Bridge Loan Agreement

BRIDGE LOAN AGREEMENT


BETWEEN


ALLIANCE IMAGING, INC.,
AS BORROWER


AND


GENERAL ELECTRIC COMPANY,
AS LENDER


DATED AS OF DECEMBER 31, 1996


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TABLE OF CONTENTS


ARTICLE I. DEFINITIONS 1
1.1. Defined Terms. 1
1.2. Exhibits and Schedules Incorporated 8


ARTICLE II. SENIOR LOAN 9
2.1. Senior Loan 9
2.2. Senior Note 9
2.3. Interest; Payments 9
2.4. Prepayments 9
2.5. Maturity Date 9
2.6. Default Interest 9
2.7. Payments on Non-Business Days; Calculations 9
2.8. Stamp Taxes, Etc 9
2.09. Costs of Closing 10
2.10. Use of Proceeds 10


ARTICLE III. CONDITIONS PRECEDENT TO CLOSING AND LOANS 10
3.1. Conditions Precedent to Closing 10
3.2. Closing Mechanics 11


ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BORROWER 11
4.1. Organization, Powers and Good Standing 11
4.2. Capitalization 12
4.3. Subsidiaries 13
4.4. Authorization 13
4.5. Governmental and Other Consents; No Violation 14
4.6. Litigation 14
4.7. Financial Statements 14
4.8. Proprietary Information 15
4.9. Registration Rights 15
4.10. Contracts 15
4.11. Absence of Changes 16
4.12. Intellectual Property 17
4.13. Compliance with Other Instruments 17
4.14. Compliance with Law; Approvals 17
4.15. Title to Assets 18
4.16. Plant, Property and Equipment 19
4.17. Accounts and Notes Receivable 19
4.18. Indebtedness 19
4.19. Real Property 19


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4.20. Employee Plans and Arrangements 20
4.21. Employees 22
4.22. Insurance 23
4.23. Environmental Compliance 23
4.24. No Undisclosed Liabilities 24
4.25. Taxes 24
4.26. No Research Grants 25
4.27. Certain Regulatory Matters 26
4.28. Transactions with Affiliates 26
4.29. Reports; SEC Documents 26
4.30. Disclosure 26
4.31. Brokers 26
4.32. Certain Additional Regulatory Matters 26
4.33. Medicare/Medicaid Participation 27


ARTICLE V. COVENANTS OF BORROWER 28
5.1. Corporate Existence, Etc. 28
5.2. Payment of Taxes 28
5.3. Maintenance of Properties 29
5.4. Maintenance of Insurance 29
5.5 Expenses. 29
5.6. Conversion Stock. 29
5.7. Compliance with Note Purchase Agreement. 29
5.8. Certain Regulatory Matters 29


ARTICLE VI. DEFAULTS AND REMEDIES 30
6.1. Default 30
6.2. Acceleration Upon Default. 31
6.3. Repayment of Funds Advanced. 31
6.4. Rights Cumulative, No Waiver. 31


ARTICLE VII. LENDER'S OPTION TO EXTEND MATURITY DATE;
OPTIONAL CONVERSION OF SENIOR LOAN 32
7.1. Lender's Option to Extend Maturity Date 32
7.2. Conversion of Senior Loan Prior to Maturity Date 32
7.3. Conversion of Senior Loan After Maturity Date 33
7.4. Acknowledgement 33


ARTICLE VIII. MISCELLANEOUS PROVISIONS 33
8.1. Indemnity 33
8.2. Notices 34
8.3. Attorneys' Fees and Expenses; Enforcement 34
8.4. Immediately Available Funds 34
8.5. Successors and Assigns 34


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8.6. Participations 34
8.7. Severability 35
8.8. No Waiver; Successors 35
8.9. Time 35
8.10. Headings 35
8.11. Governing Law 35
8.12. Integration; Interpretation 35
8.13. Waiver of Allocation Rights 36
8.14. Usury Savings 36
8.15. Revival 36
8.16. Counterparts 37


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BRIDGE LOAN AGREEMENT


BRIDGE LOAN AGREEMENT (this "AGREEMENT") dated as of December 31, 1996 between Alliance Imaging, Inc., a Delaware corporation (the "BORROWER"), and General Electric Company, a New York corporation acting through GE Medical Systems (the "LENDER").


RECITALS


WHEREAS, Borrower has requested that Lender make a loan to Borrower in a principal amount of $18,000,000, and Lender has agreed to make the requested loan upon the terms and subject to the conditions set forth herein.


NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, the parties agree as follows:


ARTICLE I. DEFINITIONS


1.1 DEFINED TERMS. The following capitalized terms generally used in this Agreement shall have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement are defined in such sections.


