UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): May 2, 2016 (April 29, 2016)

 

 

QUORUM HEALTH CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-37550   47-4725208

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

1573 Mallory Lane, Suite 100

Brentwood, Tennessee 37027

(Address of principal executive offices)

Registrant’s telephone number, including area code: (615) 221-1400

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

On April 29, 2016, Community Health Systems, Inc. (“CHS”) completed the spin-off of Quorum Health Corporation (the “Company”) through the distribution of 100% of the outstanding common stock, par value $.0001 per share, of the Company, to CHS stockholders (the “Spin-off”). To complete the Spin-off, the Board of Directors of CHS declared a pro rata dividend of the Company’s common stock to CHS stockholders of record as of the close of business on April 22, 2016 (the “Record Date”). As a result of the Spin-off, the Company is now an independent public company trading on the New York Stock Exchange (the “NYSE”) under the symbol “QHC.”

Agreements with CHS Related to the Spin-Off

In connection with the Spin-off, on April 29, 2016, the Company entered into certain agreements with CHS that allocate between the Company and CHS the various assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) that comprise the separate companies and govern certain relationships between, and activities of, the Company and CHS for a period of time after the Spin-off, including the following:

 

    A Separation and Distribution Agreement (the “Separation and Distribution Agreement”) with CHS that sets forth, among other things, agreements with CHS regarding the principal actions needed to be taken in connection with the Spin-off. It also sets forth other agreements that govern certain aspects of our relationship with CHS following the Spin-off;

 

    A Tax Matters Agreement (the “Tax Matters Agreement”) with CHS that governs the respective rights, responsibilities and obligations of CHS and the Company after the Spin-off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns;

 

    An Employee Matters Agreement (the “Employee Matters Agreement”) with CHS that governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company. It also allocates liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs; and

 

    Certain transition services agreements with CHS, under which CHS or its affiliates will provide us with certain services, and we or certain of our affiliates will provide CHS certain services, for a limited time to help ensure an orderly transition for each of the Company and CHS following the Spin-off. These transition services will include, among other services, information technology services and support, payroll processing and other human resources related services and support, patient eligibility screening services, as well as receivables, billing and collection and other revenue cycle management services and support. These agreements included a Computer and Data Processing Transition Services Agreement, a Receivables Collection Agreement (PASI), a Billing and Collection Agreement (PPSI), an Eligibility Screening Services Agreement, an Employee Service Center/HRIS Transition Services Agreement, a Shared Services Center Transition Services Agreement, a Supplemental Medicaid Program Services Agreement and a Short-Term Transition Services Agreement.

The foregoing summaries of the Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, Computer and Data Processing Transition Services Agreement, Receivables Collection Agreement (PASI), Billing and Collection Agreement (PPSI), Eligibility Screening Services Agreement, Employee Service Center/HRIS Transition Services Agreement, Shared Services Center Transition Services Agreement, Supplemental Medicaid Program Services Agreement, and Short-Term Transition Services Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of these agreements which are attached hereto as Exhibits 2.1 through 2.11, respectively, and incorporated herein by reference. In addition, descriptions of the material terms of the Separation and Distribution Agreement, Tax Matters Agreement and Employee Matters Agreement are set forth in the section entitled “Certain Relationships and Related Party Transactions – Agreements with CHS Related to the Spin-Off” in the Company’s Information Statement included in the Company’s Registration Statement on Form 10, as amended, which was filed on April 1, 2016 (the “Information Statement”) and are incorporated herein by reference.


Credit Facilities

On April 29, 2016, the Company entered into a Credit Agreement (the “CS Agreement”), among the Company, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch (“Credit Suisse”), as administrative agent and collateral agent. The CS Agreement provides for a $880,000,000 senior secured term loan facility (the “Term Facility”) and a $100,000,000 senior secured revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Facilities”). In connection with the completion of the Spin-off, the Company used the proceeds from the Term Facility to pay a dividend to CHS (the “CHS Dividend”) and the fees and expenses incurred in connection therewith. The proceeds from the Revolving Facility will be used by the Company for working capital and general corporate purposes.

The Term Facility has a maturity date of April 29, 2022 subject to customary acceleration events and repayment, extension or refinancing. Interest under the Term Facility accrues, at the option of the Company, at adjusted LIBOR plus 5.75% or the alternate base rate plus 4.75%. Interest under the Revolving Facility accrues, at the option of the Company, at adjusted LIBOR plus 2.75% or alternate base rate plus 1.75%. The Revolving Facility has a maturity date of April 29, 2021, subject to customary acceleration events and repayment, extension or refinancing.

On April 29, 2016, the Company also entered into an ABL Credit Agreement (the “UBS Credit Agreement”, and together with the CS Agreement, collectively, the “Credit Agreements”), among the Company, the lenders party thereto and UBS AG, Stamford Branch (“UBS”), as administrative agent and collateral agent. The UBS Credit Agreement provides for a $125,000,000 senior secured asset-based revolving credit facility (the “ABL Facility”). The proceeds from the ABL Facility will be used for working capital and general corporate purposes.

The ABL Facility has a maturity date of April 29, 2021, subject to customary acceleration events and to repayment, extension or refinancing. Interest under the ABL Facility accrues, at the option of the Company, at a base rate or LIBOR (except that all swingline borrowings will accrue interest based on the base rate), plus, an applicable margin determined by the average excess availability under the ABL Facility for the fiscal quarter immediately preceding the date of determination. The applicable margin ranges from 1.75% to 2.25% for LIBOR advances and from 0.75% to 1.25% for base rate advances.

The Credit Agreements contain customary negative covenants, which limit the Company’s ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets, among other things. In addition, if excess availability under the ABL Facility were to fall below certain specified levels, certain additional covenants (including fixed charge coverage ratio requirements) would be triggered, and the lenders will assume dominion and control over the Company’s cash.

The Credit Agreements contain customary events of default, including payment defaults, material breaches of representations and warranties, covenant defaults, default on other material indebtedness, customary ERISA events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business. The Credit Agreements also contains customary affirmative covenants and representations and warranties.

The foregoing summaries of the Credit Agreements and transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the CS Agreement and UBS Credit Agreement, respectively, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

Senior Notes Due 2023

As previously disclosed, on April 22, 2016, the Company issued $400,000,000 aggregate principal amount of its 11.625% Senior Notes due 2023 (the “Notes”) pursuant to an indenture, dated as of April 22, 2016 (the “Indenture”), by and between the Company and Regions Bank, as trustee (the “Trustee”). The gross offering proceeds were deposited into a segregated escrow account at the closing of the offering on April 22, 2016. On April 29, 2016, the gross offering proceeds, less the initial purchasers’ discount, were released from the escrow account to the Company. The net offering proceeds were used by the Company, together with borrowings under the Senior Facilities, to pay a $1.2 billion special dividend to CHS on April 29, 2016, and will be used, together with borrowings under the Senior Facilities, to pay the fees and expenses related to the Spin-off and for cash on hand to remain with the Company for initial working capital purposes.


On April 29, 2016, the Company, certain of the Company’s subsidiaries (the “Guarantors”) and the Trustee entered into a supplemental indenture to the Indenture (the “Supplemental Indenture”) pursuant to which the Guarantors agreed to guarantee the Notes on a senior unsecured basis. The foregoing description of the Supplemental Indenture is not complete and is qualified in its entirety by such document. A copy of the Supplemental Indenture is attached hereto as Exhibit 4.1 and incorporated herein by reference.

As previously disclosed, on April 22, 2016, in connection with the issuance of the Notes, the Company and Credit Suisse Securities (USA) LLC, as representative of the initial purchasers of the Notes, entered into a Registration Rights Agreement (the “Registration Rights Agreement”). On April 29, 2016, in connection with the execution of the Supplemental Indenture, the Guarantors also entered into a joinder to the Registration Rights Agreement (the “Registration Rights Agreement Joinder”), whereby the Guarantors agreed to become bound by the terms, conditions, covenants, agreements, indemnities and other provisions of, the Registration Rights Agreement. The foregoing summary of the Registration Rights Agreement Joinder is not complete and is qualified in its entirety by reference to such agreement. The Registration Rights Agreement Joinder is attached hereto as Exhibit 4.2 and incorporated herein by reference.

The information set forth under Item 5.02 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation under an Off Balance Sheet Arrangement of a Registrant.

The information set forth under the “Credit Facilities” and “Senior Notes Due 2023” headings under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.03 Material Modification to Rights of Security Holders.

The information set forth under Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.01 Change in Control of Registrant.

The Company was a 100% owned subsidiary of CHS immediately prior to the completion of the Spin-off. CHS completed the Spin-off by distributing ratably to its stockholders one share of the Company’s common stock for every four shares of CHS common stock held by such stockholders on the Record Date. Following completion of the Spin-off, the Company is an independent, publicly traded company, and CHS retains no ownership interest in the Company. The description of the Spin-off included under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation and Appointment of Directors

The Board of Directors of the Company (the “Board”) expanded its size to eight directors, effectively as of 4:15 p.m., eastern time (the “Effective Time”) on April 29, 2016. As of the Effective Time, each of William M. Gracey, James T. Breedlove, Joseph A. Hastings, D.M.D., William S. Hussey, Thomas D. Miller, Barbara R. Paul, M.D., and R. Lawrence Van Horn, Ph.D. were elected as directors of the Company, and W. Larry Cash and Rachel A. Seifert, who had been serving as members of the Board, ceased to be directors of the Company. Adam Feinstein was previously elected to serve as a director of the Company and as sole member of the Audit and Compliance Committee, effective on the date immediately prior to the date on which when-issued trading of shares of the Company’s common stock commenced on the NYSE, and will continue to serve as a director of the Company following the Spin-off.


As of the Effective Time:

 

    Mr. Gracey was appointed to serve as Non-Executive Chairman of the Board;

 

    Mr. Breedlove and Dr. Van Horn were appointed to serve as members of the Audit and Compliance Committee. As noted above, Mr. Feinstein had already been appointed to serve as a member and chair of the Audit and Compliance Committee and will continue to serve in that capacity;

 

    Mr. Gracey, Mr. Breedlove, Dr. Hastings and Dr. Van Horn were appointed to serve as members of the Compensation Committee, and Dr. Van Horn was appointed chair of the Compensation Committee; and

 

    Mr. Gracey, Mr. Breedlove, Mr. Feinstein and Dr. Hastings were appointed to serve as members of the Governance and Nominating Committee, and Mr. Breedlove was appointed chair of the Governance and Nominating Committee.

Adoption of Plans

Prior to the Spin-off, on April 1, 2016, the Board adopted (and as applicable, shareholder approval was obtained for) the following compensation plans:

 

    Quorum Health Corporation 2016 Stock Award Plan (the “2016 Stock Award Plan”). The 2016 Stock Award Plan provides a variety of stock-based compensation awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance awards and other share-based awards. Each type of award granted under the plan is in respect of common shares of the Company, and the maximum number of our common shares that may be issued under the plan is 4,700,000. The plan is administered by the Compensation Committee;

 

    Quorum Health Corporation 2016 Employee Performance Incentive Plan (the “2016 Employee Performance Incentive Plan”). The 2016 Employee Performance Incentive Plan provides additional compensation as incentive to certain employees of the Company or its subsidiaries and affiliates who contribute materially to the success of the Company. The Company intends that, in part, certain awards issued under the Plan satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder; and

 

    Quorum Health Corporation Supplemental Executive Retirement Plan (“SERP”). The SERP is a non-contributory non-qualified defined benefit plan that provides for the payment of benefits from the general funds of QHC. The SERP is administrated by the Compensation Committee.

