................................. 4 1.22 "Consolidated Net Income"........................................... 5 1.23 "Consolidated Net Revenues"......................................... 5 1.24 "Consolidated Tax Expense".......................................... 5 1.25 "Collateral"........................................................ 5 1.26 "Credit Parties".................................................... 5 1.27 "Default"........................................................... 5 1.28 "Default Rate"...................................................... 5 1.29 "Disclosing Party".................................................. 5 1.30 "Disposition"....................................................... 5 1.31 "Distribution"...................................................... 5 1.32 "Distribution Note"................................................. 6 1.33 "Event of Default".................................................. 6 1.34 "Existing AHS Agreement"............................................ 6 1.35 "Existing Maxum Agreement".......................................... 6 1.36 "Financing Statements".............................................. 6 1.37 "Fraud and Abuse Laws".............................................. 6 1.38 "GAAP".............................................................. 6 1.39 "GE Parties"........................................................ 6 1.40 "GE Party's Accountant"............................................. 6 1.41 "Hazardous Materials"............................................... 6 1.42 "Indebtedness"...................................................... 7 1.43 "InSight Excess Cash Flow".......................................... 7 1.44 "InSight Master Addendum"........................................... 8 1.45 "InSight Payment Obligations"....................................... 8 1.46 "InSight Preferred Shares".......................................... 8 -i- <PAGE> 1.47 "InSight Subsidiary"................................................ 8 1.48 "Liabilities" or "Liability"........................................ 8 1.49 "Lien".............................................................. 8 1.50 "Major Acquisition"................................................. 9 1.51 "Management Stock Option Plan"...................................... 9 1.52 "Maryland Gamma Knife Equipment".................................... 9 1.53 "Maryland Gamma Knife Obligations".................................. 9 1.54 "Material Adverse Effect"........................................... 9 1.55 "Maxum"............................................................. 9 1.56 "Maxum Collateral".................................................. 9 1.57 "Maxum Deferred Obligations"........................................ 9 1.58 "Maxum Early Return Obligations".................................... 9 1.59 "Maxum Early Return Units".......................................... 9 1.60 "Maxum Financing Agreements"........................................ 10 1.61 "Maxum Guaranty".................................................... 10 1.62 "Maxum Litigation".................................................. 10 1.63 "Maxum Security Agreement".......................................... 10 1.64 "Maxum Shares"...................................................... 10 1.65 "Merger"............................................................ 10 1.66 "Merger Agreement".................................................. 10 1.67 "MHC Warrant"....................................................... 10 1.68 "Original PCC Note"................................................. 10 1.69 "Original Term Note"................................................ 10 1.70 "PCC"............................................................... 10 1.71 "PCC Agreement"..................................................... 10 1.72 "Person"............................................................ 10 1.73 "Philips Certificate"............................................... 10 1.74 "Property".......................................................... 10 1.75 "PS Acquisition Agreement".......................................... 10 1.76 "Release and Settlement Agreement".................................. 11 1.77 "Restructuring Documents"........................................... 11 1.78 "Restructuring Termination Date".................................... 11 1.79 "Seattle Gamma Knife Equipment"..................................... 11 1.80 "Seattle Gamma Knife Obligations"................................... 11 1.81 "St. Benedicts Equipment"........................................... 11 1.82 "Subject Party"..................................................... 11 1.83 "Termination Agreements"............................................ 11 1.84 "Term Note"......................................................... 11 1.85 "Third Accountant".................................................. 11 1.86 "Total Balloon Payment Amount"...................................... 11 1.87 "UCC"............................................................... 12 1.88 "Withholding Charges"............................................... 12 1.89 Other Terms......................................................... 12 1.90 Rules of Construction............................................... 12 ARTICLE 2 AMENDMENTS, WAIVERS, RELEASES AND CONSENTS RELATING TO AHS DEBT................................................ 12 2.1 Amendments to Existing AHS Agreement................................ 12 2.2 Waivers, Releases and Consents relating to AHS Debt................................................................ 21 2.3 Reference to and Effect on the Existing AHS Agreement and other Loan Documents.................................. 24 2.4 Amendment to PCC Agreement.......................................... 24 -ii- <PAGE> ARTICLE 3 AMENDMENTS, WAIVERS, RELEASES AND CONSENT RELATING TO MAXUM DEBT.............................................. 25 3.1 Amendments to Existing Maxum Agreement.............................. 25 3.2 Amendments to Maxum Security Agreement.............................. 30 3.3 Waivers, Releases and Consents relating to Maxum Debt.......................................................... 32 3.4 Reference to and Effect on Existing Maxum Agreement, Maxum Security Agreement and Scheduled Documents................................................. 32 ARTICLE 4 OBLIGATIONS OF InSight.............................................. 33 4.1 AHS Prepayment Amount............................................... 33 4.2 GE Parties' Right to Challenge...................................... 33 4.3 Payments............................................................ 34 ARTICLE 5 CONDITIONS PRECEDENT; CLOSING....................................... 34 5.1 Conditions Precedent to Obligations of GE Parties............................................................. 34 (a) Release and Settlement Agreement............................... 35 (b) Termination Agreements......................................... 35 (c) Term Note...................................................... 35 (d) Guaranties..................................................... 35 (e) InSight Master Addendum........................................ 35 (f) Philips Certificate and Consent................................ 35 (g) Severance Payments............................................. 35 (h) Warranties True; Covenants Performed........................... 35 (i) Credit Parties' Consents, Approvals and Authorizations................................................. 35 (j) Unfavorable Action or Proceeding............................... 36 (k) Opinions of Counsel............................................ 36 (l) Litigation..................................................... 36 (m) Obligations.................................................... 36 (n) Charter Documents; Good Standing Certificates................................................... 36 (o) Default........................................................ 36 (p) Officer's Certificate.......................................... 36 (q) Certificate of Incumbency...................................... 37 5.2 Conditions Subsequent of Obligations of GE Parties............................................................. 37 (a) Merger Agreement............................................... 37 (b) InSight Preferred Shares....................................... 37 5.3 Conditions Precedent to Obligations of Credit Parties...................................................... 37 (a) UCC Amendments and Termination Statements...................... 37 (b) AHS Warrants and MHC Warrants.................................. 37 -iii- <PAGE> 5.4 Closing............................................................. 37 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES............................................................. 38 6.1 Representations and Warranties of AHS............................... 38 (a) Authority; Binding Obligations................................. 38 (b) Compliance with Laws; No Conflict.............................. 38 (c) Representations and Warranties in the.......................... 38 Existing AHS Agreement......................................... 38 6.2 Representations and Warranties of MHC and MHC First-Tier Subsidiaries......................................... 39 (a) Authority; Binding Obligations................................. 39 (b) Compliance with Laws; No Conflict.............................. 39 (c) Representations and Warranties in the Existing Maxum Agreement....................................... 39 6.3 Representations and Warranties of InSight........................... 40 (a) Existence and Qualification; Power; Good Standing....................................................... 40 (b) Authority; Binding Obligations................................. 40 (c) Compliance with Laws/No Conflict............................... 40 (d) Absence of Indebtedness........................................ 40 (e) Absence of Defaults............................................ 40 (f) Consents and Approvals......................................... 41 (g) Liabilities.................................................... 41 (h) Burdensome Provisions; Disputes................................ 41 (i) Joint Ventures................................................. 41 (j) Subsidiaries and Affiliates.................................... 41 (k) Litigation or Claims........................................... 41 (l) Brokers........................................................ 42 (m) Corporate Records.............................................. 42 (n) No Untrue or Inaccurate Representations or Warranties..................................................... 42 ARTICLE 7 COVENANTS AND CONTINUING AGREEMENTS................................. 42 7.1 Affirmative Covenants of InSight.................................... 42 (a) Payment of Indebtedness........................................ 42 (b) Inspection Rights.............................................. 43 (c) Compliance with Laws........................................... 43 (d) Compliance with Agreements..................................... 43 (e) Hazardous Materials Laws....................................... 43 (f) Payment of Taxes............................................... 44 (g) Preserve Accuracy of Representations and Warranties..................................................... 44 (h) Maintenance of Existence....................................... 44 (i) Accounting Methods; Books and Records of Account........................................................ 44 -iv- <PAGE> (j) Further Assurances............................................. 45 (k) Insurance; Payment of Premiums................................. 45 (l) Litigation..................................................... 45 7.2 Negative Covenants of InSight....................................... 46 (a) Change in the Nature or Conduct of Business.................... 46 (b) Mergers and Acquisitions....................................... 