"AFFILIATE" means, with respect to any Person, any other Person which directly or indirectly controls or is controlled by or is under common control with such Person, and, with respect to the Borrower only, includes any other Person with whom the Borrower has any joint venture, partnership, or other shared investment interest. As used in this definition, "control" (including its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to (i) direct or cause the direction of management or policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) or (ii) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person.


"AGREEMENT" is defined in the preamble hereto.


"APPLICABLE LAW" means, with respect to any Person, any federal, state or local statute, law, ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree or other requirement of any Governmental Authority (including any Environmental Law) applicable to such Person or any of its Affiliates or Plan Affiliates or any of their respective properties, assets, officers, directors, employees, consultants or agents.


"APPROVALS" is defined in Section 4.14(d).


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"BANKRUPTCY CODE" means Title 11 of the United States Code, as amended from time to time, and any state law relating to creditor's rights, reorganization or insolvency generally.


"BENEFIT ARRANGEMENT" means any material benefit arrangement that is not an Employee Benefit Plan, including (i) each employment, consulting or change of control agreement, (ii) each arrangement providing for fringe benefits, insurance coverage or workers' compensation benefits, (iii) each bonus, incentive, or performance pay or deferred bonus, incentive, or performance pay arrangement, (iv) each arrangement providing any termination allowance, severance or similar benefits, (v) each equity compensation plan, (vi) each deferred compensation plan and (vii) each compensation policy and practice maintained by the Borrower covering the employees, former employees, officers, former officers, directors and former directors of the Borrower, and the beneficiaries of any of them.


"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.


"BORROWER" is defined in the preamble hereto.


"BUSINESS DAY" means a day of the week (other than any Saturday or Sunday) on which banks are not authorized or required to close in the State of California. Unless specifically referenced in this Agreement as a Business Day, all references to "days" shall be to calendar days.


"BSC" is defined in Section 5.8(b).


"CAPITAL STOCK" means any and all shares, interests, participations, or other equivalents (however designated) of capital stock and any rights (other than debt securities convertible into capital stock), warrants or options to acquire such capital stock.


"CHAMPUS" is defined in Section 4.32.


"CHANGE IN CONTROL" shall be deemed to have occurred (i) at such time as any person (as defined in Section 13(d)(3) of the Securities and Exchange Act of 1934) at any time shall directly or indirectly acquire more than Forty Percent (40%) of the voting power of the Common Stock of the Borrower, (ii) upon consummation of a merger or consolidation of the Borrower into or with another corporation in which the shareholders of the Borrower immediately prior to the consummation of such transaction shall own less than Fifty Percent (50%) of the voting securities of the surviving corporation (or the parent corporation of the surviving corporation where the surviving corporation is wholly-owned by the parent corporation) immediately following the consummation of such transaction or (iii) the sale, transfer or lease of all or substantially all of the assets of the company; in any of cases (i), (ii) and (iii), in a single transaction or series of transactions.


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"CHARTER DOCUMENTS" is defined in Section 4.13.


"CLAIMS" is defined in Section 8.1.


"CLOSING" means the consummation of the transactions contemplated by this Agreement to be consummated on the Closing Date.


"CLOSING DATE" means the date upon which each of the conditions precedent set forth in Section 3.1 hereof is satisfied or waived by Lender in its sole and absolute discretion.


"CODE" means the Internal Revenue Code of 1986, as amended from time to time.


"COMMON STOCK" is defined in Section 4.2.


"CONTRACT" means all contracts and agreements, contract rights, executory commitments, license agreements, purchase and sales orders, written or oral, relating to the operation of the business of the Borrower or any Subsidiary.


"CONTRACTUAL OBLIGATION" means, as applied to any Person, any provision of any agreement or other instrument to which that Person is a party or by which it or any of the properties owned or leased by it is bound or otherwise subject.


"CONVERSION DATE" is defined in Section 7.1(a).


"CONVERSION NOTICE" is defined in Section 7.1(a).


"CONVERSION TRANSACTIONS" is defined in Section 7.1(b).


"CONVERSION STOCK" means the shares of Common Stock issuable upon conversion of the shares of Series D Preferred Stock.


"CURRENT CUSTOMER" is defined in SECTION 4.10(a).


"DEFAULT" is defined in SECTION 6.1.


"DEFAULT RATE" is defined in SECTION 2.8.


"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined in Section 3(3) of ERISA, that is sponsored or contributed to by the Borrower or any ERISA Affiliate covering employees or former employees of the Borrower, or with respect to which the Borrower or any ERISA Affiliate is a party or is otherwise bound.