The foregoing summaries of the 2016 Stock Award Plan, 2016 Employee Performance Incentive Plan and SERP do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the plans, which are attached hereto as Exhibits 10.3, 10.5 and 10.6, respectively, and incorporated herein by reference. In addition, a Form of Restricted Stock Award Agreement is attached hereto as Exhibit 10.4.


Change in Control Agreements

In connection with the Spin-off, the Company assumed the existing CHS change in control severance agreements (the “CIC Agreements”) with Thomas D. Miller and Martin D. Smith, respectively. The CIC Agreements are considered “double trigger” agreements and require both the occurrence of a change in control and a termination of employment for any benefits to become payable. The foregoing summaries of the change in control severance agreements do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the agreements, which are attached hereto as Exhibits 10.7 and 10.8, respectively, and incorporated herein by reference.

Indemnification Agreements

In connection with the Spin-off, on April 29, 2016, the Company entered into indemnification agreements with each of its directors and executive officers. The indemnification agreements supplement the applicable indemnification provisions under the Company’s amended and restated certificate of incorporation, the Company’s amended and restated by-laws and the General Corporation Law of the State of Delaware.

The foregoing summary of the indemnification agreements does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the form of indemnification agreement for directors and executive officers, which is attached hereto as Exhibit 10.9 and incorporated herein by reference.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Effective as of April 29, 2016, the Board amended and restated the Company’s certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) to reclassify and convert the Company’s common stock into the number of shares necessary to effect the Spin-off and increase the number of authorized shares of the Company from 1,000 to 400,000,000 shares, in order to effect a forward stock split to enable CHS to complete the Spin-off. The Board also amended and restated the Company’s by-laws (the “Amended and Restated By-laws”). The Amended and Restated Certificate of Incorporation and the Amended and Restated By-laws were each approved by the Company’s stockholders on April 1, 2016.

The foregoing summary of the Amended and Restated Certificate Incorporation and Amended and Restated By-laws do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Amended and Restated Certificate of Incorporation and the Amended and Restated By-laws which are attached as Exhibits 3.1 and 3.2, respectively, and incorporated herein by reference. Additional descriptions of the Amended and Restated Certificate Incorporation and Amended and Restated By-laws are set forth in the section entitled “Description of Capital Stock” in the Company’s Information Statement, and are incorporated herein by reference.

 

Item 5.05 Amendments to the Registrants Code of Ethics, or Waiver of a Provision of the Code of Ethics.

In connection with the completion of the Spin-off, the Company adopted a Code of Conduct effective as of the Effective Time, a copy of which is available under the Investor Relations section of the Company’s website at www.quorumhealth.com .

 

Item 8.01 Other Events.

A copy of the press release announcing the completion of the Spin-off is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 8.01.


Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following items are included as Exhibits to this Form 8-K and incorporated herein by reference:

 

Exhibit
No.

  

Description

  2.1    Separation and Distribution Agreement, by and between Community Health Systems, Inc. and Quorum Health Corporation, dated April 29, 2016.*
  2.2    Tax Matters Agreement, by and between Community Health Systems, Inc. and Quorum Health Corporation, dated April 29, 2016.*
  2.3    Employee Matters Agreement, by and between Community Health Systems, Inc. and Quorum Health Corporation, dated April 29, 2016.*
  2.4    Computer and Data Processing Transition Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016. *
  2.5    Receivables Collection Agreement (PASI), by and between Professional Account Services, Inc. and QHCCS, LLC, dated April 29, 2016.*
  2.6    Billing and Collection Agreement (PPSI), by and between Physician Practice Support, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.7    Eligibility Screening Services Agreement, by and between Eligibility Screening Services, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.8    Employee Service Center/HRIS Transition Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.9    Shared Services Center Transition Services Agreement, by and between Revenue Cycle Service Center, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.10    Supplemental Medicaid Program Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.11    Short-Term Transition Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016.*
  3.1    Amended and Restated Certificate of Incorporation of Quorum Health Corporation.
  3.2    Amended and Restated By-Laws of Quorum Health Corporation.
  4.1    Supplemental Indenture, dated as of April 29, 2016, by and among Quorum Health Corporation, the guarantors party thereto and Regions Bank, as trustee.
  4.2    Registration Rights Agreement Joinder, dated as of April 29, 2016, by and among the guarantors party thereto and Credit Suisse Securities (USA) LLC, as representative of the initial purchasers.
10.1    Credit Agreement, by and among Quorum Health Corporation, the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent, dated April 29, 2016.
10.2    ABL Credit Agreement, by and among Quorum Health Corporation, the lenders party thereto and UBS AG, Stamford Branch, as Administrative Agent, Collateral Agent and Swingline Lender, dated April 29, 2016.
10.3    Quorum Health Corporation 2016 Stock Award Plan.†
10.4    Form of Restricted Stock Award Agreement.†
10.5    Quorum Health Corporation 2016 Employee Performance Incentive Plan.†
10.6    Quorum Health Corporation Supplemental Executive Retirement Plan.†
10.7    Change in Control Severance Agreement, dated December 31, 2008, by and among Community Health Systems, Inc., CHSPSC, LLC (formerly Community Health Systems Professional Services Corporation) and Thomas D. Miller (incorporated herein by reference to Exhibit 10.4 of the Company’s Registration Statement on Form 10, as filed with the Commission on November 20, 2015 (File No. 001-37550).†
10.8    Change in Control Severance Agreement, dated December 31, 2008, by and among Community Health Systems, Inc., CHSPSC, LLC (formerly Community Health Systems Professional Services Corporation) and Martin D. Smith Miller (incorporated herein by reference to Exhibit 10.5 of the Company’s Registration Statement on Form 10, as filed with the Commission on November 20, 2015 (File No. 001-37550).†


10.9    Form of Indemnification Agreement for Directors and Executive Officers.†
99.1    Press Release, dated April 29, 2016.

 

* Quorum Health Corporation hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the U.S. Securities and Exchange Commission upon request.
Indicates a management contract or compensation plan or arrangement


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: May 2, 2016     QUORUM HEALTH CORPORATION
     

            (Registrant)

    By:  

/s/ Michael J. Culotta

      Michael J. Culotta
      Executive Vice President and Chief Financial Officer
      (principal financial officer and
      principal accounting officer)


Exhibit
No.

  

Description

  2.1    Separation and Distribution Agreement, by and between Community Health Systems, Inc. and Quorum Health Corporation, dated April 29, 2016.*
  2.2    Tax Matters Agreement, by and between Community Health Systems, Inc. and Quorum Health Corporation, dated April 29, 2016.*
  2.3    Employee Matters Agreement, by and between Community Health Systems, Inc. and Quorum Health Corporation, dated April 29, 2016.*
  2.4    Computer and Data Processing Transition Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016. *
  2.5    Receivables Collection Agreement (PASI), by and between Professional Account Services, Inc. and QHCCS, LLC, dated April 29, 2016.*
  2.6    Billing and Collection Agreement (PPSI), by and between Physician Practice Support, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.7    Eligibility Screening Services Agreement, by and between Eligibility Screening Services, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.8    Employee Service Center/HRIS Transition Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.9    Shared Services Center Transition Services Agreement, by and between Revenue Cycle Service Center, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.10    Supplemental Medicaid Program Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016.*
  2.11    Short-Term Transition Services Agreement, by and between CHSPSC, LLC and QHCCS, LLC, dated April 29, 2016.*
  3.1    Amended and Restated Certificate of Incorporation of Quorum Health Corporation.
  3.2    Amended and Restated By-Laws of Quorum Health Corporation.
  4.1    Supplemental Indenture, dated as of April 29, 2016, by and among Quorum Health Corporation, the guarantors party thereto and Regions Bank, as trustee.
  4.2    Registration Rights Agreement Joinder, dated as of April 29, 2016, by and among the guarantors party thereto and Credit Suisse Securities (USA) LLC, as representative of the initial purchasers.
10.1    Credit Agreement, by and among Quorum Health Corporation, the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent, dated April 29, 2016.
10.2    ABL Credit Agreement, by and among Quorum Health Corporation, the lenders party thereto and UBS AG, Stamford Branch, as Administrative Agent, Collateral Agent and Swingline Lender, dated April 29, 2016.
10.3    Quorum Health Corporation 2016 Stock Award Plan.†
10.4    Form of Restricted Stock Award Agreement.†
10.5    Quorum Health Corporation 2016 Employee Performance Incentive Plan.†
10.6    Quorum Health Corporation Supplemental Executive Retirement Plan.†
10.7    Change in Control Severance Agreement, dated December 31, 2008, by and among Community Health Systems, Inc., CHSPSC, LLC (formerly Community Health Systems Professional Services Corporation) and Thomas D. Miller (incorporated herein by reference to Exhibit 10.4 of the Company’s Registration Statement on Form 10, as filed with the Commission on November 20, 2015 (File No. 001-37550).†
10.8    Change in Control Severance Agreement, dated December 31, 2008, by and among Community Health Systems, Inc., CHSPSC, LLC (formerly Community Health Systems Professional Services Corporation) and Martin D. Smith Miller (incorporated herein by reference to Exhibit 10.5 of the Company’s Registration Statement on Form 10, as filed with the Commission on November 20, 2015 (File No. 001-37550).†


10.9    Form of Indemnification Agreement for Directors and Executive Officers.†
99.1    Press Release, dated April 29, 2016.

 

* Quorum Health Corporation hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the U.S. Securities and Exchange Commission upon request.
Indicates a management contract or compensation plan or arrangement

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

BY AND BETWEEN

COMMUNITY HEALTH SYSTEMS, INC.

AND

QUORUM HEALTH CORPORATION

DATED AS OF APRIL 29, 2016


TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS

     2   

Section 1.01.

 

Definitions

     2   

ARTICLE II THE SEPARATION

     15   

Section 2.01.

 

Formation of QHC

     15   

Section 2.02.

 

The Separation

     16   

Section 2.03.

 

Delayed Transfers of QHC Assets and QHC Liabilities

     18   

Section 2.04.

 

Delayed Transfers of CHS Assets and CHS Liabilities

     19   

Section 2.05.

 

Ancillary Agreements

     20   

Section 2.06.

 

Disclaimer of Representations and Warranties

     20   

Section 2.07.

 

Financing Transactions; QHC Cash Distribution

     21   

Section 2.08.

 

Termination of Agreements

     22   

Section 2.09.

 

Settlement of Accounts between CHS and QHC

     22   

Section 2.10.

 

Cash Transfer

     23   

Section 2.11.

 

Novation of Liabilities; Release of Guarantees

     23   

Section 2.12.

 

Further Assurances

     25   

Section 2.13.

 

Accounting for Deferred Taxes

     26   

ARTICLE III THE DISTRIBUTION

     27   

Section 3.01.

 

Actions Prior to the Distribution

     27   

Section 3.02.

 

The Distribution

     28   

Section 3.03.

 

Fractional Shares; Unclaimed Shares

     28   

Section 3.04.

 

Sole Discretion of CHS

     29   

Section 3.05.

 

Conditions to the Distribution

     29   

ARTICLE IV MUTUAL RELEASES; INDEMNIFICATION

     31   

Section 4.01.

 

Releases

     31   

Section 4.02.

 

Indemnification by QHC

     33   

Section 4.03.

 

Indemnification by CHS

     34   

Section 4.04.

 

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

     34   

Section 4.05.

 

Procedures for Indemnification of Third Party Claims

     35   

Section 4.06.

 

Additional Matters

     37   

Section 4.07.

 

Right of Contribution

     38   

Section 4.08.

