Document:

EXHIBIT 10.22

 

5,000,000.00

 

 

LOAN AND SECURITY AGREEMENT

 

by and between

 

ORION IMAGING SYSTEMS, INC.

DIGIRAD IMAGING SYSTEMS, INC.
(“Borrower”)

 

and

 

HELLER HEALTHCARE FINANCE, INC.

 

(“Lender”)

 

 

January 9, 2001

 

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND
SECURITY AGREEMENT (the “Agreement”) is made as of January 9, 2001, by and
between ORION IMAGING SYSTEMS, INC., a Delaware. corporation, and DIGlRAD
IMAGING SYSTEMS, INC., a Delaware corporation (collectively,
“Borrower”), and HELLER HEALTH CARE FINANCE, INC., a Delaware corporation
(“Lender”).

 

RECITALS

 

A.                                   Borrower
desires to establish certain financing arrangements with and borrow funds from
Lender, and Lender is willing to establish such arrangements for and make loans
and extensions of credit to Borrower, on the terms and conditions set forth
below.

 

B.                                     The
parties desire to define the terms and conditions of their relationship and to
reduce their agreements to writing.

 

NOW, THEREFORE, in
consideration of the promises and covenants contained in this Agreement, and
for other consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

As used in
this Agreement, unless otherwise specified, all references to “Sections” shall
be deemed to refer to Sections of this Agreement, and the following terms shall
have the meanings set forth below:

 

Section 1.1                                   Account.  “Account” means any right to payment for
goods sold or leased or services rendered, whether or not evidenced by an
instrument or chattel paper, and whether or not earned by performance,
including, without limitation, the right to payment of management fees.

 

Section 1.2                                   Account
Debtor.  “Account Debtor” means
any Person obligated on any Account of Borrower, including without limitation,
any Insurer and any Medicaid/Medicare Account Debtor.

 

Section 1.3                                   Affiliate.  “Affiliate” means, with respect to a
specified Person, any Person directly or indirectly controlling, controlled by,
or under common control with the specified Person, including without limitation
their stockholders and any Affiliates thereof. 
A Person shall be deemed to control a corporation or other entity if the
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and business of the corporation or other entity,
whether through the ownership of voting securities, by contract, or otherwise.

 

1

 

Section 1.4                                   Agreement.  “Agreement” means this Loan and Security
Agreement, as it may be amended or supplemented from time to time.

 

Section 1.5                                   Base
Rate.  “Base Rate” means a rate
of interest equal to one and one-quarter percent (1.25%) above the “Prime Rate
of Interest” (provided, however, that in no event shall the Base Rate fall below
ten and one-quarter percent (10.25%) so long as this Agreement remains in
effect).

 

Section 1.6                                   Borrowed
Money.  “Borrowed Money” means
any obligation to repay money, any indebtedness evidenced by notes, bonds,
debentures or similar obligations, any obligation under a conditional sale or
other title retention agreement and the net aggregate rentals under any lease
which under GAAP would be capitalized on the books of Borrower or which is the
substantial equivalent of the financing of the property so leased.

 

Section 1.7                                   Borrower.  “Borrower” has the meaning set forth in the
Preamble.

 

Section 1.8                                   Borrowing
Base.  “Borrowing Base” has the
meaning set forth in Section 2.1(d).

 

Section 1.9                                   Business
Day.  “Business Day” means any
day on which financial institutions are open for business in the State of
Maryland, excluding Saturdays and Sundays.

 

Section
1.10                            Closing;
Closing Date.  “Closing” and
“Closing Date” have the meanings set forth in Section 5.3.

 

Section
1.11                            Collateral.  “Collateral” has the meaning set forth in
Section 3.1.

 

Section
1.12                            Commitment
Fee.  “Commitment Fee” has the
meaning set forth in Section 2.4(a).

 

Section
1.13                            Concentration
Account.  “Concentration
Account” has the meaning set forth in Section 2.3.

 

Section
1.14                            Controlled
Group.  “Controlled Group” means
all businesses that would be treated as a single employer under
Section 4001(b) of ERISA.

 

Section
1.15                            Cost
Report Settlement Account. 
“Cost Report Settlement Account” means an “Account” owed to Borrower by
a Medicaid/Medicare Account Debtor pursuant to any cost report, either interim,
filed or audited, as the context may require.

 

Section
1.16                            Default
Rate.  “Default Rate” means a
rate per annum equal to five percent (5%) above the then applicable Base Rate.

 

Section
1.17                            ERISA.  “ERISA” has the meaning set forth in
Section 4.12.

 

2

 

Section
1.18                            Event
of Default.  “Event of Default”
and “Events of Default” have the meanings set forth in Section 8.1.

 

Section
1.19                            GAAP.  “GAAP” means generally accepted accounting
principles applied in a consistent manner.

 

Section
1.20                            Governmental
Authority.  “Governmental
Authority” means and includes any federal, state, District of Columbia, county,
municipal, or other government and any department, commission, board, bureau,
agency or instrumentality thereof, whether domestic or foreign.

 

Section 1.20a.                   Guaranty.  “Guaranty” means that certain Unconditional
Guaranty of Payment and Performance made by Digirad, Inc. in favor of Lender
and dated as of even date with this Agreement.

 

Section
1.21                            Hazardous
Material.  “Hazardous Material”
means any substances defined or designated as hazardous or toxic waste,
hazardous or toxic material, hazardous or toxic substance, or similar term, by
any environmental statute, rule or regulation or any Governmental Authority
applicable to Borrower or its business, operations or assets.

 

Section
1.22                            Highest
Lawful Rate.  “Highest Lawful
Rate” means the maximum lawful rate of interest referred to in Section 2.7
that may accrue pursuant to this Agreement.

 

Section
1.23                            Insurer.
“Insurer” means a Person that insures a Patient against certain of the costs
incurred in the receipt by such Patient of Medical Services, or that has an
agreement with Borrower to compensate Borrower for providing services to a
Patient.

 

Section
1.24                            Lender.  “Lender” means Heller Healthcare Finance,
Inc., a Delaware corporation.

 

Section
1.25                            Loan.  “Loan” has the meaning set forth in
Section 2.1 (a).

 

Section
1.26                            Loan
Documents.  “Loan Documents”
means and includes this Agreement, the Note, the Certificate of Validity, the
Guaranty and each and every other document now or hereafter delivered in
connection with this Agreement, as any of them may be amended, modified, or
supplemented from time to time.

 

Section
1.27                            Loan
Manaeement Fee.  “Loan
Management Fee” has the meaning set forth in Section 2.4(c).

 

Section
1.28                            Lockbox.  “Lockbox” has the meaning set forth in
Section 2.3.

 

Section 1.28 a.                Lockbox
Account.  “Lockbox
Account” means an account maintained by Borrower at the Lockbox Bank into which
all collections of Accounts are paid directly.

 

3

 

Section
1.29                            Lockbox
Bank.  “Lockbox Bank” has the
meaning set forth in Section 2.3.

 

Section
1.30                            Maximum
Loan Amount.  “Maximum Loan
Amount” has the meaning set forth in Section 2.1(a).

 

Section
1.31                            Medicaid/Medicare
Account Debtor.  “Medicaid/
Medicare Account Debtor” means any Account Debtor which is (i) the United
States of America acting under the Medicaid/Medicare program established
pursuant to the Social Security Act, (ii) any state or the District of
Columbia acting pursuant to a health plan adopted pursuant to Title XIX of
the Social Security Act or (iii) any agent, carrier, administrator or
intermediary for any of the foregoing.

 

Section
1.32                            Medical
Services.  “Medical Services”
means Medical and health care services provided to a Patient, including, but
not limited to, medical and health care services provided to a Patient and
performed by Borrower which are covered by a policy of insurance issued by an
Insurer, and includes physician services, nurse and therapist services, dental
services, hospital services, skilled nursing facility services, comprehensive
outpatient rehabilitation services, home health care services, residential and
out-patient behavioral healthcare services, and medicine or health care
equipment provided by Borrower to a Patient for a necessary or specifically
requested valid and proper medical or health purpose.

 

Section
1.33                            Note.  “Note” has the meaning set forth in
Section 2.1(c).

 

Section
1.34                            Obligations.  “Obligations” has the meaning set forth in
Section 3.1.

 

Section
1.35                            Patient.  “Patient” means any Person receiving Medical
Services from Borrower and all Persons legally liable to pay Borrower for such
Medical Services other than Insurers.

 

Section
1.36                            Permitted
Liens.  “Permitted Liens”
means:  (i) deposits or pledges to
secure obligations under workmen’s compensation, social security or similar
laws, or under unemployment insurance; (ii) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of business; (iii) mechanic’s,
workmen’s, materialmen’s or other like liens arising in the ordinary course of
business with respect to obligations which are not due, or which are being
contested in good faith by appropriate proceedings which suspend the collection
thereof and in respect of which adequate reserves have been made (provided that
such proceedings do not, in Lender’s sole discretion, involve any substantial
risk of the sale, loss or forfeiture of such property or assets or any interest
therein); (iv) liens and encumbrances in favor of Lender;
(v) purchase money security interests permitted in accordance with
Section 7.1; and (vi) liens set forth on Schedule 1.36.

 

4

 

Section
1.37                            Person.  “Person” means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.

 

Section
1.38                            Plan.  “Plan” has the meaning set forth in Section 4.12.

 

Section
1.39                            Premises.  “Premises” has the meaning set forth in
Section 4.14.

 

Section
1.40                            Prime
Rate of Interest.  “Prime Rate
of Interest” means that rate of interest designated as such by Fleet Bank,
N.A., or any successor thereto, as the same may from time to time fluctuate.

 

Section
1.41                            Prohibited
Transaction.  “Prohibited
Transaction” means a “prohibited transaction” within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Internal Revenue
Code that is not exempt under Section 407 or Section 408 of ERISA or
Section 4975(c)(2) or (d) of the Internal Revenue Code or under a class
exemption granted by the U.S. Department of Labor.

 

Section
1.42                            Qualified
Account.  “Qualified Account”
means an Account of Borrower generated in the ordinary course of Borrower’s
business from the sale of goods or rendition of Medical Services which Lender,
in its sole and reasonable credit judgment, deems to be a Qualified
Account.  Without limiting the generality
of the foregoing, no Account shall be a Qualified Account if:  (a) to the extent that the Account or
any portion of the Account is payable by an individual beneficiary, recipient
or subscriber individually and not directly to Borrower by a Medicaid/Medicare
Account Debtor, a physician practice, a professional corporation (i.e. a “P.A.”
or “P.C.”) or physician group or commercial medical insurance carrier
acceptable to Lender in its sole discretion; (b) the Account remains
unpaid more than one hundred twenty (120) days past the claim or invoice date
(but in no event more than one hundred thirty-five (135) days after the
applicable Medical Services have been rendered); (c) the Account is
subject to any defense, set-off, counterclaim, deduction, discount, credit,
charge back, freight claim, allowance, or adjustment of any kind; (d) if
the Account arises from the performance of Medical Services, the Medical
Services have not been actually been performed or the Medical Services were
undertaken in violation of any law; (e) the Account is subject to a lien
other than a Permitted Lien; (f) Borrower knows or should have known of
the bankruptcy, receivership, reorganization, or insolvency of the Account
Debtor; (g) the Account is evidenced by chattel paper or an instrument of
any kind that has not been pledged and delivered to Lender, or has been reduced
to judgment; (h) the Account is an Account of an Account Debtor having its
principal place of business or executive office outside the United States;
(i) the Account Debtor is an Affiliate or Subsidiary of Borrower;
(j) more than ten percent (10%) of the aggregate balance of all Accounts
owing from the Account Debtor obligated on the Account are outstanding more
than one hundred fifty (150) days past their invoice date; (k) fifty
percent (50%) or more of the aggregate unpaid Accounts from any single Account
Debtor are not deemed Qualified Accounts under this Agreement; (n) the
total unpaid Accounts of the Account Debtor, except for a Medicaid/Medicare
Account Debtor, exceed twenty percent (20%) of the net amount of all Qualified
Accounts (including Medicaid/Medicare Account Debtors);

 

5

 

(1) any covenant,
representation or warranty contained in the Loan Documents with respect to such
Account has been breached; or (m) the Account fails to meet such other
specifications and requirements which may from time to time be established by
Lender.

 

Section
1.43                            Reportable Event.  “Reportable
Event” means a “reportable event” as defined in Section 4043(c) of ERISA
for which the notice requirements of Section 4043(a) of ERISA are not
waived.

 

Section
1.44                            Revolving Credit Loan.  “Revolving
Credit Loan” has the meaning set forth in Section 2.1(b).

 

Section
1.45                            Term.  “Term” has the meaning
set forth in Section 2.8.

 

Section
1.46                            Termination Fee.  “Termination
Fee” shall mean a fee payable upon termination of the Agreement, as yield
maintenance for the loss of bargain and not as a penalty, equal to either
(I) if the date of notice of a termination is on or before the second anniversary
of the Closing Date, the greater of (A) three percent (3%) of the Maximum
Loan Amount and (B) the Yield Maintenance Amount or (ii) if the date
of a notice of termination is after the second anniversary of the Closing Date
and on or before the third anniversary of the Closing Date, the greater of
(A) two percent (2%) of the Maximum Loan Amount and (B) the Yield
Maintenance Amount.

 

Section
1.47                            Yield Maintenance Amount.  “Yield
Maintenance Amount” shall mean the product obtained by multiplying (a) the
difference between (i) the all in effective yield (measured as a
percentage per annum) earned by Lender under this Agreement during the three
(3) full calendar months immediately preceding the Termination Date minus
(ii) Heller Financial Inc.’s weighted average cost of capital (measured as
a percentage per annum) for the most recent publicly disclosed quarterly
financial period; times (b) the average principal amount
of outstanding Revolving Credit Loans for the three (3) calendar months
immediately preceding the Termination Date; times (c) the
quotient of (i) the number of months (full or partial) then-remaining in
the Term divided by (ii) twelve (12).

 

ARTICLE II

LOAN

 

Section 2.1                                   Terms.

 

(a)                                  The
maximum aggregate principal amount of credit extended by Lender to Borrower
under this Agreement (the “Loan”) that will be outstanding at any time is Five
Million and No/100 Dollars ($5,000,000.00) (the “Maximum Loan Amount”).  Notwithstanding anything in this Loan Agreement
to the contrary, the Maximum Loan Amount will be subject to the sublimit of
$2,500,000, and any funding above the sublimit shall be subject to approval of
Lender’s Credit Committee exercising its sole credit judgment.

 

6

 

(b)                                 The
Loan shall be in the nature of a revolving line of credit, and shall include
sums advanced and other credit extended by Lender to or for the benefit of
Borrower from time to time under this Article II (each a “Revolving Credit
Loan”) up to the Maximum Loan Amount depending upon the availability in the
Borrowing Base, the requests of Borrower pursuant to the terms and conditions
of Section 2.2, and on such other basis as Lender may reasonably
determine.  The outstanding principal
balance of the Loan may fluctuate from time to time, to be reduced by
repayments made by Borrower (which may be made without penalty or premium), and
to be increased by future Revolving Credit Loans, advances and other extensions
of credit to or for the benefit of Borrower, and shall be due and payable in
full upon the expiration of the Term. 
For purposes of this Agreement, any determination as to whether there is
availability within the Borrowing Base for advances or extensions of credit
shall be made by Lender in its sole discretion and is final and binding upon
Borrower.

 

(c)                                  At
Closing, Borrower shall execute and deliver to Lender a promissory note
evidencing Borrower’s unconditional obligation to repay Lender for Revolving
Credit Loans, advances, and other extensions of credit made under the Loan, in
the form of Exhibit A to this Agreement (as amended, modified,
restated or replaced from time to time, the “Note”), dated the date of this
Agreement, payable to the order of Lender in accordance with the terms
thereof.  The Note shall bear interest
on the outstanding principal balance of the Note from the date of the Note
until repaid, with interest payable monthly in arrears on the first Business
Day of each month, at a rate per annum (on the basis of the actual number of
days elapsed over a year of 360 days) equal to the Base Rate, provided that
after the occurrence and during the continuance of an Event of Default such
rate shall be equal to the Default Rate. 
Each Revolving Credit Loan, advance and other extension of credit shall
be deemed evidenced by the Note, which is deemed incorporated into and made a
part of this Agreement by this reference.

 

(d)                                 Subject
to the terms and conditions of this Agreement, advances under the Loan shall be
made against a borrowing base equal to eighty-five percent (85%) of Qualified
Accounts due and owing from any Medicaid/Medicare Account Debtor, Insurer or
other Account Debtor (the “Borrowing Base”). 
Lender, in its sole credit judgment, may further adjust the Borrowing
Base by applying percentages (known as “liquidity factors”) to Qualified
Accounts by payor class based upon Borrower’s actual recent collection history
for each such payor class (i.e., Medicare, Medicaid, commercial insurance,
etc.) in a manner consistent with Lender’s underwriting practices and
procedures.(1)  Such liquidity factors
may be adjusted by Lender throughout the Term as warranted by collection
histories.

 

(1)                                  To demonstrate the methodology, the
following is an illustration of the application of liquidity factors:  If Borrower historically collects x% of
invoiced insurance claims (where x is a number between 0 and 100) within the
eligibility period, the liquidity factor would be x%, so that availability
against such class of Accounts in the aggregate would be equal to Qualified
Accounts multiplied by an x% liquidity factor and then multiplied by the
85% advance rate.

 

7

 

Section 2.2                                   Loan
Administration.  Borrowings
under the Loan shall be as follows:

 

(a)                                  A
request for a Revolving Credit Loan shall be made, or shall be deemed to be
made, in the following manner: 
(i) Borrower may give Lender notice of its intention to borrow, in
which notice Borrower shall specify the amount of the proposed borrowing and
the proposed borrowing date, not later than 11:00 a.m. Eastern time one
(1) Business Day before the proposed borrowing date; provided, however,
that no such request may be made at a time when there exists an Event of
Default; and (ii) the becoming due of any amount required to be paid under
this Agreement, whether as interest or for any other Obligation, shall be
deemed irrevocably to be a request for a Revolving Credit Loan on the day
following the due date in the amount required to pay such interest or other
Obligation if such was not paid by Borrower on the due date.

 

(b)                                 Borrower
hereby irrevocably authorizes Lender to disburse the proceeds of each Revolving
Credit Loan requested, or deemed to be requested, as follows:  (i) the proceeds of each Revolving
Credit Loan requested under subsection 2.2(a)(i) shall be disbursed by
Lender by wire transfer to such bank account as may be agreed upon by Borrower
and Lender from time to time or elsewhere if pursuant to written direction from
Borrower; and (ii) the proceeds of each Revolving Credit Loan deemed to be
requested under subsection 2.2(a)(ii) shall be disbursed by Lender by way
of direct payment of the relevant interest or other Obligation.

