Agreement

Confidential Treatment Requested Confidential Portions of This Agreement That Have Been Redacted Are Marked With Brackets ([***]). The Omitted Material Has Been Filed Separately With the United States Securities and Exchange Commission.

Exhibit 10.10

CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

EXECUTION VERSION

 

 

$100,000,000

AMENDED AND RESTATED LOAN AGREEMENT

Dated as of December 31, 2014

By and Among

CAPELLA HEALTHCARE, INC.,

and

CERTAIN BORROWING SUBSIDIARIES,

as Borrowers,

CAPELLA HOLDINGS, INC.,

and

CERTAIN GUARANTYING SUBSIDIARIES,

as Guarantors,

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders,

BANK OF AMERICA, N.A.,

as Administrative Agent and Collateral Agent,

CITIBANK, N.A.,

as Syndication Agent,

and

GENERAL ELECTRIC CAPITAL CORPORATION

as Documentation Agent,

MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED

CITIGROUP GLOBAL MARKETS INC.

and

GE CAPITAL MARKETS, INC.

as Joint Lead Arrangers and Joint Bookrunners

 

 


TABLE OF CONTENTS

 

              Page  

SECTION 1.

    

DEFINITIONS; RULES OF CONSTRUCTION

     1   

1.1.

 

Definitions

     1   

1.2.

 

Accounting Terms

     44   

1.3.

 

Uniform Commercial Code

     44   

1.4.

 

Certain Matters of Construction

     44   

SECTION 2.

    

CREDIT FACILITIES

     45   

2.1.

 

Revolver Commitment

     45   

2.2.

 

[Reserved]

     47   

2.3.

 

Letter of Credit Facility

     47   

SECTION 3.

    

INTEREST, FEES AND CHARGES

     50   

3.1.

 

Interest

     50   

3.2.

 

Fees

     52   

3.3.

 

Computation of Interest, Fees, Yield Protection

     52   

3.4.

 

Reimbursement Obligations

     52   

3.5.

 

Illegality

     53   

3.6.

 

Inability to Determine Rates

     53   

3.7.

 

Increased Costs; Capital Adequacy

     54   

3.8.

 

Mitigation

     55   

3.9.

 

Funding Losses

     55   

3.10.

 

Maximum Interest

     55   

SECTION 4.

    

LOAN ADMINISTRATION

     56   

4.1.

 

Manner of Borrowing and Funding Revolver Loans

     56   

4.2.

 

Defaulting Lender

     57   

4.3.

 

Number and Amount of LIBOR Loans; Determination of Rate

     58   

4.4.

 

Borrower Agent

     58   

4.5.

 

One Obligation

     58   

4.6.

 

Effect of Termination

     58   

SECTION 5.

    

PAYMENTS

     59   

5.1.

 

General Payment Provisions

     59   

5.2.

 

Repayment of Revolver Loans

     59   

5.3.

 

[Reserved]

     59   

5.4.

 

Payment of Other Obligations

     59   

 

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5.5.

Marshaling; Payments Set Aside

  59   

5.6.

Application and Allocation of Payments

  59   

5.7.

Application of Payments

  60   

5.8.

Loan Account; Account Stated

  61   

5.9.

Taxes

  61   

5.10.

Lender Tax Information

  62   

5.11.

Nature and Extent of Each Borrower’s Liability

  63   

SECTION 6.

CONDITIONS PRECEDENT

  65   

6.1.

Conditions Precedent to Initial Loans

  65   

6.2.

Conditions Precedent to All Credit Extensions

  67   

SECTION 7.

COLLATERAL

  67   

7.1.

Additional Security

  67   

7.2.

Further Assurances

  69   

SECTION 8.

COLLATERAL ADMINISTRATION

  70   

8.1.

Borrowing Base Certificates

  70   

8.2.

Cash Management System

  70   

8.3.

Deposit Accounts; Cash Collateral; Securities Accounts

  73   

8.4.

Administration of Accounts

  73   

8.5.

Administration of Inventory

  74   

8.6.

Maintenance of Properties

  74   

8.7.

Insurance of Collateral; Condemnation Proceeds

  74   

SECTION 9.

REPRESENTATIONS AND WARRANTIES

  75   

9.1.

General Representations and Warranties

  75   

9.2.

Complete Disclosure

  81   

9.3.

Healthcare Related Representations and Warranties

  81   

SECTION 10.

COVENANTS AND CONTINUING AGREEMENTS

  83   

10.1.

Affirmative Covenants

  83   

10.2.

Negative Covenants

  87   

10.3.

Financial Covenants

  94   

SECTION 11.

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

  94   

11.1.

Events of Default

  94   

11.2.

Remedies upon Default

  96   

11.3.

Setoff

  96   

11.4.

Remedies Cumulative; No Waiver

  97   

 

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SECTION 12.

AGENT

  97   

12.1.

Appointment, Authority and Duties of Agent

  97   

12.2.

Agreements Regarding Collateral and Field Examination Reports

  98   

12.3.

Reliance By Agent

  99   

12.4.

Action Upon Default

  99   

12.5.

Ratable Sharing

  99   

12.6.

Indemnification

  99   

12.7.

Limitation on Responsibilities of Agent

  100   

12.8.

Successor Agent and Co-Agents

  100   

12.9.

Due Diligence and Non-Reliance

  101   

12.10.

Replacement of Certain Lenders

  101   

12.11.

Remittance of Payments and Collections

  101   

12.12.

Agent in its Individual Capacity

  102   

12.13.

Agent Titles

  102   

12.14.

Bank Product Providers

  102   

12.15.

No Third Party Beneficiaries

  102   

SECTION 13.

BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

  102   

13.1.

Successors and Assigns

  102   

13.2.

Participations

  103   

13.3.

Assignments

  103   

SECTION 14.

MISCELLANEOUS

  104   

14.1.

Consents, Amendments and Waivers

  104   

14.2.

Indemnity

  105   

14.3.

Notices and Communications

  106   

14.4.

Performance of Credit Parties’ Obligations

  107   

14.5.

Credit Inquiries

  107   

14.6.

Severability

  107   

14.7.

Cumulative Effect; Conflict of Terms

  107   

14.8.

Counterparts; Execution

  107   

14.9.

Entire Agreement

  107   

14.10.

Relationship with Lenders

  108   

14.11.

No Advisory or Fiduciary Responsibility

  108   

14.12.

Confidentiality

  108   

14.13.

Certifications Regarding Indentures and Term Loans

  109   

14.14.

GOVERNING LAW

  109   

 

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14.15.

Consent to Forum

  109   

14.16.

Waivers by Credit Parties

  109   

14.17.

Patriot Act Notice

  110   

14.18.

NO ORAL AGREEMENT

  110   

SECTION 15.

GUARANTY OF OBLIGATIONS

  110   

15.1.

Guaranty; Limitation of Liability

  110   

15.2.

Guaranty Absolute

  111   

15.3.

Waivers and Acknowledgments

  112   

15.4.

Subrogation

  113   

15.5.

Intercreditor Agreement Governs

  113   

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A Amended and Restated Revolver Note
Exhibit B Notice of Borrowing
Exhibit C Assignment and Acceptance
Exhibit D Assignment Notice
Exhibit E Amended and Restated Business Associate Addendum
Exhibit F Borrowing Base Certificate
Exhibit G Compliance Certificate

 

Schedule 1.1 Commitments of Lenders
Schedule 1.2 Immaterial Subsidiaries
Schedule 1.3 Mortgage Properties
Schedule 8.2.1 Deposit Accounts
Schedule 8.2.2 Cash Management System
Schedule 8.2.5 Credit Card Arrangements
Schedule 9.1.4 Names and Capital Structure
Schedule 9.1.5 Real Estate
Schedule 9.1.11 Patents, Trademarks, Copyrights and Licenses
Schedule 9.1.14 Environmental Matters
Schedule 9.1.15 Restrictive Agreements
Schedule 9.1.16 Litigation
Schedule 9.1.18 Pension Plans
Schedule 9.1.20 Labor Contracts
Schedule 9.3 Healthcare-Related Matters
Schedule 10.1.12 Post-Closing Matters
Schedule 10.2.1 Existing Debt
Schedule 10.2.2 Existing Liens
Schedule 10.2.17 Existing Affiliate Transactions

 

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AMENDED AND RESTATED LOAN AGREEMENT

THIS AMENDED AND RESTATED LOAN AGREEMENT is dated as of December 31, 2014, among CAPELLA HEALTHCARE, INC., a Delaware corporation (the “Company” and a “Borrower”), CERTAIN BORROWING SUBSIDIARIES SIGNATORY HERETO (each a “Borrower” and together with the Company, collectively, “Borrowers”), CERTAIN GUARANTYING SUBSIDIARIES SIGNATORY HERETO (each a “Subsidiary Guarantor” and collectively, “Subsidiary Guarantors”), CAPELLA HOLDINGS, INC., a Delaware corporation (the “Parent”, and together with the Subsidiary Guarantors, the “Guarantors”), THE FINANCIAL INSTITUTIONS PARTY TO THIS AGREEMENT FROM TIME TO TIME as lenders (collectively, “Lenders”), and BANK OF AMERICA, N.A., a national banking association, as administrative agent (in such capacity, the “Administrative Agent”) and collateral agent (in such capacity, the “Collateral Agent” and, together with the Administrative Agent, the “Agent”) for the Lenders.

R E C I T A L S:

WHEREAS, Borrowers, Guarantors, various financial institutions party thereto, as lenders (the “Existing Lenders”), and Agent, as agent for such lenders have entered into that certain Loan and Security Agreement (as amended, supplemented or otherwise modified prior to the date hereof, the “Existing Loan Agreement”), dated June 28, 2010 (the “Original Closing Date”), pursuant to which the Existing Lenders have made available to Borrowers a revolving credit facility, with a letter of credit subfacility;

WHEREAS, Borrowers and Guarantors have requested that the Agent, Lenders and Issuing Bank (as hereinafter defined) amend and restate the Existing Loan Agreement to modify certain terms and provisions of the Existing Loan Agreement as set forth herein;

WHEREAS, Agent, Lenders and Issuing Bank have agreed to amend and restate the Existing Loan Agreement and to make or continue to make available to the Borrowers a revolving credit facility upon the terms and conditions set forth in this Agreement, it being understood and agreed that this Agreement does not constitute a novation of the indebtedness described in the Existing Loan Agreement;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Borrowers, Guarantors, Agent, Lenders and Issuing Bank hereby agree to amend and restate the Existing Loan Agreement as follows:

 

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1.1. Definitions. As used herein, the following terms have the meanings set forth below:

ABL Priority Collateral: as defined in the Intercreditor Agreement.

Account: collectively (a) any right to payment of a monetary obligation arising from the provision of merchandise, goods or services and (b) without duplication, any “account” (as that term is defined in the UCC now or hereafter in effect), any accounts receivable, any “health-care-insurance receivables” (as that term is defined in the UCC now or hereafter in effect), any “payment intangibles” (as that term is defined in the UCC now or hereafter in effect) and all other rights to payment and/or reimbursement of every kind and description, including under governmental entitlement programs or amounts due from any Credit Party to another Credit Party, whether or not earned by performance.

Account Debtor: a Person who is obligated under an Account, Chattel Paper or General Intangible.


Acquisition: any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the Property or business of any Person, or of any business unit, line of business or division of any Person or Property constituting a business unit, line of business or division of any other Person, (b) acquisition of in excess of 50% of the Equity Interests of any Person or otherwise causing a person to become a subsidiary of the acquiring Person, or (c) merger, consolidation or amalgamation, whereby a Person becomes a subsidiary of the acquiring Person, or any other consolidation with any Person, whereby a Person becomes a subsidiary of the acquiring Person.

Additional Security Documents: have the meaning provided in Section 7.1.1.

Affiliate: with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise; provided, however, that none of the Agent, any Lender or any of their respective Affiliates shall be considered an Affiliate of Parent or any Subsidiary thereof as a result of this Agreement, the extension of credit hereunder, or its actions in connection herewith or any other Loan Document. “Controlling” and “Controlled” have correlative meanings.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates, agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

Allocable Amount: as defined in Section 5.11.3.

Anti-Terrorism Laws: any laws relating to terrorism or money laundering, including the Patriot Act.

Applicable Law: all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.

Applicable Margin: with respect to any Type of Loan, the margin set forth below, as determined by the Fixed Charge Coverage Ratio for the Measurement Period ending as of the most recent Fiscal Quarter end:

 

Level

  

Fixed Charge Coverage Ratio

   LIBOR Revolver
Loans and Letter of
Credit Fees
    Base Rate
Revolver Loans
 

I

  

> 1.75 to 1:00

     1.50     0.50

II

  

³ 1.25 to 1:00 but £ 1.75 to 1.00

     1.75     0.75

III

  

< 1.25 to 1:00

     2.00     1.00

The margins shall be subject to increase or decrease every three months after receipt by Agent pursuant to Section 10.1.2 of the financial statements and corresponding Compliance Certificate for the most recently ended Fiscal Quarter, which change shall be effective on the first day of the calendar month following receipt. If, by the first day of a month, any financial statements and Compliance Certificate due in the preceding month have not been received, then, at the option of Agent or Required Lenders, the margins shall be determined as if Level III were applicable, from such day until the first day of the calendar month following actual receipt.

 

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Approved Fund: any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of activities that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Approved Private Label Credit Card Program: a private label credit card program that is in form and substance (and for amounts) reasonably satisfactory to Agent.

Asset Disposition: a sale, lease, license, consignment, transfer or other disposition of Property of a Credit Party or its Subsidiaries, including (a) any issuance of Equity Interests of a Credit Party or its Subsidiaries (other than to a Borrower, Guarantor or the Parent) or (b) a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.

Assignment and Acceptance: an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit C.

Auto-Extension Letter of Credit: as defined in Section 2.3.1(c).

Availability: the Borrowing Base minus the principal balance of all Revolver Loans.

Availability Reserve: the sum (without duplication of any other Reserve or items that are otherwise addressed or excluded through eligibility criteria) of (a) the Rent and Charges Reserve; (b) the LC Reserve; (c) the Bank Product Reserve; (d) the aggregate amount of liabilities at any time secured by Liens upon Collateral that are senior to Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (e) amounts which Agent and Lenders may be required to pay in connection with this Agreement or for which claims may be reasonably expected to be asserted against the Collateral, Agent or Lenders (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (f) the Joint Venture Distribution Reserve.

Average Facility Usage: as defined in Section 3.2.1.

Bank of America: Bank of America, N.A., a national banking association, and its successors and assigns.

Bank of America Indemnitees: Bank of America and its officers, directors, employees, Affiliates, agents and attorneys.

Bank Product: any of the following products, services or facilities extended to any Credit Party or Subsidiary by a Lender or any of its Affiliates: (a) Cash Management Services; (b) products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d) other banking products or services as may be requested by any Credit Party or Subsidiary, other than Letters of Credit; provided, however, that for any of the foregoing to be included as an “Obligation” for purposes of a distribution under Section 5.6.2, the applicable Secured Party (other than Agent or an Affiliate of Agent) must have provided written notice to Agent , in form and substance satisfactory to Agent, within 10 days following the later of the Closing Date or creation of the Bank Product, of (i) the existence of such Bank Product, (ii) if a Bank Product Reserve is being requested by the provider of such Bank Product, the dollar amount of obligations arising thereunder to be included as a Bank Product Reserve (“Bank Product Amount”), (iii) the methodology to be used by such parties in determining the Bank Product Debt owing from time to time, and (iv) agreeing to be bound by Section 12.14.

 

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Bank Product Amount: as defined in the definition of Bank Product. The Bank Product Amount may be changed from time to time based upon written notice to Agent by the Secured Party. No Bank Product Amount may be established or increased at any time that a Default or Event of Default exists, or if a reserve in such amount would cause the aggregate Revolver Loans to exceed the Borrowing Base.

Bank Product Debt: Debt, obligations and other liabilities with respect to Bank Products owing by a Credit Party; provided that Bank Product Debt of a Credit Party shall not include its Excluded Swap Obligations.

Bank Product Provider: (a) Bank of America or any of its Affiliates that is providing a Bank Product; and (b) any other Lender or Affiliate of a Lender, in each case, that is providing a Bank Product.

Bank Product Reserve: the aggregate amount of reserves established by Agent from time to time in its commercially reasonable discretion in respect of Bank Product Debt. The amount of any Bank Product Reserve established by Agent (x) shall have a reasonable relationship to the Bank Product Debt which is the basis for such Reserve as determined by Agent in good faith and (y) shall not be duplicative of other Reserves then in effect. The imposition of any new Bank Product Reserves or change in a Bank Product Reserve after the Original Closing Date shall not be effective until three (3) Business Days after notice thereof (which may be oral notice, promptly confirmed in writing) to the Borrower Agent (unless a Default or Event of Default has occurred and is continuing, in which case such reserve or change in reserve shall be effective immediately); provided further that during the period from such notice until such new or changed Bank Product Reserve is effective, the aggregate amount of all outstanding Loans and LC Obligations as of the date of the receipt of notice may not be increased to the extent such increase would not be permitted by virtue of the Borrowing Base as adjusted after giving effect to such modification. Upon delivery of a notice described above, the Credit Parties may take such action as may be required so that the event, condition, circumstance or new fact that is the basis for such Bank Product Reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to the Agent.

Bankruptcy Code: Title 11 of the United States Code.

Base Rate: for any day, a per annum rate equal to the greatest of (a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; and (c) LIBOR for a one month interest period as determined on such day, plus 1.00%.

Base Rate Loan: any Loan that bears interest based on the Base Rate.

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base Rate.

Blocked Account: any Deposit Account subject to a Blocked Account Agreement.

Blocked Account Agreement: as defined in Section 8.2.2.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Credit Party, without duplication, its (a) Debt that (i) arises from the lending of money by any Person to such Credit Party, (ii) is evidenced by notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is a type upon which interest charges are customarily paid (excluding trade payables owing in the Ordinary Course of Business), or (iv) was issued or assumed as full or partial payment for Property; (b) Capital Leases; (c) reimbursement obligations with respect to letters of credit; and (d) guaranties of any Debt of the foregoing types owing by another Person.

Borrower Agent: as defined in Section 4.4.

 

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Borrower Materials: Borrowing Base Certificates, Compliance Certificates and other information, reports, financial statements and other materials delivered by any Credit Party hereunder, as well as other Reports and information provided by Agent to Lenders.

Borrowing: a group of Loans of one Type that are made on the same day or are converted into Loans of one Type on the same day.

Borrowing Base: on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Commitments, minus the Availability Reserve; or (b) the sum of the sum of (i) 85% of the Value of Eligible Current Accounts and Eligible Credit Card Accounts plus (ii) 50% of the Value of Eligible Older Accounts, minus the Borrowing Base Reserve; provided, however, that the portion of the Borrowing Base attributable to Self-Pay Accounts shall not exceed the least of (i) $15.0 million, (ii) 20% of the Borrowing Base, (iii) the aggregate amount of payments (net of collection fees and expenses) received by Credit Parties with respect to Self-Pay Accounts during the three (3) month period then mostly recently ended or (iv) 85% of Net Self-Pay Accounts. Notwithstanding the exclusion under the proviso in the definition of “Eligible Accounts”, (A) 50% of the Value of Accounts purchased or otherwise acquired by a Credit Party in a Permitted Acquisition (as such Value is reflected on the financial statements of the target of such Permitted Acquisition (or if such statements are not available or not applicable, as reasonably estimated by the Borrower Agent and approved by the Agent)) shall be included on and from the date of the consummation of the Permitted Acquisition in the calculation of the Borrowing Base (including for the purpose of determining Availability for Loans being made hereunder on the date of the consummation of the Permitted Acquisition to pay consideration owed in respect thereof) until the earlier of (1) 90 days following the consummation of the Permitted Acquisition pursuant to which such Accounts were acquired or (2) such time as the Agent has completed a customary due diligence investigation as to such Accounts and such target (which investigation may, at the sole discretion of the Agent, include a Field Exam) with results satisfactory to the Agent, at which time the actual Value and eligibility of such Accounts under the Borrowing Base shall be calculated and implemented accordingly, and (B) 50% of the Value of Accounts to be purchased or otherwise acquired by a Credit Party in a Permitted Acquisition shall be included for the purpose of determining Availability in the calculation of Pro Forma Availability in connection with such Permitted Acquisition; provided, however, that in each case, Accounts that would be excluded from the Borrowing Base on the basis of clauses (a), (f) or (l) of the definition of Eligible Current Accounts (or clause (c) of the definition of Eligible Credit Card Account) may be excluded from the determination of the Value of such acquired Accounts by Agent and Agent may establish Reserves in its Credit Judgment.

Borrowing Base Certificate: a certificate, substantially in the form of Exhibit F or otherwise in form and substance satisfactory to Agent, by which Borrower Agent certifies calculation of the Borrowing Base.

Borrowing Base Reserve: the sum (without duplication of any other Reserve or items that are otherwise addressed or excluded through eligibility criteria, and without duplication of any of the factors taken into account in determining “Value”) of (a) the Rent and Charges Reserve; (b) the LC Reserve; (c) the Bank Product Reserve; (d) the Joint Venture Distribution Reserve; (e) Unapplied Cash Reserve, (f) the aggregate amount of liabilities secured by Liens upon Collateral that are senior in priority to Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (g) such additional reserves, in such amounts and with respect to such matters, as Agent in its reasonable Credit Judgment may elect to impose from time to time.

Business Day: any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, North Carolina and New York, and if such day relates to a LIBOR Loan, any such day on which dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market.

 

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Capella Surety: a captive, wholly owned Subsidiary of the Parent established for the purpose of insuring the businesses or facilities owned or operated by the Company or any of its Subsidiaries, including but not limited to health care facilities, any joint venture of the Company or any of its Subsidiaries or any physician or other personnel employed by or on the medical staff of any such business or facility (including medical stop loss insurance).

Capital Expenditures: all liabilities incurred, expenditures made or payments due (whether or not made) by a Credit Party or Subsidiary for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto that would be classified as capital expenditures in accordance with GAAP, including the principal portion of Capital Leases.

Capital Lease: any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: a demand deposit, money market or other account established by Agent at such financial institution as Agent may select in its discretion, which account shall be subject to Agent’s Liens for the benefit of Secured Parties.

Cash Collateralize: the delivery of cash to Agent, as security for the payment of Obligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to any inchoate, contingent or other Obligations (including Obligations arising under Bank Products but excluding other contingent indemnification Obligations for which no claim has been asserted), Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations. “Cash Collateralization” has a correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.

Cash Management Services: any services provided from time to time by Bank of America or any of its Affiliates to any Credit Party or Subsidiary in connection with the Cash Management System, operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

Cash Management System: as defined in Section 8.2.2.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq.).

 

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CHAMPVA: collectively, the Civilian Health and Medical Program of the Department of Veteran Affairs, a program of medical benefits covering retirees and dependents of former members of the armed services administered by the United States Department of Veteran Affairs, and all laws, rules, regulations, manuals, orders, guidelines or requirements pertaining to such program including, without limitation (a) all federal statutes (whether set forth in 38 U.S.C. §1713 or elsewhere) affecting such program to the extent applicable to CHAMPVA and (b) all rules, regulations (including 38 C.F.R. §17.54), manuals, orders and administrative, reimbursement and other guidelines of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended, supplemented or otherwise modified from time to time.

CHAMPVA Account: shall mean an Account payable pursuant to CHAMPVA.

Change in Law: the occurrence, after the date hereof, of (a) the adoption, taking effect or phasing in of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof; or (c) the making, issuance or application of any request, guideline, requirement or directive (whether or not having the force of law), in each case, by any Governmental Authority; provided, however, that “Change in Law” shall include, regardless of the date enacted, adopted or issued, all requests, rules, guidelines, requirements or directives (i) under or relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (ii) promulgated pursuant to Basel III by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any similar authority) or any other Governmental Authority.

Change of Control: an event or series of events as a result of which:

(a) Parent ceases to own and control, beneficially and of record, directly or indirectly, (i) all Equity Interests of the Company, (ii) all Equity Interests of the Borrowers other than the Company and (iii) a majority of the Equity Interests of each Permitted Joint Venture Subsidiary, in each case under clauses (ii) and (iii) other than in connection with a Permitted Disposition;

(b) the Permitted Holders (i) ceases to have voting control of the Parent or (ii) prior to the consummation of an IPO, ceases to own and control, beneficially and of record, directly or indirectly, at least a majority of the Equity Interests of Parent; or

(c) after the consummation of an IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than the Permitted Holders, shall own or control , directly or indirectly, more than the 40%, on a fully diluted basis, of the Equity Interests of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent;

(d) a change occurs in the majority of directors of Parent, unless approved by the then majority of directors;

(e) all or substantially all of any Borrower’s assets are sold or transferred other than (other than with respect to the Company) a sale or transfer to another Borrower or in a Permitted Asset Disposition; or

(f) a change of control occurs under the Senior Notes Indenture or the Term Loan Credit Agreement.

Claims: all liabilities, obligations, losses, damages, penalties, judgments, proceedings, interest, costs and expenses of any kind (including remedial response costs, reasonable and documented attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Letters of Credit, Loan Documents, Borrower Materials

 

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or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Credit Party to perform or observe any terms of any Loan Document, in each case including all reasonable and documented out-of-pocket costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto; provided, that (i) prior to any Event of Default, Borrowers’ obligations to reimburse Indemnitees for the fees and expenses of counsel shall be limited to one counsel selected by Agent and to the extent necessary, one special or local counsel in each appropriate jurisdiction unless, in the reasonable opinion of Agent, representation of all such Indemnitees would be inappropriate due to the existence of an actual or potential conflict of interest and (ii) during any Event of Default, Borrowers’ obligations to reimburse Indemnitees for the fees and expenses of counsel shall be limited to one counsel for Agent and one counsel for Lenders and to the extent necessary, one special or local counsel in each appropriate jurisdiction unless, in the reasonable opinion of any Lender, representation of all such Indemnitees would be inappropriate due to the existence of an actual or potential conflict of interest.

Closing Date: December 31, 2014.

CMS: the Centers for Medicare & Medicaid Services of the HHS, and any successor thereto.

Code: the Internal Revenue Code of 1986.

Collateral: all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including all Pledge Agreement Collateral, all Security Agreement Collateral and all Mortgaged Properties but, for the avoidance of doubt, excluding all Excluded Collateral.

Commitment: for any Lender, the aggregate amount of such Lender’s Revolver Commitment. “Commitments” means the aggregate amount of all Revolver Commitments.

Commitment Termination Date: the earliest to occur of (a) the Revolver Termination Date; (b) the date on which Borrowers terminate the Revolver Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver Commitments are terminated pursuant to Section 11.2.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

Company: as defined in the first paragraph of this Agreement.

Company Material Adverse Effect: any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the results of operations, properties, financial condition or business of the Acquired Companies or the Hospital (each as defined in the Hartsville Acquisition Documents on October 14, 2014).

Company Subordinated Debt: Debt owing from (i) the Existing Joint Venture Subsidiaries to the Company evidenced by the Joint Venture Notes and (ii) any Permitted Joint Venture Subsidiaries formed or acquired after the Closing Date, which Debt is evidenced by one or more notes in favor of the Company.

Compliance Certificate: a certificate, substantially in the form of Exhibit G or otherwise in form and substance satisfactory to Agent, by which Borrower Agent certifies compliance with Section 10.3, list all outstanding Bank Products and calculate the applicable Level for the Applicable Margin.

 

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Concentration Account: as defined in Section 8.2.2.

Concentration Account Agreement: as defined in Section 8.2.2.

Confidential Healthcare Information: as defined in Section 10.1.1.

Consolidated Interest Charges: means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with Borrowed Money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedging Agreements, but excluding any non-cash or deferred interest financing costs), net of any interest income for such period, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense with respect to such period under Capital Leases that is treated as interest in accordance with GAAP, in each case of or by the Parent and its Subsidiaries for the most recently completed Measurement Period, all as determined on a consolidated basis in accordance with GAAP.

Consolidated Net Income: for any period, for the Company and its Subsidiaries on a consolidated basis, the net income of the Company and its Subsidiaries excluding (a) extraordinary gains and extraordinary losses for such period and (b) the income of any Person the ability of which to make Distributions is restricted by any Restrictive Agreement, except to the extent of the amount of dividends or other distributions actually paid in cash to a Credit Party by such Person during such period. For purposes of calculating Consolidated Net Income, the cumulative non-cash effect of changes in GAAP shall be excluded.

Contingent Obligation: any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“primary obligations”) of another obligor (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.

Contract Provider: any Person who provides professional health care services under or pursuant to any contract with the any Credit Party or any Subsidiary.

Copyright Security Agreement: a copyright security agreement or grant of security interest in United States Copyrights in the form attached to the Security Agreement, in each case, in which a Credit Party grants a Lien on its interests in copyrights to Agent, for the benefit of Secured Parties, as security for the Obligations.

Credit Extension: each of (a) a borrowing of a Revolver Loan and (b) the issuance of, extension of the expiry of or increase in the amount of a Letter of Credit.

Credit Judgment: Agent’s judgment exercised in good faith, (i) to reflect events, conditions, contingencies or risks in each case, arising or becoming known to Agent after the date hereof which, as

 

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reasonably determined by Agent in good faith, adversely affect, or could have a reasonable likelihood of adversely affecting, either (a) the Collateral, its value or the amount that might be received by Agent from the sale or other disposition or realization upon such Collateral, or (b) the assets or business of any Credit Party or (c) the security interests and liens and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof), (ii) to reflect Agent’s good faith belief that any collateral report or financial information furnished by or on behalf of any Credit Party to Agent is or may have been incomplete, inaccurate, misleading or not in accordance with the terms hereof, to the extent thereof, or (iii) in respect of any Default or an Event of Default. The amount of any Reserve established by Agent (x) shall have a reasonable relationship to the event, condition or other matter which is the basis for such Reserve as determined by Agent in good faith and (y) shall not be duplicative of other Reserves then in effect. The imposition of any new reserves or change in a reserve after the Closing Date shall not be effective until three (3) Business Days after notice thereof (which may be oral notice, promptly confirmed in writing) to the Borrower Agent (unless a Default or Event of Default has occurred and is continuing or the reserve or change in reserve is the result of a Lien that is senior in priority to Agent’s Lien that has attached to Collateral included in the Borrowing Base, in which case such reserve or change in reserve shall be effective immediately); provided further that during the period from such notice until such new or changed reserve is effective, the aggregate amount of all outstanding Loans and LC Obligations as of the date of the receipt of notice may not be increased to the extent such increase would not be permitted by virtue of the Borrowing Base as adjusted after giving effect to such modification. Upon delivery of a notice described above, the Credit Parties may take such action as may be required so that the event, condition, circumstance or new fact that is the basis for such Reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to the Agent.

Credit Party: each Borrower, each Guarantor and each Credit Support Party.

Credit Support Party: means each Person that is not a Borrower or Guarantor, but which has granted a Lien on its assets to secure the Obligations hereunder, including for the avoidance of doubt, each Permitted Joint Venture Subsidiary.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as applied to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services, (e) all Debt of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on Property owned or acquired by such Person, whether or not the Debt secured thereby has been assumed (provided that in the event such debt is limited in recourse solely to the property subject to such Lien, for purposes of this Agreement the amount of such debt shall not exceed the book value of the property subject to such Lien), (f) all Contingent Obligations of such Person of Debt of others, (g) all obligations under any Capital Leases of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party or guarantor in respect of letters of credit or in respect of letters of guaranty issued by a bank or any other financial institution (excluding undrawn letters of credit maintained exclusively to support workers compensation obligations), (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances or any Hedging Agreement, and (j) all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Equity Interest; provided that, notwithstanding any clause of this definition above, “Debt” shall not include (i) trade payables and expenses owing in the Ordinary Course of Business, and (ii) agreements providing for indemnification, purchase price adjustments or similar obligations incurred or assumed in connection with the acquisition or disposition of assets or capital stock. The Debt of any Person shall include the Debt of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Debt provide that such Person is not liable therefor.

 

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Default: an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law, interest not paid when due), 2% plus the interest rate otherwise applicable thereto.

Defaulting Lender: subject to Section 4.2.3, any Lender that, as reasonably determined by Agent, (a) fails to make any payment or provide funds to Agent or any Borrower as required hereunder, and such failure is not cured within two Business Days, (b) has notified a Borrower, Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after written request by Agent, to confirm in a manner satisfactory to Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of an Insolvency Proceeding, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

Deposit Account Control Agreements: the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account, other than Excluded Deposit Accounts, for a Credit Party, in favor of Agent, for the benefit of Secured Parties, as security for the Obligations, including the Blocked Account Agreements.

Designated Jurisdiction: any country or territory that is the subject of any Sanction.

Disqualified Equity Interest: Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 180 days after the Commitment Termination Date, (b) is convertible into or exchangeable for debt securities, (c) contains any repurchase obligation that may come into effect prior to the Full Payment of the Obligations, (d) requires cash dividend payments (other than taxes) prior to the date that is 180 days after the Commitment Termination Date, (e) provides the holders of such Equity Interest thereof with any rights to receive any cash upon the occurrence of a change of control or sale of assets prior to the date that is 180 days after the date of Fully Payment of the Obligations; provided, however, that (i) with respect to any Equity Interests issued to any employee or to any plan for the benefit of employees of the Parent or its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Equity Interests solely because it may be required to be repurchased by the Parent or one of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, resignation, death or disability and (ii) any class of Equity Interest of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not a Disqualified Equity Interest, such Equity Interests shall not be deemed to be Disqualified Equity Interests. Notwithstanding the preceding sentence, (a) any Equity Interest that would constitute Disqualified Equity Interests solely because the holders thereof have the right to require a Loan Party to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Equity Interests and (b) with respect to Equity Interests issued by a Permitted Joint Venture Subsidiary, such Equity Interests shall not constitute Disqualified Equity Interests solely by reason of customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements.

 

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Distribution: any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); any distribution or advance to a holder of Equity Interests in respect of such Equity Interest; or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest.

Dollars: lawful money of the United States.

Domestic Subsidiary: any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

Dominion Trigger Period: the period (a) commencing on the day that (i) an Event of Default occurs and is continuing or (ii) Availability is less than the Dominion Trigger Threshold and (b) continuing until the date that during the previous 30 consecutive days, (i) no Event of Default has existed and (ii) Availability has been greater than the Dominion Trigger Threshold at all times during such period.

Dominion Trigger Threshold: the greater of (a) 10% of the aggregate Commitments at such time and (b) $10,000,000.

EBITDA: for any Measurement Period, for the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP, an amount equal to:

(a) Consolidated Net Income for such period plus

(b) the following (without duplication) to the extent deducted in calculating such Consolidated Net Income for such period:

(i) Consolidated Interest Charges;

(ii) provision for Federal, state, local and foreign income taxes paid or payable by the Company and its Subsidiaries;

(iii) the amount of depreciation and amortization expense;

(iv) other extraordinary, unusual or non-recurring expenses or losses of the Company and its Subsidiaries which, in each case, do not represent a cash item in such period or any future period;

(v) one-time costs, fees, expenses, and charges incurred in connection with Permitted Acquisitions, whether or not fully consummated in an aggregate amount of up to $10,000,000 during such period;

(vi) losses from discontinued operations to the extent such losses were deducted in computing such Consolidated Net Income in an aggregate amount of up to $7,500,000 during such period;

(vii) non-controlling interest expense consisting of income of Subsidiaries attributable to minority Equity Interests of third parties in such Subsidiaries, net of Distributions declared or paid on Equity Interests held by third parties;

(viii) one-time costs, fees, expenses, and charges in an aggregate amount of up to $45,000,000 incurred in connection with the financing transactions (including the exercise of the Master Lease Purchase Option and any refinancing of the Senior Notes) contemplated in this Agreement;

 

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(ix) one-time costs, fees, expenses, and charges in an aggregate amount of up to (A) $5,000,000 incurred in connection with the incurrence of the Term Loan Obligations and (B) $2,000,000 incurred in connection with the Hartsville Acquisition;

(x) Management Fees paid during such period, in an aggregate amount in each period not to exceed $150,000; and

(xi) without duplication, any non-cash items decreasing Consolidated Net Income;

minus

(c) the following to the extent included in calculating such Consolidated Net Income:

(i) all non-cash items increasing Consolidated Net Income for such period,

(ii) gains related to pensions and other post-employment benefits; and

(iii) Federal, state, local and foreign income tax credits for such period.

For the purposes of calculating EBITDA for any Measurement Period, if at any time during such Measurement Period (and after the Closing Date), the Company or any of its Subsidiaries shall have made a Permitted Acquisition, or asset dispositions (other than dispositions in the Ordinary Course of Business), or discontinued a line of business or operations (or the effects thereof shall have occurred or be implemented in such Measurement Period) (the foregoing shall collectively be referred to as a “Material Event”), EBITDA for such Measurement Period shall be calculated after giving pro forma effect to such Material Event and any adjustments arising out of such Material Event, as are directly attributable to such Material Event, factually supportable, based on reasonable, good faith assumptions and calculations provided to Agent and reasonably expected to have a continuing impact (x) determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Securities Act of 1933 and as interpreted by the staff of the SEC and (y) acceptable to the Agent in its sole reasonable discretion, in each case, as if any such Material Event or adjustment occurred on the first day of such Measurement Period.

Eligible Accounts: Eligible Current Accounts, Eligible Credit Card Accounts and Eligible Older Accounts, provided, however, that Accounts acquired or originated by a Person acquired in a Permitted Acquisition shall not be Eligible Accounts until such time as the Agent has completed a customary due diligence investigation as to such Accounts and such Person, which investigation may, at the sole discretion of the Agent, include a Field Exam, and the Agent is reasonably satisfied with the results thereof.

Eligible Assignee: a Person that is (a) a Lender, Affiliate of a Lender or Approved Fund in respect of the Facility being assigned; (b) any other financial institution approved by (i) so long as no Default or Event of Default has occurred and is continuing, Borrower Agent (which approval shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within two Business Days after notice of the proposed assignment) and (ii) Agent, which extends revolving credit facilities of this type in its ordinary course of business; and (c) during any Event of Default, any Person acceptable to Agent in its discretion. No natural person, Obligor, Sponsor or any Affiliate of any Obligor or Sponsor shall be an Eligible Assignee.

Eligible Credit Card Accounts: as of any date of determination, Accounts due to a Credit Party (other than a Guarantor) from major credit card and debit card processors (including, but not limited to, VISA, Mastercard, American Express, Diners Club, DiscoverCard, Interlink, NYCE and other recognized

 

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payment processing services reasonably acceptable to Agent) that arise in the Ordinary Course of Business and which have been earned by performance and that are not excluded as ineligible by virtue of one or more of the criteria set forth below. None of the following shall be deemed to be Eligible Credit Card Accounts:

(a) Accounts that have been outstanding for more than seven (7) Business Days from the date of charge, or for such longer period(s) as may be approved by the Agent in its reasonable discretion except to the extent the Required Lenders revoke or limit any such longer period;

(b) Accounts with respect to which a Credit Party is not the owner or otherwise does not have good, valid and marketable title, free and clear of any Lien (other than Liens permitted hereunder pursuant to Sections 10.2.2(a), (c), (d), (e), (k), (s) and (v));

(c) Accounts as to which the Agent’s Lien attached thereon on behalf of itself and the Lenders, is not a first priority perfected Lien, other than Liens permitted hereunder pursuant to Sections 10.2.2(a) and (c);

(d) Accounts which are disputed, or with respect to which a claim, counterclaim, offset or chargeback has been asserted, by the related credit card processor (but only to the extent of such dispute, counterclaim, offset or chargeback) or which are not a valid, legally enforceable obligation of the applicable processor with respect thereto;

(e) Accounts as to which the credit card processor has the right under certain circumstances to require a Credit Party to repurchase the Accounts from such credit card or debit card processor;

(f) Accounts arising from any private label credit card program of a Credit Party, unless acceptable to Agent in its Credit Judgment;

(g) Accounts which are evidenced by chattel paper or an instrument of any kind; and

(h) Accounts due from credit card and debit card processors (other than Visa, Mastercard, American Express, Diners Club, DiscoverCard, Interlink, NYCE, Maestro, Cirrus, PLUS, MAC, STAR, Pulse, as of the date hereof, and other recognized payment processing services reasonably acceptable to Agent) which the Agent in its reasonable Credit Judgment determines to be unlikely to be collected.

Eligible Current Account: an Account owing to a Credit Party (other than a Guarantor) that arises in the Ordinary Course of Business from the sale of goods or rendition of services, is payable in Dollars and is deemed by Agent, in its Credit Judgment, to be an Eligible Account. Without limiting the foregoing, no Account shall be an Eligible Current Account if:

(a) the Account Debtor is organized or has its principal offices or assets outside the United States or Canada;

(b) (i) such Credit Party’s right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatsoever (other than the preparation and delivery of a bill) or (ii) as to which such Credit Party is not able to bring suit or otherwise enforce its remedies against the Account Debtor through judicial process;

(c) any defense, counterclaim, set-off or dispute exists as to such Account (including for overpayments), but only to the extent of such defense, counterclaim, setoff or dispute;

 

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(d) such Account is not a true and correct statement of bona fide obligation incurred in the amount of the Account for merchandise sold to or services rendered and accepted by the applicable Account Debtor (or, in the event that the Account Debtor is a Third Party Payor, merchandise sold to or services rendered and accepted by the intended beneficiary);

(e) a bill, reasonably acceptable to the Agent in form and substance or otherwise in the form otherwise required by any Account Debtor, has not been sent to the applicable Account Debtor in respect of such Account within (i) 60 days with respect to up to $5,000,000 of Accounts and (ii) 30 days for all other Accounts, in each case, after the earlier of (A) the date the patient as to which such Account relates has been discharged or (B) the date as of which such Account is first included in the Borrowing Base Certificate or otherwise reported to the Agent as Collateral;

(f) such Account (i) is not owned by such Credit Party or (ii) is subject to any Lien, other than Liens permitted hereunder pursuant to Sections 10.2.2(a), (c), (d), (e), (k), (s) and (v);

(g) such Account is the obligation of an Account Debtor that is a director, officer, other employee or Affiliate of any Credit Party (other than Accounts arising from the provision of medical care delivered to such Account Debtor in the Ordinary Course of Business), or to any entity (other than a Third Party Payor) that has any common officer or director with any Credit Party;

(h) except for Government Accounts that are otherwise Eligible Accounts, such Account is the obligation of an Account Debtor that is the United States government or a political subdivision thereof, or department, agency or instrumentality thereof unless the Agent, in its sole discretion, has agreed to the contrary in writing and such Credit Party, if necessary or desirable, has complied with respect to such obligation with the Federal Assignment of Claims Act of 1940, or any applicable state, county or municipal law restricting assignment thereof;

(i) the Account Debtor has supplied goods sold or services to a Credit Party but only to the extent of the potential offset;

(j) upon the occurrence of any of the following with respect to such Account:

(1) the Account is not paid within 120 days following the original invoice date;

(2) the Account Debtor or as applicable the Third Party Payor obligated upon such Account suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due;

(3) any Account Debtor obligated upon such Account is a debtor or a debtor in possession under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors;

(4) any Account Debtor obligated upon such Account is subject to Sanctions or any specially designated nationals list maintained by OFAC;

(k) such Account is the obligation of an Account Debtor from whom 50% or more of the dollar amount of all Accounts owing by that Account Debtor are ineligible under the criteria set forth in this definition;

 

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(l) such Account is one as to which the Agent’s Lien thereon, on behalf of itself and the Lenders, is not a first priority perfected Lien, other than Liens permitted hereunder pursuant to Sections 10.2.2(a) and (c);

(m) any of the representations or warranties in the Credit Documents with respect to such Account are untrue in any material respect with respect to such Account (or, with respect to representations or warranties that are qualified by materiality, any of such representations and warranties are untrue);

(n) such Account is evidenced by a judgment, Instrument or Chattel Paper (each such term as defined in the UCC) (other than Instruments or Chattel Paper that are held by any Credit Party or that have been delivered to the Agent);

(o) the Account Debtor has made a partial payment (other than a co-pay); the Account represents a progress billing or retainage; or it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof;

(p) such Account is otherwise unacceptable to the Agent in its Credit Judgment;

(q) such Account has been redated, extended, compromised, settled or otherwise modified or discounted, except discounts or modifications that are granted by a Credit Party in the Ordinary Course of Business and that are reflected in the calculation of the Borrowing Base;

(r) such Account exceeds the amount such Credit Party is entitled to receive under any capitation arrangement, fee schedule, discount formula, cost-based reimbursement, contractual allowance or other adjustment or limitation to such Person’s usual charges (to the extent of such excess); or

(s) such Account is of an Account Debtor that is located in a state requiring the filing of a notice of business activities report or similar report in order to permit a Credit Party to seek judicial enforcement in such state of payment of such Account, unless such Credit Party has qualified to do business in such state or has filed a notice of business activities report or equivalent report for the then-current year or if such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost;

provided that a right to payment of a Credit Party from a Governmental Authority arising pursuant to a provider tax program supplementing Medicaid rates and paid based on a percentage of Medicaid patients served by such Credit Party may be included as an “Eligible Current Account” upon the consent of all Lenders (and subject to any limits or criteria that may be established by the Agent and Lenders and notified in writing by the Agent to the Company in conjunction with such consent). In calculating delinquent portions of Accounts under clauses (k) or (l) credit balances more than 120 days old will be excluded.