"EMPLOYEE PENSION BENEFIT PLAN" means any Employee Benefit Plan, as defined in Section 3(2) of ERISA, that is regulated under Title IV of ERISA or is subject to the funding requirements of Part III of Title I of ERISA or Section 412


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of the Code, other than a Multiemployer Plan.


"EMPLOYMENT AGREEMENTS" is defined in Section 4.20(a).


"ENVIRONMENTAL LAW" means all laws, ordinances and regulations regulating or otherwise concerning the environment or relating to Hazardous Materials, including, without limitation, the Clean Air Act, as amended, 42 U.S.C. Section 7401 ET SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 ET SEQ.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 ET SEQ.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, "CERCLA"), 42 U.S.C. Section 9601 ET SEQ.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 ET SEQ.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 ET SEQ.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f ET seq.; and all comparable state and local laws, orders and regulations of applicable jurisdictions.


"EXISTING PREFERRED STOCK" means, collectively, the Series A Preferred Stock, the Series B Preferred Stock, and the Series C Preferred Stock.


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.


"ERISA AFFILIATE" of the Borrower means any other Person that, together with the Borrower as of the relevant measuring date under ERISA, was or is required to be treated as a single employer under Section 414 of the Code.


"FINANCIAL STATEMENTS" is defined in SECTION 4.7.


"GAAP" is defined in SECTION 4.7.


"GOVERNMENTAL AUTHORITY" means any federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing, in all such cases whether domestic or foreign.


"GROUP HEALTH PLAN" means any group health plan, as defined in Section 5000(b)(1) of the Code.


"HAZARDOUS MATERIALS" means oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any


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substances which are "hazardous substances," "hazardous wastes," "hazardous materials" or "toxic substances" under any Environmental Laws.


"INTEREST PAYMENT DATE" shall have the meaning ascribed to such term in the Senior Note.


"KNOWLEDGE" OR "KNOWLEDGE," with respect to any Person, means the actual knowledge of such Person, after reasonable inquiry. For purposes hereof, a Person shall be deemed to have actual knowledge of the contents of all books and records with respect to which such Person has reasonable access. Without limiting the generality of the foregoing, with respect to any Person that is a corporation, partnership or other business entity, actual knowledge shall be deemed to include the actual knowledge of all principal employees of any such Person (which, for purposes of the Borrower, shall include without limitation Richard N. Zehner, Vincent S. Pino, Terrence M. White, Jay A. Mericle, Terry A. Andrues, Neil M. Culinan, Ph.D., Cheryl A. Ford, and Michael W. Grismer) as well as the Chief Executive Officer, President, Chief Financial Officer and all Vice Presidents in the case of corporate Persons, and general partners in the case of general or limited partnerships, as the case may be.


"LEASE AGREEMENTS" is defined in Section 4.19(b).


"LEASED REAL PROPERTY" means all real property leased, occupied, operated or controlled by the Borrower or any Subsidiary or otherwise related to or used in the business of the Borrower or any Subsidiary.


"LENDER" is defined in the preamble hereto.


"LIABILITY" means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise and whether or not the same is required to be accrued on the financial statements of such Person.


"LIEN" means any lien, mortgage, pledge, security interest, charge, or encumbrance of any kind (including any conditional sale or other title retention agreement or any lease in the nature thereof) and any agreement to give or refrain from giving any lien, mortgage, pledge, security interest, charge, or other encumbrance of any kind.


"LOAN" means the Senior Loan.


"LOAN DOCUMENTS" means, collectively, this Agreement and the Senior Note, as hereafter amended, supplemented, replaced or modified, each as properly executed and in recordable form, if necessary.


"MATERIAL ADVERSE EFFECT" means, with respect to any Person or designated


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group of Persons, a change in, or effect on, or group of such changes in or effects on, the operations, financial condition or results of operations, prospects, assets or Liabilities of the Person or group of Persons, as the case may be, taken as a whole, that results in a material adverse effect on, or a material adverse change in, the operations, financial condition, results of operations, prospects, assets or Liabilities of the Person or group of Persons, as the case may be, taken as a whole, excluding adverse changes in the general economy.


"MATERIAL CONTRACTS" is defined in Section 4.10(b).


"MATURITY DATE" means February 28, 1997; provided, however, that if Lender exercises its option to extend the Maturity Date to March 31, 1997, as set forth in Section 7.1, , or if Lender fails to timely deliver the Conversion Notice to Borrower as provided in Section 7.2(c), then the "Maturity Date" shall mean March 31, 1997.


"MAXIMUM AMOUNT" is defined in Section 8.14.


"MULTIEMPLOYER PLAN" means any multiemployer plan as defined in either Section 3(37) or 4001(a)(3) of ERISA.