 

(c)                                  All
Revolving Credit Loans, advances and other extensions of credit to or for the
benefit of Borrower shall constitute one general Obligation of Borrower, and
shall be secured by Lender’s lien upon all of the Collateral.

 

(d)                                 Lender
shall enter all Revolving Credit Loans as debits to a loan account in the name
of Borrower and shall also record in said loan account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are
indefeasibly paid to Lender, and may record therein, in accordance with
customary accounting practice, other debits and credits, including interest and
all charges and expenses properly chargeable to Borrower.  All collections into the Concentration
Account pursuant to Section 2.3 shall be applied first to fees, costs and
expenses due and owing under the Loan Documents, then to interest due and owing
under the Loan Documents, and then to principal outstanding with respect to
Revolving Credit Loans.

 

(e)                                  Lender
will account to Borrower monthly with a statement of Revolving Credit Loans,
charges and payments made pursuant to this Agreement, and such accounting
rendered by Lender shall be deemed final, binding and conclusive upon Borrower,
absent manifest error, unless Lender is notified by Borrower in writing to the
contrary within thirty (30) days of the date each accounting is mailed to
Borrower.  Such notice shall be deemed
an objection to those items specifically objected to in the notice.

 

Section 2.3                                   Collections,
Disbursements, Borrowing Availability, and Lockbox Account.  Borrower shall maintain a lockbox account
(the “Lockbox”) with FIRST UNION BANK (the “Lockbox Bank”), subject to the
provisions of this

 

8

 

Agreement, and shall
execute with the Lockbox Bank a Lockbox Agreement in the form attached as Exhibit B,
and such other agreements related to the Lockbox Agreement as Lender may
require.  Borrower shall ensure that all
collections of Accounts are paid directly from Account Debtors into the
Lockbox, and that all funds paid into the Lockbox are transferred daily into a
depository account maintained by Lender at Bank One, N.A., or such other
financial institution as determined by Lender in its sole discretion, by
written notice to Borrowers and the Lockbox Bank (the “Concentration
Account”).  Lender shall apply, on a
daily basis, all funds transferred into the Concentration Account pursuant to
this Section 2.3 to reduce the outstanding indebtedness under the Loan (in
accordance with Section 2.2(d)), and all future Revolving Credit Loans,
advances and other extensions of credit to be made by Lender under the
conditions set forth in this Article II. 
To the extent that any collections of Accounts or proceeds of other
Collateral are not sent directly to the Lockbox but are received by Borrower,
such collections shall be held in trust for the benefit of Lender and
immediately remitted, in the form received, to the Lockbox Bank for transfer to
the Concentration Account immediately upon receipt by Borrower. Borrower
acknowledges and agrees that its compliance with the terms of this
Section 2.3 is essential, and that Lender will suffer immediate and
irreparable injury and have no adequate remedy at law, if Borrower, through its
acts or omissions, causes or permits Account Debtors to pay other than to the
Lockbox Account, or if Borrower fails to immediately deposit collections of
Accounts or proceeds of other Collateral in the Lockbox Account as herein
required.  Upon Borrower’s failure to
comply with any such terms Lender shall give Borrower written notice of such
noncompliance.  If such noncompliance is
not cured by Borrower within two (2) Business Days of such notice, Lender shall
be entitled to assess a non-compliance fee which shall operate to increase the
Base Rate by two percent (2%) per annum (which non-compliance fee shall be in
lieu of and not in addition to any increase in the Base Rate due to an Event of
Default) during any period of non-compliance. 
Lender shall be entitled to assess such fee whether or not an Event of
Default is declared or otherwise occurs. 
All funds transferred from the Concentration Account for application to
Borrower’s indebtedness to Lender shall be applied to reduce the Loan balance,
but for purposes of calculating interest shall be subject to a five (5)
Business Day clearance period.  If as the
result of collections of Accounts pursuant to the terms and conditions of this
Section 2.3 a credit balance exists with respect to the Concentration
Account, such credit balance shall not accrue interest in favor of Borrower,
but shall be available to Borrower at any time or times for so long as no Event
of Default, and no event or circumstance which, with notice or the passage of
time (or both), would constitute an Event of Default, exists.

 

Section 2.4                                   Fees.

 

(a)                                  Upon
execution of this Agreement, Borrower shall unconditionally pay to Lender a
commitment fee equal to one-half percent (0.50%) of the Maximum Loan Amount
(the “Commitment Fee”), provided that so long as the sublimit of the Loan is
not increased from $2,500,000 to $5,000,000, only $12,500 shall be due and
payable by Borrower, with the remaining $12,500 being due and payable if and
only if the sublimit is increased to $5,000,000.

 

9

 

(b)                                 For
so long as the Loan is available to Borrower, Borrower unconditionally shall
pay to Lender a monthly loan management fee (the “Loan Management Fee”) equal
to one-twelfth of one percent (0.083%) of the average amount of the outstanding
principal balance of the Revolving Credit Loans during the preceding
month.  The Loan Management Fee shall be
payable monthly in arrears on the first day of each successive calendar month.

 

(c)                                  Borrower
shall pay to Lender all out-of-pocket audit and appraisal fees in connection
with audits and appraisals of Borrower’s books and records and such other
matters as Lender shall deem appropriate, which shall be due and payable on the
later of (i) the first Business Day of the month following the date of
issuance by Lender of a request for payment thereof to Borrower or
(ii) ten (10) days following the date of issuance by Lender of a request
for payment thereof to Borrower.

 

(d)                                 Borrower
shall pay to Lender, on demand, any and all fees, costs or expenses which
Lender or any participant pays to a bank or other similar institution
(including, without limitation, any fees paid by Lender to any participant)
arising out of or in connection with (i) the forwarding to Borrower or any
other Person on behalf of Borrower, by Lender, of proceeds of Revolving Credit
Loans made by Lender to Borrower pursuant to this Agreement, and (ii) the
depositing for collection, by Lender or any participant, of any check or item
of payment received or delivered to Lender or any participant on account of
Obligations.

 

Section 2.5                                   Payments.  Principal payable on account of Revolving Credit Loans shall be payable
by Borrower to Lender immediately upon the earliest of (i) the receipt by
Borrower or Lender of any payments on or proceeds from any of the Collateral,
to the extent of such proceeds, (ii) the occurrence of an Event of Default
if the Loan and the maturity of the payment of the Obligations are accelerated,
or (iii) the termination of this Agreement pursuant to Section 2.8 of
this Agreement; provided, however, that if any advance made by
Lender in excess of the Borrowing Base shall exist at any time, Borrower shall,
immediately upon demand, repay such overadvance.  Interest accrued on the Revolving Credit Loans shall be due on
the earliest of (i) the first Business Day of each month (for the
immediately preceding month), computed on the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default if the Loan
and the maturity of the payment of the Obligations are accelerated, or
(iii) the termination of this Agreement pursuant to Section 2.8.  Except to the extent otherwise set forth in
this Agreement, all payments of principal and of interest on the Loan, all
other charges and any other obligations of Borrower under this Agreement, shall
be made to Lender to the Concentration Account, in immediately available funds.

 

Section 2.6                                   Use
of Proceeds.  The proceeds of
Lender’s advances under the Loan shall be used solely for working capital and
for other costs of Borrower arising in the ordinary course of Borrower’s
business.

 

Section 2.7                                   Interest
Rate Limitation.  The parties
intend to conform strictly to the applicable usury laws in effect from time to
time during the term of the Loan. 
Accordingly, if any transaction contemplated by this Agreement would be
usurious under

 

10

 

such laws, then
notwithstanding any other provision of this Agreement:  (i) the aggregate of all interest that
is contracted for, charged, or received under this Agreement or under any other
Loan Document shall not exceed the maximum amount of interest allowed by applicable
law (the “Highest Lawful Rate”), and any excess shall be promptly credited to
Borrower by Lender (or, to the extent that such consideration shall have been
paid, such excess shall be promptly refunded to Borrower by Lender);
(ii) neither Borrower nor any other Person now or hereafter liable under
this Agreement shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Highest Lawful Rate; and (iii) the
effective rate of interest shall be reduced to the Highest Lawful Rate.  All sums paid, or agreed to be paid, to
Lender for the use, forbearance, and detention of the debt of Borrower to
Lender shall, to the extent permitted by applicable law, be allocated
throughout the full term of the Note until payment is made in full so that the
actual rate of interest does not exceed the Highest Lawful Rate in effect at
any particular time during the full term thereof.  If at any time the rate of interest under the Note exceeds the
Highest Lawful Rate, the rate of interest to accrue pursuant to this Agreement
shall be limited, notwithstanding anything to the contrary in this Agreement,
to the Highest Lawful Rate, but any subsequent reductions in the Base Rate
shall not reduce the interest to accrue pursuant to this Agreement below the
Highest Lawful Rate until the total amount of interest accrued equals the
amount of interest that would have accrued if a varying rate per annum equal to
the interest rate under the Note had at all times been in effect.  If the total amount of interest paid or
accrued pursuant to this Agreement under the foregoing provisions is less than
the total amount of interest that would have accrued if a varying rate per
annum equal to the interest rate under the Note had been in effect, then
Borrower agrees to pay to Lender an amount equal to the difference between
(x) the lesser of (A) the amount of interest that would have accrued
if the Highest Lawful Rate had at all times been in effect, or (B) the
amount of interest that would have accrued if a varying rate per annum .equal
to the interest rate under the Note had at all times been in effect, and
(y) the amount of interest accrued in accordance with the other provisions
of this Agreement.

 

Section 2.8                                   Term.

 

(a)                                  Subject
to Lender’s right to cease making Revolving Credit Loans to Borrower upon or
after any Event of Default, this Agreement shall be in effect for a period of
three (3) years from the Closing Date, unless terminated as provided in this
Section 2.8 (the “Term”), and this Agreement shall be renewed for one-year
periods thereafter upon the mutual written agreement of the parties.

 

(b)                                 Notwithstanding
anything in this Agreement to the contrary, Lender may terminate this Agreement
without notice upon or after the occurrence of an Event of Default.

 

(c)                                  Upon
at least thirty (30) days prior written notice to Lender (the “Termination
Notice Period”), Borrower may terminate this Agreement after the first annual
anniversary of the Closing Date, provided
however, at the effective date of any termination, Borrower shall
pay to Lender (in addition to the then outstanding principal, accrued interest
and other Obligations owing under the terms of this Agreement and any

 

11

 

other Loan Documents) as yield maintenance for the loss of bargain and
not as a penalty, an amount equal to the applicable Termination Fee.  Consistent with the foregoing, Borrower has
no right to terminate this Agreement until after the first anniversary of the
Closing Date.

 

(d)                                 All
of the Obligations shall be immediately due and payable upon the termination
date stated in any notice of termination of this Agreement (the “Termination
Date”); provided that, notwithstanding anything in Section 2.8(c) to the
contrary, the Termination Date shall be effective no earlier than the first
Business Day of the month following the expiration of the Termination Notice
Period.  All undertakings, agreements,
covenants, warranties, and representations of Borrower contained in the Loan
Documents shall survive any such termination and Lender shall retain its liens
in the Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrower has paid the Obligations to
Lender, in full, in immediately available funds.

 

(e)                                  Notwithstanding
any provision of this Agreement which makes reference to the continuance of an
Event of Default, nothing in this Agreement shall be construed to permit
Borrower to cure an Event of Default following the lapse of the applicable cure
period, and Borrower shall have no such right in any instance unless
specifically granted in writing by Lender.

 

Section 2.9                                   Joint
and Several Liability; Binding Obligations.  Each entity constituting Borrower shall be jointly and severally
liable for all of the obligations of Borrower under this note.  Each Borrower, individually, expressly
understands, agrees and acknowledges, that the loan would not be made available
on the terms herein in the absence of the collective credit of all of the
Borrowers, the joint and several liability of all Borrowers, and the cross
collateralization of the collateral of all Borrowers.  Accordingly, each Borrower, individually acknowledges that the
benefit to each of the participants in the facility as a whole constitutes
reasonably equivalent value, regardless of the amount of the loan actually
borrowed by, advanced to, or the amount of collateral provided by, any
individual Borrower.  In addition, each
entity comprising Borrower hereby acknowledges and agrees that all of the representations,
warranties, covenants, obligations, conditions, agreements and other terms
contained in this Agreement shall be applicable to and shall be binding upon
each entity comprising Borrower, and shall be binding upon all such entities
when taken together.

 

ARTICLE III

COLLATERAL

 

Section 3.1                                   Generally.  As security for the payment of all
liabilities of Borrower to Lender, including without limitation:  (i) indebtedness evidenced under the
Note, repayment of Revolving Credit Loans, advances and other extensions of
credit, all fees and charges owing by Borrower, (including without limitation
the Termination Fee) and all other liabilities and obligations of every kind or
nature whatsoever of Borrower to

 

12

 

Lender, whether now
existing or hereafter incurred, joint or several, matured or unmatured, direct
or indirect, primary or secondary, related or unrelated, due or to become due,
including but not limited to any extensions, modifications, substitutions,
increases and renewals thereof, (ii) the payment of all amounts advanced
by Lender to preserve, protect, defend, and enforce its rights under this
Agreement and in the following property in accordance with the terms of this
Agreement, and (iii) the payment of all expenses incurred by Lender in
connection therewith (collectively, the “Obligations”), Borrower hereby assigns
and grants to Lender a continuing first priority lien on and security interest
in, upon, and to the following property (the “Collateral”):

 

(a)                                  All
of Borrower’s now-owned and hereafter acquired or arising Accounts, accounts
receivable and rights to payment of every kind and description, and all of
Borrower’s contract rights, chattel paper, documents and instruments with
respect thereto, and all of Borrower’s rights, remedies, security and liens,
in, to and in respect of the Accounts, including, without limitation, rights of
stoppage in transit, replevin, repossession and reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party, guaranties or other
contracts of suretyship with respect to the Accounts, deposits or other
security for the obligation of any Account Debtor, and credit and other
insurance;

 

(b)                                 All
moneys, securities and other property and the proceeds thereof, now or
hereafter held or received by, in transit to, in possession of, or under the
control of Lender or a bailee or Affiliate of Lender, from or for Borrower,
whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all of Borrower’s deposits (general or special), balances, sums
and credits with Lender at any time existing;

 

(c)                                  All
of Borrower’s now owned or hereafter acquired deposit accounts into which
Accounts are deposited, including the Lockbox Account;

 

(d)                                 All
of Borrower’s now owned and hereafter acquired or arising general intangibles
and other property of every kind and description with respect to, evidencing or
relating to its Accounts, accounts receivable and other rights to payment,
including, but not limited to, all existing and future customer lists, choses
in action, claims, books, records, ledger cards, contracts, licenses, formulae,
tax and other types of refunds, returned and unearned insurance premiums,
rights and claims under insurance policies, and computer programs, information,
software, records, and data, as the same relates to the Accounts; and

 

(f)                                    The
proceeds (including, without limitation, insurance proceeds) of all of the
foregoing.

 

Section 3.2                                   Lien
Documents.  At Closing and
thereafter as Lender deems necessary in its sole discretion, Borrower shall
execute and deliver to Lender, or have executed and delivered (all in form and
substance satisfactory to Lender in its sole discretion):

 

13

 

(a)                                  UCC-1
Financing Statements pursuant to the Uniform Commercial Code in effect in the
jurisdiction(s) in which Borrower operates, which Lender may file in any
jurisdiction where any Collateral is or may be located and in any other
jurisdiction that Lender deems appropriate; provided that a carbon,
photographic, or other reproduction or other copy of this Agreement or of a
financing statement is sufficient as and may be filed in lieu of a financing
statement; and

 

(b)                                 Any
other agreements, documents, instruments, and writings deemed necessary by
Lender or as Lender may otherwise request from time to time in its sole
discretion to evidence, perfect, or protect Lender’s lien and security interest
in the Collateral required under this Agreement.

 

Section 3.3                                   Collateral
Administration.

 

(a)                                  All
Collateral (except deposit accounts) will at all times be kept by Borrower at
its principal office(s) as set forth on Schedule 4.15 and shall not
be moved from such locations without the prior written consent of Lender, which
consent shall not be unreasonably withheld.

 

(b)                                 Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender.  In addition, if
Accounts in an aggregate face amount in excess of $50,000.00 become ineligible
because they fall within one of the specified categories of ineligibility set
forth in the definition of Qualified Accounts or otherwise, Borrower shall
notify Lender of such occurrence on the first Business Day following Borrower’s
discovery of such occurrence and the Borrowing Base shall thereupon be adjusted
to reflect such occurrence.  If requested
by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly, which shall include all Accounts
that have been created since the date of the last assignment, together with
copies of claims, invoices or other information related thereto.

 

(c)                                  Whether
or not an Event of Default has occurred, any of Lender’s officers, employees or
agents shall have the right, at any time or times hereafter, in the name of
Lender or any designee of Lender or Borrower, to verify the validity, amount or
any other matter relating to any Accounts by mail, telephone, telegraph or
otherwise.  Borrower shall cooperate
fully with Lender in an effort to facilitate and promptly conclude such verification
process.

 

(d)                                 To
expedite collection, Borrower shall endeavor in the first instance to make
collection of its Accounts for Lender: 
Lender retains the right at all times after the occurrence and during
the continuance of an Event of Default, subject to applicable law regarding
Medicaid/Medicare Account Debtors, to notify Account Debtors that Accounts have
been assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including attorneys’ fees, to
Borrower.

 

14

 

Section 3.4                                   Other
Actions.  In addition to the
foregoing, Borrower (i) shall provide prompt written notice to each
private indemnity, managed care or other Insurer who either is currently an
Account Debtor or becomes an Account Debtor at any time following the date of
this Agreement that Lender has been granted a first priority lien and security
interest in, upon and to all Accounts applicable to such Insurer and directs
each Account Debtor to make payments into the Lockbox, and hereby authorizes
Lender, upon Borrower’s failure to send such notices within ten (10) days after
the date of this Agreement (or ten (10) days after the Insurer becomes an
Account Debtor), to send any and all similar notices to such Insurers, and (ii) shall
do anything further that may be lawfully required by Lender to secure Lender
and effectuate the intentions and objects of this Agreement, including but not
limited to the execution and delivery of lockbox agreements, continuation
statements, amendments to financing statements, and any other documents
required under this Agreement.  At
Lender’s request, Borrower shall also immediately deliver to Lender all items
for which Lender must receive possession to obtain a perfected security
interest.  Borrower shall, on Lender’s
demand, deliver to Lender all notes, certificates, and documents of title,
chattel paper, warehouse receipts, instruments, and any other similar
instruments constituting Collateral.