 

Covenant Not to Sue

     39   

Section 4.09.

 

Remedies Cumulative

     39   

Section 4.10.

 

Survival of Indemnities

     39   

Section 4.11.

 

Coordination with Ancillary Agreements

     39   

ARTICLE V INSURANCE MATTERS

     40   

Section 5.01.

 

Insurance Matters

     40   

 

i


ARTICLE VI CERTAIN OTHER MATTERS

     43   

Section 6.01.

 

Late Payments

     43   

Section 6.02.

 

Treatment of Payments for Tax Purposes

     43   

Section 6.03.

 

Inducement

     43   

Section 6.04.

 

Post-Effective Time Conduct

     43   

Section 6.05.

 

Non-Solicitation of Employees

     43   

ARTICLE VII EXCHANGE OF INFORMATION; CONFIDENTIALITY

     44   

Section 7.01.

 

Agreement for Exchange of Information

     44   

Section 7.02.

 

Ownership of Information

     46   

Section 7.03.

 

Stored Records

     46   

Section 7.04.

 

Limitations of Liability

     46   

Section 7.05.

 

Other Agreements Providing for Exchange of Information; Retention of Records

     47   

Section 7.06.

 

Production of Witnesses; Records; Cooperation

     48   

Section 7.07.

 

Privileged Matters

     48   

Section 7.08.

 

Confidentiality

     51   

Section 7.09.

 

Protective Arrangements

     52   

ARTICLE VIII DISPUTE RESOLUTION

     53   

Section 8.01.

 

Good-Faith Negotiation

     53   

Section 8.02.

 

Arbitration; Litigation

     53   

Section 8.03.

 

Litigation and Unilateral Commencement of Arbitration

     54   

Section 8.04.

 

Conduct During Dispute Resolution Process

     54   

Section 8.05.

 

Consent to Jurisdiction

     55   

Section 8.06.

 

Waiver of Jury Trial

     55   

ARTICLE IX TERMINATION

     55   

Section 9.01.

 

Termination

     55   

ARTICLE X MISCELLANEOUS

     56   

Section 10.01.

 

Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures

     56   

Section 10.02.

 

Governing Law

     57   

Section 10.03.

 

Assignability

     57   

Section 10.04.

 

Third Party Beneficiaries

     57   

Section 10.05.

 

Notices

     58   

Section 10.06.

 

Severability

     58   

Section 10.07.

 

Force Majeure

     58   

Section 10.08.

 

No Set Off

     59   

Section 10.09.

 

Responsibility for Expenses

     59   

Section 10.10.

 

Headings

     59   

Section 10.11.

 

Survival of Covenants

     59   

Section 10.12.

 

Performance

     59   

Section 10.13.

 

Waivers of Default

     60   

Section 10.14.

 

Amendments

     60   

Section 10.15.

 

Interpretation

     60   

 

ii


Section 10.16.

 

Public Announcements

     60   

Section 10.17.

 

Specific Performance

     61   

Section 10.18.

 

Limitations of Liability

     61   

Section 10.19.

 

Mutual Drafting

     61   

 

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SCHEDULES AND EXHIBITS

 

Schedules   
Schedule 1.01(a)    Ancillary Agreements
Schedule 1.01(b)    CHS Insurance Policies
Schedule 1.01(c)    CHS Specified Liabilities
Schedule 1.01(d)    QHC Specified Assets
Schedule 1.01(e)    QHC Facilities
Schedule 1.01(f)    QHC Specified Liabilities
Schedule 1.01(g)    Transferred Entities
Schedule 2.02    Plan of Separation
Schedule 2.07    QHC Financing Transactions
Schedule 2.08(b)(ii)    Intercompany Agreements; Other Agreements to be Assigned
Schedule 2.09(a)    Intercompany Accounts
Exhibits   
Exhibit A    Form of Amended and Restated Certificate of Incorporation of QHC
Exhibit B    Form of Amended and Restated By-laws of QHC

 

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SEPARATION AND DISTRIBUTION AGREEMENT

THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of April 29, 2016, is by and between COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (“ CHS ”), and QUORUM HEALTH CORPORATION, a Delaware corporation (“ QHC ”).

RECITALS

WHEREAS, the CHS Board of Directors (the “ CHS Board ”) has determined that it is in the best interests of CHS and its stockholders to create a new publicly traded company that shall operate the QHC Business (as defined herein);

WHEREAS, in furtherance of the foregoing, the CHS Board has determined that it is appropriate and advisable to: (i) separate the QHC Business (as defined herein) from the CHS Business (as defined herein) (the “ Separation ”); and (ii) following the Separation, make a distribution, on a pro rata basis, to holders of the issued and outstanding common shares, par value $0.01 per share, of CHS (the “ CHS Common Stock ”) on the Record Date (as defined herein) of all of the outstanding shares of common stock, par value $0.0001 per share, of QHC (the “ QHC Common Stock ”), owned by CHS (the “ Distribution ”); and

WHEREAS, QHC has been incorporated solely for these purposes and has not engaged in activities except in preparation for the Separation and the Distribution;

WHEREAS, the Distribution is intended to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Section 355 of the Code;

WHEREAS, QHC and CHS have prepared, and QHC has filed with the SEC, a Registration Statement on Form 10, which includes the Information Statement (as defined herein), and which sets forth disclosure concerning QHC, the Separation and the Distribution; and

WHEREAS, each of CHS and QHC has determined that it is necessary and advisable to set forth the principal transactions required to effect the Separation and the Distribution and to describe other agreements that shall govern certain other matters prior to and following the Separation and the Distribution.


NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement (as defined herein), the Parties (as defined herein) hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Definitions . Reference is made to Section 10.15 regarding the interpretation of certain words and phrases used in this Agreement. In addition, for purposes of this Agreement, the following terms shall have the meanings set forth below.

Actual Deferred Taxes ” means the deferred Taxes and prepaid Taxes as defined under GAAP as of the Distribution Date.

Adjustment ” has the meaning set forth in Section 2.12 .

Affiliate ” (including, with a correlative meaning, “ affiliated ”) means, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “ control ” (including with correlative meanings, “ controlled by ” and “ under common control with ”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. The Parties agree that, for purposes of this Agreement and the Ancillary Agreements, neither QHC nor any of the QHC Subsidiaries, including the Transferred Entities, shall be deemed to be an Affiliate of CHS or any of the CHS Subsidiaries, and neither CHS nor any of the CHS Subsidiaries shall be deemed to be an Affiliate of QHC or any of the QHC Subsidiaries.

Agent ” means American Stock Transfer & Trust Company, LLC, or such other trust company or bank duly appointed to act as distribution agent, transfer agent and registrar for the QHC Common Stock in connection with the Distribution.

Agreement ” means this Separation and Distribution Agreement and each of the Schedules and Exhibits hereto.

Ancillary Agreements ” means the agreements set forth on Schedule 1.01(a) and all other agreements entered into by the Parties or their Subsidiaries (but as to which no Third Party is a party) in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

Arbitration Request ” has the meaning set forth in Section 8.02(a) .

Arbitration Rules ” has the meaning set forth in Section 8.02(a) .

Assets ” means, with respect to any Person, the assets, rights, interests, claims and properties of all kinds, real and personal, tangible, intangible and contingent, wherever located (including in the possession of suppliers, distributors, other Third Parties or elsewhere), of such Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement and any rights or benefits pursuant to any Proceeding.

 

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BA Agreement ” means any Business Associate Agreement entered into by a Party for purposes of compliance with the Health Insurance Portability and Accountability Act of 1996, as amended, and the rules and regulations thereunder.

Business Entity ” means any corporation, general or limited partnership, trust, joint venture, unincorporated organization, limited liability entity or other entity.

By-laws ” means the Amended and Restated By-laws of Quorum Health Corporation, substantially in the form of Exhibit B .

C2 ” means CHS/Community Health Systems, Inc., a Delaware corporation and a wholly-owned subsidiary of CHS.

Certificate of Incorporation ” means the Amended and Restated Certificate of Incorporation of Quorum Health Corporation, substantially in the form of Exhibit A .

Change of Control ” means, with respect to a Party, the occurrence after the Effective Time of any of the following: (i) the sale, conveyance or disposition, in one or a series of related transactions, of all or substantially all of the assets of such Party to a Third Party that is not an Affiliate of such Party prior to such transaction or the first of such related transactions; (ii) the consolidation, merger or other business combination of a Party with or into any other Business Entity, immediately following which the then-current stockholders of the Party, as such, fail to own in the aggregate at least Majority Voting Power of the surviving party in such consolidation, merger or business combination or of its ultimate publicly-traded parent Business Entity; (iii) a transaction or series of transactions in which any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires Majority Voting Power of such Party (other than (a) a reincorporation or similar corporate transaction in which each of such Party’s stockholders owns, immediately thereafter, interests in the new parent company in substantially the same percentage as such stockholder owned in such Party immediately prior to such transaction, or (b) in connection with a transaction described in clause (ii), which shall be governed by such clause (ii)); or (iv) a majority of the board of directors of such Party ceasing to consist of individuals who have become directors as a result of being nominated or elected by a majority of such Party’s directors.

CHS ” has the meaning set forth in the Preamble.

CHS Accounts ” has the meaning set forth in Section 2.09(b) .

CHS Assets ” means all Assets of the Parties or their respective Subsidiaries as of the Effective Time, other than the QHC Assets.

CHS Board ” shall have the meaning set forth in the Recitals.

CHS Business ” means all businesses, operations and activities (whether or not such businesses, operations or activities are or have been terminated, divested or discontinued) conducted at any time prior to the Effective Time by either Party or its Subsidiaries, other than the QHC Business.

 

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CHS CIA ” has the meaning set forth in Section 2.02(f) .

CHS Common Stock ” has the meaning set forth in the Recitals.

CHS Facility ” means a Facility owned or operated by CHS or a CHS Subsidiary and that is not a QHC Facility.

CHS Group ” means CHS and the CHS Subsidiaries.

CHS Indemnitees ” means (i) CHS and each CHS Subsidiary; (ii) each of the respective past, present and future directors, officers, employees or agents of the entities described in (i) above, in each case in their respective capacities as such; and (iii) each of the heirs, executors, administrators, successors and assigns of any of the foregoing.

CHS Indemnity Obligations ” means all Losses incurred by any QHC Indemnitee to the extent such Losses relate to, arise out of or result from, directly or indirectly, any of the following items:

(i) any CHS Liability;

(ii) any failure of CHS or a CHS Subsidiary or any other Person to pay, perform or otherwise promptly discharge any CHS Liabilities in accordance with their terms, whether prior to, at or after the Effective Time;

(iii) any Third Party Claim relating to the conduct of any business, operation or activity by CHS or a CHS Subsidiary from and after the Effective Time (other than the conduct of business, operations, or activities for the benefit of QHC pursuant to an Ancillary Agreement); and

(iv) any breach by CHS or a CHS Subsidiary of this Agreement or any Ancillary Agreement.

CHS Insurance Policies ” means those insurance policies maintained by CHS or a CHS Subsidiary and listed on Schedule 1.01(b) .

CHS Liabilities ” means (i) the Liabilities relating to, arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case, before, at or after the Effective Time) in connection with the conduct or operation of the CHS Business, or ownership of the CHS Assets, and (ii) any CHS Specified Liability; provided , however , that, for the avoidance of doubt CHS Liabilities shall not include any QHC Liability.

CHS Specified Liabilities ” means those Liabilities set forth on Schedule 1.01(c) .

 

4


CHS Subsidiary ” means any Business Entity that is a Subsidiary of CHS prior to, at or after the Effective Time (other than QHC or a QHC Subsidiary).