46 (c) Distributions.................................................. 46 (d) ERISA.......................................................... 46 (e) Increase in Salaries and Payment of Bonuses.................... 46 (f) Capital Expenditures........................................... 47 (g) Leases......................................................... 47 (h) Transactions with Affiliates................................... 47 (i) Adverse Agreements............................................. 47 (j) Guarantees..................................................... 47 (k) Liens; Negative Pledges; Sales and Leasebacks..................................................... 47 (l) Indebtedness................................................... 48 (m) Corporate Name................................................. 48 (n) Disposition of Property........................................ 48 (o) Capital Structure.............................................. 48 (p) Joint Ventures and Partnerships................................ 48 (q) Severance Payments............................................. 48 7.3 Payment of Charges.................................................. 48 7.4 Contesting Charges.................................................. 49 7.5 Survival of Liabilities Upon Termination of Agreement........................................................... 49 7.6 Requests for Consent of GE Parties.................................. 49 ARTICLE 8 INFORMATION AND REPORTING REQUIREMENTS.............................. 50 8.1 Financial Statements................................................ 50 (a) Audited Year-End Financial Statements.......................... 50 (b) Quarterly Financial Statements................................. 50 (c) Officer's Certificate.......................................... 50 8.2 Public Documents.................................................... 51 8.3 Other Reports....................................................... 51 8.4 Certain Notices..................................................... 51 ARTICLE 9 EVENTS OF DEFAULT; RIGHTS AND REMEDIES.............................. 52 9.1 Event of Default.................................................... 52 9.2 Default Rate of Interest; Late Fee.................................. 54 9.3 Remedies............................................................ 55 9.4 Notice of Disposition of Collateral................................. 56 9.5 Right of Set-Off.................................................... 56 9.6 Appointment of GE Parties as Credit Parties' Lawful Attorneys.................................................... 57 9.7 GE Medical as GE Capital's Attorney-in-Fact......................... 57 -v- <PAGE> ARTICLE 10 MISCELLANEOUS....................................................... 58 10.1 Survival of Representations and Warranties of Credit Parties...................................................... 58 10.2 Modification of Agreement; Sale of Interest......................... 58 10.3 Expenses............................................................ 58 10.4 Automatic Drafting.................................................. 59 10.5 Waivers by GE Parties; Cumulative Remedies.......................... 60 10.6 Waivers by Credit Parties........................................... 60 10.7 Severability........................................................ 61 10.8 Parties............................................................. 61 10.9 Conflict of Terms................................................... 61 10.10 Governing Law; Consent to Jurisdiction and Venue............................................................... 61 10.11 MUTUAL WAIVER OF JURY TRIAL......................................... 62 10.12 Notice.............................................................. 62 10.13 Indemnification..................................................... 65 10.14 Acquisition Loans to InSight........................................ 66 10.15 Section Titles and Table of Contents................................ 66 10.16 Counterparts........................................................ 66 10.17 Integration......................................................... 66 10.18 Confidentiality and Publicity....................................... 67 -vi- <PAGE> SCHEDULES --------- 2.1(k) Seven Locations of AHS 2.1(u) Accounts for Automatic Drafting Agreement 2.2(b)(i) AHS Location Obligations 2.2(b)(ii) St. Benedicts Equipment 2.2(d)(i) Maryland Gamma Knife Equipment 2.2(d)(ii) Seattle Gamma Knife Equipment 2.2(f) Amortization Schedules of Notes Re-Amortized 3.1(e) Minimum Lease Payment Leases 3.1(g) Insurance maintained by Maxum 3.3(c) Maxum Early Return Units and Obligations 5.1(n) List of Jurisdictions where each Credit Party is Qualified 5.1(o) Defaults as of Closing 6.1(b) Exceptions to Compliance with Laws by AHS 6.1(c) Exceptions to Representations and Warranties of AHS 6.2(c) Exceptions to Representations and Warranties of MHC and MHC First Tier Subsidiaries 6.3(a) Principal Place of Business, Chief Executive Office and Jurisdictions where Qualified for InSight 6.3(f) Consents and Approvals of InSight 6.3(j) Subsidiaries and Affiliates of InSight 6.3(l) Brokers 7.1(k) Insurance Maintained by InSight 7.2(j) Guaranty Obligations of InSight 7.2(l) Indebtedness of InSight -viii- <PAGE> EXHIBITS -------- 1.51 Form of Management Stock Option Plan 1.83(i) Form of AHS Termination Agreement 1.83(ii) Form of Maxum Termination Agreement 2.1(c) Form of Automatic Drafting Agreement 2.1(l) Form of AHS Amended and Restated Promissory Note 5.1(a) Form of Release and Settlement Agreement 5.1(d)(i) Form of AHS Guaranty 5.1(d)(ii) Form of Maxum Guaranty 5.1(k)(i) Form of AHS Counsel's Opinion 5.1(k)(ii) Form of Maxum Counsel's Opinion -viii- <PAGE> MASTER DEBT RESTRUCTURING AGREEMENT ----------------------------------- THIS MASTER DEBT RESTRUCTURING AGREEMENT (this "Agreement") is entered into as of ______________, 1996 by and among General Electric Company, a New York corporation acting through GE Medical Systems ("GE Medical"), General Electric Capital Corporation, a New York corporation ("GE Capital"), and InSight Health Services Corp., a Delaware corporation ("InSight"), American Health Services Corp., a Delaware corporation ("AHS"), Maxum Health Corp., a Delaware corporation ("MHC"), and each of the undersigned subsidiaries of MHC (the "MHC First-Tier Subsidiaries"). R E C I T A L S - - - - - - - - A. GE Capital is a financial institution which finances, among other things, equipment leases and purchases and GE Medical is a primary supplier of equipment and services to AHS, MHC and the MHC First-Tier Subsidiaries. B. GE Capital has entered into a Loan and Security Agreement dated as of June 1, 1993 with AHS (the "Existing AHS Agreement"), pursuant to which GE Capital extended to AHS a term loan in the principal amount of $15,188,229.68, evidenced by a Promissory Note dated June 1, 1993 (the "Original Term Note") made by AHS in favor of GE Capital, to finance (i) the buy out by AHS of certain equipment leases between GE Medical, as lessor, and AHS, as lessee, and (ii) the purchase by AHS of certain equipment from GE Medical. Also pursuant to the Existing AHS Agreement, AHS has issued in favor of GE Capital the Promissory Note dated June 1, 1993 in the principal amount of $1,810,851.78 to provide for the payment of, among other things, state sale taxes imposed as a result of the sale of certain equipment by GE Medical to AHS. The obligations of AHS under the Existing AHS Agreement are secured by the collateral described in the Existing AHS Agreement. C. GE Capital has also entered into the Asset Purchase Agreement dated as of December 31, 1992 with Philips Credit Corporation ("PCC") pursuant to which GE Capital purchased from PCC the Promissory Note dated March 9, 1989 (the "Original PCC Note") made by AHS in favor of PCC in the original principal amount of $14,280,000. The remaining obligations of AHS under the Original PCC Note were restructured effective as of May 1, 1994 by reducing the then outstanding principal amount of $9,582,205 to $8,000,000, evidenced by the Amended and Restated Promissory Note dated April 12, 1994 made by AHS in favor of GE Capital in the principal amount of $8,000,000. In addition, in connection with such refinancing, the Original Term Note (as such term is defined in Recital B above) was amended pursuant to the First Amendment to Promissory Note dated as of April 12, 1994 <PAGE> between AHS and GE Capital for the purpose of amending the amortization schedule thereto (the Original Term Note, as so amended, is referred herein as the "Term Note"). D. GE Medical has entered into certain installment sales contracts, lease agreements, financing agreements, service agreements, promissory notes and installment notes with AHS (collectively, the "AHS Financing Agreements"). E. GE Medical has entered into (i) an Agreement dated as of June 1, 1993 (the "Existing Maxum Agreement") and (ii) certain installment sales contracts, lease agreements, financing agreements, service agreements, promissory notes and installment notes (collectively, the "Maxum Financing Agreements"), in each case with MHC and the MHC First-Tier Subsidiaries. The obligations of MHC and the MHC First-Tier Subsidiaries under the Existing Maxum Agreement and the Maxum Financing Agreements are secured by the collateral described in the Maxum Security Agreement and the Maxum Financing Agreements. F. AHS, MHC, InSight and GE Medical have entered into the Preferred Stock Acquisition Agreement, dated as of February __, 1996 (the "PS Acquisition Agreement"), pursuant to which GE Medical acquired from (i) AHS an aggregate of 1,000,000 shares of Series C Preferred Stock, par value $0.03 per share, of AHS (the "AHS Shares") and (ii) MHC an aggregate of 15,000 shares of Series B Preferred Stock, par value $0.01 per share, of MHC (the "Maxum Shares"), in exchange for certain financial accommodations from GE Capital and GE Medical described herein. G. AHS, MHC and InSight have also entered into the Agreement and Plan of Merger, dated as of February __, 1996 (the "Merger Agreement"), contemplating the merger of two newly-formed wholly-owned subsidiaries of InSight with and into AHS and MHC (the "Merger"), respectively, after which AHS and MHC will be wholly-owned subsidiaries of InSight. H. InSight, AHS, MHC and the MHC First-Tier Subsidiaries have requested that GE Medical and GE Capital (i) make certain financial accommodations in exchange for the issuance of the AHS Shares and the Maxum Shares, including, without limitation, (A) amending and waiving certain provisions and covenants of the Existing AHS Agreement and the Existing Maxum Agreement, (B) releasing AHS of certain obligations under the Existing AHS Agreement and the AHS Financing Agreements and (C) releasing MHC and the MHC First-Tier Subsidiaries of certain obligations under the Maxum Financing Agreements and (ii) consent to the Merger. GE Medical and GE Capital are, on the terms and conditions stated below, agreeable to granting the requests of InSight, AHS, MHC and the MHC First-Tier Subsidiaries on the terms and conditions set forth herein. I. In accordance with the terms, conditions and provisions of the Merger Agreement, immediately after the consummation of -2- <PAGE> the transactions contemplated by the PS Acquisition Agreement and this Agreement and as a condition subsequent to GE Medical's acquisition of the AHS Shares and the Maxum Shares, the Merger will occur and the AHS Shares and the Maxum Shares will be exchanged for an aggregate of 2,501,760 shares of Series A Convertible Preferred Stock of InSight (the "InSight Preferred Shares"), which shall constitute all of the issued and outstanding shares of preferred stock of InSight and 48 percent of all of the capital stock of InSight on a fully-diluted basis. NOW, THEREFORE, in consideration of the foregoing recitals and the terms and conditions contained herein, and of any extension of credit or financial accommodation heretofore, hereby or hereafter made by GE Medical or GE Capital to or on behalf of InSight, AHS, MHC or any of the MHC First-Tier Subsidiaries, the parties hereto hereby agree as follows: ARTICLE 1 GENERAL DEFINITIONS AND RULES OF CONSTRUCTION --------------------------------------------- Capitalized terms used but not defined in Sections 2.1, 2.2 and 2.3 hereof are used therein as defined in the Existing AHS Agreement and capitalized terms used but not defined in Sections 3.1, 3.2, 3.3 and 3.4 hereof are used therein as defined in the Existing Maxum Agreement. The following terms used in this Agreement have the following respective meanings: 1.1 "Affiliate" shall mean as to any Person, (a) any other Person which, --------- directly or indirectly, controls, is controlled by or is under common control with that Person and (b) any other Person in which, directly or indirectly, any Person described in (i) controls, is controlled by or is under common control. 