 

Section 3.5                                   Searches.  Before Closing, and thereafter (as and when
determined by Lender in its sole discretion), Lender will perform the searches
described in clauses (a) and (b) below against Borrower (the results of
which are to be consistent with Borrower’s representations and warranties under
this Agreement), all at Borrower’s expense:

 

(a)                                  Uniform
Commercial Code searches with the Secretary of State and local filing offices
of each jurisdiction where Borrower maintains its executive offices, a place of
business, or assets;

 

(b)                                 Judgment,
federal tax lien and corporate and partnership tax lien searches, in each
jurisdiction searched under clause (a) above; and

 

In addition,
prior to Closing, at Borrower’s expense, Borrower shall obtain and deliver to
Lender good standing certificates showing Borrower to be in good standing in
its state of formation and in each other state in which it is doing and
currently intends to do business for which qualification is required.

 

Section 3.6                                   Power
of Attorney.  Each of the
officers of Lender is hereby irrevocably made, constituted and appointed the
true and lawful attorney for Borrower (without requiring any of them to act as
such) with full power of substitution to do the following:  (i) endorse the name of Borrower upon
any and all checks, drafts, money orders, and other instruments for the payment
of money that are payable to Borrower and constitute collections on Borrower’s
Accounts; (ii) execute in the name of Borrower any financing statements,
schedules, assignments, instruments, documents, and statements that Borrower is
obligated to give Lender under this Agreement; and (iii) do such other and
further acts and deeds in the name of Borrower that Lender may deem necessary
or desirable to enforce any Account or other Collateral or perfect Lender’s
security interest or lien in any Collateral. 
In addition, if Borrower breaches its obligation to direct

 

15

 

payments of the proceeds
of the Collateral to the Lockbox Account, Lender, as the irrevocably made,
constituted and appointed true and lawful attorney for Borrower pursuant to
this paragraph, may, by the signature or other act of any of Lender’s officers
(without requiring any of them to do so), direct any federal, state or private
payor or fiscal intermediary to pay proceeds of the Collateral to Borrower by
directing payment to the Lockbox Account.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Each entity
comprising Borrower represents and warrants to Lender, and shall be deemed to
represent and warrant on each day on which any Obligations shall be outstanding
under this Agreement, that:

 

Section 4.1                                   Subsidiaries.  Except as set forth in Schedule 4.1,
Borrower has no subsidiaries.

 

Section 4.2                                   Organization
and Good Standing.  Borrower is
a corporation duly incorporated, validly existing, and in good standing under
the laws of its state of formation, is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties owned
or leased by it therein or the nature of its business makes such qualification
necessary, has the corporate power and authority to own its assets and transact
the business in which it is engaged, and has obtained all certificates,
licenses and qualifications required under all laws, regulations, ordinances,
or orders of public authorities necessary for the ownership and operation of
all of its properties and transaction of all of its business.

 

Section 4.3                                   Authority.  Borrower has full corporate power and
authority to enter into, execute, and deliver this Agreement and to perform its
obligations under this Agreement, to borrow the Loan, to execute and deliver
the Note, and to incur and perform the obligations provided for in the Loan
Documents, all of which have been duly authorized by all necessary corporate
action.  No consent or approval of
shareholders of, or lenders to, Borrower and no consent, approval, filing or
registration with any Governmental Authority is required as a condition to the
validity of the Loan Documents or the performance by Borrower of its obligations
under the Loan Documents.

 

Section 4.4                                   Binding
Agreement.  This Agreement and
all other Loan Documents constitute, and the Note, when issued and delivered
pursuant to this Agreement for value received, will constitute, the valid and
legally binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms.

 

Section 4.5                                   Litigation.  Except as disclosed in Schedule 4.5,
there are no actions, suits, proceedings or investigations pending or
threatened against Borrower before any court or arbitrator or before or by any
Governmental Authority which, in anyone case or in the aggregate, if determined
adversely to the interests of Borrower, could have a material adverse effect on
the business, properties, condition (financial or

 

16

 

otherwise) or operations,
current or prospective, of Borrower, or upon its ability to perform its
obligations under the Loan Documents. 
Borrower is not in default with respect to any order of any court,
arbitrator, or Governmental Authority applicable to Borrower or its properties.

 

Section 4.6                                   No
Conflicts.  The execution and
delivery by Borrower of this Agreement and the other Loan Documents do not, and
the performance of its obligations under the Loan Documents will not, violate,
conflict with, constitute a default under, or result in the creation of a lien
or encumbrance upon the property of Borrower (other than for the benefit of
Lender) under:  (i) any provision
of Borrower’s articles of incorporation or bylaws, (ii) any provision of
any law, rule, or regulation applicable to Borrower, or (iii) any of the
following:  (A) any indenture or
other agreement or instrument to which Borrower is a party or by which Borrower
or its property is bound; or (B) any judgment, order or decree of any
court, arbitration tribunal, or Governmental Authority having jurisdiction over
Borrower which is applicable to Borrower.

 

Section 4.7                                   Financial
Condition.  The annual financial
statements of Borrower as of and for the period ending December 31, 2000
audited by Ernst & Young and the unaudited financial statements of Borrower
as of and for the period ending November 30,2000, certified by the chief
financial officer of Borrower, which have been delivered to Lender, fairly
present the financial condition of Borrower and the results of its operations
and changes in financial condition as of the dates and for the periods referred
to, and have been prepared in accordance with GAAP.  There are no material unrealized or anticipated liabilities,
direct or indirect, fixed or contingent, of Borrower as of the dates of such
financial statements which are not reflected in such financial statements or in
the notes to such financial statements. 
There has been no adverse change in the business, properties, condition
(financial or otherwise) or operations (current or prospective) of Borrower
since September 30, 2000. Borrower’s fiscal year ends on
December 31.  The federal tax
identification number of each entity comprising Borrower is as described on Schedule 4.7.

 

Section 4.8                                   No
Default.  Borrower is not in
default under or with respect to any obligation in any respect which could be
adverse to its business, operations, property or financial condition, or which
could adversely affect the ability of Borrower to perform its obligations under
the Loan Documents.  No Event of Default
or event which, with the giving of notice or lapse of time, or both, could
become an Event of Default, has occurred and is continuing.

 

Section 4.9                                   Title
to Properties.  Borrower has
good and marketable title to its properties and assets, including the
Collateral and the properties and assets reflected in the financial statements
described in Section 4.7, subject to no lien, mortgage, pledge,
encumbrance or charge of any kind, other than Permitted Liens.  Borrower has not agreed or consented to
cause any of its properties or assets whether owned now or hereafter acquired
to be subject in the future (upon the happening of a contingency or otherwise)
to any lien, mortgage, pledge, encumbrance or charge of any kind other than
Permitted Liens.

 

17

 

Section
4.10                            Taxes.  Borrower has filed, or has obtained
extensions for the filing of, all federal, state and other tax returns which
are required to be filed, and has paid all taxes shown as due on those returns
and all assessments, fees and other amounts due as of the date of this
Agreement.  All tax liabilities of
Borrower were, as of September 30, 2000 and are now, adequately provided
for on Borrower’s books.  No tax
liability has been asserted by the Internal Revenue Service or other taxing
authority against Borrower for taxes in excess of those already paid.

 

Section
4.11                            Securities
and Banking Laws and Regulations.

 

(a)                                  The
use of the proceeds of the Loan and Borrower’s issuance of the Note will not
directly or indirectly violate or result in a violation of the Securities Act
of 1933 or the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including without limitation Regulations U, T or X of
the Board of Governors of the Federal Reserve System.  Borrower is not engaged in the business of extending credit for
the purpose of the purchasing or carrying “margin stock” within the meaning of
those regulations.  No part of the
proceeds of the Loan under this Agreement will be used to purchase or carry any
margin stock or to extend credit to. others for such purpose.

 

(b)                                 Borrower
is not an investment company within the meaning of the Investment Company Act
of 1940, as amended, nor is it, directly or indirectly, controlled by or acting
on behalf of any Person which is an investment company within the meaning of
that Act.

 

Section
4.12                            ERISA.  No employee benefit plan (a “Plan”) subject
to the Employee Retirement Income Security Act of 1974 (“ERISA”) and
regulations issued pursuant to ERISA that is maintained by Borrower or under
which Borrower could have any material liability under ERISA (i) has
failed to meet minimum funding standards established in Section 302 of
ERISA, (ii) has failed to substantially comply with all applicable
requirements of ERISA and of the Internal Revenue Code, including all
applicable rulings and regulations thereunder, or (iii)  has engaged in or
been involved in a prohibited transaction (as defined in ERISA) under ERISA or
under the Internal Revenue Code. 
Neither Borrower nor any member of a Controlled Group that includes
Borrower has assumed, or received notice of a claim asserted against Borrower
or another member of the Controlled Group for, withdrawal liability (as defined
in the Multi-Employer Pension Plan Amendments Act of 1980, as amended) with
respect to any multi-employer pension plan. Borrower has timely made when due
all contributions with respect to any multi-employer pension plan in which it
participates and no event has occurred triggering a material claim against
Borrower for withdrawal liability with respect to any multi-employer pension
plan in which Borrower participates.

 

Section
4.13                            Compliance
with Law.  Except as described
in Schedule 4.13,  Borrower is not in violation of any
statute, rule or regulation of any Governmental Authority (including, without
limitation, any statute, rule or regulation relating to employment practices or
to environmental, occupational and health standards and controls).  Borrower has obtained all licenses, permits,
franchises, and other

 

18

 

governmental
authorizations necessary for the ownership of its properties and the conduct of
its business.  Borrower is current with
all reports and documents required to be filed with any state or federal
securities commission or similar Governmental Authority and is in full
compliance with all applicable rules and regulations of such commissions.

 

Section
4.14                            Environmental
Matters.  No use, exposure,
release, generation, manufacture, storage, treatment, transportation or
disposal of Hazardous Material has occurred or is occurring on or from any real
property on which the Collateral is located or which is owned, leased or
otherwise occupied by Borrower (the “Premises”), or off the Premises as a
result of any action of Borrower, except as described in Schedule 4.14.  All Hazardous Material used, treated,
stored, transported to or from, generated or handled on the Premises, or off
the Premises by Borrower, has been disposed of on or off the Premises by or on
behalf of Borrower in a lawful manner. 
There are no underground storage tanks present on or under the Premises
owned or leased by Borrower.  No other
environmental, public health or safety hazards exist with respect to the
Premises.

 

Section
4.15                            Places
of Business.  As of the Closing
Date, the only places of business of Borrower, and the places where it keeps
and intends to keep the Collateral and records concerning the Collateral, are
at the addresses set forth in Schedule 4.15.  Schedule 4.15 also lists the owner
of record of each such property.

 

Section
4.16                            Intellectual
Property.  Borrower exclusively
owns or possesses all the patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, franchises, licenses, and
rights with respect to the foregoing necessary for the current and planned
future conduct of its business, without any conflict with the rights of
others.  A list of all such intellectual
property (indicating the nature of Borrower’s interest), as well as all
outstanding franchises and licenses given by or held by Borrower, is attached
as Schedule 4.16.  Borrower
is not in default of any obligation or undertaking with respect to such
intellectual property or rights.  To the
best of Borrower’s knowledge, Borrower is not infringing on any patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, franchises, licenses, any rights with respect to the foregoing, or
any other intellectual property rights of others and the Borrower is not aware
of any infringement by others of any such rights owned by Borrower.

 

Section
4.17                            Stock
Ownership.  The identity of the
stockholders of record of all classes of the outstanding stock of Borrower,
together with the respective ownership percentages held by such stockholders,
are as set forth on Schedule 4.17.

 

Section
4.18                            Material
Facts.  Neither this Agreement
nor any other Loan Document nor any other agreement, document, certificate, or
statement furnished to Lender by or on behalf of Borrower in connection with
the transactions contemplated by this Agreement contains any untrue statement
of material fact or omits to state a material fact necessary to make the
statements contained in this Agreement or other Loan Document not
misleading.  There is no fact known to
Borrower that adversely affects or in the future may adversely affect the
business, operations, affairs or financial condition of Borrower, or any of its
properties or assets.

 

19

 

Section
4.19                            Investments.
Guarantees. and Certain Contracts. 
Borrower does not own or hold any equity or long-term debt investments
in, have any outstanding advances to, have any outstanding guarantees for the
obligations of, or have any outstanding borrowings from, any Person, except as
described on Schedule 4.19. 
Borrower is not a party to any contract or agreement, or subject to
any corporate restriction, which adversely affects its business.

 

Section
4.20                            Business
Interruptions.  Within five
years before the date of this Agreement, neither the business, property or
assets, or operations of Borrower has been adversely affected in any way by any
casualty, strike, lockout, combination of workers, or order of the United
States of America or other Governmental Authority, directed against
Borrower.  There are no pending or
threatened labor disputes, strikes, lockouts, or similar occurrences or
grievances against Borrower or its business.

 

Section
4.21                            Names.  Within five years before the date of this
Agreement, Borrower has not conducted business under or used any other name
(whether corporate, partnership or assumed) other than as shown on Schedule 4.21.  Borrower is the sole owner of all names
listed on that Schedule and any and all business done and invoices issued in
such names are Borrower’s sales, business, and invoices.  Each trade name of Borrower represents a
division or trading style of Borrower and not a separate Person or independent
Affiliate.

 

Section
4.22                            Joint
Ventures.  Borrower is not
engaged in any joint venture or partnership with any other Person, except as
set forth on Schedule 4.22.

 

Section
4.23                            Accounts.  Lender may rely, in determining which
Accounts are Qualified Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts.  Unless otherwise indicated in writing to Lender, with respect to
each Qualified Account, Borrower represents that:

 

(a)                                  The
Account is genuine and in all respects what it purports to be, and is not
evidenced by a judgment;

 

(b)                                 The
Account arises out of a completed, bona  fide sale and delivery of
goods or rendition of Medical Services by Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all purchase
orders, contracts, certification, participation, certificate of need, or other
documents relating thereto and forming a part of the contract between Borrower
and the Account Debtor;

 

(c)                                  The
Account is for a liquidated amount maturing as stated in a duplicate claim or
invoice covering such sale or rendition of Medical Services, a copy of which
has been furnished or is available to Lender;

 

(d)                                 The
Account, and Lender’s security interest in such Account, is not, and will not
(by voluntary act or omission by Borrower), be in the future, subject to any
offset, lien, deduction, defense, dispute, counterclaim or any other adverse
condition, and each such Account is absolutely owing to Borrower and is not
contingent in any respect or for any reason;

 

20

 

(e)                                  There
are no facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable thereunder
from the face amount of the claim or invoice and statements delivered to Lender
with respect thereto;

 

(f)                                    To
the best of Borrower’s knowledge, (i) the Account Debtor under the Account
had the capacity to contract at the time any contract or other document giving
rise to the Account was executed and (ii) such Account Debtor is solvent;

 

(g)                                 To
the best of Borrower’s knowledge, there are no proceedings or actions which are
threatened or pending against any Account Debtor under the Account which might
result in any material adverse change in such Account Debtor’s financial
condition or the collectibility of such Account;

 

(h)                                 The
Account has been billed and forwarded to the Account Debtor for payment in
accordance with applicable laws and compliance and conformance with any and
requisite procedures, requirements and regulations governing payment by such
Account Debtor with respect to such Account, and such Account if due from a
Medicaid/Medicare Account Debtor is properly payable directly to Borrower; and

 

(i)                                     Borrower
has obtained or is in the process of obtaining all certificates of need,
Medicaid and Medicare provider numbers, licenses, permits and authorizations
that are necessary in the generation of such Accounts.

 

Section
4.24                            Solvency.  Both before and after giving effect to the
transactions contemplated by the terms and provisions of this Agreement,
Borrower (taken as a whole) (i) owns property whose fair saleable value is
greater than the amount required to pay all of Borrower’s Indebtedness
(including contingent debts), (ii) was and is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) had and has capital
sufficient to carry on its business and transactions and all business and
transactions in which it about to engage. 
For purposes of this Agreement, the term “Indebtedness” means, without
duplication (x) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a balance
sheet of such Borrower as of the date on which Indebtedness is to be
determined, (y) all obligations of any other person or entity which such
Borrower has guaranteed, and (z) the Obligations.

 

Section
4.25                            Year
2000 Compliance.

 

(a)                                  All
devices, systems, machinery, information technology, computer software and
hardware, and other date sensitive technology (collectively, the “Systems”)
necessary for Borrower to carry on its business as currently conducted and as
expected to be conducted in the future are Year 2000 Compliant or will be Year
2000 Compliant within a period of time calculated to result in no material
disruption of any of Borrower’s business operations.  For purposes of these provisions, “Year 2000 Compliant” means
that such Systems are designed to be used before, during and after the
Gregorian calendar year 2000 A.D. and will operate during each such time period
without

 

21

 

error related to date data, specifically including any error relating
to, or the product of, date data that represents or refers to different
centuries or more than one century.

 

(b)                                 Borrower
has:  (i) undertaken a detailed
inventory, review, and assessment of all areas within its business and
operations that could be adversely affected by the failure of Borrower to be
Year 2000 Compliant on a timely basis; (ii) developed a detailed plan and
time line for becoming Year 2000 Compliant on a timely basis; and (iii) to
date, implemented that plan in accordance with the timetable in all material
respects.

 

ARTICLE V

CLOSING AND CONDITIONS OF LENDING

 

Section 5.1                                   Conditions
Precedent to Agreement.  The
obligation of Lender to enter into and perform this Agreement and to make
Revolving Credit Loans is subject to the following conditions precedent:

 

(a)                                  Lender
shall have received two (2) originals of this Agreement, the Certificate of
Validity, the Guaranty and all other Loan Documents required to be executed and
delivered at or before Closing (other than the Note, as to which Lender shall
receive only one original), executed by Borrower and any other required
Persons, as applicable.

 

(b)                                 Lender
shall have received all searches and good standing certificates required by
Section 3.5.

 

(c)                                  Borrower
shall have complied and shall then be in compliance with all the terms,
covenants and conditions of the Loan Documents.

 

(d)                                 There
shall have occurred and be continuing no Event of Default and no event which,
with the giving of notice or the lapse of time, or both, could constitute such
an Event of Default.

 

(e)                                  The
representations and warranties contained in Article IV shall be true and
correct.

 

(f)                                    Lender
shall have received copies of all board of directors resolutions of Borrower,
and other action taken by Borrower to authorize the execution, delivery and
performance of the Loan Documents and the borrowing of the Loan under the Loan
Documents, as well as the names and signatures of the officers of Borrower
authorized to execute documents on its behalf in connection with the Loan, all
as also certified as of the date of this Agreement by Borrower’s chief
financial officer, or equivalent, and such other papers as Lender may require.

 

(g)                                 Lender
shall have received copies, certified as true, correct and complete by a
corporate officer of each Borrower, of the certificate of incorporation of

 

22

 

each Borrower, with any amendments to any of the foregoing, and all
other documents necessary for performance of the obligations of Borrower under
this Agreement and the other Loan Documents.

