Exhibit 10.18


 


EXECUTION COPY 


 


THIRD AMENDMENT TO CREDIT AGREEMENT,


WAIVER AND CONSENT


 


THIS THIRD
AMENDMENT TO CREDIT AGREEMENT, WAIVER AND CONSENT (this “Amendment”),
dated as of February 26, 2004, is by and among INSIGHT HEALTH SERVICES CORP., a
Delaware corporation (the “Borrower”), the Guarantors parties hereto,
the Lenders parties hereto, BANK OF AMERICA, N.A., as Administrative Agent for
the Lenders (in such capacity, the “Administrative Agent”), WACHOVIA
BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank), as
Syndication Agent (in such capacity, the “Syndication Agent”) and THE
CIT GROUP/BUSINESS CREDIT, INC., as Documentation Agent (in such capacity, the
“Documentation Agent”).


 


W I T N E S S E T H


 


WHEREAS, the
Borrower, the Parent, the Subsidiary Guarantors, the Lenders, the
Administrative Agent, the Syndication Agent and the Documentation Agent entered
into that certain Credit Agreement dated as of October 17, 2001 (as
amended by that certain First Amendment to Credit Agreement, Waiver and Consent
dated as of January 24, 2003, and that certain Second Amendment to
Credit Agreement, Waiver and Consent dated as of July 11, 2003, the “Existing
Credit Agreement”);


 


WHEREAS, the
Borrower has requested that certain provisions of the Existing Credit Agreement
be amended; and


 


WHEREAS, the
parties have agreed to amend the Existing Credit Agreement as set forth herein.


 


NOW,
THEREFORE, in consideration of the agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:


 


PART 1


DEFINITIONS


 


SUBPART 1.1       Certain Definitions.  Unless otherwise defined herein or the
context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:


 


“Amended Credit Agreement” means the Existing Credit Agreement
as amended hereby.


 


“RemainCo Acquisition Closing” shall have the meaning assigned
to the term “Closing” in Section 2.3 of the RemainCo Purchase Agreement.


 

















 


“RemainCo Acquisition Closing Conditions” means:


 


(i)            The Administrative
Agent shall have received (and will promptly furnish to the Lenders) an
executed copy of the RemainCo Purchase Agreement, certified by an Executive
Officer of the Borrower to be true, correct and complete.


 


(ii)           The Administrative
Agent shall have received (and will promptly furnish to the Lenders) the
financial statements of Comprehensive Medical Imaging, Inc. and its
Subsidiaries referred to in Section 4.7 of the RemainCo Purchase
Agreement.


 


(iii)          The Acquisition of
the RemainCo Shares purchased in the RemainCo Acquisition Closing shall have
been consummated on or before April 30, 2004 in accordance with the terms
of the RemainCo Purchase Agreement and in compliance with applicable law and
regulatory approvals, and all material conditions precedent to the obligation
of the buyer for the RemainCo Acquisition Closing under the RemainCo Purchase
Agreement shall have been satisfied. 
The RemainCo Purchase Agreement shall not have been altered, amended or
otherwise changed or supplemented or any condition therein waived in a manner
materially adverse to the Administrative Agent and/or the Lenders without the
prior written consent of the Administrative Agent.


 


“Third
Amendment Effective Date” is defined in the first paragraph of Part 4
hereof.


 


SUBPART 1.2       Other Definitions.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.


 


PART 2


AMENDMENTS TO
EXISTING CREDIT AGREEMENT


 


Effective on
(and subject to the occurrence of) the Third Amendment Effective Date, the
Existing Credit Agreement is hereby amended in accordance with this Part 2.


 


SUBPART 2.1       Amendments to Section 1.1.
Section 1.1 of the Existing Credit Agreement is hereby amended in the
following respects:


 


(a)           The definition of “Lien” appearing in
Section 1.1 of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:


 


“Lien” means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference,


 


2

















 


priority or other
security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, and any financing lease having substantially
the same economic effect as any of the foregoing).


 


(b)           The following new definitions are
hereby added to Section 1.1 of the Existing Credit Agreement in
appropriate alphabetical order:


 


“RemainCo” means Comprehensive Medical Imaging, Inc.


 


“RemainCo Acquisition” means the Acquisition by InSight Health
Corp. of the RemainCo Shares pursuant to the RemainCo Purchase Agreement.