Code ” means the Internal Revenue Code of 1986, as amended.

Commission ” means the United States Securities and Exchange Commission.

Compliance Agreement ” means an agreement setting forth the agreement of the party executing such agreement to comply with applicable Laws and to take specified actions intended to permit such compliance to be monitored.

Consents ” means any consents, waivers or approvals from, or notification requirements to, any Third Parties.

Conveyance and Assumption Instruments ” means, collectively, such deeds, bills of sale, asset transfer agreements, business transfer agreements, deeds or agreements, endorsements, assignments, assumptions (including Liability assumption agreements), leases, subleases, affidavits and other instruments of sale, conveyance, contribution, distribution, lease, transfer and assignment between CHS or, where applicable, a CHS Subsidiary or designee of CHS, on the one hand, and QHC or, where applicable, a QHC Subsidiary, on the other hand, as may be necessary or advisable under the Laws of the relevant jurisdictions to effect the Separation.

Custodial Party ” has the meaning set forth in Section 8.03(a) .

Delayed CHS Asset ” has the meaning set forth in Section 2.04(a) .

Delayed CHS Liability ” has the meaning set forth in Section 2.04(a) .

Delayed QHC Asset ” has the meaning set forth in Section 2.03(a) .

Delayed QHC Liability ” has the meaning set forth in Section 2.03(a) .

Direct Claim ” has the meaning set forth in Section 4.06(b) .

Dispute ” has the meaning set forth in Section 8.01(a) .

Distribution ” has the meaning set forth in the Recitals.

Distribution Date ” means the date of the consummation of the Distribution, which shall be determined by the CHS Board in its sole discretion.

Effective Time ” means 4:15 Eastern Time on the Distribution Date.

Employee Matters Agreement ” means the Employee Matters Agreement to be entered into by and between CHS and QHC in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

5


Estimated Deferred Taxes ” means the deferred Taxes and prepaid Taxes as defined under GAAP, as reflected on the balance sheet accounts of QHC and the QHC Subsidiaries, as of the Distribution Date as determined by the Parties within sixty (60) days after the Distribution Date.

Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

Facilities ” means hospitals and other health care facilities.

Final Adjustment ” has the meaning set forth in Section 2.13 .

Financial Reporting and Proxy Materials ” has the meaning set forth in Section 7.01(c) .

Force Majeure ” means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not reasonably have been foreseen by such Party (or such Person), or, if it could reasonably have been foreseen, was unavoidable, and includes acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities, other national or international calamities or acts of terrorism or failures of energy sources or distribution or transportation facilities. Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

GAAP ” means U.S. generally accepted accounting principles as applied by CHS as of the Distribution Date.

Governmental Authority ” means any federal, state or local court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority, including the NYSE and any similar self-regulatory body under applicable securities Laws.

Group ” means the CHS Group or the QHC Group, as the context requires.

Indemnifying Party ” has the meaning set forth in Section 4.04(a) .

Indemnitee ” means a QHC Indemnitee or a CHS Indemnitee, as appropriate.

Indemnity Payment ” has the meaning set forth in Section 4.04(a) .

Information ” means information in written, oral, electronic or other tangible or intangible forms, including books, records, manuals, agreements and other materials (in any form or medium), including, without limitation, all mortgages, licenses, indentures, contracts, financial data, customer lists, marketing materials and studies, advertising materials, price lists, correspondence, distribution lists, supplier lists, production data, sales and promotional materials and records, purchasing materials and records, personnel records, manufacturing and quality

 

6


control records and procedures, blue prints, research and development files, records, data and laboratory books, account records, sales order files, litigation files, computer files, microfiche, tape recordings, photographs, patient and medical records, and Medicare cost report files and workpapers; provided that “Information” does not include patents, trademarks, or other intellectual property.

Information Statement ” means the information statement forming a part of the Registration Statement as the same may be amended or supplemented from time to time prior to the Effective Time.

Initial Notice ” has the meaning set forth in Section 8.01 .

Insurance Administration ” shall mean, with respect to an insurance policy, the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each such policy; discussions or negotiations with insurers and the control of any Proceedings relating to any such policy; the reporting to excess insurance carriers of any losses or claims which may cause the per-occurrence, per claim or aggregate limits of any such policy to be exceeded; and the distribution of Insurance Proceeds as contemplated by this Agreement.

Insurance Proceeds ” means, with respect to any insured party, those monies, net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof, which are: (i) received by an insured from an insurance carrier or its estate; (ii) paid by an insurance carrier or its estate on behalf of the insured; or (iii) received (including by way of setoff) from any Third Party in the nature of insurance, contribution or indemnification in respect of any Liability.

Intercompany Accounts ” means any receivable, payable or loan between any member of the CHS Group, on the one hand, and any member of the QHC Group, on the other hand, that exists prior to the Effective Time and is reflected in the books and records of the relevant members of the CHS Group and the QHC Group, except for any such receivable, payable or loan that arises pursuant to this Agreement or any Ancillary Agreement.

Law ” means any federal, state, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any Tax treaty), license, permit, authorization, approval, Consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case enacted, promulgated, issued or entered by a Governmental Authority.

Liabilities ” means all debts, liabilities, obligations, responsibilities, response actions, losses, damages (whether compensatory, punitive, consequential, incidental, treble or other), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including those arising under or in connection with any Law or other pronouncements of Governmental Authorities having the effect of Law, Proceeding, threatened Proceeding, order or consent decree of any Governmental Authority or any award of any arbitration tribunal, and those arising under any contract,

 

7


guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including any costs, expenses, interest, attorneys’ fees, disbursements and expenses of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof.

Losses ” means, with respect to any matter for which a person is entitled to indemnification pursuant to Article IV hereof, any and all losses, damages, settlements, claims, fines, penalties, costs and expenses (including reasonable attorneys’ fees, but not including time spent by employees of such person) actually incurred by such person arising from such matter, but excluding consequential damages.

Majority Voting Power ” means a majority of the ordinary voting power in the election of directors of all the outstanding voting securities of the resulting Business Entity or of the Party, respectively.

Non-Custodial Party ” has the meaning set forth in Section 7.03(a) .

Notice ” means any written notice, request demand or other communication specifically referencing this Agreement and given in accordance with Section 10.05 .

NYSE ” means the New York Stock Exchange.

OIG ” means the Office of Inspector General of the U.S. Department of Health and Human Services.

Parties ” means the parties to this Agreement.

Person ” means any (i) individual; (ii) Business Entity; or (iii) Governmental Authority.

Plan of Separation ” has the meaning set forth in Section 2.02 .

Prime Rate ” means the rate that Bloomberg displays as Prime Rate by Country United States at http://www.bloomberg.com/markets/rates-bonds/key-rates/ or on a Bloomberg terminal at PRIMBB Index.

Privileged Information ” means any information, in written, oral, electronic or other tangible or intangible forms, including any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), as to which a Party or its respective Subsidiaries would be entitled to assert or have asserted a privilege, including the attorney-client and attorney work product privileges.

Proceeding ” means any past, present or future suit, countersuit, action, alternative dispute resolution process, claim, counterclaim, demand, hearing, inquiry, investigation or proceeding before a judicial, quasi-judicial, tribunal, arbitration or mediation body, or by or before a Governmental Authority, in each case, involving CHS, a CHS

 

8


Subsidiary, a CHS Indemnitee (but only if in a capacity entitling such Person to the rights of a CHS Indemnitee), QHC, a QHC Subsidiary, or a QHC Indemnitee (but only if in a capacity entitling such Person to the rights of a QHC Indemnitee), in each case, other than any such matter solely between CHS or any CHS Subsidiaries, on the one hand, and QHC or any QHC Subsidiaries, on the other hand, arising with respect to a controversy, dispute or claim under this Agreement or any Ancillary Agreement.

QHC ” has the meaning set forth in the Preamble.

QHC Accounts ” has the meaning set forth in Section 2.09(b ).

QHC Assets ” means only the following Assets:

(i) all of the issued and outstanding capital stock or other equity interests of the Transferred Entities that are owned by either Party or any of its Subsidiaries as of the Effective Time or, in the case of a Transferred Entity formed after the Effective Time, as of the date on which such Transferred Entity is transferred from CHS or a CHS Subsidiary to QHC or a QHC Subsidiary;

(ii) the Assets of either Party or any of its Subsidiaries as of the Effective Time included or reflected on the QHC Pro Forma Balance Sheet or any notes or subledgers thereto, it being understood that (x) the QHC Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of QHC Assets pursuant to this subclause (ii); and (y) the amounts set forth on the QHC Pro Forma Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of QHC Assets pursuant to this subclause (ii);

(iii) all other Assets of either Party or any of its Subsidiaries as of the Effective Time that are of a nature or type that would have resulted in such Assets being included as Assets on a pro forma combined balance sheet of QHC or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Assets included on the QHC Pro Forma Balance Sheet or any notes or subledgers thereto), it being understood that (x) the QHC Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of QHC Assets pursuant to this subclause (iii); and (y) the amounts set forth on the QHC Pro Forma Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of QHC Assets pursuant to this subclause (iii);

(iv) the Assets expressly allocated to QHC or a QHC Subsidiary pursuant to this Agreement or any Ancillary Agreement;

(v) all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time under the QHC Contracts;

 

9


(vi) all other rights, interests and claims of either Party or any of their Subsidiaries as of the Effective Time with respect to Information that is exclusively related to the QHC Assets, the QHC Liabilities, the QHC Business or the Transferred Entities and, subject to the provisions of the applicable Ancillary Agreements, a non-exclusive right to all Information that is related to the QHC Assets, the QHC Liabilities, the QHC Business or the Transferred Entities (but is not exclusively related to such matters);

(vii) all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time to the QHC Facilities;

(viii) the Assets relating to, arising out of or resulting from Proceedings to the extent such Proceedings relate to, arise out of, or result from the QHC Business, the other QHC Assets, or the QHC Liabilities, except to the extent such Proceedings are CHS Liabilities; and

(ix) the Assets set forth on Schedule 1.01(d) .

The Parties agree that all Delayed QHC Assets shall be QHC Assets for purposes of this Agreement and the Ancillary Agreements regardless of when such Delayed QHC Assets are assumed by QHC or a QHC Subsidiary or designee. The Parties also agree that, if any Transferred Entity holds a CHS Asset, such CHS Asset shall nonetheless be treated as a CHS Asset and the Parties shall, and shall cause their respective Subsidiaries to, use their commercially reasonable efforts to cause such CHS Asset to be transferred to CHS or a CHS Subsidiary.

QHC Business ” means:

(i) Operation of the QHC Facilities . The business, operations and activities conducted at any time prior to the Effective Time by either Party or any of its Subsidiaries of the QHC Facilities;

(ii) Operation of Quorum Health Resources, LLC . The business, operations and activities conducted at any time prior to the Effective Time by Quorum Health Resources; and

(iii) QHC Former Businesses . The business, operations and activities conducted at any time prior to the Effective Time by either Party or any of its Subsidiaries to the extent such business, operations and activities relate to, arise out of or result from a QHC Former Business.

QHC Cash Distribution ” has the meaning set forth in Section 2.07 .

QHC CIA ” has the meaning set forth in Section 2.02(f) .

QHC Common Stock ” has the meaning set forth in the Recitals.