 

(h)                                 Lender
shall have received a written opinion of counsel for Borrower, dated the date
of this Agreement, substantially in the form of Exhibit C.

 

(i)                                     Lender
shall have received such financial statements, reports, certifications, and
other operational information required to be delivered under this Agreement,
including without limitation an initial borrowing base certificate calculating
the Borrowing Base.

 

(j)                                     Lender
shall have received the Commitment Fee.

 

(k)                                  The
Lockbox, Lockbox Account and the Concentration Account shall have been
established.

 

(1)                                  Lender
shall have received an estoppel certificate substantially in the form of Exhibit D
from Borrower’s landlord or sublandlord, as the case may be, with respect to
each of the facilities identified on Schedule 4.15.

 

(m)                               Lender
shall have received a certificate of Borrower’s chief financial officer, dated
the Closing Date, certifying that all of the conditions specified in this
Section have been fulfilled.

 

Section 5.2                                   Conditions
Precedent to Advances. 
Notwithstanding any other provision of this Agreement, no Loan proceeds,
Revolving Credit Loans, advances or other extensions of credit under the Loan
shall be disbursed under this Agreement unless the following conditions have
been satisfied or waived immediately before such disbursement:

 

(a)                                  The
representations and warranties on the part of Borrower contained in
Article IV of this Agreement shall be true and correct in all respects at
and as of the date of disbursement or advance, as though made on and as of such
date (except to the extent that such representations and warranties expressly
relate solely to an earlier date and except that the references in
Section 4.7 to financial statements shall be deemed to be a reference to
the then most recent annual and interim financial statements of Borrower
furnished to Lender pursuant to Section 6.1).

 

(b)                                 No
Event of Default or event which, with the giving of notice of the lapse of
time, or both, could become an Event of Default shall have occurred and be
continuing or would result from the making of the disbursement or advance.

 

(c)                                  No
adverse change in the condition (financial or otherwise), properties, business,
or operations of Borrower shall have occurred and be continuing with respect to
Borrower since the date of this Agreement.

 

23

 

Section 5.3                                   Closing.  Subject to the conditions of this
Article V, the Loan shall be made available on the date as is mutually
agreed by the parties (the “Closing Date”) at such time as may be mutually
agreeable to the parties upon the execution of this Agreement (the “Closing”)
at such place as may be requested by Lender.

 

Section 5.4                                   Waiver
of Rights.  By completing the
Closing under this Agreement, or by making advances under the Loan, Lender does
not waive a breach of any representation or warranty of Borrower under this
Agreement or under any other Loan Document, and all of Lender’s claims and
rights resulting from any breach or misrepresentation by Borrower are
specifically reserved by Lender.

 

ARTICLE VI

AFFIRMATIVE COVENANTS

 

Each entity
comprising Borrower covenants and agrees that for so long as Borrower may
borrow under this Agreement and until payment in full of the Note and
performance of all other obligations of Borrower under the Loan Documents:

 

Section 6.1                                   Financial
Statements and Collateral Reports. 
Borrower operates on a fiscal month ending on the dates set forth in
Schedule 6.1.  Borrower will
furnish to Lender (i) a sales and collections report and accounts
receivable aging schedule on a form acceptable to Lender within thirty (30)
days after the end of each fiscal month, which shall include, but not be
limited to, a report of sales, credits issued, and collections received;
(ii) payables aging schedules within thirty (30) days after the end of
each fiscal month; (iii) internally prepared monthly financial statements
for Borrower, certified by the chief financial officer of Borrower, within
sixty (60) days of the end of each fiscal month, accompanied by management
analysis and actual vs. budget variance reports; (iv) to the extent
prepared by Borrower, annual projections, profit and loss statements, balance
sheets, and cash flow reports (prepared on a monthly basis) for the succeeding
fiscal year within thirty (30) days before the end of each of Borrower’s fiscal
years; (v) internally prepared annual financial statements for Borrower
within sixty (60) days after the end of each of Borrower’s fiscal years; (vi) annual
audited financial statements for Borrower prepared by Ernst & Young, or
another firm of independent public accountants satisfactory to Lender, within
one hundred thirty-five (135) days after the end of each of Borrower’s fiscal
years; (vii) promptly upon receipt thereof, copies of any reports
submitted to Borrower by the independent accountants in connection with any
interim audit of the books of Borrower and copies of each management control
letter provided to Borrower by independent accountants; (viii) as soon as
available, copies of all financial statements and notices provided by Borrower
to all of its stockholders; and (ix) such additional information, reports
or statements as Lender may from time to time request.  Annual financial statements shall set forth
in comparative form figures for the corresponding periods in the prior fiscal
year.  All financial statements shall
include a balance sheet and statement of earnings and shall be prepared in
accordance with GAAP.

 

24

 

Section 6.2                                   Payments
Under this Agreement.  Borrower
will make all payments of principal, interest, fees, and all other payments
required under this Agreement and under the Loan, and under any other
agreements with Lender to which Borrower is a party, as and when due.

 

Section 6.3                                   Existence.
Good Standing, and Compliance with Laws.  Borrower will do or cause to be done all things necessary
(i) to obtain and keep in full force and effect all corporate existence,
rights, licenses, privileges, and franchises of Borrower necessary to the
ownership of its property or the conduct of its business, and comply with all
applicable current and future laws, ordinances, rules, regulations, orders and
decrees of any Governmental Authority having or claiming jurisdiction over
Borrower; and (ii) to maintain and protect the properties used or useful
in the conduct of the operations of Borrower, in a prudent manner, including
without limitation the maintenance at all times of such insurance upon its insurable
property and operations as required by law or by Section 6.7.

 

Section 6.4                                   Legality.  The making of the Loan and each disbursement
or advance under the Loan shall not be subject to any penalty or special tax,
shall not be prohibited by any governmental order or regulation applicable to
Borrower, and shall not violate any rule or regulation of any Governmental
Authority, and necessary consents, approvals and authorizations of any
Governmental Authority to or of any such disbursement or advance shall have been
obtained.

 

Section 6.5                                   Lender’s
Satisfaction.  All instruments
and legal documents and proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
Lender and its counsel, and Lender shall have received all documents, including
records of corporate proceedings and opinions of counsel, which Lender may have
requested in connection therewith.

 

Section 6.6                                   Taxes
and Charges.  Borrower will
timely file all tax reports and pay and discharge all taxes, assessments and
governmental charges or levies imposed upon Borrower, or its income or profits
or upon its properties or any part thereof, before the same shall be in default
and before the date on which penalties attach thereto, as well as all lawful
claims for labor, material, supplies or otherwise which, if unpaid, might
become a lien or charge upon the properties or any part thereof of Borrower; provided,
however, that Borrower shall not be required to pay and discharge or cause
to be paid and discharged any such tax, assessment, charge, levy or claim so
long as the validity or amount thereof shall be contested in good faith and by
appropriate proceedings by Borrower, and Borrower shall have set aside on their
books adequate reserve therefor; and provided  further, that such
deferment of payment is permissible only so long as Borrower’s title to, and
its right to use, the Collateral is not adversely affected thereby and Lender’s
lien and priority on the Collateral are not adversely affected, altered or
impaired thereby.

 

Section 6.7                                   Insurance.  Borrower will carry adequate public
liability and professional liability insurance with responsible companies
reasonably satisfactory to 

 

25

 

Lender in such amounts
and against such risks as is customarily maintained by similar businesses and
by owners of similar property in the same general area.

 

Section 6.8                                   General
Information.  Borrower will
furnish to Lender such information as Lender may, from time to time, request
with respect to the business or financial affairs of Borrower, and permit any
officer, employee or agent of Lender to visit and inspect any of the
properties, to examine the minute books, books of account and other records,
including management letters prepared by Borrower’s auditors, of Borrower, and
make copies thereof or extracts therefrom, and to discuss its and their
business affairs, finances and accounts with, and be advised as to the same by,
the accountants and officers of Borrower, all at such times and as often as
Lender may reasonably require.

 

Section 6.9                                   Maintenance
of Property.  Borrower will
maintain, keep and preserve all of its properties in good repair, working order
and condition and from time to time make all necessary repairs, renewals,
replacements, betterments and improvements thereto, so that the business
carried on in connection therewith may be properly conducted at all times.

 

Section
6.10                            Notification
of Events of Default and Adverse Developments.  Borrower promptly will notify Lender
upon the occurrence of:  (i) any
Event of Default; (ii) any event which, with the giving of notice or lapse
of time or both, could constitute an Event of Default; (iii) any event,
development or circumstance whereby the financial statements previously
furnished to Lender fail in any material respect to present fairly, in
accordance with GAAP, the financial condition and operational results of
Borrower; (iv) any judicial, administrative or arbitration proceeding
pending against Borrower, and any judicial or administrative proceeding known
by Borrower to be threatened against it which, if adversely decided, could
adversely affect its condition (financial or otherwise) or operations (current
or prospective) or which may expose Borrower to uninsured liability of
$100,000.00 or more; (v) any default claimed by any other creditor for
Borrowed Money of Borrower other than Lender; and (vi) any other
development in the business or affairs of Borrower which may be adverse; in
each case describing the nature of the event or development. In the case of
notification under clauses (i) and (ii)), Borrower should set forth the
action Borrower proposes to take with respect to such event.

 

Section
6.11                            Employee
Benefit Plans.  Borrower will
(i) comply with the funding requirements of ERISA with respect to the
Plans for its employees, or will promptly satisfy any accumulated funding
deficiency that arises under Section 302 of ERlSA; (ii) furnish
Lender, promptly after filing the same, with copies of all reports or other
statements filed with the United States Department of Labor, the Pension
Benefit Guaranty Corporation, or the Internal Revenue Service with respect to
all Plans, or which Borrower, or any member of a Controlled Group, may receive
from such Governmental Authority with respect to any such Plans, and
(iii) promptly advise Lender of the occurrence of any Reportable Event or
Prohibited Transaction with respect to any such Plan and the action which
Borrower proposes to take with respect thereto. Borrower will make all
contributions when due with respect to any multi-employer pension plan in

 

26

 

which it participates and
will promptly advise Lender: 
(x) upon its receipt of notice of the assertion against Borrower of
a claim for withdrawal liability; (y) upon the occurrence of any event
which could trigger the assertion of a claim for withdrawal liability against
Borrower; and (z) upon the occurrence of any event which would place
Borrower in a Controlled Group as a result of which any member (including
Borrower) thereof may be subject to a claim for withdrawal liability, whether
liquidated or contingent.

 

Section
6.12                            Financing
Statements.  Borrower shall
provide to Lender evidence satisfactory to Lender as to the due recording of
termination statements, releases of collateral, and Forms UCC-3, and shall
cause to be ;recorded financing statements on Form UCC-1, duly executed by
Borrower and Lender, in all places necessary to release all existing security
interests and other liens in the Collateral (other than as permitted by this
Agreement) and to perfect and protect Lender’s first priority lien and security
interest in the Collateral, as Lender may request.

 

Section
6.13                            Financial
Records.  Borrower shall keep
current and accurate books of records and accounts in which full and correct
entries will be made of all of its business transactions, and will reflect in
its financial statements adequate accruals and appropriations to reserves, all
in accordance with GAAP.

 

Section
6.14                            Collection
of Accounts.  Borrower shall
continue to collect its Accounts in the ordinary course of business, subject to
the lockbox provisions of this Agreement.

 

Section
6.15                            Places
of Business.  Borrower shall
give thirty (30) days’ prior written notice to Lender of any change in the
location of any of its places of business, of the places where its records
concerning its Accounts are kept, of the places where the Collateral is kept,
or of the establishment of any new, or the discontinuance of any existing,
places of business.

 

Section
6.16                            Business
Conducted.  Borrower shall
continue in the business currently conducted by it using its best efforts to
maintain its customers and goodwill. 
Borrower shall not engage, directly or indirectly, in any line of
business substantially different from the business conducted by it immediately
before the Closing Date, or engage in business or lines of business which are
not reasonably related thereto.

 

Section
6.17                            Litigation
and Other Proceedings.  Borrower
shall give prompt notice to Lender of any litigation, arbitration, or other
proceeding before any Governmental Authority against or affecting Borrower if
the amount claimed is more than $25,000.00.

 

Section
6.18                            Bank
Accounts.  Borrower shall assign
to Lender all of its depository and disbursement accounts into which
collections of Accounts are deposited.

 

Section
6.19                            Submission
of Collateral Documents. 
Borrower will, on demand of Lender, make available to Lender copies of
shipping and delivery receipts evidencing the shipment of goods that gave rise
to an Account, medical records, insurance 

 

27

 

verification forms,
assignment of benefits, in-take forms or other proof of the satisfactory
performance of services that gave rise to an Account, a copy of the claim or
invoice for each Account and copies of any written contract or order from which
the Account arose.  Borrower shall
promptly notify Lender if an Account becomes evidenced or secured by an
instrument or chattel paper and upon request of Lender, will promptly deliver
any such instrument or chattel paper to Lender.

 

Section
6.20                            Licensure;
MedicaidlMedicare Cost Reports. 
Borrower will maintain all certificates of need, provider numbers and
licenses necessary to conduct its business as currently conducted, and take any
steps required to comply with any such new or additional requirements that may
be imposed on providers of medical products and Medical Services.  If required, all Medicaid/Medicare cost reports
will be properly filed.

 

Section
6.21                            Officer’s
Certificates.  Together with the
monthly financial statements delivered pursuant to clause (iii) of
Section 6.1, and together with the audited annual financial statements
delivered pursuant to clause (vi) of that Section, Borrower shall deliver
to Lender a certificate of its chief financial officer, in form and substance
satisfactory to Lender:

 

(a)                                  Setting
forth the information (including detailed calculations) required to establish
whether Borrower is in compliance with the requirements of Articles VI and
VII as of the end of the period covered by the financial statements then being
furnished; and

 

(b)                                 Stating
that the signer has reviewed the relevant terms of this Agreement, and has made
(or caused to be made under his supervision) a review of the transactions and
conditions of Borrower from the beginning of the accounting period covered by
the income statements being delivered to the date of the certificate, and that
such review has not disclosed the existence during such period of any condition
or event which constitutes an Event of Default or which is then, or with the
passage of time or giving of notice or both, could become an Event of Default,
and if any such condition or event existed during such period or now exists,
specifying the nature and period of existence thereof and what action Borrower
has taken or proposes to take with respect thereto.

 

Section
6.22                            Visits
and Inspections.  Borrower
agrees to permit representatives of Lender, from time to time, as often as may
be reasonably requested, but only during normal business hours, to visit and
inspect the properties of Borrower, and to inspect, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, Borrower’s business, assets, liabilities, financial
condition, business prospects and results of operations.

 

Section
6.23                            Net
Worth.  Borrower will not at any
time allow its net worth, as computed in accordance with GAAP, to fall below
$0.

 

28

 

ARTICLE VII

NEGATIVE COVENANTS

 

Borrower
covenants and agrees that so long as Borrower may borrow under this Agreement
and until payment in full of the Note and performance of all other obligations
of Borrower under the Loan Documents:

 

Section 7.1                                   Borrowing.  Borrower will not create, incur, assume or
suffer to exist any liability for Borrowed Money except:  (i) indebtedness to Lender;
(ii) indebtedness of Borrower secured by mortgages, encumbrances or liens
expressly permitted by Section 7.3; (iii) accounts payable to trade
creditors and current operating expenses
(other than for borrowed money) which are not aged more than one hundred
twenty (120) days from the billing date or more than sixty (60) days from the
due date, in each case incurred in the ordinary course of business and paid
within such time period, unless the same are being contested in good faith and
by appropriate and lawful proceedings, and Borrower shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by Borrower and its independent accountants; (iv) equipment lease
and purchase money security interest transactions up to $3,000,000 for the
first calendar quarter of 2001; (v) after the first calendar quarter of
2001 and through the first calendar quarter of 2002, equipment lease and
purchase money transactions up to $4,000,000 per calendar quarter provided that
Borrower achieves positive Net Income (in accordance with GAAP, but prior to
any allocation for shared corporate overhead expenses with Guarantor) for the
preceding calendar quarter; (v) after the first calendar quarter of 2002
equipment lease and purchase money transactions up to $4,000,000 per calendar quarter
provided that Borrower achieves positive Net Income (in accordance with GAAP)
for the preceding calendar quarter; and (vii) borrowings incurred in the
ordinary course of its business and not exceeding $75,000.00 in the aggregate
outstanding at anyone time.  Borrower
will not make prepayments on any existing or future indebtedness for Borrowed
Money to any Person (other than Lender, to the extent permitted by this
Agreement or any subsequent agreement between Borrower and Lender).

 

Section 7.2                                   Joint
Ventures.  Borrower will not
invest directly or indirectly in any joint venture for any purpose without the
prior written notice to, and the prior written consent of, Lender, which
consent shall not be unreasonably withheld.

 

Section 7.3                                   Liens
and Encumbrances.  Borrower will
not create, incur, assume or suffer to exist any mortgage, pledge, lien or
other encumbrance of any kind (including the charge upon property purchased
under a conditional sale or other title retention agreement) upon, or any
security interest in, any of its Collateral, whether now owned or hereafter
acquired, except for Permitted Liens.

 

Section 7.4                                   Restriction
on Fundamental Changes.  Without
the prior written consent of Lender, such consent not to be unreasonably
withheld based on Lender’s determination whether the requisite following
actions would have a detrimental impact on (a) Borrower’s ability to repay
the Loan and/or (b) the Lender’s rights in the

 

29

 

Collateral, Borrower will
not:  (i) enter into any
transaction of merger or consolidation; (ii) liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution); (iii) convey,
sell, lease, sublease, transfer or otherwise dispose of, in one transaction or
a series of transactions, any of its assets, or the capital stock of any
subsidiary of Borrower, whether now owned or hereafter acquired; or
(iv) acquire by purchase or otherwise all or any substantial part of the
business or assets of, or stock or other evidence of beneficial ownership of,
any Person, other than Nuclear Imaging Systems, Inc. or its affiliates.  Borrower agrees that compliance with this
Section 7.4 is a material inducement to Lender’s advancing credit under
this Agreement and Borrower further agrees that any breach of the terms of this
Section 7.4 shall constitute fraud. 
Borrower further agrees that in addition to all other remedies available
to Lender, Lender shall be entitled to specific enforcement of the covenants in
this Section 7.4, including injunctive relief.

 

Section 7.5                                   Sale
and Leaseback.  Borrower will
not, directly or indirectly, enter into any arrangement whereby Borrower sells
or transfers all or any part of its assets and thereupon and within one year
thereafter rents or leases the assets so sold or transferred without prior
written notice to and the prior written consent of Lender, which consent shall
not be unreasonably withheld.