1.2 "AHS Amended and Restated Term Note" shall mean the Amended and ---------------------------------- Restated Promissory Note in the principal amount of $7,500,000 to be executed by AHS in favor of GE Capital on the Closing Date to evidence the Term Loan (as defined in the Amended AHS Agreement), in substantially the form attached hereto as Exhibit 2.1(l). 1.3 "AHS Chicago Loop Equipment" shall mean a .5T Signa system located at -------------------------- Chicago Loop Center of AHS. 1.4 "AHS Chicago Loop Obligations" shall have the meaning set forth in ---------------------------- Section 2.2(c) hereof. 1.5 "AHS Collateral" shall mean the Collateral described in Section 4.1 -------------- of the Amended AHS Agreement. 1.6 "AHS Deferred Obligations" shall have the meaning set forth in ------------------------ Section 2.2(e) hereof. -3- <PAGE> 1.7 "AHS Financing Agreements" shall have the meaning set forth in the ------------------------ Recitals hereof. 1.8 "AHS Guaranty" shall have the meaning set forth in Section 5.1(d)(i) ------------ hereof. 1.9 "AHS Litigation" shall mean the civil action filed in the United -------------- States District Court of the District of Puerto Rico styled P.R.F., Inc. d/b/a ------------------ San Juan Health Centre, Inc., et. al. v. Phillips Credit Corporation, American ------------------------------------------------------------------------------ Health Services Corporation, et. al., 92 Civ. 2266, and claims related thereto ------------------------------------ or asserted therein. 1.10 "AHS Location Obligations" shall have the meaning set forth in ------------------------ Section 2.2(b)(i) hereof. 1.11 "AHS Prepayment Amount" shall have the meaning set forth in Section --------------------- 4.1 hereof. 1.12 "AHS Shares" shall have the meaning set forth in the Recitals hereof. ---------- 1.13 "AHS Warrant" shall mean, collectively, the Common Stock Purchase ----------- Warrants issued by AHS to GE Medical on July 9, 1993 and on April 12, 1994. 1.14 "Amended AHS Agreement" shall mean the Existing AHS Agreement, as --------------------- amended by this Agreement. 1.15 "Amended Maxum Agreement" shall mean the Existing Maxum Agreement, as ----------------------- amended by this Agreement. 1.16 "Amended Maxum Security Agreement" shall mean the Maxum Security -------------------------------- Agreement, as amended by this Agreement. 1.17 "Automatic Drafting Agreement" shall mean the Authorization Agreement ---------------------------- for Pre-Arranged Payments (Debits) dated as of the Closing Date between GE Medical and InSight and AHS, in substantially the form of Exhibit 2.1(c) attached hereto." 1.18 "Bankruptcy Code" shall mean Title 11 of the United States Code, as --------------- from time to time amended, and the rules and regulations promulgated thereunder. 1.19 "Business Day" shall mean any day except Saturday, Sunday or any day ------------ on which banks in New York, New York are required or authorized by law to be closed. 1.20 "Closing Date" shall mean the date of this Agreement. ------------ 1.21 "Consolidated Depreciation Expense" shall mean, for any period, the --------------------------------- depreciation expense of InSight and the InSight Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. -4- <PAGE> 1.22 "Consolidated Net Income" shall mean, for any period, the net income ----------------------- (or loss) of InSight and the InSight Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. 1.23 "Consolidated Net Revenues" shall mean, for any period, the net ------------------------- revenues of InSight and the InSight Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. 1.24 "Consolidated Tax Expense" shall mean, for any period, the income tax ------------------------ expense of InSight and the InSight Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. 1.25 "Collateral" shall mean, collectively, the AHS Collateral and the ---------- Maxum Collateral. 1.26 "Credit Parties" shall mean, collectively, InSight, AHS, MHC and the -------------- MHC First-Tier Subsidiaries. 1.27 "Default" shall mean any event which, with the passage of time, the ------- giving of notice, or both, would become an Event of Default, unless cured or unless waived as specifically provided in this Agreement. 1.28 "Default Rate" shall mean the lower of (a) the rate per annum equal ------------ --- ----- to the sum of the fluctuating interest rate, from time to time, for three-year treasury notes plus 8 percent or (b) the highest rate permitted by applicable law. 1.29 "Disclosing Party" shall have the meaning set forth in Section ---------------- 10.18(a) hereof. 1.30 "Disposition" shall mean the sale, transfer or other disposition in ----------- any single transaction or series of related transactions of any asset or group of related assets, of any of the Credit Parties that has or have at the date of the Disposition an aggregate book value or fair market value (which shall be deemed to be equal to the sales price for such asset or assets upon a sale to a Person that is not an Affiliate of such Credit Party) of $100,000 or more, other than (a) the sale or other disposition of inventory in the ordinary course of business and (b) the sale or other disposition of equipment that is replaced not later than 90 days thereafter, by equipment performing substantially the same function. For purposes hereof (i) the phrase "series of related transactions" shall refer to transactions which, taken as a whole, are conceived and implemented on a strategically integrated basis and (ii) the phrase "related assets" shall refer to assets which are functionally related to one another. 1.31 "Distribution" shall mean, with respect to any shares of capital ------------ stock or any warrant or right to acquire shares of -5- <PAGE> capital stock or any other equity security issued by a Person (a) the retirement, redemption, purchase or other acquisition, directly or indirectly, for value by such Person of any such security, except to the extent that the consideration therefor consists of shares of capital stock, (b) the declaration or (without duplication) payment by such Person of any dividend in cash or in Property, directly or indirectly, on or with respect to any such security, (c) any investment by such Person in the holder of five percent or more of any such security if a purpose of such investment is to avoid characterization as a Distribution and (d) any other payment by such Person constituting a distribution under applicable laws with respect to such security. 1.32 "Distribution Note" shall mean a promissory note made by InSight in ----------------- favor of GE Medical to evidence InSight's obligation to pay certain premiums to GE Medical for GE Medical's services to AHS and MHC upon the terms set forth in the InSight Master Addendum. 1.33 "Event of Default" shall have the meaning set forth in Section 9.1 ---------------- hereof. 1.34 "Existing AHS Agreement" shall have the meaning set forth in the ---------------------- Recitals hereof. 1.35 "Existing Maxum Agreement" shall have the meaning set forth in the ------------------------ Recitals hereof. 1.36 "Financing Statements" shall mean the Form UCC-1 or other financing -------------------- statements to be filed in the appropriate offices for the perfection of a security interest in any of the Collateral. 1.37 "Fraud and Abuse Laws" shall have the meaning set forth in Section -------------------- 5.1(n) hereof. 1.38 "GAAP" shall mean generally accepted accounting principles applied on ---- a consistent basis as in effect from time to time and practices which are recognized as such by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied for all periods after the date of this Agreement. 1.39 "GE Parties" shall mean, collectively, GE Capital and GE Medical. ---------- 1.40 "GE Party's Accountant" shall have the meaning set forth in Section --------------------- 4.2(a) hereof. 1.41 "Hazardous Materials" shall mean any substance, material or waste ------------------- that is regulated because of its hazardous, -6- <PAGE> toxic or polluting nature by any city, county or other local or regional government authority, any State in which any of the Credit Parties does business, or the United States Government or any agency thereof having jurisdiction, including any material or substance that is (a) petroleum or petroleum distillates, including crude oil, natural gas, natural gas liquids, liquefied natural gas or synthetic gas, (b) asbestos, (c) designated as a "hazardous substance" pursuant to section 311 of the Clean Water Act, 33 U.S.C. 1251, et seq., 33 U.S.C. 1321, or listed pursuant to section 307 of the Clean -- --- Water Act, 33 U.S.C. 1317, (d) defined as a "hazardous waste" pursuant to section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et -- seq., 42 U.S.C. 6903, (e) defined as a "hazardous substance" pursuant to section --- 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, et seq., 42 U.S.C. 9601, (f) determined to be a chemical -- --- substance or mixture that poses an unreasonable risk of injury to human health or the environment under the Toxic Substances Control Act, 15 U.S.C. 2601, et -- seq., (g) determined to be a "Hazardous Air Pollutant" under the Clean Air Act, --- 42 U.S.C. 7501, et seq. or (h) listed, defined or identified in the regulations -- --- adopted pursuant to any of the laws enumerated in clauses (a) through (g) of this Section 1.41. 1.42 "Indebtedness" shall mean, as applied to any Person, without ------------ duplication (a) all items, except items of capital stock or of surplus or of general contingency or deferred tax reserves that would, in accordance with GAAP, be required to be included as liabilities on a balance sheet of such Person on the date as of which Indebtedness is to be determined, (b) all obligations secured by (or regarding which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien to which any Property owned or held by such Person is subject, whether or not the obligation secured thereby shall have been assumed and (c) all obligations of other Persons which such Person has guaranteed, including, without limitation, all obligations of such Person consisting of recourse liabilities with respect to accounts receivable sold or otherwise disposed of by such Person. 1.43 "InSight Excess Cash Flow" shall mean, for any fiscal year of ------------------------ InSight, an amount equal to (a) the sum of the amounts for such fiscal year of (i) Consolidated Net Income, (ii) Consolidated Depreciation Expense, (iii) non- cash interest expense incurred by InSight and the InSight Subsidiaries during such fiscal year, (iv) the excess of (A) Consolidated Tax Expense over (B) income taxes actually paid and (v) other non-cash items reducing Consolidated Net Income, all as determined on a consolidated basis for InSight and the InSight Subsidiaries in accordance with GAAP, minus (b) the sum of the amounts ----- for such fiscal year of (i) all principal payments made by InSight and the InSight Subsidiaries on Indebtedness and (ii) capital expenditures made by InSight and the InSight Subsidiaries that would be capitalized on the consolidated balance sheet of -7- <PAGE> InSight, all as determined on a consolidated basis for InSight and the InSight Subsidiaries in accordance with GAAP. 1.44 "InSight Master Addendum" shall mean the Master Service Agreement ----------------------- Addendum, dated as of the Closing Date, among GE Medical, InSight, AHS and MHC, providing for, among other things, InSight's payment of premiums to GE Medical for GE Medical's services to AHS and MHC upon the terms set forth therein. 