 

10


QHC Contracts ” means the following contracts, agreements, arrangements, commitments or understandings to which either Party or any of its Subsidiaries is a party or by which it or its Assets is bound, whether or not in writing, in each case, prior to the Effective Time:

(i) any contract, agreement, arrangement, commitment or understanding or portion thereof that is a QHC Liability;

(ii) any contract, agreement, arrangement, commitment or understanding or portion thereof to the extent related to the QHC Business;

(iii) any employment, change of control, retention, consulting, indemnification, termination, severance or other similar agreements with any employee or consultant of QHC or a QHC Subsidiary; and

(iv) any other contract, agreement, arrangement, commitment or understanding or portion thereof that is otherwise expressly contemplated pursuant to this Agreement or any Ancillary Agreement to be assigned to QHC or a QHC Subsidiary;

provided , however , that (A) such contracts, agreements, arrangements, commitments or understandings or portions thereof that are contemplated to be retained by CHS or a CHS Subsidiary pursuant to any provision of this Agreement or any Ancillary Agreement shall not be QHC Contracts; (B) such contracts, agreements, arrangements, commitments or understandings or portions thereof that relate to debt instruments, insurance arrangements, or employee benefit plans or programs shall be QHC Contracts only to the extent expressly provided for under the terms of this Agreement or any Ancillary Agreement; and (C) the rights and obligations of CHS and the CHS Subsidiaries under this Agreement and the Ancillary Agreements shall not be QHC Contracts.

QHC Facilities ” means the Facilities set forth on Schedule 1.01(e) .

QHC Financing Transactions ” has the meaning set forth in Section 2.07(a) .

QHC Former Business ” means any Business Entity, division, business unit or business, including any business within the meaning of Rule 11-01(d) of Regulation S-X promulgated under the Exchange Act (in each case, including any Assets and Liabilities comprising the same) that is not owned, leased or operated by a Party or any of its Subsidiaries as of immediately prior to the Effective Time because it has been sold, conveyed, assigned, transferred or otherwise disposed of or divested by QHC or one of the QHC Subsidiaries to one or more Persons (other than CHS or any CHS Subsidiaries) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated, in each case, prior to the Effective Time.

QHC Group ” means QHC and the QHC Subsidiaries.

QHC Indemnitees ” means (i) QHC and each QHC Subsidiary; (ii) each of the respective past, present and future directors, officers, employees or agents of the entities described in (i) above, in each case in their respective capacities as such; and (iii) each of the heirs, executors, administrators, successors and assigns of any of the foregoing.

 

11


QHC Indemnity Obligations ” means all Losses incurred by a CHS Indemnitee to the extent such Losses relate to, arise out of or result from, directly or indirectly, any of the following items:

(i) any QHC Liability;

(ii) any failure of QHC or a QHC Subsidiary or any other Person to pay, perform or otherwise promptly discharge any QHC Liabilities in accordance with their terms, whether prior to, at or after the Effective Time;

(iii) any Third Party Claim relating to the conduct of any business, operation or activity by QHC or a QHC Subsidiary from and after the Effective Time;

(iv) any Proceeding in respect of the CHS CIA to the extent such Proceeding relates to, arises out of or results from any business, operation or activity of QHC occurring from and after the Effective Time; and

(v) any breach by QHC or a QHC Subsidiary of this Agreement or any Ancillary Agreement.

QHC Liabilities ” means any or all of the following Liabilities of either Party or any of its Subsidiaries:

(i) all Liabilities included or reflected on the QHC Pro Forma Balance Sheet or any notes or subledgers thereto, subject to any discharge of such Liabilities after the date of such QHC Pro Forma Balance Sheet, it being understood that (x) the QHC Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of QHC Liabilities pursuant to this subclause (i); and (y) the amounts set forth on the QHC Pro Forma Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of QHC Liabilities pursuant to this subclause (i);

(ii) all other Liabilities that are incurred or accrued by either Party or any of its Subsidiaries from the date of the QHC Pro Forma Balance Sheet to the Effective Time that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a pro forma combined balance sheet of QHC or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes or subledgers to be prepared on a basis consistent with the determination of the Liabilities included on the QHC Pro Forma Balance Sheet or any notes or subledgers thereto), it being understood that (x) the QHC Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of QHC Liabilities pursuant to this subclause (ii); and (y) the amounts set forth on the QHC Pro Forma Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of QHC Liabilities pursuant to this subclause (ii);

 

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(iii) all Liabilities relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case, to the extent that such Liabilities relate to, arise out of or result from the QHC Business or a QHC Asset, including, for clarity, all Liabilities relating to, arising out of or resulting from the business, operations and activities conducted by Quorum Health Resources whether or not covered by the QHR Policies;

(iv) all Liabilities for claims made by Third Parties, or the directors, officers, employees, agents of CHS, QHC or their respective Subsidiaries or Affiliates against either Party or any of its Subsidiaries to the extent relating to, arising out of or resulting from the QHC Business or the QHC Assets;

(v) all Liabilities related to any outstanding checks issued by CHS, QHC, or any of their respective Subsidiaries prior to the Effective Time, to the extent such checks arise out of or are related to the QHC Business;

(vi) all Liabilities expressly allocated to QHC or a QHC Subsidiary pursuant to this Agreement or any Ancillary Agreement, and the obligations of QHC or a QHC Subsidiary under such agreements;

(vii) all Liabilities relating to, arising out of or resulting from the QHC Financing Transactions;

(viii) the Liabilities relating to, arising out of, or resulting from Proceedings to the extent such Proceedings relate to, arise out of, or result from the QHC Business, the QHC Assets, or the other QHC Liabilities;

(ix) all Liabilities relating to, arising out of, or resulting from the QHC CIA;

(x) all Liabilities assumed by QHC or a QHC Subsidiary from a Third Party after the Effective Time (whether or not such Liabilities initially arose or accrued before the Effective Time); and

(xi) all QHC Specified Liabilities.

provided , however , that, for the avoidance of doubt QHC Liabilities shall not include any CHS Liability.

The Parties agree that all Delayed QHC Liabilities shall be QHC Liabilities for purposes of this Agreement and the Ancillary Agreements regardless of when such Delayed QHC Liabilities are assumed by QHC or a QHC Subsidiary or designee. The Parties also agree

 

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that, if any Transferred Entity holds a CHS Liability, such CHS Liability shall nonetheless be treated as a CHS Liability and the Parties shall, and shall cause their respective Subsidiaries to, use their commercially reasonable efforts to cause such CHS Liability to be assumed by CHS or a CHS Subsidiary.

QHC Pro Forma Balance Sheet ” means the pro forma combined balance sheet of QHC and the QHC Subsidiaries, including any notes or subledgers thereto, as of December 31, 2015, as presented in the Information Statement made available to the Record Holders prior to the Effective Time.

QHC Specified Liabilities ” means those Liabilities set forth on Schedule 1.01(f) .

QHC Subsidiary ” means any Business Entity that is a Subsidiary of QHC prior to, at or after the Effective Time, including the Transferred Entities, which shall be deemed to have been QHC Subsidiaries at all times prior to, at and after the Effective Time.

QHR Policies ” has the meaning set forth in Section 5.01(b) .

Quorum Health Resources ” means Quorum Health Resources, LLC, a Delaware limited liability company, and including any Business Entity that is a Subsidiary of Quorum Health Resources, LLC prior to, at or after the Effective Time.

Record Date ” means the close of business on the date to be determined by the CHS Board as the record date for determining holders of CHS Common Stock entitled to participate in the Distribution.

Record Holders ” means the holders of record of CHS Common Stock as of the close of business on the Record Date.

Records Facility ” has the meaning set forth in Section 8.03(a) .

Registration Statement ” means the registration statement on Form 10 filed under the Exchange Act on September 4, 2015, pursuant to which the class of QHC Common Stock to be distributed in the Distribution has been registered, together with all amendments and supplements thereto.

Representatives ” has the meaning set forth in Section 8.08(a) .

Security Interest ” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

Separation ” has the meaning set forth in the Recitals.

Settlement ” has the meaning set forth in Section 2.02(f) .

Stored Records ” has the meaning set forth in Section 8.03(a) .

 

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Subsidiary ” or “ subsidiary ” shall mean, with respect to any Person, any Business Entity of which such Person: (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Business Entity; (B) the total combined equity interests; or (C) the capital or profit interests, in the case of a partnership; (ii) has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body; or (iii) with respect to any non-corporate entity, is a general partner or an entity performing similar functions (for example, manager of a limited liability company or a trustee of a trust).

Tangible Information ” means Information that is contained in written, electronic or other tangible forms.

Tax ” has the meaning set forth in the Tax Matters Agreement.

Tax Matters Agreement ” means the Tax Matters Agreement to be entered into by and between CHS and QHC or their respective Subsidiaries in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

Third Party ” means any Person other than the Parties or any of their respective Subsidiaries.

Third Party Claim ” has the meaning set forth in Section 4.05(a) .

Transferred Cash Amount ” has the meaning set forth in Section 2.10 .

Transferred Entities ” means the entities set forth on Schedule 1.01(g) .

Transition Services Agreements ” means the Ancillary Agreements to be entered into by and between one or more CHS Subsidiaries and one or more QHC Subsidiaries in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement regarding the provision of transition and other post-Distribution Date services and designated as Transition Services Agreements on Schedule 1.01(a) .

U.S. ” or “ United States ” means the United States of America, including each of the fifty (50) states thereof, the District of Columbia, Puerto Rico, and all other territories and possessions of the United States of America.

ARTICLE II

THE SEPARATION

Section 2.01. Formation of QHC .

(a) Incorporation of QHC . The Parties acknowledge that: (i) CHS caused QHC to be incorporated in Delaware on July 27, 2015; and (ii) immediately prior to the Effective Time, CHS shall be the sole stockholder of QHC.

 

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(b) Adoption of QHC’s Certificate of Incorporation and By-laws . On or prior to the Distribution Date, CHS and QHC shall take all necessary actions so that, as of or prior to the Effective Time, the Certificate of Incorporation and the By-laws shall be the certificate of incorporation and bylaws of QHC.

(c) QHC’s Directors and Officers . On or prior to the Distribution Date, CHS and QHC shall take all necessary actions so that as of the Effective Time: (i) the directors and executive officers of QHC shall be those set forth in the Information Statement made available to the Record Holders prior to the Effective Time, unless otherwise agreed by the Parties; and (ii) QHC shall have such other officers as QHC shall appoint.

(d) NYSE Listing . QHC shall prepare and file, and shall use commercially reasonable efforts to have approved prior to the Effective Time, an application for the listing of the QHC Common Stock to be distributed in the Distribution and the shares of QHC Common Stock to be reserved for issuance pursuant to any director or employee benefit plan or arrangement on the NYSE (and such other stock exchanges as may be necessary or desirable), subject to official notice of distribution.

Section 2.02. The Separation . The Parties acknowledge that the Separation is intended to result in QHC owning the QHC Assets and assuming the QHC Liabilities as set forth below in this Article II and in the applicable Ancillary Agreements. Subject to Sections 2.03 and 2.04 , on or prior to the Distribution Date, in accordance with the plan and structure of the Separation set forth of Schedule 2.02 (the “ Plan of Separation ”):

(a) Transfer and Assignment of QHC Assets . CHS shall, and shall cause the applicable CHS Subsidiaries to, contribute, assign, transfer, convey and deliver to QHC or the applicable QHC Subsidiaries, and QHC or such QHC Subsidiaries shall accept from CHS and the applicable CHS Subsidiaries, all of CHS’ and such CHS Subsidiaries’ respective direct or indirect rights, title and interest in and to all of the QHC Assets, including all of the outstanding shares of capital stock or other ownership interests in the Transferred Entities, which shall result in QHC owning directly or indirectly all of the Transferred Entities (it being understood that if a QHC Asset shall be held by a Transferred Entity or a Subsidiary of a Transferred Entity, such QHC Asset may be assigned, transferred, conveyed and delivered for all purposes hereunder as a result of the transfer of all or substantially all of the equity interests in such Transferred Entity to QHC or a QHC Subsidiary).