 


“RemainCo Shares” means all of the issued and outstanding shares
of Capital Stock of RemainCo .


 


“RemainCo Purchase Agreement” means the Stock Purchase Agreement
dated as of February 13, 2004 by and among InSight Health Corp., Cardinal
Health 414, Inc., RemainCo, and Cardinal Health, Inc. in respect of the
RemainCo Acquisition, together with all schedules and exhibits thereto.


 


“Third Amendment” means the Third Amendment to Credit Agreement,
Waiver and Consent dated as of February 26, 2004 by and among the
Borrower, the Guarantors, the Lenders, the Administrative Agent, the
Syndication Agent and the Documentation Agent.


 


SUBPART 2.2       Amendments to Section 7.9.  Subsections (a) and (b) of Section 7.9
of the Existing Credit Agreement is hereby amended in their entireties to read
as follows:


 


7.9          Financial Covenants.


 


(a)           Senior Leverage
Ratio.  The Senior Leverage Ratio,
as of the last day of each fiscal quarter of the Consolidated Parties set forth
below, shall be less than or equal to:


 


	
  Fiscal
  Year

  	
   

  	
  September 30

  	
   

  	
  December 31

  	
   

  	
  March 31

  	
   

  	
  June 30

  	
   

  
	
  2003

  	
   

  	
  2.50 to 1.00

  	
   

  	
  2.50 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  
	
  2004

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  
	
  2005

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  
	
  2006

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.85 to 1.00

  	
   

  	
  2.75 to 1.00

  	
   

  	
  2.75 to 1.00

  	
   

  
	
  2007

  	
   

  	
  2.75 to 1.00

  	
   

  	
  2.75 to 1.00

  	
   

  	
  2.50 to 1.00

  	
   

  	
  2.50 to 1.00

  	
   

  
	
  2008

  	
   

  	
  2.50 to 1.00

  	
   

  	
  2.50 to 1.00

  	
   

  	
  2.25 to 1.00

  	
   

  	
  2.25 to 1.00

  	
   

  
	
  Thereafter

  	
   

  	
  2.00 to 1.00

  	
   

  	
  2.00 to 1.00

  	
   

  	
  2.00 to 1.00

  	
   

  	
  2.00 to 1.00

  	
   

  



 


3

















 


(b)           Total Leverage
Ratio.  The Total Leverage Ratio, as
of the last day of each fiscal quarter of the Consolidated Parties set forth
below, shall be less than or equal to:


 


	
  Fiscal
  Year

  	
   

  	
  September 30

  	
   

  	
  December 31

  	
   

  	
  March 31

  	
   

  	
  June 30

  	
   

  
	
  2003

  	
   

  	
  5.00 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  	
  4.90 to 1.00

  	
   

  	
  4.75 to 1.00

  	
   

  
	
  2004

  	
   

  	
  4.75 to 1.00

  	
   

  	
  4.75 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  2005

  	
   

  	
  5.00 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  2006

  	
   

  	
  5.00 to 1.00

  	
   

  	
  5.00 to 1.00

  	
   

  	
  4.75 to 1.00

  	
   

  	
  4.75 to 1.00

  	
   

  
	
  2007

  	
   

  	
  4.50 to 1.00

  	
   

  	
  4.50 to 1.00

  	
   

  	
  4.25 to 1.00

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  2008

  	
   

  	
  4.25 to 1.00

  	
   

  	
  4.25 to 1.00

  	
   

  	
  4.00 to 1.00

  	
   

  	
  4.00 to 1.00

  	
   

  
	
  Thereafter

  	
   

  	
  3.75 to 1.00

  	
   

  	
  3.75 to 1.00

  	
   

  	
  3.75 to 1.00

  	
   

  	
  3.75 to 1.00

  	
   

  



 


SUBPART 2.3       Amendments to Section 8.1.  Section 8.1(c) is hereby amended in its
entirety to read as follows:


 


8.1          Indebtedness.


 


The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:


 


***********


 


