radnet_10q-ex1017.htm

ANNEX B TO AMENDMENT NO. 3 TO CREDIT AGREEMENT

SUPPLEMENTAL ANNEX B

PRO RATA SHARES AND COMMITMENT AMOUNTS

The existing Commitments of each Lender set forth below shall be increased by the amount set forth below:

Lender: General Electric Capital Corporation

Term Loan B Commitment: $25,000,000

Lender: Royal Bank of Canada

Revolving Loan Commitment: $10,000,000

ANNEX F TO AMENDMENT NO. 3 TO CREDIT AGREEMENT

MINIMUM FIXED CHARGE COVERAGE RATIO

(Section 6.1(c))

EBITDA (calculated in Section 6.1(b) of this Annex)	$ ___________

$ Less: any provision for income taxes (whether paid or payable in cash)	___________

Capital Expenditures (calculated in Section 6.1(a) of this Annex), other than the portion thereof funded by third party financing	___________

Operating Cash Flow	$
	===========
$ Fixed Charge Coverage Ratio is defined as follows:

Interest expense (whether cash or non-cash) deducted in the determination of Consolidated Net Income, including interest expense with respect to any Funded Debt and interest expense that has been capitalized

Less: Amortization of capitalized fees and expenses incurred with respect to the Related Transactions included in interest expense above	$ ___________

Amortization of any original discount attributable to any Funded Debt or warrants included in interest expense above	____________

Interest paid in kind and included in interest expense above	____________

Imputed interest or other non-cash interest related to swap or other interest rate agreements	____________

Interest Expense*	$ ____________

Plus: Scheduled payments of principal with respect to all Indebtedness**	____________

Fixed Charges	$
	============
Fixed Charge Coverage Ratio (Operating Cash Flow from above, divided by Fixed Charges)
	============

* During the period from the Closing Date through the Fiscal Quarter ended September 30, 2008, cash Interest Expense shall be calculated for the period commencing on the Closing Date and ending on the date most recently ended for which a Compliance Certificate is delivered to Agent divided by the number of days in such period and multiplied by 360 days. Thereafter, cash Interest Expense shall be calculated for the twelve (12) month period ending on the date most recently ended for which a Compliance Certificate is delivered to Agent.

** For calculations as of September 30, 2007, scheduled payments of principal with respect to all Indebtedness will be deemed to be the actual amount of such payments for the fiscal quarter ended September 30, 2007 multiplied by 4.0. For calculations as of December 31, 2007, scheduled payments of principal with respect to all Indebtedness will be deemed to be the actual amount of such payments for the fiscal quarters ended September 30, 2007 and December 31, 2007 multiplied by 2.0. For calculations of as March 31, 2008, scheduled payments of principal with respect to all Indebtedness will be deemed to be the actual amounts of such payments for the fiscal quarters ended September 30, 2007, December 31, 2007 and March 31, 2008 multiplied by 1.33 or one and one-third.

EXHIBIT 6.2(d) TO AMENDMENT NO. 3 TO CREDIT AGREEMENT

EXHIBIT 6.2(d)

BORROWING BASE CERTIFICATE

RADNET MANAGEMENT, INC.

Date: ___________________9

This Certificate is given by Radnet Management, Inc. ("Borrower") pursuant to subsection 6.2(d) of that certain Credit Agreement dated as of ____________________________________ among Borrower, the other Credit Parties party thereto, the Lenders from time to time party thereto and General Electric Capital Corporation, as agent for the Lenders (as such agreement may have been amended, restated, supplemented or otherwise modified from time to time the "Credit Agreement"). Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.

The undersigned is duly authorized to execute and deliver this. Certificate on behalf of Borrower. By executing this Certificate such officer hereby certifies to Agent and Lenders that:

(a)	Attached hereto as Schedule I is a calculation of the [proposed] Borrowing Base for Borrower as of the above date;

(b)	Attached hereto as Schedule II is a calculation of EBITDA for Holdings and its Subsidiaries as of the above date;

(c)	Based on such schedule, the [proposed] Borrowing Base as of the above date is:

IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed by its ______________ this ____ day of __________________

RADNET MANAGEMENT, INC.

By: ____________________________

Its: ____________________________

SCHEDULE I

EXHIBIT 6.2(d)

CALCULATION OF BORROWING BASE

(a)	Applicable Senior Multiple Multiplied by:	$ _________

(b)	EBITDA (calculated in Schedule II to this Exhibit 6.2(d)) for twelve-month period ending on [insert date of most recent monthly financial statements required to be delivered pursuant to Section 6.1(a) of Credit Agreement] the "Defined Period")	$ _________

(c)	Product of (a) and (b)	$ _________

Less:

(d)	Outstanding principal balance of all Senior Debt of Holdings and its Subsidiaries as of [insert date of Borrowing Base Certificate] other than Revolving Loans	$ _________

(e)	((c) minus (d)) (if not a positive number, such amount shall be deemed to be zero)	$ _________

(f)	Applicable Total Multiple	$ _________

Multiplied by:

(g)	EBITDA (calculated in Section 6.1(b) of this Annex) for twelve-month period ending on [insert date of most recent monthly financial statements required to be delivered pursuant to Section 6.1(a) of Credit Agreement] the "Defined Period")	$ _________

(h)	Product of (f) and (g)	$ _________

Less:

(i)	Outstanding principal balance of total Funded Debt of Holdings and its Subsidiaries as of [insert date of Borrowing Base Certificate] other than Revolving Loans	$ _________

(j)	((h) minus (i)) (if not positive number, such amount shall be deemed to be zero)	$ _________

(k)	Borrowing Base as of [insert date of Borrowing Base Certificate] (lesser of (e) and (j))	$ _________