Eligible Older Account: an Account that would constitute an Eligible Current Account except that such account remains unpaid for more than 120 days after the original invoice date; provided however that no Account shall be an Eligible Older Account if it is unpaid for more than 150 days after the original invoice date.

Enforcement Action: any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).

Environmental Laws: all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.

 

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Environmental Notice: a notice (whether written or oral) from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.

Environmental Release: a release as defined in CERCLA or under any other Environmental Law.

Equity Interest: the interest of any (a) shareholder in a corporation; (b) partner in a partnership (whether general, limited, limited liability or joint venture); (c) member in a limited liability company; or (d) other Person having any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under common control with a Credit Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Credit Party or ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any Credit Party or ERISA Affiliate fails to meet any funding obligations with respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding waiver; (g) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (h) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party or ERISA Affiliate.

Event of Default: as defined in Section 11.

Excluded Capital Expenditures: Capital Expenditures (a) financed directly with proceeds of a substantially contemporaneous issuance of Equity Interests by the Parent (other than to a Credit Party or Subsidiary), (b) financed with Borrowed Money permitted hereunder other than Revolver Loans, or (c) made with (i) Net Proceeds from any Permitted Asset Disposition described in clauses (b), (j), (k) and (s) of the definition thereof or (ii) proceeds of insurance arising from any casualty or other insured damage or from condemnation or similar awards with respect to any property or asset.

Excluded Collateral: as defined in the Security Agreement.

Excluded Deposit Account: any Deposit Account (a) used exclusively for payroll, payroll taxes, employee benefits (including deferred compensation plans approved by the Board of Directors of the Parent) or similar operational disbursements, (b) maintained in the Ordinary Course of Business containing not more than $100,000 at any time (and not more than $500,000 in the aggregate at any time for all such Excluded Deposit Accounts arising under this clause (b)), (c) constituting an Excluded Facility Deposit Account or (d) containing only equity proceeds from the Sponsor solely for Capital Expenditures.

 

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Excluded Equity Interests: shall have the meaning provided in the Pledge Agreement.

Excluded Facility Deposit Account: the Recourse Account and each Deposit Account maintained in the Ordinary Course of Business of the Borrowers containing not more than $7,000,000 in the aggregate at any time for all such Deposit Accounts and subject to the sweep requirements of Section 8.2.2(g).

Excluded Swap Obligation: with respect to a Credit Party, each Swap Obligation as to which, and only to the extent that, such Credit Party’s guaranty of or grant of a Lien as security for such Swap Obligation is or becomes illegal under the Commodity Exchange Act because the Credit Party does not constitute an “eligible contract participant” as defined in the act (determined after giving effect to any keepwell, support or other agreement for the benefit of such Credit Party and all guarantees of Swap Obligations by other Credit Parties) when such guaranty or grant of Lien becomes effective with respect to the Swap Obligation. If a Hedging Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or portions thereof described in the foregoing sentence shall be Excluded Swap Obligation(s) for the applicable Credit Party.

Excluded Tax: with respect to Agent, any Lender, Issuing Bank or any other recipient of a payment to be made by or on account of any Obligation, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located; (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which a Borrower is located; (c) any backup withholding tax required by the Code to be withheld from amounts payable to a Lender that has failed to comply with Section 5.10; (d) in the case of a Foreign Lender, any United States withholding tax that is (i) required to be imposed on amounts payable to such Foreign Lender pursuant to laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office), or (ii) attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.10, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrowers with respect to such withholding tax pursuant to Section 5.9; and (e) any U.S. federal withholding Taxes imposed under FATCA.

Existing Joint Venture Subsidiaries: collectively, Columbia Capital Medical Center Limited Partnership, a Washington limited partnership, Hot Springs National Park Hospital Holdings, LLC, a Delaware limited liability company, White County Community Hospital, LLC, a Delaware limited liability company, White County Physician Services, LLC, a Tennessee limited liability company, National Park Real Property, LLC, a Delaware limited liability company, Capital Medical Center Specialty Physicians, LLC, a Delaware limited liability company, River Park Hospital, LLC, a Tennessee limited liability company, Cannon County Hospital, LLC, a Tennessee limited liability company, River Park Physician Group, LLC, a Delaware limited liability company, Saint Thomas/Capella, LLC, a Delaware limited liability company, Stones River Clinic Services, LLC, a Tennessee limited liability company, White County Primary Care, LLC, a Tennessee limited liability company and Hartsville HMA, LLC, a South Carolina limited liability company.

Extraordinary Expenses: all costs, expenses or advances that Agent may incur in connection with the Loan Documents and the transactions contemplated thereby during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of a Credit Party, including those relating to (a) any audit, inspection, repossession, storage, appraisal, insurance, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Agent, any Lender, any Credit Party, any representative of

 

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creditors of a Credit Party or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents, Letters of Credit or Obligations, including any lender liability or other Claims (excluding any Claim that is determined in a final, nonappealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of Agent); (c) the exercise, protection or enforcement of any rights or remedies of Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; and (g) Protective Advances. Such costs, expenses and advances include transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees (subject to the limitations set forth in clause (ii) of the definition of “Claims” herein), appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, wages and salaries or fees paid to independent contractors in liquidating any Collateral, and travel expenses.

Fair Market Value: with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by the board of directors or other governing body or, pursuant to a specific delegation of authority by such board of directors or governing body, a designated senior officer, of a Borrower, or the Subsidiary of a Borrower selling such asset.

FASB ASC: the Accounting Standards Codification of the Financial Accounting Standards Board. “Federal health care offense” has the same meaning as the definition at subsection (a) of 18 U.S.C. § 24, and any statutes succeeding thereto.

FATCA: Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

FCPA: the Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder.

Federal health care program: as defined in subsection (f) of 42 U.S.C. § 1320a-7b, and any statutes succeeding thereto.

Federal Funds Rate: (a) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such transactions, as determined by Agent.

Field Exam: any visit and inspection of the properties, assets and records of any Credit Party during the term of this Agreement, which shall include access to such properties, assets and records sufficient to permit the Agent or its representatives to examine, audit and make extracts from any Credit Party’s books and records, make examinations and audits of any Credit Party’s other financial matters and Collateral as Agent deems appropriate in its Credit Judgment, and discussions with its officers, employees, agents and advisors regarding such Credit Party’s business, financial condition, assets, prospects and results of operations.

First Lien Net Funded Debt: as of any date of determination, Total Net Funded Debt excluding any such Debt that is unsecured or is secured only by Liens ranking junior to the Liens securing the Obligations, but for the avoidance of doubt, including the principal portion of Capital Leases.

 

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First Lien Net Leverage Ratio: as of any date of determination, the ratio of (a) First Lien Net Funded Debt as of the last day of the most recently ended Measurement Period, to (b) EBITDA for such Measurement Period.

Fiscal Quarter: each period of three months, commencing on the first day of a Fiscal Year.

Fiscal Year: the fiscal year of Parent and Subsidiaries for accounting and tax purposes, ending on December 31st of each year.

Fixed Asset Priority Collateral: as defined in the Intercreditor Agreement.

Fixed Asset Priority Collateral Account: as defined in the Intercreditor Agreement.

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for the Company and Subsidiaries for the most recent four Fiscal Quarters, of (a) EBITDA minus Capital Expenditures (other than Excluded Capital Expenditures) and cash taxes paid, to (b) Fixed Charges.

Fixed Charge Trigger Period: the period (a) commencing on the day that Availability is less than the Fixed Charge Trigger Threshold and (b) continuing until the date that during the previous 30 consecutive days, Availability has been greater than the Fixed Charge Trigger Threshold at all times during such period, provided that the Sponsor shall have the right to make a cash equity contribution to the Parent or Borrowers (the “Cure Right”) within 10 days of the first date that Availability is less than the Fixed Charge Trigger Threshold (the “Fixed Charge Trigger Date”), in an amount that would be sufficient to increase Availability to an amount greater than the Fixed Charge Trigger Threshold as of the Fixed Charge Trigger Date, and upon receipt by the Agent within such 10 day period of such cash amount (the “Cure Amount”) pursuant to the exercise by the Sponsor of such Cure Right, such Fixed Charge Trigger Period shall be deemed not to have occurred; provided, that (i) no Credit Extensions shall have been requested by Borrower Agent during the period from the Fixed Charge Trigger Date to the date the Cure Amount is received, (ii) the Cure Right may only be exercised up to two (2) times in any Fiscal Year and (iii) to the extent that on the date the Cure Amount is received by Agent, the Availability on such date is less than the Availability on the Fixed Charge Trigger Date (as a result of deemed Borrowings, interest or other amounts becoming due, changes in the Borrowing Base, or otherwise), the Cure Amount shall be in an amount sufficient to increase Availability as of the date the Cure Amount is received by Agent to an amount greater than the Fixed Charge Trigger Threshold as of such date.

Fixed Charge Trigger Threshold: the greater of (a) 10% of the aggregate Commitments at such time and (b) $10,000,000.

Fixed Charges: the sum of (a) Consolidated Interest Charges paid or required to be paid in cash (other than payment-in-kind), (b) mandatory and voluntary principal payments made on Borrowed Money (other than the Loans or payments made in connection with the consummation of the Master Lease Purchase Option), and (c) all Distributions made in cash (other than cash Distributions by Subsidiaries that are not wholly-owned to holders of Equity Interests therein who are not Credit Parties).

Flood Certificate: a “Standard Flood Hazard Determination Form” of the Federal Emergency Management Agency and any successor Governmental Authority performing a similar function.

Flood Program: the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.

Flood Zone: areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.

 

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FLSA: the Fair Labor Standards Act of 1938.

Foreign Lender: any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.

Foreign Plan: any employee benefit plan or arrangement (a) maintained or contributed to by any Credit Party or Subsidiary that is not subject to the laws of the United States; or (b) mandated by a government other than the United States for employees of any Credit Party or Subsidiary.

Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation” under Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on the assets of such Subsidiary to secure the Obligations would, in the good faith judgment of Borrower Agent, result in material tax liability to the Credit Parties.

Fronting Exposure: at any time there is a Defaulting Lender, (a) with respect to the Issuing Bank, such Defaulting Lender’s Pro Rata share of the outstanding LC Obligations other than LC Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof; and (b) with respect to Agent’s provision of Swingline Loans, such Defaulting Lender’s Pro Rata share of Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

Full Payment: with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); (b) or if such Obligations are Bank Product Debt, LC Obligations or any other Obligations contingent in nature (except such other contingent indemnification Obligations for which no claim has been asserted), Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its discretion, in the amount of required Cash Collateral). No Loans shall be deemed to have been paid in full until all Commitments related to such Loans have expired or been terminated.

GAAP: generally accepted accounting principles in effect in the United States from time to time.

Government Accounts: collectively, any and all Accounts which are (a) Medicare Accounts, (b) Medicaid Accounts, (c) TRICARE Accounts, (d) CHAMPVA Accounts or (e) any other Account payable by a Governmental Authority acceptable to the Agent in its Credit Judgment.

Governmental Approvals: all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.

Governmental Authority: any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.

Government Receivables Bank: as defined in Section 8.2.2.

Government Receivables Deposit Account: as defined in Section 8.2.2.

Government Receivables Deposit Account Agreement: as defined in Section 8.2.2.

Guarantor Payment: as defined in Section 5.11.3.

 

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Guarantors: the Subsidiary Guarantors and each other Person who guarantees payment or performance of any Obligations from time to time.

Guaranty: each guaranty agreement, including the guaranties set forth in Section 15, executed by a Guarantor in favor of Agent.

Hartsville Acquisition: the acquisition by the Company of (i) all the Equity Interests of Hartsville Medical Group, LLC, a South Carolina limited liability company (“HMG”) and (ii) substantially all of the Equity Interests of Hartsville HMA, LLC, a South Carolina limited liability company (“HMA” and together with HMG, collectively, the “Target”) pursuant to the terms of the Hartsville Acquisition Agreement.

Hartsville Acquisition Agreement: that certain Purchase Agreement dated October 10, 2014 by and among the Company, Carolinas JV Holdings, L.P., a Delaware limited partnership, HMA, HMG, CHS/Community Health Systems, Inc., a Delaware corporation and Carolina Pines Holdings, LLC, a South Carolina limited liability company.

Hedging Agreement: an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.

HHS: the United States Department of Health and Human Services, and any successor thereto.

HIPAA: the Health Insurance Portability and Accountability Act of 1996, as amended, which includes the privacy standards adopted by HHS as they may be amended from time to time, 45 C.F.R. parts 160 and 164, subparts A and E, the security standards adopted by HHS as they may be amended from time to time, 45 C.F.R. parts 160, 162 and 164, subpart C, and the privacy provisions of the Health Information Technology for Economic and Clinical Health Act and its implementing regulations.

Immaterial Credit Party: any Credit Party other than the Company or Parent that (a) if designated, could be included in the group of Subsidiaries designated as “Immaterial Subsidiaries” in the definition thereof, but for the fact that such Credit Party owns assets included in the Borrowing Base, (b) is immaterial to the Credit Parties taken as a whole and (c) does not own any assets with an aggregate value in excess of $3,000,000 included in the Borrowing Base.

Immaterial Subsidiary: each Subsidiary of the Company that has been designated by the Borrower Agent in writing to the Agent as a “Designated Immaterial Subsidiary” for purposes of this Agreement and the other Loan Documents, provided that at no time shall (a) the total assets of all Immaterial Subsidiaries as of the end of the most recent Fiscal Quarter for which Financial Statements have been delivered hereunder, equal or exceed three percent (3.0 %) of the consolidated total assets of the Company and its Subsidiaries, or (b) any Immaterial Subsidiary own any assets included in the Borrowing Base, or (c) the gross revenues of all Immaterial Subsidiaries (including any Immaterial Subsidiaries dissolved, liquidated or otherwise disposed of during any Measurement Period) for any Measurement Period equal or exceed three percent (3.0 %) of the consolidated gross revenues of the Company and its Subsidiaries for such Measurement Period, in each case as determined in accordance with GAAP. As of the Closing Date, the Subsidiaries specified on Schedule 1.2 hereto are the only Subsidiaries designated by the Borrower Agent as Immaterial Subsidiaries for purposes of this Agreement and the other Loan Documents.

Indemnified Taxes: Taxes other than Excluded Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Bank of America Indemnitees.

 

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Insolvency Proceeding: any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person, including inventions, designs, patents, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, applications, registrations and franchises; all licenses or other rights to use any of the foregoing; and all books and records relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit or otherwise) that a Credit Party’s or Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property violates another Person’s Intellectual Property.

Intercompany Obligations: as defined in Section 15.4.1.

Intercreditor Agreement: that certain Intercreditor Agreement dated December 31, 2014 by and between the Agent and the Term Loan Agent and acknowledged by the Credit Parties.

Interest Period: as defined in Section 3.1.3.

Interest Rate Contract: any interest rate swap, collar or cap agreement, or other agreement or arrangement by any Credit Party or Subsidiary with a Lender that is designed to protect against fluctuations in interest rates.

Inventory: as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in a Credit Party’s business (but excluding Equipment).

Investment: any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any loan, advance or capital contribution to or other investment in a Person. Notwithstanding anything to the contrary herein, prepaid expenses, extension of trade credit recorded as accounts receivable and other similar items created, in each case, in the Ordinary Course of Business are not Investments.

IPO: the issuance by Parent of its common stock in an underwritten primary public offering pursuant to an effective registration statement (other Form S-8) filed with the Securities and Exchange Commission in accordance with the Securities Exchange Act of 1933.

IRS: the United States Internal Revenue Service.

ISP: the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect as to a Letter of Credit).

Issuing Bank: (i) Bank of America or an Affiliate of Bank of America, and (ii) any replacement issuer appointed pursuant to Section 2.3.4.

Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees, Affiliates, agents and attorneys.

 

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Joint Venture Distribution Reserve: on any date of determination, the cumulative aggregate amounts reported monthly by Borrower Agent as the amount of Distributions to be made (but not yet made) to non-Credit Party holders of Equity Interests in Joint Venture Subsidiaries, as of such date.

Joint Venture Notes: that certain Amended and Restated Global Intercompany Note dated December 31, 2014, by each Permitted Joint Venture Subsidiary and certain of their Affiliates in favor of the Company, and any other promissory note entered into by a Permitted Joint Venture Subsidiary in favor of the Company, in each case which note has been pledged to Agent pursuant to the Pledge Agreement.

Joint Venture Subsidiary Security Documents: (i) the amended and restated security agreement dated as of the date hereof, executed and delivered by the Permitted Joint Venture Subsidiaries in favor of the Agent for the benefit of the Secured Parties (whether executed by the Existing Joint Venture Subsidiaries on the date hereof or by joinder agreements with respect to Permitted Joint Venture Subsidiaries formed or acquired after the date hereof) and all other documents, instruments and agreements now or hereafter executed or delivered in connection therewith or with any such joinder agreement and (ii) any security agreement executed by Joint Venture Subsidiaries formed or acquired after the date hereof in favor of the Agent for the benefit of the Secured Parties and all other documents, instruments and agreements now or hereafter executed or delivered in connection therewith.

LC Application: an application by Borrower Agent to Issuing Bank for issuance of a Letter of Credit, in form and substance satisfactory to Issuing Bank.

LC Conditions: the following conditions necessary for issuance of a Letter of Credit: (a) each of the conditions set forth in Section 6; (b) after giving effect to such issuance, total LC Obligations do not exceed the Letter of Credit Subline, the aggregate Revolver Loans do not exceed the Borrowing Base and, if no Revolver Loans are outstanding, the LC Obligations do not exceed the Borrowing Base (without giving effect to the LC Reserve for purposes of this calculation); (c) the expiration date of such Letter of Credit is (i) no more than 365 days from issuance (or automatic renewal, in the case of an Auto-Extension Letter of Credit), in the case of standby Letters of Credit, (ii) no more than 180 days from issuance, in the case of documentary Letters of Credit, and (iii) except as agreed by Agent and the Issuing Bank, at least 10 Business Days prior to the Revolver Termination Date; (d) the Letter of Credit and payments thereunder are denominated in Dollars; and (e) the purpose and form of the proposed Letter of Credit is satisfactory to Issuing Bank in its reasonable discretion.

LC Documents: all documents, instruments and agreements (including LC Requests and LC Applications) delivered by Borrower Agent or any other Person to Issuing Bank or Agent in connection with issuance, amendment or renewal of, or payment under, any Letter of Credit.

LC Obligations: the sum (without duplication) of (a) all amounts owing by Borrowers for any drawings under Letters of Credit; (b) the stated amount of all outstanding Letters of Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.

LC Request: a request for issuance of a Letter of Credit, to be provided by Borrower Agent to Issuing Bank, in form satisfactory to Agent and Issuing Bank.

LC Reserve: the aggregate of all LC Obligations, other than (a) those that have been Cash Collateralized; and (b) if no Default or Event of Default exists, those constituting fees relating to Letters of Credit and charges owing to the Issuing Bank.

Leaseholds: of any Person shall mean all the right, title and interest of such Person as lessee, sublessee or licensee in, to and under leases, subleases or licenses of land, improvements and/or fixtures.

 

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Lender Indemnitees: Lenders and Bank Product Providers and their officers, directors, employees, Affiliates, agents and attorneys.

Lenders: as defined in the preamble to this Agreement, including Agent in its capacity as a provider of Swingline Loans and any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.

Lending Office: the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Agent and Borrower Agent.

Letter of Credit: any standby or documentary letter of credit issued by Issuing Bank for the account of a Borrower, or any indemnity, guarantee, exposure transmittal memorandum or similar form of credit support issued by Agent or Issuing Bank for the benefit of a Borrower.

Letter of Credit Subline: $80,000,000.

LIBOR: the per annum rate of interest (rounded up, if necessary, to the nearest 1/8th of 1%), determined by Agent at or about 11:00 a.m. (London time) two Business Days prior to the commencement of the interest period, for a term equivalent to such period, equal to the London Interbank Offered Rate, or comparable or successor rate approved by Agent, as published on the applicable Reuters screen page (or other commercially available source designated by Agent); provided, that any such comparable or successor rate shall be applied by Agent, if administratively feasible, in a manner consistent with market practice; provided, further, that to the extent such market practice is not administratively feasible for the Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Agent. If the Board of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR shall be (i) the foregoing rate divided by (ii) 1 minus the Reserve Percentage.

LIBOR Loan: each set of LIBOR Revolver Loans having a common length and commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

License: any license or agreement under which a Credit Party is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.

Licensor: any Person from whom a Credit Party obtains the right to use any Intellectual Property.

Lien: as to any Person, such Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, mortgages, pledges, hypothecations, collateral assignments, deposit arrangement, preference, priority, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property, or other security agreement of any kind or nature whatsoever and any lease having substantially the same effect as any of the foregoing.

Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which, for any material Collateral located on premises not owned by a Credit Party, the lessor, mortgagee or owner (as applicable) waives or subordinates any Lien it may have on the Collateral, and agrees to permit Agent to enter upon the premises and remove the Collateral or to use the premises to collect on the Collateral.

Loan: a Revolver Loan.

 

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Loan Account: the loan account established by each Lender on its books pursuant to Section 5.8.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Loan Year: each 12 month period commencing on the Original Closing Date and on each anniversary of the Original Closing Date.

Management Agreement: the Professional Services Agreement, dated as of May 4, 2005, between GTCR Golder Rauner II, L.L.C. and the Company, as amended and in effect on the Original Closing Date.

Management Fees: the following fees and expenses payable by the Company to GTCR Golder Rauner II, L.L.C. pursuant to, and subject to the terms and conditions of, the Management Agreement: (a) a management fee in an amount not to exceed $500,000 in each Fiscal Year, (b) one-time fees, each payable on the date of the consummation of certain equity and debt financings described in the Management Agreement in an amount not to exceed 1% of the gross amount (or, in the case of revolving facilities, the maximum committed amount) of such equity and debt financings received by (or made available to) the Credit Parties and (c) indemnities and reimbursement of reasonable out-of-pocket fees and expenses, in each case pursuant to and in accordance with the terms and conditions of the Management Agreement.

Margin Stock: as defined in Regulation U of the Board of Governors.

Master Lease Agreement: the Master Lease Agreement entered into on June 30, 2012 by and among the Company, Muskogee Regional Medical Center, LLC, Muskogee Community Hospital LLC, MCH Management, LLC and certain other parties thereto, pursuant to which Muskogee Regional Medical Center, LLC leases the hospital facility (and all related equipment and improvements) known as EASTAR East Campus (formerly known as Muskogee Community Hospital).

Master Lease Purchase Option: that certain option held by Muskogee Regional Medical Center, LLC pursuant to the Master Lease Agreement to purchase the assets currently leased by Muskogee Regional Medical Center, LLC under the Master Lease Agreement for an aggregate purchase price not to exceed $39,400,000, which option may be exercised by Muskogee Regional Medical Center, LLC at any time prior to August 19, 2014. For the avoidance of doubt, such exercise and purchase shall constitute an Acquisition that is subject to meeting the requirements for a Permitted Acquisition (or obtaining the consent of the Required Lenders).

Material Adverse Effect: the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, assets, Properties, or financial condition of the Credit Parties taken as a whole or on the validity or priority of the Agent’s Liens on any material amount of Collateral; (b) materially impairs the enforceability of, or the ability of the Company, or the Credit Parties taken as a whole, to perform any material obligation under, this Agreement, the Security Documents, the Notes, the Subordination Agreements or any other material Loan Document, including repayment of any Obligations; or (c) a material impairment of the rights and remedies of Agent or any Lender under this Agreement, the Security Documents, the Notes, the Subordination Agreements or any other material Loan Document.

Material Contract: any agreement or arrangement to which a Credit Party or Subsidiary is party (other than the Loan Documents) (a) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect; or (b) that relates to Company Subordinated Debt or other Debt in an aggregate amount of $7,500,000 or more.

Material Event: has the meaning given to such term in the definition of “EBITDA”.

 

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Measurement Period: at any date of determination, the most recently completed four (4) consecutive Fiscal Quarters of the Company and its Subsidiaries.

Medicaid: collectively, the healthcare assistance program established by Title XIX of the Social Security Act (42 U.S.C. §§1396 et seq.) and any statutes succeeding thereto, and all laws, rules, regulations, manuals, orders, guidelines or requirements (whether or not having the force of law) pertaining to such program, in each case as the same may be amended, supplemented or otherwise modified from time to time.

Medicaid Account: an Account payable pursuant to an agreement entered into between a state agency or other entity administering Medicaid in such state and a healthcare facility or physician under which the healthcare facility or physician agrees to provide services or supplies for Medicaid patients.

Medicaid Certification: certification by CMS or a state agency or entity under contract with CMS that health care operations are in compliance with all the conditions of participation set forth in the Medicaid Regulations.

Medicaid Provider Agreement: an agreement entered into between a state agency or other such entity administering the Medicaid program and a health care operation under which the health care operation agrees to provide services for Medicaid beneficiaries in accordance with the terms of the agreement and Medicaid Regulations.

Medicaid Regulations: collectively, (i) all federal statutes (whether set forth in Title XIX of the Social Security Act or elsewhere) affecting the medical assistance program established by Title XIX of the Social Security Act and any statutes succeeding thereto; (ii) all applicable provisions of all federal rules, regulations, manuals and orders of all Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (i) above and all federal administrative, reimbursement and other guidelines of all Governmental Authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (i) above; (iii) all state statutes and plans for medical assistance enacted in connection with the statutes and provisions described in clauses (i) and (ii) above; and (iv) all applicable provisions of all rules, regulations, manuals and orders of all Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (iii) above and all state administrative, reimbursement and other guidelines of all Governmental Authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (ii) above, in each case as may be amended, supplemented or otherwise modified from time to time.

Medicare: collectively, the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act and any statutes succeeding thereto, and all laws, rules, regulations, manuals, orders or guidelines (whether or not having the force of law) pertaining to such program, in each case as the same may be amended, supplemented or otherwise modified from time to time.

Medicare Account: an Account payable pursuant to an agreement entered into between a state agency or other entity administering Medicare in such state and a healthcare facility or physician under which the healthcare facility or physician agrees to provide services or supplies for Medicare patients.

Medicare Certification: certification by CMS or a state agency or entity under contract with CMS that the health care operation is in compliance with all the conditions of participation set forth in the Medicare Regulations.

Medicare Provider Agreement: an agreement entered into between a state agency or other such entity administering the Medicare program and a health care operation under which the health care operation agrees to provide services for Medicare beneficiaries in accordance with the terms of the agreement and Medicare Regulations.

 

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Medicare Regulations: collectively, all federal statutes (whether set forth in Title XVIII of the Social Security Act or elsewhere) affecting the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act and any statutes succeeding thereto; together with all applicable provisions of all rules, regulations, manuals and orders and administrative, reimbursement and other guidelines having the force of law of all Governmental Authorities (including without limitation, HHS, CMS, the Office of the Inspector General for HHS, or any person succeeding to the functions of any of the foregoing) promulgated pursuant to or in connection with any of the foregoing having the force of law, as each may be amended, supplemented or otherwise modified from time to time.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: a mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt, leasehold deed to secure debt, debenture or similar security instrument pursuant to which a Borrower or a Guarantor grants to the Agent a Lien on its Real Estate, as security for its Obligations.

Mortgage Policy: an ALTA Lender’s title insurance policy (Form 2006).

Mortgaged Property: initially, the Real Estate owned by a Borrower or its Subsidiaries specified on Schedule 1.3, and shall include any Real Estate owned by a Borrower or any of its Subsidiaries which is encumbered (or required to be encumbered) by a Mortgage pursuant to the terms hereof.

Multiemployer Plan: any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Credit Party or ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

Multiple Employer Plan: a Plan which has two or more contributing sponsors (including a Credit Party or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

Net Self-Pay Accounts: at any date of determination, the then outstanding aggregate amount of Self-Pay Accounts that are Eligible Accounts (other than Eligible Credit Card Accounts) less the amounts of allowances or reserves established or maintained by the Borrowers and Joint Venture Subsidiaries with respect to such outstanding Self-Pay Accounts.

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when received, any deferred or escrowed payments) received by a Credit Party or Subsidiary in cash from such disposition, net of (a) reasonable and customary costs and expenses actually incurred in connection therewith, including legal fees and sales commissions; (b) amounts applied to repayment of Debt secured by a Permitted Lien (senior to Agent’s Liens, in the case of Collateral sold); (c) transfer or similar taxes; and (d) reserves for indemnities, until such reserves are no longer needed.

Notes: each Revolver Note or other promissory note executed by a Borrower to evidence any Obligations.

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to request a Borrowing of Revolver Loans, substantially in the form of Exhibit B or otherwise in form satisfactory to Agent.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be provided by Borrower Agent to request a conversion or continuation of any Loans as LIBOR Loans, in form satisfactory to Agent.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC Obligations and other obligations of Borrowers with respect to Letters of Credit, (c) interest, expenses, fees and other sums

 

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payable by Credit Parties under Loan Documents, (d) obligations of Credit Parties under any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank Product Debt, and (g) other Debts, obligations and liabilities of any kind owing by Credit Parties pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several; provided that Obligations of a Credit Party shall not include its Excluded Swap Obligations.

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

Operating Agreement: (a) Amended and Restated Operating Agreement of White County Community Hospital, LLC dated as of June 30, 2011, among Sparta Hospital Corporation and the other members party thereto from time to time; as amended by Amendment No. 1 effective June 30, 2011 and in effect on the date hereof, (b) Fourth Amended and Restated Agreement of Limited Partnership of Columbia Capital Medical Center Limited Partnership dated as of January 12, 2007, among Columbia Olympia Management, Inc., Capital Medical Center Partner, LLC, WPC Holdco, LLC, Capital Medical Center Holdings, LLC and the other limited partners party thereto from time to time; as amended by the First Amendment effective April 30, 2007 and in effect on the date hereof; (c) Amended and Restated Limited Liability Company Agreement of Hot Springs National Park Hospital Holdings, LLC dated as of May 1, 2006, among NPMC Holdings, LLC (f/k/a Tennyson Holdings, Inc.) and the other members party thereto from time to time; as amended by the First Amendment effective March 31, 2010, the Second Amendment effective June 27, 2007, the Third Amendment effective October 12, 2007, the Fourth Amendment effective August 31, 2009, the Fifth Amendment effective April 28, 2011, the Sixth Amendment effective April 29, 2011, the Seventh Amendment effective May 14, 2014, the Eighth Amendment effective September 18, 2012, the Ninth Amendment effective October 9, 2012, and the Tenth Amendment effective December 19, 2012 and in effect on the date hereof; (d) Amended and Restated Operating Agreement of River Park Hospital, LLC dated as of May 1, 2012, among Saint Thomas/Capella, LLC and the other members party thereto from time to time, as in effect on the date hereof; (e) Amended and Restated Operating Agreement of Cannon County Hospital, LLC dated as of June 30, 2011, among Sparta Hospital Corporation and the other members party thereto from time to time, as amended by Amendment No. 1 effective June 20, 2011 and in effect on the date hereof; (f) Limited Liability Company Agreement of River Park Physician Group, LLC dated as of April 21, 2008, by River Park Hospital, Inc., as in effect on the date hereof; (g) Limited Liability Company Agreement of Saint Thomas/Capella, LLC of Saint Thomas/Capella, LLC dated as of May 1, 2012, among Capella Healthcare, Inc., Sparta Hospital Corporation, and Saint Thomas Health, as in effect on the date hereof; (h) Operating Agreement of Stones River Clinic Services, LLC dated as of February 2012, by Cannon County Hospital, LLC, as in effect on the date hereof; (i) Operating Agreement of White County Primary Care, LLC dated as of February 2012, by White County Physician Services, LLC, as in effect on the date hereof; (j) Amended and Restated Operating Agreement of Hartsville HMA, LLC dated as of October 31, 2009, by Hartsville HMA, LLC, as amended by Amendment No. 1 effective December 31, 2014 and in effect on the date hereof (as shall be amended and restated by that certain Second Amended and Restated Operating Agreement to be dated on or about January 1, 2015); and (k) each operating agreement, limited liability agreement, partnership agreement or bylaws of any Permitted Joint Venture Subsidiary, as in effect on the effective date thereof or otherwise amended, restated, supplemented or modified as permitted by the terms hereof.

Ordinary Course of Business: the ordinary course of business of Parent, any Borrower or Subsidiary, consistent with past practices and undertaken in good faith.

Organic Documents: with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.

 

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OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: each Note, LC Document, Lien Waiver, Intercreditor Agreement, Subordination Agreement, Additional Security Documents, Borrowing Base Certificate, Compliance Certificate or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter delivered by a Credit Party or other Person to Agent or a Lender in connection with any transactions relating hereto.

Other Taxes: all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

Parent: Capella Holdings, Inc., a Delaware corporation.

Patent Security Agreement: a patent security agreement or grant of security interest in United States Patents in the form attached to the Security Agreement, in each case, in which a Credit Party grants a Lien on its interests in patents to Agent, for the benefit of Secured Parties, as security for the Obligations.

Participant: as defined in Section 13.2.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to a Credit Party, including those constituting proceeds of any Collateral.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Act: the Pension Protection Act of 2006.

Pension Funding Rules: the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

Pension Plan: any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by any Credit Party and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

Permitted Acquisitions: each Acquisition with respect to which:

(a) the Credit Parties and their Subsidiaries and any such newly created or acquired Subsidiary shall comply with the requirements of Section 7.1.5;

(b) the lines of business of the Person to be (or the property and assets of which are to be) so purchased or otherwise acquired shall be a Permitted Business;

(c) such Acquisition shall be approved by the board of directors of the Person (or (i) if such Person is not a corporation, a similar or appropriate governing body or Person or (ii) with respect to a Person which is an agency or instrumentality of a Governmental Authority, the Board of Directors, governing body or representative of such Governmental Authority) which is the subject of such Acquisition and such Person does not otherwise oppose such Acquisition;

 

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(d) (i) giving effect to any such Acquisition and payment of all consideration in connection therewith (including a reasonable estimation of any purchase price adjustment, earn-out provision, payments in respect of non-competition or consulting agreements or deferred compensation agreements), the Pro Forma Fixed Charge Coverage Ratio shall be at least 1.10 to 1.00 as of the most recently ended Measurement Period for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) shall have been delivered (or were required to have been delivered) to Agent, (ii) Pro Forma Availability shall be at least the greater of (A) 20% of the aggregate Commitments and (B) $20,000,000 for each day during the 30 day period prior to such Acquisition, and (iii) Availability shall be at least the greater of (A) 20% of the aggregate Commitments and (B) $20,000,000 immediately after giving effect to such Acquisition;

(e) immediately before and immediately after giving effect to any such Acquisition, no Default or Event of Default shall have occurred and be continuing; and

(f) the Company shall have delivered to the Agent at least five (5) Business Days prior to the date on which any such Acquisition is to be consummated or such shorter time as Agent may allow, a certificate of a Senior Officer of the Borrower Agent, in form and substance reasonably satisfactory to the Agent, (i) certifying that all of the requirements set forth above will be satisfied on or prior to the consummation of such purchase or other acquisition and (ii) a reasonably detailed calculation of item (d) above (and such certificate shall be updated as necessary to make it accurate as of the date the purchase or other acquisition is consummated).

Permitted Asset Disposition: an Asset Disposition that is

(a) a sale or lease of Inventory in the Ordinary Course of Business;

(b) a disposition of Inventory or Equipment that is obsolete, worn out, replaced, is no longer used or useful, unmerchantable, or unsaleable, in each case, in the Ordinary Course of Business;

(c) termination of a lease of real or personal Property that is not necessary for the Ordinary Course of Business and could not reasonably be expected to have a Material Adverse Effect;

(d) (i) non-exclusive licenses of Intellectual Property granted in the Ordinary Course of Business that do not materially interfere with the business of the Credit Parties or any rights of Agent hereunder or (ii) assignments, transfers, or exclusive licenses of Intellectual Property between or among any Credit Parties;

(e) leases, subleases, licenses of or other similar agreements with respect to Real Estate and assignments, licenses and sublicenses of Intellectual Property, each in the Ordinary Course of Business which do not materially interfere with the business of the Credit Parties;

(f) Cash and Cash Equivalents paid by a Credit Party or any Subsidiary as consideration for an Investment that is a Permitted Investment or otherwise liquidated, sold or disposed of in the Ordinary Course of Business;

(g) an Upstream Payment;

(h) Asset Dispositions (other than Accounts) (i) among the Credit Parties, (ii) among Credit Support Parties, (iii) among Subsidiaries that are not Credit Parties, (iii) by a Subsidiary that is not a Credit Party to a Credit Party and (iv) Asset Dispositions that constitute Permitted Non-Credit Party Transactions so long as no Default or Event of Default exists or would arise therefrom;

 

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(i) dispositions of Accounts (i) among Borrowers, (ii) among Credit Support Parties and (iii) by a Subsidiary that is not a Credit Party to a Credit Party;

(j) dispositions of Real Estate of any Credit Party or any Subsidiary, including sale-leaseback transactions involving any Real Estate, on market terms in arm’s-length transactions, for fair value;

(k) (i) the sale or issuance of any Equity Interests of the Parent (other than Disqualified Equity Interests) and (ii) as long as no Event of Default exists or would arise therefrom, the sale or issuance of any Equity Interest in a Borrower, Guarantor or Subsidiary (x) to convert such Borrower, Guarantor, or Subsidiary to a Permitted Joint Venture Subsidiary or (y) to increase the number or percentage of Equity Interests held by, or to bring in a new, Qualified Investor with respect to a Permitted Subsidiary Joint Venture, in each case, to the extent permitted hereunder;

(l) dispositions or abandonment of Intellectual Property that is no longer material and useful to the business of the Loan Parties;

(m) transactions permitted under Section 10.2 to the extent constituting an Asset Disposition;

(n) the sale for cash in the Ordinary Course of Business to any collection agency of Accounts that have not been paid for more than 180 days after the billing date (or are otherwise not Eligible Accounts) and which Accounts are not included as Eligible Accounts in the most recent Borrowing Base Certificate delivered to Agent;

(o) the cancellation of Debt owing from any Credit Party or Subsidiary, other than a Permitted Joint Venture Subsidiary, in the Ordinary Course of Business;

(p) a disposition by merger or dissolution in compliance with Section 10.2.9 hereof;

(q) a disposition of any Immaterial Credit Party, or any Subsidiary that is not a Credit Party, or a sale of some or all of the assets thereof (in one or more transactions) in connection with a dissolution of such Immaterial Credit Party or Subsidiary that is not a Credit Party or in connection with the liquidation of its existing business or its change of operational business if (i) in the Company’s reasonable judgment, such disposition, liquidation or dissolution will not have a materially adverse impact on the financial condition or operations of the Credit Parties taken as a whole, (ii) such disposition, liquidation or dissolution will not cause the aggregate Revolver Loans to exceed the Borrowing Base, (iii) no Default or Event of Default exists or would result therefrom, (iv) prior written notice is given by Borrower Agent to Agent and (v) the aggregate of Borrowing Base assets owned by Immaterial Credit Parties disposed of in any Fiscal Year under this clause (q) does not exceed 5% of the Commitments unless otherwise approved by the Agent;

(r) a disposition constituting a Permitted Asset Swap; and

(s) as long as no Default or Event of Default exists or would arise therefrom, other dispositions of assets (other than Accounts and Inventory unless (i) such Accounts or Inventory are disposed of in connection with the sale of a healthcare facility (or a division thereof) and (ii) Availability shall exceed the greater of (A) $20,000,000 and (B) 20% of the aggregate Commitments after giving effect thereto and written notice and a calculation thereof has been provided to the Agent) by the Credit Parties for not less than the fair market value thereof; provided that the aggregate consideration for all assets disposed of in reliance upon this clause (s) shall not exceed $30,000,000 in any Fiscal Year and at least 50% of such aggregate consideration shall be payable in cash; provided, that no such disposition shall be made to a Subsidiary that is not a Credit Party or to a Permitted Minority Joint Venture unless such disposition shall constitute a Permitted Non-Credit Party Transaction.

 

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Permitted Asset Swap: means sales, transfers or other dispositions of assets, including all of the outstanding Equity Interests of a Credit Party (other than all or substantially all of the Equity interests of the Parent or the Company or all or substantially all of the assets of the Borrowers and the other Credit Parties), for consideration at least equal to the fair market value of the assets sold or disposed of, but only if (a) consummated in connection with a Permitted Acquisition, (b) the consideration received consists of Equity Interests of a Person that becomes a Credit Party engaged in the Permitted Business, or property or assets received by a Credit Party (other than cash, except to the extent used as a bona fide means of equalizing the value of the property or assets involved in the swap transaction) of a nature or type or that are used in the Permitted Business existing on the date of such sale or other disposition and (c) that to the extent any such assets constitute Collateral, the assets received in return shall become Collateral and the Credit Parties shall comply with Section 7 with respect to any such assets received in return.

Permitted Business: means the lines of business conducted by the Credit Parties and their Subsidiaries on the date hereof and the business reasonably related, incidental, similar or ancillary thereto, or a reasonable extension, development or expansion thereof, including the ownership, operation and/or management of a hospital or other facility or business related to the health care industry or the provision of health care services in connection with the ownership, operation and/or management of a hospital or ancillary to the provision of health care services or information for the investment in or management, lease or operation of a hospital or outpatient clinic and any captive insurance company.