(c)           (i) purchase
money Indebtedness (including obligations in respect of Capital Leases or
Synthetic Leases) (A) hereafter incurred by the Borrower or any of its
Restricted Subsidiaries to finance the purchase of fixed assets or
(B) assumed or acquired by the Borrower and its Restricted Subsidiaries in
connection with any transaction otherwise permitted by this Credit Agreement,
(ii) Indebtedness hereafter incurred by the Borrower or any of its Restricted
Subsidiaries to finance the payment of insurance premiums, (iii) unsecured
Indebtedness assumed by the Borrower and its Restricted Subsidiaries in
connection with a Permitted Acquisition and (iv) unsecured Indebtedness
(in addition to Indebtedness permitted pursuant to Section 8.1(f)) of the
Borrower issued to the seller to pay a portion of the purchase price for any
Person or Property acquired in a Permitted Acquisition, provided that
(A) the aggregate principal amount of all such Indebtedness for all such
Persons shall not exceed $60,000,000 at any one time outstanding; (B) the
aggregate principal amount of all such Indebtedness for all such Persons that
are Joint Ventures shall not exceed at any one time outstanding (1) during
the period from the Closing Date through and including
March 31, 2005, $10,000,000, and (2) at any time thereafter,
$15,000,000; (C) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (D) no such Indebtedness shall
be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing (plus premiums, accrued
interest and costs of refinancing);


 


4

















 


SUBPART 2.4       Amendments to Section 8.2.  Subsections (c), (g) and (q) of
Section 8.2 of are hereby amended in their entireties to read as follows:


 


8.2          Liens.


 


The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property, whether now owned or hereafter acquired, except for:


 


***********


 


(c)           (i) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and suppliers and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary course of business
(other than with respect to obligations for the payment of borrowed money),
(ii) the contractual Lien of the landlord under that certain Lease Agreement
dated June 26, 2000 for the diagnostic medical imaging center located at
25775 West McBean Pkwy, Suite 100, Valencia, California 91355, which
lease agreement is being assumed by InSight Health Corp. in connection with the
CMI Acquisition, and (iii) contractual Liens of landlords under the lease
agreements described on Schedule 8.2(c), which lease agreements are
obligations of RemainCo and/or its Subsidiaries and will become obligations of
the applicable Consolidated Party upon the closing of the RemainCo Acquisition,
provided that, in the case of each of clauses (i), (ii)
and (iii) above, such Liens secure only amounts not more than 30 days past
due and payable or, if due and payable, no action has been taken to enforce any
such Lien or, if action has been taken to enforce any such Lien, such action is
being contested in good faith by appropriate proceedings by the Credit Parties
in a manner which stays enforcement thereof and for which adequate reserves
determined in accordance with GAAP have been established;


 


***********


 


(g)           (i) Liens on
Property of any Person securing purchase money Indebtedness (including Capital
Leases and Synthetic Leases) of such Person permitted under
Section 8.1(c)(i), provided that any such Lien attaches to such
Property concurrently with or within 90 days after the acquisition thereof and
secures only the repayment of such purchase money Indebtedness (including
Capital Leases and Synthetic Leases); and


 


(ii) Liens on the amounts payable to any Person under an insurance
policy securing Indebtedness of such Person incurred to finance the premium for
such insurance policy and permitted under Section 8.1(c)(ii).


 


***********


 


5

















 


(q)           (i)            Liens existing as of the Closing
Date and set forth on Schedule 8.2 (and renewals, replacements,
refinancings and extensions thereof to the extent permitted under
Section 8.1), provided that no such Lien shall at any time be
extended to or cover any Property other than the Property subject thereto on
the Closing Date; and


 


(ii)           the Lien granted by
Comprehensive Diagnostic Imaging, Inc. (as successor in interest to Physicians
Plaza Medical Imaging Center, LP).  in favor of J. Norman Liu, M.D., Inc. (as
successor in interest to Plaza Radiology Medical Group, Inc.), as such Lien
exists on the Third Amendment Effective Date, provided that (A) such
Lien shall not at any time be extended to or cover any Property other than the
type of Property subject thereto on the Third Amendment Effective Date and (B)
no action has been taken to enforce such Lien or, if action has been taken to
enforce such Lien, such action is being contested in good faith by appropriate
proceedings by the Credit Parties in a manner which stays enforcement thereof
and for which adequate reserves determined in accordance with GAAP have been
established.