(b) Acceptance and Assumption of QHC Liabilities . QHC and the applicable QHC Subsidiaries shall accept, assume and agree faithfully to perform, discharge and fulfill all of the QHC Liabilities in accordance with their respective terms, without regard for the manner in which or circumstances under which such QHC Liabilities arose or against whom they are asserted. QHC and the applicable QHC Subsidiaries shall be responsible for all QHC Liabilities, regardless of when or where such QHC Liabilities arose or arise, or whether the facts on which they are based occurred prior to, at or after the Effective Time, regardless of where or against whom such QHC Liabilities are asserted or determined (including any such QHC Liabilities arising out of claims made by CHS’ or QHC’s respective Subsidiaries or Affiliates or by Representatives of CHS or QHC or their respective Subsidiaries or Affiliates against either Party or any of its Subsidiaries or Affiliates) or whether asserted or determined prior to the date hereof,

 

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and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by either Party or any of its Subsidiaries or Affiliates or any of their respective Representatives.

(c) Transfer and Assignment of CHS Assets . CHS and QHC shall cause QHC and any Business Entity that shall be a QHC Subsidiary after the Effective Time to contribute, assign, transfer, convey and deliver to CHS or a Business Entity designated by CHS that shall be a CHS Subsidiary after the Effective Time all of QHC’s and such QHC Subsidiary’s respective direct or indirect rights, title and interest in and to all CHS Assets held by QHC or a QHC Subsidiary.

(d) Acceptance and Assumption of CHS Liabilities . CHS and the applicable CHS Subsidiaries shall accept, assume and agree faithfully to perform, discharge and fulfill, all of the CHS Liabilities held by QHC or any Business Entity that shall be a QHC Subsidiary after the Effective Time, and CHS and the applicable CHS Subsidiaries shall be responsible for all of such CHS Liabilities in accordance with their respective terms, without regard for the manner in which or circumstances under which such CHS Liabilities arose or against whom they are asserted. CHS and the applicable CHS Subsidiaries shall be responsible for all CHS Liabilities, regardless of when or where such CHS Liabilities arose or arise, or whether the facts on which they are based occurred prior to, at or after the Effective Time, regardless of where or against whom such CHS Liabilities are asserted or determined (including any such CHS Liabilities arising out of claims made by CHS’ or QHC’s respective Subsidiaries or Affiliates or by Representatives of CHS or QHC or their respective Subsidiaries or Affiliates) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by either Party or any of its Subsidiaries or Affiliates or any of their respective Representatives.

(e) Issuance of QHC Common Stock . On or prior to the Distribution Date, CHS and QHC shall take all necessary actions to cause to be issued and outstanding, and delivered to CHS, in accordance with the Plan of Separation, such number of shares of QHC Common Stock constituting all the shares to be distributed as set forth below in Section 3.02 .

(f) Corporate Integrity Agreement . CHS and QHC acknowledge that (i) CHS entered into that certain Corporate Integrity Agreement, dated as of July 28, 2014 (the “ CHS CIA ”) with the OIG in connection with a civil settlement (the “ Settlement ”) with the U.S. Department of Justice, other federal agencies and identified relators; and (ii) prior to the Distribution, the QHC Facilities were bound by the terms of the Settlement and the CHS CIA. Following the Distribution, (i) CHS and QHC shall cooperate in good faith with the OIG to negotiate a Corporate Integrity Agreement applicable to QHC (the “ QHC CIA ”) and to amend or modify the CHS CIA to take into account the effect of the Distribution; (ii)  provided that the QHC CIA includes substantially similar terms as the CHS CIA, or otherwise is not materially more burdensome to QHC than the CHS CIA is to CHS, QHC shall promptly enter into the QHC CIA without delay; and (iii) until such time as the QHC CIA is entered into by QHC, QHC shall continue to operate the QHC Business in compliance in all respects with the CHS CIA in the same manner as prior to the Distribution. For the avoidance of doubt, following the Effective Time, (i) CHS shall be responsible for compliance by CHS and the CHS Subsidiaries with the CHS CIA and (ii) QHC shall be responsible for compliance by QHC and the QHC Subsidiaries

 

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with (A) until such time as the QHC CIA is entered into, the CHS CIA (to the extent such terms are applicable to and enforceable against QHC Business), and (B) at an after such time as the QHC CIA is entered into, the QHC CIA.

Section 2.03. Delayed Transfers of QHC Assets and QHC Liabilities .

(a) Delayed QHC Transfers . If and to the extent the valid, complete and perfected transfer or assignment to QHC or a QHC Subsidiary or designee of any QHC Assets or the assumption by QHC or a QHC Subsidiary or designee of any QHC Liabilities (i) would be a violation of applicable Law, (ii) requires a Consent that has not been obtained as of or prior to the Effective Time, or (iii) in spite of the Parties best efforts, such transfer or assignment has not been fully effected on or prior to the Effective Time, whether due to impracticality or other reasons as determined by the Parties, then, unless the Parties shall otherwise mutually agree, the transfer or assignment to QHC or the applicable QHC Subsidiary or designee of such QHC Assets or the assumption by QHC or the applicable QHC Subsidiary or designee of such QHC Liabilities shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal or other impediments are removed or such Consent is obtained (any such QHC Asset, a “ Delayed QHC Asset ” and any such QHC Liability, a “ Delayed QHC Liability ”). Notwithstanding the foregoing, any Delayed QHC Assets or Delayed QHC Liabilities shall continue to constitute QHC Assets or QHC Liabilities, respectively, for all other purposes of this Agreement.

(b) Treatment of Delayed QHC Assets and Delayed QHC Liabilities . From and after the Effective Time, CHS shall, and shall cause the CHS Subsidiaries to, hold on behalf of and for the benefit of QHC or, where applicable, a QHC Subsidiary or designee, all Delayed QHC Assets, and to pay, perform and discharge fully all Delayed QHC Liabilities. QHC or the applicable QHC Subsidiary or designee shall promptly reimburse CHS or the applicable CHS Subsidiaries for all commercially reasonable payments made in connection with the performance and discharge of such Delayed QHC Liabilities. Each such Delayed QHC Asset or Delayed QHC Liability shall be held by CHS or, where applicable, a CHS Subsidiary or designee for, insofar as reasonably practicable, the benefit and burden of QHC or the applicable QHC Subsidiary or designee. CHS and QHC shall, and shall cause their respective Subsidiaries to, take such other actions as may be reasonably requested by the other Party or any of its Subsidiaries in accordance with the provisions of this Agreement so that all the benefits and burdens relating to such Delayed QHC Asset and Delayed QHC Liability, including expenses, risk of loss, potential for gain and control of such Delayed QHC Asset and Delayed QHC Liability, shall inure from and after the Effective Time to QHC or the applicable QHC Subsidiaries or designees, without recourse of any kind to CHS or any CHS Subsidiary or designee. Any registration fees or recordation fees required to be paid to a Governmental Authority in connection with the transfer of a Delayed QHC Asset or a Delayed QHC Liability shall be borne by QHC.

(c) Transfer of Delayed QHC Assets and Delayed QHC Liabilities . When and as the Parties agree and provided that, as of such agreed-upon time (i) the necessary Consents for each Delayed QHC Asset or Delayed QHC Liability shall have been obtained; (ii) the assumption by QHC or a QHC Subsidiary or designee of each Delayed QHC Asset or Delayed QHC Liability is not at such time a violation of applicable Law; and (iii) all other barriers of impracticality or otherwise have been resolved to the satisfaction of the Parties:

(A) CHS shall, and shall cause each CHS Subsidiary to, contribute, assign, transfer, convey and deliver to QHC or such QHC Subsidiaries or designees as QHC may determine, and QHC shall, and shall cause such QHC Subsidiaries or designees to, accept from CHS and the CHS Subsidiaries all of CHS’ and the CHS Subsidiaries’ respective rights, title and interest in and to such Delayed QHC Assets; and

 

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(B) QHC shall, and shall cause such QHC Subsidiaries or designees as QHC may determine to, accept, assume and agree faithfully to perform, discharge and fulfill such Delayed QHC Liabilities, in accordance with their terms.

Section 2.04. Delayed Transfers of CHS Assets and CHS Liabilities .

(a) Delayed CHS Transfers . If and to the extent that the valid, complete and perfected transfer or assignment to CHS or a CHS Subsidiary or designee of any CHS Assets or the assumption by CHS or a CHS Subsidiary or designee of any CHS Liabilities (i) would be a violation of applicable Law, (ii) require a Consent that has not been obtained as of or prior to the Effective Time, or (iii) in spite of the Parties best efforts, such transfer or assignment has not been fully effected on or prior to the Effective Time, whether due to impracticality or other reasons as determined by the Parties, then, unless the Parties shall otherwise mutually agree, the transfer or assignment to CHS or the applicable CHS Subsidiary or designee of such CHS Assets or the assumption by CHS or the applicable CHS Subsidiary or designee of such CHS Liabilities shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal or other impediments are removed or such Consent is obtained (any such CHS Asset, a “ Delayed CHS Asset ” and any such CHS Liability, a “ Delayed CHS Liability ”). Notwithstanding the foregoing, any Delayed CHS Assets or Delayed CHS Liabilities shall continue to constitute CHS Assets or CHS Liabilities, respectively, for all other purposes of this Agreement.

(b) Treatment of Delayed CHS Assets and Delayed CHS Liabilities . Except as otherwise provided herein or in any Ancillary Agreement, from and after the Effective Time, QHC shall, and shall cause the QHC Subsidiaries or designees to, hold on behalf of and for the benefit of CHS or, where applicable, a CHS Subsidiary or designee, all Delayed CHS Assets, and to pay, perform and discharge fully all Delayed CHS Liabilities. CHS or the applicable CHS Subsidiary or designee shall promptly reimburse QHC or the applicable QHC Subsidiaries or designees for all commercially reasonable payments made in connection with the performance and discharge of such Delayed CHS Liabilities. Each such Delayed CHS Asset or Delayed CHS Liability shall be held by QHC or, where applicable, a QHC Subsidiary or designee for, insofar as reasonably practicable, the benefit and burden of CHS or the applicable CHS Subsidiary or designee. CHS and QHC shall, and shall cause their respective Subsidiaries to, take such other actions as may be reasonably requested by the other Party or any of its Subsidiaries in accordance with the provisions of this Agreement so that all the benefits and burdens relating to such Delayed CHS Asset and Delayed CHS Liability, including expenses, risk of loss, potential for gain and control of such Delayed CHS Asset and Delayed CHS Liability, shall inure from and after the Effective Time to CHS or the applicable CHS Subsidiaries or designees, without recourse of any kind to QHC or any QHC Subsidiary. Any registration fees or recordation fees required to be paid to a Governmental Authority in connection with the transfer of a Delayed CHS Asset or a Delayed CHS Liability shall be borne by CHS.