Permitted Contingent Obligations: Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; (g) arising under the Term Loan Credit Agreement; or (h) other Contingent Obligations in an aggregate amount of $20,000,000 or less at any time.

Permitted Debt: as defined in Section 10.2.1.

Permitted Distributions: Distributions consisting of the following:

(a) Upstream Payments;

(b) Distributions by any Subsidiary of a Credit Party to any Credit Party and Distributions by any Subsidiary of any Permitted Joint Venture Subsidiary to any Credit Party;

(c) Distribution by a Permitted Joint Venture Subsidiary to the third party holders of the Equity Interests thereof on a pro rata basis in the Ordinary Course of Business in amounts and on terms and frequency to the extent required or, provided no Default or Event of Default exists at the time of such Distribution or would be caused thereby, permitted under the Organic Documents or Operating Agreements relating thereto.

(d) dividend payments or other Distributions payable solely in the common stock or other comparable voting Equity Interest of the Parent;

(e) purchases, redemptions or other acquisition or retirement for value of Equity Interest of the Parent or any of its Subsidiaries held by any current or former director, officer, employee, consultant or advisor of the Parent or any Subsidiary, or their estates, spouses, former spouses, or the beneficiaries of such estates, in an amount not to exceed $10,000,000 in any Fiscal Year and in an aggregate amount not to exceed $30,000,000 for all such Distributions during the term of this Agreement;

 

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(f) Distributions in an aggregate amount of up to $5,000,000 for any purpose; provided no Default or Event of Default exists at the time of any such Distribution or would be caused thereby;

(g) other Distributions if, at least ten (10) Business Days prior to such Distribution, the Borrower Agent has delivered a certificate to Agent demonstrating that (i) after giving effect thereto the Pro Forma Fixed Charge Coverage Ratio as of the most recently ended Measurement Period for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) shall have been delivered to Agent (or required to have been delivered) shall be at least 1.10 to 1.00, (ii) Pro Forma Availability shall exceed the greater of (A) $20,000,000 and (B) 20% of the aggregate Commitments for each day during the 30 day period prior to such Distribution, (iii) Availability immediately after making such Distribution shall exceed the greater of (A) $20,000,000 and (b) 20% of the aggregate Commitments and (iv) no Default or Event of Default exists before or immediately after giving effect to such Distributions; and

(h) Distributions to the Parent consisting of amounts necessary to permit the Parent to (i) pay its proportionate share of reasonable and customary corporate and operating expenses (including reasonable out-of-pocket expenses for legal, administrative and accounting services provided by third parties, and compensation, benefits and other amounts payable to officers and employees in connection with their employment in the Ordinary Course of Business and to board of director observers), and franchise fees or similar taxes and fees required to maintain its corporate existence; (ii) pay Federal, state and local income taxes (other than tax obligations of Foreign Subsidiaries) attributable to the Credit Parties; (iii) pay working capital adjustments due in connection with any Permitted Acquisition; (iv) pay director fees and expenses, administrative expenses, premiums of director and officer insurance; (v) pay other ordinary operating expenses of Parent in an amount not to exceed $500,000 in a fiscal year; (vi) distributions to Sponsor consisting of the return of equity proceeds provided by the Sponsor for Capital Expenditures but not used within 30 days of receipt, provided such equity proceeds were at all times maintained in an Excluded Deposit Account and not used to repay any Obligations or any other purpose; and (vii) make the Permitted Distributions described in clauses (e), (f) or (g) above.

Permitted Holders: at any time, each of (i) the Sponsor (not including, however, any portfolio companies of the Sponsor) and (ii) the directors, executive officers and other management personnel of the Parent and the Company, as the case may be, on the date hereof.

Permitted Investment: an Investment consisting of any the following:

(a) Investments to the extent existing on the Closing Date and set forth on Schedule 10.2.5 and any modification, renewal or extension thereof (but not any increase in the principal amount thereof);

(b) Cash and Cash Equivalents that are subject to Agent’s Lien and control pursuant to documentation in form and substance satisfactory to Agent (other than Cash and Cash Equivalents in the Excluded Deposit Accounts that are not required to be subject to Agent’s control);

(c) so long as no Event of Default exists or would arise therefrom and to the extent constituting Permitted Non-Credit Party Transactions, (i) Investments in Permitted Minority Joint Ventures and (ii) Investments by any Credit Party in Subsidiaries that are not Credit Parties;

(d) Investments (i) of any Credit Party in any other Credit Party other than Investments in Equity Interests of the Parent (provided that if such Investment is made by a Borrower or Guarantor in any Permitted Joint Venture Subsidiary to repurchase Equity Interests from a Qualified Investor, such Investment is subject to clause (q) or (r) below and, if made in the form of a loan, such Investment shall be evidenced by a Joint Venture Note), (ii) among Subsidiaries that are not Credit Parties and (iii) of any Subsidiary that is not a Credit Party in any Credit Party;

 

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(e) Permitted Acquisitions (and earnest money deposits made in connection with any letter of intent or purchase agreement entered into in connection with any Permitted Acquisition), Capital Expenditures and Permitted Contingent Obligations;

(f) Investments consisting of securities received in connection with the satisfaction or enforcement of debt or claims due and owing to a Credit Party or a Subsidiary or as security for such debt or claim or received in connection with the bankruptcy or reorganization of suppliers or customers and in settlement of delinquent obligations of, and other disputes with, customers arising in the Ordinary Course of Business;

(g) Investments in the form of Hedging Agreements permitted by Section 10.2.15;

(h) guaranties constituting Permitted Debt;

(i) to the extent constituting Investments, the transactions permitted under Section 10.2.1, 10.2.2, 10.2.4, 10.2.5, 10.2.6, 10.2.7, 10.2.8, 10.2.9, 10.2.10 and 10.2.17;

(j) deposits with financial institutions permitted hereunder;

(k) Investments by any Credit Party or Subsidiary in payment intangibles, chattel paper (each defined in the UCC) and Accounts, notes receivable, prepaid accounts and similar items arising or acquired in the Ordinary Course of Business and payable or dischargeable in accordance with customary trade terms of such Credit Party or such Subsidiary;

(l) Investments received in settlement of amounts due (other than with respect to Eligible Accounts) to Parent or any Credit Party effected in the Ordinary Course of Business;

(m) Investments in promissory notes received from the purchaser in a Permitted Asset Disposition described in clause (s) of the definition thereof;

(n) loans or advances to employees of any Credit Party or Subsidiary in the ordinary course of business as presently conducted other than any loans or advances that would be in violation of Section 402 of the Sarbanes-Oxley Act; provided, however, that the aggregate principal amount of all loans and advances permitted pursuant to this clause (o) shall not exceed $3,000,000 at any time;

(o) loans and advances to any existing director, officer or employee of any Credit Party or Subsidiary (other than any loans or advances that would be in violation of Section 402 of the Sarbanes-Oxley Act) the proceeds of which shall be used for the sole purpose of acquisition by such director, officer or employee of any of the Equity Interests or equivalents of Parent; provided, however, that the aggregate principal amount of all loans and advances permitted pursuant to this clause (o) shall not exceed $7,500,000 at any time;

(p) Investments, loans and advances by any Credit Party or Subsidiary to Capella Surety, when no Default or Event of Default exists or would result thereby, in an aggregate principal amount of up to $14,250,000 in any Fiscal Year to fund (i) the capital required under the applicable laws or regulations of the jurisdiction in which Capella Surety is formed or determined by independent actuaries as prudent and necessary capital to operate Capella Surety and (ii) reasonable and customary corporate overhead expenses of Capella Surety;

(q) Investments by any Credit Party who is a partner in or a member of a Permitted Joint Venture Subsidiary consisting of the acquisition of a Qualified Investor’s interest in such Permitted Joint Venture Subsidiary required pursuant to the terms and conditions of the Organic Documents of such Permitted Joint Venture Subsidiary; provided, that the consideration for such Investment shall be in the form of either cash or an unsecured note; and

 

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(r) any other Investment if, at least five (5) Business Days prior to (or such shorter period as Agent may in its reasonable discretion allow) such Investment, the Borrower Agent has delivered a certificate to Agent demonstrating that (i) after giving effect thereto the Pro Forma Fixed Charge Coverage Ratio as of the most recently ended Measurement Period for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) shall have been delivered to Agent (or required to have been delivered) shall be at least 1.10 to 1.00, (ii) Pro Forma Availability shall exceed the greater of (A) $20,000,000 and (B) 20% of the aggregate Commitments for each day during the 30 day period prior to such Investment, (iii) Availability immediately after making such Investment shall exceed the greater of (A) $20,000,000 and (B) 20% of the aggregate Commitments and (iv) no Default or Event of Default exists before or immediately after giving effect to such Investments.

Permitted Joint Venture Subsidiary: (a) an Existing Joint Venture Subsidiary, (b) a Subsidiary of the Company that is a Borrower or Guarantor that sells, transfers or issues, in the aggregate, a portion of its Equity Interests to Qualifying Investors in connection with the conduct of the Permitted Business (and not merely to raise capital), (c) a newly formed Subsidiary organized in connection with the conduct of the Permitted Business of the Credit Parties, a portion of the Equity Interests of which is (or, once capitalization is complete, will be) owned by Qualifying Investors, (d) a Person owned by Qualifying Investors in which a Credit Party acquires Equity Interests or (e) a Subsidiary of any Person described in the foregoing clauses (a) – (d); provided, that, in each case, the business is of a type that is in compliance with Section 10.2.16, and complies with 42 U.S.C. §1395nn, as amended (if applicable), and other Applicable Laws relating to physician referrals; provided, further that, in each case, other than with respect to any Existing Joint Venture Subsidiary:

(a) Credit Parties hold at least a majority of the Equity Interest of such Permitted Joint Venture Subsidiary and none of such Equity Interests owned by a Credit Party are subject to any lien, pledge or encumbrance (except in favor of Agent);

(b) the investors, participants and each other holder of Equity Interests therein (other than the Credit Parties) participate on terms materially no more favorable than the terms applicable to the Credit Parties (other than solely due to the percentage of Equity Interests owned in such joint venture by each such Person and rights customarily incidental thereto),

(c) no Credit Party shall be under any obligation to make Investments in such joint venture, transfer or sell assets to such joint venture or incur any Contingent Obligation in respect of such joint venture, except for customary capital calls and put and call rights typically found in joint venture agreements in the healthcare industry and consistent with past practices of the Parent and its Subsidiaries

(d) the organizational and capital structure and operating agreements relating to such Permitted Joint Venture Subsidiary shall be reasonably acceptable to Agent and shall authorize and permit the continued existence and/or grants of the liens and security interests with respect to the Collateral in favor of the Agent, and such Permitted Joint Venture Subsidiary shall be permitted to enter into the cash management arrangements and other agreements and arrangements required hereunder (or in lieu thereof, such operating agreements shall permit the adoption of resolutions, and such resolutions shall have been adopted, to authorize and permit the same);

(e) the first priority liens and security interests of the Agent shall continue in the Collateral owned by a Credit Party becoming a Permitted Joint Venture Subsidiary and Agent shall be granted first priority liens and security interests in the Collateral owned by any Permitted Joint Venture Subsidiary and such Permitted Joint Venture Subsidiary shall maintain or enter into the Cash Management System and shall execute and deliver such agreements, opinions and such other documents as reasonably required by Agent, in a manner and in substantially similar form and substance as with respect to the Existing Joint Venture Subsidiaries;

 

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(f) any indebtedness owing, and liens or security interests granted, to other Credit Parties by such Permitted Joint Venture Subsidiary shall be evidenced by a Joint Venture Note;

(g) Agent shall have received acknowledgments of all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens;

(h) the conditions set forth in Section 6.1(c), (e), (f), (g), (h) and (i) shall have been satisfied with respect to a Permitted Joint Venture Subsidiary that is a newly formed Subsidiary and with respect to a Permitted Joint Venture Subsidiary that is an existing Subsidiary, to the extent of any changes in Organic Documents of such existing Subsidiary;

(i) any Permitted Joint Venture Subsidiary that results from an Acquisition shall be also subject to all of the requirements set forth in the definition of Permitted Acquisition; and

(j) such Permitted Joint Venture Subsidiary shall duly execute and deliver to Agent such security agreements, joinder agreements, amendments or supplements to the Loan Documents as are reasonably requested by the Agent, Deposit Account Control Agreements as described in Section 8.2, to cause or authorize the filing of appropriate UCC financing statements, and take any other action as may be necessary to vest in Agent valid and subsisting Liens on the properties purported to be subject thereto and deliver a legal opinion with respect thereto in form and substance reasonably satisfactory to Agent. Upon the satisfaction of the conditions contained in this definition, a Borrower or Guarantor that thereupon becomes a Permitted Joint Venture Subsidiary shall no longer be a Borrower or Guarantor under this Agreement.

Permitted Lien: as defined in Section 10.2.2.

Permitted Minority Joint Venture: any joint venture of the Company and/or one or more of its Subsidiaries on the one hand and one or more third party investors on the other and (a) which is not a Permitted Joint Venture Subsidiary, (b) in which the investors, participants and each other holder of Equity Interests therein (other than the Credit Parties) participate on terms materially no more favorable than the terms applicable to the Credit Parties (other than solely due to the percentage of Equity Interests owned in such Joint Venture by each such Person and rights customarily incidental thereto), (c) that is not a Credit Party and no direct or indirect Subsidiary of which is a Credit Party, (d) with respect to which no Credit Party shall be under any obligation to make Investments in such Joint Venture, transfer or sell assets to such Joint Venture or incur any Contingent Obligation in respect of such Joint Venture, except for customary capital calls and put and call rights typically found in joint venture agreements in the healthcare industry and consistent with past practices of the Parent and its Subsidiaries, (e) the business of which is of a type that is in compliance with Section 10.2.16, and (f) which complies with 42 U.S.C. §1395nn, as amended (if applicable), and other Applicable Laws relating to physician referrals.

Permitted Non-Credit Party Transactions: (a) Asset Dispositions from a Credit Party to a Subsidiary that is not a Credit Party or to a Permitted Minority Joint Venture, (b) any guaranties, payments or prepayments of Debt permitted under Sections 10.2.1(r)(ii) and 10.2.8(d) and (c) any Permitted Investment under clause (c) of the definition thereof, all in an aggregate amount for all such dispositions, payments and investments of up to $7,500,000 in any Fiscal Year.

Permitted Purchase Money Debt: Purchase Money Debt of Credit Parties and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does not exceed $15,000,000.00 at any time.

Person: any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.

 

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Plan: any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of a Credit Party or any ERISA Affiliate or any such Plan to which a Credit Party or any ERISA Affiliate is required to contribute on behalf of any of its employees.

Platform: as defined in Section 14.3.3.

Pledge Agreement: that certain Pledge Agreement dated December 31, 2014 by and among Borrowers, Guarantors and Agent.

Pledge Agreement Collateral: has the meaning given to the term “Collateral” in the Pledge Agreement.

Pledgee: has the meaning provided in the Pledge Agreement.

Prime Rate: the rate of interest announced by Bank of America from time to time as its prime rate. Such rate is set by Bank of America on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

Private Account: each Account of any Credit Party other than a Government Account.

Private Deposit Account: each Deposit Account of any Credit Party other than a Government Receivables Deposit Account.

Pro Forma Availability: for any date of calculation, the pro forma Availability on such date determined as if the applicable transaction or payment had been consummated on such date, and, for the avoidance of doubt, (a) including 50% of the Value of Accounts to be purchased or otherwise acquired in a Permitted Acquisitions to the extent permitted under the definition of Borrowing Base and (b) excluding, if applicable, the Accounts disposed of in any Permitted Asset Swap consummated in connection with a Permitted Acquisition.

Pro Forma Fixed Charge Coverage Ratio: for any date of calculation, the Fixed Charge Coverage Ratio for the Measurement Period most recently ended prior to such date for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) have been delivered (or were required to be delivered) determined as if the applicable transaction or payment had been consummated as of the beginning of such Measurement Period.

Pro Rata: with respect to any Lender, a percentage (carried out to the ninth decimal place) determined (a) while Revolver Commitments are outstanding, by dividing the amount of such Lender’s Revolver Commitment by the aggregate amount of all Revolver Commitments; and (b) at any other time, by dividing the amount of such Lender’s Loans and LC Obligations by the aggregate amount of all outstanding Loans and LC Obligations or, if all Loans and LC Obligations have been paid in full and/or Cash Collateralized, by dividing the Obligations owing to such Lender’s and its Affiliates’ by the aggregate amount of remaining Obligations, in each case, subject to adjustment as provided in Section 4.2.2.

Properly Contested: with respect to any obligation of a Credit Party, (a) the obligation is subject to a bona fide dispute regarding amount or the Credit Party’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings, diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not reasonably be expected to have a Material Adverse Effect; (e) no Lien is imposed on assets of the Credit Party, unless bonded and stayed to the satisfaction of Agent; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.

 

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Property: any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 90 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.

Qualified ECP: a Credit Party with total assets exceeding $10,000,000, or that constitutes an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” under Section 1a(18)(A)(v)(II) of such act.

Qualifying Investor: means (i) physicians, hospitals, health systems, or other healthcare providers, other healthcare companies and other strategic joint venture partners, (ii) such other individual investors whose aggregate beneficial ownership in such Subsidiary does not exceed 5%, (iii) any individual physician who intends to purchase Equity Interests of any Permitted Joint Venture Subsidiary, (iv) any Person owned, controlled, managed or operated by individual physician(s), (v) any trust of which an individual physician is a grantor, trustee or a beneficiary, (vi) any retirement plan owned or controlled by, or for the benefit of, an individual physician or (vii) a Person in the business of operating or managing a business or facility which Credit Parties are permitted to operate hereunder; provided, that in each case, the Person is of a type that complies with 42 U.S.C. § 1395nn, as amended (if applicable).

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: with respect to any Person, all right, title and interest (whether as owner, lessor or lessee) of such Person in and to land, improvements and fixtures, which constitute real property, including Leaseholds, or any buildings, structures, parking areas or other improvements thereon.

Recourse Account: a Deposit Account maintained solely in connection with, and if required under, an Approved Private Label Credit Card Program, against which the card issuer may initiate draws or debits for chargebacks and indemnification obligations thereunder and which does not contain a balance of funds in excess of amounts which the card issuer has notified the Company will be drawn from or debited to such Deposit Account.

Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount that does not exceed the principal amount of the Debt being extended, renewed or refinanced plus accrued interest and reasonable fees and expenses incurred in connection with such refinancing, refunding, renewal or extension; (b) the interest rate applicable to any such refinancing, refunding, renewing or extending Debt does not exceed the greater of the (i) interest rate for the Debt being refinanced, refunded, renewed, or extended and (ii) the otherwise market rate of interest for such Debt, (c) it has a final maturity no sooner than and a weighted average life no less than, the Debt being extended, renewed or refinanced; (d) it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (e) the representations, covenants and defaults applicable to it are not materially less favorable to Credit Parties than those applicable to the Debt being extended, renewed or refinanced; (f) no additional Lien is granted to secure it (other than, in the case of the Term

 

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Loan Obligations, if a Lien on such assets is also granted to Agent for the benefit of the Lenders) and, in the case of the Term Loan Obligations, the Liens securing the same are subject to the Intercreditor Agreement; (g) no additional Person is obligated on such Debt; and (h) upon giving effect to it, no Default or Event of Default exists.

Refinancing Debt: Borrowed Money that is the result of an extension, renewal or refinancing of Debt permitted under Section 10.2.1(b), (d), (f) or (u) as to which the Refinancing Conditions are satisfied.

Reimbursement Date: as defined in Section 2.3.2.

Rent and Charges Reserve: a reserve, in Agent’s discretion, (a) for any business office location where books and records relating to Accounts Collateral are located, in an amount up to three (3) months rent to any landlord, mortgagee or other Person who possesses any Accounts Collateral or could assert a Lien thereon and (b) for any location, in an amount up to the aggregate of all past due rent and other amounts owing by a Credit Party to any landlord, mortgagee or other Person who possesses any Collateral or could assert a Lien thereon, unless, in each case under clauses (a) and (b) above, a Lien Waiver has been obtained from such landlord, mortgagee or other person.

Report: as defined in Section 12.2.3.

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

Reporting Trigger Period: the period (a) commencing on the day that (i) an Event of Default occurs and is continuing or (ii) Availability is less than the Reporting Trigger Threshold and (b) continuing until the date that during the previous 30 consecutive days, (i) no Event of Default has existed and (ii) Availability has been greater than the Reporting Trigger Threshold at all times during such period.

Reporting Trigger Threshold: 20% of the aggregate Commitments at such time.

Required Lenders: Secured Parties (other than Bank Product Providers) holding more than 50% of (a) the aggregate outstanding Revolver Commitments; or (b) following termination of the Revolver Commitments, the aggregate outstanding Loans and LC Obligations or, if all Loans and LC Obligations have been paid in full, the aggregate remaining Obligations; provided, however, that Commitments, Loans and other Obligations held by a Defaulting Lender and its Affiliates shall be disregarded in making such calculation, but any related Fronting Exposure shall be deemed held as a Loan or LC Obligation by the Secured Party that funded the applicable Loan or issued the applicable Letter of Credit; provided, further, that, if there are more than two Lenders, the Required Lenders shall include at least two Lenders who are not Affiliates.

Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up to the nearest 1/8th of 1%) applicable to member banks under regulations issued from time to time by the Board of Governors for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).

Reserves: the Availability Reserves and Borrowing Base Reserves.

Restricted Investment: any Investment by a Credit Party or Subsidiary, other than (a) Permitted Investments; and (b) loans and advances permitted under Section 10.2.7.

 

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Restrictive Agreement: an agreement (other than a Loan Document) that conditions or restricts the right of any Credit Party or other Subsidiary to incur or repay Borrowed Money, to grant Liens on any assets, to declare or make Distributions, to modify, extend or renew any agreement evidencing Borrowed Money, or to repay any intercompany Debt.

Revolver Commitment: for any Lender, its obligation to make Revolver Loans and to participate in LC Obligations up to the maximum principal amount shown on Schedule 1.1, or as hereafter determined pursuant to each Assignment and Acceptance to which it is a party. “Revolver Commitments” means the aggregate amount of such commitments of all Lenders.

Revolver Commitments Increase Effective Date: as defined in Section 2.1.7(d).

Revolver Loan: a loan made pursuant to Section 2.1, and any Swingline Loan or Protective Advance.

Revolver Note: a promissory note to be executed by Borrowers in favor of a Lender in the form of Exhibit A, which shall be in the amount of such Lender’s Revolver Commitment and shall evidence the Revolver Loans made by such Lender.

Revolver Termination Date: the earlier to occur of (a) June 3, 2019, (b) November 16, 2016, if, as of such date, (i) the Senior Notes have not been repaid in full or refinanced on terms reasonably satisfactory to Agent (including a maturity date no earlier than December 3, 2019) and (ii) the Term Loan Obligations have not been repaid in full or the maturity date has not been extended to a date that is no earlier than September 3, 2019, and (c) April 1, 2017 if, as of such date, the Senior Notes have not been repaid in full or refinanced on terms reasonably satisfactory to Agent (including a maturity date no earlier than December 3, 2019).

Royalties: all royalties, fees, expense reimbursement and other amounts payable by a Credit Party under a License.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Sanction: any international economic sanction administered or enforced by the United States Government (including OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

Secured Parties: Agent, Issuing Bank, Lenders and Bank Product Providers.

Security Agreement: that certain Security Agreement dated December 31, 2014 by and among Borrowers, Guarantors and Agent.

Security Agreement Collateral: shall mean all “Collateral” as defined in the Security Agreement and all “Collateral” as defined in the Joint Venture Subsidiary Security Documents, but in each case excluding any Excluded Collateral.

Security Documents: the Security Agreement, Pledge Agreement, Joint Venture Subsidiary Security Documents, Guaranties, Deposit Account Control Agreements, Mortgages, Copyright Security Agreement, Patent Security Agreement, Trademark Security Agreement, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.3.3 of this Agreement and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.

 

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Self-Pay Account: any Account for which a Third Party Payor is not the Account Debtor other than Accounts for which the Account Debtor is a credit card or debit card company or processor.

Senior Notes: the unsecured 9.25% senior notes due 2017 issued pursuant to the Senior Notes Indenture on terms reasonably satisfactory to Agent, including a principal maturity date no earlier than 6 months after the Commitment Termination Date.

Senior Notes Indenture: the Indenture dated June 28, 2010 by and among the Company, the Guarantors party thereto and U.S. Bank, National Association, as trustee.

Senior Officer: the chairman of the board, president, chief executive officer or chief financial officer of, any Credit Party or Borrower Agent, as applicable.

Settlement Report: a report delivered by Agent to Lenders summarizing the Revolver Loans and participations in LC Obligations outstanding as of a given settlement date, allocated to Lenders on a Pro Rata basis.

Social Security Act: Social Security Act of 1935 (42 U.S.C. §§1395 et seq.).

Solvent: as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (d) is able to pay all of its debts as they mature; (e) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (f) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (g) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “Fair salable value” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.

Specified Credit Party: a Credit Party that is not then an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 5.11).

Sponsor: GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P., each a Delaware limited partnership together with each of their Affiliates and any other entity brought in as a sponsor or co-sponsor in the ordinary course.

Subsidiary: any entity more than 50% of whose voting securities or Equity Interests is owned by Parent, a Borrower or any combination of Parent and Borrowers (including indirect ownership by a Parent or a Borrower through other entities in which Parent or Borrowers directly or indirectly owns more than 50% of the voting securities or Equity Interests), including for the avoidance of doubt, each Permitted Joint Venture Subsidiary.

Subsidiary Guarantor: as defined in the first paragraph of this Agreement together with each Domestic Subsidiary of the Company or any other Borrower (other than Permitted Joint Venture Subsidiaries) that executes a joinder agreement and becomes a party to this Agreement or otherwise enters into a Guaranty of the Obligations.

Subordination Agreements: any subordination agreement executed by a Person in favor of the Agent for the benefit of the Secured Parties, as may be contemplated or required hereunder.

 

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Swap Obligations: with respect to a Credit Party, its obligations under a Hedging Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

Swingline Loan: any Borrowing of Base Rate Revolver Loans funded with Agent’s funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

Taxes: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Third Party Payor: any governmental entity, insurance company, health maintenance organization, professional provider organization or similar entity that is obligated to make payment on any Account.

Term Loan Agent: Credit Suisse AG, as administrative agent for the Term Loan Lenders, together with its successors and assigns in such capacity.

Term Loan Credit Agreement: the Credit Agreement, dated as of December 31, 2014 among the Company, the guarantors signatory thereto, the Term Loan Lenders and the Term Loan Agent, as amended, supplemented, restated or otherwise modified in accordance with Section 10.2.19.

Term Loan Documents: the “Credit Documents” as defined in the Term Loan Credit Agreement.

Term Loan Lenders: each of the “Lenders” as defined in the Term Loan Credit Agreement.

Term Loan Obligations: all “Obligations” as defined in the Term Loan Credit Agreement, to the extent such obligations and the Liens securing such obligations are subject to the Intercreditor Agreement.

Total Net Funded Debt: as of any date of determination, (i) the sum of outstanding Loans, Letter of Credit Obligations, the principal amount of funded Debt for borrowed money and Purchase Money Debt, the principal portion of Capital Leases and (without duplication) guarantees of any of the foregoing in each case, of the Company and its Subsidiaries, less (ii) all unrestricted cash and Cash Equivalents of the Company and its Subsidiaries.

Total Net Leverage Ratio: as of any date of determination, the ratio of (a) Total Net Funded Debt as of the last day of the most recently ended Measurement Period, to (b) EBITDA for such Measurement Period.

Trademark Security Agreement: a trademark security agreement or grant of security interest in United States Trademarks in the form attached to the Security Agreement, in each case, in which a Credit Party grants a Lien on its interests in trademarks to Agent, for the benefit of Secured Parties, as security for the Obligations.

Transferee: any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.

TRICARE: collectively, a program of medical benefits covering former and active members of the uniformed services and certain of their dependents, financed and administered by the United States Departments of Defense, Health and Human Services and Transportation, which program was formerly known as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), and all laws, rules, regulations, manuals, orders and administrative, reimbursement and other guidelines of all Governmental Authorities promulgated in connection with such program (whether or not having the force of law), in each case as the same may be amended, supplemented or otherwise modified from time to time.

 

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TRICARE Account: means an Account payable pursuant to TRICARE.

Type: any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the same interest option and, in the case of LIBOR Loans, the same Interest Period.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.

UCC Filing Collateral: Collateral, including Collateral constituting investment property, for which a security interest can be perfected by filing a UCC-1 financing statement.

UCP: the “Uniform Customs and Practice for Documentary Credits 600” published by the International Chamber of Commerce (or such later version thereof as may be in effect as to a Letter of Credit).

Unapplied Cash Reserve: at any date of determination, the amount of payments received by the Credit Parties with respect to Accounts which as of such date, have not been credited or applied to a specific Account.

Upstream Payment: a Distribution by a Subsidiary of a Borrower or Subsidiary Guarantor to such Borrower or Subsidiary Guarantor.

Value: the face amount of an Account, net of any returns, rebates, discounts (calculated on the shortest terms), credits, contractual allowances or other allowances, capitation or Taxes (including sales, excise or other taxes) that have been or could be claimed by the Account Debtor or any other Person.

1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Parent delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements, except for any change required or permitted by GAAP if Parent’s certified public accountants concur with such change, the change is disclosed to Agent, all relevant provisions of the Loan Documents (including Section 10.3) are amended in a manner reasonably satisfactory to Required Lenders to take into account the effects of the change. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Debt of Parent and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded.

1.3. Uniform Commercial Code. As used herein, the following terms are defined in accordance with the UCC in effect in the State of New York from time to time: “Chattel Paper,” “Commercial Tort Claim,” “Deposit Account,” “Securities Account,” “Document,” “Equipment,” “General Intangibles,” “Goods,” “Instrument,” “Investment Property,” “Letter-of-Credit Right” and “Supporting Obligation.”

1.4. Certain Matters of Construction. The terms “hereto,” “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document. All references to (a) laws

 

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or statutes include all related rules, regulations, interpretations, supplements, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section means, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day means time of day at Agent’s notice address under Section 14.3.1; or (g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute discretion of such Person (unless otherwise qualified). All references to Value, Borrowing Base components, Loans, Letters of Credit, Obligations and other amounts herein shall be denominated in Dollars and unless the content otherwise requires, all determinations (including calculations of Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise satisfactory to Agent in its Credit Judgment (and not necessarily calculated in accordance with GAAP). No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Whenever the phrase “to the Credit Parties’ knowledge”, “to the Borrowers’ knowledge”, to the Credit Parties’ knowledge” or words of similar import are used in any Loan Documents, it means actual knowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties.

 

SECTION 2. CREDIT FACILITIES

2.1. Revolver Commitment.

2.1.1. Revolver Loans. Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment, on the terms set forth herein, to make Revolver Loans to Borrowers from time to time through the Commitment Termination Date. The Revolver Loans may be repaid and reborrowed as provided herein. In no event shall Lenders have any obligation to honor a request for a Revolver Loan if the unpaid balance of Revolver Loans outstanding at such time (including the requested Loan) would exceed the Borrowing Base.

2.1.2. Revolver Notes. The Revolver Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender. At the request of any Lender, Borrowers shall deliver a Revolver Note to such Lender.

2.1.3. Use of Proceeds. The proceeds of Revolver Loans shall be used by Borrowers solely (a) to satisfy existing Debt; (b) to pay fees and transaction expenses associated with the closing of this credit facility; (c) to pay Obligations in accordance with this Agreement; (d) to make Acquisitions, Distributions and other payments, in each case, to the extent permitted hereunder; and (e) for working capital and other lawful corporate purposes of Borrowers. Borrowers shall not, directly or indirectly, use any Letter of Credit or the proceeds of any Loan, nor use, lend, contribute or otherwise make available any Letter of Credit or proceeds of any Loan to any Subsidiary, joint venture partner or other Person, (y) to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of issuance of the Letter of Credit or funding of the Loan, is the subject of Sanctions; or (z) in any manner that will result in a violation of Sanctions by any Person (including any Secured Party or other individual or entity participating in the transaction).

2.1.4. Voluntary Reduction or Termination of Revolver Commitments.

(a) The Revolver Commitments shall terminate on the Revolver Termination Date, unless sooner terminated in accordance with this Agreement. Upon at least 30 days prior written notice to Agent, or such shorter period as Agent may reasonably allow, at any time after the first Loan Year, Borrowers may, at their option, terminate the Revolver Commitments and this credit facility. Any notice of termination given by Borrowers shall be irrevocable. On the termination date, Borrowers shall make Full Payment of all Obligations.

(b) Borrowers may permanently reduce the Revolver Commitments, on a Pro Rata basis for each Lender, upon at least 30 days prior written notice to Agent, or such shorter period as Agent may reasonably allow, which notice shall specify the amount of the reduction and shall be irrevocable once given. Each reduction shall be in a minimum amount of $5,000,000, or an increment of $1,000,000 in excess thereof.

 

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2.1.5. [Reserved].

2.1.6. Protective Advances. Agent shall be authorized, in its discretion, at any time that any conditions in Section 6 are not satisfied, to make Base Rate Revolver Loans (“Protective Advances”) (a) up to an aggregate amount of $10,000,000 outstanding at any time, if Agent deems such Loans necessary or desirable to preserve or protect Collateral, or to enhance the collectability or repayment of Obligations; or (b) to pay any other amounts chargeable to Credit Parties under any Loan Documents, including costs, fees and expenses. In no event shall Protective Advances be required that would cause the outstanding Revolver Loans and LC Obligations to exceed the aggregate Revolver Commitments. Each Lender shall participate in each Protective Advance on a Pro Rata basis. Required Lenders may at any time revoke Agent’s authority to make further Protective Advances by written notice to Agent. Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.

2.1.7. Increase in Revolver Commitments.

(a) Request for Increase. Provided there exists no Default or Event of Default, upon notice to Agent (which shall promptly notify the Lenders), Borrower Agent may from time to time, request an increase in the Revolver Commitments by an amount (for all such requests) not exceeding $25,000,000 on the terms and conditions set forth herein; provided that (i) any such request for an increase shall be in a minimum amount of $5,000,000, and (ii) the Borrower may make a maximum of three such requests. At the time of sending such notice, Borrower Agent (in consultation with Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).

(b) Lender Elections to Increase. Each Lender shall notify Agent within such time period whether or not it agrees to increase its Revolver Commitment and, if so, whether by an amount equal to, greater than, or less than its Pro Rata share of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Revolver Commitment.

(c) Notification by Agent; Additional Lenders. Agent shall notify Borrower Agent and each Lender of the Lenders’ responses to each request made hereunder. To the extent the full amount of a requested increase is not agreed to by the Lenders, Agent will use commercially reasonable efforts to obtain one or more Eligible Assignees that are not then Lenders and who are reasonably acceptable to the Borrower Agent, or the Borrowers may obtain one or more Eligible Assignees that are not Lenders and who are reasonably acceptable to the Agent and Issuing Bank (which approvals shall not be unreasonably withheld) to become Lenders pursuant to a joinder agreement in form and substance satisfactory to Agent and its counsel.

(d) Effective Date and Allocations. If the Revolver Commitments are increased in accordance with this Section, Agent and Borrower Agent shall determine the effective date (the “Revolver Commitments Increase Effective Date”) and the final allocation of such increase. Agent shall promptly notify Borrower Agent and the Lenders of the final allocation of such increase and the Revolver Commitments Increase Effective Date. For the avoidance of doubt, any increase in the Revolver Commitments shall be on the same terms and conditions contained herein, as such terms and conditions exist as of the Revolver Commitments Increase Effective Date.

 

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(e) Conditions to Effectiveness of Increase. As a condition precedent to such increase, (x) after giving effect to such increase, Revolver Commitments shall not exceed the ABL Cap Amount (as such term is defined in the Intercreditor Agreement) and (y) the Borrower Agent shall deliver to Agent a certificate dated as of the Revolver Commitments Increase Effective Date signed by a Senior Officer of the Borrower Agent (i) certifying and attaching the resolutions (or, if applicable, consent or ratification) adopted by each Credit Party approving or consenting to such increase, and (ii) certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Section 9 and the other Loan Documents are true and correct on and as of the Revolver Commitments Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.1.7, the representations and warranties contained in Section 9.1.7 shall be deemed to refer to the most recent statements furnished pursuant to Section 10.1.2, and (B) no Default or Event of Default exists. Borrowers shall prepay any Revolver Loans outstanding on the Revolver Commitments Increase Effective Date (and pay any additional amounts required pursuant to Section 3.9) to the extent necessary to keep the outstanding Revolver Loans ratable with any revised Pro Rata shares arising from any nonratable increase in the Revolver Commitments under this Section.

(f) Conflicting Provisions. This Section shall supersede any provisions in Section 12.5 or 14.1 to the contrary.

2.2. [Reserved].

2.3. Letter of Credit Facility.

2.3.1. Issuance of Letters of Credit. Issuing Bank agrees to issue Letters of Credit from time to time until 30 days prior to the Revolver Termination Date (or until the Commitment Termination Date, if earlier) or such shorter period as Issuing Bank may allow, on the terms set forth herein, including the following:

(a) Each Borrower acknowledges that Issuing Bank’s issuance of any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application with respect to the requested Letter of Credit, as well as such other instruments and agreements as Issuing Bank may customarily require for issuance of a letter of credit of similar type and amount. Issuing Bank shall have no obligation to issue any Letter of Credit unless (a) Issuing Bank receives a LC Request and LC Application at least two Business Days prior to the requested date of issuance; (b) each LC Condition is satisfied; and (c) if a Defaulting Lender exists, such Lender or Borrowers have entered into arrangements, including the delivery of Cash Collateral, satisfactory to Agent and Issuing Bank (in their sole discretion) to eliminate Issuing Bank’s actual or potential Fronting Exposure (after giving effect to Section 4.2.2 with respect to any Defaulting Lender) arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other LC Obligations as to which Issuing Bank has actual or potential Fronting Exposure, as it may elect in its sole discretion. If Issuing Bank receives written notice from the Agent or a Lender at least three Business Days before issuance of a Letter of Credit that any LC Condition has not been satisfied, Issuing Bank shall have no obligation to issue the requested Letter of Credit (or any other) until such notice is withdrawn in writing by the Agent or until Required Lenders have waived such condition in accordance with this Agreement. Prior to receipt of any such notice, Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.

(b) Letters of Credit may be requested by Borrower Agent only (a) to support obligations of a Credit Party or Subsidiary (to the extent permitted hereunder) incurred in the Ordinary Course of Business; or (b) as otherwise approved by the Agent. Except as provided in Section 2.3.1(c), the increase, renewal or extension of any Letter of Credit shall be treated as the issuance of a new Letter of Credit, except that delivery of a new LC Application shall be required at the discretion of Issuing Bank.

 

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(c) If the Borrower Agent so requests in any applicable LC Application, Issuing Bank may, in its discretion (not to be unreasonably withheld), agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Borrower Agent shall not be required to make a specific request to Issuing Bank for any such extension but, if requested by Issuing Bank prior to any renewal date, Borrower Agent shall confirm in writing whether it requests that such Letter of Credit be allowed to automatically renew. Once an Auto-Extension Letter of Credit has been issued, Lenders shall be deemed to have authorized (but may not require) Issuing Bank to permit the extension of such Letter of Credit; provided, however, that Issuing Bank shall not permit any such extension if (A) Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue a Letter of Credit (as extended) under the terms hereof (by reason of the provisions of clauses (i), (ii) or (iii) of Section 2.3.1(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from Agent that the Required Lenders have elected not to permit such extension or (2) from Agent, any Lender or Borrower Agent that one or more of the applicable LC Conditions is not then satisfied, and in each such case directing Issuing Bank not to permit such extension.

(d) Borrowers assume all risks of the acts, omissions or misuses of any Letter of Credit by the beneficiary. In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank or any Lender shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented by any Documents; any differences or variation in the character, quality, quantity, condition, packing, value or delivery of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy, genuineness or legal effect of any Documents or of any endorsements thereon; the time, place, manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions, delay, default or fraud by any shipper or other Person in connection with any goods, shipment or delivery; any breach of contract between a shipper or vendor and a Borrower; errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any consequences arising from causes beyond the control of Issuing Bank, Agent or any Lender, including any act or omission of a Governmental Authority. The rights and remedies of Issuing Bank under the Loan Documents shall be cumulative. Issuing Bank shall be fully subrogated to the rights and remedies of each beneficiary whose claims against Borrowers are discharged with proceeds of any Letter of Credit.

(e) In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or LC Documents, Issuing Bank shall be entitled to act, and shall be fully protected in acting, upon any certification, documentation or communication in whatever form believed by Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person. Issuing Bank may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such experts. Issuing Bank may employ agents and attorneys-in-fact in connection with any matter relating to Letters of Credit or LC Documents, and shall not be liable for the negligence or misconduct of agents and attorneys-in-fact selected with reasonable care.

 

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2.3.2. Reimbursement; Participations.

(a) If Issuing Bank honors any request for payment under a Letter of Credit, Borrowers shall pay to Issuing Bank, (i) on the same day (“Reimbursement Date”), if Issuing Bank has given Borrower Agent not less than one (1) Business Day’s prior notice of such payment under a Letter of Credit, otherwise (ii) one (1) Business Day after Issuing Bank gives notice to Borrower Agent of the amount paid by Issuing Bank under such Letter of Credit; together with interest at the interest rate for Base Rate Revolver Loans from the Reimbursement Date until payment by Borrowers. The obligation of Borrowers to reimburse Issuing Bank for any payment made under a Letter of Credit shall be absolute, unconditional, irrevocable, and joint and several, and shall be paid without regard to any lack of validity or enforceability of any Letter of Credit or the existence of any claim, setoff, defense or other right that Borrowers may have at any time against the beneficiary. Unless the Borrower Agent shall have notified the Agent and Issuing Bank prior to 2:00 p.m. (New York City time) on the Reimbursement Date that Borrower Agent intends to reimburse the Issuing Bank with funds other than the proceeds of Loans, then whether or not Borrower Agent submits a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate Revolver Loans in an amount necessary to pay all amounts due Issuing Bank on any date that payment is due from the Credit Parties (as set forth in the first sentence of this clause (a)) and each Lender agrees to fund its Pro Rata share of such Borrowing whether or not the Commitments have terminated, the aggregate Revolver Loans exceed the Borrowing Base before or after such Borrowing, or the conditions in Section 6 are satisfied.

(b) Upon issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased from Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and participation in all LC Obligations relating to the Letter of Credit. Issuing Bank is issuing Letters of Credit in reliance upon this participation. If Issuing Bank makes any payment under a Letter of Credit and Borrowers do not reimburse such payment on the Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall promptly (within one Business Day) and unconditionally pay to Agent (and Agent may apply Cash Collateral provided for this purpose), for the benefit of Issuing Bank, the Lender’s Pro Rata share of such payment. Upon request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit and LC Documents in its possession at such time.