 


SUBPART 2.5       New Schedule
8.2(c).  The Existing
Credit Agreement is hereby amended by adding a new Schedule 8.2(c)
in the form of Schedule 8.2(c) attached hereto.


 


PART 3


WAIVERS AND
CONSENT


 


Subject to the
occurrence of the Third Amendment Effective Date, the Required Lenders, the
Required Revolving Lenders and the Required Unfunded New Delayed-Draw Term
Lenders agree that, provided that the RemainCo Acquisition Closing Conditions
shall have been satisfied for the RemainCo Acquisition Closing (in each case as
reasonably determined by the Administrative Agent):


 


(a)           The requirement that
the aggregate consideration (including cash and non-cash consideration, any
assumption of Indebtedness, any earn-out payments, and any proceeds of any
Equity Issuance by any Consolidated Party to any of the Sponsors or the Related
Parties in connection with such Acquisition) paid by the Consolidated Parties
in respect of the RemainCo Acquisition not exceed $30,000,000, as set forth in
clause (i)(vii)(A) of Section 8.6 of the Amended Credit Agreement, is
hereby waived; provided, however, that the aggregate purchase
price (excluding fees and expenses associated with the RemainCo Acquisition and
the financing thereof, but specifically including any amounts paid to satisfy
the Liens and obligations described in subparagraph (d) of this Part 3 to the
extent that the Consolidated Parties are not indemnified for such amounts by
Cardinal Health, Inc. and/or its affiliates pursuant to the RemainCo Purchase
Agreement) paid by the Consolidated Parties for all of the RemainCo Shares is
not in excess of $50,000,000;


 


6

















 


(b)           The requirement that
the aggregate consideration (including cash and non-cash consideration, any
assumption of Indebtedness and any earn-out payments, but excluding the
proceeds of any Equity Issuance by any Consolidated Party to any of the
Sponsors or the Related Parties in connection with such Acquisition) paid by the
Consolidated Parties in respect of all Acquisitions consummated during the
period from October 17, 2003 to October 16, 2004 not exceed $40,000,000, as set
forth in clause (i)(viii)(3) of Section 8.6 of the Amended Credit
Agreement, is hereby waived solely with respect to the RemainCo Acquisition; provided,
however, that the aggregate purchase price (excluding fees and expenses
associated with the RemainCo Acquisition and the financing thereof, but
specifically including any amounts paid to satisfy the Liens and obligations
described in subparagraph (d) of this Part 3 to the extent that the
Consolidated Parties are not indemnified for such amounts by Cardinal Health,
Inc. and/or its affiliates pursuant to the RemainCo Purchase Agreement) paid by
the Consolidated Parties for all of the RemainCo Shares is not in excess of
$50,000,000; and


 


(c)           The consideration
paid by the Consolidated Parties in respect of the RemainCo Acquisition shall
be excluded from any future calculation under Section 8.6(i)(viii)(3) of
the Amended Credit Agreement.


 


(d)           The existence of any Liens against
RemainCo and/or its Subsidiaries described on Schedule 1 attached hereto and
any obligations secured by such Liens shall not be deemed to constitute a
breach of the terms of Section 8.1 or Section 8.2 of the Amended Credit
Agreement, provided that, as of the date 45 days following the consummation of
the RemainCo Acquisition (or such later date as the Administrative Agent shall
reasonably determine), the Administrative Agent shall have received evidence
satisfactory to the Administrative Agent and its legal counsel that (1) none of
the Consolidated Parties shall be obligated in respect of any such Indebtedness
or other obligations and (2) none of the Liens securing any such obligations shall
be effective with respect to the Property of any Consolidated Party.


 


The waivers
set forth in this Part III are one-time waivers and are granted only for the
limited purposes set forth herein and shall be effective only in the specific
circumstances provided for above and only for the purposes for which
given.  Except as waived pursuant to the
terms of this Part III or amended pursuant to Part II, the
Existing Credit Agreement and all other Credit Documents shall continue in full
force and effect.


 


PART 4


CONDITIONS TO
EFFECTIVENESS


 


This Amendment
shall be and become effective as of the date hereof (the “Third Amendment
Effective Date”) when all of the conditions set forth in this Part 4
shall have


 


7

















 


been satisfied, and thereafter
this Amendment shall be known, and may be referred to, as the “Third
Amendment.”