 

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(c) Transfer of Delayed CHS Assets and Delayed CHS Liabilities . When and as the Parties agree and provided that, as of such agreed-upon time (i) the necessary Consents for each Delayed CHS Asset or Delayed CHS Liability shall have been obtained; (ii) the assumption by CHS or a CHS Subsidiary or designee of each Delayed CHS Asset or Delayed CHS Liability is not at such time a violation of applicable Law; and (iii) all other barriers of impracticality or otherwise have been resolved to the satisfaction of the Parties:

(A) QHC shall, and shall cause each QHC Subsidiary to, contribute, assign, transfer, convey and deliver to CHS or such CHS Subsidiaries or designees as CHS may determine, and CHS shall, and shall cause such CHS Subsidiaries or designees to, accept from QHC and the QHC Subsidiaries all of QHC’s and the QHC Subsidiaries’ respective rights, title and interest in and to such Delayed CHS Assets; and

(B) CHS shall, and shall cause such CHS Subsidiaries or designees as CHS may determine to, accept, assume and agree faithfully to perform, discharge and fulfill such Delayed CHS Liabilities, in accordance with their terms.

Section 2.05. Ancillary Agreements . Prior to the Effective Time, the Parties shall execute and deliver, or where applicable shall cause their respective Subsidiaries to execute and deliver, each Ancillary Agreement to which they are intended to be a party; provided , however , that if this Article II calls for an Ancillary Agreement to be executed and delivered on or as of a later time, it shall be executed and delivered on or as of such later time.

Section 2.06. Disclaimer of Representations and Warranties .

(a) EACH OF CHS (ON BEHALF OF ITSELF AND EACH OF THE CHS SUBSIDIARIES) AND QHC (ON BEHALF OF ITSELF AND EACH OF THE QHC SUBSIDIARIES) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS: (X) REPRESENTING OR WARRANTING TO ANY OTHER PARTY HERETO OR THERETO IN ANY WAY AS TO (I) THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED, LICENSED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY; (II) ANY APPROVALS OR NOTIFICATIONS REQUIRED IN CONNECTION HEREWITH OR THEREWITH; (III) THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY; (IV) THE ABSENCE OR PRESENCE OF ANY DEFENSES TO OR RIGHT OF SETOFF AGAINST OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY PROCEEDING OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF EITHER PARTY; OR (V) THE LEGAL SUFFICIENCY OF ANY CONVEYANCE AND ASSUMPTION INSTRUMENTS OR ANY OTHER ANCILLARY AGREEMENT TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING OF SUCH CONVEYANCE AND ASSUMPTION INSTRUMENTS OR SUCH OTHER ANCILLARY AGREEMENTS; OR (Y) MAKING ANY OTHER REPRESENTATIONS OR GRANTING ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE. EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER

 

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WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY PATENTS, TRADEMARKS, OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. EXCEPT AS MAY EXPRESSLY BE SET FORTH IN THIS AGREEMENT OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED OR LICENSED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES OR LICENSEES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (A) ANY CONVEYANCE AND ASSUMPTION INSTRUMENT OR ANY OTHER ANCILLARY AGREEMENT MAY PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ALL SECURITY INTERESTS; AND (B) ANY NECESSARY CONSENTS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS, AGREEMENTS, SECURITY INTERESTS OR JUDGMENTS ARE NOT COMPLIED WITH.

(b) QHC hereby waives compliance by itself and each and every QHC Subsidiary with the requirements and provisions of any “bulk-sale” or “bulk transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the QHC Assets to QHC or a QHC Subsidiary.

(c) CHS hereby waives compliance by itself and each and every CHS Subsidiary with the requirements and provisions of any “bulk-sale” or “bulk transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any and all of the CHS Assets to CHS or a CHS Subsidiary.

Section 2.07. Financing Transactions; QHC Cash Distribution .

(a) QHC Financing Transactions . Prior to the Effective Time, QHC and one or more QHC Subsidies shall enter into the financing transactions described on Schedule 2.07 (the “ QHC Financing Transactions ”).

(b) QHC Cash Distribution . Immediately prior to the Effective Time, QHC shall distribute cash proceeds from the QHC Financing Transactions (the “ QHC Cash Distribution ”) in such amounts and in the manner described on Schedule 2.07 in connection with the Separation and Distribution and in partial consideration for the ultimate transfer of QHC Assets to QHC. CHS shall cause the cash received in the QHC Cash Distribution to be held in a segregated account.

(c) Use of Proceeds by C2. Upon receipt of the QHC Cash Distribution, C2 shall use such funds to complete the repayments, repurchases and redemptions with respect to CHS’ existing indebtedness in such amounts and in the manner described on Schedule 2.07 , with such repayments, repurchases and redemptions to occur as promptly as practicable following the Distribution and in no event later than twelve (12) months following the Distribution Date.

 

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(d) Preparation of Materials . Prior to the Effective Time, QHC shall cooperate in the preparation of all materials as may be necessary or advisable to complete the QHC Financing Transactions.

Section 2.08. Termination of Agreements .

(a) Termination of Agreements Between CHS and QHC . Except as set forth in Section 2.08(b) , the Parties agree that all agreements, arrangements, commitments or understandings, whether or not in writing, entered into prior to the Effective Time between or among QHC or a QHC Subsidiary, on the one hand, and CHS or a CHS Subsidiary, on the other hand, shall be terminated effective as of immediately prior to the Effective Time; provided that the provisions of this Section 2.08(a)  shall not terminate any rights or obligations (i) between CHS and any of the CHS Subsidiaries; or (ii) between QHC and any of the QHC Subsidiaries.

(b) Exceptions . The provisions of Section 2.08(a)  shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement and the Ancillary Agreements; (ii) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.08(b)(ii) ; (iii) any agreements, arrangements, commitments or understandings to which any Third Party is a party; and (iv) any agreements, arrangements, commitments or understandings, to which any non-wholly owned Subsidiary of CHS or QHC, as the case may be, is a party (it being understood that directors’ qualifying shares or similar interests shall be disregarded for purposes of determining whether a Subsidiary is wholly owned). To the extent that the rights and obligations of CHS or a CHS Subsidiary under any agreements, arrangements, commitments or understandings not terminated under this Section 2.08 constitute QHC Assets or QHC Liabilities, they shall be assigned or assumed by QHC or the applicable QHC Subsidiary or designee pursuant to this Agreement.

Section 2.09. Settlement of Accounts between CHS and QHC .

(a) Each Intercompany Account outstanding immediately prior to the Effective Time, in any general ledger account of CHS, QHC or any of their respective Subsidiaries, other than those set forth on Schedule 2.09(a) , shall be satisfied and/or settled by the relevant members of the CHS Group and the QHC Group no later than the Effective Time by (i) forgiveness by the relevant obligor, (ii) one or a related series of distributions of capital or (iii) cash payment by the relevant obligor to the relevant obligee, in each case as agreed to by the Parties. Each such Intercompany Account set forth on Schedule 2.09(a) shall continue to be outstanding after the Effective Time and thereafter (i) shall be an obligation of the relevant Party (or the relevant member of such Party’s Group), each responsible for fulfilling its (or a member of such Party’s Group’s) obligations in accordance with the terms and conditions applicable to such obligation, and (ii) shall be for each relevant Party (or the relevant member of such Party’s Group) an obligation to a third-party and shall no longer be an Intercompany Account.

(b) CHS and QHC each agrees to take, or cause their respective Subsidiaries to take, prior to the Effective Time, all actions necessary to amend all contracts or agreements governing each bank and brokerage account owned by QHC or any other member of the QHC Group (collectively, the “ QHC Accounts ”) and all contracts or agreements governing each bank

 

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or brokerage account owned by CHS or any other member of the CHS Group (collectively, the “ CHS Accounts ”) so that each such QHC Account and CHS Account, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any CHS Account or QHC Account, respectively, is de-linked effective at or prior to the Effective Time.

(c) As between CHS and QHC (and their respective Subsidiaries) all payments and reimbursements received after the Effective Time by either Party (or any of its Subsidiaries) in respect or satisfaction of a business, Asset or Liability of the other Party (or any of its Subsidiaries), including any payments received by automatic deposit from third parties into lockbox accounts, shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, as promptly as commercially practicable or as otherwise agreed between the Parties, upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause its applicable Subsidiary to pay over, to the other Party the amount of such payment or reimbursement.

Section 2.10. Cash Transfer . Prior to the Effective Time and pursuant to the Plan of Separation, CHS shall transfer, or cause its Subsidiaries to transfer (including by one (1) or more transfers or capital contributions), to QHC and/or the designated QHC Subsidiaries an aggregate amount of cash and cash equivalents equal to Twenty Million Dollars ($20,000,000.00), subject to adjustment in accordance with the QHC Financing Transactions described on Schedule 2.07 (such amounts, the “ Transferred Cash Amount ”).

Section 2.11. Novation of Liabilities; Release of Guarantees .

(a) Novation of QHC Liabilities .

(i) Each of CHS and QHC, at the request of the other Party, shall use commercially reasonable efforts to obtain, or cause to be obtained, any Consent, substitution, approval or amendment required to novate or fully assign to QHC or a designated QHC Subsidiary the QHC Liabilities and obtain in writing the unconditional release of CHS and each CHS Subsidiary that is a party to any such arrangements, so that, in any such case, QHC and the designated QHC Subsidiaries shall be solely responsible for such QHC Liabilities; provided , however , that, except as otherwise expressly provided in the Ancillary Agreements, neither CHS nor QHC (nor any of their respective Subsidiaries) shall be obligated to contribute any capital, pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees to a Governmental Authority from whom such Consents, substitutions, approvals, amendments, terminations or releases are requested.

(ii) If CHS or QHC is unable to obtain, or to cause to be obtained, any such required Consent, substitution, approval, amendment, termination or release, CHS or the applicable CHS Subsidiary shall continue to be bound by such arrangement and, unless not permitted by the terms thereof or by Law, QHC shall, as agent or subcontractor for CHS or such CHS Subsidiary, as the case may be, pay, perform and discharge fully all the obligations or other Liabilities of CHS or such CHS Subsidiary, as the case may be, that constitute QHC Liabilities thereunder from and after the Effective Time. CHS shall cause each CHS Subsidiary without further consideration, to pay and remit, or cause to be paid or remitted, to QHC, promptly all

 

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money, rights and other consideration received by it or a CHS Subsidiary in respect of QHC’s performance as agent or subcontractor for CHS or such CHS Subsidiary, as the case may be, with respect to such Liabilities of CHS or the applicable CHS Subsidiary (unless any such consideration is a CHS Asset).

(b) Novation of CHS Liabilities .

(i) Each of CHS and QHC, at the request of the other Party, shall use commercially reasonable efforts to obtain, or cause to be obtained, any Consent, substitution, approval or amendment required to novate or assign to CHS or a designated CHS Subsidiary the CHS Liabilities and obtain in writing the unconditional release of QHC and each QHC Subsidiary that is a party to any such arrangements, so that, in any such case, CHS and the designated CHS Subsidiaries shall be solely responsible for such CHS Liabilities; provided , however , that, except as otherwise expressly provided herein or in the Ancillary Agreements, neither CHS nor QHC (nor any of their respective Subsidiaries) shall be obligated to contribute any capital, pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees to a Governmental Authority from whom such Consents, substitutions, approvals, amendments, terminations or releases are requested.

(ii) If CHS or QHC is unable to obtain, or to cause to be obtained, any such required Consent, substitution, approval, amendment, termination or release, QHC or the applicable QHC Subsidiary shall continue to be bound by such arrangement and, unless not permitted by the terms thereof or by Law, CHS shall, as agent or subcontractor for QHC or such QHC Subsidiary, as the case may be, pay, perform and discharge fully all the obligations or other Liabilities of QHC or such QHC Subsidiary, as the case may be, that constitute CHS Liabilities, as the case may be, thereunder from and after the Effective Time. QHC shall cause each QHC Subsidiary without further consideration, to pay and remit, or cause to be paid or remitted, to CHS, promptly all money, rights and other consideration received by it or a QHC Subsidiary in respect of CHS’ performance as agent or subcontractor for QHC or such QHC Subsidiary, as the case may be, with respect to such Liabilities of QHC or the applicable QHC Subsidiary (unless any such consideration is a QHC Asset). If and when any such Consent, substitution, approval, amendment, termination or release shall be obtained or the obligations under such arrangements shall otherwise become assignable or able to be novated, QHC or the applicable QHC Subsidiary shall promptly assign or novate, or cause to be assigned or novated, all its obligations and other Liabilities thereunder or any obligations of QHC or a QHC Subsidiary to CHS or its designated CHS Subsidiary without payment of further consideration and CHS or such CHS Subsidiary shall, without the payment of any further consideration, assume such obligations.