(c) The obligation of each Lender to make payments to Agent for the account of Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever, and shall be made in accordance with this Agreement under all circumstances, irrespective of any lack of validity or unenforceability of any Loan Documents; any draft, certificate or other document presented under a Letter of Credit having been determined to be forged, fraudulent, noncompliant, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; waiver by Issuing Bank of a requirement that exists for its protection (and not a Borrower’s protection) or that does not prejudice a Borrower; any honor of an electronic demand for payment even if a draft is required; any payment of an item presented after a Letter of Credit’s expiration date if authorized by the UCC, ISP or UCP, as applicable; or any setoff or defense that any Credit Party may have with respect to any Obligations. Issuing Bank does not assume any responsibility for any failure or delay in performance or any breach by any Borrower or other Person of any obligations under any LC Documents. Issuing Bank does not make to Lenders any express or implied warranty, representation or guaranty with respect to the Collateral, LC Documents or any Credit Party. Issuing Bank shall not be responsible to any Lender for any recitals, statements, information, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any LC Documents; the validity, genuineness, enforceability, collectability, value or sufficiency of any Collateral or the perfection of any Lien therein; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Credit Party.

(d) No Issuing Bank Indemnitee shall be liable to any Credit Party, any Lender or other Person for any action taken or omitted to be taken in connection with any Letter of Credit or LC Document except as a result of its gross negligence or willful misconduct. Issuing Bank may refrain from taking any action with respect to a Letter of Credit or LC Documents until it receives written instructions (and in its discretion, appropriate assurances) from the Lenders or Required Lenders, as applicable.

 

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2.3.3. Cash Collateral. (a) If any LC Obligations, whether or not then due or payable, shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that Availability is less than zero, (c) after the Commitment Termination Date, or (d) within 20 Business Days prior to the Revolver Termination Date, then Borrowers shall, at Issuing Bank’s, Agent’s or Required Lenders’ request, Cash Collateralize the stated amount of all outstanding Letters of Credit and pay to Issuing Bank the amount of all other LC Obligations.

(b) All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. Borrowers hereby grant to (and subject to the control of) Agent, for the benefit of Agent, Issuing Bank and Lenders, and agree to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.3.3(c). If at any time Agent determines that Cash Collateral is subject to any right or claim of any Person other than Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, Borrowers or the relevant Defaulting Lender will, promptly upon demand by Agent, pay or provide to Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

(c) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.3.3 or Sections 4.1.3, 4.2 or 11.2 in respect of Letters of Credit or Swingline Loans shall be held and applied to the satisfaction of the specific LC Obligations, Swingline Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(d) Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 13.3.2)) or (ii) Agent’s good faith determination that there exists excess Cash Collateral; provided, however, (A) that Cash Collateral furnished by or on behalf of a Credit Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 2.3.3 may be otherwise applied in accordance with Section 5.6), and (B) the Person providing Cash Collateral and Issuing Bank or Agent, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

2.3.4. Resignation of Issuing Bank. Issuing Bank may resign at any time upon notice to Agent and Borrowers. From the effective date of such resignation, Issuing Bank shall have no obligation to issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall continue to have all rights and other obligations of an Issuing Bank hereunder relating to any Letter of Credit issued by it prior to such date. Agent shall promptly appoint a replacement Issuing Bank, which, as long as no Default or Event of Default exists, shall be reasonably acceptable to Borrowers.

 

SECTION 3. INTEREST, FEES AND CHARGES

3.1. Interest.

3.1.1. Rates and Payment of Interest.

(a) The Obligations shall bear interest (a) if a Base Rate Loan, at the Base Rate in effect from time to time, plus the Applicable Margin; (b) if a LIBOR Loan, at LIBOR for the applicable

 

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Interest Period, plus the Applicable Margin; and (c) if any other Obligation (including, to the extent permitted by law, interest not paid when due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Revolver Loans. Interest shall accrue from the date the Loan is advanced or the Obligation is incurred or payable, until paid by Borrowers. If a Loan is repaid on the same day made, one day’s interest shall accrue.

(b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at the Default Rate (whether before or after any judgment). Each Borrower acknowledges that the cost and expense to Agent and Lenders due to an Event of Default are difficult to ascertain and that the Default Rate is fair and reasonable compensation for this.

(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of each month; (ii) on any date of prepayment, with respect to the principal amount of Loans being prepaid; and (iii) on the Commitment Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.

3.1.2. Application of LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day, subject to delivery of a Notice of Conversion/Continuation, elect to convert any portion of the Base Rate Loans to, or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR Loan. During any Default or Event of Default, Agent may (and shall at the direction of Required Lenders) declare that no Loan may be made, converted or continued as a LIBOR Loan.

(b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three Business Days before the requested conversion or continuation date. Promptly after receiving any such notice, Agent shall notify each Lender thereof. Each Notice of Conversion/Continuation shall be irrevocable, and shall specify the amount of Loans to be converted or continued, the conversion or continuation date (which shall be a Business Day), and the duration of the Interest Period (which shall be deemed to be one month if not specified). If, upon the expiration of any Interest Period in respect of any LIBOR Loans, Borrowers shall have failed to deliver a Notice of Conversion/Continuation, they shall be deemed to have elected to convert such Loans into Base Rate Loans. Agent does not warrant or accept responsibility for, nor shall it have any liability with respect to, administration, submission or any other matter related to any rate described in the definition of LIBOR.

3.1.3. Interest Periods. In connection with the making, conversion or continuation of any LIBOR Loans, Borrowers shall select an interest period (“Interest Period”) to apply, which interest period shall be one, two, or three months; provided, however, that:

(a) the Interest Period shall commence on the date the Loan is made or continued as, or converted into, a LIBOR Loan, and shall expire on the numerically corresponding day in the calendar month at its end;

(b) if any Interest Period commences on a day for which there is no corresponding day in the calendar month at its end or if such corresponding day falls after the last Business Day of such month, then the Interest Period shall expire on the last Business Day of such month; and if any Interest Period would expire on a day that is not a Business Day, the period shall expire on the next Business Day; and

(c) no Interest Period shall extend beyond the Revolver Termination Date.

 

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3.1.4. Interest Rate Not Ascertainable. If Agent shall determine that on any date for determining LIBOR, due to any circumstance affecting the London interbank market, adequate and fair means do not exist for ascertaining such rate on the basis provided herein, then Agent shall immediately notify Borrowers of such determination. Until Agent notifies Borrowers that such circumstance no longer exists, the obligation of Lenders to make LIBOR Loans shall be suspended, and no further Loans may be converted into or continued as LIBOR Loans.

3.2. Fees.

3.2.1. Unused Line Fee. Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders (other than a Defaulting Lender for any period during which it is a Defaulting Lender), a fee calculated as follows (the “Unused Fee”): (a) if Average Facility Usage (defined below) for the most recently ended calendar month is greater than or equal to 50% of the aggregate Commitments for such calendar month, the Unused Fee shall be 0.25% per annum times the amount by which (i) the Commitments during such month exceed (ii) the Average Facility Usage for such month and (b) if Average Facility Usage for the most recently ended calendar month is less than 50% of the aggregate Commitments for such calendar month, the Unused Fee shall be 0.375% per annum times the amount by which (i) the Commitments during such month exceed (ii) the Average Facility Usage for such month. Such fee shall be payable quarterly in arrears, on the first day of each fiscal quarter and on the Revolver Termination Date. “Average Facility Usage” means the average daily balance of Revolver Loans (other than Swingline Loans or Protective Advances) and undrawn amount of Letters of Credit during any calendar month.

3.2.2. LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR Revolver Loans times the average daily stated amount of Letters of Credit, which fee shall be payable monthly in arrears, on the first day of each month; provided, however, any Letter of Credit fees otherwise payable for the account of a Defaulting Lender shall be payable, to the maximum extent permitted by Applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Pro Rata shares allocable to such Letter of Credit pursuant to Section 4.2.2, with the balance of such fee, if any, payable to Issuing Bank for its own account; (b) to Issuing Bank, for its own account, a fronting fee equal to .125% per annum on the stated amount of each Letter of Credit, which fee shall be payable monthly in arrears, on the first day of each month; and (c) to Issuing Bank, for its own account, all customary and documented charges associated with the issuance, amending, negotiating, payment, processing, transfer and administration of Letters of Credit, which charges shall be paid as and when incurred. During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum.

3.2.3. Amendment Fee. On the Closing Date, Borrowers shall pay to Agent a fee of $25,000 to be shared Pro Rata among the Lenders.

3.3. Computation of Interest, Fees, Yield Protection. All interest, as well as fees and other charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of 360 days. Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error. All fees shall be fully earned when due and shall not be subject to rebate, refund or proration. All fees payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money. A certificate as to amounts payable by Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Borrower Agent by Agent or the affected Lender (with a copy to the Agent), as applicable, shall be final, conclusive and binding for all purposes, absent manifest error, and Borrowers shall pay such amounts to the appropriate party within 10 days following receipt of the certificate.

3.4. Reimbursement Obligations. Borrowers shall reimburse Agent for all Extraordinary Expenses. Borrowers shall also reimburse Agent for all legal, accounting, appraisal, consulting, and other

 

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fees, costs and expenses reasonably incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection, audit or appraisal with respect to any Credit Party or Collateral, whether prepared by Agent’s personnel or a third party; provided, however, that (i) prior to any Event of Default, Borrowers’ obligations to reimburse Agent for the fees and expenses of counsel shall be limited to one counsel selected by Agent and to the extent necessary, one special or local counsel in each appropriate jurisdiction unless, in the reasonable opinion of Agent, representation of all such Indemnitees would be inappropriate due to the existence of an actual or potential conflict of interest and (ii) during any Event of Default, Borrowers’ obligations to reimburse Agent for the fees and expenses of counsel shall be limited to one counsel for Agent and one counsel for Lenders and to the extent necessary, one special or local counsel in each appropriate jurisdiction unless, in the reasonable opinion of any Lender, representation of all such Indemnitees would be inappropriate due to the existence of an actual or potential conflict of interest. Borrowers acknowledge that counsel may provide Agent with a benefit (such as a discount, credit or accommodation for other matters) based on counsel’s overall relationship with Agent, including fees paid hereunder. If, for any reason (including inaccurate reporting on financial statements, a Compliance Certificate or in any other Borrower Materials), it is determined that a higher Applicable Margin should have applied to a period than was actually applied, then the proper margin shall be applied retroactively and Borrowers shall immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount equal to the difference between the amount of interest and fees that would have accrued using the proper margin and the amount actually paid. All amounts payable by Borrowers under this Section shall be due on demand.

3.5. Illegality. If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Loans, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, (a) any obligation of such Lender to make or continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be suspended and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the LIBOR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by Agent without reference to the LIBOR component of Base Rate, in each case until such Lender notifies Agent that the circumstances giving rise to such determination no longer exist. Upon delivery of such notice (with a copy to the Borrower Agent), (x) Borrowers shall, at Borrowers’ election, prepay or convert all LIBOR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by Agent without reference to the LIBOR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon LIBOR, Agent shall, during the period of such suspension, compute the Base Rate applicable to such Lender without reference to the LIBOR component thereof until Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon LIBOR. Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount so prepaid or converted.

3.6. Inability to Determine Rates. Agent will promptly notify Borrower Agent and each Lender if, in connection with a request for a Borrowing of, or conversion to or continuation of, a LIBOR Loan, (a) Agent determines that (a) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, or (b) adequate and reasonable means do not exist for determining LIBOR for the requested Interest Period, or (b) Agent or

 

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Required Lenders determine for any reason that LIBOR for the requested Interest Period does not adequately and fairly reflect the cost to such Lenders of funding such Loan. Thereafter, (x) the obligation of Lenders to make or maintain LIBOR Loans shall be suspended and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR component of the Base Rate, the utilization of the LIBOR component in determining the Base Rate shall be suspended, in each case until Agent (upon instruction by Required Lenders) revokes such notice. Upon receipt of such notice, Borrower Agent may revoke any pending request for a Borrowing of, conversion to or continuation of a LIBOR Loan or, failing that, will be deemed to have submitted a request for a Base Rate Loan.

3.7. Increased Costs; Capital Adequacy.

3.7.1. Change in Law. If any Change in Law shall:

(a) impose modify or deem applicable any reserve, liquidity, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in calculating LIBOR) or Issuing Bank;

(b) subject any Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document, Letter of Credit or participation in LC Obligations, or change the basis of taxation of payments to such Lender or Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.9 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or Issuing Bank); or

(c) impose on any Lender, Issuing Bank or interbank market any other condition, cost or expense affecting any Loan, Loan Document, Commitment, Letter of Credit or participation in LC Obligations;

and the result thereof shall be to increase the cost to a Lender of making or maintaining any Loan or Commitment, or converting to or continuing any interest option for a Loan, or to increase the cost to a Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by a Lender or Issuing Bank hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or Issuing Bank, Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.

3.7.2. Capital Adequacy. If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital as a consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC Obligations, to a level below that which such Lender, Issuing Bank or holding company could have achieved but for such Change in Law (taking into consideration such Lender’s, Issuing Bank’s and holding company’s policies with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate it or its holding company for any such reduction suffered. Each Lender or Issuing Bank, upon determining in good faith any additional amount payable pursuant to this Section 3.7.2 will give prompt written notice thereof to Borrower Agent setting forth in reasonable detail the basis of the calculation of such additional amounts.

3.7.3. Compensation. Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section 3.7 shall not constitute a waiver of its right to demand such compensation, but Borrowers shall not be required to compensate a Lender or Issuing Bank for any

 

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increased costs incurred or reductions suffered more than six months prior to the date that the Lender or Issuing Bank notifies Borrower Agent of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

3.7.4. LIBOR Loan Reserves. If any Lender is required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits, Borrowers shall pay additional interest to such Lender on each LIBOR Loan equal to the costs of such reserves allocated to the Loan by the Lender (as determined by it in good faith, which determination shall be conclusive absent manifest error). The additional interest shall be due and payable on each interest payment date for the Loan; provided, however, that if the Lender notifies Borrowers (with a copy to Agent) of the additional interest less than 10 days prior to the interest payment date, then such interest shall be payable ten (10) days after Borrowers’ receipt of the notice.

3.8. Mitigation. If any Lender gives a notice under Section 3.5 or requests compensation under Section 3.7, or if Borrowers are required to pay additional amounts with respect to a Lender under Section 5.9, then such Lender shall use reasonable efforts to designate a different Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to it. Borrowers shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

3.9. Funding Losses. If for any reason (other than default by a Lender) (a) any Borrowing of, or conversion to or continuation of, a LIBOR Loan does not occur on the date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn), (b) any repayment or conversion of a LIBOR Loan occurs on a day other than the end of its Interest Period, or (c) Borrowers fail to repay a LIBOR Loan when required hereunder, then Borrowers shall pay to Agent its customary administrative charge and to each Lender all losses and expenses that it sustains as a consequence thereof, including any loss or expense arising from liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds. Lenders shall not be required to purchase Dollar deposits in the London interbank market or any other offshore Dollar market to fund any LIBOR Loan, but the provisions hereof shall be deemed to apply as if each Lender had purchased such deposits to fund its LIBOR Loans.

3.10. Maximum Interest. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (“maximum rate”). If Agent or any Lender shall receive interest in an amount that exceeds the maximum rate, the excess interest shall be applied to the principal of the Obligations or, if it exceeds such unpaid principal, refunded to Borrowers. In determining whether the interest contracted for, charged or received by Agent or a Lender exceeds the maximum rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

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SECTION 4. LOAN ADMINISTRATION

4.1. Manner of Borrowing and Funding Revolver Loans.

4.1.1. Notice of Borrowing.

(a) Whenever Borrowers desire funding of a Borrowing of Revolver Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such notice must be received by Agent no later than 12:00 noon (a) on the Business Day of the requested funding date, in the case of Base Rate Loans, and (b) at least three Business Days prior to the requested funding date, in the case of LIBOR Loans. Notices received after 12:00 noon shall be deemed received on the next Business Day. Each Notice of Borrowing shall be irrevocable and shall specify (1) the amount of the Borrowing, (2) the requested funding date (which must be a Business Day), (3) whether the Borrowing is to be made as Base Rate Loans or LIBOR Loans, and (4) in the case of LIBOR Loans, the duration of the applicable Interest Period (which shall be deemed to be one month if not specified).

(b) Unless payment is otherwise timely made by Borrowers, the becoming due of any Obligations (whether principal, interest, fees or other charges, including Extraordinary Expenses, LC Obligations, Cash Collateral and Bank Product Debt) shall be deemed to be a request for Base Rate Revolver Loans on the due date, in the amount of such Obligations. The proceeds of such Revolver Loans shall be disbursed as direct payment of the relevant Obligation.

(c) If Borrowers establish a controlled disbursement account with Agent or any Affiliate of Agent, then the presentation for payment of any check or other item of payment drawn on such account at a time when there are insufficient funds to cover it shall be deemed to be a request for Base Rate Revolver Loans on the date of such presentation, in the amount of the check and items presented for payment. The proceeds of such Revolver Loans may be disbursed directly to the controlled disbursement account or other appropriate account.

4.1.2. Fundings by Lenders. Each Lender shall timely honor its Revolver Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans that is properly requested hereunder. Except for Borrowings to be made as Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing) by 1:00 p.m. on the proposed funding date for Base Rate Loans or by 3:00 p.m. at least two Business Days before any proposed funding of LIBOR Loans. Each Lender shall fund to Agent such Lender’s Pro Rata share of the Borrowing to the account specified by Agent in immediately available funds not later than 3:00 p.m. on the requested funding date, unless Agent’s notice is received after the times provided above, in which event Lender shall fund its Pro Rata share by 11:00 a.m. on the next Business Day. Subject to its receipt of such amounts from Lenders, Agent shall disburse the proceeds of the Revolver Loans as directed by Borrower Agent. Unless Agent shall have received (in sufficient time to act) written notice from a Lender that it does not intend to fund its Pro Rata share of a Borrowing, Agent may assume that such Lender has deposited or promptly will deposit its share with Agent, and Agent may disburse a corresponding amount to Borrowers. If a Lender’s share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not received by Agent, then Agent shall be entitled to recover such corresponding amount and interest thereon at the applicable rate from such Lender. If such Lender does not pay such corresponding amount upon demand from Agent, then Borrowers agree to repay to Agent on demand the amount of such share, together with interest thereon from the date disbursed until repaid, at the rate applicable to the Borrowing.

4.1.3. Swingline Loans; Settlement.

(a) Agent may, but shall not be obligated to, advance Swingline Loans to Borrowers, up to an aggregate outstanding amount equal to 10% of the aggregate Commitments, unless the funding is specifically required to be made by all Lenders hereunder. Each Swingline Loan shall constitute a Revolver Loan for all purposes, except that payments thereon shall be made to Agent for its own account, and shall bear interest at the Base Rate in effect from time to time plus the Applicable Margin. The obligation of Borrowers to repay Swingline Loans shall be evidenced by the records of Agent and need not be evidenced by any promissory note.

(b) To facilitate administration of the Revolver Loans, Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that

 

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settlement among them with respect to Swingline Loans and other Revolver Loans may take place on a date determined from time to time by Agent, which shall occur at least once each week. On each settlement date, settlement shall be made with each Lender in accordance with the Settlement Report delivered by Agent to Lenders. Between settlement dates, Agent may in its discretion apply payments on Revolver Loans to Swingline Loans, regardless of any designation by Borrower or any provision herein to the contrary. Each Lender’s obligation to make settlements with Agent is absolute and unconditional, without offset, counterclaim or other defense, and whether or not the Commitments have terminated, the aggregate Revolver Loans exceed the Borrowing Base or the conditions in Section 6 are satisfied. If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any Swingline Loan may not be settled among Lenders hereunder, then each Lender shall be deemed to have purchased from Agent a Pro Rata participation in each unpaid Swingline Loan and shall transfer the amount of such participation to Agent, in immediately available funds (and Agent may apply Cash Collateral available with respect to the applicable Swingline Loan), within one Business Day after Agent’s request therefor.

4.1.4. Notices. Each Borrower authorizes Agent and Lenders to extend, convert or continue Loans, effect selections of interest rates, and transfer funds to or on behalf of Borrowers based on telephonic or e-mailed instructions. Borrowers shall confirm each such request by prompt delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but if it differs in any material respect from the action taken by Agent or Lenders, the records of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any liability for any loss suffered by a Borrower as a result of Agent or any Lender acting upon its understanding of telephonic or e-mailed instructions from a person believed in good faith by Agent or any Lender to be a person authorized to give such instructions on a Borrower’s behalf.

4.2. Defaulting Lender.

4.2.1. Reallocation of Payments. Agent may (but shall not be required to), in its discretion, retain any payments or other funds received by Agent that are to be provided to a Defaulting Lender hereunder, and may hold any such amounts (without interest accruing thereon) as collateral for such Lender’s obligations hereunder and apply such funds to such Lender’s defaulted obligations or readvance the funds to Borrowers in accordance with this Agreement. The failure of any Lender to fund a Loan, to make any payment in respect of LC Obligations or to otherwise perform its obligations hereunder shall not relieve any other Lender of its obligations, and no Lender shall be responsible for default by another Lender. Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that, solely for purposes of determining a Defaulting Lender’s right to (a) vote on matters relating to the Loan Documents (other than a modification that would (i) increase or extend the Commitment of such Defaulting Lender or (ii) reduce or waive payment of principal, interest or fees that by its terms affects such Defaulting Lender more adversely than other affected Lenders) and (b) to share in payments, fees and Collateral proceeds thereunder, a Defaulting Lender shall not be deemed to be a “Lender” until all its defaulted obligations have been cured.

4.2.2. Reallocation of Pro Rata Shares to Reduce Fronting Exposure. During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swingline Loans pursuant to Sections 2.3.2 and 4.1.3, the Pro Rata share of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided that the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swingline Loans shall not exceed the positive difference, if any, of (a) the Commitment of that non-Defaulting Lender minus (b) the aggregate outstanding amount of the Revolver Loans of such non-Defaulting Lender.

4.2.3. Defaulting Lender Cure. If Borrowers, Agent and Issuing Bank agree in writing in their sole discretion that a Defaulting Lender’s defaulted obligations have been cured, Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any

 

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conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as Agent may determine to be necessary to cause the Revolver Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held on a Pro Rata basis by the Lenders in accordance with their Pro Rata interests (without giving effect to Section 4.2.2), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrowers while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed to by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

4.3. Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of LIBOR Loans when made shall be in a minimum amount of $5,000,000, plus any increment of $1,000,000 in excess thereof. No more than four Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR Loans having the same length and beginning date of their Interest Periods shall be aggregated together and considered one Borrowing for this purpose. Upon determining LIBOR for any Interest Period requested by Borrowers, Agent shall promptly notify Borrowers thereof by telephone or electronically and, if requested by Borrowers, shall confirm any telephonic notice in writing.

4.4. Borrower Agent. Each Credit Party hereby designates Capella Healthcare, Inc. (“Borrower Agent”) as its representative and agent for all purposes under the Loan Documents, including requests for and receipts of Loans and Letters of Credit, designation of interest rates, delivery or receipt of communications, preparation and delivery of Borrowing Base, financial reports or any other Borrower Materials, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with Agent, Issuing Bank or any Lender. Borrower Agent hereby accepts such appointment. Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including any notice of borrowing) delivered by Borrower Agent on behalf of any Credit Party. Agent and Lenders may give any notice or communication with a Credit Party hereunder to Borrower Agent on behalf of such Credit Party. Each of Agent, Issuing Bank and Lenders shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes under the Loan Documents. Each Credit Party agrees that any notice, election, communication, delivery, representation, agreement, action or undertaking made on its behalf by Borrower Agent shall be binding upon and enforceable against it.

4.5. One Obligation. The Loans, LC Obligations and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Agent’s Lien upon all Collateral; provided, however, that Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.

4.6. Effect of Termination. On the effective date of any termination of the Commitments, all Obligations shall be immediately due and payable, and any Lender or any Bank Product Provider may terminate its and its Affiliates’ Bank Products (including, only with the consent of Agent, any Cash Management Services). All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2 and this Section, and the obligation of each Credit Party and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.

 

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SECTION 5. PAYMENTS

5.1. General Payment Provisions. All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Taxes, and in immediately available funds, not later than 12:00 noon on the due date. Any payment after such time may be deemed made on the next Business Day. Any payment of a LIBOR Loan prior to the end of its Interest Period shall be accompanied by all amounts due under Section 3.9. Any prepayment of Loans shall be applied first to Base Rate Loans and then to LIBOR Loans, unless otherwise requested by Borrower Agent or, if an Event of Default is continuing, as the Agent may determine. Notwithstanding the foregoing, if the amount of any prepayment of Revolving Loans shall be in excess of the amount of the Base Rate Loans at the time outstanding (an “Excess Amount”), so long as no Default or Event of Default shall have occurred and be continuing, only the portion of the amount of such prepayment as is equal to the amount of such outstanding Base Rate Loans shall be immediately prepaid and the balance shall be held as Cash Collateral or, at the election of the Borrower Agent, the Excess Amount shall be made available to the Borrowers to the extent it would not cause the aggregate Revolver Loans to exceed the Borrowing Base.

5.2. Repayment of Revolver Loans. Revolver Loans shall be due and payable in full on the Revolver Termination Date, unless payment is sooner required hereunder. Revolver Loans may be prepaid from time to time, without penalty or premium. If any Asset Disposition includes the disposition of Accounts, Inventory or other ABL Priority Collateral (except as otherwise permitted under this Agreement between Credit Parties or so long as no Dominion Trigger Period exists or occurs as a result thereof) or if any prepayment of any Term Loan Obligation may be required with the proceeds of any Asset Disposition or insurance or condemnation award attributable to ABL Priority Collateral, then Net Proceeds thereof shall be applied to the Revolver Loans (to the extent outstanding) and used to cash collateralize Letters of Credit. Notwithstanding anything herein to the contrary, if the aggregate Revolver Loans exceed the Borrowing Base, Borrowers shall, on the sooner of Agent’s demand or the first Business Day after any Senior Officer of the Borrower Agent has knowledge thereof, repay the outstanding Revolver Loans in an amount sufficient to reduce the principal balance of Revolver Loans to the Borrowing Base.

5.3. [Reserved].

5.4. Payment of Other Obligations. Obligations including Loans, LC Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.

5.5. Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any obligation to marshal any assets in favor of any Credit Party or against any Obligations. If any payment by or on behalf of Borrowers is made to Agent, Issuing Bank or any Lender, or Agent, Issuing Bank or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

5.6. Application and Allocation of Payments.

5.6.1. General. Payments made by Borrowers or Credit Parties hereunder shall be applied (a) first, as specifically required hereby; (b) second, to Obligations then due and owing; (c) third, to other Obligations specified by Borrower Agent; and (d) fourth, to other Obligations, as determined by Agent in its discretion.

5.6.2. Post-Default Allocation. Notwithstanding anything in any Loan Document to the contrary, during the continuation of an Event of Default, monies to be applied to the Obligations,

 

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whether arising from payments by Credit Parties, realization on Collateral, setoff or otherwise, shall, at the request of the Required Lenders and subject to the provisions of Sections 2.1.6, 2.3.3 and 4.2 and the Intercreditor Agreement, be allocated as follows:

(a) first, to all fees, indemnification, costs and expenses, including Extraordinary Expenses, owing to Agent;

(b) second, to all amounts owing to Agent on Swingline Loans and Obligations arising from Cash Management Services, Protective Advances, and Loans and participations that a Defaulting Lender has failed to settle or fund;

(c) third, to all amounts owing to Issuing Bank on LC Obligations;

(d) fourth, to all Obligations constituting fees, indemnification, costs or expenses owing to Lenders (excluding amounts relating to Bank Products);

(e) fifth, to all Obligations constituting interest (excluding amounts relating to Bank Products);

(f) sixth, to provide Cash Collateral for outstanding Letters of Credit to the extent not otherwise Cash Collateralized by Borrowers pursuant to Section 2.3.3;

(g) seventh, to all Loans;

(h) eighth, to all other Bank Product Debt; and

(i) last, to all remaining Obligations.

Subject to Section 2.3.3, amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a pro rata basis among the Obligations in the category. Monies and proceeds obtained from a Credit Party shall not be applied to its Excluded Swap Obligations, but appropriate adjustments shall be made with respect to amounts obtained from other Credit Parties to preserve the allocations in any applicable category. Agent shall have no obligation to calculate the amount to be distributed with respect to any Bank Product Debt, but may request and rely upon written notice of the amount (setting forth a reasonably detailed calculation) from the Secured Party. If the provider fails to deliver the calculation within five Business Days following request, Agent may assume the amount is zero. The allocations set forth in this Section are solely to determine the rights and priorities among Secured Parties, and may be changed by agreement of the affected Secured Parties, without the consent of any Credit Party. This Section is not for the benefit of or enforceable by any Credit Party.

5.6.3. Erroneous Application. Agent shall not be liable for any application of amounts made by it in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person (other than the Credit Parties) to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by a Secured Party, such Secured Party hereby agrees to return it).

5.7. Application of Payments. During any Dominion Trigger Period, (a) if the Concentration Account is maintained at Bank of America, the ledger balance in the Concentration Account as of the end of a Business Day shall be transferred to Agent’s account and applied to the Obligations at the beginning of the next Business Day and (b) if the Concentration Account is not maintained at Bank of America, payments shall be applied to the Obligations on the Business Day of receipt of good funds by Agent in the account designated by Agent for such purposes; provided that if any such payment is received after 2:00 p.m., it may be deemed received on the next Business Day. If, as a

 

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result of such application, a credit balance exists, the balance shall not accrue interest in favor of Borrowers and shall be made available to Borrowers as long as no Default or Event of Default exists. During an Event of Default, each Borrower irrevocably waives the right to direct the application of any payments or Collateral proceeds, and agrees that Agent shall have the continuing, exclusive right to apply and reapply same against the Obligations, in such manner as Agent deems advisable.

5.8. Loan Account; Account Stated.

5.8.1. Loan Account. Agent shall maintain in accordance with its usual and customary practices an account or accounts (“Loan Account”) evidencing the Debt of Borrowers resulting from each Loan or issuance of a Letter of Credit from time to time. Any failure of Agent to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Agent may maintain a single Loan Account in the name of Borrower Agent, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.

5.8.2. Entries Binding. Entries made in the Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Account is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies Agent in writing within 30 days after receipt or inspection that specific information is subject to dispute.

5.9. Taxes.

5.9.1. Payments Free of Taxes. All payments by Credit Parties of Obligations shall, to the extent permitted by Applicable Law, be free and clear of and without reduction for any Taxes. If Applicable Law requires any Credit Party or Agent to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall, if applicable, be based on information provided pursuant to Section 5.10 and Agent shall pay the amount withheld or deducted to the relevant Governmental Authority. If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased as necessary so that Agent, Lender or Issuing Bank, as applicable, receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities in accordance with Applicable Law.

5.9.2. Payment. Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Agent, Lenders and Issuing Bank for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Credit Party or Agent, or paid by Agent, any Lender or Issuing Bank, with respect to any Obligations, Letters of Credit or Loan Documents, whether or not such Taxes were properly asserted by the relevant Governmental Authority, and including all penalties, interest and reasonable expenses relating thereto, as well as any amount that a Lender or Issuing Bank fails to pay indefeasibly to Agent under Section 5.10. A certificate as to the amount of any such payment or liability delivered to Borrower Agent by Agent, or by a Lender or Issuing Bank (with a copy to Agent), shall be conclusive, absent manifest error. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Borrower, Borrower Agent shall deliver to Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Agent.

5.9.3. Treatment of Certain Refunds. Unless required by Applicable Law, at no time shall Agent have any obligation to file for or otherwise pursue on behalf of any Lender or Issuing Bank, or have any obligation to pay to any Lender or Issuing Bank, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or Issuing Bank, as the case may be. If Agent, any Lender or Issuing Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other

 

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Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to Section 5.9, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 5.9 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by such Agent, Lender or Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrowers, upon request of the Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Agent, Lender or Issuing Bank in the event such Agent, Lender or Issuing Bank is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require Agent, any Lender or any Issuing Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrowers or any other Person.

5.10. Lender Tax Information.

5.10.1. Status of Lenders. Each Lender shall deliver documentation and information to Agent and Borrower Agent, at the times and in form required by Applicable Law or reasonably requested by Agent or Borrower Agent, sufficient to permit Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.

5.10.2. Documentation. If a Borrower is resident for tax purposes in the United States, any Lender that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Agent and Borrower Agent IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested by Agent or Borrower Agent to determine whether such Lender is subject to backup withholding or information reporting requirements. If any Foreign Lender is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Agent and Borrower Agent, on or prior to the date on which it becomes a Lender hereunder (and from time to time thereafter upon request by Agent or Borrower Agent, but only if such Foreign Lender is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, IRS Form W-8BEN and a certificate showing such Foreign Lender is not (a) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of any Credit Party within the meaning of section 881(c)(3)(B) of the Code, or (c) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code; or (e) any other form or certification prescribed by Applicable Law or reasonably requested by Borrower Agent or Agent as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Agent and Borrowers to determine the withholding or deduction required to be made. If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower Agent and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower Agent or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower Agent or the Agent as may be necessary for the Borrower Agent and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 5.10.2, “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

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5.10.3. Lender Obligations. Each Lender and Issuing Bank shall promptly notify Borrowers and Agent of any change in circumstances that would change any claimed Tax exemption or reduction. Each Lender and Issuing Bank shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Agent by any Governmental Authority due to such Lender’s or Issuing Bank’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section. Each Lender and Issuing Bank authorizes Agent to set off any amounts due to Agent under this Section against any amounts payable to such Lender or Issuing Bank under any Loan Document.

5.11. Nature and Extent of Each Borrower’s Liability.

5.11.1. Joint and Several Liability. Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents, except its Excluded Swap Obligations. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Credit Party is or may become a party or be bound; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Credit Party; (e) any election by Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or any Lender against any Credit Party for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.

5.11.2. Waivers.

(a) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to proceed against any Credit Party, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. Each Borrower waives all defenses available to a surety, guarantor or accommodation co-obligor other than Full Payment of all Obligations and waives, to the maximum extent permitted by law, any right to revoke any guaranty of the Obligations as long as it is a Borrower. It is agreed among each Borrower, Agent and Lenders that the provisions of this Section 5.11 are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and Lenders would decline to make Loans and issue Letters of Credit. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.

(b) Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral or any Real Estate by judicial foreclosure or non judicial sale or enforcement, without affecting any rights and remedies under this Section 5.11. If, in taking any action in connection with the exercise of any rights or remedies, Agent or any Lender shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the

 

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action may result in loss of any rights of subrogation that any Borrower might otherwise have had. Any election of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as non-judicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. Agent may bid all or a portion of the Obligations at any foreclosure or trustee’s sale or at any private sale, and the amount of such bid need not be paid by Agent but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.11, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

5.11.3. Extent of Liability; Contribution.

(a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.11 shall be limited to the greater of (a) all amounts for which such Borrower is primarily liable, as described below, and (b) such Borrower’s Allocable Amount.

(b) If any Borrower makes a payment under this Section 5.11 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “Allocable Amount” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.11 without rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.

(c) Nothing contained in this Section 5.11 shall limit the liability of any Borrower to pay or guarantee Loans made directly or indirectly to that Borrower (including Loans advanced hereunder to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), LC Obligations relating to Letters of Credit issued to support such Borrower’s or its Subsidiaries’ business, Bank Product Debt incurred to support such Borrower’s or its Subsidiaries’ business, and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.

(d) Each Credit Party that is a Qualified ECP when its guaranty of or grant of Lien as security for a Swap Obligation becomes effective hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide funds or other support to each Specified Credit Party with respect to such Swap Obligation as may be needed by such Specified Credit Party from time to time to honor all of its obligations under the Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP’s obligations and undertakings under this Section 5.11 voidable under any applicable fraudulent transfer or conveyance act). The obligations and undertakings of each Qualified ECP under this Section shall remain in full force and effect until Full Payment of all Obligations. Each Credit Party intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support or other agreement” for the benefit of, each Credit Party for all purposes of the Commodity Exchange Act.

 

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5.11.4. Joint Enterprise. Each Borrower has requested that Agent and Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and the successful operation of each Borrower is dependent upon the successful performance of the integrated group. Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of the facility, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that Agent’s and Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.

5.11.5. Subordination. Each Borrower hereby subordinates any claims, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution, indemnification or set off, that it may have at any time against any other Credit Party, howsoever arising, to the Full Payment of all Obligations.

 

SECTION 6. CONDITIONS PRECEDENT

6.1. Conditions Precedent to Initial Loans. In addition to the conditions set forth in Section 6.2, this Agreement shall not be effective and there shall be no obligation or requirement, on or after the Closing Date, to fund an initial request for a Loan, initial issuance of any Letter of Credit, or otherwise extend initial credit to any Credit Party hereunder, until the date that each of the following conditions has been satisfied or waived:

(a) Amended and Restated Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note. Each other Loan Document shall have been duly executed and delivered to Agent by each of the signatories thereto, and each Credit Party shall be in compliance with all terms thereof.

(b) Agent shall have received, in proper form for filing or recording, all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens; provided that no such filings or recordations shall be required with respect to the Fixed Asset Priority Collateral (as defined in the Intercreditor Agreement) unless and until corresponding filings or recordations are required to be provided to the Term Loan Agent in accordance with the Term Loan Documents.

(c) [Reserved].

(d) Agent shall have received a certificate, in form and substance satisfactory to it, from a knowledgeable Senior Officer of Borrower Agent certifying that, after giving effect to the transactions hereunder, (i) the Credit Parties, taken as a whole, are Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 9 are true and correct; (iv) each Credit Party has complied with all agreements and conditions to be satisfied by it under the Loan Documents; and (v) as to matters set forth in Section 6.1(k) (and attaching the Term Loan Documents).

(e) Agent shall have received a certificate of a duly authorized officer of each Credit Party, certifying (i) that attached copies of such Credit Party’s Organic Documents are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified, revoked or contradicted by any other resolution; (iii) that attached copies of such Credit Party’s good standing certificates are true, complete and correct copies from such Credit Party’s jurisdiction of organization certified by the appropriate official of such jurisdiction as of a recent date; and (iv) to the title, name and signature of each Person authorized to sign the Loan Documents. Agent may conclusively rely on this certificate until it is otherwise notified by the applicable Credit Party in writing.

 

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(f) Agent shall have received a written opinion of Waller Lansden Dortch & Davis, PLLC, as counsel to the Credit Parties, address to the Agent, in its capacities as administrative agent and collateral agent, and each of the Lenders, in form and substance reasonably satisfactory to the Agent.

(g) Agent shall have received copies of the charter documents of each Credit Party, certified by the Secretary of State or other appropriate official of such Credit Party’s jurisdiction of organization. Agent shall have received good standing certificates for each Credit Party, issued by the Secretary of State or other appropriate official of such Credit Party’s jurisdiction of organization and each jurisdiction where such Credit Party’s conduct of business or ownership of Property necessitates qualification.

(h) Agent shall have received copies of policies or certificates of insurance for the insurance policies carried by Credit Parties, all in compliance with the Loan Documents.

(i) Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the Closing Date.

(j) Agent shall have received a Borrowing Base Certificate prepared as of November 30, 2014.

(k) Agent shall have received evidence of the effectiveness, prior to or substantially with the occurrence of the Closing Date, of the Term Loan Documents and the receipt by Borrowers of loan proceeds of $100,000,000, in each case, in compliance in all material respects with all applicable laws and regulations, with the receipt of all necessary material governmental, stockholder and third party consents and approvals.

(l) Agent shall have received the Intercreditor Agreement, duly executed and delivered by the Term Loan Agent and acknowledged by the Credit Parties, in form and substance reasonably satisfactory to the Agent.

(m) The Hartsville Acquisition has been consummated in accordance with the terms of the Hartsville Acquisition Documents, without giving effect to any amendments or waivers thereto by Parent, or consents by Parent thereunder, that are materially adverse to the interests of the Lenders (in their capacity as such) without the consent of the Agent (such consent not to be unreasonably withheld, conditioned or delayed) and Borrower Agent shall have certified Borrowers’ compliance with clause (d) of the definition of “Permitted Acquisition” (including reasonably detailed calculations thereof).

(n) After giving effect to the consummation of the Hartsville Acquisition and Term Loan Credit Agreement, none of the Borrowers and their Subsidiaries shall have (or guarantee or provide collateral security for) any Debt for borrowed money owed to a Person other than a Borrower or other Credit Party, except for (i) Debt pursuant to or in respect of the Loan Documents and (ii) Permitted Debt.

(o) Since December 31, 2013, there shall not have occurred or arisen any Company Material Adverse Effect.

(p) Lenders shall have received, at least 3 Business Days prior to the Closing Date, all documentation or other information as is reasonably requested in writing at least 10 Business Days prior to the Closing Date by Agent about Credit Parties and their respective Subsidiaries reasonably determined to be required under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

 

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6.2. Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and Lenders shall not be required to fund any Loans, arrange for issuance of any Letters of Credit or grant any other accommodation to or for the benefit of Credit Parties (other than Protective Advances in accordance with Section 2.1.6), unless the following conditions are satisfied:

(a) No Default or Event of Default shall exist at the time of, or result from, such funding, issuance or grant;

(b) The representations and warranties of each Credit Party in the Loan Documents shall be true and correct in all material respects on the date of, and upon giving effect to, such funding, issuance or grant (except for representations and warranties that expressly relate to an earlier date);

(c) All conditions precedent in any other Loan Document shall be satisfied;

(d) No event shall have occurred or circumstance exist that has or could reasonably be expected to have a Material Adverse Effect;

(e) With respect to issuance of a Letter of Credit, the LC Conditions shall be satisfied; and

(f) After giving effect to any requested Credit Extension, (i) the aggregate outstanding amount of all Revolver Loans plus all unreimbursed drawings under Letters of Credit plus the undrawn amount of all outstanding Letters of Credit does not exceed (ii) the Borrowing Base (excluding any applicable LC Reserve).

Each request (or deemed request) by Borrowers for funding of a Loan, issuance of a Letter of Credit or grant of an accommodation shall constitute a representation by Borrowers that the foregoing conditions are satisfied on the date of such request and on the date of such funding, issuance or grant. As an additional condition to any funding, issuance or grant, Agent shall have received such other information, documents, instruments and agreements as it reasonably deems appropriate in connection therewith.

 

SECTION 7. COLLATERAL

7.1. Additional Security.

7.1.1. The Borrowers and Guarantors will grant to the Agent for the benefit of the Secured Parties security interests in and Mortgages on such assets and Real Estate of such Borrowers and Guarantors (other than Excluded Collateral (including Excluded Equity Interests)) as are not covered by the Security Documents in effect on the Closing Date and as may be reasonably requested from time to time by the Agent or the Required Lenders (collectively, as amended, restated, supplemented or otherwise modified from time to time, the “Additional Security Documents”). All such security interests and Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Agent and the Borrowers and shall constitute valid, enforceable (except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law)) under applicable domestic law and perfected security interests, hypothecations and Mortgages superior to and prior to the rights of all third Persons and subject to no other Liens, in each case, except for Permitted Liens and subject to the terms of the Intercreditor Agreement. The Additional Security Documents or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect (if and to the extent the assets subject to the applicable Additional Security Document can be perfected by the actions required by such Additional Security Document), preserve and protect the Liens in favor of the Agent required to be granted pursuant to the Additional Security Documents and all material taxes, fees and other charges payable in connection therewith shall be paid in full to the extent due and owing. Notwithstanding the

 

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foregoing, this Section 7.1.1 shall not apply to (and Borrowers and Guarantors shall not be required to grant a Mortgage in) (i) any owned Real Estate the Fair Market Value of which (as reasonably determined by Borrower Agent) is less than or equal to $2,000,000 or (ii) any Leasehold.