 

Section 7.6                                   Dividends.
Distributions and Management Fees. 
Upon notice from Lender to Borrower of the existence of an Event of
Default under this Agreement, Borrower will not declare or pay any dividends or
other distributions with respect to, purchase, redeem or otherwise acquire for
value any of its outstanding stock now or hereafter outstanding, or return any
capital of its stockholders, nor shall Borrower pay management fees or fees of
a similar nature to any Person.

 

Section 7.7                                   Loans.  Borrower will not make loans or advances to
any Person, other than (i) trade credit extended in the ordinary course of
its business, and (ii) advances for business travel and similar temporary
advances made in the ordinary course of business to officers, stockholders,
directors, and employees.

 

Section 7.8                                   Contingent
Liabilities.  Borrower will not
assume, guarantee, endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any Person, except by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.

 

Section 7.9                                   Subsidiaries.  Borrower will not form any subsidiary, or
make any investment in or any loan in the nature of an investment to, any other
Person without prior written notice to and the prior written consent of Lender,
which consent shall not be unreasonably withheld.

 

Section
7.10                            Compliance
with ERISA.  Borrower will not
permit with respect to any Plan covered by Title IV of ERISA any
Prohibited Transaction or any Reportable Event.

 

Section
7.11                            Certificates
of Need.  Borrower will not
amend, alter or suspend or terminate or make provisional in any material way,
any certificate of need or provider

 

30

 

number without the prior
written consent of Lender, which consent shall not be unreasonably withheld.

 

Section
7.12                            Transactions
with Affiliates.  Borrower will
not enter into any transaction, including without limitation the purchase,
sale, or exchange of property, or the loaning or giving of funds to any
Affiliate or subsidiary, except in the ordinary course of business and pursuant
to the reasonable requirements of Borrower’s business and upon terms
substantially the same and no less favorable to Borrower as it would obtain in
a comparable arm’s length transaction with any Person not an Affiliate or
subsidiary, and so long as the transaction is not otherwise prohibited under
this Agreement.  For purposes of the
foregoing, Lender consents to the transactions described on Schedule 7.12.

 

Section
7.13                            Use
of Lender’s Name.  Borrower will
not use Lender’s name (or the name of any of Lender’s affiliates) in connection
with any of its business operations. 
Borrower may disclose to third parties that Borrower has a borrowing
relationship with Lender.  Nothing contained
in this Agreement is intended to permit or authorize Borrower to make any
contract on behalf of Lender.

 

Section
7.14                            Change
in Capital Structure.  There
shall occur no change in the ownership of Borrower’s capital stock or in
Borrower’s capital structure, both as set forth in Schedule 4.17.

 

Section
7.15                            Contracts
and Agreements.  Borrower will
not become or be a party to any contract or agreement which would breach this
Agreement, or breach any other instrument, agreement, or document to which
Borrower is a party or by which it is or may be bound.

 

Section
7.16                            Margin
Stock.  Borrower will not carry
or purchase any “margin security” within the meaning of Regulations U, T or X
of the Board of Governors of the Federal Reserve System.

 

Section
7.17                            Truth
of Statements and Certificates. 
Borrower will not furnish to Lender any certificate or other document
that contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.

 

ARTICLE VIII

EVENTS OF DEFAULT

 

Section 8.1                                   Events
of Default.  Each of the
following (individually, an “Event of Default” and collectively, the “Events of
Default”) shall constitute an event of default under this Agreement:

 

(a)                                  A
default in the payment of any installment of principal of, or interest upon,
the Note when due and payable, whether at maturity or otherwise, or any breach
of Section 2.3, which default or breach, as applicable, shall have
continued

 

31

 

unremedied for a period of five (5) days after written notice of the
default or breach from Lender to Borrower;

 

(b)                                 A
default in the payment of any other charges, fees, or other monetary
obligations owing to Lender arising out of or incurred in connection with this
Agreement when such payment is due and payable, which default shall have
continued unremedied for a period of five (5) days after written notice of the
default from Lender to Borrower;

 

(c)                                  A
default in the due observance or performance by Borrower or any guarantor of
the Obligations of any other term, covenant or agreement contained in any of
the Loan Documents, which default shall have continued unremedied for a period
of ten (10) days after written notice of the default from Lender to Borrower;

 

(d)                                 Any
representation or warranty made by Borrower in this Agreement or in any of the
other Loan Documents, any financial statement, or any statement or
representation made in any other certificate, report or opinion delivered in
connection with this Agreement or the other Loan Documents proves to have been
incorrect or misleading in any material respect when made, which default shall
have continued unremedied for a period of ten (10) days after written notice of
the default from Lender to Borrower;

 

(e)                                  Any
obligation of Borrower (other than its Obligations under this Agreement) for
the payment of Borrowed Money is not paid when due or within any applicable
grace period, or such obligation becomes or is declared to be due and payable
before the expressed maturity of the obligation, or there shall have occurred
an event which, with the giving of notice or lapse of time, or both, would
cause any such obligation to become, or allow any such obligation to be
declared to be, due and payable;

 

(f)                                    Borrower
makes an assignment for the benefit of creditors, offers a composition or
extension to creditors, or makes or sends notice of an intended bulk sale of
any business or assets now or hereafter conducted by Borrower;

 

(g)                                 (i) Borrower
files a petition in bankruptcy, (ii) Borrower is adjudicated insolvent or
bankrupt, petitions or applies to any tribunal for any receiver of or any
trustee for itself or any substantial part of its property, (iii) Borrower
commences any proceeding relating to itself under any reorganization,
arrangement, readjustment or debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, (iv) any such
proceeding is commenced against Borrower and such proceeding remains
undismissed for a period of sixty (60) days, (v) Borrower by any act
indicates its consent to, approval of, or acquiescence in, any such proceeding
or the appointment of any receiver of or any trustee for a Borrower or any
substantial part of its property, or suffers any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days;

 

(h)                                 One
or more final judgments against Borrower or attachments against its property
not fully and unconditionally covered by insurance shall be rendered

 

32

 

by a court of record and shall remain unpaid, unstayed on appeal,
undischarged, unbonded and undismissed for a period of thirty (30) days;

 

(i)                                     A
Reportable Event which might constitute grounds for termination of any Plan
covered by Title IV of ERISA or for the appointment by the appropriate
United States District Court of a trustee to administer any such Plan or for
the entry of a lien or encumbrance to secure any deficiency, has occurred and
is continuing thirty (30) days after its occurrence, or any such Plan is
terminated, or a trustee is appointed by an appropriate United States District
Court to administer any such Plan, or the Pension Benefit Guaranty Corporation
institutes proceedings to terminate any such Plan or to appoint a trustee to
administer any such Plan, or a lien or encumbrance is entered to secure any
deficiency or claim;

 

(j)                                     Any
outstanding stock of Borrower is sold or otherwise transferred by the Person
owning such stock on the date of this Agreement;

 

(k)                                  There
shall occur any uninsured damage to or loss, theft or destruction of any
portion of the Collateral that exceeds $100,000 in the aggregate;

 

(1)                                  Borrower
breaches or violates the terms of, or a default or an event which could,
whether with notice or the passage of time, or both, constitute a default,
occurs under any other existing or future agreement (related or unrelated)
between Borrower and Lender;

 

(m)                               Upon
the issuance of any execution or distraint process against Borrower or any of
its property or assets;

 

(n)                                 Borrower
ceases any material portion of its business operations as currently conducted;

 

(o)                                 Any
indication or evidence is received by Lender that Borrower may have directly or
indirectly been engaged in any type of activity which, in Lender’s discretion,
may result in the forfeiture of any property of Borrower to any Governmental
Authority, which default shall have continued unremedied for a period of ten
(10) days after written notice from Lender;

 

(p)                                 Borrower
or any Affiliate of Borrower, shall challenge or contest, in any action, suit
or proceeding, the validity or enforceability of this Agreement, or any of the
other Loan Documents, the legality or the enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Lender;

 

(q)                                 Borrower
shall be criminally indicted or convicted under any law that is reasonably
likely to lead to a forfeiture of any Collateral;

 

(r)                                    There
shall occur a material adverse change in the financial condition or business
prospects of Borrower, or if Lender in good faith deems itself insecure as a
result of acts or events bearing upon the financial condition of Borrower or

 

33

 

the repayment of the Note,
which default shall have continued unremedied for a period of ten (10) days
after written notice from Lender; or

 

(s)                                  A
default or event of default occurs under any other note, instrument, deed of
trust, mortgage, loan agreement, security agreement, letter agreement or other
document executed and delivered by Borrower or Guarantor, or any Affiliate of
Borrower or Guarantor, in connection with any financing provided by Lender or
Lender’s Affiliate to any such parties;

 

Section 8.2                                   Acceleration.  Upon the occurrence of any of the foregoing
Events of Default, the Note shall become and be immediately due and payable
upon declaration to that effect delivered by Lender to Borrower; provided that,
upon the happening of any event specified in Section 8.1(g), the Note
shall be immediately due and payable without declaration or other notice to
Borrower.

 

Section 8.3                                   Remedies.

 

(a)                                  Upon
the occurrence of and during the continuance of an Event of Default under this
Agreement or the other Loan Documents, Lender, in addition to all other rights,
options, and remedies granted to Lender under this Agreement or at law or in
equity, may take any of the following steps (which list is given by way of
example and is not intended to be an exhaustive list of all such rights and
remedies):

 

(i)                                     Terminate
the Loan, whereupon all outstanding Obligations (including without limitation
the Termination Fee which fee shall also be due and payable upon acceleration
hereunder) shall be immediately due and payable;

 

(ii)                                  Exercise
all other rights granted to it under this Agreement and all rights under the
UCC in effect in the applicable jurisdiction(s) and under any other applicable
law; and

 

(iii)                               Exercise
all rights and remedies under all Loan Documents now or hereafter in effect,
including but not limited to:

 

(A)                              The
right to take possession of, send notices regarding, and collect directly the
Collateral, with or without judicial process;

 

(B)                                The
right to (by its own means or with judicial assistance) enter any of Borrower’s
premises and take possession of the Collateral, or render it unusable, or dispose
of the Collateral on such premises in compliance with subsection (C)
below, without any liability for rent, storage, utilities, or other sums, and
Borrower shall not resist or interfere with such action;

 

(C)                                The
right to require Borrower at Borrower’s expense to assemble all or any part of
the Collateral and make it available to Lender at any place designated by
Lender; and

 

34

 

(D)                               The
right to reduce the Maximum Loan Amount or to use the Collateral and/or funds
in the Concentration Account in amounts up to the Maximum Loan Amount for any
reason.

 

(b)                                 Borrower
agrees that a notice received by it at least five (5) days before the time of
any intended public sale, or the time after which any private sale or other
disposition of the Collateral is to be made, shall be deemed to be reasonable
notice of such sale or other disposition. 
If permitted by applicable law, any perishable Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by Lender without prior notice to Borrower.  At any sale or disposition of Collateral,
Lender may (to the extent permitted by applicable law) purchase all or any part
of the Collateral, free from any right of redemption by Borrower, which right
is hereby waived and released.  Borrower
covenants and agrees not to interfere with or impose any obstacle to Lender’s
exercise of its rights and remedies with respect to the Collateral.

 

Section 8.4                                   Nature
of Remedies.  Lender shall have
the right to proceed against all or any portion of the Collateral to satisfy
[the liabilities and Obligations of Borrower to Lender in any order.  All rights and remedies granted Lender under
this Agreement and under any agreement referred to in this Agreement, or
otherwise available at law or in equity, shall be deemed concurrent and
cumulative, and not alternative remedies, and Lender may proceed with any
number of remedies at the same time until the Loans, and all other existing and
future liabilities and obligations of Borrower to Lender, are satisfied in
full.  The exercise of anyone right or
remedy shall not be deemed a waiver or release of any other right or remedy,
and Lender, upon the occurrence of an Event of Default, may proceed against
Borrower, and/or the Collateral, at any time, under any agreement, with any
available remedy and in any order.

 

ARTICLE IX

MISCELLANEOUS

 

Section 9.1                                   Expenses
and Taxes.

 

(a)                                  Borrower
agrees to pay, whether or not the Closing occurs, a reasonable documentation
preparation fee, together with actual audit and appraisal fees and all other
out-of-pocket charges and expenses incurred by Lender in connection with the
negotiation, preparation, legal review and execution of each of the Loan
Documents, including but not limited to UCC and judgment lien searches and UCC
filings and fees for post-Closing UCC and judgment lien searches.  In addition, Borrower shall pay all such
fees associated with any amendments to the Loan Documents following Closing.

 

(b)                                 Borrower
also agrees to pay all out-of-pocket charges and expenses incurred by Lender
(including the fees and expenses of Lender’s counsel) in connection with the
enforcement, protection or preservation of any right or claim of Lender, the
termination of this Agreement, the termination of any liens of Lender on the

 

35

 

Collateral, and the collection of any amounts due under the Loan
Documents.  If Lender uses in-house
counsel for any of these purposes (i.e., for any task in connection with the
enforcement, protection or preservation of any right or claim of Lender and the
collection of any amounts due under its Loan Documents), Borrower further
agrees that its Obligations under the Loan Documents include reasonable charges
for such work commensurate with the fees that would otherwise be charged by
outside legal counsel selected by Lender for the work performed.

 

(c)                                  Borrower
shall pay all taxes (other than taxes based upon or measured by Lender’s income
or revenues or any personal property tax), if any, in connection with the
issuance of the Note and the recording of the security documents therefor.  The obligations of Borrower under this
clause (c) shall survive the payment of Borrower’s indebtedness under this
Agreement and the termination of this Agreement.

 

Section 9.2                                   Entire
Agreement; Amendments.  This
Agreement and the other Loan Documents constitute the full and entire
understanding and agreement among the parties with regard to their subject
matter and supersede all prior written or oral agreements, understandings,
representations and warranties made with respect thereto.  No amendment, supplement or modification of
this Agreement nor any waiver of any provision thereof shall be made except in
writing executed by the party against whom enforcement is sought.

 

Section 9.3                                   No
Waiver; Cumulative Rights.  No
waiver by any party to this Agreement of anyone or more defaults by the other
party in the performance of any of the provisions of this Agreement shall
operate or be construed as a waiver of any future default or defaults, whether
of a like or different nature.  No
failure or delay on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver of such right, power or
remedy nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise of such right, power or remedy or
the exercise of any other right, power or remedy.  The remedies provided for in this Agreement are cumulative and
are not exclusive of any remedies that may be available to any party to this
Agreement at law, in equity or otherwise.

 

Section 9.4                                   Notices.  Any notice or other communication required
or permitted under this Agreement shall be in writing and personally delivered,
mailed by registered or certified mail (return receipt requested and postage
prepaid), sent by telecopier (with a confirming copy sent by regular mail), or
sent by prepaid overnight courier service, and addressed to the relevant party
at its address set forth below, or at such other address as such party may, by
written notice, designate as its address for. purposes of notice under this
Agreement:

 

36

 

                                                

 

	
  (a)

  	
   

  	
  If to
  Lender, at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Heller
  Healthcare Finance, Inc.

  
	
   

  	
   

  	
  2 Wisconsin
  Circle, 4th Floor

  
	
   

  	
   

  	
  Chevy Chase,
  Maryland 20815

  
	
   

  	
   

  	
  Attention:  Pascale Bissainthe, Deputy General Counsel

  
	
   

  	
   

  	
  Telephone:  (301) 961-1640

  
	
   

  	
   

  	
  Telecopier:  (301) 664-9866

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If to Borrower, at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Orion
  Imaging Systems, Inc.

  
	
   

  	
   

  	
  9350 Trade
  Place

  
	
   

  	
   

  	
  San Diego,
  California 92126

  
	
   

  	
   

  	
  Attention:  Ms. Joyce Mehrberg, CFO

  
	
   

  	
   

  	
  Telephone:  (858) 530-1201

  
	
   

  	
   

  	
  Telecopier:  (858) 549-7714

  

 

If mailed, notice shall be
deemed to be given five (5) days after being sent, and if sent by personal
delivery, telecopier or prepaid courier, notice shall be deemed to be given
when delivered.

 

Section 9.5                                   Severability.  If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law.  Upon determination that any such term is invalid, illegal or unenforceable,
Lender may, but is not obligated to, advance funds to Borrower under this
Agreement until the parties to this Agreement amend this Agreement so as to
effect the original intent of the parties as closely as possible in a valid and
enforceable manner.

 

Section 9.6                                   Successors
and Assigns.  This Agreement,
the Note, and the other Loan Documents shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and
assigns.  Notwithstanding the foregoing,
Borrower may not assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of Lender, which may be
withheld in its sole discretion.  Lender
may sell, assign, transfer, or participate any or all of its rights or
obligations under this Agreement without notice to or consent of Borrower.

 

Section 9.7                                   Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.

 

37

 

Section 9.8                                   Interpretation.  No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any party because that
party or its legal representative drafted that provision.  The titles of the paragraphs of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.  Any pronoun
used in this Agreement shall be deemed to include singular and plural and masculine,
feminine and neuter gender as the case may be. The words “herein,” “hereof,”
and “hereunder” shall be deemed to refer to this entire Agreement, except as
the context otherwise requires.

 

Section 9.9                                   Survival
of Terms.  All covenants,
agreements, representations and warranties made in this Agreement, any other
Loan Document, and in any certificates and other instruments delivered in
connection with this Agreement shall be considered to have been relied upon by
Lender and shall survive the making by Lender of the Loans contemplated by this
Agreement and the execution and delivery to Lender of the Note, and shall
continue in full force and effect until all liabilities and obligations of
Borrower to Lender are satisfied in full.

 

Section
9.10                            INTENTIONALLY
DELETED

 

Section
9.11                            Time.  Whenever Borrower is required to make any
payment or perform any act on a Saturday, Sunday, or a legal holiday under the
laws of the State of Maryland (or other jurisdiction where Borrower is required
to make the payment or perform the act), the payment may be made or the act
performed on the next Business Day. 
Time is of the essence in Borrower’s performance under this Agreement
and all other Loan Documents.

 

Section
9.12                            Commissions.  The transaction contemplated by this
Agreement was brought about by Lender and Borrower acting as principals and
without any brokers, agents, or finders being the effective procuring
cause.  Borrower represents that it has
not committed Lender to the payment of any brokerage fee, commission, or charge
in connection with this transaction.  If
any such claim is made on Lender by any broker, finder, or agent or other
person, Borrower will indemnify, defend, and hold Lender harmless from and
against the claim and will defend any action to recover on that claim, at
Borrower’s cost and expense, including Lender’s counsel fees.  Borrower further agrees that until any such
claim or demand is adjudicated in Lender’s favor, the amount demanded will be
deemed a liability of Borrower under this Agreement, secured by the Collateral.