1.45 "InSight Payment Obligations" shall have the meaning set forth in --------------------------- Section 9.1(a) hereof. 1.46 "InSight Preferred Shares" shall have the meaning set forth in the ------------------------ Recitals hereof. 1.47 "InSight Subsidiary" shall mean each of AHS, MHC, the MHC First-Tier ------------------ Subsidiaries and any other corporation of which 50 percent or more of the outstanding shares of each class having voting power (other than shares having such power by reason of the happening of a contingency) is owned or controlled, directly or indirectly, by InSight. 1.48 "Liabilities" or "Liability" shall mean, as applied to any Person, ----------- --------- all loans, advances, indebtedness, liabilities, and obligations of such Person to the GE Parties of any and every kind and nature, whether now or hereafter owing, arising, due or payable by such Person, whether or not evidenced by any note, agreement or other instrument and whether primary, secondary, direct, contingent, fixed or otherwise, including, without limitation (a) obligations of performance, (b) principal, interest, loan fees, charges, expenses, attorneys' fees and other amounts chargeable to such Person and (c) future advances made to or for the benefit of such Person. 1.49 "Lien" shall mean (a) any mortgage or deed of trust, pledge, ---- hypothecation, assignment, deposit arrangement, lien (including tax liens, judgment liens, liens of mechanics, suppliers, and other Persons for the provision of goods or services, and all other liens arising under statute, common law or judicial interpretation), charge, claim, security interest, capitalized lease obligation, easement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement or any financing lease having substantially the same economic effect as any of the foregoing), (b) any arrangement, express or implied, under which any Property is transferred, sequestered or otherwise identified for the purpose of subjecting such Property to the payment of Indebtedness or performance of any other obligation in priority to the payment of general, unsecured creditors, (c) any Indebtedness which is unpaid more than 45 days after such Indebtedness shall have become due and payable and which if unpaid would by law (including but not limited to bankruptcy and insolvency laws) or -8- <PAGE> otherwise, be given any priority whatsoever over general, unsecured creditors and (d) the filing of, or agreement to give, any Financing Statement perfecting a security interest under the UCC or comparable law of any jurisdiction. 1.50 "Major Acquisition" shall mean any acquisition by InSight, directly ----------------- or indirectly, of all of the outstanding capital stock or substantially all of the assets of any Person, which Person had annual net revenues in excess of $20,000,000 for such Person's most recent fiscal year, as determined in accordance with GAAP. 1.51 "Management Stock Option Plan" shall mean the Management Stock Option ---------------------------- Plan contemplated to be adopted by the Board of Directors of InSight, in substantially the form attached hereto as Exhibit 1.51, on or before the Closing Date. 1.52 "Maryland Gamma Knife Equipment" shall have the meaning set forth in ------------------------------ Section 2.2(d)(i) hereof. 1.53 "Maryland Gamma Knife Obligations" shall have the meaning set forth -------------------------------- in Section 2.2(d)(i) hereof. 1.54 "Material Adverse Effect" shall mean, with respect to any Credit ----------------------- Party, any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Restructuring Document, (b) is or could reasonably be expected to be material and adverse to the business, condition (financial or otherwise), operations, performance, Property or prospects of such Credit Party, (c) materially impairs or could reasonably be expected to materially impair the ability of such Credit Party to satisfy the Liabilities or (d) materially impairs or could reasonably be expected to materially impair the ability of any GE Party to enforce its legal remedies under this Agreement or any Restructuring Document. 1.55 "Maxum" shall mean, collectively, MHC and the MHC First-Tier ----- Subsidiaries. 1.56 "Maxum Collateral" shall mean the Collateral described in Section 1 ---------------- of the Amended Maxum Security Agreement. 1.57 "Maxum Deferred Obligations" shall have the meaning set forth in -------------------------- Section 3.3(b) hereof. 1.58 "Maxum Early Return Obligations" shall have the meaning set forth in ------------------------------ Section 3.3(c) hereof. 1.59 "Maxum Early Return Units" shall have the meaning set forth in ------------------------ Section 3.3(c) hereof. -9- <PAGE> 1.60 "Maxum Financing Agreements" shall have the meaning set forth in the -------------------------- Recitals hereof. 1.61 "Maxum Guaranty" shall have the meaning set forth in Section -------------- 5.1(d)(ii) hereof. 1.62 "Maxum Litigation" shall mean the civil action filed in the United ---------------- States District Court of the Southern District of New York styled In re Maxum ----------- Health Corp. Securities Litigation, 93 Civ. 3287, and claims related thereto or ---------------------------------- asserted therein. 1.63 "Maxum Security Agreement" shall mean the Security Agreement dated as ------------------------ of June 1, 1993, and amended hereby, by and among MHC, the MHC First-Tier Subsidiaries and GE Medical. 1.64 "Maxum Shares" shall have the meaning set forth in the Recitals ------------ hereof. 1.65 "Merger" shall have the meaning set forth in the Recitals hereof. ------ 1.66 "Merger Agreement" has the meaning set forth in the Recitals hereof. ---------------- 1.67 "MHC Warrant" shall mean the Common Stock Purchase Warrant issued by ----------- MHC to GE Medical on February 8, 1994. 1.68 "Original PCC Note" shall have the meaning set forth in the Recitals ----------------- hereof. 1.69 "Original Term Note" shall have the meaning set forth in the Recitals ------------------ hereof. 1.70 "PCC" shall have the meaning set forth in the Recitals hereof. --- 1.71 "PCC Agreement" shall have the meaning set forth in Section 2.4(a) ------------- hereof. 1.72 "Person" shall mean any individual, corporation, partnership, trust, ------ association or other entity or organization, including any government, political subdivision, agency or instrumentality thereof. 1.73 "Philips Certificate" shall have the meaning set forth in Section ------------------- 5.1(f) hereof. 1.74 "Property" shall mean any interest in any kind of property or asset, -------- whether real, personal or mixed, or tangible or intangible. 1.75 "PS Acquisition Agreement" shall have the meaning set forth in the ------------------------ Recitals hereof. -10- <PAGE> 1.76 "Release and Settlement Agreement" shall have the meaning set forth -------------------------------- in Section 5.1(a) hereof. 1.77 "Restructuring Documents" shall mean, collectively, this Agreement, ----------------------- the Release and Settlement Agreement, the AHS Amended and Restated Term Note, the AHS Guaranty, the Maxum Guaranty, the Termination Agreements, the Philips Certificate, the Automatic Drafting Agreements, the Merger Agreement, the PS Acquisition Agreement, the Existing AHS Agreement and the other Loan Documents (as such term is defined in the Existing AHS Agreement), the Existing Maxum Agreement and the Scheduled Documents (as such term is defined in the Existing Maxum Agreement), the PCC Agreement, the Distribution Notes, the InSight Master Addendum, the AHS Financing Agreements, the Maxum Financing Agreements and all other agreements and notes of any type or nature heretofore or hereafter executed and delivered by any of the Credit Parties in favor of any of the GE Parties in any way relating to or in furtherance of this Agreement, in each case as originally executed or as may from time to time be supplemented, modified, amended, restated or extended. 1.78 "Restructuring Termination Date" shall mean the date on which all ------------------------------ Liabilities under the Restructuring Documents have been completely and finally paid and discharged, whether by prepayment or otherwise. 1.79 "Seattle Gamma Knife Equipment" shall have the meaning set forth in ----------------------------- Section 2.2(d)(ii) hereof. 1.80 "Seattle Gamma Knife Obligations" shall have the meaning set forth in ------------------------------- Section 2.2(d)(ii) hereof. 1.81 "St. Benedicts Equipment" shall have the meaning set forth in Section ----------------------- 2.2(b)(ii) hereof. 1.82 "Subject Party" shall have the meaning set forth in Section 10.18(a) ------------- hereof. 1.83 "Termination Agreements" shall mean the Termination Agreements, ---------------------- substantially in the forms attached hereto as Exhibits 1.83(i) and 1.83(ii) attached hereto, to be entered into between GE Medical and AHS and between GE Medical and MHC and the MHC First-Tier Subsidiaries, respectively, in each case on the Closing Date. 1.84 "Term Note" shall have the meaning set forth in the Recitals hereof. --------- 1.85 "Third Accountant" shall have the meaning set forth in Section 4.2(b) ---------------- hereof. 1.86 "Total Balloon Payment Amount" shall have the meaning set forth in ---------------------------- Section 4.1 hereof. -11- <PAGE> 1.87 "UCC" shall mean the Uniform Commercial Code of the jurisdiction with --- respect to which such term is used, as in effect from time to time. 1.88 "Withholding Charges" shall have the meaning set forth in Section 7.3 ------------------- hereof. 1.89 Other Terms: All terms used in this Agreement, where the context so ----------- indicates or requires, shall have the meanings provided by the UCC as in effect in the applicable jurisdiction to the extent the same are used or defined therein. Any accounting terms used in this Agreement and not specifically defined herein shall have the meanings given them in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP. 1.90 Rules of Construction: Except as otherwise specifically provided in --------------------- this Agreement, the singular of any term shall include the plural, and vice versa, the use of any term shall be equally applicable to any gender, "or" shall not be exclusive and "including" shall not be limiting. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits hereto, as from time to time be amended, modified or supplemented, and not to any particular Section or clause contained in this Agreement. Any reference to a "Section," "Schedule" or "Exhibit" shall refer to the relevant Section of, or Schedule or Exhibit to, this Agreement, unless specifically indicated to the contrary. ARTICLE 2 AMENDMENTS, WAIVERS, RELEASES AND CONSENTS ------------------------------------------ RELATING TO AHS DEBT. -------------------- 2.1 Amendments to Existing AHS Agreement. Effective as of the Closing ------------------------------------- Date and subject to satisfaction of all of the conditions precedent and the conditions subsequent set forth in Article 5 hereof, including the consummation of the Merger, the Existing AHS Agreement is amended as follows: (a) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "AHS Guaranty" between the definitions of "Affiliate" and "Ancillary Note" therein: "'AHS Guaranty' shall mean the Guaranty, dated as of the ------------- Restructuring Closing Date, made by Borrower in favor of Lender and Lender's Agent to guarantee the obligations of MHC and the MHC First- Tier Subsidiaries to Lender and Lender's Agent." -12- <PAGE> (b) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "Amended Maxum Agreement" between the definitions of "AHS Guaranty" and "Ancillary Note" therein: "'Amended Maxum Agreement' shall mean the Agreement dated as of June ----------------------- 1, 1993 between Lender's Agent and MHC and the MHC First-Tier Subsidiaries, as amended by the Restructuring Agreement." (c) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "Automatic Drafting Agreement" between the definitions of "Ancillary Note" and "Bankruptcy Code" therein: "'Automatic Drafting Agreement' shall mean the Authorization ---------------------------- Agreement for Pre-Arranged Payments (Debits) dated as of the Restructuring Closing Date between Borrower and Lender, in substantially the form of Exhibit 2.1(c) attached to the Restructuring Agreement." (d) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "Guaranteed Liabilities" between the definitions of "GAAP" and "Hazardous Materials" therein: "'Guaranteed Liabilities' shall mean the liabilities of Borrower ---------------------- under the Guaranty, dated as of the Restructuring Closing Date, made by Borrower in favor of Lender's Agent to guarantee the liabilities of MHC and the MHC First-Tier Subsidiaries to the Lender's Agent, which liabilities are secured by the Collateral of Borrower." (e) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "InSight" between the definitions of "Indebtedness" and "Invasive Technology" therein: "'InSight' shall mean InSight Health Services Corp., a Delaware ------- corporation." (f) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "MHC" between the definitions of "Maximum Lawful Rate" and "Nonrevolving Credit Loan" therein: "'MHC' shall mean Maxum Health Corp., a Delaware corporation." --- (g) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "MHC First-Tier Subsidiaries" between the definitions of "MHC" and "Nonrevolving Credit Loan" therein: -13- <PAGE> "'MHC First-Tier Subsidiaries' shall mean the subsidiaries of MHC --------------------------- named in the Amended Maxum Agreement as parties thereto." (h) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "Restructuring Agreement" between the definitions of "Restructured Lease Documents" and "Solvent" therein: "'Restructuring Agreement' shall mean the Master Debt Restructuring ----------------------- Agreement, dated as of ______________, 1996, by and among Lender's Agent, Lender, InSight, Borrower, MHC and the MHC First-Tier Subsidiaries." (i) Section 1 of the Existing AHS Agreement is amended by inserting the following definition of "Restructuring Closing Date" between the definitions of "Restructuring Agreement" and "Solvent" therein: "'Restructuring Closing Date' shall mean _________________, 1996." -------------------------- (j) Section 1.63 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "1.63 'Term' shall mean the period of ________ months commencing on ---- the Restructuring Closing Date and ending on the last Business Day of March 2000." (k) To reduce the outstanding principal amount of the Term Loan from $_________ to $7,500,000 as of the Closing Date, Section 1.65 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "1.65 'Term Loan' shall mean the outstanding principal amount of the --------- term loan in the amount of $7,500,000 owed by Borrower to Lender and identified by GE contract number 8506754-004, which amount is allocated among the seven locations of Borrower's operations set forth on Schedule 2.1(k) attached to the Restructuring Agreement." (l) Section 1.67 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "1.67 'Term Note' shall mean the Amended and Restated Promissory --------- Note (including any modifications, renewals, extensions and replacements thereof) in the original principal amount of $7,500,000, to be dated as of the Restructuring Closing Date and executed and delivered by Borrower to Lender on the same date to evidence the obligations, repayment terms and conditions of the Term Loan. A form of Term Note is attached to the Restructuring Agreement as Exhibit 2.1(l)." -14- <PAGE> (m) The Existing AHS Agreement is amended by deleting the definition of "Warrant" in Section 1.69 and all other references therein to "Warrant" and "Warrants." (n) Section 2.2 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "2.2 Interest on Term Loan. Except as otherwise provided in this --------------------- Agreement, the Term Loan shall bear interest, payable monthly, calculated daily on the basis of a 360 day year until paid in full at the lower of (a) the rate of 10.75 percent or (b) the highest rate permitted by applicable law. Interest which has accrued and is not paid monthly by Borrower shall be added to the principal balance due under the Term Note (as set forth in such Term Note) for purposes of subsequent calculations of interest due hereunder and thereunder." (o) Section 2.3(A) of the Existing AHS Agreement is amended in its entirety to read in full as follows: "(A) Term Loan. Principal and interest under the Term Loan --------- shall be payable in consecutive equal monthly installments, each in the amount specified in the amortization schedule attached to the Term Note, payable on the last Business Day of each calendar month, commencing on the last Business Day of the calendar month in which the Restructuring Closing Date occurs and ending on the last Business Day of March 2000; provided, -------- however, that the last such installment shall be in the amount necessary to ------- repay in full the unpaid principal amount of the Term Loan and interest accrued thereon." (p) The first paragraph of Section 4.1 of the Existing AHS Agreement is amended to read in full as follows: "4.1 Security Interest. To secure the prompt and complete payment ----------------- and performance by Borrower when due of the Liabilities and the Guaranteed Liabilities, Borrower hereby grants, sells, assigns, conveys, pledges, hypothecates and transfers to Lender and Lender's Agent for the ratable benefit of Lender and Lender's Agent, a continuing security interest in and Lien in accordance with Section 4.2 hereof upon all of the following Property and interests in Property of Borrower, whether now owned or existing or hereafter acquired or arising and wherever located (all of which Property, together with all other personal Property and interests in personal property which shall from time to time secure the Liabilities and the Guaranteed Liabilities being hereinafter collectively called the "Collateral"):" (q) Section 4.2 of the Existing AHS Agreement is amended in its entirety to read in full as follows: -15- <PAGE> "4.2 Priority of Security Interest. The priority of Lender's ----------------------------- and Lender's Agent's Liens in the Collateral granted by Borrower to Lender and Lender's Agent pursuant to Section 4.1 hereof shall be as follows: (A) Each of Lender and Lender's Agent shall have an equal first priority Lien and, with respect to the Property described in Subsections 4.2(A)(i) and (ii) hereof, purchase money security interest in (i) all Equipment purchased by Borrower from Lender's Agent with a portion of the proceeds of the Term Loan; (ii) the equipment identified in the Restructured Leases to the extent such Restructured Leases are capital leases; and (iii) except as provided in Subsections 4.2(B) and (C) hereof, all property, rights and other interests identified in Subsections 4.1(D) and 4.1(E) hereof with respect to the property described in Subsections 4.2(A)(i) and (ii). (B) Each of Lender and Lender's Agent shall have an equal second priority Lien junior only to the Liens created under the Philips Loan Documents in the portion of the Collateral identified in Subsections 4.1(D) and (E) hereof to the extent a Lien exists under the Philips Loan Documents with respect to such Collateral. (C) Notwithstanding any provision in Section 4.1 or this Section 4.2 to the contrary, in no event shall Lender or Lender's Agent have any Lien on Collateral that is prior to or of equal priority with any Lien on such Collateral existing under the Philips Loan Documents; provided that each of Lender's and Lender's Agent's Liens in the Equipment identified in Subsections 4.2(A)(i) and (ii) hereof and all additions to, substitutions for, replacements of or accessories to such Equipment in all events shall be a first priority Lien and purchase money security interest. (D) Lender's Agent shall have a third priority Lien junior only to the Liens created under clauses (A), (B) and (C) of this Section 4.2 to secure the Guaranteed Liabilities in the portion of the Collateral identified in Subsections 4.1(D) and 4.1(E) hereof." (r) Section 4.3 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "4.3 Disclosure of Security Interest. Borrower shall make ------------------------------- appropriate entries in its financial statements and its books and records disclosing Lender's Lien and Lender's Agent's Lien on the Collateral." (s) Section 4.4 of the Existing AHS Agreement is amended in its entirety to read in full as follows: -16- <PAGE> "4.4 Payment by Lender and Lender's Agent of Claims Asserted ------------------------------------------------------- Against Borrower. Except as provided in Section 8.4 hereof, each of Lender ---------------- and Lender's Agent may, at any time hereafter, in its sole discretion and without waiving or releasing any obligation, Liability, Guaranteed Liability or duty of Borrower under this Agreement or any Event of Default, pay, acquire or accept an assignment of any Lien asserted after a default by Borrower in the payment or performance of the obligation secured by such Lien by any Person against the Collateral or cure any default of Borrower under any contract or agreement; provided, however, that neither -------- ------- Lender nor Lender's Agent shall take such action unless Lender or Lender's Agent shall first give Borrower written notice of its intent to do so, and Borrower does not, within 20 days of such notice, pay such claim or obtain, to the reasonable satisfaction of Lender's or Lender's Agent's, as the case may be, the release of the Liens to which such notice relates. Notwithstanding the foregoing, neither Lender nor Lender's Agent shall take any action to pay any Lien referenced in this Section 4.4 if Borrower is taking all reasonable action necessary to remove such Lien and is proceeding diligently with such removal, as determined in the reasonable discretion of Lender and Lender's Agent. All amounts advanced by Lender or Lender's Agent under this Section 4.4 and all costs, fees, and expenses, including attorneys' fees, court costs, expenses, and other charges relating thereto, incurred by Lender or Lender's Agent on account thereof, shall be payable, on demand, by Borrower to Lender and Lender's Agent and shall be the Liabilities hereunder and the Guaranteed Liabilities, in each case secured by the Collateral." (t) Section 4.5 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "4.5 Termination Statements. Borrower acknowledges and agrees ---------------------- that it is Borrower's intent that all Financing Statements filed hereunder shall remain in full force and effect until this Agreement shall have been terminated in accordance with the provisions hereunder, even if, at any time or times prior to such termination, no loans or advances shall be outstanding under this Agreement. Accordingly, Borrower waives any rights which it may have under the UCC to demand the filing of termination statements with respect to the Collateral, and agrees that neither Lender nor Lender's Agent shall be required to send such termination statements to Borrower, or to file them with any filing office, unless and until this Agreement and the Amended Maxum Agreement shall have been terminated in accordance with their respective terms and all Liabilities hereunder and the Guaranteed Liabilities paid in full in immediately available funds. Notwithstanding the provisions of this Section 4.5, Lender -17- <PAGE> and Lender's Agent shall deliver a termination statement to Borrower with respect to any Financing Statement describing Equipment that is sold by Borrower in accordance with the provisions of Section 6.2(P) hereof, provided that Borrower has paid Lender the amount required to be paid by Borrower to Lender pursuant to Section 6.2(P) hereof." (u) Section 6.1 of the Existing AHS Agreement is amended by inserting the following provision as Section 6.1(V) therein: "(V) Automatic Drafting. After the occurrence and during the ------------------ continuance of a Default or an Event of Default pursuant to this Agreement, Borrower shall at all times adequately fund the accounts identified in the Automatic Drafting Agreement and set forth on Schedule 2.1(u) attached to the Restructuring Agreement in amounts sufficient to pay the Liabilities when due and owing." (v) Section 6.1 of the Existing AHS Agreement is amended by inserting the following provision as Section 6.1(W) therein: "(W) Customer Contracts Entered into after Restructuring Closing ----------------------------------------------------------- Date. Borrower shall not, at any time following the Restructuring Closing ---- Date, enter into any contract for use of equipment by a hospital or other facility or entity (a "Customer") that is leased by Borrower from Lender's Agent, financed by Lender or leased from Lender's Agent pursuant to installment sales agreements, capital leases or other financing methods or is or will be after it is acquired subject to a first priority security interest of Lender or Lender's Agent, unless such contract expressly provides for (x) the assignability thereof to Lender or Lender's Agent, as applicable and (y) the acknowledgment and consent by the Customer to the security interest of Lender or Lender's Agent in such contract. Borrower shall, promptly after entering into any such contract, provide a copy thereof to Lender." (w) Section 6.1 of the Existing AHS Agreement is amended by inserting the following provision as Section 6.1(X) therein: "(X) Security Interests in Future Entities. Borrower shall not, ------------------------------------- at any time after the Restructuring Closing Date, form or create any joint venture or partnership, unless (i) Lender is granted a first priority security interest in Borrower's interest therein and any distributions to Borrower therefrom or (ii) Lender otherwise consents to the formation or creation thereof without the granting thereto of such security interest." -18- <PAGE> (x) Section 6.2(B) of the Existing AHS Agreement is amended in its entirety to read in full as follows: "(B) Investments and Acquisitions. Borrower shall not create, ---------------------------- form or otherwise acquire any Subsidiary unless such Subsidiary is separate and separately funded. Borrower shall not make, nor shall it permit any Subsidiary (other than RCI) to make, any loan or advances of money to any Person or any investment, directly or indirectly (by way of transfer of Property, contributions to capital, purchase of stock or securities or evidences of Indebtedness, acquisition of business or assets, or otherwise), in any Person in amounts exceeding $200,000 in any single transaction or $1,000,000 in the aggregate during any fiscal year of Borrower, except for those transactions described in Schedule 6.1(c) attached to the Restructuring Agreement. Notwithstanding the foregoing, RCI may and, subject to the prior written consent of Lender, any other Subsidiary may make investments with respect to business activities associated with Gamma Knife or any other Invasive Technology (as defined below), however, Borrower shall not purchase, finance, operate or control business activities associated with Gamma Knife or any other invasive technology except through such separate and separately funded Subsidiary. For purposes of this Section 6.2(B), "Invasive Technology" shall mean any business wherein permanent change in anatomy, structure, physiology or metabolism is introduced to the customer as a direct result of the technology used or actually performed; provided, however, that Invasive -------- ------- Technology shall not include radiation therapy. Requests by Borrower to take any action that is not permitted by this Section 6.2(B) shall comply with Section 6.6 hereof and shall be approved or disapproved by Lender in accordance with Section 6.6 hereof within 10 Business Days following Lender's receipt of Borrower's request for consent. The parties acknowledge that this Section 6.2(B) shall not restrict or limit activities permitted by the terms of Sections 6.2(H) and (I) hereof." (y) Section 6.2(H) of the Existing AHS Agreement is amended in its entirety to read in full as follows: "(H) Capital Expenditures. Neither Borrower nor any Subsidiary -------------------- (other than RCI) shall make capital expenditures (including expenditures for capitalized leases but excluding expenditures for routine repairs and replacement) in excess of $200,000 in any single transaction or $1,000,000 in the aggregate during any fiscal year. Notwithstanding the foregoing, this Section 6.2(H) shall not apply to (i) capital expenditures made by Borrower pursuant to transactions with Lender or Lender's Affiliates and Subsidiaries, or (ii) capital expenditures made by any Subsidiary of Borrower that is separate and -19- <PAGE> separately funded. Requests by Borrower to take any action that is not permitted by this Section 6.2(H) shall comply with Section 6.6 hereof and shall be approved or disapproved by Lender in accordance with Section 6.6 hereof within 10 Business Days following Lender's receipt of Borrower's request for consent." (z) Section 6.2(L) of the Existing AHS Agreement is amended in its entirety to read in full as follows: "(L) Guarantees. Except as set forth in Schedule 6.1(c) ---------- attached to the Restructuring Agreement, Borrower shall not guarantee or in any way become liable, directly or indirectly, with respect to the obligations or liabilities of any Person, whether by guaranty, endorsement, agreement to purchase or repurchase, agreement to supply or advance funds or otherwise; provided, however, that the foregoing restrictions shall not -------- ------- apply to: (i) the Guaranteed Liabilities; and (ii) endorsements of negotiable instruments for collection in the ordinary course of business." (aa) Section 6.2(M) of the Existing AHS Agreement is amended in its entirety to read in full as follows: "(M) Liens; Negative Pledges; Sales and Leasebacks. Except for --------------------------------------------- (i) Liens identified in Schedule 6.1(c) attached to the Restructuring Agreement, (ii) Liens expressly permitted in this Agreement, (iii) Liens created pursuant to this Agreement, (iv) Liens for taxes, assessments and other similar charges which are not yet due and payable, (v) Liens of landlords, mechanics, materialmen, warehousemen, carriers or other similar statutory Liens securing obligations that are not yet due, (vi) Liens resulting from good faith deposits to secure payments of workmen's compensation or other social security programs or to secure the performance of statutory obligations or surety or appeal bonds and (vii) Liens consented to by Lender, Borrower shall not create, permit or suffer to exist, and Borrower shall defend the Collateral against and take such other action as is necessary to remove, any Lien of any nature whether by sale, lease, negative pledge, merger, consolidation, liquidation, dissolution or otherwise, on the Collateral, whether now owned or hereafter acquired, and Borrower shall defend the right, title and interest of Lender in and to any Borrower's rights to the Collateral against the claims and demands of all Persons whomsoever, except as hereinabove provided." (bb) Section 6.2(N) of the Existing AHS Agreement is amended in its entirety to read in full as follows: -20- <PAGE> "(N) Indebtedness. Borrower shall not create, incur, assume or ------------ permit to exist and will not permit any Subsidiary to create, incur, assume or permit to exist any Indebtedness or evidence of Indebtedness, except for (i) the Liabilities, (ii) the Philips Debt, (iii) trade indebtedness in the ordinary course of business, including trade payables for services performed, (iv) nonrecourse debt as to Borrower incurred by a separate and separately funded Subsidiary, (v) Indebtedness expressly permitted in this Agreement, (vi) Indebtedness to Lender, Lender's Agent and Lender's Affiliates, (vii) such other permitted Indebtedness identified in Schedule 6.1(c) attached to the Restructuring Agreement, (viii) liabilities for taxes, assessments, governmental charges or levies which are not yet due and payable, (ix) endorsements of negotiable instruments for collection in the ordinary course of business, (x) Indebtedness up to but not exceeding $200,000 in any single transaction or $1,000,000 in the aggregate during any fiscal year of Borrower and (xi) Indebtedness of Borrower consented to by Lender." (cc) Section 6.6 of the Existing AHS Agreement is amended in its entirety to read in full as follows: "6.6 Requests for Lender's Consent. Any request by Borrower for ----------------------------- Lender's written consent prior to taking any action prohibited by Subsections 6.2(B), 6.2(G), 6.2(H), 6.2(I), 6.2(J), 6.2(O), 6.2(P) and 6.2(S) hereof as described in such Subsections, shall be in writing and shall include a detailed description that is reasonably acceptable to Lender of the proposed action to be taken by Borrower. Lender shall approve or disapprove of such request within the number of Business Days provided in the respective Subsections identified in Section 6.2 hereof; provided, however, that any failure by Lender to respond to such request -------- ------- shall be deemed to be a rejection thereof." (dd) Sections 7.1, 7.2, 7.3, 7.4, 7.5 and 7.6 are deleted from the Existing AHS Agreement in their entirety. 2.2 Waivers, Releases and Consents relating to AHS Debt. Effective as of --------------------------------------------------- the Closing Date and subject to satisfaction of all of the conditions precedent and the conditions subsequent set forth in Article 5 hereof, including the consummation of the Merger, each of the GE Parties makes the following waivers, releases and consents: (a) GE Capital hereby consents to the Merger and waives the covenants set forth in Section 6.2(A) and Section 6.2(S) of the Existing AHS Agreement for the sole purpose of consenting to the Merger. (b) (i) GE Medical shall release AHS of all of its obligations under the AHS Financing Agreements set forth on -21- <PAGE> Schedule 2.2(b)(i) attached hereto (the "AHS Location Obligations"), relating to the seven locations of AHS operations set forth on Schedule 2.1(k) attached hereto; provided, however, that GE Medical shall not so release such AHS -------- ------- Location Obligations in the event there shall have occurred and be continuing a payment default with respect thereto as of the Closing Date. GE Medical and AHS shall execute and deliver a Termination Agreement in connection with any such release and, if necessary, GE Medical shall file UCC termination statements in appropriate jurisdictions with respect thereto. (ii) The parties hereto acknowledge that (A) certain Equipment set forth on Schedule 2.2(b)(ii) attached hereto (the "St. Benedicts Equipment") has been sold to Ogden Regional Medical Center with the consent of GE Capital and (B) the proceeds of $800,000.00 received by AHS from such sale have been applied to repayment of the Term Loan (as such term is defined in the Existing AHS Agreement), thereby reducing the outstanding principal amount of the Term Loan to $7,500,000 as reflected in the Amended and Restated Term Note. (c) Upon return and delivery of the AHS Chicago Loop Equipment to GE Medical by AHS, at the sole cost and expense of AHS, to a location designated by GE Medical in the continental United States, GE Medical shall release AHS of all of its obligations under (i) the Maxiservice