7.1.2. The Borrowers will, and will cause each of the other Credit Parties to, at the expense of the Borrowers, but subject to the limitations set forth herein and the other Security Documents, make, execute, endorse, acknowledge, authorize, file and/or deliver to the Agent from time to time such vouchers, invoices, schedules, confirmatory collateral assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, ALTA real property surveys (to the extent required by the Term Loan Agent) in form and substance approved by the Term Loan Agent (or existing ALTA surveys together with “affidavits of no-change” in the form acceptable to the Term Loan Agent and the issuing title company to omit any exception for matters that a survey may show and to provide a “same as survey” endorsement to the Mortgage Policy), reports, assignments, and other documents, assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents (other than Excluded Collateral) as the Agent may reasonably require. Furthermore, the Borrowers will, and will cause the other Credit Parties to, deliver to the Agent with respect to Mortgaged Properties (1) to the extent such items are required by the Term Loan Agent, such customary opinions of counsel (including an opinion of counsel in the state in which such Mortgaged Property is located with respect to the enforceability of the form of Mortgage to be recorded in such state), (2) to the extent such items are required by the Term Loan Agent, a lender’s Mortgage Policy in an amount not less than the fair market value of such Mortgaged Property, together with a title report issued by a title company with respect thereto and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, in form and substance reasonably satisfactory to the Agent and insuring that the Agent has a second priority mortgage lien on such Mortgaged Property together with such endorsements in favor of Agent as are required by the Term Loan Agent, and evidence reasonably satisfactory to the Agent that the applicable Credit Party has paid to the title company or to the applicable Governmental Authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of such Mortgage Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgage for such Mortgaged Property in the appropriate real estate records, (3) (A) a completed Flood Certificate with respect such Mortgaged Property, which Flood Certificate shall be addressed to the Collateral Agent and otherwise comply with the Flood Program; (B) if the Flood Certificate states that such Mortgaged Property is located in a Flood Zone, Borrower Agent’s written acknowledgment of receipt of written notification from the Collateral Agent (x) as to the existence of a Mortgage on such Mortgaged Property and (y) as to whether the community in which such Mortgaged Property is located is participating in the Flood Program; (C) if such Mortgaged Property is located in a Flood Zone and is located in a community that participates in the Flood Program, evidence that the Borrower has obtained a policy of flood insurance that is in compliance with all applicable requirements of the Flood Program; and (D) if such Mortgaged Property is located in a Flood Zone and is located in a community that does not participate in the Flood Program, evidence that the Borrower has obtained private flood insurance that is in compliance with all applicable regulations or as is acceptable to the Collateral Agent and (4) to the extent such items are required by or delivered to the Term Loan Agent, other related documentation as and when may reasonably be requested by the Collateral Agent in order to assure itself that Section 7.1.1 has been complied with. Notwithstanding the foregoing, nothing in this Agreement shall require any Credit Party to (i) make any filings or take any other action to record or perfect the Agent’s Lien in any intellectual property outside the United States or (ii) take any actions in any non-U.S. jurisdiction or that are required by the laws of any non-U.S. jurisdiction in order to (x) create any security interests in assets located or titled outside of the U.S. or (y) perfect such security interests (it being understood that there shall be no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction).

7.1.3. If the Agent or the Required Lenders reasonably determine that they are required by law or regulation to have appraisals prepared in respect of any Mortgaged Property, the Borrowers will, at their own expense, provide to the Agent appraisals which satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of the Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended, and which shall otherwise be in form and substance reasonably satisfactory to the Agent.

 

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7.1.4. The Credit Parties agree that each action required by clauses 7.1.1 through 7.1.3 shall be completed within 60 days after such action is requested to be taken by the Agent or the Required Lenders (as such time may be extended by the Agent in its reasonable discretion).

7.1.5. New Subsidiaries. Upon the formation or acquisition of any new direct or indirect Domestic Subsidiary (other than an Immaterial Subsidiary) by any Credit Party, then the Borrower Agent shall, at the Credit Parties’ expense, within 60 days after such formation or acquisition (or such later date as the Agent may specify in its sole discretion), (a)(i) cause it to become a Borrower under this agreement if it is a wholly-owned Domestic Subsidiary of the Company, or (ii) if none of the assets of such subsidiary are to be included in the Borrowing Base or the Agent otherwise consents (or requests) in writing, cause it to become a Guarantor and guaranty the Obligations in a manner reasonably satisfactory to Agent, or (iii) if it is a Permitted Joint Venture Subsidiary, cause such Subsidiary to grant Liens on “Collateral” (as defined in the Joint Venture Subsidiary Security Documents) owned or held by such Subsidiary pursuant to the Joint Venture Subsidiary Security Documents, and (b) cause such Subsidiary and its parent to duly execute and deliver to Agent such joinder agreements, amendments or supplements to the Loan Documents as are reasonably requested by and in form and substance reasonably satisfactory to the Agent, control agreements (if required under Section 8.2) and a legal opinion in form and substance reasonably satisfactory to Agent, to cause or authorize the filing of appropriate UCC financing statements, recording of Mortgages in accordance with Section 7.1.1 and, to the extent required by the Pledge Agreement, delivery of stock or membership interest certificates and delivery of intercompany notes (to the extent certificated), in each case, accompanied by undated stock powers or other appropriate instruments of transfer executed in blank, and to take any other action as may be necessary to vest in Agent valid and subsisting Liens in or on all the assets of such Subsidiary purported to be subject thereto and all the Equity Interests of such Subsidiary (other than Excluded Equity Interests); provided, that a Permitted Joint Venture Subsidiary shall execute and deliver such additional agreements, instruments and documents (and satisfy any additional requirements) as set forth in the definition thereof.

7.1.6. New Deposit Accounts and Securities Accounts. Concurrently with or prior to the opening of a Deposit Account, Securities Account or commodity account by any Credit Party, other than any Excluded Deposit Account, such Credit Party shall deliver to Agent a Deposit Account Control Agreement (which with respect to a Government Receivables Deposit Account will be a Government Receivables Deposit Account Agreement as defined in Section 8.2.2(b) hereof), or if acceptable to Administrative Agent, an amendment or joinder to an existing Deposit Account Control Agreement, covering such Deposit Account (as required hereunder with respect to the proceeds of Accounts to be deposited in such Deposit Account), and/or a control agreement covering such Securities Account or commodity account, in form and substance reasonably satisfactory to Agent, duly executed by such Credit Party, Agent and the applicable bank, securities intermediary or commodity intermediary, as the case may be.

7.1.7. Liens required to be granted from time to time pursuant to this Section 7.1.7 shall be subject to exceptions and limitations set forth in this Agreement and the other Loan Documents.

7.2. Further Assurances.

7.2.1. All Liens granted to Agent under the Loan Documents are for the benefit of Secured Parties. Promptly upon request, Credit Parties shall deliver such instruments, assignments, or other documents or agreements, and shall take such actions, as Agent deems appropriate under Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise to give effect to the intent of this Agreement. Each Credit Party authorizes Agent to file any financing statement that, with respect to each Borrower and Guarantor, describes the Collateral as “all assets” or “all personal property” or words to

 

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similar effect, and, with respect to each Credit Support Party, describes the Collateral pledged by such Credit Support Party in a manner consistent with the description contained in the Joint Venture Security Documents. Each Credit Party ratifies any filings made by Agent to effect or perfect its Lien on any Collateral.

7.2.2. Notwithstanding anything to the contrary, if any Credit Party or any Subsidiary of the Credit Parties is a primary obligor or provides a guarantee of and/or provides collateral security for the benefit of the holders of the Senior Notes or the credit providers under the Term Loan Documents (or, in each case, any Replacement Indebtedness in respect thereof) such Credit Party or such Subsidiary, as applicable, shall, if not otherwise required to do so under Section 7, promptly provide a similar guaranty and collateral security (subject to the terms of the Intercreditor Agreement) with respect to the Obligations for the benefit of the Secured Creditors.

 

SECTION 8. COLLATERAL ADMINISTRATION

8.1. Borrowing Base Certificates. Borrower Agent shall deliver to Agent (and after receipt, Agent shall promptly distribute to each Lender) a Borrowing Base Certificate (i) by the 20th day of each month, prepared as of the close of business as of the previous month and (ii) during a Reporting Trigger Period, by 5 p.m. (New York City time) by the third Business Day of each week, as of the prior week end. All calculations of Availability in any Borrowing Base Certificate shall originally be made by Borrowers and certified by a Senior Officer of Borrower Agent, provided that Agent may from time to time review and adjust any such calculation to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the Borrowing Base Reserve or Availability Reserve or to adjust the Reserves in its Credit Judgment.

8.2. Cash Management System.

8.2.1. Schedule of Deposit Accounts. Schedule 8.2.1 (as may be updated on a Fiscal Quarter basis) sets forth all Deposit Accounts maintained by the Credit Parties. Except as set forth below pursuant to the Cash Management System and with respect to the Recourse Account, each Credit Party shall be the sole account holder of each Deposit Account and shall not allow any other Person to have control over a Deposit Account or any Property deposited therein (other than Term Loan Agent, pursuant to a Deposit Account Control Agreement executed by Agent, Term Loan Agent, the applicable Credit Party and the applicable bank).

8.2.2. Cash Management System. The Credit Parties will establish and maintain the cash management system described below (the “Cash Management System”):

(a) Except in connection with Excluded Deposit Accounts or as set forth on Schedule 8.2.2, on or prior to the Closing Date (or, with respect to Deposit Accounts acquired in connection with the Hartsville Acquisition, such later date not to exceed 90 days after the Closing Date as the Agent may, in its sole reasonable discretion, consent to in writing), each Credit Party will (i) take all actions necessary to provide that all Account Debtors in respect of Government Accounts forward payment directly to an account of such Credit Party designated as a Government Receivables Deposit Account on Schedule 8.2.2 (such schedule to be delivered to the Agent on or before the Closing Date (or, with respect to Deposit Accounts acquired in connection with the Hartsville Acquisition, such later date not to exceed 90 days after the Closing Date as the Agent may, in its sole reasonable discretion, consent to in writing)) (each a “Government Receivables Deposit Account”) and (ii) take all actions necessary to provide that all Account Debtors in respect of all Private Accounts forward payment directly to an account of such Credit Party designated as a Private Deposit Account on Schedule 8.2.2. On or after the Closing Date, the Borrower Agent shall at all times maintain a concentration account in its name (the “Concentration Account”) with a bank reasonably acceptable to the Agent.

 

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(b) Except in connection with Excluded Deposit Accounts or as set forth on Schedule 8.2.2, on or prior to the Closing Date (or, with respect to Deposit Accounts acquired in connection with the Hartsville Acquisition, such later date not to exceed 90 days after the Closing Date as the Agent may, in its sole discretion, consent to in writing), (i) each Credit Party that owns or originates Government Accounts shall deliver to the Agent for each Government Receivables Deposit Account established or maintained by such Credit Party, a tri-party deposit account agreement between the Agent, the bank at which such Government Receivables Deposit Account (each a “Government Receivables Bank”) is maintained and such Credit Party, in form and substance reasonably satisfactory to the Agent (each a “Government Receivables Deposit Account Agreement”), (ii) each Credit Party that owns or originates Private Accounts shall deliver to the Agent for each Private Deposit Account (other than Excluded Deposit Accounts) established or maintained by such Credit Party, a tri-party blocked account control agreement or lockbox account agreement between the Agent, the bank at which each such Private Deposit Account is maintained and the relevant Credit Parties, in form and substance reasonably satisfactory to the Agent (each a “Private Deposit Account Agreement”) and (iii) the Borrower Agent shall deliver to the Agent for the Concentration Account, a tri-party blocked account control agreement or lockbox account agreement between the Agent, the bank at which the Concentration Account is maintained and the Borrower Agent, in form a substance reasonably satisfactory to the Agent (the “Concentration Account Agreement” and, together with any Government Receivables Deposit Account Agreement and any Private Deposit Account Agreement, each a “Blocked Account Agreement”). Each such Government Receivables Deposit Account Agreement and Private Deposit Account Agreement (other than the Fixed Asset Priority Collateral Account) shall provide, among other things, that the bank at which any such Blocked Account is maintained, agrees to forward on a daily basis all available amounts in each such account to the Concentration Account (provided, that Government Receivables Deposit Account Agreements shall also provide that such direction to make daily transfers to the Concentration Account may be revoked by the applicable Credit Party. Any such revocation shall constitute an immediate Event of Default hereunder.). In addition, the Concentration Account Agreement shall provide, among other things, that during the continuation of a Dominion Trigger Period, the bank at which such Concentration Account is maintained shall, upon receipt of notice by the Agent (given in its discretion or at the direction of Required Lenders), make daily sweeps from the Concentration Account into the Agent’s account for application to the Obligations.

(c) On each Business Day, each Credit Party will cause (or ensure that) the entire available balance in each Government Receivables Deposit Account to be (or is) transferred by ACH or book entry transfer to the Concentration Account. No Credit Party will transfer any funds out of any Government Receivables Deposit Account or any other Blocked Account except to the Concentration Account. The balance from time to time standing to the credit of the Blocked Accounts shall be distributed as directed in accordance with the provisions of the Blocked Account Agreements. Other than during a Dominion Trigger Period, the balance from time to time standing to the credit of the Concentration Account shall be distributed as directed by the Borrower Agent.

(d) So long as no Default or Event of Default has occurred and is continuing, the Credit Parties may amend Schedules 8.2.1 and 8.2.2 to add or replace a depository bank or any Blocked Account; provided that (i) the Agent shall have consented in writing in advance to the opening of such new or replacement Blocked Account with the relevant bank (which consent shall not be unreasonably withheld or delayed) and (ii) prior to the time of the opening of such account, the applicable Credit Party and such bank shall have executed and delivered to the Agent a Blocked Account Agreement in form and substance reasonably satisfactory to the Agent in its sole discretion. Each Credit Party shall cease using any Blocked Account to hold proceeds of Collateral promptly and in any event within 30 days (or such later date as the Agent may, in its sole reasonable discretion, consent to in writing) following notice from the Agent to the Borrower Agent that (A) the creditworthiness of the bank holding such Blocked Account is no longer acceptable in the Agent’s Credit Judgment, or (B) the operating performance, funds transfer or availability procedures or performance with respect to accounts or lockboxes of the bank holding such Blocked Account or Agent’s liability under any Blocked Account Agreement with such bank is no longer acceptable in the Agent’s Credit Judgment.

 

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(e) The Blocked Accounts shall be Collateral accounts, with all cash, checks and other similar items of payment in such accounts securing payment of the Loans and all other Obligations, and in which the applicable Credit Party shall have granted a Lien to the Agent, for the benefit of the Secured Parties, pursuant to this Agreement. Each Credit Party shall use commercially reasonable efforts to ensure that all cash, checks and other similar items of payment in the Blocked Accounts are solely in respect of Collateral. The Borrower Agent may deposit in the Fixed Asset Priority Collateral Account any (and only) identifiable Proceeds of Fixed Asset Priority Collateral to the extent required by the Term Loan Documents.

(f) All collections of Accounts and all proceeds of the sale or other disposition of any Collateral, other than collections and proceeds that are held in Excluded Deposit Accounts in accordance with the terms hereof, shall be deposited directly into a Private Deposit Account or the Concentration Account (or if collections or proceeds of Government Accounts, into a Government Receivables Deposit Account). In the event that, notwithstanding the provisions of this Section 8.2.2(f), any Credit Party receives or otherwise has dominion and control of any proceeds or collections of Accounts or proceeds of Collateral outside of the Blocked Accounts, such proceeds and collections shall be held in trust by such Credit Party for the Agent and shall, not later than five (5) Business Days after receipt thereof, be deposited into a Private Deposit Account or the Concentration Account (or if collections or proceeds of Government Accounts, into a Government Receivables Deposit Account) or dealt with in such other fashion as such Credit Party may be instructed by the Agent.

(g) All amounts held in Excluded Facility Deposit Accounts shall be held in trust for the Agent. Whenever balances on deposit in an Excluded Facility Deposit Account exceed $20,000, all amounts then on deposit in such Excluded Facility Deposit Account shall within 5 Business Days thereof be deposited into a Private Deposit Account or the Concentration Account (or if collections or proceeds of Government Accounts, into a Government Receivables Deposit Account) or dealt with in such other fashion as such Credit Party may be instructed by the Agent.

8.2.3. Account Statements. During the continuance of a Dominion Trigger Period, each Credit Party shall provide the Agent with any information and account statements with respect to the Blocked Accounts as reasonably requested by Agent.

8.2.4. Sole Dominion of Agent. During a Dominion Trigger Period, the Concentration Account and each Private Deposit Account shall at all times be under the sole dominion and control of the Agent. Each Credit Party hereby acknowledges and agrees that during a Dominion Trigger Period, (i) such Credit Party has no right of withdrawal from the Concentration Account, (ii) the funds on deposit in the Concentration Account shall at all times be collateral security for all of the Obligations and (iii) the funds on deposit in the Concentration Account shall be transferred daily to the Agent’s account for application to the Obligations.

8.2.5. Credit Card Charges.

(a) Annexed hereto as Schedule 8.2.5 (such Schedule to be delivered to the Agent on or before the 60th calendar day after the Closing Date (or such later date as the Agent may, in its sole reasonable discretion, consent to in writing)) is a list as of the date such Schedule is delivered, of all arrangements to which any Credit Party is a party with respect to the payment to such Credit Party of the proceeds of all credit card charges for services by such Credit Party.

(b) Each Credit Party shall ensure that its credit card clearinghouses and processors (including those listed on Schedule 8.2.5) are at all times instructed in writing to deposit all proceeds of credit card charges due to such Credit Party directly to a Private Deposit Account or the Concentration Account.

 

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(c) Unless consented to in writing by the Agent, after the delivery of Schedule 8.2.5, the Credit Parties shall not enter into any agreements with credit card processors or clearinghouses other than those expressly contemplated herein unless contemporaneously therewith such credit card processors or clearinghouses are instructed in writing to deposit all proceeds of credit card charges due to such Credit Party directly to a Private Deposit Account or the Concentration Account.

8.3. Deposit Accounts; Cash Collateral; Securities Accounts.

8.3.1. Deposit Accounts. Each Credit Party hereby authorizes and directs each bank or other depository with which any Deposit Account or similar account is maintained to deliver to Agent, upon request made in accordance with this Agreement, the Security Documents, Applicable Law and any applicable Deposit Account Control Agreement, all balances in any Deposit Account maintained by such Credit Party, without inquiry into the authority or right of Agent to make such request.

8.3.2. Cash Collateral. Any Cash Collateral may be invested, at Agent’s discretion, in Cash Equivalents, but Agent shall have no duty to do so, regardless of any agreement or course of dealing with any Credit Party, and shall have no responsibility for any investment or loss. Each Credit Party hereby grants to Agent, for the benefit of Secured Parties, a security interest in all Cash Collateral held by Agent from time to time and all proceeds thereof, as security for the Obligations, whether such Cash Collateral is held in a Cash Collateral Account or elsewhere. Subject to Section 2.3.3, Agent may apply Cash Collateral to the payment of any Obligations, in such order as provided in this Agreement or, during the continuance of a Default or Event of Default, as Agent may elect, as they become due and payable. Each Cash Collateral Account and all Cash Collateral shall be under the sole dominion and control of Agent. No Credit Party or other Person claiming through or on behalf of any Credit Party shall have any right to any Cash Collateral, until Full Payment of all Obligations.

8.3.3. Securities Accounts. Each Credit Party irrevocably authorizes and directs each securities intermediary or other Person with which any Securities Account or similar investment property is maintained, if any, upon written instruction of the Agent, to dispose of such Collateral at the direction of the Agent and comply with the instructions originated by Agent without further consent of any Credit Party. The Agent agrees with the Credit Parties that such instruction shall not be given by the Agent unless an Event of Default has occurred and is continuing

8.4. Administration of Accounts.

8.4.1. Records and Schedules of Accounts. Each Credit Party shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Agent sales, collection, reconciliation and other reports in form reasonably satisfactory to Agent, on such periodic basis as Agent may reasonably request. Borrower Agent (on behalf of each Borrower and Credit Support Party) shall also provide to Agent (which delivery may be made electronically) (i) on or before the 20th day of each month, a detailed aged trial balance of all Accounts as of the end of the preceding month, specifying amount, invoice date and otherwise in form reasonably satisfactory to Agent, showing such information as Agent may reasonably request, and (ii) at the time of the delivery of the financial statements required by Section 10.1.2(b), in each case, as of the month end relating to such financial statements, a report as to the amount of the Joint Venture Distribution Reserve. If Accounts in an aggregate face amount of $10,000,000 or more cease to be Eligible Accounts, Borrower Agent shall notify Agent of such occurrence promptly (and in any event within one Business Day) after Borrower Agent has knowledge thereof.

8.4.2. Taxes. If an Account of any Borrower or Credit Support Party includes a charge for any Taxes, Agent is authorized, in its reasonable discretion, to pay the amount thereof to the proper taxing authority for the account of such Borrower or Credit Support Party and to charge Borrowers therefor; provided, however, that neither Agent nor Lenders shall be liable for any Taxes that may be due from Credit Parties or with respect to any Collateral.

 

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8.4.3. Account Verification. If an Event of Default exists and is continuing, Agent shall have the right at any time (subject to Applicable Law), in the name of any Credit Party or, with respect to Accounts other than Government Accounts if an Event of Default is continuing, the name of Agent or any designee of Agent, to verify the validity, amount or any other matter relating to any Accounts of Credit Party by mail, telephone or otherwise. Prior to a Default or Event of Default, Agent shall have the right to require reasonable test verifications of the validity, amount or any other matter relating to any Accounts of a Credit Party selected by Agent with a representative or designee of Agent present and in manner that allows such representative or designee to independently verify the results thereof or to make such verifications by mail in the name of a designee. Credit Parties shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process.

8.5. Administration of Inventory. Each Credit Party shall keep materially accurate and complete records of its Inventory, including costs and daily withdrawals and additions, and shall submit to Agent inventory and reconciliation reports in form reasonably satisfactory to Agent, on such periodic basis as Agent may reasonably request but not more frequently than three (3) times in a Fiscal Year or as frequently as requested when a Default or Event of Default exists and is continuing. Credit Parties shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all leased locations where any Collateral is located.

8.6. Maintenance of Properties. Each Credit Party will keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect.

8.7. Insurance of Collateral; Condemnation Proceeds. Each Credit Party shall maintain insurance or self-insurance with respect to its Property, covering casualty, hazard, theft, malicious mischief, flood, and other risks, in amounts, with endorsements and with insurers (with a Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to Agent. All proceeds under each policy covering Collateral shall be payable to Agent, subject to the Intercreditor Agreement. From time to time upon request, Credit Parties shall deliver to Agent the originals or certified copies of its insurance policies. Unless Agent shall agree otherwise, each policy covering Collateral shall include satisfactory endorsements (a) showing Agent as lenders’ loss payee; (b) requiring 30 days or such shorter period as Agent may allow prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever; and (c) specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of any Credit Party or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If any Credit Party fails to provide and pay for any insurance required hereunder, Agent may, at its option, but shall not be required to, procure the insurance and charge Credit Parties therefor. Each Credit Party agrees to deliver to Agent, promptly as rendered, copies of all reports made to insurance companies relating to Collateral. While no Event of Default exists, Credit Parties may settle, adjust or compromise any insurance or condemnation claim, and retain the proceeds thereof unless a Dominion Trigger Period is then in effect. If an Event of Default exists and subject to the Intercreditor Agreement, only Agent shall be authorized to settle, adjust and compromise such claims relating to Collateral and proceeds thereof shall be applied to the Obligations if a Dominion Trigger Period is then in effect.

 

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SECTION 9. REPRESENTATIONS AND WARRANTIES

9.1. General Representations and Warranties. To induce Agent and Lenders to enter into this Agreement and to make available the Commitments, Loans and Letters of Credit, each Credit Party represents and warrants that:

9.1.1. Organization and Qualification. Each Credit Party and Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Credit Party and Subsidiary is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect. Each Credit Party has the power and authority to own its material property and assets and to transact the business in which it is engaged.

9.1.2. Power and Authority. Each Credit Party has the power and is duly authorized to execute, deliver and perform the terms and provisions of each Loan Document to which it is a party. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Credit Party, other than those already obtained; (b) contravene the Organic Documents of any Credit Party; (c) violate, conflict with or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Credit Party.

9.1.3. Enforceability. Each Loan Document is a legal, valid and binding obligation of each Credit Party party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

9.1.4. Capital Structure. Schedule 9.1.4 shows as of the closing date, for each Credit Party and Subsidiary, its name, its jurisdiction of organization, its authorized and issued Equity Interests, the holders of its Equity Interests, and all agreements binding on such holders with respect to their Equity Interests (excluding Organic Documents). Except as disclosed on Schedule 9.1.4, in the five years preceding the Closing Date, no Credit Party or Subsidiary has acquired any substantial assets from any other Person nor been the surviving entity in a merger or combination. Each Credit Party has good title to its Equity Interests in its Subsidiaries, and all such Equity Interests are duly issued, fully paid and non-assessable. There are no outstanding purchase options, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to Equity Interests of any Credit Party or Subsidiary other than as provided in each Credit Party or Subsidiary’s Organic documents or the documents listed on Schedule 9.1.4 or in connection with transactions permitted hereunder and consummated after the date hereof.

9.1.5. Title to Properties; Agent’s Liens. Except as could not reasonably be expected to have a Material Adverse Effect, each Credit Party and Subsidiary has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Agent or Lenders, in each case free of Liens except Permitted Liens. Each Credit Party and Subsidiary has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens. All Liens of Agent in the Collateral are duly perfected Liens with the priority required under the Security Documents, subject only to Permitted Liens. All Real Estate owned or leased by a Credit Party or any of its Subsidiaries as of the Closing Date, and the nature of the interest therein, is correctly set forth in Schedule 9.1.5.

9.1.6. Accounts. Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Credit Parties with respect thereto. Credit Parties warrant, with respect to each Account at the time it is shown as an Eligible Account in a Borrowing Base Certificate, that:

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

(b) it arises out of a completed, bona fide sale and delivery of goods or rendition of services in the Ordinary Course of Business, and substantially in accordance with any order, contract or other document relating thereto;

 

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(c) it is for a sum certain, maturing as stated in the invoice covering such sale or rendition of services, a copy of which is available to Agent on request;

(d) it is not subject to any offset, Lien (other than Agent’s Lien and Liens permitted by Section 10.2.2(c), (d), (e), (k), (s) and (v), deduction, defense, dispute, counterclaim or other adverse condition except as arising in the Ordinary Course of Business and disclosed to Agent; and it is absolutely owing by the Account Debtor (or Third Party Payor, as applicable), without contingency in any respect;

(e) no purchase order, agreement, document or Applicable Law restricts assignment of the Account (or, as to Government Accounts, the granting of security interests in such Accounts) to Agent (regardless of whether, under the UCC, the restriction is ineffective), and the applicable Credit Party is the sole payee or remittance party shown on the invoice;

(f) no extension, compromise, settlement, modification, credit or deduction has been authorized with respect to the Account, except discounts or allowances granted in the Ordinary Course of Business for prompt payment that are reflected on the face of the invoice related thereto and in the reports submitted to Agent hereunder; and

(g) to the Credit Parties’ knowledge, (a) there are no facts or circumstances that are reasonably likely to impair the enforceability or collectability of such Account; (b) the Account Debtor (other than as to a self-pay Account) had the capacity to contract when the Account arose, continues to meet the applicable Credit Party’s customary credit standards, is Solvent, is not contemplating or subject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and (c) there are no proceedings or actions threatened or pending against any Account Debtor that could reasonably be expected to have a material adverse effect on the Account Debtor’s financial condition.

9.1.7. Financial Statements. The consolidated balance sheets, and related statements of income, cash flow and shareholder’s equity, of the Company and Subsidiaries that have been and are hereafter delivered to Agent and Lenders, are prepared in accordance with GAAP, and fairly present the financial positions and results of operations of Credit Parties and Subsidiaries at the dates and for the periods indicated. All projections delivered from time to time to Agent and Lenders have been prepared in good faith, based on reasonable assumptions in light of the circumstances at such time. Since December 31, 2013, there has been no change in the condition, financial or otherwise, of any Credit Party or Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to Agent or Lenders at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. The Credit Parties, taken as a whole, are Solvent.

9.1.8. Surety Obligations. No Credit Party or Subsidiary is obligated as surety or indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.

9.1.9. Taxes. Each Credit Party and Subsidiary has filed all federal, state and material local tax returns and other material reports that it is required by law to file, and has paid, or made provision for the payment of, material Taxes upon it, its income and its Properties that are due and payable, except (a) to the extent being Properly Contested and (b) not yet delinquent. The provision for Taxes on the books of each Credit Party and Subsidiary is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.

9.1.10. Brokers. There are no brokerage commissions, finder’s fees or investment except in connection with Note offering or as otherwise notified to agent in writing banking fees payable in connection with any transactions contemplated by the Loan Documents.

 

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9.1.11. Intellectual Property. Each Credit Party and Subsidiary owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others. Except as disclosed on Schedule 9.1.11, or as disclosed in writing to the Agent from time to time by the Borrower Agent, no Credit Party or Subsidiary pays or owes any material Royalty or other material compensation to any Person with respect to any Intellectual Property that relates to the Collateral.

9.1.12. Governmental Approvals. Except as could not reasonably be expected to have a Material Adverse Effect, each Credit Party and Subsidiary has, is in compliance with, and is in good standing with respect to, all Governmental Approvals necessary to conduct its business and to own, lease and operate its Properties.

9.1.13. Compliance with Laws. Each Credit Party and Subsidiary has duly complied, and its Properties and business operations are in compliance, in all respects, with all Applicable Law, except where noncompliance could not reasonably be expected to have a Material Adverse Effect. Except as could not reasonably be expected to have a Material Adverse Effect, there have been no citations, notices or orders of noncompliance issued to any Credit Party or Subsidiary under any Applicable Law. To the knowledge of a Senior Officer, no Inventory has been produced in violation of the FLSA.

9.1.14. Compliance with Environmental Laws. Except as disclosed on Schedule 9.1.14, no Credit Party’s or Subsidiary’s past or present operations, Real Estate or other Properties are subject to any federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up except as could not reasonably be expected to have a Material Adverse Effect. No Credit Party or Subsidiary has received any Environmental Notice except as could not reasonably be expected to have a Material Adverse Effect. No Credit Party or Subsidiary has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it except as could not reasonably be expected to have a Material Adverse Effect.

9.1.15. Burdensome Contracts. No Credit Party or Subsidiary is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Credit Party or Subsidiary is party or subject to any Restrictive Agreement other than its Organic Documents, except as shown on Schedule 9.1.15. No such Restrictive Agreement prohibits the execution, delivery or performance of any Loan Document by a Credit Party.

9.1.16. Litigation. Except as shown on Schedule 9.1.16, there are no proceedings pending before any Governmental Authority or, to any Credit Party’s knowledge, threatened proceedings or investigations against any Credit Party or Subsidiary, or any of their businesses, operations, Properties, prospects or conditions, that (a) would be reasonably likely to adversely affect in any material respect the ability of the Credit Parties to consummate the transactions or perform its obligations under any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect. No Credit Party or Subsidiary is in default with respect to any material order, injunction or judgment of any Governmental Authority.

9.1.17. No Defaults. No event or circumstance exists that constitutes a Default or Event of Default. No Credit Party or Subsidiary is in default, and no event or circumstance exists that with the passage of time or giving of notice would constitute a default, under any Material Contract. There is no basis upon which any party (other than a Credit Party or Subsidiary) could terminate for cause a Material Contract prior to its scheduled termination date.

9.1.18. ERISA. Except as disclosed on Schedule 9.1.18:

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal and state laws. Each Pension Plan that is intended to be a qualified

 

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plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the knowledge of Credit Parties, nothing has occurred that would or could reasonably be expected to prevent or cause the loss of such tax-qualified status.

(b) There are no pending or, to the knowledge of Credit Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted in or could reasonably be expected to have a Material Adverse Effect.

(c) (i) No ERISA Event has occurred, and no Credit Party or any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) each Credit Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and no Credit Party or any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) no Credit Party or any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) no Credit Party or any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

(d) With respect to any Foreign Plan, (i) all employer and employee contributions required by law or by the terms of the Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles; and (iii) it has been registered as required and has been maintained in good standing with applicable regulatory authorities.

(e) No Credit Party or any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than (A) on the Closing Date, those listed on Schedule 9.1.18 hereto and (B) thereafter, Pension Plans not otherwise prohibited by this Agreement.

9.1.19. Trade Relations. There exists no actual or threatened termination, limitation or modification of any business relationship between any Credit Party or Subsidiary and any Account Debtor or supplier, or any group of Account Debtors or suppliers, who individually or in the aggregate are material to the business of the Credit Parties taken as a whole. There exists no condition or circumstance that could reasonably be expected to impair the ability of the Credit Parties taken as a whole to conduct their business at any time hereafter in substantially the same manner as conducted on the Closing Date.

9.1.20. Labor Relations. At the Closing Date, except as described on Schedule 9.1.20, no Credit Party or Subsidiary is party to or bound by any collective bargaining agreement or other labor

 

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agreement. To any Credit Party’s knowledge, there are no material grievances, disputes or controversies with any union or other organization of any Credit Party’s or Subsidiary’s employees, or any asserted or threatened strikes, work stoppages or demands for collective bargaining except as could not reasonably be expected to have a Material Adverse Effect.

9.1.21. Payable Practices. No Credit Party or Subsidiary has made any material change in its historical accounts payable practices from those in effect on the Closing Date except as disclosed to Agent in writing.

9.1.22. Not a Regulated Entity. No Credit Party is (a) an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.

9.1.23. Margin Stock. No Credit Party or Subsidiary is engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit will be used by Credit Parties to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.

9.1.24. USA Patriot Act; OFAC;FCPA.

(a) No Credit Party, Subsidiary or, to the knowledge of any Credit Party or Subsidiary, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity currently the subject of any Sanctions. No Credit Party or Subsidiary is located, organized or resident in a Designated Jurisdiction.

(b) To the extent applicable, each Credit Party and its Subsidiaries is in compliance, in all material respects, with (i) the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.) (as amended, the “Trading with the Enemy Act”), and each of the foreign assets control regulations administered by OFAC (31 CFR Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (ii) the Patriot Act, and (iii) the FCPA.

(c) No part of the proceeds of the Loans will be used by any Credit Party or its Subsidiaries, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA. No part of the proceeds of any Loans or Letter of Credit hereunder will be used directly or indirectly to fund any operations in, finance any investments or activities in or make any payments to, any Person, or in any Designated Jurisdiction, that, at the time of issuance of the Letter of Credit or funding of the Loan, is the subject of Sanctions; or in any manner that will result in a violation of Sanctions by any Person (including any Secured Party or other individual or entity participating in the transaction). No Credit Party (i) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or to its knowledge is otherwise associated with any such Person in any manner that violates Section 2 of such executive order or (iii) is a Person on the list of “Specially Designated Nationals and Blocked Persons” or subject to the limitations or prohibitions under any other OFAC regulation or executive order.

 

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9.1.25. Security Documents.

(a) The provisions of the Security Agreement and the Joint Venture Subsidiary Security Documents (in each case, taken as a whole) are effective to create in favor of the Agent for the benefit of the Secured Parties a legal, valid and enforceable (except (i) to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law) and (ii) for the effect of foreign laws, rules and regulations as they relate to pledges of Equity Interests in Foreign Subsidiaries and intercompany Debt owed by Foreign Subsidiaries) security interest in all right, title and interest of the Credit Parties in the Security Agreement Collateral described therein, and the Agent, for the benefit of the Secured Parties, has (or, after the filing of UCC-1 financing statements in the office and with the information specified by the Credit Parties in the Security Agreement, the payment of all applicable fees and the taking of such other actions as are required by the Security Agreement, will have) a fully perfected security interest in the United States in all right, title and interest in all of the Security Agreement Collateral described therein (if and to the extent the Security Agreement Collateral can be perfected by the filing of UCC-1 financing statements and the other actions required by the Security Agreement), subject to no other Liens other than Permitted Liens. The recordation of (x) the grant of security interest in U.S. Patents and (y) the grant of security interest in U.S. Trademarks in the respective form attached to the Security Agreement, in each case in the United States Patent and Trademark Office, together with filings on Form UCC-1 made pursuant to the Security Agreement and payment of all applicable fees, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States trademark registrations and United States patents that are part of the Security Agreement Collateral, and the recordation of the grant of security interest in U.S. Copyrights substantially in the form attached to the Security Agreement with the United States Copyright Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States copyright registrations that are part of the Security Agreement Collateral.

(b) Upon the filing of UCC-1 financing statements, or any amendments to UCC-1 financing statements filed on or prior to the Closing Date, in each case, in the office and with the information specified by the Credit Parties in the Security Agreement and the taking of such other actions required by the Pledge Agreement and, if applicable, Section 10.1.12, security interests created under the Pledge Agreement in favor of the Agent, as Pledgee, for the benefit of the Secured Parties, constitute perfected security interests in the Pledge Agreement Collateral described in the Pledge Agreement (if and to the extent such Pledge Agreement Collateral can be perfected by the filing of UCC-1 financing statements and the taking of such other actions required by the Pledge Agreement and, if applicable, Section 10.1.12), subject to no security interests of any other Person (other than Permitted Liens).

(c) Upon filing or recording, as applicable, with the appropriate recording office, each Mortgage shall create, as security for the obligations purported to be secured thereby, a valid and enforceable (except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law)) perfected security interest in and mortgage Lien on the respective Mortgaged Property in favor of the Agent (or such other Person as may be required or desired under local law) for the benefit of the Secured Creditors, superior and prior to the rights of all third Persons and subject to no other Liens other than, in each case, Permitted Liens.

(d) Notwithstanding anything herein to the contrary, it is understood that, other than with respect to (i) any UCC Filing Collateral and (ii) stock certificates of the Borrowers and their wholly-owned domestic Subsidiaries, to the extent (x) any UCC or other lien searches are not received or (y) any Lien on any Collateral is not provided and/or perfected on the Closing Date after the Borrowers’ use of commercially reasonable efforts to do so without undue burden and expense, the receipt of such UCC searches and the provision and/or perfection of a Lien on such Collateral shall not be required on the Closing Date, but shall instead be required to be delivered after the Closing Date in accordance with Section 10.1.12.

 

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9.2. Complete Disclosure. No Loan Document, nor any financial statement or report delivered hereunder, as of the date delivered or deemed delivered, contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Credit Party has failed to disclose to Agent in writing that could reasonably be expected to have a Material Adverse Effect.

9.3. Healthcare Related Representations and Warranties.

9.3.1. Compliance with Laws and Other Agreements. Except as could not reasonably be expected to result in a Material Adverse Effect, no Credit Party nor any Subsidiary is currently nor has been at any time prior to the Closing Date:

(a) been convicted of an offense or committed an act or omission which could reasonably form a basis under 42 U.S.C. § 1320a-7 or 42 U.S.C. §1395nn and any statutes succeeding thereto and any regulations promulgated thereunder for the Secretary of HHS to exclude any Credit Party or any Subsidiary from participation in a Federal health care program; or

(b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Medicaid Provider Agreement, Medicare Provider Agreement or other agreement or instrument to which any Credit Party or any Subsidiary is a party, which default has resulted in, or could reasonably be expected to result in, the revocation, termination, cancellation or suspension of Medicaid Certification or Medicare Certification of any Credit Party or any Subsidiary.

9.3.2. Contract Providers. To knowledge of the Credit Parties and except as could not reasonably be expected to result in a Material Adverse Effect, no Contract Provider

(a) is a party to any judgment, order, decree, agreement or instrument, or subject to restrictions;

(b) is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Medicaid Provider Agreement, Medicare Provider Agreement or other agreement or instrument to which such Person is a party, which default has resulted in, or could reasonably be expected to result in, the revocation, termination, cancellation or suspension of the Medicaid Certification or the Medicare Certification of such Person; or

(c) has been convicted of an offense or has committed an act or omission which could reasonably form a basis under 42 U.S.C. § 1320a-7 or 42 U.S.C. §1395nn and any statutes succeeding thereto and regulations promulgated thereunder for the Secretary of HHS to exclude the Contract Provider from participation in a Federal health care program.

9.3.3. Healthcare Related Litigation. Except as disclosed in Schedule 9.3 (as may be updated from time to time by written notice to the Agent), there is no action, suit, investigation or proceeding at law or in equity or by or before any Governmental Authority or agency or arbitral body pending, or, to the knowledge of the Credit Parties, threatened by or against any Credit Party or any Subsidiary or, to the knowledge of any Credit Party, any Contract Provider, or affecting any Credit Party or any Subsidiary or, to the knowledge of any Credit Party, any Contract Provider or any properties or rights of any Credit Party or any Subsidiary or, to the knowledge of any Credit Party, any Contract Provider, which could reasonably be expected to (i) result in the revocation, termination, cancellation or suspension of Medicaid Certification or Medicare Certification of such Person or (ii) result in the exclusion of such Person from participation in a Federal health care program except, in each case, with respect to any Contract Provider or any Subsidiary that is not a Credit Party only, as could not reasonably be expected to result in a Material Adverse Effect.

 

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9.3.4. RICO. No Credit Party nor any Subsidiary is engaged in or has engaged in any course of conduct that could subject any of their respective properties to any Lien, seizure or other forfeiture under any racketeer influenced and corrupt organizations law, whether civil or criminal, or other similar laws.

9.3.5. Reimbursement from Third Party Payors. Except as disclosed in Schedule 9.3 or as could not reasonably be expected to result in a Material Adverse Effect, (i) the Accounts of the Credit Parties and, to the knowledge of the Credit Parties, each Contract Provider have been and will continue to be adjusted to reflect reimbursement policies of Third Party Payors such as Medicare, Medicaid, Blue Cross/Blue Shield, private insurance companies, health maintenance organizations, preferred provider organizations, alternative delivery systems, managed care systems, government contracting agencies and other Third Party Payors and (ii) Accounts relating to such Third Party Payors do not and shall not exceed amounts any Credit Party is entitled to receive under any capitation arrangement, fee schedule, discount formula, cost-based reimbursement or other adjustment or limitation to its usual charges, except for overpayments, returns or adjustments in the Ordinary Course of Business.

9.3.6. Fraud and Abuse. Except as could not reasonably be expected to result in a Material Adverse Effect, no Credit Party nor any Subsidiary nor, to the knowledge of any Credit Party’s officers, any of its stockholders, officers or directors, or any Contract Provider, have engaged in any activities which are prohibited under federal Medicare and Medicaid statutes, 42 U.S.C. §1320a-7b, or 42 U.S.C. §1395nn or the regulations promulgated pursuant to such statutes or related state or local statutes or regulations, or which are prohibited by binding rules of professional conduct, or which are prohibited under any statute which constitutes a Federal health care offense, or the regulations promulgated pursuant to such statutes, including but not limited to the following: (i) knowingly and willfully making or causing to be made a false statement or representation of a material fact in any applications for any benefit or payment; (ii) knowingly and willfully making or causing to be made any false statement or representation of a material fact for use in determining rights to any benefit or payment; (iii) failing to disclose knowledge by a claimant of the occurrence of any event affecting the initial or continued right to any benefit or payment on its own behalf or on behalf of another, with intent to secure such benefit or payment fraudulently; (iv) knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind or offering to pay such remuneration (x) in return for referring an individual to a Person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part by a Federal health care program or other applicable Third Party Payors, or (y) in return for purchasing, leasing or ordering or arranging for or recommending the purchasing, leasing or ordering of any good, facility, service, or item for which payment may be made in whole or in part by a Federal health care program or other applicable Third Party Payors; (v) knowingly or willfully offering or paying any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any Person to induce such Person (x) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or (y) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in party under a Federal health care program.