 


SUBPART 4.1       Counterparts of Amendment. The
Administrative Agent shall have received counterparts (or other evidence of
execution, including telephonic message, satisfactory to the Administrative
Agent) of this Amendment, which collectively shall have been duly executed on
behalf of each of the Borrower, the Guarantors, the Required Lenders, the
Required Revolving Lenders, and the Required Unfunded New Delayed-Draw Term
Lenders.


 


SUBPART 4.2       Amendment Fee.  For the account of each Lender approving
this Amendment by 12:00 noon Charlotte, North Carolina time on February
26, 2004 (as evidenced by delivery of an executed signature page prior to
such time), the Administrative Agent shall have received an amendment fee equal
to 12.5 basis points on the amount equal to the sum of (i) such Lender’s
Revolving Commitment plus (ii) such Lender’s New Delayed-Draw Term
Loan Commitment plus (iii) the outstanding Tranche B Term Loans held by
such Lender.


 


SUBPART 4.3       Other Fees and Out of Pocket Costs.  The Borrower shall have paid any and all
reasonable out-of-pocket costs (to the extent invoiced) incurred by the
Administrative Agent or Banc of America Securities LLC (including the
reasonable fees and expenses of the Administrative Agent’s legal counsel), and
all other fees and other amounts payable to the Administrative Agent or Banc of
America Securities LLC, in each case in connection with the arrangement, negotiation,
preparation, execution and delivery of this Amendment.


 


PART 5


MISCELLANEOUS


 


SUBPART 5.1       Representations and Warranties.  The Credit Parties hereby represent and
warrant to the Administrative Agent and the Lenders that (a) after giving
effect to this Amendment, (i) no Default or Event of Default exists under the
Credit Agreement or any of the other Credit Documents and (ii) the
representations and warranties set forth in Section 6 of the Amended
Credit Agreement are, subject to the limitations set forth therein, true and
correct in all material respects as of the date hereof (except for those which
expressly relate to an earlier date) and (b) the transactions contemplated in
this Amendment are not prohibited by the Subordinated Note Indenture (as in effect
immediately prior to the Third Amendment Effective Date).


 


SUBPART 5.2       Reaffirmation of Credit Party
Obligations.  Each Credit Party
hereby ratifies the Amended Credit Agreement and acknowledges and reaffirms (i)
that it is bound by all terms of the Amended Credit Agreement and (ii) that it
is responsible for the observance and full performance of the Credit Party
Obligations.  Without limiting the
generality of the proceeding sentence, (i) each of the Guarantors restates
that it jointly and severally guarantees the prompt payment when due of all
Credit Party Obligations, in


 


8

















 


accordance with, and pursuant
to the terms of, Section 4 of the Existing Credit Agreement and
(ii) each of the Credit Parties agrees that all references in the
Collateral Documents to the term “Credit Party Obligations” shall be deemed to
include all of the obligations of the Credit Parties to the Lenders and the
Administrative Agent, whenever arising, under the Amended Credit Agreement, the
Collateral Documents or any of the other Credit Documents (including, but not
limited to, any interest accruing after the occurrence of a Bankruptcy Event
with respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code).


 


SUBPART 5.3       Cross-References.  References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.


 


SUBPART 5.4       Instrument Pursuant to Existing Credit
Agreement.  This Amendment is a
Credit Document executed pursuant to the Existing Credit Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered and
applied in accordance with the terms and provisions of the Existing Credit
Agreement.


 


SUBPART 5.5       References in Other Credit Documents.  At such time as this Amendment shall become
effective pursuant to the terms of Part 4 all references in the Existing Credit
Agreement and the other Credit Documents to the “Credit Agreement” shall be deemed
to refer to the Credit Agreement as amended by this Amendment.


 


SUBPART 5.6       Counterparts.  This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.


 


SUBPART 5.7       Governing Law.  THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.


 


SUBPART 5.8       Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.


 


SUBPART 5.9       Costs, Expenses.  The Borrower agrees to pay on demand all
reasonable costs and expenses of the Administrative Agent in connection with
the preparation, execution, delivery and administration of this Amendment
(including, without limitation, the fees and expenses of counsel to the
Administrative Agent) in accordance with the terms of Section 11.5 of the
Existing Credit Agreement.


 


9