"MULTIPLE EMPLOYER PLAN" means any Employee Benefit Plan sponsored by more than one employer, within the meaning of Sections 4063 or 4064 of ERISA or Code Section 413(c).


"NOTE PURCHASE AGREEMENT" is defined in Section 5.7.


"OBLIGATIONS" means each and all of the obligations of Borrower under or with respect to the Loan or the Loan Documents.


"PERMITTED ENCUMBRANCES" means: (i) Liens for taxes, assessments or charges for claims that are not yet due and payable or being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with of GAAP; (ii) statutory Liens of carriers, warehousemen, mechanics, materialmen, bankers and other Liens imposed by law and created in the ordinary course of business for amounts that are not material, and that are not yet due and payable or that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (iii) Liens incurred and deposits made in the ordinary course of business to secure the performance (including by way of surety bonds or appeal bonds) of tenders, bids, leases, contracts, statutory obligations or similar obligations or arising as a result of progress payments under contracts, in each case in the ordinary course of business and not relating to the repayment of debt; (iv) easements, rights-of-way, covenants, consents, reservations, encroachments, variations and other restrictions, charges, encumbrances; (v) building restrictions, zoning laws and other statutes, laws, rules, regulations, ordinances and restrictions; (vi) leases or subleases approved by, or deemed


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approved by Lender; (vii) any attachment or judgment Lien, not otherwise constituting a Default hereunder, in existence less than thirty (30) days after the entry thereof or with respect to which (A) execution has been stayed, (B) payment is covered in full by insurance to which Lender has been made the loss payable party, or (C) Borrower is in good faith prosecuting an appeal or other appropriate proceedings for review and has set aside on its books and granted to Lender a priority perfected security interest in such reserves as may be required by GAAP with respect to such judgment or award; and (viii) Liens with respect to purchase money security interests (including refinancings thereof) granted in the ordinary course of the Borrower's business, consistent with past practice.


"PERSON" means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated organization or any other entity or organization, including a government or any agency or political subdivision thereof and, for the purpose of the definition of "ERISA Affiliate" a trade or business.


"PLAN AFFILIATE" means, with respect to any Person, any employee benefit plan or arrangement sponsored by, maintained by or contributed to such Person, and with respect to any employee benefit plan or arrangement, any Person sponsoring, maintaining or contributing to such plan or arrangement.


"PROHIBITED TRANSACTION" means a transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA.


"REFINANCING AGREEMENTS" means the Assignment and Amended & Restated Standstill Agreement between the Borrower, on the one hand, and Northwestern Mutual Life Insurance Company, The Travelers Insurance Company, The Travelers Indemnity Company, the Travelers Life and Annuity Company, The Lincoln National Life Insurance Company and Bedrock Asset Trust I, on the other hand, dated as of December 31, 1996.


"REFINANCING TRANSACTIONS" means the transactions contemplated by the Refinancing Agreements, including without limitation (i) the repurchase by the Borrower of the Subordinated Debentures for the face amount thereof plus accrued and unpaid interest through the date of such repurchase, and (ii) the repurchase by the Borrower of all outstanding shares of its Series A Preferred Stock for an aggregate of $6,830,000 plus accrued and unpaid dividends through the closing date of such repurchase.


"SEC DOCUMENTS" is defined in Section 4.29.


"SECURITIES" means, collectively, the Series D Preferred Stock, the Conversion Stock, the Series E Preferred Stock, and the Series E Conversion Stock.


"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any


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similar federal statute and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.


"SENIOR LOAN" means the Senior Loan made by Lender to Borrower pursuant to Section 2.1 in the principal amount not to exceed Eighteen Million Dollars ($18,000,000), all pursuant to the terms and conditions of this Agreement.


"SENIOR NOTE" means a note in the form of the Senior Note attached hereto as EXHIBIT A, as hereafter amended, supplemented, replaced or modified.


"SERIES A PREFERRED STOCK" means the Borrower's Series A 6.0% Cumulative Preferred Stock.


"SERIES B PREFERRED STOCK" means the Borrower's Series B Cumulative Preferred Stock.


"SERIES C PREFERRED STOCK" means the Borrower's Series C Convertible Preferred Stock.


"SERIES D CERTIFICATE OF DESIGNATION" means the Certificate of Designation, Preferences and Rights of Series D 4% Cumulative Redeemable Convertible Preferred Stock in the form set forth as EXHIBIT B hereto.


"SERIES D PREFERRED STOCK" means the Series D 4% Cumulative Redeemable Convertible Preferred Stock, with the rights, preferences and privileges set forth in the Series D Certificate of Designation.


"SERIES E CERTIFICATE OF DESIGNA ...