SCHEDULE II

EXHIBIT 6.2(d)

EBITDA

Consolidated Net Income is defined as follows:

Net income during the measuring period on a consolidated basis excluding:	_____________

the income (or deficit) of any Person accrued prior to the date it became a Subsidiary of, or was merged or consolidated into, Holdings or any of Holdings' Subsidiaries	_____________

the income (or deficit) of any Person (other than a Subsidiary) in which Holdings has an ownership interest, except to the extent any such income has actually been received by Borrower or any of its Subsidiaries in the form of cash dividends or distributions	_____________

the undistributed earnings of any Subsidiary of Holdings to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law applicable to such Subsidiary	_____________

any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period	_____________

any net gain attributable to the write-up of any asset	_____________

any loss attributable to the write-down of any asset (other than Accounts and Inventory)	_____________

any net gain from the collection of the proceeds of life insurance policies	_____________

any net gain arising from the acquisition of any securities, or the extinguishment of any Indebtedness, of Holdings or any of its Subsidiaries	_____________

any deferred credit representing the excess of equity in any Subsidiary of Holdings at the date of acquisition of such Subsidiary over the cost to Holdings of the investment in such Subsidiary	_____________

Consolidated Net Income	$____________

EBITDA is defined as follows:	_____________

Consolidated Net Income (from above)	_____________

Less: (in each case to the extent included in the calculation of Consolidated Net Income, but without duplication):	_____________

income tax credits	_____________

interest income	_____________

gain from extraordinary items	_____________

any gain arising from the sale, exchange or other disposition of assets (including Equipment) out of the ordinary course of business, other than Accounts and Inventory	_____________

any other non-cash gains	_____________

expenditures related to the Related Transactions and not reflected on the Pro Forma or the footnotes thereto	_____________

non-recurring gains	_____________

Plus: (in each case to the extent deducted in the calculation of Consolidated Net Income, but without duplication):	_____________

any provision for income taxes	_____________

Interest expense (whether cash or non-cash) deducted in the determination of Consolidated Net Income, including interest expense with respect to any Funded Debt and interest expense that has been capitalized	_____________

depreciation and amortization	_____________

amortized debt discount (but in the case of amortization and expenses of Related Transactions, only to the extent included in the Pro Forma)	_____________

any deduction as the result of any grant to any members of the management of Holdings or any of its Subsidiaries of any Stock	_____________

loss from extraordinary items	_____________

any loss arising from the sale, exchange or other disposition of assets (including Equipment) out of the ordinary course of business, other than Accounts and Inventory	_____________

any other non-cash losses (other than non-cash losses relating to write-offs, write-downs or reserves with respect to Accounts and Inventory)	_____________

expenses of the Related Transactions, provided that such expenses were included in the Pro Forma, or disclosed in any notes thereto	_____________

employee severance expenses and retention bonuses in an aggregate amount not to exceed $2,600,000 paid on or prior to December 31, 2007 which expenses arose as a result of the transactions contemplated by the Radiologix Merger Agreement for all periods ending on or after the Closing Date	_____________

Other agreed to adjustments1	_____________

Plus: Pro Forma Cost Savings2	_____________

EBITDA3	$ _____________

____________________

1. Other agreed adjustments to include EBITDA related to operating leases to the extent such leases have been converted to capital leases as of the end of the applicable measuring period.

2. With respect to each trailing twelve month period ending on the Fiscal Quarter as specified on Exhibit A attached hereto, Pro Forma Cost Savings shall be deemed to be the amount set forth opposite such Fiscal Quarter on Exhibit A.

3. EBITDA for entities acquired in a Permitted Acquisition or EBITDA relating to new joint ventures or management arrangements shall be included to the extent that such EBITDA has been approved by Agent in its reasonable discretion (it being agreed that to the extent not already included in EBITDA of Holdings and its Subsidiaries, EBITDA of Radiologix and its Subsidiaries for the Fiscal Months set forth on Exhibit B attached hereto shall be deemed to be the amount set forth opposite such Fiscal Month on Exhibit B).

EXHIBIT A

PRO FORMA COST SAVINGS

Fiscal Month	Adjustment
December, 2006	$10,975,410.00
January, 2007	$10,929,679.10
February, 2007	$10,838,217.40
March, 2007	$10,701,024.80
April, 2007	$10,518,101.30
May, 2007	$10,280,300.70
June, 2007	$9,978,476.90
July, 2007	$9,603,483.80
August, 2007	$9,137,028.80
September, 2007	$8,569,966.00
October, 2007	$7,893,149.00
November, 2007	$7,097,431.80
December, 2007	$6,301,714.60
January, 2008	$5,432,828.00
February, 2008	$4,609,672.20
March, 2008	$3,832,247.30
April, 2008	$3,100,553.30
May, 2008	$2,423,736.40
Jiine, 2008	$1,810,942.70
July, 2008	$1,271,318.30
August, 2008	$823,155.80
September, 2008	$475,601.10
October, 2008	$237,800.60
November, 2008	$118,900.30

EXHIBIT B

EBITDA OF RADIOLOGIX AND ITS SUBSIDIARIES

Fiscal Month	EBITDA
September, 2005	$3,939,000.00
October, 2005	$3,796,000.00
November, 2005	$2,545,000.00
December, 2005	$4,386,000.00
January, 2006	$3,430,000.00
February, 2006	$3,048,000.00
March, 2006	$5,435,000.00
April, 2006	$2,564,000.00
May, 2006	$3,449,000.00
June, 2006	$5,059,000.00
July, 2006	$3,028,000.00
August, 2006	$4,048,000.00
September, 2006	$4,449,000.00