 

Section
9.13                            Third
Parties.  No rights are intended
to be created under this Agreement or under any other Loan Document for the
benefit of any third party donee, creditor, or incidental beneficiary of
Borrower.  Nothing contained in this
Agreement shall be construed as a delegation to Lender of Borrower’s duty of
performance, including without limitation Borrower’s duties under any account
or contract in which Lender has a security interest.

 

Section
9.14                            Discharge
of Borrower’s Obligations. 
Lender, in its sole discretion, shall have the right at any time, and
from time to time, without prior notice to

 

38

 

Borrower if Borrower
fails to do so, to:  (i) obtain
insurance covering any of the Collateral as required under this Agreement;
(ii) pay for the performance of any of Borrower’s obligations under this
Agreement; (iii) discharge taxes, liens, security interests, or other
encumbrances at any time levied or placed on any of the Collateral in violation
of this Agreement unless Borrower is in good faith with due diligence by
appropriate proceedings contesting those items; and (iv) pay for the
maintenance and preservation of any of the Collateral.  Expenses and advances shall be added to the
Loan, until reimbursed to Lender and shall be secured by the Collateral.  Any such payments and advances by Lender
shall not be construed as a waiver by Lender of an Event of Default.

 

Section
9.15                            Information
to Participants.  Lender may
divulge (subject to a confidentiality agreement reasonably satisfactory to
Borrower) to any participant (who in no event may be a competitor of Borrower
or its Affiliates).  it may obtain in
the Loan, or any portion of the Loan, all information, and furnish to such
participant copies of reports, financial statements, certificates, and
documents obtained under any provision of this Agreement or any other Loan
Document.

 

Section
9.16                            Indemnity.  Borrower hereby agrees to indemnify and hold
harmless Lender, its partners, officers, agents and employees (collectively,
“Indemnitee”) from and against any liability, loss, cost, expense, claim,
damage, suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys’ fees and expenses) arising from Borrower’s
failure to observe, perform or discharge any of its covenants, obligations,
agreements or duties under this Agreement, or from the breach of any of the
representations or warranties contained in Article IV of this Agreement.  In addition, Borrower shall defend
Indemnitee against and save it harmless from all claims of any Person with
respect to the Collateral. 
Notwithstanding any contrary provision in this Agreement, the obligation
of Borrower under this Section 9.16 shall survive the payment in full of
the Obligations and the termination of this Agreement.

 

Section
9.17                            Lender
Approvals.  Unless expressly
provided herein to the contrary, any approval, consent, waiver or satisfaction
of Lender with respect to any matter that is the subject of this Agreement, the
other Loan Documents may be granted or withheld by Lender in its sole and
absolute discretion.

 

Section
9.18                            Choice
of Law: Consent to Jurisdiction. 
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.  IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR THE NOTE IS
COMMENCED BY LENDER IN THE ST ATE COURTS OF THE STATE OF MARYLAND OR IN THE
U.S. DISTRICT COURT FOR THE DISTRICT OF MARYLAND, BORROWER HEREBY CONSENTS TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF
VENUE IN THE STATE OF MARYLAND.  ANY
PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF MAILED BY REGISTERED MAIL,
POSTAGE PREPAID, TO BORROWER AT ITS

 

39

 

ADDRESS DESCRIBED IN SECTION 9.4. OR IF SERVED BY ANY
OTHER MEANS PERMITTED BY APPLICABLE LAW.

 

Section
9.19                            Waiver
of Trial by Jury.  BORROWER HEREBY
(A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE
OF RIGHT BY A JURY, AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER, AND THIS WAIVER IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. 
LENDER IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS AGREEMENT TO
ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS
AGREEMENT, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF BORROWER’S WAIVER OF THE
RIGHT TO JURY TRIAL.  FURTHER, BORROWER
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER’S
COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL
NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

 

Section
9.20                            Confession
of Judgment.  UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT, BORROWER AUTHORIZES ANY ATTORNEY ADMITTED TO PRACTICE
BEFORE ANY COURT OF RECORD IN THE UNITED STATES OR THE CLERK OF SUCH COURT TO
APPEAR ON BEHALF OF BORROWER IN ANY COURT IN ONE OR MORE PROCEEDINGS, OR BEFORE
ANY CLERK THEREOF OF PROTHONOTARY OR OTHER COURT OFFICIAL, AND TO CONFESS
JUDGMENT AGAINST BORROWER IN FAVOR OF LENDER IN THE FULL AMOUNT DUE ON THIS
AGREEMENT (INCLUDING PRINCIPAL, ACCRUED INTEREST AND ANY AND ALL CHARGES, FEES
AND COSTS) PLUS REASONABLE ATTORNEYS’ FEES NOT TO EXCEED FIFTEEN PERCENT (15%)
OF THE AMOUNT DUE, PLUS COURT COSTS, ALL WITHOUT PRIOR NOTICE OR OPPORTUNITY OF
BORROWER FOR PRIOR HEARING.  BORROWER
AGREES AND CONSENTS THAT VENUE AND JURISDICTION SHALL BE PROPER IN THE CIRCUIT
COURT OF ANY COUNTY OF THE STATE OF MARYLAND OR OF BALTIMORE CITY, MARYLAND, OR
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND.  BORROWER WAIVES THE BENEFIT OF ANY AND EVERY
STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY WAIVED CONFERRING
UPON BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD RIGHTS, STAY OF
EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM THE ENFORCEMENT
OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON A
JUDGMENT.  THE AUTHORITY AND POWER TO
APPEAR FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ONE

 

40

 

OR MORE EXERCISES THEREOF, OR BY ANY IMPERFECT EXERCISE
THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT
THERETO; SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS
FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS LENDER
SHALL DEEM NECESSARY, CONVENIENT, OR PROPER.

 

 

[SIGNATURES FOLLOW]

 

41

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed as of the date first written
above.

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HELLER HEALTHCARE FINANCE, INC.

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Joseph Prandoni

  
	
   

  	
  Name:

  	
  JOSEPH PRANDONI

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  ORION IMAGING SYSTEMS, INC.

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Joyce Mehrberg

  
	
   

  	
  Name:

  	
  Joyce Merhberg

  
	
   

  	
  Title:  CFO

  
	
   

  	
   

  
	
   

  	
  DIGIRAD IMAGING SYSTEMS, INC.

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Joyce Mehrberg

  
	
   

  	
  Name:

  	
  Joyce Merhberg

  
	
   

  	
  Title:  CFO

  

 

42

 

LIST OF EXHIBITS

 

Exhibit A - Form of Revolving
Credit Note

 

Exhibit B - Form of Lockbox
Agreement

 

Exhibit C - Form of Legal
Opinion

 

Exhibit D - Form of Estoppel
Certificate

 

43

 

LIST OF SCHEDULES

 

	
  Schedule
  1.36

  	
  -

  	
  Permitted
  Liens

  
	
   

  	
   

  	
   

  
	
  Schedule 4.1

  	
  -

  	
  Subsidiaries

  
	
   

  	
   

  	
   

  
	
  Schedule 4.5

  	
  -

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  Schedule 4.7

  	
  -

  	
  Tax
  Identification Numbers

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.13

  	
  -

  	
  Non-Compliance
  with Law

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.14

  	
  -

  	
  Environmental
  Matters

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.15

  	
  -

  	
  Places of
  Business

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.16

  	
  -

  	
  Licenses

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.17

  	
  -

  	
  Stock
  Ownership

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.19

  	
  -

  	
  Borrowings
  and Guarantees

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.21

  	
  -

  	
  Trade Names

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.22

  	
  -

  	
  Joint
  Ventures

  
	
   

  	
   

  	
   

  
	
  Schedule 6.1

  	
  -

  	
  Financial
  Reporting

  
	
   

  	
   

  	
   

  
	
  Schedule
  7.12

  	
  -

  	
  Transactions
  with Affiliates

  

 

44

 

SCHEDULE 1.36

 

PERMITTED LIENS

 

ALL UCC FILINGS REFLECTED IN
UCC SEARCH RESULTS.

 

1

 

SCHEDULE 4.1

 

SUBSIDIARIES

 

1.                                       DIGIRAD
IMAGING SYSTEMS, INC. is a subsidiary of ORION IMAGING SYSTEMS, INC.

 

2

 

SCHEDULE 4.5

 

LITIGATION

 

NONE.

 

3

 

SCHEDULE 4.7

 

TAX IDENTIFICATION NUMBERS

 

	
  1.

  	
   

  	
  ORION
  IMAGING SYSTEMS, INC.:

  	
   

  	
  33-0919092

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  DIGIRAD
  IMAGING SYSTEMS, INC:

  	
   

  	
  33-0912524

  	
   

  

 

4

 

SCHEDULE 4.13

 

NON-COMPLIANCE WITH LAW

 

NONE.

 

5

 

SCHEDULE 4.14

 

ENVIRONMENTAL MATTERS

 

NONE.

 

6

 

SCHEDULE 4.15

 

PLACES OF BUSINESS

 

1.                                       ORION
IMAGING SYSTEMS, INC.:

 

	
  1) 9350
  Trade Place

  
	
  San Diego,
  CA  92126

  
	
   

  
	
  2) The Mark
  Building

  
	
  3223
  Phoenixville Pike, Suite C 

  
	
  Malvern,
  PA  19355  

  
	
   

  
	
  3) 2579-P
  Eric Lane 

  
	
  Piedmont
  Business Center 

  
	
  Burlington,
  NC  27215  

  
	
   

  
	
  4) 15215
  Shady Grove Road, Suite 100 

  
	
  Rockville,
  MD  20850  

  
	
   

  
	
  5) 2241
  Corsons Lane, Unit D 

  
	
  Plymouth
  Meeting, PA  19462

  
	
   

  
	
  6) 128 S.
  Moon Avenue 

  
	
  Brandon, FL
  33511

  

 

2.                                       DIGIRAD
IMAGING SYSTEMS, INC.:

 

	
  1) 9350
  Trade Place

  
	
  San Diego,
  CA  92126  

  
	
   

  
	
  2) The Mark
  Building

  
	
  3223
  Phoenixville Pike, Suite C

  
	
  Malvem,
  PA  19355

  
	
   

  
	
  3) 2579-P
  Eric Lane

  
	
  Piedmont
  Business Center 

  
	
  Burlington,
  NC  27215

  
	
   

  
	
  4) 15215
  Shady Grove Road, Suite 100

  
	
  Rockville,
  MD  20850

  
	
   

  
	
  5) 2241
  Corsons Lane, Unit D

  
	
  Plymouth
  Meeting, PA  19462

  

 

7

 

SCHEDULE 4.16

 

LICENSES

 

NONE.

 

8

 

SCHEDULE 4.17

 

STOCK OWNERSHIP

 

1.                                       DIGIRAD
CORPORATION owns 100% of ORION IMAGING SYSTEMS, INC.

 

2.                                       ORION
IMAGING SYSTEMS, INC. owns 100% of DIGIRAD IMAGING SYSTEMS, INC.

 

9

 

SCHEDULE 4.19

 

BORROWINGS AND GUARANTEES

 

NONE.

 

10

 

SCHEDULE 4.21

 

TRADE NAMES

 

1.                                       ORION
IMAGING SYSTEMS, INC.

 

2.                                       DIGIRAD
IMAGING SYSTEMS, INC.

 

11

 

SCHEDULE 4.22

 

JOINT VENTURES

 

NONE.

 

12

 

SCHEDULE 6.1

 

FINANCIAL REPORTING

 

SEE ATTACHED.

 

13

 

ACCOUNTING CALENDAR - 2001

 

	
  January

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  
	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  
	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  
	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  

 

	
  February

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  
	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  
	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  
	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  

 

	
  March

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  
	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  
	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  
	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  
	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
  1

  	
   

  

 

	
  April

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  
	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  
	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  
	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  

 

14

 

	
  May

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  30

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  
	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  
	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  
	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  

 

	
  June

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  
	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  
	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  
	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  
	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  1

  	
   

  

 

Bold = Company
Holiday

 

15

 

ACCOUNTING CALENDAR - 2000

 

	
  July

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  
	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  
	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  
	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  

 

	
  August

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  30

  	
   

  	
  31

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  
	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  
	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  
	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  

 

	
  September

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
  1

  	
   

  	
  2

  	
   

  
	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  
	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  
	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  
	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  

 

	
  October

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  
	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  
	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  
	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  

 

16

 

	
  November

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  
	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  
	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  
	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  

 

	
  December

  	
   

  
	
  Mon

  	
   

  	
  Tue

  	
   

  	
  Wed

  	
   

  	
  Thu

  	
   

  	
  Fri

  	
   

  	
  Sat

  	
   

  	
  Sun

  	
   

  
	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  1

  	
   

  	
  2

  	
   

  
	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  
	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  
	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  
	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  

 

Bold = Company
Holiday

 

17

 

SCHEDULE 7.12

 

TRANSACTIONS WITH AFFILIATES

 

NONE.

 

18

 

$5,000,000.00

 

 

AMENDMENT NO. 1

 

TO

 

LOAN AND SECURITY AGREEMENT

 

originally dated as of January 9, 2001

 

by and among

 

DIGIRAD IMAGING SOLUTIONS, INC.

(formerly known as Orion Imaging Systems, Inc.),

 

DIGIRAD IMAGING SYSTEMS, INC.

 

and

 

HELLER HEALTHCARE FINANCE, INC.

 

 

Amended as of
January    , 2002

 

 

AMENDMENT NO. 1 TO LOAN AND SECURITY
AGREEMENT

 

THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this
“Amendment”) is made as of this        day of
January, 2002, by and among DIGIRAD IMAGING SOLUTIONS, INC. (formerly known as
Orion Imaging Systems, Inc.), a Delaware corporation, and DIGIRAD IMAGING
SYSTEMS, INC., a Delaware corporation (collectively, “Borrower”), and HELLER
HEALTHCARE FINANCE, ‘INC., a Delaware corporation (“Lender”).

 

RECITALS

 

A.                                   Pursuant
to that certain Loan and Security Agreement dated January 9, 2001 by and
between Borrower and Lender (as amended hereby and as may be further amended
from time to time, the “Loan Agreement”), the parties have established
certain financing arrangements that allow Borrower to borrow funds from Lender
in accordance with the terms and conditions set forth in the Loan Agreement.

 

B.                                     The
parties now desire to amend the Loan Agreement in accordance with the terms and
conditions set forth below.

 

NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower have agreed to the following amendments to the Loan
Agreement.  Capitalized terms used but
not defined in this Amendment shall have the meanings that are set forth in the
Loan Agreement.

 

1.                                       Amendment
to Loan Agreement.  Section 7.1
of the Loan Agreement is hereby deleted in its entirety and restated as
follows:

 

“Section 7.1. 
Borrowing. 
Borrower will not create, incur, assume or suffer to exist any liability
for Borrowed Money except: 
(i) indebtedness to Lender; (ii) indebtedness of Borrower
secured by mortgages, encumbrances or liens expressly permitted by
Section 7.3; (iii) accounts payable to trade creditors and current
operating expenses (other than for borrowed money) which are not aged more than
one hundred twenty (120) days from the billing date or more than sixty (60)
days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being contested
in good faith and by appropriate and lawful proceedings, and Borrower shall
have set aside such reserves, if any, with respect thereto as are required by
GAAP and deemed adequate by Borrower and its independent accountants;
(iv) beginning with the first calendar quarter of 2002 and continuing
until the first quarter of 2003, equipment lease and purchase money security
interest transactions up to $3,000,000 per

 

1

 

calendar quarter; (v) beginning with the first
calendar quarter of 2003 and continuing until the first quarter of 2004,
equipment lease and purchase money transactions up to $4,000,000 per calendar
quarter, provided that Borrower achieves positive Net Income (in accordance
with GAAP, but prior to any allocation for shared corporate overhead expenses
with Guarantor) for the preceding calendar quarter; and (vi) borrowings
incurred in the ordinary course of its business and not exceeding $75,000.00 in
the aggregate outstanding at anyone time. 
Borrower will not make prepayments on any existing or future
indebtedness for Borrowed Money to any Person (other than Lender, to the extent
permitted by this Agreement or any subsequent agreement between Borrower and
Lender).”

 

2.                                       Waiver.  Lender hereby waives Borrower’s failure to
comply with Section 7.1(v) of the Loan Agreement through the date of this
Amendment.  Nothing contained in this
Amendment or in any other communications between Lender and Borrower shall be
deemed to constitute or shall be construed as a waiver or release of any other
provision of the Loan Agreement.

 

3.                                       Fees
and Costs.  In consideration of
Lender’s agreement to enter into this Amendment, Borrower hereby agrees to pay
to Lender a fee equal to Fifteen Thousand Dollars ($15,000); provided, however,
that in the event the initial public offering for Guarantor does not occur on
or before April 26, 2002, the Borrower shall pay to Lender an additional
fee equal to Ten Thousand Dollars ($10,000) (all of the foregoing amounts being
referred to herein as the “Fee”).
 The first $15,000 portion of the
Fee shall be due and payable by
Borrower on the date of its execution and delivery of this Amendment, and the
second portion of the Fee, if
applicable, shall be due and payable by Borrower by the close of business on
April 26, 2002.  The Fee shall constitute a portion of the
Obligations evidenced by the Note and secured by the Loan Agreement and other
Loan Documents.  Borrower hereby
authorizes Lender to deduct the Fee from
the proceeds of the next Revolving Credit Loan.  Borrower shall be responsible for the payment of all reasonable
fees of Lender’s in-house counsel incurred in connection with the preparation
of this Amendment and any related documents. 
Borrower hereby authorizes Lender to deduct all of such fees set forth
in this Section 2 from the proceeds of the next Revolving Credit Loan.

 

4.                                       Schedules.  Borrower hereby represents and warrants that
the information set forth on the Schedules attached to the original Loan
Agreement is true and correct as of the date of this Agreement.

 

5.                                       Reference
to the Effect on the Loan Agreement.

 

(a)                                  Upon
the effectiveness of this Amendment, each reference in the Loan Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import
shall mean and be a reference to the Loan Agreement as amended by this
Amendment.

 

2

 

(b)                                 Except
as specifically amended above, the Loan Agreement and all other Loan Documents
shall remain in full force and effect, and are hereby ratified and confirmed.

 

(c)                                  The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided in this Amendment, operate as a waiver of any right, power
or remedy of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other, documents, instruments and agreements executed or
delivered in connection with the Loan Agreement.

 

6.                                       Governing
Law.  This Amendment shall be
governed by and construed in accordance with the laws of the State of Maryland.

 

7.                                       Headings.  Section headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.

 

8.                                       Counterparts.  This Amendment may be executed in
counterparts, and both counterparts taken together shall be deemed to
constitute one and the same instrument.

 

 

[SIGNATURES ON
FOLLOWING PAGE]

 

3

 

IN
WITNESS WHEREOF, the parties have caused this
Amendment to be executed as of the date first written above.