9.3.7. Licensing and Accreditation. Except as could not reasonably be expected to result in a Material Adverse Effect, each Credit Party and its Subsidiaries and, to the knowledge of each Credit Party’s officers, each Contract Provider, has, to the extent applicable: (i) obtained (or been duly assigned) and maintains all required certificates of need or determinations of need as required by the relevant state Governmental Authority for the acquisition, construction, expansion of, investment in or operation of its businesses as currently operated; (ii) obtained and maintains in good standing all required licenses; (iii) to the extent prudent and customary in the industry in which it is engaged, obtained and maintains accreditation from all generally recognized accrediting agencies; (iv) obtained and maintains Medicaid Certification and Medicare Certification; and (v) entered into and maintains in good standing its Medicare Provider Agreement and its Medicaid Provider Agreement.

 

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9.3.8. Miscellaneous. Except as set forth on Schedule 9.3, no Credit Party nor any of its directors, officers or management employees is: (i) a party to a corporate integrity agreement with the Office of Inspector General of HHS; (ii) subject to reporting obligations pursuant to any settlement agreement entered into with any governmental entity; (iii) as of the Closing Date, the subject of any government payor program investigation conducted by any federal or state enforcement agency; (iv) to its knowledge, a defendant in any qui tam/False Claims Act litigation, except as could not reasonably be expected to result in a Material Adverse Effect; (v) served with or received any search warrant in any qui tam/False Claims Act litigation except as could not reasonably be expected to result in a Material Adverse Effect; (vi) served with or received any search warrant, subpoena, civil investigative demand, contact letter, or telephone or personal contact by or from any federal or state enforcement agency relating to any investigation, except as could not reasonably be expected to result in a Material Adverse Effect; (vii) subject to any complaints from employees, independent contractors, vendors, physicians, or any other person that would indicate that the Credit Parties have violated any material law or regulation, except as could not reasonably be expected to result in a Material Adverse Effect; (viii) in violation of HIPAA, except as would not reasonably be expected to have a Material Adverse Effect, or (ix) in violation of 42 U.S.C. §1320a-7(b) or 42 U.S.C. §1395nn, except as could not reasonably be expected to result in a Material Adverse Effect. For purposes of this Agreement, the term “compliance program” refers to provider programs of the type described in the compliance guidance published by the Office of Inspector General of HHS.

 

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

10.1. Affirmative Covenants. Until Full Payment of all Obligations, each Credit Party shall, and shall cause each Subsidiary to:

10.1.1. Inspections.

(a) Permit Agent from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to conduct Field Exams (with a frequency subject to the limitations set forth in clause (b) below) and to have discussions with its officers, employees, agents, advisors and independent accountants regarding a Credit Party’s business, financial condition, assets, prospects and results of operations; provided that representatives of the Borrower Agent shall be given the opportunity to participate in any discussions with the independent accountants. Lenders may participate in any such Field Exams at their own expense. Neither Agent nor any Lender shall have any duty to any Credit Party to make any Field Exam, nor to share any results of any Field Exam with any Credit Party. Credit Parties acknowledge that all Field Exams, appraisals and reports are prepared by Agent and Lenders for their purposes, and Credit Parties shall not be entitled to rely upon them.

(b) Reimburse Agent for all reasonable and documented out-of-pocket charges, costs and expenses of Agent in connection with Field Exams, provided that the Credit Parties shall only be obligated to reimburse Agent for such charges, costs and expenses for (i) one field examination in any calendar year during which no Reporting Trigger Period has occurred and (A) no Loans have been outstanding for more than 30 days during such calendar year, (B) on any day during such calendar year, no Loans have been outstanding in an amount greater than 15% of the Borrowing Base on such day; and (C) on any day during such calendar year, no Loans and Letters of Credit have been outstanding in an aggregate amount greater than 25% of the Borrowing Base on such day; (ii) two field exams in any calendar year in which no Reporting Trigger Period has occurred during such year but (A) Loans have been outstanding on more than 30 days during such calendar year, (B) on any day during such calendar year, Loans have been outstanding in an amount greater than 15% of the Borrowing Base on such day; or (C) on any day during such calendar year, Loans and Letters of Credit have been outstanding in an aggregate amount greater than 25% of the Borrowing Base on such day; and (iii) three field exams in any calendar year if a Reporting Trigger Period has occurred during such year; provided, however, that (y) if a Field Exam is initiated during a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursed by Credit Parties without regard to such limits and such Field Exam shall not count towards such limits and (z) the Agent may undertake one additional Field Exam during each calendar year at the Lenders’ expense.

 

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(c) Subject to the foregoing limitations as to frequency of Field Exams, Credit Parties specifically agree to pay Agent’s then standard charges for each day that an employee of Agent or its Affiliates is engaged in any examination activities. This Section shall not be construed to limit Agent’s right to use third parties to conduct Field Exams nor to conduct Field Exams or obtain appraisals at its own cost or expense.

(d) During the course of the Field Exams and other visits, inspections, examinations and discussions, representatives of the Agent and the Lenders may encounter individually identifiable healthcare information as defined under the Administrative Simplification (including privacy and security) regulations promulgated pursuant to HIPAA, or other confidential information relating to healthcare patients (collectively, the “Confidential Healthcare Information”). The Borrower Agent or the Credit Parties maintaining such Confidential Healthcare Information shall, consistent with HIPAA’s “minimum necessary” provisions, permit such disclosure for their “healthcare operations” purposes. Unless otherwise required by law, the Agents, the Lenders and their respective representatives shall not require or perform any act that would cause the Credit Parties or any of their Subsidiaries to violate any laws, regulations or ordinances intended to protect the privacy rights of healthcare patients, including, without limitation, HIPAA. The Agent and each of the Lenders agree to comply with the requirements of the Amended and Restated Business Associate Addendum set forth in Exhibit E.

10.1.2. Financial and Other Information. Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to Agent and Lenders:

(a) as soon as available, and in any event within 120 days after the close of each Fiscal Year, balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year, on a consolidated basis for Company and Subsidiaries, which consolidated statements shall be audited and certified (without qualification) by a firm of independent certified public accountants of recognized standing selected by Company and acceptable to Agent in its reasonable discretion, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information acceptable to Agent;

(b) as soon as available, and in any event within 30 days after the end of each month (but within 45 days after the last month of a fiscal quarter and 60 days after the last month in a Fiscal Year), unaudited balance sheets as of the end of such month and the related statements of income and cash flow for such month and for the portion of the Fiscal Year then elapsed, on a consolidated basis for Company and Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such month and period, subject to normal year end adjustments and the absence of footnotes;

(c) a Compliance Certificate executed by the chief financial officer of Borrower Agent which certifies compliance with Section 10.3 and provides a reasonably detailed calculation of the Fixed Charge Coverage Ratio delivered (i)(A) concurrently with delivery of financial statements under clause (a) above and (B) in each case when such month is the last month of a Fiscal Quarter, concurrently with the delivery of financial statements under clause (b) above, in each case of clauses (A) and (B), whether or not a Fixed Charge Trigger Period then exists, (ii) on the first day of any Fixed Charge Trigger Period (certifying compliance as of the last day of the Measurement Period most recently ended prior to the start of such Fixed Charge Trigger Period and for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) shall have been delivered (or were required to have been delivered) to Agent) and as of the last day of such Measurement Period thereafter ending (with delivery of the financial statements required under clause (b) above for such Measurement Period, but in any case within 45 days of such last day) during any Fixed Charge Trigger Period and (iii) as requested by Agent while a Default or Event of Default exists;

 

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(d) concurrently with delivery of financial statements under clause (a) above, a copy of any “management letter” received from its certified public accountants and management’s response thereto in connection with each annual audit of the financial statements of the Company and Subsidiaries made by such accountants, subject to such confidentiality limitations as may be reasonably required by such accountants in writing;

(e) not later than 45 days after the beginning of each Fiscal Year, projections of Company’s and its Subsidiaries consolidated balance sheets, results of operations, cash flow, statements of income and Availability for such Fiscal Year, quarter by quarter and for the next three Fiscal Years, year by year, in a form substantially consistent with the projections for each of the four Fiscal Quarters of the Fiscal Year for which such financial statements were provided, in reasonable detail setting forth, with appropriate discussion, the principal assumptions upon which such projections are based;

(f) at Agent’s request, a trade payables aging, all in form satisfactory to Agent;

(g) promptly after the sending or filing thereof, copies of any proxy statements, financial statements and information or reports that Parent has made generally available to its shareholders or to holders (or any trustee, agent or other representative therefor) of any Term Loan Obligation or Senior Notes; copies of any regular, periodic and special reports or registration statements or prospectuses that Parent files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; and copies of any press releases or other statements made available by Parent or any Credit Party to the public concerning material changes to or developments in the business of the Parent or any other Credit Party;

(h) promptly after the sending or filing thereof, copies of any annual report to be filed in connection with each Plan or Foreign Plan; and

(i) such other reports and information (financial or otherwise) as Agent may reasonably request from time to time in connection with any Collateral or any Credit Party’s financial condition, operations or business.

Documents required to be delivered pursuant to Section 10.1.2(g) (to the extent any such documents are included in materials otherwise filed with the Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower Agent posts such documents, or provides a link thereto on the Borrower Agent’s website on the Internet at www.capellahealth.com; or (ii) on which such documents are posted on the Borrower Agent’s behalf at www.sec.gov or otherwise on an Internet or intranet website, if any, in each case to which each Lender and the Agent have access (whether a commercial, third-party website or whether sponsored by the Agent); provided that, the Borrower Agent shall notify the Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Agent by electronic mail electronic versions of such documents. The Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Credit Parties with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

10.1.3. Notices. Notify Agent and Lenders in writing, promptly after a Credit Party’s obtaining knowledge thereof, of any of the following that affects a Credit Party: (a) the assertion of any material claim by a Third Party Payor or the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if an adverse determination could reasonably be expected have a Material Adverse Effect, but including any litigation or other proceedings being threatened or instituted (i) against any Credit Party, any Subsidiary or any Contract Provider that could reasonably be expected to

 

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result in the suspension, revocation or termination of a Medicaid Provider Agreement, Medicaid Certification, Medicare Provider Agreement or Medicare Certification, (ii) against any Credit Party, any Subsidiary or any Contract Provider, that could reasonably be expected to result in the suspension or exclusion of such Credit Party from participation in a Federal health care program, or (iii) with respect to any Loan Document; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any labor contract in each case to the extent it could reasonably be expected have a Material Adverse Effect; (c) any default under or termination of a Material Contract (including the Term Loan Documents); (d) the existence of any Default or Event of Default; (e) any judgment in an amount exceeding $5,000,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution of such claim could have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution in each case to the extent it could have a Material Adverse Effect; (h) any Environmental Release by a Credit Party or on any Property owned, leased or occupied by a Credit Party; or receipt of any Environmental Notice; (i) the occurrence of any ERISA Event; (j) the discharge of or any withdrawal or resignation by Credit Parties’ independent accountants; or (k) any opening of a new hospital, medical or healthcare related facility, office or place of business where any material amount of Collateral will be held, at least 30 days prior or such shorter period as Agent may allow to such opening.

10.1.4. [Reserved].

10.1.5. Compliance with Laws. Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, Titles XVIII and XIX of the Social Security Act, Medicare Regulations, Medicaid Regulations, and all laws, rules and regulations of Governmental Authorities pertaining to the licensing of professional and other health care providers, including applicable requirements of the Standards for Privacy of Individually Identifiable Health Information which were promulgated pursuant to HIPAA, and all laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Credit Party or Subsidiary, it shall act promptly and diligently to investigate and report to Agent and all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.

10.1.6. Taxes. Pay and discharge all material Taxes prior to the date on which they become delinquent or penalties attach, unless such Taxes are being Properly Contested.

10.1.7. Insurance. In addition to the insurance required hereunder with respect to Collateral, maintain self-insurance or insurance with insurers (with a Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to Agent, (a) with respect to the Properties and business of Credit Parties and Subsidiaries of such type (including, as applicable, malpractice and other personal injury, product liability, workers’ compensation, larceny, embezzlement or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated; and (b) business interruption insurance in an amount not less than $50,000,000, with deductibles satisfactory to Agent.

10.1.8. Licenses. Keep each material License affecting any disposition of Inventory or any other material Property of Credit Parties and Subsidiaries in full force and effect; promptly notify Agent of any proposed modification to any such material License, or entry into any new material License, in each case at least 30 days prior to its effective date (or such shorter period as Agent may allow); pay all material Royalties when due; and notify Agent of any default or breach asserted by any Person to have occurred under any material License.

 

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10.1.9. Future Subsidiaries. Promptly notify Agent upon any Person becoming a Subsidiary (other than an Immaterial Subsidiary), comply with the requirements of Section 7.1.5 hereof and execute and deliver all documents and agreements reasonably requested by the Agent as are necessary to evidence and perfect the Agent’s Lien as required by this Agreement.

10.1.10. Governmental Licenses. Obtain and maintain all licenses, permits, certifications and approvals of all applicable Governmental Authorities as are required for the conduct of its business as currently conducted and herein contemplated, including without limitation professional licenses, Medicaid Certifications and Medicare Certifications except as could not reasonably be expected to have a Material Adverse Effect.

10.1.11. End of Fiscal Years; Fiscal Quarters. The Credit Parties will cause their (i) fiscal years to end on December 31 of each calendar year and (ii) fiscal quarters to end on the last day of each period described in the definition of “Fiscal Quarter” unless, in each case, otherwise agreed by the Agent in its reasonable discretion.

10.1.12. Post-Closing Actions. Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, the parties hereto acknowledge and agree that the Credit Parties and their Subsidiaries shall be required to take the actions specified in Schedule 10.1.12 attached hereto as promptly as practicable, and in any event within the time periods set forth in Schedule 10.1.12 (which time periods may be extended in the discretion of the Agent). The provisions of Schedule 10.1.12 shall be deemed incorporated by reference herein as fully as if set forth herein in its entirety.

All conditions precedent and representations contained in this Agreement and the other Loan Documents shall be deemed modified to the extent necessary to effect the foregoing (and to permit the taking of the actions described above in this Section 10.1.12 within the time periods required above, rather than as elsewhere provided in the Loan Documents), provided that (x) to the extent any representation and warranty would not be true because the foregoing actions were not taken on the Closing Date, the respective representation and warranty shall be required to be true and correct in all material respects at the time the respective action is taken (or was required to be taken) in accordance with the foregoing provisions of this Section 10.1.12 and (y) all representations and warranties relating to the Security Documents shall be required to be true in all material respects immediately after the actions required to be taken by this Section 10.1.12 have been taken. The acceptance of the benefits of each credit extension shall constitute a representation, warranty and covenant by the Credit Parties to each of the Lenders that the actions required pursuant to this Section 10.1.12 will be, or have been, taken within the relevant time periods referred to in this Section 10.1.12 and that, at such time, such affected representations and warranties contained in this Agreement and the other Loan Documents shall then be true and correct in all material respects without any modification pursuant to this Section 10.1.12, and the parties hereto acknowledge and agree that the failure to take any of the actions required above, within the relevant time periods required above, shall give rise to an immediate Event of Default pursuant to this Agreement.

10.2. Negative Covenants. Until Full Payment of all Obligations, each Credit Party shall not, and shall cause each Subsidiary not to:

10.2.1. Permitted Debt; Disqualified Equity Interests. Create, incur, guarantee or suffer to exist any Debt, or issue any Disqualified Equity Interest, except (collectively, “Permitted Debt”):

(a) the Obligations;

(b) Debt evidenced by the Senior Notes;

(c) Permitted Purchase Money Debt;

 

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(d) Borrowed Money (other than the Obligations, Term Loan Obligations, Company Subordinated Debt and Permitted Purchase Money Debt), but only to the extent outstanding on the Closing Date, not satisfied with proceeds of the initial Loans and identified on Schedule 10.2.1;

(e) (i) Bank Product Debt and (ii) obligations under Hedging Agreements permitted under Section 10.2.15;

(f) Debt that is in existence when a Person becomes a Subsidiary or that is secured by an asset when acquired by a Credit Party or Subsidiary, as long as such Debt was not incurred in contemplation of such Person becoming a Subsidiary or such acquisition, and does not exceed $5,000,000 in the aggregate at any time;

(g) unsecured Debt in an amount not in excess of $15,000,000 at any time of any Credit Party or Subsidiary (other than any loans or advances that would be in violation of Section 402 of the Sarbanes-Oxley Act) owing to any then existing or former director, officer or employee of Credit Party or Subsidiary or their respective assigns, estates, heirs or their current or former spouses for the repurchase, redemption or other acquisition or retirement for value of any of the Equity Interests of Parent held by them;

(h) unsecured Debt of any Credit Party or Subsidiary owing to any seller as payment of the purchase price of a Permitted Acquisition, provided that such unsecured Debt shall be on market terms and deeply subordinated to the Obligations hereunder on terms reasonably acceptable to the Agent;

(i) contingent indemnification obligations of any Credit Party or Subsidiary to financial institutions, in each case to the extent in the ordinary course of business and on terms and conditions which are within the general parameters customary in the banking industry, entered into to obtain cash management services or deposit account overdraft protection services (in amount similar to those offered for comparable services in the financial industry) or other services in connection with the management or opening of deposit accounts or incurred as a result of endorsement of negotiable instruments for deposit or collection purposes and other customary, contingent loss indemnification obligations of any Credit Party or Subsidiary incurred in the ordinary course of business;

(j) contingent liabilities of any Credit Party or Subsidiary in respect of any purchase price adjustment, earn-out provision, non-competition or consulting agreement or deferred compensation agreement, or other indemnity obligations, in each case owing to the seller or any Affiliate thereof or officers or directors of any of them in connection with any Permitted Acquisition;

(k) accretion or amortization of original issue discount and accretion of interest paid in kind, in each case in respect of Debt otherwise permitted here under;

(l) Permitted Contingent Obligations;

(m) Debt of (i) any Credit Party (other than Parent) owing to any Credit Party, (ii) any Credit Party owing to any Subsidiaries that are not Credit Parties, (iii) any Subsidiary that is not a Credit Party owing to a Subsidiary that is not a Credit Party; (iv) any Subsidiary that is not a Credit Party owing to a Credit Party to the extent constituting a Permitted Non-Credit Party Transaction and (v) the Parent to any Credit Party incurred in substitution of (and not in addition to) any Distribution that might otherwise be made to the Parent pursuant to clause (e) of the definition of Permitted Distribution or to make payments permitted under Section 10.2.21;

(n) Refinancing Debt;

(o) Debt of the Credit Parties in an aggregate outstanding amount of up to $25,000,000 consisting of Debt (i) incurred in the Ordinary Course of Business in connection with the

 

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financing of insurance premiums; (ii) incurred for the construction or acquisition or improvement of, or to finance or to refinance, any Real Estate owned by any Credit Party and (iii) owing to any landlord in connection with the financing with such landlord of leasehold improvements;

(p) Debt in connection with one or more sale leaseback transactions, the fair market value of all properties covered by sale leaseback transactions not to exceed (i) $25,000,000 or (ii) $200,000,000; provided that at the time of any such sale leaseback under this clause (ii) and giving effect to such sale leaseback as if occurring on the last day of the most recently ended Measurement Period (x) the First Lien Net Leverage Ratio is less than 4.75 to 1.00 and (y) the Total Net Leverage Ratio is less than 6.50 to 1.00.

(q) Debt in respect of performance bonds, bid bonds, customs and appeal bonds, performance and completion guarantees and similar obligations related thereto, in each case provided in the Ordinary Course of Business;

(r) guarantees by any Credit Party of (i) any Debt of any other Credit Party permitted hereunder, (ii) so long as no Default or Event of Default has occurred and is continuing or would arise therefrom, any Debt of Subsidiaries that are not Credit Parties to the extent constituting Permitted Non-Credit Party Transactions and (iii) provided that (x) no guarantee of the Term Loan Obligations or any other Debt that is secured on a junior basis to the Obligations, unsecured or contractually subordinated to the Obligations (including the Senior Notes) shall be permitted unless such guaranteeing party shall have also provided a guarantee of the Obligations on the terms set forth herein and (y) if the Debt being guaranteed is subordinated to the Obligations, such guarantee shall be subordinated to the Guaranty of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Debt;

(s) Debt of any Permitted Joint Venture Subsidiary owing to any Credit Party that is a Permitted Investment by such Credit Party;

(t) recourse and indemnification obligations under an Approved Private Label Credit Card Program;

(u) Debt consisting of the Term Loan Obligations; and

(v) Debt that is not included in any of the preceding clauses of this Section (including any Debt subordinated on terms reasonably acceptable to Agent) and does not exceed $50,000,000 in the aggregate at any time.

10.2.2. Permitted Liens. Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):

(a) Liens in favor of Agent securing the Obligations;

(b) Purchase Money Liens securing Permitted Purchase Money Debt;

(c) Liens for Taxes not yet due or being Properly Contested;

(d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising in the Ordinary Course of Business, but only if (a) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (b) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Credit Party or Subsidiary;

(e) Liens incurred or deposits made in the Ordinary Course of Business in connection with workers compensation, unemployment or other insurance obligations, or to secure the

 

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performance of tenders, bids, leases, contracts (except those relating to Borrowed Money), statutory obligations and other similar obligations, or arising as a result of progress payments under government contracts;

(f) Liens of landlords, carriers, warehousemen, mechanics, repairmen, workmen and materialmen and other similar Liens arising in the Ordinary Course of Business for (i) amounts not yet overdue and (ii) amounts that are overdue and that are being Properly Contested;

(g) Liens arising in the Ordinary Course of Business that are subject to Lien Waivers;

(h) Liens arising by virtue of a judgment or judicial order (to the extent, and for so long as, such judgments and orders do not, individually or in the aggregate constitute an Event of Default under Section 11.1(g)) against any Credit Party or Subsidiary (including with respect to any appeal bonds), or any Property of a Credit Party or Subsidiary, as long as such Liens are (a) in existence for less than 20 consecutive days or being Properly Contested, and (b) at all times junior to Agent’s Liens;

(i) easements, rights-of-way, restrictions (including municipal and zoning ordinances, building and other land use laws and regulations imposed by any governmental authority which are not violated in any material respect by existing improvements, structures, facilities or buildings or the present use of any real property), covenants or other agreements of record, conditions, licenses, encroachments, protrusions and other similar charges or encumbrances on Real Estate and other minor defects or irregularity in title, that do not secure any monetary obligation and do not materially interfere with the Ordinary Course of Business;

(j) normal and customary Liens and rights of setoff upon deposits in favor of depository institutions existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by a Borrower, in each case granted in the ordinary course of business in favor of such depository institutions with which such accounts are maintained, securing amounts owing to such depository institutions with respect to cash management, automated clearing house transfers and operating account arrangements, and Liens of a collecting bank arising under Section 4-210 of the UCC on Payment Items in the course of collection;

(k) existing Liens shown on Schedule 10.2.2;

(l) Liens on securities which are subject to repurchase agreements as contemplated in the definition of “Cash Equivalents”;

(m) Liens on earnest money deposits of cash or cash equivalents made by or received by the Credit Parties in connection with any Permitted Acquisition or Permitted Asset Disposition;

(n) Liens securing Refinancing Debt, to the extent such Liens are permitted hereunder with respect to the Debt subject to such permitted refinancing;

(o) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the Ordinary Course of Business;

(p) any interest or title of a lessor, sublessor, licensor or licensee (and any underlying lessor, sublessor, licensor or licensee) under any lease, license or similar agreement entered into by any Credit Party in the Ordinary Course of Business, including any sale leaseback transaction permitted hereunder;

 

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(q) Liens on property of a Person existing at the time such Person becomes a Subsidiary or at the time is merged into or consolidated with any Credit Party in a Permitted Acquisition; provided that (x) any Debt that is secured by such Liens is permitted to exist under Section 10.2.1(f) and (y) such Liens were not created in contemplation of such merger, consolidation or investment and do not extend to (i) Accounts or Inventory or (ii) any other assets other than those of the Person merged into or consolidated with such Credit Party or acquired by such Credit Party;

(r) Liens on property other than Accounts or Inventory of any Credit Party securing any of their Debt or their other liabilities provided that the aggregate amount of all such Debt and other liabilities not exceed $1,000,000 at any time;

(s) Liens on assets of Permitted Joint Venture Subsidiaries in favor of Borrowers or Guarantors, which at all times are evidenced by Joint Venture Notes and liens on assets of a Borrower or Guarantor securing obligations owing by such Borrower or Guarantor to any other Borrower or Guarantor which are at all times subject to a deep subordination agreement acceptable to the Agent in its sole discretion;

(t) rights of debit or withdrawal against the Recourse Account in favor of the card issuer under an Approved Private Label Credit Card Program;

(u) Liens on proceeds or refunds due under insurance policies in connection with the financing of premiums due thereunder; and

(v) Liens in favor of the Term Loan Agent or any other Term Loan Lender securing the Term Loan Obligations.

10.2.3. [Reserved].

10.2.4. Distributions; Upstream Payments. Declare or make any Distributions, except Permitted Distributions; or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, the Term Loan Documents and the Organic Documents, under Applicable Law or in effect on the Closing Date as shown on Schedule 9.1.15 or as permitted by Section 10.2.14.

10.2.5. Restricted Investments. Make any Restricted Investment.

10.2.6. Disposition of Assets. Make any Asset Disposition, except a Permitted Asset Disposition.

10.2.7. Loans. Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) loans or advances to officers or employees of any Credit Party or any Subsidiary for the purchase of Equity Interests of the Parent as part of the overall employee compensation or incentive programs of such Credit Party or Subsidiary, as applicable, in an aggregate outstanding principal amount not to exceed $10,000,000 at any time; (e), intercompany loans by a Borrower or Subsidiary Guarantor to another Borrower, Subsidiary Guarantor or Credit Support Party; (f) intercompany loans by any Borrower to the Parent made in substitution of (and not in addition to) any Distribution that might otherwise be made to the Parent pursuant to clause (e) of the definition of Permitted Distribution; and (g) to the extent constituting loans (including loans to Permitted Minority Joint Ventures), the transactions permitted under the definition of Permitted Investments.

 

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10.2.8. Restrictions on Payment of Certain Debt. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any terms of, Company Subordinated Debt, the Senior Notes, the Term Loan Obligations or any Borrowed Money owing to a Person who is not a Credit Party, other than:

(a) regularly scheduled payments (including mandatory prepayments) of principal, interest and fees (with proceeds of Equity Interests or otherwise) not in violation of any of the terms of any intercreditor or subordination agreement applicable thereto to which the Agent is a party or of which it is an intended beneficiary;

(b) through the incurrence of Refinancing Debt;

(c) other prepayments if, not less than ten (10) days prior thereto, the Borrower Agent has delivered a certificate demonstrating that (i) after giving effect thereto (A) the Pro Forma Fixed Charge Coverage Ratio shall not be less than 1.10 to 1.00 as of the most recently ended Measurement Period for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) shall have been delivered to Agent (or have been required to be delivered), and (ii) Pro Forma Availability shall exceed the greater of (A) $20,000,000 and (B) 20% of the aggregate Commitments at such time and for each day during the 30 day period prior to such prepayment; provided that no Default or Event of Default exists before or immediately after giving effect to such prepayment; and

(d) payments or prepayments of Debt owing by any Credit Party to any Subsidiary that is not a Credit Party to the extent constituting Permitted Non-Credit Party Transactions, provided that no Default or Event of Default exists before or immediately after giving effect to such payment or prepayment.

10.2.9. Fundamental Changes. Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except for (a) in connection with a Permitted Acquisition, any Subsidiary may merge or amalgamate with or into, or consolidate with, any other Person or permit any other Person to merge with or into or consolidate with any Borrower or Guarantor; provided that in any merger, amalgamation or consolidation involving any Borrower or Guarantor, such Borrower or Guarantor is the surviving Person or the surviving person becomes a Borrower or Guarantor immediately upon consummation of such any merger, amalgamation or consolidation, (b) any Borrower may merge with another Borrower, (c) any Guarantor may merge with another Guarantor, (d) any Credit Support Party may merge with another Credit Support Party, (e) any Subsidiary that is not a Credit Party may merge with or into any other Subsidiary that is not a Credit Party; (f) with thirty (30) days (or such less amount as Agent may allow) notice (x) change its name or conduct business under any fictitious name; change its tax, charter or other organizational identification number; or (z) change its form or state of organization, (g) the liquidation or dissolution of any Immaterial Credit Party or any Subsidiary that is not a Credit Party and (h) in connection with any Permitted Asset Disposition.

10.2.10. Subsidiaries and Issuance of Equity Interests. Form or acquire any Subsidiary after the Closing Date, except in accordance with Sections 10.1.9 and 10.2.5, or issue, or permit any existing Subsidiary to issue, any additional Equity Interests except director’s qualifying shares, except as permitted under Section 10.2.6.

10.2.11. Organic Documents. Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date in a manner that could reasonably be expected to be adverse to the Lenders.

10.2.12. Tax Consolidation. File or consent to the filing of any consolidated income tax return with any Person other than Credit Parties and Subsidiaries.

 

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10.2.13. Accounting Changes. Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2, or change its Fiscal Year.

10.2.14. Restrictive Agreements. Become a party to any Restrictive Agreement, except a Restrictive Agreement (a) in effect on the Closing Date; (b) relating to secured Debt permitted hereunder (including the Term Loan Obligations), as long as the restrictions apply only to collateral for such Debt and (other than with respect to the Term Loan Obligations) such collateral does not constitute Collateral; (c) constituting customary restrictions on assignment in leases and other contracts; (d) governing Refinancing Debt; (e) embodied in the Organic Documents relating only to a Permitted Joint Venture Subsidiary and restricting only such Permitted Joint Venture Subsidiary (provided that such Restrictive Agreement may not restrict the right of such Permitted Joint Venture Subsidiary to incur or repay Borrowed Money owing to Borrowers or Guarantors or to modify, extend or renew any agreement evidencing such Borrowed Money, to grant Liens on any Collateral or to declare or make Distributions); (f) embodied in the Senior Notes or in the Term Loan Documents; and (g) that do not affect the Collateral (or Agent’s Liens thereon), are immaterial to the performance by the Credit Parties of their Obligations under the Loan Documents and as could not reasonably be expected to have a Material Adverse Effect, in each case as are customary in the Ordinary Course of Business (i) in Hedging Agreements, (ii) in sale, sale leaseback, purchase or merger agreements pending a sale or merger; (iii) in any contract or contractual obligation (including leases and licenses) restricting assignment thereof; and (iv) imposed by customers or under contracts restricting cash or deposits or net worth.

10.2.15. Hedging Agreements. Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.

10.2.16. Conduct of Business. Engage in any business, other than any Permitted Business.

10.2.17. Affiliate Transactions. Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) expense reimbursement, payment of reasonable compensation and indemnification to officers and employees and consultants for services actually rendered, and loans and advances permitted by Section 10.2.7; (c) expense reimbursement, payment of customary directors’ fees and indemnities; (d) transactions solely among Credit Parties not expressly prohibited under this Agreement (except that with respect to transactions with the Parent, any such transaction is otherwise permitted under this Agreement); (e) as permitted under Sections 10.2.1, 10.2.2, 10.2.4, 10.2.5, 10.2.6, 10.2.8, 10.2.9, 12.2.10, 10.2.12 and 10.2.20, provided that, if such transactions are with Subsidiaries that are not Credit Parties or with Permitted Minority Joint Ventures, such transactions shall be permitted only to the extent they constitute Permitted Non-Credit Party Transactions; (f) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 10.2.17; (g) the Management Agreement and the Management Fees thereunder; (h) transactions with Capella Surety in the Ordinary Course of Business (provided that any Investments are Permitted Investments); and (i) transactions with Affiliates in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to Agent and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate.

10.2.18. Plans. Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date.

10.2.19. Amendments to Senior Note Indenture and Term Loan Documents. Amend, supplement or otherwise modify (i) the Senior Note Indenture, if such modification (a) increases the principal balance of the Debt thereunder, or increases any required payment of principal or interest; (b) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (c) shortens the final maturity date or otherwise accelerates amortization; (d) increases the interest rate; (e) increases or adds any fees or charges; (f) modifies any

 

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covenant in a manner or adds any representation, covenant or default that is more onerous or restrictive in any material respect for any Credit Party or Subsidiary, or that is otherwise materially adverse to any Credit Party, any Subsidiary or Lenders; or (g) results in the Obligations not constituting a “Credit Facility” under the Senior Note Indenture; or (ii) the Term Loan Documents, if such modification is not permitted by the terms of the Intercreditor Agreement.

10.2.20. Amendments to Intercompany Debt Due from Joint Venture Subsidiaries and the Company. Amend, waive, supplement or otherwise modify the agreements relating to the Company Subordinated Debt or the Liens and security interests securing such Debt in a manner that adversely affects Agent or any Lender without the prior written consent of Agent, or agree to any other amendment modification or supplement to the Joint Venture Notes and related documents without providing five days prior written notice to Agent, or waive, release, forgive or convert to equity such Debt, or terminate, release, let expire, waive or modify the liens or collateral securing such Debt, except in connection with a sale, lease, exchange, transfer or other disposition of Collateral permitted under the terms of the Loan Documents or permitted pursuant to a waiver or consent by the Lenders.

10.2.21. Parent. Parent shall not incur any material obligation (other than under the Loan Documents and the Term Loan Documents, in each case, to which it is a party and any permitted refinancing and corporate overhead) or hold or acquire any material assets (other than cash and cash equivalents, the Equity Interests of Borrower Agent and Capella Surety) and shall have no operations other than holding cash and cash equivalents to the extent necessary for payment of customary administrative expense and customary overhead costs, and Equity Interests of its Subsidiaries and activities reasonably related thereto (including payment of such administrative expenses and overhead costs).

10.3. Financial Covenants. Until Full Payment of all Obligations, Borrowers shall not permit the Fixed Charge Coverage Ratio to be less than 1.00 to 1.00 determined (i) on the date any Fixed Charge Trigger Period commences, as of the last day of the Measurement Period most recently ended (and for which the Financial Statements and Compliance Certificate required by Section 10.1.2(b) and (c) shall have been delivered (or were required to have been delivered) to Agent) and (ii) as of the last day of each Measurement Period thereafter ending during any Fixed Charge Trigger Period.

 

SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1. Events of Default. Each of the following shall be an “Event of Default” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:

(a) A Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise) and such failure (other than in the case of principal or reimbursement obligations for draws under Letters of Credit) shall continue unremedied for more than two (2) Business Days;

(b) Any representation, warranty or other written statement of a Credit Party made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;

(c) A Credit Party breaches or fails to perform any covenant contained in (i) Section 7.1, 7.2, 8.2.2, 8.2.4, 8.2.5, 8.7, 10.2 or 10.3 of this Agreement or (ii) Section 8.1, 10.1.1, 10.1.2 and such failure under this clause (ii) shall continue unremedied for more than three (3) Business Days;

(d) A Credit Party breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 30 days after a Senior Officer of

 

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Borrower Agent has knowledge thereof or receives notice thereof from Agent, whichever is sooner; provided, however, that such notice and opportunity to cure shall not apply if the breach or failure to perform is a willful breach by a Credit Party;

(e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; a Credit Party denies or contests the validity or enforceability of any Loan Documents or Obligations, or the enforceability, perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by Agent and Lenders);

(f) Any breach or default of a Credit Party occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any of the Senior Notes, the Term Loan Obligations or any Debt (other than the Obligations) in excess of $7,500,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;

(g) Any judgment or order for the payment of money is entered against a Credit Party in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Credit Parties, $7,500,000 (net of any insurance coverage therefor), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;

(h) A Credit Party is enjoined, restrained or in any way prevented by any Governmental Authority from conducting any material part of its business; a Credit Party suffers the loss, revocation or termination of any material license, permit, lease or agreement necessary to its business; there is a cessation of any material part of a Credit Party’s business for a material period of time; any material Collateral or Property of a Credit Party is taken or impaired through condemnation; a Credit Party agrees to or commences any liquidation, dissolution or winding up of its affairs; or a Credit Party is not Solvent; except, in each case, to the extent such Credit Party is an Immaterial Credit Party;

(i) An Insolvency Proceeding is commenced by a Credit Party; a Credit Party makes an offer of settlement, extension or composition to its unsecured creditors generally; a trustee is appointed to take possession of any substantial Property of or to operate any of the business of a Credit Party; or an Insolvency Proceeding is commenced against a Credit Party and: the Credit Party consents to institution of the proceeding, the petition commencing the proceeding is not timely contested by the Credit Party, the petition is not dismissed within 30 days after filing, or an order for relief is entered in the proceeding;

(j) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected to result in liability of a Credit Party to a Pension Plan, Multiemployer Plan or PBGC, or that constitutes grounds for appointment of a trustee for or termination by the PBGC of any Pension Plan or Multiemployer Plan; a Credit Party or ERISA Affiliate fails to pay when due any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan, in each case under this clause (j) which has resulted or could reasonably be expected to result in liability of a Credit Party in an aggregate amount of not less than $7,500,000;

(k) A Credit Party or any of its Senior Officers is criminally indicted or convicted for (a) a felony committed in the conduct of the Credit Party’s business, or (b) violating any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could reasonably be expected to lead to forfeiture of any material Property or any Collateral or the right to conduct a material part of its business;

(l) (i) cancellation, revocation, suspension or termination of any Medicare Certification, Medicare Provider Agreement, Medicaid Certification or Medicaid Provider Agreement affecting the Credit Party, any Subsidiary or any Contract Provider, or (ii) the loss of any other permits, licenses, authorizations, certifications or approvals from any federal, state or local Governmental

 

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Authority or termination of any contract with any such authority, in either case which cancellation, revocation, suspension, termination or loss (X) in the case of any suspension or temporary loss only, continues for a period greater than 45 days and (Y) results in the suspension or termination of operations of the Credit Party or any Subsidiary or in the failure of the Credit Party or any Subsidiaries or any Contract Provider to be eligible to participate in Medicare or Medicaid programs or to accept assignments of rights to reimbursement under Medicaid Regulations or Medicare Regulations; provided that any such events described in this clause (l) shall result either singly or in the aggregate in the termination, cancellation, suspension or material impairment of operations or rights to reimbursement which account for 5% or more of the Credit Parties’ consolidated gross revenues (on an annualized basis); or

(m) A Change of Control occurs.

11.2. Remedies upon Default. If an Event of Default described in Section 11.1(i) occurs with respect to any Credit Party, then to the extent permitted by Applicable Law, all Obligations shall become automatically due and payable and all Commitments shall terminate, without any action by Agent or notice of any kind. In addition, or if any other Event of Default exists, Agent may in its discretion (and shall upon written direction of Required Lenders) do any one or more of the following from time to time:

(a) declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Credit Parties to the fullest extent permitted by law;

(b) terminate, reduce or condition any Commitment, or make any adjustment to the Borrowing Base;

(c) require Credit Parties to Cash Collateralize LC Obligations, Bank Product Debt and other Obligations that are contingent or not yet due and payable, and, if Credit Parties fail promptly to deposit such Cash Collateral, Agent may (and shall upon the direction of Required Lenders) advance the required Cash Collateral as Revolver Loans (whether or not the aggregate Revolver Loans exceed the Borrowing Base before or after any such advance of Cash Collateral as Revolver Loans or the conditions in Section 6 are satisfied);

(d) exercise any other rights or remedies afforded under any agreement, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC;

(e) enforce, as Collateral Agent, all of the Liens and security interests granted or pledged pursuant to the Security Documents in accordance with the terms thereof; and

(f) enforce each Guaranty in accordance with the terms thereof.

11.3. Setoff. (a) At any time during an Event of Default, Agent, Issuing Bank, Lenders, and any of their Affiliates are authorized, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Agent, Issuing Bank, such Lender or such Affiliate to or for the credit or the account of a Credit Party against any Obligations, irrespective of whether or not Agent, Issuing Bank, such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or are owed to a branch or office of Agent, Issuing Bank, such Lender or such Affiliate different from the branch or office holding such deposit or obligated on such indebtedness; provided that in the event any Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to Agent for further application in accordance with the provisions of Section 4.2 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed to be held in trust for the benefit of Agent and the Lenders and (b) the Defaulting Lender shall provide promptly to Agent a statement describing in reasonable detail the Obligations owing

 

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to such Defaulting Lender as to which it exercised such right of setoff. The rights of Agent, Issuing Bank, each Lender and each such Affiliate under this Section are in addition to other rights and remedies (including other rights of setoff) that such Person may have.

(b) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EACH LENDER EXPRESSLY WAIVES ITS RIGHT OF SET-OFF (AND ANY SIMILAR RIGHT INCLUDING BANKERS’ LIENS) WITH RESPECT TO ANY ACCOUNTS, INCLUDING DEPOSIT ACCOUNTS, INTO WHICH MEDICARE, MEDICAID AND OTHER GOVERNMENT RECEIVABLES ARE DEPOSITED.

11.4. Remedies Cumulative; No Waiver.

11.4.1. Cumulative Rights. All agreements, warranties, guaranties, indemnities and other undertakings of Credit Parties under the Loan Documents are cumulative and not in derogation of each other. The rights and remedies of Agent and Lenders under the Loan Documents are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and are not exclusive of any other rights or remedies available by agreement, by law, at equity or otherwise. All such rights and remedies shall continue in full force and effect until Full Payment of all Obligations.

11.4.2. Waivers. No waiver or course of dealing shall be established by (a) the failure or delay of Agent or any Lender to require strict performance by Credit Parties with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise; (b) the making of any Loan or issuance of any Letter of Credit during a Default, Event of Default or other failure to satisfy any conditions precedent; or (c) acceptance by Agent or any Lender of any payment or performance by a Credit Party under any Loan Documents in a manner other than that specified therein. It is expressly acknowledged by Credit Parties that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.

 

SECTION 12. AGENT

12.1. Appointment, Authority and Duties of Agent.

12.1.1. Appointment and Authority. Each Secured Party appoints and designates Bank of America as Agent under all Loan Documents. Agent may, and each Secured Party authorizes Agent to, enter into all Loan Documents to which Agent is intended to be a party and accept all Security Documents. Each Lender agrees that any action taken by Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized by and binding upon all Secured Parties. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document; (c) act as collateral agent for Secured Parties for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents, Applicable Law or otherwise. The title of “Agent” is solely as a matter of custom and the duties of Agent are ministerial and administrative in nature only, and in no event does Agent have any agency, fiduciary or implied duty to or relationship with any Lender, Secured Party, Participant or other Person, by reason of any Loan Document or any transaction relating thereto. Agent alone shall be authorized to determine eligibility and applicable advance rates under the Borrowing Base, whether to impose or release any reserve, and to exercise its Credit Judgment in connection therewith, or whether any conditions to funding or issuance of a Letter of Credit have been satisfied, which determinations and judgments, if exercised in good faith, shall exonerate Agent from liability to any Secured Party or other Person for any error in judgment.