Agreement dated November 12, 1991 between AHS and GE Medical and identified by GE contract number 8505023-003, (ii) the Maxiservice Agreement, dated November 12, 1991, between AHS and GE Medical and identified by GE contract number 8505023-004, and (iii) the promissory note, dated January 9, 1992, made by AHS in favor of GE Medical and identified by GE contract number 8505052-001 (collectively, the "AHS Chicago Loop Obligations"); provided, however, that GE Medical shall not so release such -------- ------- AHS Chicago Loop Obligations in the event there shall have occurred and be continuing a payment default with respect thereto as of the Closing Date. GE Medical and AHS shall execute and deliver a Termination Agreement in connection with any such release and, if necessary, GE Medical shall file UCC termination statements in appropriate jurisdictions with respect thereto. (d) (i) In connection with the sale of certain Equipment set forth on Schedule 2.2(d)(i) attached hereto (the "Maryland Gamma Knife Equipment") by AHS to the University of Maryland Medical Systems consented to by GE Capital and the application of proceeds to obligations of AHS to GE Medical evidenced by the promissory note, dated June 30, 1992 and identified by GE contract number 8506307-006, and the installment note, dated December 17, 1993 and identified by GE contract number 8506307-008, in each case by AHS in favor of GE Medical (collectively, the "Maryland Gamma Knife Obligations"), GE Medical shall forgive the remaining amounts owed by AHS under the Maryland Gamma Knife Obligations of $200,000.00. GE Medical and AHS shall execute and deliver a Termination Agreement in -22- <PAGE> connection with such sale and, if necessary, GE Medical shall file UCC termination statements in appropriate jurisdictions with respect thereto. (ii) The GE Parties shall consent to the sale by Radiosurgery Centers, Inc., a wholly-owned subsidiary of AHS ("RCI"), of certain Equipment set forth on Schedule 2.2(d)(ii) attached hereto (the "Seattle Gamma Knife Equipment") to Northwest Hospital and the assumption by Northwest Hospital of the obligations of RCI to GE Medical evidenced by (A) the installment note, dated March 2, 1993 and identified by GE contract number 8505837-001, (B) the promissory note, dated July 20, 1993 and identified by GE contract number 8505837-002, (C) the promissory note, dated July 20, 1993 and identified by GE contract number 8506808-001, and (D) the promissory note, dated February 11, 1994 and identified by GE contract number 8506808-002, in each case made by RCI in favor of GE Medical (collectively, the "Seattle Gamma Knife Obligations"); provided, however, that no such consent shall be required to be given by the GE -------- ------- Parties if there shall have occurred and be continuing a payment default with respect to any of the Seattle Gamma Knife Obligations as of the Closing Date. (iii) In connection with such sale of the Seattle Gamma Knife Equipment to Northwest Hospital and the assumption by Northwest Hospital of the Seattle Gamma Knife Obligations, GE Medical shall forgive RCI of a portion of the Seattle Gamma Knife Obligations in the amount of $415,000. GE Medical and AHS shall execute and deliver a Termination Agreement in connection with such sale and, if necessary, GE Medical shall file UCC termination statements in appropriate jurisdictions with respect thereto. (e) GE Medical shall release AHS of all of its obligations under (i) the promissory note, dated June 1, 1993 and identified by GE contract number 8506748-001, (ii) the promissory note, dated April 12, 1994 and identified by GE contract number 8505616-002, and (iii) the promissory note, dated April 12, 1994 and identified by GE contract number 8505616-003, in each case made by AHS in favor of GE Medical (collectively, the "AHS Deferred Obligations"); provided, -------- however, that GE Medical shall not so release such AHS Deferred Obligations in ------- the event there shall have occurred and be continuing a payment default with respect thereto as of the Closing Date. GE Medical and AHS shall execute and deliver a Termination Agreement in connection with any such release and, if necessary, GE Medical shall file UCC termination statements in appropriate jurisdictions with respect thereto. (f) The amortization schedules of three promissory notes, dated June 15, 1988, June 15, 1988 and March 9, 1989, respectively, identified by GE contract numbers 8506307-001, 8506307-002 and 8506307-009, respectively, in each case made by AHS in favor of PCC and purchased by GE Capital from PCC -23- <PAGE> pursuant to the Asset Purchase Agreement dated December 31, 1992 between GE Capital and PCC (collectively, the "Re-Amortized Notes"), shall be amended to be as set forth on Schedule 2.2(f) attached hereto. AHS shall repay the principal amount of each of the Re-Amortized Notes in 84 consecutive monthly installments, in the amounts set forth on Schedule 2.2(f), payable on the last Business Day of each calendar month, commencing on the last Business Day of January 1996 and ending on the last Business Day of December 2002; provided, however, that the -------- ------- last such installment shall be in the principal amount necessary to repay in full the unpaid principal amount of each Re-Amortized Note and interest accrued thereon. The unpaid principal amount of each of the Re-Amortized Notes shall bear interest at the lower of (i) the rate of 10.75 percent per annum or (ii) --- ----- the highest rate permitted by applicable law, and, upon full payment of the Total Balloon Payment Amount by AHS with InSight Excess Cash Flow pursuant to Section 4.1 hereof, at the lower of (y) the rate of 10.25 percent per annum or --- ----- (z) the highest rate permitted by applicable law. 2.3 Reference to and Effect on the Existing AHS Agreement and other Loan -------------------------------------------------------------------- Documents. --------- (a) On and after the Closing Date, each reference in the Existing AHS Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the other Loan Documents (as defined in the Existing AHS Agreement) to the Existing AHS Agreement shall mean and be a reference to the Existing AHS Agreement as amended hereby. (b) Except as specifically amended, waived or released above, the Existing AHS Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. Without limiting the generality of the foregoing, the AHS Collateral does and shall continue to secure the payment of all obligations of AHS under the Loan Documents, as amended hereby, and the AHS Guaranty. (c) The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of GE Capital or GE Medical under any of the Loan Documents or the AHS Financing Agreements or constitute a waiver of any provision of any of the Loan Documents or the AHS Financing Agreements. 2.4 Amendment to PCC Agreement. -------------------------- (a) The GE Parties hereby agree that the Agreement, dated as of March 9, 1989, between AHS and PCC, as amended (the "PCC Agreement"), is amended by deleting Sections 5.13, 5.14, 5.16, 5.27 and 5.28 therefrom in their entirety. (b) On and after the Closing Date, each reference in the PCC Agreement to "this Agreement," "hereunder," "hereof," -24- <PAGE> "herein" or words of like import, and each reference in the other documents relating thereto to the PCC Agreement shall mean and be a reference to the PCC Agreement as amended hereby. (c) Except as specifically amended above, the PCC Agreement and the other documents relating thereto shall remain in full force and effect and are hereby ratified and confirmed in all respects. Without limiting the generality of the foregoing, the collateral securing the payment of all obligations of AHS under the PCC Agreement does and shall continue to secure such obligations. (d) The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of GE Capital or GE Medical under the PCC Agreement or any of the other documents relating thereto or constitute a waiver of any provision of the PCC Agreement or any such document. ARTICLE 3 AMENDMENTS, WAIVERS, RELEASES AND CONSENTS ------------------------------------------ RELATING TO MAXUM DEBT. ---------------------- 3.1 Amendments to Existing Maxum Agreement. Effective as of the Closing --------------------------------------- Date and subject to satisfaction of all of the conditions precedent and the conditions subsequent set forth in Article 5 hereof, including the consummation of the Merger, the Existing Maxum Agreement is amended as follows: (a) Section 1 of the Existing Maxum Agreement is amended by inserting the following definition of "InSight" between the definitions of "Indebtedness" and "IRC" therein: "'InSight' shall mean InSight Health Services Corp., a Delaware ------- corporation." (b) Section 1 of the Existing Maxum Agreement is amended by inserting the following definition of "Maxum Guaranty" between the definitions of "Maxum" and "Merrill/Highline Promissory Note" therein: "'Maxum Guaranty' shall mean the Joint and Several Guaranty, dated as --------------- of the Restructuring Closing Date, made by MHC and the First-Tier Subsidiaries in favor of GE and GE Capital to guarantee the obligations of AHS to GE and GE Capital." (c) Section 1 of the Existing Maxum Agreement is amended by inserting the following definition of "Restructuring Agreement" between the definitions of "Reserves" and "Scheduled Documents" therein: -25- <PAGE> "'Restructuring Agreement' shall mean the Master Debt Restructuring ----------------------- Agreement, dated as of ______________, 1996, by and among GE, General Electric Capital Corporation, a New York corporation ("GE Capital"), InSight, American Health Services Corp., a Delaware corporation ("AHS"), MHC and the First-Tier Subsidiaries." (d) Section 1 of the Existing Maxum Agreement is amended by inserting the following definition of "Restructuring Closing Date" between the definitions of "Restructuring Agreement" and "Scheduled Documents" therein: "'Restructuring Closing Date' shall mean ___________________, 1996." -------------------------- (e) Section 1.46 of the Existing Maxum Agreement is amended in its entirety to read in full as follows: "1.46 'Minimum Lease Payment' shall mean $18,000; provided, however, --------------------- -------- ------- that with respect to the leases between GE and MHC that are identified on Schedule 3.1(e) attached to the Restructuring Agreement, the 'Minimum Lease Payment' shall mean $13,000 and provided further, however, that GE shall, ---------------- ------- upon InSight's request, reassess the amount of the Minimum Lease Payment from time to time to determine, in its sole and absolute discretion, whether any additional adjustments thereto would be appropriate in light of various factors, including market conditions." (f) The Existing Maxum Agreement is amended by deleting the definition of "Warrant" in Section 1.61 and all other references therein to "Warrant" and "Warrants." (g) Section 5.1(N) of the Existing Maxum Agreement is amended in its entirety to read in full as follows: "(N) Insurance; Payment of Premiums. MHC and the First-Tier ------------------------------ Subsidiaries shall, at their sole cost and expense, maintain in full force and effect the types of insurance coverages set forth on Schedule 3.1(g) attached to the Restructuring Agreement. All policies of insurance required to be maintained under this Section 5.1(N) shall be in form and with insurers reasonably acceptable to GE. All policies of insurance on that portion of the Collateral in which GE holds a first Lien shall contain an endorsement in form and substance acceptable to GE and showing GE as loss payee with respect to such Collateral. Such endorsement or independent instrument furnished to GE shall provide that the insurance company providing any such policy of insurance will give GE at least 30 days' prior written notice before any such policy or policies of insurance shall be materially altered or canceled, and that no act or default of MHC or any of the First-Tier Subsidiaries