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HELLER
  HEALTHCARE FINANCE, INC.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ J. Anthony
  Romero

  	
   

  
	
   

  	
  Name:

  	
  J. Anthony Romero

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  DIGIRAD
  IMAGING SOLUTIONS, INC.

  
	
   

  	
  (formerly
  known as Orion Imaging Systems, Inc.),

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  John Dahldorf

  	
   

  
	
   

  	
  Name:

  	
  John Dahldorf

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
  DIGRAD
  IMAGING SYSTEMS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John Dahldorf

  	
   

  
	
   

  	
  Name:

  	
  John Dahldorf

  
	
   

  	
  Title:

  	
  CFO

  
						

 

4

 

 

$5,000,000.00
REVOLVING CREDIT LOAN 

 

 

AMENDMENT
NO. 2

 

TO

 

LOAN
AND SECURITY AGREEMENT

 

originally
dated as of January 9, 2001

 

by
and among

 

DIGIRAD
IMAGING SOLUTIONS, INC.

 

(formerly
known as Orion Imaging Systems, Inc.)

 

and

 

DIGIRAD
IMAGING SYSTEMS, INC.

 

 

and

 

 

HELLER
HEALTHCARE FINANCE, INC.

 

Amended
as of August 1, 2002

 

 

AMENDMENT
NO. 2 TO LOAN AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 2
TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is made as of this 1st day of August, 2002, by and among DIGIRAD
IMAGING SOLUTIONS, INC. (formerly known as Orion Imaging Systems, Inc.),
a Delaware corporation, and DIGIRAD IMAGING SYSTEMS, INC., a Delaware
corporation (collectively, “Borrower”), and HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation and a GE Capital Company (“Lender”).

 

RECITALS

 

A.                                   Pursuant
to that certain Loan and Security Agreement dated January 9, 2001 by and
between Borrower and Lender (the “Loan Agreement”), the parties have
established certain financing arrangements that allow Borrower to borrow funds
from Lender in accordance with the terms and conditions set forth in the Loan
Agreement.

 

B.                                     The
parties now desire to amend the Loan Agreement to extend the Term of the Loan
and to make other modifications, all in accordance with the terms and
conditions set forth below.

 

C.                                     Capitalized
terms used but not defined in this Amendment shall have the meanings that are
set forth in the Loan Agreement.

 

NOW, THEREFORE,
in consideration of the premises set forth above, the terms and conditions
contained in this Amendment, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrower
have agreed to the following amendments to the Loan Agreement.

 

1.                                      Amendments
to Loan Agreement.  The Loan
Agreement is hereby amended as follows:

 

(a)                                  Amendment
to Section 1.5. 
Section 1.5 setting forth the definition of “Base Rate” is deleted
in its entirety and replaced as follows:

 

Section 1.5. Base
Rate.  “Base Rate” means a rate of interest equal
to one and one-quarter percent (1.25%) above the Prime Rate of Interest;
provided, however, that in no event shall the Base Rate fall below eight and
one-quarter percent (8.25%) so long as this Agreement remains in effect.”

 

(b)                                 Amendment
to Section 1.46. 
Section 1.46 setting forth the definition of “Base Rate” is deleted
in its entirety and replaced as follows:

 

5

 

“Section 1.46  Termination Fee.  “Termination Fee”
shall mean a fee payable upon termination of the Agreement, as yield
maintenance for the loss of bargain and not as a penalty, equal to the greater
of (a) two percent (2%) of the Maximum Loan Amount and (b) the Yield
Maintenance Amount.”

 

(c)                                  Amendment
to Section 2.8(a).  Section 2.8(a)
is hereby deleted in its entirety and amended restated as follows:

 

“(a)                            Subject
to Lender’s right to cease making Revolving Credit Loans to Borrower upon or
after any Event of Default, this Agreement shall be in effect through and
including December 31, 2004, unless terminated as provided in this
Section 2.8 (the “Term”), and this Agreement shall be renewed for one-year
periods thereafter upon the mutual written agreement of the parties.”

 

3.                                       Confirmation
of Representation. Warranties and Covenants. 
Each Borrower hereby (a) confirms that all of the
representations and warranties set forth in Article IV of the Loan
Agreement are true and correct with respect to such Borrower as of the date
hereof, and each Borrower covenants to perform its obligations under the Loan
Agreement, and (b) specifically represents and warrants to Lender that it has
good and marketable title to all of its respective Collateral, free and clear
of any lien or security interest in favor of any other person or entity.

 

4.                                       Updated
Schedules.  As a
condition precedent to Lender’s agreement to enter into this Amendment, and in
order for this Amendment to be effective, Borrower shall revise, update and
deliver to Lender all Schedules to the Loan Agreement to (a) reflect updated
and accurate information with respect to each Borrower, and (b) to update all
other information as necessary to make the Schedules previously delivered
correct.  Borrower hereby represents and
warrants that the information set forth on the attached Schedules is true and
correct as of the date of this Agreement. 
The attached Schedules are hereby incorporated into the Loan Agreement
as if originally set forth therein.

 

5.                                       Enforceability.  This Amendment constitutes the legal, valid
and binding obligation of each Borrower, and is enforceable against each
Borrower in accordance with its terms.

 

6.                                       Fees and
Costs.  In
consideration of Lender’s agreement to extend the Term of the Loan and to
reduce the Base Rate as provided herein, Borrower hereby agrees to pay to
Lender an extension fee equal to Four Thousand Dollars ($4,000), and a
modification fee equal to Twenty Thousand Dollars ($20,000).  In addition, Borrower shall be responsible
for the payment of all reasonable fees of Lender’s in-house counsel incurred in
connection with the preparation of this Amendment and any related
documents.  All of the fees described in
this Section 6 shall constitute a portion of the Obligations evidenced by
the Note and secured by the Loan Agreement and other Loan Documents, and
Borrower hereby authorizes Lender to deduct all of such fees set forth in this
Section 6 from the proceeds of the next Revolving Credit Loan.

 

6

 

7.                                       Reference
to the Effect on the Loan Agreement.

 

(a)                                  Upon
the effectiveness of this Amendment, each reference in the Loan Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import
shall mean and be a reference to the Loan Agreement as amended by this
Amendment.

 

(b)                                 Except as
specifically amended above, the Loan Agreement, and all other Loan Documents,
shall remain in full force and effect, and are hereby ratified and confirmed.

 

(c)                                  The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided in this Amendment, operate as a waiver of any right, power
or remedy of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments and agreements executed or
delivered in connection with the Loan Agreement.

 

8.                                       Governing
Law.  This
Amendment shall be governed by and construed in accordance with the laws of the
State of Maryland.

 

9.                                       Headings.  Section headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.

 

10.                                 Counterparts.  This Amendment may be executed in
counterparts, and both counterparts taken together shall be deemed to
constitute one and the same instrument.

 

 

[SIGNATURES
APPEAR ON FOLLOWING PAGE]

 

7

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first written above.

 

	
  WITNESS/ATTST:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HELLER HEALTHCARE
  FINANCE, INC.,

  
	
   

  	
   

  	
  a Delaware corporation and a GE Capital Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Brett Robinson

  	
  (SEAL)

  	
   

  
	
  Name:

  	
   

  	
  Name: BRETT ROBINSON

  
	
  Title:

  	
   

  	
  Title: VICE PRESIDENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIGIRAD IMAGING
  SOLUTIONS, INC.

  (formerly known as Orion Imaging Systems,

  Inc.), a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Susan Yeagley Sullivan

  	
   

  	
  By:

  	
  /s/ John Dahldorf

  	
  (SEAL)

  
	
  Name:  Susan Yeagley Sullivan

  	
   

  	
  Name: John Dahldorf

  
	
  Title:  Corp. Controller

  	
   

  	
  Title:  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIGIRAD IMAGING
  SYSTEMS, INC.

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Susan Yeagley Sullivan

  	
   

  	
  By:

  	
  /s/ John Dahldorf

  	
  (SEAL)

  
	
  Name:  Susan Yeagley Sullivan

  	
   

  	
  Name: John DahlDorf

  
	
  Title:  Corp. Controller

  	
   

  	
  Title:  CFO

  

 

8

 

ACKNOWLEDGEMENT
OF GUARANTOR:

 

Guarantor, by signature below as such, for a valuable consideration,
the receipt and adequacy of which are hereby acknowledged, hereby consents to
and joins in this Amendment and hereby declares to and agrees with Lender:  (1) that its Guaranty of the Obligations is
and shall continue in full force and effect for the benefit of the Lender with
respect to the Obligations, as amended by this Amendment, (2) that there are no
offsets, claims, counterclaims, cross-claims or defenses of Guarantor with
respect to the Guaranty nor, to Guarantor’s knowledge, with respect to the
Obligations, (3) that the Guaranty is not released, diminished or impaired in
any way by this Amendment or the transactions contemplated hereby, and (4) that
the Guaranty is hereby ratified and confirmed in all respects. Guarantor hereby
acknowledges that, without this consent and reaffirmation, Lender would not
execute this Amendment or otherwise consent to its terms.

 

	
  WITNESS/ATTEST:

  	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIGIRAD CORPORATION

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Susan Yeagley Sullivan

  	
   

  	
  By:

  	
  /s/ John Dahldorf

  	
  (SEAL)

  
	
  Name:  Susan Yeagley Sullivan

  	
   

  	
  Name:

  	
  John Dahldorf

  
	
  Title:  Corp. Controller

  	
   

  	
  Title:

  	
  CFO

  
							

 

9

 

Digirad Corporation 

Digirad Imaging Solutions 

Locations (all leased)

as of 4/28/02

 

	
  Address

  	
   

  	
  City, State, 
  ZIP

  	
   

  	
  ST

  
	
  7390 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  7394 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  7408 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  7410 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  7414 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  7444 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  9333 Trade Place

  	
   

  	
  San Diego, CA 92126

  	
   

  	
  CA

  
	
  9350 Trade Place

  	
   

  	
  San Diego, CA 92126

  	
   

  	
  CA

  
	
  7404 Trade Street

  	
   

  	
  San Diego, CA 92121

  	
   

  	
  CA

  
	
  930 North St. #210

  	
   

  	
  Allentown, PA 18102

  	
   

  	
  PA

  
	
  930 North St. #210

  	
   

  	
  Allentown, PA 18102

  	
   

  	
  PA

  
	
  5 Laurel Drive

  	
   

  	
  Flanders, NJ 07836 (No

  	
   

  	
  NJ

  
	
  1811 Executive Drive

  	
   

  	
  Indianapolis, IN

  	
   

  	
  IN

  
	
  Bay 14, 4700 Belle Grove Rd.

  	
   

  	
  Baltimore, MD 21225

  	
   

  	
  MD

  
	
  78248B Causeway Blvd

  	
   

  	
  Tampa, FL 33619

  	
   

  	
  FL

  
	
  1246 Brittain Road

  	
   

  	
  Akron, OH

  	
   

  	
  OH

  
	
  7561 Currency Drive

  	
   

  	
  Orlando, FL

  	
   

  	
  FL

  
	
  776 Jernee Mill Road, Suite 116

  	
   

  	
  Sayerville, NJ, 08872-17

  	
   

  	
  NJ

  
	
  251-109 Dominion Drive

  	
   

  	
  Morrisville, NC (Gastonia

  	
   

  	
  NC

  
	
  24301 Catherine Industrial Drive,
  Suite 112

  	
   

  	
  Novi, MI 48375-2420

  	
   

  	
  MI

  
	
  710 65th Street, Unit C

  	
   

  	
  Schererville, IN 46375-13

  	
   

  	
  IN

  
	
  1217 West loop North #170

  	
   

  	
  Houston, TX 77055

  	
   

  	
  TX

  
	
  3210 Canaan Center Drive, Unit 4

  	
   

  	
  Charlotte, NC 28269-428

  	
   

  	
  NC

  
	
  1203 North High Street, Unit B

  	
   

  	
  Millville, NJ 08332-2530

  	
   

  	
  NJ

  
	
  30-C 6th Road

  	
   

  	
  Woburn, MA, 01801-175

  	
   

  	
  MA

  
	
  212 W. Spring St

  	
   

  	
  Frackville, PA 17931

  	
   

  	
  PA

  
	
  2600 S. 162nd St.

  	
   

  	
  New Berlin, WI 53151

  	
   

  	
  WI

  
	
  23785 Cabot Blvd. #324

  	
   

  	
  Hayward, CA 94545

  	
   

  	
  CA

  
	
  1035 S. Milliken Ave. Ste G

  	
   

  	
  Ontario, CA 91761

  	
   

  	
  CA

  
	
  302 W. Fallbrook, Ste 104

  	
   

  	
  Fresno, CA 93711

  	
   

  	
  CA

  
	
  1499 SW 30th Avenue Suite 9

  	
   

  	
  Boynton Beach, FL 3342

  	
   

  	
  FL

  

 

 

$5,000
000.00 REVOLVING CREDIT LOAN

 

 

AMENDMENT
NO. 3

 

 

TO

 

 

TO
LOAN AND SECURITY AGREEMENT

 

 

originally
dated as of January 9, 2001

 

 

by
and among

 

 

DIGIRAD
IMAGING SOLUTIONS, INC.

 

(formerly
known as Orion Imaging Systems, Inc.),

 

 

DIGIRAD
IMAGING SYSTEMS, INC.

 

 

and

 

 

HELLER
HEALTHCARE FINANCE, INC.

 

 

Amended
as of September 27, 2002

 

 

AMENDMENT
NO. 3 TO LOAN AND SECURITY AGREEMENT

 

THIS
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is made as of this 27th day of September, 2002, by and among DIGIRAD
IMAGING SOLUTIONS, INC. (formerly known as Orion Imaging Systems, Inc.), a
Delaware corporation, and DIGIRAD IMAGING SYSTEMS, INC., a Delaware
corporation (collectively, “Borrower”), and HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation (“Lender”).

 

RECITALS

 

A.                                                                Pursuant
to that certain Loan and Security Agreement dated January 9, 2001 by and
among Borrower and Lender (as amended hereby and as may be further amended from
time to time, the “Loan Agreement”), the parties have established certain
financing arrangements that allow Borrower to borrow funds from Lender in
accordance with the terms and conditions set forth in the Loan Agreement.

 

B.                                                                  The
parties now desire to amend the Loan Agreement in accordance with the terms and
conditions set forth below.

 

C.                                                                  Capitalized
terms used but not defined in this Amendment shall have the meanings that are
set forth in the Loan Agreement.

 

NOW,
THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained in this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrower have agreed to the following amendments to
the Loan Agreement.

 

1.                                      Amendments
to Loan Agreement.

 

(a)                                  Section 2.1(a)
- Maximum Loan Amount. 
Section 2.1(a) of the Loan Agreement is hereby amended by deleting
the second sentence in its entirety such that Section 2.1 (a) now reads as
follows:

 

“(a)                            The
maximum aggregate principal amount of credit extended by Lender to Borrower
under this Agreement (the “Loan”) that will  be outstanding at any time
is Five Million and No/100 Dollars ($5,000,000.00) (the “Maximum Loan Amount”).”

 

(b)                                 Section 9.4
- Notices.  Section 9.4 of the
Loan Agreement is hereby amended by adding the following to the end of
Section 9.4:

 

“In addition, in the event that Lender provides notice (or is required
to provide notice) to Borrower of the occurrence of an Event of Default, Lender
agrees to also provide notice to Silicon Valley Bank, in writing and in the
manner such notice is provided to Borrower, at the following address:

 

1

 

Silicon Valley Bank

38 Technology Drive

Suite 150

Irvine, CA 92618

Attn: Mr. Robert Anderson

Telephone: (949) 789-1915

Fax: (949) 789-1930”

 

2.                                      Fees
and Costs.  In consideration of
Lender’s agreement to enter into this Amendment, and pursuant to
Section 2.4 of the Loan Agreement, Borrower hereby agrees to pay to Lender
a commitment fee equal to Twelve Thousand Five Hundred and No/100 Dollars
($12,500.00).  In addition, Borrower
shall be responsible for the payment of all reasonable fees of Lender’s
in-house counsel incurred in connection with the preparation of this Amendment
and any related documents.  Borrower
hereby authorizes Lender to deduct all of such fees set forth in this
Section 2 from the proceeds of the next Revolving Credit Loan.

 

3.                                      Confirmation
of Representations and Warranties.   Borrower hereby confirms that all of the representations and
warranties set forth in Article IV of the Loan Agreement are true and
correct as of the date hereof, and specifically represents and warrants to
Lender that it has good and marketable title to all of its respective
Collateral, free and clear of any lien or security interest in favor of any other
person or entity.

 

4.                                      Schedules.  Borrower hereby represents and warrants that
the information set forth on the Schedules attached to the Loan Agreement is
true and correct as of the date of this Agreement.

 

5.                                      Reference
to the Effect on the Loan Agreement.

 

(a)                                  Upon
the effectiveness of this Amendment, each reference in the Loan Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import
shall mean and be a reference to the Loan Agreement as amended by this
Amendment.

 

(b)                                 Except
as specifically amended above, the Loan Agreement and all other Loan Documents
shall remain in full force and effect, and are hereby ratified and confirmed.

 

(c)                                  The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided in this Amendment, operate as a waiver of any right, power
or remedy of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments and agreements executed or
delivered in connection with the Loan Agreement.

 

6.                                      Governing
Law.  This Amendment shall be
governed by and construed in accordance with the laws of the State of Maryland.

 

7.                                      Headings.  Section headings in this Amendment are
included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.

 

2

 

8.                                      Counterparts.  This Amendment may be executed in
counterparts, and both counterparts taken together shall be deemed to
constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the parties have caused this
Amendment to be executed as of the date first written above.

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HELLER HEALTHCARE
  FINANCE, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Joseph Prandoni

  	
   

  
	
   

  	
  Name:

  	
  JOSEPH PRANDONI

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  DIGIRAD IMAGING
  SOLUTIONS, INC.

  
	
   

  	
  (formerly known as
  Orion Imaging Systems, Inc.),

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Joseph Prandoni

  	
   

  
	
   

  	
  Name:

  	
  JOSEPH PRANDONI

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIGIRAD IMAGING
  SYSTEMS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John Dahldorf

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John Dahldorf

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
							

 

3

 

ACKNOWLEDGEMENT
OF GUARANTOR:

 

Guarantor, by signature below as such, for a valuable consideration,
the receipt and adequacy of which are hereby acknowledged, hereby consents to
and joins in this Amendment and hereby declares to and agrees with the Lender
that its Guaranty of the Obligations is and shall continue in full force and
effect for the benefit of the Lender with respect to the Obligations, as
amended by this Amendment, that there are no offsets, claims, counterclaims,
crossclaims or defenses of the Guarantor with respect to the Guaranty nor, to
the Guarantor’s knowledge, with respect to the Obligations, that the Guaranty
is not released, diminished or impaired in any way by this Amendment or the
transactions contemplated hereby, and that the Guaranty is hereby ratified and
confirmed in all respects.  Guarantor
hereby acknowledges that without this consent and reaffirmation, Lender would
not execute this Amendment or otherwise consent to its terms.