 

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12.1.2. Duties. Agent has no duties except those expressly set forth in the Loan Documents. The conferral upon Agent of any right shall not imply a duty on Agent’s part to exercise such right, unless instructed to do so by Required Lenders in accordance with this Agreement.

12.1.3. Agent Professionals. Agent may perform its duties through agents and employees. Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.

12.1.4. Instructions of Required Lenders. The rights and remedies conferred upon Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. In determining compliance with a condition for any action hereunder, including satisfaction of any condition in Section 6, Agent may presume that the condition is satisfactory to a Secured Party unless Agent has received notice to the contrary from such Secured Party before Agent takes the action. Agent may request instructions from Required Lenders or other Secured Parties with respect to any act (including the failure to act) in connection with any Loan Documents or Collateral, and may seek assurances to its satisfaction from Secured Parties of their indemnification obligations against all Claims that could be incurred by Agent in connection with any act. Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Secured Parties, and no Secured Party shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent of all specific parties shall be required in the circumstances described in Section 14.1.1 and in no event shall Required Lenders, without the prior written consent of each Lender, direct Agent to accelerate and demand payment of Loans held by one Lender without accelerating and demanding payment of all other Loans, nor to terminate the Commitments of one Lender without terminating the Commitments of all Lenders. In no event shall Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Documents or could subject any Agent Indemnitee to liability.

12.2. Agreements Regarding Collateral and Field Examination Reports.

12.2.1. Lien Releases; Care of Collateral. Secured Parties authorize Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations; (b) that is the subject of an Asset Disposition which Borrower Agent certifies in writing to Agent is a Permitted Asset Disposition or a Lien which Borrower Agent certifies is a Permitted Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on any such certificate without further inquiry); (c) that does not constitute Collateral with a value in excess of $10,000,000 in any Fiscal Year; or (d) subject to Section 14.1, with the written consent of Required Lenders. Secured Parties authorize Agent to subordinate its Liens to any Purchase Money or other Lien entitled to priority hereunder, under the Security Agreement or under the Intercreditor Agreement. Agent has no obligation whatsoever to any Lenders or other Secured Party to assure that any Collateral exists or is owned by a Credit Party, or is cared for, protected, insured or encumbered, nor to assure that Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.

12.2.2. Possession of Collateral. Agent and Secured Parties appoint each Lender as agent (for the benefit of Secured Parties) for the purpose of perfecting Liens in any Collateral held or controlled by such Lender, to the extent such Liens are perfected by possession or control. If any Lender obtains possession or control of any Collateral, it shall notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral to Agent or otherwise deal with it in accordance with Agent’s instructions.

12.2.3. Reports. Agent shall promptly forward to each Lender, when complete, copies of any field audit, examination or appraisal report prepared by or for Agent with respect to any Credit Party

 

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or Collateral (“Report”). Reports and other Borrower Materials may be made available to Lenders by providing access to them on the Platform, but Agent shall not be responsible for system failures or access issues that may occur from time to time. Each Lender agrees (a) that neither Bank of America nor Agent makes any representation or warranty as to the accuracy or completeness of any Report or other Borrower Materials, and shall not be liable for any information contained in or omitted from any Report or other Borrower Materials; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Credit Parties’ books and records as well as upon representations of Credit Parties’ officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender agrees to indemnify and hold harmless Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report or other Borrower Materials, as well as from any Claims arising as a direct or indirect result of Agent furnishing a Report or other Borrower Materials to such Lender, via the Platform or otherwise.

12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon advice and statements of Agent professionals. Agent shall have a reasonable and practicable amount of time to act upon any instruction, notice or other communication under any Loan Document, and shall not be liable for any delay in acting.

12.4. Action Upon Default. Agent shall not be deemed to have knowledge of any Default, Event of Default, or of any failure to satisfy any conditions in Section 6, unless it has received written notice from a Lender or Borrower Agent specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default, Event of Default or failure of such condition, it shall promptly notify Agent and the other Lenders thereof in writing. Each Secured Party agrees that, except as otherwise provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not take any Enforcement Action, accelerate Obligations (other than Bank Product Obligations) or assert any right relating to any Collateral.

12.5. Ratable Sharing. If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its ratable share of such Obligation, such Lender shall forthwith purchase from Secured Parties such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.6.2, as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. Notwithstanding the foregoing, if a Defaulting Lender obtains a payment or reduction of any Obligation, it shall immediately turn over the full amount thereof to Agent for application under Section 4.2.2 and it shall provide a written statement to Agent describing the Obligation affected by such payment or reduction. No Lender shall set off against any Blocked Account without the prior consent of Agent. The Pro Rata sharing provisions of this Section shall not be construed to apply to (a) any payment made by or on behalf of Borrowers pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (b) the application of Cash Collateral provided for in Section 2.3.3, (c) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolver Loans or sub-participations in LC Obligations or Swingline Loans to any assignee or participant or (d) any payment made in respect of, and to any Lender participating in, any additional loan facility arising under any amendment of this Agreement.

12.6. Indemnification. EACH SECURED PARTY SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT

 

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NOT REIMBURSED BY CREDIT PARTIES (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF CREDIT PARTIES UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THE CLAIM RELATES TO OR ARISES FROM AN AGENT INDEMNITEE ACTING AS OR FOR AGENT (IN ITS CAPACITY AS AGENT). In Agent’s discretion, it may reserve for any such Claims made against an Agent Indemnitee or Issuing Bank Indemnitee, and may satisfy any judgment, order or settlement relating thereto, from proceeds of Collateral prior to making any distribution of Collateral proceeds to Secured Parties. If Agent is sued by any receiver, bankruptcy trustee, debtor-in-possession or other Person for any alleged preference or fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Agent by each Secured Party to the extent of its Pro Rata share.

12.7. Limitation on Responsibilities of Agent. Agent shall not be liable to any Secured Party for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Agent’s gross negligence or willful misconduct. Agent does not assume any responsibility for any failure or delay in performance or any breach by any Credit Party, Lender or other Secured Party of any obligations under the Loan Documents. Agent does not make to Secured Parties any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Liens, Loan Documents or Credit Party. No Agent Indemnitee shall be responsible to Secured Parties for any recitals, statements, information, representations or warranties contained in any Loan Documents or Borrower Materials; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectability, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectability of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Credit Party or Account Debtor. No Agent Indemnitee shall have any obligation to any Secured Party to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Credit Party of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.

12.8. Successor Agent and Co-Agents.

12.8.1. Resignation; Successor Agent. Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Agent. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) an institution reasonably acceptable to Required Lenders and (provided no Default or Event of Default exists) that is reasonably acceptable to Borrowers. If no successor agent is appointed prior to the effective date of the resignation of Agent, then Agent may appoint a successor agent that is an institution acceptable to it (which shall be a Lender unless no Lender accepts the role) or in the absence of such appointment, Required Lenders shall on such date assume all rights and duties of Agent hereunder. Upon acceptance by a successor Agent of an appointment to serve as Agent hereunder, such successor Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Agent without further act. On the effective date of its resignation, the retiring Agent shall be discharged from its duties and obligations hereunder but shall continue to have all rights and protections under the Loan Documents with respect to actions taken or omitted to be taken by it while Agent, including the indemnification set forth in Sections 12.6 and 14.2, and all rights and protections under this Section 12. Any successor to Bank of America by merger or acquisition of stock or this loan shall continue to be Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.

12.8.2. Separate Collateral Agent. It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Agent may appoint an additional Person

 

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who is not so limited, as a separate collateral agent or co-collateral agent. If Agent so appoints a collateral agent or co-collateral agent, each right, protection and remedy intended to be available to Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Agent. Secured Parties shall execute and deliver instruments, agreements and documents as Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Agent until appointment of a new agent.

12.9. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it has, independently and without reliance upon Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Credit Party and its own decision to enter into this Agreement and to fund Loans and participate in LC Obligations hereunder. Each Secured Party has made such inquiries concerning the Loan Documents, the Collateral and each Credit Party as such Secured Party feels necessary. Each Secured Party further acknowledges and agrees that the other Secured Parties have made no representations or warranties concerning any Credit Party, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Secured Party will, independently and without reliance upon the other Lenders, Agent or any other Secured Party, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making Loans and participating in LC Obligations, and in taking or refraining from any action under any Loan Documents. Except for notices, reports and other information expressly requested by a Lender, Agent shall have no duty or responsibility to provide any Secured Party with any notices, reports or certificates furnished to Agent by any Credit Party or any credit or other information concerning the affairs, financial condition, business or Properties of any Credit Party (or any of its Affiliates) which may come into possession of Agent or any of Agent’s Affiliates.

12.10. Replacement of Certain Lenders. If a Lender (other than the Agent) (a) is a Defaulting Lender, (b) gives notice under Section 3.5 or requests payment or compensation under Section 3.7 or 5.9 (and has not designated a different Lending Office pursuant to and that satisfies the requirements of Section 3.8), or (c) within the last 120 days, fails to give its consent to any amendment, waiver or action for which consent of all Lenders was required and Required Lenders consented, then, in addition to any other rights and remedies that any Person may have, Borrower or Agent may, and upon request of the Required Lenders, Agent shall upon written notice to such Lender, require such Lender to assign all of its rights and obligations under the Loan Documents to Eligible Assignee(s) or one or more other assignees reasonably acceptable to Agent, pursuant to appropriate Assignment and Acceptance(s) within 20 days after Borrower or Agent’s notice. Agent is irrevocably appointed as attorney-in-fact to execute any such Assignment and Acceptance if the Lender fails to execute same. Such Lender shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it under the Loan Documents, including all principal, interest and fees through the date of assignment (but excluding any prepayment charge).

12.11. Remittance of Payments and Collections.

12.11.1. Remittances Generally. All payments by any Lender to Agent shall be made by the time and on the day set forth in this Agreement, in immediately available funds. If no time for payment is specified or if payment is due on demand by Agent and request for payment is made by Agent by 1:00 p.m. on a Business Day, payment shall be made by Lender not later than 4:00 p.m. on such day, and if request is made after 1:00 p.m., then payment shall be made by 11:00 a.m. on the next Business Day. Payment by Agent to any Secured Party shall be made by wire transfer, in the type of funds received by Agent. Any such payment shall be subject to Agent’s right of offset for any amounts due from such payee under the Loan Documents.

 

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12.11.2. Failure to Pay. If any Secured Party fails to pay any amount when due by it to Agent pursuant to the terms hereof, such amount shall bear interest from the due date until paid in full, at the greater of the Federal Funds Rate or at the rate determined by Agent as customary for interbank compensation for two Business Days and thereafter at the Default Rate for Base Rate Revolver Loans. In no event shall Borrowers be entitled to receive credit for any interest paid by a Secured Party to Agent, nor shall any Defaulting Lender be entitled to interest on any amounts held by Agent pursuant to Section 4.2.

12.11.3. Recovery of Payments. If Agent pays any amount to a Secured Party in the expectation that a related payment will be received by Agent from a Credit Party and such related payment is not received, then Agent may recover such amount from each Secured Party that received it. If Agent determines at any time that an amount received under any Loan Document must be returned to a Credit Party or paid to any other Person pursuant to Applicable Law or otherwise, then, notwithstanding any other term of any Loan Document, Agent shall not be required to distribute such amount to any Lender. If any amounts received and applied by Agent to any Obligations held by a Secured Party are later required to be returned by Agent pursuant to Applicable Law, such Secured Party shall pay to Agent, on demand, such Lender’s Pro Rata share of the amounts required to be returned.

12.12. Agent in its Individual Capacity. As a Lender, Bank of America shall have the same rights and remedies under the Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders” or any similar term shall include Bank of America in its capacity as a Lender. Agent, Lenders and their respective Affiliates may accept deposits from, lend money to, provide Bank Products to, act as financial or other advisor to, and generally engage in any kind of business with, Credit Parties and their Affiliates, as if they were not Agents or Lenders hereunder, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the other Secured Parties. In their individual capacities, Agent, Lenders and their respective Affiliates may receive information regarding Credit Parties, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and shall have no obligation to provide such information to any Secured Party.

12.13. Agent Titles. Each Lender, other than Bank of America, that is designated (on the cover page of this Agreement or otherwise) by Bank of America as an “Agent”, “Arranger” or “Bookrunner” of any type shall not have any right, power, responsibility or duty under any Loan Documents other than those applicable to all Lenders, and shall in no event be deemed to have any fiduciary relationship with or duty to any Secured Party.

12.14. Bank Product Providers. Each Bank Product Provider, by delivery of a notice to Agent of a Bank Product, agrees to be bound by the Loan Documents, including Sections 5.6, 12 and 14.3.3. Each such Bank Product Provider shall indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by Credit Parties, against all Claims that may be incurred by or asserted against any Agent Indemnitee in connection with such provider’s Bank Product Debt.

12.15. No Third Party Beneficiaries. This Section 12 is an agreement solely among Secured Parties and Agent, and shall survive Full Payment of the Obligations. This Section 12 does not confer any rights or benefits upon Credit Parties or any other Person. As between Credit Parties and Agent, any action that Agent may take under any Loan Documents or with respect to any Obligations shall be conclusively presumed to have been authorized and directed by Lenders.

 

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

13.1. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Credit Parties, Agent, Lenders, other Secured Parties and their respective successors and assigns, except that (a) no Credit Party shall have the right to assign its rights or delegate its obligations under any Loan Documents; and (b) any assignment by a Lender must be made in compliance with Section 13.3.

 

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Agent may treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 13.3. Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.

13.2. Participations.

13.2.1. Permitted Participants; Effect. Subject to Section 13.3.3, any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a financial institution (other than a Defaulting Lender) (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Loans and Commitments for all purposes, all amounts payable by Borrowers shall be determined as if such Lender had not sold such participating interests, and Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Agent and the other Lenders shall not have any obligation or liability to any such Participant. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in writing.

13.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loan or Commitment in which such Participant has an interest, postpones the Commitment Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan or Commitment, or releases all or substantially all of the value of the Guarantees or the Collateral.

13.2.3. Participant Register. Each Lender that sells a participation shall, acting as a non-fiduciary agent of the Borrower (solely for tax purposes), maintain a register in which it enters the Participant’s name, address and principal amounts (and stated interest) in Commitments, Loans and LC Obligations. Entries in the register shall be conclusive, absent manifest error, and such Lender shall treat each Person recorded in the register as the owner of the participation for all purposes, notwithstanding any notice to the contrary. No Lender shall have an obligation to disclose any information in such register except to the extent necessary to establish that a Participant’s interest is in registered form under the Code and Section 5f.103-1(c) of the United States Treasury Regulations. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

13.2.4. Benefit of Set-Off. Credit Parties agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it. By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 12.5 as if such Participant were a Lender.

13.3. Assignments.

13.3.1. Permitted Assignments. A Lender may assign to an Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $5,000,000 (unless otherwise agreed by Agent in its discretion) and integral multiples of $1,000,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Commitments retained by the transferor Lender is at least $5,000,000 (unless otherwise agreed by Agent in its discretion); and (c) the parties to each such assignment shall execute and deliver to Agent, for

 

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its acceptance and recording, an Assignment and Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to secure obligations of such Lender, including a pledge or assignment to a Federal Reserve Bank; provided, however, that any payment by Credit Parties to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Credit Parties’ obligations hereunder to the extent of such payment and no such pledge or assignment shall release the Lender from its obligations hereunder nor substitute the pledgee or assignee for such Lender as a party hereto.

13.3.2. Effect; Effective Date. Upon delivery to Agent of an assignment notice in the form of Exhibit D and a processing fee (payable by the assignor or assignee) of $3,500 (unless otherwise agreed by Agent in its discretion), the assignment shall become effective as specified in the notice, if it complies with this Section 13.3. From such effective date, the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder. Upon consummation of an assignment, the transferor Lender, Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as applicable. The transferee Lender shall comply with Section 5.10 and deliver, upon request, an administrative questionnaire satisfactory to Agent.

13.3.3. Certain Assignees. No assignment or participation may be made to a Borrower, Sponsor, Affiliate of a Borrower or Sponsor, Defaulting Lender or natural person. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or sub-participations, or other compensating actions, including funding, with the consent of Borrowers and Agent, the applicable Pro Rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (a) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to Agent or any Lender hereunder (and interest accrued thereon) and (b) acquire (and fund as appropriate) its full Pro Rata share of all Loans and participations in Letters of Credit and Swingline Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

13.3.4. Register. Agent, acting as a non-fiduciary agent of Borrowers (solely for tax purposes), shall maintain (a) a copy (or electronic equivalent) of each Assignment and Acceptance delivered to it, and (b) a register for recordation of the names, addresses and Commitments of, and the principal amounts (and stated interest) in Loans and LC Obligations owing to, each Lender. Entries in the register shall be conclusive, absent manifest error, and Borrowers, Agent and Lenders shall treat each Person recorded in such register as a Lender for all purposes under the Loan Documents, notwithstanding any notice to the contrary. Agent may choose to show only one Borrower as the borrower in the register, without any effect on the liability of any Credit Party with respect to the Obligations. The register shall be available for inspection by Borrower Agent or any Lender, from time to time upon reasonable notice.

 

SECTION 14. MISCELLANEOUS

14.1. Consents, Amendments and Waivers.

14.1.1. Amendment. No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of Required Lenders (or Agent with the consent of Required Lenders) and each Credit Party party to such Loan Document; provided, however, that

(a) without the prior written consent of Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Agent;

 

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(b) without the prior written consent of Issuing Bank, no modification shall be effective with respect to Section 2.3 or any other provision in a Loan Document that relates to Letters of Credit or any rights, duties or discretion of Issuing Bank;

(c) without the prior written consent of each affected Lender, including a Defaulting Lender, no modification shall be effective that would (i) increase or extend the Commitment of such Lender; (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender (provided, however, that any reduction or waiver of principal, interest or fees that by its terms affects a Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender); (iii) extend the Revolver Termination Date applicable to such Lender’s Obligations; or (iv) amend this clause (c); and

(d) without the prior written consent of all Lenders (except a Defaulting Lender as provided in Section 4.2), no modification shall be effective that would (a) alter Section 5.6.2 of this Agreement or Section 1.1 of the Security Agreement (except to add Collateral) or 14.1.1; (b) amend the definitions of Pro Rata or Required Lenders; (c) modify (A) the definition of Borrowing Base (and the defined terms used in such definition) or any component (other than Reserves) of the Borrowing Base, including eligibility criteria and advance rates, in any manner that would increase availability thereunder or (B) the discretion of the Agent to change, establish or eliminate any Reserves; (d) release all or substantially all Collateral; or (v) release any material Credit Party from liability for any material Obligations or release any material portion of the value of the Guaranties of the Obligations except as contemplated by the Loan Documents.

(e) without the prior written consent of a Bank Product Provider, no modification shall affect its relative payment priority under Section 5.6.2.

14.1.2. Limitations. The agreement of Credit Parties shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders, Agent and/or Issuing Bank as among themselves. Only the consent of the parties to any agreement relating to fees or a Bank Product shall be required for any modification of such agreement, and no Bank Product Provider (in such capacity) shall have a right to participate in any manner in or consent to modification of any Loan Document other than its Bank Product agreement. Any waiver or consent granted by Agent or Lenders hereunder shall be effective only if in writing and only for the matter specified.

14.1.3. Payment for Consents. No Credit Party will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.

14.2. Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS (AS DEFINED HEREIN) THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS (AS DEFINED HEREIN) ASSERTED BY ANY CREDIT PARTY OR OTHER PERSON OR ARISING FROM THE NEGLIGENCE (AS OPPOSED TO THE GROSS NEGLIGENCE) OF AN INDEMNITEE, WHETHER ANY SUCH CLAIM IS ASSERTED BY A CREDIT PARTY, A HOLDER OF EQUITY INTERESTS, OR CREDITOR(S), OF A CREDIT PARTY, AN INDEMNITEE OR ANY THIRD PARTY. In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.

 

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14.3. Notices and Communications.

14.3.1. Notice Address. Subject to Section 4.1.4, all notices and other communications by or to a party hereto shall be in writing and, if to a Credit Party, shall be given at Borrower Agent’s address shown on the signature pages hereof, and, if to any other Person, at such Person’s address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 14.3. Each such notice or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4, 2.3, 3.1.2 or 4.1.1 shall be effective until actually received by the individual to whose attention at Agent such notice is required to be sent. Any written notice or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by Borrower Agent shall be deemed received by all Credit Parties.

14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet websites may be used only for routine communications, such as financial statements, Borrowing Base Certificates, other Borrower Materials and other information required by Section 10.1.2, administrative matters, distribution of Loan Documents, and matters permitted under Section 4.1.4. Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.

14.3.3. Platform. Borrower Materials shall be delivered pursuant to procedures approved by Agent, including electronic delivery (if possible) upon request by Agent and Agent may deliver or post Borrower Materials to an electronic system maintained by Agent (“Platform”). Borrower Materials and other information relating to this credit facility may be made available to Secured Parties on the Platform, and Credit Parties and Secured Parties acknowledge that “public” information is not segregated from material non-public information on the Platform. The Platform is provided “as is” and “as available.” Agent does not warrant the accuracy or completeness of any information on the Platform nor the adequacy or functioning of the Platform, and expressly disclaims liability for any errors or omissions in the Borrower Materials or any issues involving the Platform. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY AGENT WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. Secured Parties acknowledge that Borrower Materials may include material non-public information of Credit Parties and should not be made available to any personnel who do not wish to receive such information or who may be engaged in investment or other market-related activities with respect to any Credit Party’s securities. No Agent Indemnitee shall have any liability to Borrowers, Secured Parties or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) relating to use by any Person of the Platform or delivery of Borrower Materials and other information through the Platform or over the internet.

14.3.4. Non-Conforming Communications. Agent and Lenders may rely upon any notices and other communications purportedly given by or on behalf of any Credit Party even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Credit Party shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any electronic or telephonic communication purportedly given by or on behalf of a Credit Party.

 

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14.4. Performance of Credit Parties’ Obligations. Agent may, in its discretion at any time and from time to time, at Credit Parties’ expense, pay any amount or do any act required of a Credit Party under any Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent by Credit Parties, on demand, with interest from the date incurred to the date of payment thereof at the Default Rate applicable to Base Rate Revolver Loans. Any payment made or action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.

14.5. Credit Inquiries. Each Credit Party hereby authorizes Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Credit Party or Subsidiary.

14.6. Severability. Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect. Without limiting the foregoing provisions of this Section 14.6, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by the Bankruptcy Code or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency reorganization or similar debtor relief laws, as determined in good faith by Agent or Issuing Bank, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several limitations, tests or measurements to regulate similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.

14.8. Counterparts; Execution. Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when Agent has received counterparts bearing the signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement. Any electronic signature, contract formation on an electronic platform and electronic record-keeping shall have the same legal validity and enforceability as a manually executed signature or use of a paper-based recordkeeping system to the fullest extent permitted by Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any similar state law based on the Uniform Electronic Transactions Act.

14.9. Entire Agreement. Time is of the essence with respect to all Loan Documents and Obligations. The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

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14.10. Relationship with Lenders. The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Commitments of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not be necessary for Agent or any other Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Agent, Lenders or any other Secured Party pursuant to the Loan Documents or otherwise shall be deemed to constitute Agent and any Secured Party to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Credit Party.

14.11. No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated by any Loan Document, Credit Parties acknowledge and agree that (a) (i) this credit facility and any related arranging or other services by Agent, any Lender, any of their Affiliates or any arranger are arm’s-length commercial transactions between Credit Parties and their Affiliates, on one hand, and Agent, any Lender, any of their Affiliates or any arranger, on the other hand; (ii) Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate; and (iii) Credit Parties are capable of evaluating and understanding, and do understand and accept, the terms, risks and conditions of the transactions contemplated by the Loan Documents; (b) each of Agent, Lenders, their Affiliates and any arranger is and has been acting solely as a principal in connection with this credit facility and any Bank Product and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Credit Parties, any of their Affiliates or any other Person, and has no obligation with respect to the transactions contemplated by the Loan Documents except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be engaged in a broad range of transactions that involve interests that differ from those of Credit Parties and their Affiliates, and have no obligation to disclose any of such interests to Credit Parties or their Affiliates. To the fullest extent permitted by Applicable Law, each Credit Party hereby waives and releases any claims that it may have against Agent, Lenders, their Affiliates and any arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by a Loan Document.

14.12. Confidentiality. Each of Agent, Lenders and Issuing Bank agrees to maintain the confidentiality of all Information (as defined below), except that Information may be disclosed (a) to its Affiliates, and to its and their partners, directors, officers, employees, agents, advisors and representatives (provided such Persons are informed of the confidential nature of the Information and instructed to keep it confidential); (b) to the extent requested by any governmental, regulatory or self-regulatory authority purporting to have jurisdiction over it or its Affiliates; (c) to the extent required by Applicable Law or by any subpoena or other legal process; (d) to any other party hereto; (e) in connection with any action or proceeding, or other exercise of rights or remedies, relating to any Loan Documents or Obligations; (f) subject to an agreement containing provisions substantially the same as this Section, to any Transferee or any actual or prospective party (or its advisors) to any Bank Product or to any swap, derivative or other transaction under which payments are to be made by reference to a Credit Party or Credit Party’s obligations under the Loan Documents; (g) with the consent of Borrower Agent; or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) is available to Agent, any Lender, Issuing Bank or any of their Affiliates on a nonconfidential basis from a source other than Credit Parties. Notwithstanding the foregoing, Agent and Lenders may publish or disseminate general information describing this credit facility, including the names and addresses of Credit Parties and a general description of Credit Parties’ businesses, and may use Credit Parties’ logos, trademarks or product photographs in advertising materials. As used herein, “Information” means all information received from a Credit Party or Subsidiary relating to it or its business that is identified as confidential when delivered. Any Person required to maintain the confidentiality of Information pursuant to this Section shall be deemed to have complied if it exercises the same degree of care that it accords its own confidential information. Each of Agent, Lenders and Issuing Bank acknowledges that i. Information may include material non-public information concerning a Credit Party or Subsidiary; ii. it has developed compliance procedures regarding the use of material non-public information; and iii. it will handle such material non-public information in accordance with Applicable Law, including federal and state securities laws.

 

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14.13. Certifications Regarding Indentures and Term Loans. Credit Parties certify to Agent and Lenders that neither the execution or performance of the Loan Documents nor the incurrence of any Obligations by Credit Parties violates the Senior Note Indenture, including Section 4.09 thereof or the Term Loan Documents. Credit Parties further certify that the Commitments and Obligations constitute “Permitted Debt” under the Senior Notes Indenture and are permitted under Section 10.04 of the Term Loan Credit Agreement. Agent may condition Borrowings, Letters of Credit and other credit accommodations under the Loan Documents from time to time upon Agent’s receipt of evidence that the Commitments and Obligations continue to constitute “Permitted Debt” at such time.

14.14. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ALL CLAIMS, UNLESS EXPRESSLY OTHERWISE SPECIFIED IN THE RELEVANT LOAN DOCUMENT, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

14.15. Consent to Forum.

14.15.1. Forum. EACH CREDIT PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH CREDIT PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURT AND CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1. Nothing herein shall limit the right of Agent or any Lender to bring proceedings against any Credit Party in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law. Nothing in this Agreement shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.

14.16. Waivers by Credit Parties. To the fullest extent permitted by Applicable Law, each Credit Party waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in any proceeding or dispute of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, documents, instruments, chattel paper and guaranties at any time held by Agent on which a Credit Party may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Agent, Issuing Bank or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each Credit Party acknowledges that the foregoing waivers are a material inducement to Agent, Issuing Bank and Lenders entering into this Agreement and that Agent, Issuing Bank and Lenders are relying upon the foregoing in their dealings with Credit Parties. Each Credit Party has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

 

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14.17. Patriot Act Notice. Agent and Lenders hereby notify Credit Parties that pursuant to the requirements of the Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each Credit Party, including its legal name, address, tax ID number and other information that will allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Credit Parties’ management and owners, such as legal name, address, social security number and date of birth. Borrowers shall, promptly upon request, provide all documentation and other information as Agent, Issuing Bank or any Lender may request from time to time in order to comply with any obligations under any “know your customer,” anti-money laundering or other requirements of Applicable Law.

14.18. NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

 

SECTION 15. GUARANTY OF OBLIGATIONS

15.1. Guaranty; Limitation of Liability. In order to induce Agent, Issuing Bank and Lenders to enter into this Agreement and to induce the Lenders to extend credit hereunder and to induce the Lenders or their affiliates to provide Bank Products, and in recognition of the direct benefit received by the Guarantors from the extension of such credit and provision of such Bank Products, each Guarantor hereby absolutely, unconditionally and irrevocably guarantees (the undertaking by each Guarantor under this Section 15 being, as amended from time to time, the “Facility Guaranty”) the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Credit Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by Agent or any other Secured Party in enforcing any rights under this Facility Guaranty or any other Loan Document, subject to limitations expressly set forth elsewhere herein. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Credit Party to any Secured Party under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of any Insolvency Proceeding involving such other Credit Party.

15.1.1. No Fraudulent Transfer. Each Guarantor, Agent and each other Secured Party, hereby confirms that it is the intention of such Persons that this Facility Guaranty and the obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Facility Guaranty and the Obligations of each Guarantor hereunder. To effectuate the foregoing intention, each Guarantor, Agent and each of the other Secured Parties hereby irrevocably agree that such Guaranteed Obligations and other liabilities shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of each Guarantor that are relevant under the laws referred to in the first sentence hereof, and after giving effect to any collections from, any rights to receive contributions from, or payments made by or on behalf of, any of the other Credit Parties in respect of the Obligations under any Loan Document, result in the Guaranteed Obligations and all other liabilities of each Guarantor under this Facility Guaranty not constituting a fraudulent transfer or conveyance.

 

15.1.2. Contribution. Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Facility Guaranty, any other Loan Document or any other guaranty, each Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents.

 

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15.2. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any Applicable Law, now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto. The obligations of each Guarantor under or in respect of this Facility Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Credit Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Facility Guaranty, irrespective of whether any action is brought against any Borrower or any other Credit Party or whether any Borrower or any other Credit Party is joined in any such action or actions. The liability of each Guarantor under this Facility Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term of, including any increase in the amount of, all or any of the Guaranteed Obligations or any other Obligations of any other Credit Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Credit Party or otherwise;

(c) any taking, exchange, release or non-perfection of any Collateral or any other collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

(d) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Credit Party under the Loan Documents or any other assets of any Credit Party; the failure of Agent, any other Secured Party or any other person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such Collateral, property or security;

(e) the fact that any Collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that such Guarantor is not entering into this Facility Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any such Collateral;

(f) any change, restructuring or termination of the corporate structure or existence of any Credit Party or any of its Subsidiaries;

(g) any failure of any Secured Party to disclose to any Credit Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Credit Party now or hereafter known to such Secured Party (each Guarantor waiving any duty on the part of the Secured Parties to disclose such information);

 

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(h) the failure of any other Person to execute or deliver any Loan Document or any supplement thereto or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

(i) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Credit Party or any other guarantor or surety, other than payment in full of the Guaranteed Obligations (other than contingent indemnification obligations).

15.2.2. Reinstatement. This Facility Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by Agent or any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of any Borrower or any other Credit Party or otherwise, all as though such payment had not been made.

15.2.3. Guaranteed Obligations Due. Each Guarantor hereby further agrees that, as between each Guarantor on the one hand, and Agent and the other Secured Parties, on the other hand, (i) the Guaranteed Obligations of each Guarantor may be declared to be forthwith due and payable as provided in Section 11.2 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 11.2) for purposes of Section 15.1, notwithstanding any stay, injunction or other prohibition preventing such declaration in respect of the Obligations of any of the Credit Parties guaranteed hereunder (or preventing such Guaranteed Obligations from becoming automatically due and payable) as against any other Person and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations (or such Guaranteed Obligations being deemed to have become automatically due and payable) as provided in Section 11.2, such Guaranteed Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by each Guarantor for all purposes of this Facility Guaranty.

15.3. Waivers and Acknowledgments. Each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Facility Guaranty and any requirement that Agent or any Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Credit Party or any other Person or any Collateral.

15.3.1. Waiver of Right of Revocation. Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Facility Guaranty and acknowledges that this Facility Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

15.3.2. Waiver of Defenses. Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by Agent or any Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of each Guarantor or other rights of each Guarantor to proceed against any of the other Credit Parties, any other guarantor or any other Person or any Collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of each Guarantor hereunder.

15.3.3. Waiver of Duty to Disclose. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of Agent or any Secured Party to disclose to each Guarantor any matter, fact or thing relating to the business, financial condition, operations, or performance of any other Credit Party or any of its Subsidiaries now or hereafter known by Agent or such Secured Party.

15.3.4. Knowing Waivers. Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 15.2 and this Section 15.3 are knowingly made in contemplation of such benefits.

 

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15.4. Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against any Borrower, any other Credit Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of each Guarantor’s Obligations under or in respect of this Facility Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of Agent or any Secured Party against any Borrower, any other Credit Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower, any other Credit Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until Full Payment of all of the Guaranteed Obligations (other than contingent indemnification obligations) and all other amounts payable under this Facility Guaranty shall have occurred, all Letters of Credit and all Bank Product Debt shall have expired or been terminated or Cash Collateralized and the Commitments shall have expired or been terminated. If any amount shall be paid to each Guarantor in violation of the immediately preceding sentence at any time prior to the Full Payment of the Guaranteed Obligations and all other amounts payable under this Facility Guaranty, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of each Guarantor and shall forthwith be paid or delivered to Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Facility Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Facility Guaranty thereafter arising. If any Guarantor shall make payment to any Secured Party of all or any part of the Guaranteed Obligations, and Full Payment of the Guaranteed Obligations shall occur, then the Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Facility Guaranty.

15.4.1. Subordination. Each Guarantor hereby subordinates any and all debts, liabilities and other obligations in the nature of borrowed money owed to each Guarantor by each other Credit Party (as used in this Section 15, the “Intercompany Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 15.4:

15.4.2. Prohibited Payments, Etc. Except (a) during the continuance of any Event of Default under Sections 11.1(a) or (i) or (b) after notice from Agent or any Lender of any other Event of Default under this Agreement, each Guarantor may receive regularly scheduled payments from any other Credit Party on account of the Intercompany Obligations. During the continuance of any Event of Default under Sections 11.1(a) or (i) or after notice from Agent or any Lender of any other Event of Default under this Agreement, however, each Guarantor shall not demand, accept or take any action to collect any payment on account of the Intercompany Obligations unless the Required Lenders otherwise agree.

15.4.3. Prior Payment of Guaranteed Obligations. In any Insolvency Proceeding relating to any other Credit Party, each Guarantor agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Guaranteed Obligations (other than contingent indemnification obligations, but including all interest, expenses and fees (including legal fees) accruing after the commencement of any Insolvency Proceeding, whether or not constituting an allowed claim in such proceeding (as used in this Section 15, “Post Petition Interest”)) before each Guarantor receives payment of any Intercompany Obligations.

 

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15.4.4. Turn-Over. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Credit Party), each Guarantor shall, if Agent so requests, collect, enforce and receive payments on account of the Intercompany Obligations as trustee for the Secured Parties and deliver such payments to Agent on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of each Guarantor under the other provisions of this Facility Guaranty.

15.4.5. Agent Authorization. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Credit Party), Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, Intercompany Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, Intercompany Obligations and (B) to pay any amounts received on such obligations to Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest).

15.4.6. Continuing Guaranty; Assignments. This Facility Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the Full Payment of the Guaranty Obligations, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Secured Parties and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Loans owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case as and to the extent provided in Section 13.3. No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties.

15.5. Intercreditor Agreement Governs. Each Lender and the Agent (a) hereby agrees that it will be bound by and will take no actions contrary to the provisions of any intercreditor agreement entered into pursuant to the terms hereof, (b) hereby authorizes and instructs the Agent to enter into each intercreditor agreement and any other intercreditor agreement entered into pursuant to the terms hereof and to subject the Liens securing the Obligations to the provisions thereof and (c) hereby authorizes and instructs the Agent to enter into any such intercreditor agreement (including any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such intercreditor agreements in connection with the incurrence by any Credit Party of any Permitted Debt or as otherwise provided for by the terms of this Agreement that is permitted to be secured by the Collateral pursuant to Sections 10.2.1 and 10.2.2 of this Agreement, in order to permit such Debt to be secured by a valid, perfected Lien (with such priority as may be designated by such Credit Party, to the extent such priority is permitted by the Loan Documents)), and to subject the Liens on the Collateral securing the Obligations to the provisions thereof.

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

 

BORROWERS:
CAPELLA HEALTHCARE, INC., a Delaware corporation
By:

/s/ Denise W. Warren

Name: Denise W. Warren

Title:

Executive Vice President, Chief Financial Officer and Treasurer
Address:
c/o Capella Healthcare, Inc.
501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662
Attention:  Denise W. Warren
CAPELLA HOLDINGS OF OKLAHOMA, LLC
CAPITAL MEDICAL CENTER HOLDINGS, LLC
CAPITAL MEDICAL CENTER PARTNER, LLC
CAROLINA PINES HOLDINGS, LLC
CMCH HOLDINGS, LLC
COLUMBIA OLYMPIA MANAGEMENT, INC.
FARMINGTON CLINIC COMPANY, LLC
FARMINGTON HEART & VASCULAR CENTER, LLC
FARMINGTON HOSPITAL CORPORATION
FARMINGTON MISSOURI HOSPITAL COMPANY, LLC
HARTSVILLE MEDICAL GROUP, LLC
LAWTON HOLDINGS, LLC
LAWTON SURGERY INVESTMENT COMPANY, LLC
MUSKOGEE HOLDINGS, LLC
MUSKOGEE MEDICAL AND SURGICAL ASSOCIATES, LLC
MUSKOGEE PHYSICIAN GROUP, LLC
MUSKOGEE REGIONAL MEDICAL CENTER, LLC
NATIONAL PARK CARDIOLOGY SERVICES, LLC
NATIONAL PARK FAMILY CARE, LLC
NATIONAL PARK PHYSICIAN SERVICES, LLC
By:

/s/ Denise W. Warren

Name: Denise W. Warren
Title: Vice President and Treasurer
Address:
c/o Capella Healthcare, Inc.
501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662
Attention:  Denise W. Warren


NPMC HOLDINGS, LLC
NPMC, LLC
OREGON HEALTHCORP, LLC
RUSSELLVILLE HOLDINGS, LLC
SOUTHWESTERN MEDICAL CENTER, LLC
SOUTHWESTERN NEUROSURGERY PHYSICIANS, LLC
SOUTHWESTERN PHYSICIAN SERVICES, LLC
SOUTHWESTERN RADIOLOGY AFFILIATES, LLC
SOUTHWESTERN SURGICAL AFFILIATES LLC
SPARTA HOSPITAL CORPORATION
ST. MARY’S HOLDINGS, LLC
ST. MARY’S PHYSICIAN SERVICES, LLC
ST. MARY’S REAL PROPERTY, LLC
WILLAMETTE VALLEY CLINICS, LLC
WILLAMETTE VALLEY HEALTH SOLUTIONS, LLC
WILLAMETTE VALLEY MEDICAL CENTER, LLC
WPC HOLDCO, LLC
By:

/s/ Denise W. Warren

Name: Denise W. Warren
Title: Vice President and Treasurer
Address:
c/o Capella Healthcare, Inc.
501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662
Attention:   Denise W. Warren


GUARANTOR:
CAPELLA HOLDINGS, INC., a Delaware corporation
By:

/s/ Denise W. Warren

Name: Denise W. Warren
Title: Executive Vice President, Chief Financial Officer and Treasurer
Address:
c/o Capella Healthcare, Inc.
501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662
Attention:   Denise W. Warren


AGENT AND LENDERS:
BANK OF AMERICA, N.A., as Agent and Lender
By:

/s/ Seth Benefield

Name: Seth Benefield
Title: Senior Vice President
Address:
Bank of America, N.A.
300 Galleria Parkway, Suite 800
Atlanta, Georgia 30339
Facsimile:   404.607.3277


CITIBANK, N.A., as Lender
By:

/s/ Brendan Mackay

Name: Brendan Mackay
Title: Vice President
Address:
Citibank, N.A.
388 Greenwich St, 19th floor
New York, New York 10013
Attention:   Brendan Mackay
Facsimile:   646.328.3110


GENERAL ELECTRIC CAPITAL CORPORATION, as Lender
By:

/s/ Denis Cloud

Name: Dennis Cloud
Title: Duly Authorized Signatory
Address:
General Electric Capital Corporation
500 West Monroe, Suite 1400
Chicago, Illinois 60614
Attention:   Dennis Cloud
Facsimile:   866.388.3572


Schedule 1.1

COMMITMENTS OF LENDERS

 

Lender

   Commitment  

Bank of America, N.A.

   $ 40,000,000.00   

Citibank, N.A.

   $ 30,000,000.00   

General Electric Capital Corporation

   $ 18,000,000.00   

GE Asset Based Master Note LLC

   $ 12,000,000.00   
  

 

 

 

Total

$ 100,000,000.00   
  

 

 

 


Schedule 1.2

IMMATERIAL SUBSIDIARIES

Capella Acquisition Subsidiary, LLC

Columbia Medical Group - South Pittsburg, Inc.

Cullman County Medical Clinic, Inc.

Cullman Hospital Corporation

Cullman Surgery Venture Corp.

Grandview Holding Company, Inc.

Grandview Physician Group, LLC

Hartselle Physicians, Inc.

Mineral Area Pharmacy and Durable Medical Equipment, LLC

National Healthcare of Cullman, Inc.

National Healthcare of Decatur, Inc.

National Healthcare of Hartselle, Inc.

Parkway Medical Clinic, Inc.

Providence MRI Associates, LLC

Providence Radiologic Services, LLC

River Park Hospitalists, LLC

Sequatchie Valley Urology, LLC

SP Acquisition Corp.