or any other Person shall affect the right of -26- <PAGE> GE to recover under such policy or policies of insurance in case of loss or damage. Each of MHC and the First-Tier Subsidiaries shall deliver to GE the original (or a certified copy) of each such policy of insurance and evidence of payment of all premiums therefor. In addition, MHC and the First-Tier Subsidiaries shall notify GE promptly of any occurrence causing a material loss to any real or personal property covered by any such insurance and the estimated (or actual, if available) amount of such loss. Each of MHC and the First-Tier Subsidiaries shall direct all insurers under such policies of insurance to pay all proceeds payable thereunder with respect to the Collateral directly to GE. Such proceeds shall be held by GE to be applied, first, to GE's expenses in settling, prosecuting and defending any insurance claim and, then, so long as no Default or Event of Default shall have occurred and be continuing, to the restoration or repair of any portion of the Collateral that has been damaged or destroyed to the same condition, character and value as existed prior to such damage or destruction. In the event that a Default or an Event of Default shall have occurred and be continuing, GE shall have the right to apply all such insurance proceeds towards repayment of the Liabilities secured by the Collateral. Each of MHC and the First-Tier Subsidiaries shall forthwith, at the request of GE, duly execute and deliver instruments of assignment of any such insurance policies to comply with this Section 5.1(N) and cause the insurers with respect to such policies to acknowledge notice of such assignment. After the occurrence and during the continuance of a Default or an Event of Default, each of MHC and the First-Tier Subsidiaries irrevocably makes, constitutes, and appoints GE (and all officers, employees or agents designated by GE) as true and lawful attorney (and agent-in-fact) therefor for the purpose of making, settling and adjusting claims under such policies of insurance that relate to the Collateral (provided that GE shall consult therewith prior to finally making, settling or adjusting claims under such policies of insurance) or endorsing the name thereof on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance that relates to the Collateral. In the event MHC or any of the First-Tier Subsidiaries at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required hereunder or shall fail to pay any premium in whole or in part, relating thereto, GE, without waiving or releasing any Liabilities or Default or Event of Default hereunder, may (but shall not be obligated to) at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take such other action with respect thereto which is deemed advisable thereby. All sums so disbursed by GE, including attorneys' fees, court costs, expenses and other charges relating thereto, shall be payable, on demand, by MHC and the First-Tier -27- <PAGE> Subsidiaries to GE and shall be additional Liabilities hereunder secured by the Collateral. GE reserves the right at any time, upon review of the risk profile of MHC and the First-Tier Subsidiaries, to require additional forms and insurance to, in GE's reasonable opinion, adequately protect GE's interests in the Collateral." (h) Section 5.1 of the Existing Maxum Agreement is amended by inserting the following provision as Section 5.1(S) therein: "(S) Financing Statements. MHC and the First-Tier Subsidiaries -------------------- hereby authorize GE to file one or more Financing Statements, and amendments thereto, relative to all or any part of the Collateral without the signature of MHC or any of the First-Tier Subsidiaries where permitted by law. MHC and the First-Tier Subsidiaries hereby agree to execute, within 10 days after receipt of GE's written request, such Financing Statements as may be necessary to replace, prior to expiration, any Financing Statements delivered to GE on the Closing Date and to evidence GE's continuing security interest in the Collateral." (i) Section 5.2 of the Existing Maxum Agreement is amended by inserting the following provision as Section 5.2(T) therein: "(T) Guarantees. Neither MHC nor any of the First-Tier ---------- Subsidiaries shall guarantee or in any way become liable, directly or indirectly, with respect to the obligations or liabilities of any Person, whether by guaranty, endorsement, agreement to purchase or repurchase, agreement to supply or advance funds or otherwise; provided, however, that -------- ------- the foregoing restriction shall not apply to: (i) the Liabilities evidenced by the Maxum Guaranty; (ii) the Indebtedness of MHC and the First-Tier Subsidiaries existing on the Restructuring Closing Date which are set forth on Schedule 6.2(c) attached to the Restructuring Agreement; and (iii) endorsements of negotiable instruments for collection in the ordinary course of business." (j) Section 5.2(H) of the Existing Maxum Agreement is amended in its entirety to read in full as follows: "(H) Capital Expenditures. Neither MHC nor any of the First-Tier -------------------- Subsidiaries shall make capital expenditures (including expenditures for capitalized leases but excluding expenditures for routine repairs and replacements) in excess of $200,000 in any single transaction or series of related -28- <PAGE> transactions or $1,000,000 in the aggregate during any fiscal year of MHC. Notwithstanding the foregoing, this Section 5.2(H) shall not apply to capital expenditures made by MHC or any of the First-Tier Subsidiaries pursuant to transactions with GE. Requests by MHC or any of the First-Tier Subsidiaries to take any action that is prohibited by this Section 5.2(H) shall comply with Section 5.6 hereof and shall be approved or disapproved by GE in accordance with Section 5.6 hereof within ten (10) Business Days following GE's receipt of MHC's or any of the First-Tier Subsidiaries' request for consent. Capital expenditures following the Closing Date for equipment with an acquisition cost in excess of $50,000 shall be made by MHSC and not MHC, any other First-Tier Subsidiary or any other Subsidiary." (k) Section 5.2 (L) of the Existing Maxum Agreement is amended in its entirety to read in full as follows: "(L) Liens; Negative Pledges; Sales and Leasebacks. Except for (i) --------------------------------------------- Liens which are Permitted Liens as identified in Schedule 6.2(c) attached to the Restructuring Agreement, (ii) Liens expressly permitted by the terms of this Agreement, (iii) Liens created pursuant to this Agreement or any of the Scheduled Documents, (iv) Liens for taxes, assessments and other similar charges which are not yet due and payable, (v) Liens of landlords, mechanics, materialmen, warehousemen, carriers or other similar statutory Liens securing obligations which are not yet due, (vi) Liens resulting from good faith deposits to secure payments of workmen's compensation or other social security programs or to secure the performance of statutory obligations or surety or appeal bonds, and (vii) Liens consented to by GE, neither MHC or any of the First-Tier Subsidiaries shall create, permit or suffer to exist, and MHC and the First-Tier Subsidiaries shall defend the Collateral whether now owned or hereafter acquired, and MHC and the First- Tier Subsidiaries shall defend the right, title and interest of GE in and to any of the MHC's or any of the First-Tier Subsidiaries' rights to the Collateral against the claims and demands of all Persons whomsoever, except as hereinabove provided." (l) Section 5.2(M) of the Existing Maxum Agreement is amended in its entirety to read as follows: "(M) Indebtedness. Except for (i) Indebtedness outstanding on the ------------ Restructuring Closing Date, (ii) the liabilities, (iii) liabilities for taxes, assessments, governmental charges or levies which are not yet due and payable or which are being contested in accordance with the terms of this Agreement, (iv) endorsements of negotiable instruments for collection in the ordinary course of business, (v) reimbursement obligations under bonds required to be obtained under the terms of this agreement, (vi) trade indebtedness in the ordinary -29- <PAGE> course of business, including payable for services performed and (vii) Indebtedness expressly permitted in this Agreement, neither MHC nor any of the First-Tier Subsidiaries shall create, incur, assume, permit to exist or guarantee more than $200,000 of Indebtedness in any single transaction or series of related transactions or $1,000,000 of Indebtedness in the aggregate during any fiscal year of MHC. Requests by MHC or any of the First-Tier Subsidiaries to take any action that is prohibited by this Section 5.2(M) shall comply with Section 5.6 below and shall be approved or disapproved by GE in accordance with Section 5.6 below within 10 Business Days following GE's receipt of MHC's or any of the First Tier Subsidiaries' request for consent." (m) Section 5.6 of the Existing Maxum Agreement is amended in its entirety to read as follows: "5.6 Requests for GE's Consent. Any request by MHC or any of the ------------------------- First-Tier Subsidiaries for GE's written consent prior to taking any action prohibited by Sections 5.2(B), 5.2(C), 5.2(G), 5.2(H), 5.2(I), 5.2(J), 5.2(M), 5.2(N) and 5.2(R) above as described in such Sections, shall be in writing and shall include (i) a reference to the covenant(s) relevant to the request, (ii) a detailed description that is reasonably acceptable to GE of the requested deviation from the covenant(s) and (iii) the reason for the requested deviation from the covenant(s). GE shall approve or disapprove of such request within the number of Business Days provided in the respective Sections identified in Section 5.2 hereof; provided, however, that any failure by GE to respond to such -------- ------- request shall be deemed to be a rejection thereof." (n) Sections 6.1, 6.2, 6.3, 6.4 and 6.5 are deleted from the Existing Maxum Agreement in their entirety. 3.2 Amendments to Maxum Security Agreement. Effective as of the --------------------------------------- Closing Date and subject to satisfaction of all of the conditions precedent and the conditions subsequent set forth in Article 5 hereof, including the consummation of the Merger, the Maxum Security Agreement is amended as follows: (a) Section 1 of the Maxum Security Agreement is amended by inserting the following definition of "Amended AHS Agreement" between the definitions of "Accounts" and "Chattel Paper" therein: "'Amended AHS Agreement' shall mean the Loan and Security Agreement dated as of June 1, 1993 between General Electric Capital Corporation, a New York corporation ("GE Capital"), and American Health Services Corp., a Delaware corporation ("AHS"), as amended by the Restructuring Agreement." (b) Section 1 of the Maxum Security Agreement is amended by inserting the following definition of "Maxum Guaranty" between the definitions of "Joint Ventures" and "Obligations" therein: -30- <PAGE> "'Maxum Guaranty' shall mean the Joint and Several Guaranty, dated as of the Restructuring Closing Date, made by Obligors in favor of GE and GE Capital to guarantee the obligations of AHS to GE and GE Capital." (c) The definition of "Obligations" in Section 1 of the Maxum Security Agreement is amended in its entirety to read in full as follows: "'Obligations' shall mean all loans, advances, indebtedness, liabilities and obligations of the Obligors (a) to GE under the Agreement, as amended by the Restructuring Agreement (as so amended, the 'Agreement'), and (b) to GE and GE Capital under the Maxum Guaranty, in each case every kind and nature, whether now or hereafter owing, arising, due or payable from any of the Obligors to GE or GE Capital, as the case may be, whether or not evidenced by any note, agreement or other instrument and whether primary, secondary, direct, contingent, fixed or otherwise, including obligations of performance and includin

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