 

 

 

	
  WITNESS/ATTEST:

  	
   

  	
  DIGIRAD CORPORATION

  	
   

  
	
   

  	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Susan Yeagley Sullivan

  	
   

  	
  By:

  	
    /s/
  John Dahldorf

  	
  (SEAL)

  	
   

  
	
  Name:  Susan Yeagley Sullivan

  	
   

  	
  Name:

  	
  John Dahldorf

  	
   

  
	
  Title:  Corp. Controller

  	
   

  	
  Title:

  	
  CFO

  	
   

  
								

 

4

 

$5,000,00.00
REVOLVING CREDIT LOAN

 

 

AMENDMENT
NO. 4

 

 

TO

 

 

LOAN
AND SECURITY AGREEMENT

 

 

originally
dated as of January 9, 2001

 

 

by
and among

 

 

DIGIRAD
IMAGING SOLUTIONS, INC.

 

(f/k/a
Orion Imaging Systems, Inc.),

 

 

DIGIRAD
IMAGING SYSTEMS, INC.

 

 

and

 

 

GE
HFS HOLDINGS, INC.

 

(f/k/a
Heller Healthcare Finance, Inc.)

 

 

Amended
as of March 1, 2004

 

 

AMENDMENT
NO. 4 TO LOAN AND SECURITY AGREEMENT

 

THIS
AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT (this 4
“Amendment”) is made as of this l day of March, 2004, by and among DIGlRAD
IMAGING SOLUTIONS, INC. (f/k/a Orion Imaging Systems, Inc.), a
Delaware corporation, and DIGIRAD IMAGING SYSTEMS, INC., a Delaware
corporation (collectively, “Borrower”), and GE HFS HOLDINGS, INC. (f/k/a Heller
Healthcare Finance, Inc.), a Delaware corporation (“Lender”).

 

RECITALS

 

A.                                    Pursuant
to that certain Loan and Security Agreement dated January 9, 2001 by and
among Borrower and Lender (as amended hereby and as may be further amended from
time to time, the “Loan Agreement”), the parties have established
certain financing arrangements that allow Borrower to borrow funds from Lender
in accordance with the terms and conditions set forth in the Loan Agreement.

 

B.                                    The
parties now desire to amend the Loan Agreement in accordance with the terms and
conditions set forth below.

 

C.                                    Capitalized
terms used but not defined in this Amendment shall have the meanings that are
set forth in the Loan Agreement.

 

NOW,
THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained in this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrower have agreed to the following amendments to
the Loan Agreement.

 

1.                                      Amendments
to Loan Agreement.

 

(a)                                  Amendment
to Section 1.5.  Section 1.5 setting forth the
definition of

 

“Base Rate” is deleted in its entirety and replaced as follows:

 

“Section 1.5.
Base Rate. “Base Rate” means a rate of interest equa1
to one and one-quarter percent (1.25%) above the Prime Rate of Interest;
provided, however, that in no event shall the Base Rate fall below six percent
(6.00%) so long as this Agreement remains in effect”

 

(b)                                 Amendment
to Section 9.4.  Section 9.4(b) of the Loan Agreement
is hereby deleted in its entirety and replaced as follows:

 

1

 

“(b)                           If to Borrower, at:

 

Digirad Corporation

13950 Stowe Drive

Poway, CA 92064

Phone: 858-530-1201

 

2.                                      Fees
and Costs. In consideration of Lender’s agreement to enter into this
Amendment, and pursuant to Section 2.4 of the Loan Agreement, Borrower
hereby agrees to pay to Lender a commitment fee equal to Twenty Five Thousand
and No/100 Dollars ($25,000.00); provided that Lender shall waive such
fee in the event that Borrower renews its credit facility with Lender, before
the expiration of the Term, on substantially similar terms as set forth in the
Loan Agreement.  In addition, Borrower
shall be responsible for the payment of all reasonable fees of Lender’s
in-house counsel incurred in connection with the preparation of this Amendment
and any related documents.

 

3.                                      Confirmation
Representations and Warranties. Borrower hereby confirms that
all of the representations and warranties set forth in Article IV of the
Loan Agreement are true and correct as of the date hereof, and specifically
represents and warrants to Lender that it has good and marketable title to all
of its respective Collateral, free and clear of any lien or security interest
in favor of any other person or entity.

 

4.                                      Schedules.
Borrower hereby represents and warrants that the information set forth on the
Schedules attached to the Loan Agreement is true and correct as of the date of
this Agreement.

 

5.                                      Reference
to the Effect on the Loan Agreement.

 

(a) Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of
similar import shall mean and be a reference to the Loan Agreement as amended
by this Amendment.

 

(b) Except as specifically amended above, the Loan Agreement and all
other Loan Documents shall remain in full force and effect, and are hereby
ratified and confirmed.

 

(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided in this Amendment, operate as a waiver of any
right, power or remedy of Lender, nor constitute a waiver of any provision of
the Loan Agreement, or any other documents, instruments and agreements executed
or delivered in connection with the Loan Agreement.

 

6.                                       Governing
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Maryland.

 

7.                                       Headings.
Section headings in this Amendment are included for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose.

 

2

 

8.                                       Counterparts.
This Amendment may be executed in counterparts, and both counterparts taken
together shall be deemed to constitute one and the same instrument.

 

 

IN
WITNESS WHEREOF, the parties have caused this
Amendment to be executed as of the date first written above.

 

 

	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GE HFS HOLDINGS,
  INC.

  	
   

  
	
   

  	
  (f/k/a Heller
  Healthcare Finance, Inc.)

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Severance

  	
   

  
	
   

  	
  Name: Paul Severance

  	
   

  
	
   

  	
  Title: Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIGIRAD IMAGING
  SOLUTIONS, INC.

  	
   

  
	
   

  	
  (f/k/a Orion
  Imaging Systems, Inc.),

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd P. Clyde

  	
   

  
	
   

  	
  Name: Todd P. Clyde

  	
   

  
	
   

  	
  Title: CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIGIRAD IMAGING
  SYSTEMS, INC.,

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd P. Clyde

  	
   

  
	
   

  	
  Name: Todd P. Clyde

  	
   

  
	
   

  	
  Title: CFO

  	
   

  
					

 

3

 

ACKNOWLEDGEMENT
OF GUARANTOR:

 

 

Guarantor, by signature below as such, for a valuable consideration,
the receipt and adequacy of which are hereby acknowledged, hereby consents to
and joins in this Amendment and hereby declares to and agrees with the Lender
that its Guaranty of the Obligations is and shall continue in full force and
effect for the benefit of the Lender with respect to the Obligations, as
amended by this Amendment, that there are no offsets, claims, counterclaims,
crossclaims or defenses of the Guarantor with respect to the Guaranty nor, to
the Guarantor’s knowledge, with respect to the Obligations, that the Guaranty
is not released, diminished or impaired in any way by this Amendment or the
transactions contemplated hereby, and that the Guaranty is hereby ratified and
confirmed in all respects. Guarantor hereby acknowledges that without this
consent and reaffirmation, Lender would not execute this Amendment or otherwise
consent to its terms.

 

 

	
  WITNESS/ATTEST:

  	
   

  	
  DIGIRAD
  CORPORATION,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
               /s/
  Todd P. Clyde

  	
   

  	
  By:

  	
     /s/
  Vera Pardee

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: Todd P. Clyde

  	
   

  	
  Name: Vera Pardee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its: CFO

  	
   

  	
  Its: General Counsel

  	
   

  
					

 

4EXHIBIT
10.24

 

*** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
(INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83 AND 230.406.

 

CONSULTING AGREEMENT

 

THIS
CONSULTING AGREEMENT (hereinafter “AGREEMENT”) is made and entered into by and
between McAdams and Whitham Consulting (hereinafter “MWC”) and Digirad
Corporation (hereinafter “DIGIRAD”) on January 6, 2003 (the “Execution Date”).

 

RECITALS

 

A.            The only principals of
MWC are Dr. Stephen McAdams and Mr. John Whitham.

 

B.           DIGIRAD has a need for
the consulting services of MWC and MWC is willing to provide such consulting
services to DIGIRAD upon the terms and conditions stated in this AGREEMENT.

 

NOW,
THEREFORE, for and in consideration of the execution of this AGREEMENT and the
mutual covenants contained in the following paragraphs, DIGIRAD and MWC agree
as follows:

 

1.             Consulting Period.  The parties agree that during the period
from the Execution Date through        
***         (the “Consulting
Period”), DIGIRAD will retain MWC as a consultant, pursuant to the terms and
conditions stated herein.  The
Consulting Period will thereafter be automatically renewed for additional,
successive      ***     periods unless either party notifies the
other party in writing at least        
***        prior to the end of
the applicable Consulting Period of its intention to discontinue this
AGREEMENT.  Notwithstanding the
foregoing, however,         ***         may terminate this AGREEMENT at any
time for any reason, with or without cause, by delivering written notice of
such termination to         ***        , with such termination to be
effective upon         ***        receipt of such notice.

 

2.            Services.  The parties agree that the nature of the consulting services
which MWC will provide to DIGIRAD hereunder shall consist of the following:

 

a)             Provide
and generate qualified sales leads for DIGIRAD’s products and Digirad Imaging
Solutions’ (“DIS”) services.

 

b)            Reasonably
accept and promptly respond to DIGIRAD product sales and DIS service inquiries
from existing customers, potential customers, DIGIRAD personnel, and others at
DIGIRAD’s discretion (e.g., investors, potential employees, analysts, etc.).

 

c)             Reasonably
accept and promptly perform customer site visits to      ***
              ***              and                  ***             
facilities that contain DIGIRAD’s gamma cameras.

 

***        Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the commission.

 

 

d)              Actively
promote DIGIRAD products and DIS services to        ***    
                     ***                        .

 

e)             Actively
promote and encourage                            ***                       
                                    
***                               
..

 

f)             Actively
promote DIGIRAD’s products and DIS’ services to        ***      as agreed
to by DIGIRAD and MWC                            ***                           .

 

g)            Act as advisors on
future product developments.

 

h)            Maintain
a             ***

***

    ***   
..

 

i)              Be
the first to adopt new Digirad Technology, assuming clinical acceptance, by
purchasing the system and acting as a national reference site.

 

3.            Independent Contractor Status.  The parties agree that nothing herein
contained shall be deemed to create an agency, joint venture, partnership or
franchise relationship between parties hereto. 
MWC acknowledges that it is an independent contractor, is not an agent
or employee of DIGIRAD and is not entitled to any DIGIRAD employment rights or
benefits and is not authorized to act on behalf of DIGIRAD.  MWC shall be solely responsible for any and
all tax obligations of MWC and those of its employees and representatives,
including but not limited to, all city, state and federal income taxes, social
security withholding tax and other self employment tax incurred by MWC.  DIGIRAD shall not dictate the work hours of
MWC during the term of this AGREEMENT. 
Anything herein to the contrary notwithstanding, the parties hereby
acknowledge and agree that DIGIRAD shall have no right to control the manner,
means, or method by which MWC performs the services called for by this
AGREEMENT.  Rather, DIGIRAD shall be
entitled only to direct MWC with respect to the elements of services to be
performed by MWC and the results to be derived by Company, to inform MWC as to
where and when such services shall be performed, and to review and assess the
performance of such services by MWC for the limited purposes of assuring that
such services have been performed and confirming that such results were
satisfactory.  DIGIRAD shall be entitled
to exercise broad general power of supervision and control over the results of
work performed by MWC’s personnel to ensure satisfactory performance, including
the right to inspect, the right to stop work, the right to make suggestions or
recommendations as to the details of the work, and the right to propose
modifications to the work.

 

4.             Compensation.  During the Consulting Period, customer
identification will take place as follows:

 

	
  a)

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  

 

***        Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the commission.

 

 

	
  b)

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  

 

During the
Consulting Period, DIGIRAD shall compensate MWC as follows:

 

a)             DIGIRAD
will pay MWC $  ***  per customer site visit to        ***   

      ***    .

 

b)            For
Identified Customers, DIGIRAD will pay MWC $ 
***  per DIGIRAD camera system
purchased by an Identified Customer after such customer has purchased a DIGIRAD
system, had it installed and completed all necessary payments for the system in
full.  Additionally, DIGIRAD will issue
to MWC warrants to purchase      
***       shares of DIGIRAD
common stock for each unit sold to Identified Customers.  The warrant value of the DIGIRAD Common
Stock will be as determined by the Board of Directors of DIGIRAD at its meeting
immediately following the date the aforementioned criteria have been satisfied.

 

c)             DIGIRAD
will issue to each of the principals of MWC a warrant to purchase up to an
aggregate total of      ***     shares of DIGIRAD common stock at a per
share exercise price of $  ***   . 
Each warrant will be exercisable for shares of  DIGIRAD common stock in
the following amounts and under the following schedule:  (1) each warrant will be exercisable for up
to      ***     shares of . DIGIRAD
Common Stock at      ***     for services rendered to       ***    
; and (2) each warrant will be exercisable for up to all       ***    
shares of DIGIRAD Common Stock at      
***      for services rendered
to       ***      .  In the event that
DIGIRAD is acquired by a third party whether by means of a merger, a sale of
substantially all of its assets or the sale of more than 50% of its outstanding
securities (each, an “Acquisition Event”), each of  the warrants will be
immediately exercisable in full for the purchase of all       ***    
shares of DIGIRAD common stock upon the closing of the Acquisition
Event.

 

d)            All
references to a number of shares of common stock to be issued pursuant to any
warrant and the exercise price thereof shall be appropriately adjusted to
reflect any stock splits, stock dividends or combinations relating to DIGIRAD’s
Common Stock after the Execution Date.

 

5.            Outside
Activities.  The parties agree
that during the Consulting Period, MWC and its employees and personnel shall
not become employed by, or act as a consultant to, any person or entity that is
directly competitive with the business activities of DIGIRAD.  Persons and entities which shall be
considered “directly competitive with the business activities of DIGIRAD” are
any company, being a business or research entity, that works with or intents to
work with gamma radiation detection devices. 
The parties agree that nothing in this AGREEMENT shall prohibit or
otherwise limit MWC from becoming employed by, or acting as a consultant to,
any person or entity that is not directly competitive with the business
activities of

 

***        Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the commission.

 

 

DIGIRAD.  MWC specifically represents that it agrees
that the foregoing limitation on its outside activities and those of its
employees and personnel, is reasonable in scope and duration, and does not
impose an unreasonable burden on the ability of its employees and personnel to
earn a living.

 

6.             Promise
to Maintain Confidentiality of DIGIRAD’s Confidential

Information.  MWC acknowledges that in its capacity as a
consultant to DIGIRAD it shall continue to be privy to confidential information
belonging to DIGIRAD.  MWC hereby
promises and agrees that, unless compelled by legal process, MWC, as well as
its employees and personnel, will not disclose to others and will keep
confidential all information it has received while working as a consultant to,
DIGIRAD concerning DIGIRAD’s research and development activities, products and
procedures, the identities of DIGIRAD’s customers, DIGIRAD’s sales, DIGIRAD’s
prices, the terms of any of DIGIRAD’s contracts with third parties, and the
like.  MWC agrees that a violation by it
or any of its employees or personnel of the foregoing obligation to maintain
the confidentiality of DIGIRAD’s confidential information will constitute a
material breach of this AGREEMENT and will entitle DIGIRAD to immediately
terminate this AGREEMENT, with no further obligations then being owed to MWC.  MWC specifically confirms that MWC, as well
as its employees and personnel, will continue to comply with the terms of the
Non-Disclosure Agreement executed between MWC and DIGIRAD.

 

7.             Effect
of Termination.  Within       ***    
days after the termination of this Agreement in its entirety for any
reason, the parties shall promptly return to one another all property and other
materials of the other party in their respective possessions, including all
media (and copies thereof) containing confidential information of DIGIRAD and
including without limitation all marketing materials, customer lists, placement
records, service records and sales forecasts. 
If this Agreement is terminated by DIGIRAD, then within                 ***             after DIGIRAD gives MWC notice of its intention to
terminate this Agreement, DIGIRAD and MWC will review the Identified Customers
as supplied and will reasonably agree to a final written list of Identified
Customers.  For                             ***                             after the termination date of this Agreement, DIGIRAD
shall compensate MWC pursuant to the terms of this Agreement,                                                   
***    
                          ***                 .

 

8.             Integrated
Agreement.  The parties
acknowledge and agree that no promises or representations were made to them
which do not appear written herein and that this AGREEMENT contains the entire
agreement of the parties on the subject matter thereof.  The parties further acknowledge and agree
that parol evidence shall not be required to interpret the intent of the
parties.

 

9.             Voluntary
Execution.  The parties hereby
acknowledge that they have read and understand this AGREEMENT and that they
sign this AGREEMENT voluntarily and without coercion.

 

***        Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the commission.

 

 

10.          Waiver.
Amendment and Modification of AGREEMENT.  The parties agree that no waiver, amendment or modification of
any of the terms of this AGREEMENT shall be effective unless in writing and
signed by all parties affected by the waiver, amendment or modification.  No waiver of any term, condition or default
of any term of this AGREEMENT shall be construed as a waiver of any other term,
condition or default.

 

11.         Representation
by Counsel.  The parties
represent that they understand that they have the right to be represented in
negotiations for the preparation of this AGREEMENT by counsel of their own choosing,
and that they have entered into this AGREEMENT voluntarily, without coercion,
and based upon their own judgment, and not in reliance upon any representations
or promises made by the other party, other than those contained within this
AGREEMENT.  The parties further agree
that if any of the facts or matters upon which they now rely in making this
AGREEMENT hereafter prove to be otherwise, this AGREEMENT will nonetheless
remain in full force and effect.

 

12.          California
Law.  The parties agree that this
AGREEMENT and its terms shall be construed under California law.

 

13.          Attorney’s
Fees.  If any action at law or
in equity is necessary to enforce or determine the terms of this AGREEMENT, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements, in addition to any other relief to which the party may
be entitled.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS
WHEREOF, the parties have executed this AGREEMENT as of the date first above
written

 

	
   

  	
   

  	
   

  	
  MCADAMS AND WHITHAM CONSULTING

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  /s/  Dr. Stephen McAdams

  	
   

  
	
   

  	
   

  	
   

  	
  Dr. Stephen
  McAdams

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  1/20/2003

  	
   

  	
  /s/ John Whitham

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Mr. John
  Whitham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  DIGIRAD CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  1-29-03

  	
   

  	
  By:

  	
  /s/ David Sheehan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  President and CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]