Western Washington Healthcare, LLC


Schedule 1.3

MORTGAGE PROPERTIES

 

Grantor

  

Address/City/State/Zip Code

  

Applicable Mortgage Filing Office

Muskogee Regional Medical Center, LLC    2900 North Main St., Muskogee, OK 74401    Muskogee
Southwestern Medical Center, LLC    5602 SW Lee Blvd, Lawton, OK, 73505    Comanche
Southwestern Medical Center, LLC    1602 SW 82nd St., Lawton, OK, 73505    Comanche
St. Mary’s Real Property, LLC    1808 West Main Street, Russellville, AR 72801    Pope
Willamette Valley Medical Center, LLC    2700 SE Stratus Avenue, McMinnville, OR 97128    Yamhill
Farmington Missouri Hospital Company, LLC    1212 Weber Road, Farmington, MO 63640 (Mineral Area Regional Medical Center)    St. Francois
Farmington Clinic Company, LLC    1101 Weber Road, Farmington, MO 63640 (Medical Office/Clinic)    St. Francois


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

Schedule 8.2.1

DEPOSIT ACCOUNTS

Borrowers and Guarantors

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Capella Healthcare, Inc.    Bank of America (“BofA”)    Concentration Account    [***]
Capella Healthcare, Inc.    BofA    Non-Medicare/
Medicaid
   [***]
Capella Healthcare, Inc.    BofA    Non-Medicare/
Medicaid
   [***]
Capella Healthcare, Inc.    BofA    Medicare/Medicaid
(Government
Receivables Deposit
Account)
   [***]
Capella Healthcare, Inc.    BofA    Medicare/Medicaid
(Government
Receivables Deposit
Account)
   [***]
Capella Healthcare, Inc.    BofA    Managed Care    [***]
Farmington Missouri Hospital Company, LLC    BofA    Direct Deposit Account
with Lockbox
   [***]
Farmington Missouri Hospital Company, LLC    BofA    Direct Deposit Account    [***]
Hartsville Medical Group, LLC    BofA    Direct Deposit Account    [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Russellville Holdings, LLC    BofA    Direct Deposit Account
with Lockbox
   [***]
Southwestern Physician Services, LLC    BofA    Direct Deposit Account    [***]
White County Community Hospital, LLC    BofA    Direct Deposit Account
with Lockbox
   [***]
Willamette Valley Medical Center, LLC    BofA    Direct Deposit Account
with Lockbox
   [***]

Credit Support Parties

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

River Park Hospital, LLC    BofA    River Park Direct
Deposit Account
Lockbox
   [***]
Hot Springs National Park Hospital Holdings, LLC    BofA    National Park Direct
Deposit Account
Lockbox
   [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Excluded Deposit Accounts

Borrowers and Guarantors

 

Grantor Name/ Account Name

  

Bank Name

  

Account Type

  

Account Number

Capella Healthcare, Inc.    BofA    Disbursement Account    [***]
Capella Healthcare, Inc.    BofA    Disbursement Account    [***]
Farmington Missouri Hospital Company, LLC    BofA    Disbursement Account    [***]
Muskogee Regional Medical Center, LLC    BofA    Disbursement Account    [***]
Russellville Holdings, LLC    BofA    Disbursement Account    [***]
Southwestern Medical Center, LLC    BofA    Disbursement Account    [***]
Sparta Hospital Corporation    BofA    Disbursement Account    [***]
Willamette Valley Medical Center, LLC    BofA    Disbursement Account    [***]
Capella Healthcare, Inc.    BofA    Consolidated SBA
Disbursement Account
   [***]
Capella Healthcare, Inc.    BofA    Payroll    [***]
Capella Healthcare, Inc.    BofA    Payroll Tax    [***]
Capella Healthcare, Inc.    BofA    Employee Benefits    [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name/ Account Name

  

Bank Name

  

Account Type

  

Account Number

Muskogee Regional Medical Center, LLC    BofA    Workers Compensation
Disbursement Account
   [***]
Southwestern Medical Center, LLC    BofA    Workers Compensation
Disbursement Account
   [***]

Credit Support Parties

 

Grantor Name/ Account Name

  

Bank Name

  

Account Type

  

Account Number

Cannon County Hospital, LLC    BofA    Disbursement Account    [***]
Cannon County Hospital, LLC    BofA    Disbursement Account    [***]
Columbia Capital Medical Center Limited Partnership    BofA    Disbursement Account    [***]
Hartsville, LLC    BofA    Disbursement Account    [***]
Hot Springs National Park Hospital Holdings, LLC    BofA    Disbursement Account    [***]
River Park Hospital, LLC    BofA    Disbursement Account    [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Borrowers and Guarantors (Excluded Facility Deposit Accounts)

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Muskogee Regional Medical Center, LLC    BofA    Direct Deposit Account    [***]
Southwestern Medical Center, LLC    BofA    Direct Deposit Account    [***]
Southwestern Physician Services, LLC    BofA    Direct Deposit Account    [***]
Farmington Missouri Hospital Company, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Hartsville Medical Group, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Muskogee Medical and Surgical Associates LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
National Park Cardiology Services, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
National Park Physician Services, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
National Park Family Care, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Saint Mary’s Physician Services, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Southwestern Surgical Affiliates LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Sparta Hospital Corporation    US Bank    Direct Deposit Account
with Lockbox
   [***]
Sparta Hospital Corporation    US Bank    Direct Deposit Account
with Lockbox
   [***]
Willamette Valley Clinics, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Farmington Missouri Hospital Company, LLC    First State Community Bank    Direct Deposit Account    [***]
Farmington Missouri Hospital Company, LLC    KeyBank    Direct Deposit Account
with Lockbox
   [***]
Russellville Holdings, LLC    Simmons First Bank    Direct Deposit Account    [***]
Russellville Holdings, LLC    Bank of the Ozarks    Direct Deposit Account
with Lockbox
   [***]
Willamette Valley Clinics, LLC    Wells Fargo    Direct Deposit Account    [***]
Willamette Valley Medical Center, LLC    Wells Fargo    Direct Deposit Account    [***]
Muskogee Regional Medical Center, LLC    BancFirst    Direct Deposit Account    [***]
Muskogee Medical and Surgical Associates LLC    BancFirst    Direct Deposit Account    [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Credit Support Parties (Excluded Facility Deposit Accounts)

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Columbia Capital Medical Center Limited Partnership    BofA    Direct Deposit Account
with Lockbox
   [***]
Hartsville, LLC    BofA    Direct Deposit Account
with Lockbox
   [***]
Cannon County Hospital, LLC    BofA    DeKalb Direct Deposit
Account with Lockbox
   [***]
Cannon County Hospital, LLC    BofA    Stones River Direct
Deposit Account with
Lockbox
   [***]
Capital Medical Center Specialty Physicians, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Capital Medical Center Physicians, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Columbia Capital Medical Center Limited Partnership    US Bank    Direct Deposit Account
with Lockbox
   [***]
River Park Physician Group, LLC    US Bank    Direct Deposit Account
with Lockbox
   [***]
Hartsville, LLC    Carolina Bank and Trust    Direct Deposit Account    [***]
Cannon County Hospital, LLC    Regions    Direct Deposit Account    [***]


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

River Park Hospital, LLC    Regions    Direct Deposit Account    [***]


Schedule 8.2.2

CASH MANAGEMENT SYSTEM

See Schedule 8.2.1.


Schedule 8.2.5

CREDIT CARD ARRANGEMENTS

 

1. Credit card deposits are sent to the applicable Direct Deposit Account for each facility held at Bank of America and listed on Schedule 8.2.1.

 

2. US Buyer Initiated Payments Services Agreement between American Express Travel Related Services Company Incorporated and Capella Healthcare, Inc. dated December 30, 2009.


Schedule 9.1.4

NAMES AND CAPITAL STRUCTURE

The legal names and jurisdictions of incorporation of each Credit Party and Subsidiary are as follows:

 

Borrower

  

Jurisdiction of Organization & Type of Organization

Capella Healthcare, Inc.    Delaware Corporation
Capella Holdings, Inc.    Delaware Corporation
Capella Holdings of Oklahoma, LLC    Delaware Limited Liability Company
Capital Medical Center Holdings, LLC    Delaware Limited Liability Company
Capital Medical Center Partner, LLC    Delaware Limited Liability Company
Carolina Pines Holdings, LLC    South Carolina Limited Liability Company
CMCH Holdings, LLC    Delaware Limited Liability Company
Columbia Olympia Management, Inc.    Delaware Corporation
Farmington Clinic Company, LLC    Missouri Limited Liability Company
Farmington Hospital Corporation    Missouri Corporation
Farmington Heart & Vascular Center, LLC    Delaware Limited Liability Company
Farmington Missouri Hospital Company, LLC    Missouri Limited Liability Company
Hartsville Medical Group, LLC    South Carolina Limited Liability Company
Lawton Holdings, LLC    Delaware Limited Liability Company


Borrower

  

Jurisdiction of Organization & Type of Organization

Lawton Surgery Investment Company, LLC    Delaware Limited Liability Company
Muskogee Holdings, LLC    Delaware Limited Liability Company
Muskogee Medical and Surgical Associates, LLC    Delaware Limited Liability Company
Muskogee Physician Group, LLC    Delaware Limited Liability Company
Muskogee Regional Medical Center, LLC    Delaware Limited Liability Company
National Park Cardiology Services, LLC    Delaware Limited Liability Company
National Park Family Care, LLC    Delaware Limited Liability Company
National Park Physician Services, LLC    Delaware Limited Liability Company
NPMC Holdings, LLC    Delaware Limited Liability Company
NPMC, LLC    Delaware Limited Liability Company
Oregon Healthcorp, LLC    Delaware Limited Liability Company
Russellville Holdings, LLC    Delaware Limited Liability Company
Southwestern Medical Center, LLC    Delaware Limited Liability Company
Southwestern Neurosurgery Physicians, LLC    Oklahoma Limited Liability Company
Southwestern Physician Services, LLC    Oklahoma Limited Liability Company
Southwestern Radiology Affiliates, LLC    Delaware Limited Liability Company


Borrower

  

Jurisdiction of Organization & Type of Organization

Southwestern Surgical Affiliates LLC    Delaware Limited Liability Company
Sparta Hospital Corporation    Tennessee Corporation
St. Mary’s Holdings, LLC    Delaware Limited Liability Company
St. Mary’s Physician Services, LLC    Delaware Limited Liability Company
St. Mary’s Real Property, LLC    Delaware Limited Liability Company
Willamette Valley Clinics, LLC    Delaware Limited Liability Company
Willamette Valley Health Solutions, LLC    Delaware Limited Liability Company
Willamette Valley Medical Center, LLC    Delaware Limited Liability Company
WPC Holdco, LLC    Delaware Limited Liability Company

 

Credit Support Party

  

Jurisdiction of Organization & Type of Organization

Capital Medical Center Physicians, LLC    Delaware Limited Liability Company
Capital Medical Center Specialty Physicians, LLC    Delaware Limited Liability Company
Columbia Capital Medical Center Limited Partnership    Washington Limited Partnership
Cannon County Hospital, LLC    Tennessee Limited Liability Company
Hartsville HMA, LLC    South Carolina Limited Liability Company


Credit Support Party

  

Jurisdiction of Organization & Type of Organization

Hot Springs National Park Hospital Holdings, LLC    Delaware Limited Liability Company
National Park Real Property, LLC    Delaware Limited Liability Company
River Park Hospital, LLC    Tennessee Limited Liability Company
River Park Physician Group, LLC    Delaware Limited Liability Company
Saint Thomas/Capella, LLC    Delaware Limited Liability Company
Stones River Clinic Services, LLC    Tennessee Limited Liability Company
White County Community Hospital, LLC    Delaware Limited Liability Company
White County Physician Services, LLC    Tennessee Limited Liability Company
White County Primary Care, LLC    Tennessee Limited Liability Company

 

Immaterial Subsidiary

  

Jurisdiction of Organization & Type of Organization

Capella Acquisition Subsidiary, LLC    Delaware Limited Liability Company
Columbia Medical Group - South Pittsburg, Inc.    Tennessee Limited Liability Company
Cullman County Medical Clinic, Inc.    Alabama Corporation
Cullman Hospital Corporation    Alabama Corporation
Cullman Surgery Venture Corp.    Delaware Corporation


Immaterial Subsidiary

  

Jurisdiction of Organization & Type of Organization

Grandview Holding Company, Inc.    Delaware Corporation
Grandview Physician Group, LLC    Tennessee Limited Liability Company
Hartselle Physicians, Inc.    Alabama Corporation
Mineral Area Pharmacy and Durable Medical Equipment, LLC    Missouri Limited Liability Company
National Healthcare of Cullman, Inc.    Delaware Corporation
National Healthcare of Decatur, Inc.    Delaware Corporation
National Healthcare of Hartselle, Inc.    Delaware Corporation
Parkway Medical Clinic, Inc.    Alabama Corporation
Providence MRI Associates, LLC    Oklahoma Limited Liability Company
Providence Radiologic Services, LLC    Oklahoma Limited Liability Company
River Park Hospitalists, LLC    Tennessee Limited Liability Company
Sequatchie Valley Urology, LLC    Tennessee Limited Liability Company
SP Acquisition Corp.    Tennessee Corporation
Western Washington Healthcare, LLC    Washington Limited Liability Company


The Authorized and issued Equity Interests, and the record holders of Equity Interests of each Credit Party and Subsidiary are as follows:

 

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

   % of Equity
Interests held
by Owner
 

Capella Holdings, Inc.

   Capella Healthcare, Inc.    100 Common      100

Saint Thomas/Capella, LLC

   Cannon County Hospital, LLC    N/A      64.5

Upper Cumberland Healthcare Initiatives, LLC (Physicians)

      N/A      35.5

NPMC Holdings, LLC

   Capella Acquisition Subsidiary, LLC    N/A      100

Muskogee Holdings, LLC

   Capella Holdings of Oklahoma, LLC    N/A      100

CMCH Holdings, LLC

   Capital Medical Center Holdings, LLC    N/A      100

Capital Medical Center Holdings, LLC

   Capital Medical Center Partner, LLC    N/A      100

Columbia Capital Medical Center Limited Partnership

   Capital Medical Center Physicians, LLC    N/A      99

Capital Medical Center Holdings, LLC

           1

Columbia Capital Medical Center Limited Partnership

   Capital Medical Center Specialty Physicians, LLC    N/A      99

Capital Medical Center Holdings, LLC

           1


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

Capella Healthcare, Inc.

   Carolina Pines Holdings, LLC    N/A      100

Capella Healthcare, Inc.

   CMCH Holdings, LLC    N/A      100

Capital Medical Center Holdings

   Columbia Capital Medical Center Limited Partnership    N/A      39.7

Capital Medical Center Partner, LLC

      N/A      48.55

Columbia Olympia Management, Inc.

      N/A      1.0

WPC Holdco, LLC

      N/A      1.0

Capital Medical Center Physicians

      N/A      9.75

SP Acquisition Corp.

   Columbia Medical Group - South Pittsburgh, Inc.    1,000 Common      100

Capital Medical Center Holdings, LLC

   Columbia Olympia Management, Inc.    1000 Common      100

Capella Healthcare, Inc.

   Cullman County Medical Clinic, Inc.    1000 Common      100

Capella Healthcare, Inc.

   Cullman Hospital Corporation    1 Common      100

Cullman Hospital Corporation.

   Cullman Surgery Venture Corp.    1,000 Common      100


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

Farmington Hospital Corporation

   Farmington Clinic Company, LLC    N/A      100

Farmington Hospital Corporation

   Farmington Heart & Vascular Center, LLC    N/A      100

Capella Healthcare, Inc.

   Farmington Hospital Corporation    1000 Common      100

Farmington Hospital Corporation

   Farmington Missouri Hospital Company, LLC    N/A      100

Capella Healthcare, Inc.

   Grandview Holding Company, Inc.    1,000 Common      100

Grandview Holding Company, Inc.

   Grandview Physician Group, LLC    N/A      100

Capella Healthcare, Inc.

   Hartselle Physicians, Inc.    1000 Common      100

Carolina Pines Holdings, LLC

   Hartsville HMA, LLC    N/A      98.55

Physicians/Physician Entities

      N/A      1.45

Carolina Pines Holdings, LLC

   Hartsville Medical Group, LLC    N/A      100

NPMC Holdings, LLC

   Hot Springs National Park Hospital Holdings, LLC    N/A      95.04

Physicians/Physician Entities

      N/A      4.96


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

Capella Healthcare, Inc.

   Lawton Holdings, LLC    N/A      100

Lawton Holdings, LLC

   Lawton Surgery Investment Company, LLC    N/A      100

Farmington Hospital Corporation

   Mineral Area Pharmacy and Durable Medical Equipment, LLC    N/A      100

Capella Healthcare, Inc.

   Muskogee Holdings, LLC    N/A      100

Capella Holdings of Oklahoma, Inc.

   Muskogee Medical and Surgical Associates, LLC    N/A      100

Capella Holdings of Oklahoma, LLC

   Muskogee Physician Group, LLC    N/A      100

Capella Holdings of Oklahoma, LLC

   Muskogee Regional Medical Center, LLC    N/A      100

Cullman Hospital Corporation

   National Healthcare of Cullman, Inc.    1,000      100

Capella Healthcare, Inc.

   National Healthcare of Decatur, Inc.    1,000 Common      100

Capella Healthcare, Inc.

   National Healthcare of Hartselle, Inc.    1,000 Common      100


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

NPMC Holdings, LLC

   National Park Cardiology Services, LLC    N/A      100

NPMC Holdings, LLC

   National Park Family Care, LLC    N/A      100

NPMC Holdings, LLC

   National Park Physician Services, LLC    N/A      100

Hot Springs National Park Hospital Holdings, LLC

   National Park Real Property, LLC    N/A      100

Capella Healthcare, Inc.

   NPMC Holdings, LLC    N/A      100

NPMC Holdings, LLC

   NPMC, LLC    N/A      100

Capella Healthcare, Inc.

   Oregon Healthcorp, LLC    N/A      100

Capella Healthcare, Inc.

   Parkway Medical Clinic, Inc.    1,000 Common      100

Capella Holdings of Oklahoma, LLC

   Providence MRI Associates, LLC    N/A      100

Capella Holdings of Oklahoma, LLC

   Providence Radiologic Services, L.C.    N/A      100

Saint Thomas/Capella, LLC

   River Park Hospital, LLC    N/A      100


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

Saint Thomas/Capella, LLC

   River Park Hospitalists, LLC    N/A      100

Saint Thomas/Capella, LLC

   River Park Physician Group, LLC    N/A      100

St. Mary’s Holdings, LLC

   Russellville Holdings, LLC    N/A      100

Capella Healthcare, Inc.

   Saint Thomas/Capella, LLC    N/A      57.85

Sparta Hospital Corporation

      N/A      35.66

Saint Thomas Health

      N/A      6.49

Grandview Holding Company, Inc.

   Sequatchie Valley Urology, LLC    N/A      100

Lawton Holdings, LLC

   Southwestern Medical Center, LLC    N/A      100

Lawton Holdings, LLC

   Southwestern Neurosurgery Physicians, LLC    N/A      100

Lawton Holdings, LLC

   Southwestern Physician Services, LLC    N/A      100

Lawton Holdings, LLC

   Southwestern Radiology Affiliates, LLC    N/A      100


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

Lawton Holdings, LLC

   Southwestern Surgical Affiliates LLC    N/A      100

Capella Healthcare, Inc.

   SP Acquisition Corp.    1,000 Common      100

Capella Healthcare, Inc.

   Sparta Hospital Corporation    1,000 Common      100

Capella Healthcare, Inc.

   St. Mary’s Holdings, LLC    N/A      100

St. Mary’s Holdings, LLC

   St. Mary’s Physician Services, LLC    N/A      100

Russellville Holdings, LLC

   St. Mary’s Real Property, LLC    N/A      100

Cannon County Hospital, LLC

   Stones River Clinic Services, LLC    N/A      100

Columbia Olympia Management, Inc.

   Western Washington Healthcare, LLC    N/A      99

Columbia Capital Medical Center Limited Partnership

      N/A      1

Saint Thomas/Capella, LLC

   White County Community Hospital, LLC    N/A      87.725

Upper Cumberland Healthcare Initiatives, LLC (Physicians)

      N/A      12.275


Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner
 

White County Community Hospital, LLC

   White County Physician Services, LLC    N/A      99

Saint Thomas/Capella, LLC

           1

White County Physician Services, LLC

   White County Primary Care, LLC    N/A      100

Oregon Healthcorp, LLC

   Willamette Valley Clinics, LLC    N/A      100

Oregon Healthcorp, LLC

   Willamette Health Solutions, LLC    N/A      100

Oregon Healthcorp, LLC

   Willamette Valley Medical Center, LLC    N/A      100

Capital Medical Center Holdings, LLC

   WPC Holdco, LLC    N/A      100

All agreements binding on holders of Equity Interests of Credit Parties and Subsidiaries with respect to such interests:

None.


In the five years preceding the Closing Date, no Credit Party or Subsidiary has acquired any substantial assets from any other Person nor been the surviving entity in a merger or combination, except:

 

Credit Party

  

Change in Identity or Corporate Structure

Carolina Pines Holdings, LLC    Consummation of the Hartsville Acquisition on the Closing Date
Lawton Surgery Investment Company, LLC    Acquired substantially all the assets of Great Plains Ambulatory Surgery Center on June 30, 2011
Muskogee Regional Medical Center, LLC    Acquired substantially all the assets of Muskogee RT Associates, LLC on March 16, 2012 Acquired certain assets from Muskogee Community Hospital, LLC and entered into a long term lease for certain assets on July 1, 2012 Exercised its option to purchase the assets covered under the long-term lease from Muskogee Community Hospital, LLC on July 31, 2014
Sparta Hospital Corporation    Acquired membership interests in Cannon County Hospital, LLC on June 30, 2011
Southwestern Medical Center, LLC    Acquired substantially all the assets of Southwest Imaging Center, Inc. on December 31, 2012
   Acquired substantially all the assets of Raindancer, LLC d/b/a Doctors MRI on December 31, 2012
National Park Family Care, LLC    Acquired substantially all the assets of Hollywood Avenue Family Medicine Clinic, P.A. on February 1, 2011


Schedule 9.1.5

REAL ESTATE

 

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Muskogee Regional Medical Center, LLC    2900 North Main St. Muskogee, OK 74401    Owned
Muskogee Regional Medical Center, LLC    Eco Friendly Drive, Muskogee, OK 74401 (part of hospital campus)    Owned
Muskogee Medical Center Authority    318 South 37th Street, Muskogee, OK 74401    Owned
Muskogee Medical Center Authority    109 South 36th Street, Muskogee, OK 74401    Owned
Muskogee Medical Center Authority    211 South 36th Street, Muskogee, OK 74401    Owned
Muskogee Medical Center Authority    251 South 37th Street, Muskogee, OK 74401    Owned
Muskogee Medical Center Authority    37th Street & Denver, Muskogee, OK 74401(5 tracts in vicinity)    Owned
Muskogee Medical Center Authority    Highway 69, 1.5 miles south of Highway 51, Wagoner, OK (7.25 acres; no location information)    Owned
Southwestern Medical Center, LLC    412 SW Summit Ave, Lawton, OK, 73501    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Southwestern Medical Center, LLC    5602 SW Lee Blvd, Lawton, OK, 73505    Owned
Southwestern Medical Center, LLC    1602 SW 82nd St. Lawton, OK, 73505    Owned
St. Mary’s Real Property, LLC    1808 West Main Street Russellville, AR 72801    Owned
St. Mary’s Real Property, LLC    809 West Main Street Russellville, AR 72801    Owned
St. Mary’s Real Property, LLC    1608 West Main Street Russellville, AR 72801    Owned
St. Mary’s Real Property, LLC    1800 West C Street Russellville, AR 72801    Owned
St. Mary’s Real Property, LLC    1714 State Hwy 22 West Dardanelle, AR 72834    Owned
St. Mary’s Real Property, LLC    Parking Lot, West “C” Place Russellville, AR 72801    Owned
St. Mary’s Real Property, LLC    Vacant Lot: West “C” Street and New Orleans Avenue Russellville, AR 72801    Owned
St. Mary’s Real Property, LLC    Two properties (no location information)    Owned
Willamette Valley Medical Center, LLC    2700 SE Stratus Avenue, McMinnville, OR 97128    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Farmington Missouri Hospital Company, LLC    1212 Weber Road, Farmington, MO 63640 (Mineral Area Regional Medical Center)    Owned
Farmington Clinic Company, LLC    1101 Weber Road, Farmington, MOS 63640 (Medical Office/Clinic)    Owned
Farmington Clinic Company, LLC    1101 Weber Road, Farmington, MO 63640 (Map House)    Owned
Farmington Clinic Company, LLC    1103 Weber Road, Farmington, MO 63640 (Medical Building)    Owned
Farmington Clinic Company, LLC    1102 Weber Road, Farmington, MO 63640 (unimproved parking lot)    Owned
Farmington Clinic Company, LLC    600 Purcell Drive, Potosi, MO 63664 (Potosi Clinic)    Owned
Farmington Clinic Company, LLC    751 Maple Valley Drive, Farmington, MO 63640 (Maple Valley Clinic)    Owned
Farmington Clinic Company, LLC    764 Weber, Farmington, MO 63640 (Farmington Clinic)    Owned
Farmington Clinic Company, LLC    55 Nesbit, Bonne Terre, MO 63640 (Bonne Terre Clinic)    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Farmington Missouri Hospital Company, LLC    545 Wallace, Farmington, MO 63640 (Intern House)    Owned
Farmington Clinic Company, LLC    1013 Weber Road, Farmington, MO 63640 (Alexander House)    Owned
Farmington Missouri Hospital Company, LLC    601 Wallace Road, Farmington, MO (unimproved parking lot)    Owned
Farmington Clinic Company, LLC    Vacant property on Weber Road    Owned
Farmington Clinic Company, LLC    San Jewell Tract 1 Mineral Area Park Farmington, MO (unimproved parking lot)    Owned
Farmington Missouri Hospital Company, LLC    Wallace Road, Pt. Lot 23, Farmington, MO (unimproved parking lot)    Owned
Farmington Missouri Hospital Company, LLC    Wallace Road, Murphy Place, Farmington, MO (unimproved parking lot)    Owned
Hartsville HMA, LLC    1304 West Bobo Newsom Highway, Hartsville, SC 29550    Owned
Muskogee Regional Medical Center, LLC    300 Rockefeller Drive, Muskogee, OK 74401 (The Pavilion (Mental Health); Wound Care; Cancer Center)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Muskogee Regional Medical Center, LLC    421 South 34th Street, Muskogee, OK 74401 (Day Care Center)    Leased
Muskogee Regional Medical Center, LLC    3520-24 Chandler Road, Muskogee, OK 74403 (Muskogee Immediate Care)    Leased
Muskogee Regional Medical Center, LLC    201 South York, Muskogee, OK 74403 (Comprehensive Rehab Services)    Leased
Muskogee Regional Medical Center, LLC    101 Rockefeller Drive, Muskogee, OK 74401 (MOB II)    Leased
Muskogee Regional Medical Center, LLC    333 South 36th Street, Muskogee, OK 74401 (Emergency Room; Regional Medical Lab)    Leased
Muskogee Regional Medical Center, LLC    209 South 36th Street, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    3204 W. Okmulgee, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    3502 W. Okmulgee, Muskogee, OK 74401 (Office Building)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Muskogee Regional Medical Center, LLC    3504 W. Okmulgee, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    3506 W. Okmulgee, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    2900 No. Main Street, Muskogee, OK 74401 (Hospital)    Leased
Muskogee Regional Medical Center, LLC    4318/4300 AW. Okmulgee, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    333 South 38th, Suite D, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    100 Community Health Dr., Ste 101, Eufaula, OK 74432 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    1200 West Cherokee, Wagoner, OK 74467    Leased
Russellville Holdings, LLC    Parking Lot: 309-317 North Seattle Street; 1903, 1904 and 1906 West C Place; Russellville, AR 72801    Owned
Russellville Holdings, LLC    1708 West C Place, Russellville, AR 72801    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Russellville Holdings, LLC    3 properties (no location information)    Owned
Southwestern Medical Center, LLC    5604 SW Lee Boulevard, Lawton, OK 73505 (5604 Medical Office Building)    Leased
Southwestern Medical Center, LLC    5606 SW Lee Boulevard, Lawton, OK 73505 (5606 Medical Office Building)    Leased
Southwestern Medical Center, LLC    904 SW 38th Street, Lawton, OK 73505 (Premier Orthopedics)    Leased
Southwestern Medical Center, LLC    Ste. 100, 5404 SW Lee Blvd., Lawton, OK 73505 (Great Plains Ambulatory)    Leased
Southwestern Medical Center, LLC    5116 W. Gore Blvd., Lawton, OK 73505 (The Imaging Center)    Leased
Southwestern Medical Center, LLC    5366 NW Cache Rd., Lawton, OK 73505 (Dr’s MRI)    Leased
Southwestern Medical Center, LLC    402 North Broadway, Walters, OK 73572    Leased
St. Mary’s Real Property, LLC    1813 West Main Street, Russellville, AR 72801 (Heart Clinic Arkansas)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

St. Mary’s Real Property, LLC    2205 West Main Street, Russellville, AR 72801 (Saint Mary’s Outpatient Surgery Center)    Leased
St. Mary’s Real Property, LLC    11720 State Highway 27 North, Hector, AR 72843 (Valley Health Services of Hector)    Leased
St. Mary’s Real Property, LLC    3808 West Main, Russellville, AR 72801 (Saint Mary’s Wellness Fitness Center)    Leased
St. Mary’s Real Property, LLC    101 Skyline Drive, Russellville, AR 72801 (Millard Henry Clinic - Main Clinic)    Leased
St. Mary’s Real Property, LLC    101 Skyline Drive, Russellville, AR 72801 (Millard Henry Clinic - New MOB)    Leased
St. Mary’s Real Property, LLC    1601 North Church Street, Atkins AR 72823 (Millard Henry Clinic - Atkins)    Leased
St. Mary’s Real Property, LLC    8970 SR 7, Unit A#1, Dover Centre, Dover, AR 72837 (Millard Henry Clinic - Dover)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

St. Mary’s Real Property, LLC    105 Skyline Drive, Russellville, AR 72801 (Millard Henry Clinic - OBGYN and General Surgery Clinic)    Leased
St. Mary’s Real Property, LLC    101 Skyline Drive, Russellville, AR 72801 (Millard Henry Clinic Transcription Building)    Leased
St. Mary’s Real Property, LLC    10 Hospital Drive, Morrilton, AR 72110 (Morrilton Medical Clinic)    Leased
St. Mary’s Real Property, LLC    1902 West C. Place, Russellville, AR 72801 (Storage/Warehouse)    Leased
St. Mary’s Real Property, LLC    106 South Inglewood, Russellville, AR 72801 (Family Practice 2)    Leased
Willamette Valley Medical Center, LLC    375 SE Norton Lane #A, McMinnville, OR 97128 (McMinnville Internal Medicine)    Leased
Willamette Valley Medical Center, LLC    222 SE Jefferson, Sheridan, OR 97378 (Sheridan Medical Center)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Willamette Valley Medical Center, LLC    392 NE Norton Lane, McMinnville, OR 97128 (Williamette Valley Medical Center Wound Care and Hyperbaric Medicine and McMinnville Surgical Associates)    Leased
Willamette Valley Medical Center, LLC    1010 SAW Bay Street, Newport, OR 97365 (David Bice MD)    Leased
Columbia Capital Medical Center Limited Partnership    3900 Capitol Mall Drive Southwest, Olympia, WA 98502 (Capital Medical Center and Women’s Center)    Owned
Columbia Capital Medical Center Limited Partnership    502 McPhee Road Southwest, Olympia, WA 98502 (McPhee Storage Warehouse)    Owned
Columbia Capital Medical Center Limited Partnership    403 Black Hills Lane Southwest Suite B, Olympia, WA 98502 (Black Hills Medical Office Park)    Owned
Capital Medical Center    405 Black Hills Lane Southwest Suite G&H, Olympia, WA 98502 (Black Hills Medical Office Park)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Capital Medical Center    404 Black Hills Lane Southwest Suite B, Olympia, WA 98502 (Black Hills Medical Office Park)    Leased
Capital Medical Center    412 A&B Black Hills Lane Southwest, Olympia, WA 98502 (Black Hills Medical Office Park)    Leased
Capital Medical Center Limited Partnership    3920 Capitol Mall Drive Southwest, Olympia, WA 98502 (Medical Office Building)    Owned
Capital Medical Center    534 McPhee Road Southwest Olympia, WA 98502 (Residence)    Owned
Columbia Capital Medical Center Limited    3525 Ensign Road Northeast Suite B, Olympia, WA 98502 (Olympia Radiology)    Owned
Capital Medical Center    601 McPhee Road Southwest Bldgs 1 and 2, Olympia, WA 98502    Leased
Columbia Capital Medical Center Limited Partnership    413 Black Hills Lane Southwest, Olympia, WA 98502 (land around the Hospital, Physicians Pavilion, and Black Hills Medical Park)    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Columbia Capital Medical Center Limited Partnership    3435 Ensign Road NE, Olympia, WA 98502    Owned
Columbia Capital Medical Center Limited Partnership    527 McPhee Road SW, Olympia, WA 98502    Owned
Columbia Capital Medical Center Limited Partnership    605 McPhee Road SW, Olympia, WA 98502    Owned
Capital Medical Center    2960 Limited Lane NW, Olympia, WA 98502    Leased
Columbia Capital Medical Center Limited Partnership    403 Black Hills Lane Southwest Suite D, Olympia, WA 98502 (Black Hills Medical Office Park)    Owned
Capital Medical Center    412C Black Hills Lane Southwest, Olympia, WA 98502 (Black Hills Medical Office Park)    Leased
Cannon County Hospital, LLC    520 West Main Street, Smithville, TN 37166 (Hospital/Plant Operations Shop/Onsite Storage/Hazmat Building)    Owned
DeKalb Community Hospital    518 West Main Street, Smithville, TN 37166 (Medical Office Building)    Owned
Cannon County Hospital, LLC    527 West Main Street, Smithville, TN 37166 (527 Office Building)    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Cannon County Hospital, LLC    324 Doolittle Road, Woodbury, TN 37190 (Main Hospital/Metal Building/Plant Ops Building)    Owned
Stones River Hospital    370 Doolittle Road, Woodbury, TN 37190 (Medical Office Building)    Owned
White County Community Hospital, LLC    401 Sewell Road, Sparta, TN 38583 (Sparta Hospital Corporation)    Owned
White County Community Hospital, LLC    401 Sewell Road (Suites 411,413,415,419), Sparta, TN 38583 (Medical Arts Professional Building #1)    Owned
Highlands Medical Center (fka White County Community Hospital)    421, 423 Sewell Road, Sparta, TN 38583 (Medical Arts Professional Building #2)    Owned
White County Community Hospital, LLC    401 Sewell Road (Suites 431, 433, 435, 439, 441), Sparta, TN 38583 (Medical Arts Professional Building #3)    Owned
Highlands Medical Center (fka White County Community Hospital)    399 Sewell Road, Sparta, TN 38583 (Modular Annex)    Leased
Highlands Medical Center (fka White County Community Hospital)    336 North Spring, Sparta, TN 38583 (off-site storage)    Leased


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Highlands Medical Center (fka White County Community Hospital)    401 North Spring Street #2, Sparta, TN 38583 (off-site storage)    Leased
Highlands Medical Center (fka White County Community Hospital)    494 North Spring, Sparta, TN 38583 (Marsha Brown Drake Building)    Leased
White County Community Hospital, LLC    401 Sewell Road, Sparta, TN 38583 (Communications Building)    Owned
White County Community Hospital, LLC    401 Sewell Road, Sparta, TN 38583 (Storage Building #1 & #2)    Owned
White County Community Hospital, LLC    401 Sewell Road, Sparta, TN 38583 (Storage Building #3)    Owned
National Park Medical Center    1910 Malvern Avenue, Garland, AR 71901 (Hot Springs National Park Hospital Holdings, LLC)    Owned
National Park Medical Center    3610 Central Avenue, Garland, AR 71901 (Central Ambulance Building)    Owned
National Park Medical Center    1900 Malvern Ave, Suite 302, Garland, AR 71901 (OPB - MOB Condo - Surgery Clinic)    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

National Park Medical Center    1900 Malvern Ave, Suite 205, Garland, AR 71901 (OPB - MOB Condo - Home Health)    Owned
National Park Medical Center    1900 Malvern Ave, Suite 303, Garland, AR 71901 (OPB - MOB Condo - Home Health)    Owned
National Park Medical Center    1900 Malvern Ave, Suite 304, Garland, AR 71901 (OPB - MOB Condo - Ortho)    Owned
National Park Medical Center    1900 Malvern Ave, Suite 403, Garland, AR 71901 (OPB - MOB Condo - Warren)    Leased
National Park Medical Center    1900 Malvern Ave, Suite 402, Garland, AR 71901 (OPB - MOB Condo - PFW)    Leased
National Park Medical Center    1900 Malvern Ave, Suite 101, Garland, AR 71901 (OPB - MOB Condo - Fordyce )    Leased
National Park Medical Center    1900 Malvern Ave, Suite 105, Garland, AR 71901 (OPB - MOB Condo - Mammo)    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

National Park Medical Center    121 Cordoba Center, #400, Garland, AR 71901 (Hot Springs Village Clinic)    Leased
National Park Medical Center    124 Hollywood Avenue, Garland, AR 71901 (Hollywood Clinic)    Leased
National Park Medical Center    FMC - 1st Floor    Leased
National Park Medical Center    130 Medical Park St., Garland, AR 71901 (FMC Old Building)    Leased
River Park Hospital, Inc.    1559 Sparta Street, McMinnville, TN 37110    Owned
River Park Hospital, Inc.    1589 Sparta Street, McMinnville, TN 37110 (River Park Rental Properties - Offices)    Owned
River Park Hospital, Inc.    Vo-Tech Drive, McMinnville, TN 37110 (Physician’s Offices POB2)    Owned
River Park Hospital, Inc.    145 Health Way, McMinnville, TN 37110 (Middle Tennessee Surgical Care at River Park Hospital)    Owned
River Park Hospital, Inc.    1589 Sparta St Suite 306, McMinnville, TN 37110 (River Park Physicians Group)    Owned


Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Hartsville Medical Group, LLC    110 Doctors Drive, Suite A-1, Cheraw, SC    Leased
Hartsville Medical Group, LLC    700 Medical Park Drive, Hartsville, SC    Leased
Hartsville Medical Group, LLC    696 Medical Park Drive, Hartsville, SC    Leased
Hartsville, LLC    223 Pearl Street, Darlington, SC    Leased
Hartsville, LLC    Storage Bldg, 2521 Kellytown Road, Hartsville, SC    Leased


Schedule 9.1.11

PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

None.


Schedule 9.1.14

ENVIRONMENTAL MATTERS

None.


Schedule 9.1.15

RESTRICTIVE AGREEMENTS

Restrictive Agreements in the notes evidencing Intercompany Obligations in effect on the Closing Date.


Schedule 9.1.16

LITIGATION

None.


Schedule 9.1.18

PENSION PLANS

None.


Schedule 9.1.20

LABOR CONTRACTS

 

Parties

  

Type of Agreement    

    

Term of
Agreement

Capital Medical Center and United Staff Nurses Union Local 141 UFCW    Collective Bargaining Agreement          2013-2016
Capital Medical Center and United Service Works Union Local 21    Collective Bargaining Agreement          2013-2015


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Schedule 9.3

HEALTHCARE-RELATED MATTERS

[***]


Schedule 10.1.12

POST-CLOSING MATTERS

 

1. Within 90 days of the Closing Date, Parent and the Borrowers will, and will cause each other Guarantor to, take the actions set forth in Sections 7.1.1 through 7.1.3 of the Amended and Restated Loan Agreement, including, without limitation, to grant to the Collateral Agent for the benefit of the Secured Parties security interests in and Mortgages on the assets and Real Estate set forth below.

 

Guarantor

  

Address/City/State/Zip Code

Muskogee Regional Medical Center, LLC    2900 North Main St., Muskogee, OK 74401
Southwestern Medical Center, LLC    5602 SW Lee Blvd, Lawton, OK, 73505
Southwestern Medical Center, LLC    1602 SW 82nd St. Lawton, OK, 73505
St. Mary’s Real Property, LLC    1808 West Main Street, Russellville, AR 72801
Willamette Valley Medical Center, LLC    2700 SE Stratus Avenue, McMinnville, OR 97128
Farmington Missouri Hospital Company, LLC    1212 Weber Road, Farmington, MO 63640 (Mineral Area Regional Medical Center)
Farmington Clinic Company, LLC    1101 Weber Road, Farmington, MO 63640 (Medical Office/Clinic)

 

2. Within 90 days of the Closing Date, Parent and the Borrowers will, and will cause each other Credit Party to, take the actions relating to deposit account control agreements set forth in Sections 8.2.2(a) and (b) of the Amended and Restated Loan Agreement.

 

3.

Within 30 days of the Closing Date, Parent and the Borrowers will take, and will cause Muskogee Medical and Surgical Associates, LLC to take, all actions necessary to terminate (i) the Lien granted by Muskogee Medical and Surgical Associates, LLC in favor of ASD Specialty Healthcare Inc. and described on Schedule 10.2.2 hereof and (ii)


  the UCC-1 financing statement (Initial Filing # 2012 3571918) naming ASD Specialty Healthcare Inc. DBA Oncology Supply as secured party and Muskogee Medical and Surgical Associates, LLC as debtor.

 

4. Within 10 Business Days of the Closing Date, the Borrowers will, and, as necessary, will cause each other applicable Credit Party to, deliver to the Collateral Agent Schedule 13 to the Perfection Certificate and Schedule 8.2.1 to the Loan Agreement, which in each case shall be complete and correct as of the date of delivery; provided that each Schedule delivered pursuant hereto shall be subject to the approval of the Collateral Agent (such approval not to be unreasonably withheld).


Schedule 10.2.1

EXISTING DEBT

 

1. Indebtedness with respect to the Liens in favor of ASD Specialty Healthcare described on Schedule 10.2.2 below.

 

2. Guaranty by Muskogee Regional Medical Center, LLC of approximately $140,000 in loans provided to Muskogee Surgical Investors, LLC by HealthSouth Corporation.

 

3. To the extent constituting debt of a Subsidiary, see Schedule 10.2.5.


Schedule 10.2.2

EXISTING LIENS

Liens evidenced by the filings listed below:

 

Debtor

  

Secured Party

  

Brief Description of

Collateral

Muskogee Medical and Surgical Associates, LLC    ASD Specialty Healthcare Inc.*    Personal Property

 

* To be terminated in accordance with Schedule 10.1.12


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Schedule 10.2.5

PERMITTED INVESTMENTS

 

1. Investments in Auriga Insurance Group by Capella Holdings, Inc.

 

2. Ownership of 49% of the Equity Interests of Muskogee Surgical Investors, LLC (which owns 65% of Healthsouth Surgery Center of Muskogee, LLC) by Muskogee Regional Medical Center, LLC

 

3. Ownership of 25% of the Equity Interests of Surgery Center of Cullman, LLC by Cullman Surgery Venture Corp., which in turn is 100% owned by Cullman Hospital Corporation, which in turn is 100% owned by Capella Healthcare, Inc.

 

Creditor

  

Debtor

  

Principal Amount

Outstanding

  

Date of Note

Capella Healthcare, Inc.    Cannon County Hospital, LLC    $[***] (Revolver, maximum commitment amount)    December 31, 2014
Capella Healthcare, Inc.    Cannon County Hospital, LLC    $[***]    December 31, 2014
Capella Healthcare, Inc.    Columbia Capital Medical Center Limited Partnership    $[***]    December 31, 2014
Capella Healthcare, Inc.    Columbia Capital Medical Center Limited Partnership    $[***] (Revolver, maximum commitment amount)    December 31, 2014
Capella Healthcare, Inc    Farmington Hospital Corporation    $[***]    December 31, 2014
Capella Healthcare, Inc.    Muskogee Holdings, LLC    $[***]    December 31, 2014


CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Creditor

  

Debtor

  

Principal Amount

Outstanding

  

Date of Note

Capella Healthcare, Inc    NPMC Holdings, LLC    $[***]    December 31, 2014
Capella Healthcare, Inc.    Oregon Healthcorp, LLC    $[***]    December 31, 2014
Capella Healthcare, Inc.    River Park Hospital, LLC    $[***]    December 31, 2014
Capella Healthcare, Inc.    SP Acquisition Corp.    Principal amount not to exceed $[***]    December 31, 2014
Capella Healthcare, Inc.    St. Mary’s Holdings, LLC    $[***]    December 31, 2014
Capella Healthcare, Inc.    White County Community Hospital, LLC    $[***] (Revolver, maximum commitment amount)    December 31, 2014
Capella Healthcare, Inc.    White County Community Hospital, LLC    $[***]    December 31, 2014