(c) Release of Guarantees .

(i) Each of CHS and QHC, at the request of the other Party, shall use commercially reasonable efforts, as soon as is reasonably practicable, to (A) have QHC or a QHC Subsidiary removed as guarantor of or obligor for any CHS Liability to the extent that such guarantees or obligations relate to CHS Liabilities, which shall include the removal of any Security Interest on or in any QHC Asset that may serve as collateral or security for any such CHS Liability; and (B) have CHS or a CHS Subsidiary removed as guarantor of or obligor for any QHC Liability to the extent that such guarantees or obligations relate to QHC Liabilities,

 

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which shall include the removal of any Security Interest on or in any CHS Asset that may serve as collateral or security for any such QHC Liability; provided , however , that, except as otherwise expressly provided in the Ancillary Agreements and without limiting the requirements under Section 2.11(c)(ii) , the use of commercially reasonable efforts under this Section 2.11(c)(i)  shall not obligate either CHS or QHC (nor any of their respective Subsidiaries) to contribute any capital, pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees to a Governmental Authority from whom such Consents, substitutions, amendments, terminations or releases are requested.

(ii) To the extent required to obtain a release from a guarantee:

(A) of CHS or a CHS Subsidiary, QHC shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any CHS Asset that may serve as collateral or security for any such QHC Liability and the release of any CHS guaranty with respect to obligations arising after the Effective Time, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either with which QHC (1) would be reasonably unable to comply or (2) would not reasonably be able to avoid breaching; and

(B) of QHC or a QHC Subsidiary, CHS shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any QHC Asset that may serve as collateral or security for any such CHS Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either with which CHS (1) would be reasonably unable to comply or (2) would not reasonably be able to avoid breaching.

(iii) If CHS or QHC is unable to obtain, or to cause to be obtained, any such required removal or release as set forth in clauses (i) and (ii) of this Section 2.11(c) , (A) the Party or its relevant Subsidiary that has assumed the Liability with respect to such guarantee shall indemnify and hold harmless the guarantor or obligor against or from any Liability arising from or relating thereto (in accordance with the provisions of Article IV ) and shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor, to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder; and (B) each of CHS and QHC, on behalf of themselves and their respective Subsidiaries, agree not to renew or extend the term of, increase its obligations under, or transfer to a Third Party, any loan, guarantee, lease, contract or other obligation for which the other Party or such Party’s Subsidiaries is or may be liable unless all obligations of such other Party and the Subsidiaries of such other Party with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such other Party.

Section 2.12. Further Assurances .

(a) Additional Actions . Except as set forth in Section 3.04 and Article IX , in addition to the actions specifically provided for elsewhere in this Agreement, each Party shall, and shall cause each of its respective Subsidiaries to, use commercially reasonable efforts, prior

 

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to and after the Effective Time to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary or advisable under applicable Laws and agreements to consummate the transactions contemplated by this Agreement and the Ancillary Agreements; provided , however , that neither CHS nor QHC (nor any of their respective Subsidiaries) shall be obligated under this Section 2.12(a)  to pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees paid to a Governmental Authority.

(b) Cooperation . Without limiting the foregoing, prior to and after the Effective Time, each Party shall, and shall cause each of its Subsidiaries to, cooperate with the other Party without any further consideration to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all Conveyance and Assumption Instruments and to make all filings with, and to obtain all Consents of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the QHC Assets and the CHS Assets and the assignment and assumption of the QHC Liabilities and the CHS Liabilities as contemplated by this Agreement and the other transactions contemplated hereby and thereby.

(c) Misallocations . Except to the extent otherwise contemplated in connection with a Delayed QHC Asset or Delayed QHC Liability under Section 2.03 or a Delayed CHS Asset or Delayed CHS Liability under Section 2.04 , in the event that, at any time or from time to time (whether prior to, at or after the Effective Time), one Party or any of its Subsidiaries shall receive or otherwise possess any Asset that is allocated to the other Party or any Subsidiary of such other Party pursuant to this Agreement or any Ancillary Agreement, the first Party shall promptly transfer, or cause its Subsidiary to transfer, such Asset to the Party so entitled thereto or such Party’s Subsidiary or designee and such Party or such Party’s Subsidiary or designee shall accept such Asset; provided that, the terms of this Section 2.12(c)  are not intended to limit or otherwise modify in any way the Parties’ rights and obligations under this Agreement or the Tax Matters Agreement. Except to the extent otherwise contemplated in connection with a Delayed QHC Asset or Delayed QHC Liability under Section 2.03 or a Delayed CHS Asset or Delayed CHS Liability under Section 2.04 , in the event that, at any time or from time to time (whether prior to, at or after the Effective Time), one Party or any of its Subsidiaries shall receive or otherwise assume any Liability that is allocated to the other Party or any Subsidiary of such other Party pursuant to this Agreement or any Ancillary Agreement, the first Party shall promptly transfer, or cause its Subsidiary to transfer, such Liability to the Party so entitled thereto or such Party’s Subsidiary or designee, and such Party or such Party’s Subsidiary or designee shall accept, assume and agree faithfully to perform such Liability; provided that, the terms of this Section 2.12(c)  are not intended to limit or otherwise modify in any way the Parties’ rights and obligations under this Agreement or the Tax Matters Agreement.

Section 2.13. Accounting for Deferred Taxes . Subsequent to the Distribution Date but no later than November 20, 2017, CHS shall determine the difference, if any, between the Estimated Deferred Taxes and the Actual Deferred Taxes (the “ Adjustment ”) and shall provide QHC with a schedule that sets forth the Adjustment and how it was calculated. QHC shall

 

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provide a Notice to CHS of any disagreement with the Adjustment within twenty (20) days of receipt of the schedule setting forth the Adjustment and its calculation. QHC and CHS shall use commercially reasonable efforts to resolve any disagreement by December 20, 2017, and, if the Parties are unable to agree prior to such date, the Parties shall utilize the procedures set forth in Article VIII (except those set forth in Section 8.01(a)(i))  to resolve such disagreement (such Adjustment, as modified to reflect the disposition of any disagreement, the “ Final Adjustment ”). CHS and QHC shall, and shall cause their respective Subsidiaries to, reflect the Final Adjustment to shareholders’ equity on their respective books.

ARTICLE III

THE DISTRIBUTION

Section 3.01. Actions Prior to the Distribution . Prior to the Effective Time and subject to the terms and conditions set forth herein, the Parties shall take, or cause to be taken, the following actions in connection with the Distribution:

(a) Notice to NYSE . CHS shall, to the extent possible, give the NYSE not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.

(b) Securities Law Matters . QHC shall file any amendments or supplements to the Registration Statement as may be necessary or advisable in order to cause the Registration Statement to become and remain effective as required by the Commission or federal, state or other applicable securities Laws. CHS and QHC shall cooperate in preparing, filing with the Commission and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or advisable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. CHS and QHC shall take all such action as may be necessary or advisable under the securities or blue sky Laws of the United States (and any comparable Laws under any non-U.S. jurisdiction) in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

(c) Distribution of Information Statement . CHS shall, as soon as is reasonably practicable after the Registration Statement is declared effective under the Exchange Act and the CHS Board has approved the Distribution, cause the Information Statement to be made available to the Record Holders.

(d) The Distribution Agent . CHS shall enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.

(e) Stock-Based Employee Benefit Plans . At or prior to the Effective Time, CHS and QHC shall take all actions as may be necessary to approve the stock-based employee benefit plans of QHC in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the NYSE.

 

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(f) Satisfying Conditions to Distribution . CHS and QHC shall cooperate to cause the conditions to the Distribution set forth in this Article III to be satisfied and to effect the Distribution at the Effective Time.

Section 3.02. The Distribution . Subject to the terms and conditions contained herein:

(a) Delivery of QHC Common Stock . On or prior to the Distribution Date, CHS shall deliver to the Agent, for the benefit of the Record Holders, book-entry transfer authorizations for such number of the outstanding shares of QHC Common Stock as is necessary to effect the Distribution.

(b) Effective Time of Distribution . The Distribution shall be effective at the Effective Time.

(c) Distribution of Shares and Cash . CHS shall instruct the Agent to distribute, as soon as practicable following the Effective Time, to each Record Holder the following:

(i) one share of QHC Common Stock for every four (4) CHS Common Shares held by such Record Holder as of the Record Date; and

(ii) cash, if applicable, in lieu of fractional shares obtained in the manner provided in Section 3.03 .

(d) Transfer Authorizations . QHC agrees to provide all book-entry transfer authorizations for shares of QHC Common Stock that CHS or the Agent shall require (after giving effect to Section 3.03 ) in order to effect the Distribution.

Section 3.03. Fractional Shares; Unclaimed Shares .

(a) No Fractional Shares . Notwithstanding anything herein to the contrary, no fractional shares of QHC Common Stock shall be issued in connection with the Distribution, and any such fractional share interests to which a Record Holder would otherwise be entitled shall not entitle such Record Holder to vote or to any other rights as a stockholder of QHC. In lieu of any such fractional shares, each Record Holder who, but for the provisions of this Section 3.03 , would be entitled to receive a fractional share interest of QHC Common Stock pursuant to the Distribution, shall be paid cash, without any interest thereon, as hereinafter provided. CHS shall instruct the Agent to determine the number of whole shares and fractional shares of QHC Common Stock allocable to each Record Holder, to aggregate all such fractional shares into whole shares, to sell the whole shares obtained thereby in the open market at the then-prevailing prices on behalf of each Record Holder who otherwise would be entitled to receive fractional share interests and to distribute to each such Record Holder his, her or its ratable share of the total proceeds of such sale, after making appropriate deductions of the amounts required for U.S. federal income tax withholding purposes and after deducting any applicable transfer Taxes and the costs and expenses of such sale and distribution, including brokers fees and commissions. The sales of fractional shares shall occur as soon after the Effective Time as practicable and as determined by the Agent. None of CHS, QHC or the Agent shall guarantee any minimum sale price for the fractional shares of CHS Common Stock. Neither CHS nor QHC shall pay any

 

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interest on the proceeds from the sale of fractional shares. The Agent shall have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Agent nor the broker-dealers through which the aggregated fractional shares are sold shall be Affiliates of CHS or QHC.

(b) Beneficial Owners . Solely for purposes of computing fractional share interests pursuant to this Section 3.03 , the beneficial owner of CHS Common Stock held of record in the name of a nominee in any nominee account shall be treated as the holder of record with respect to such shares.

(c) Unclaimed Stock or Cash . Any QHC Common Stock or cash in lieu of fractional shares with respect to QHC Common Stock that remain unclaimed by any Record Holder one hundred and eighty (180) days after the Distribution Date shall be delivered to QHC, QHC shall hold such QHC Common Stock for the account of such Record Holder and the Parties agree that all obligations to provide such QHC Common Stock and cash, if any, in lieu of fractional share interests shall be obligations of QHC, subject in each case to applicable escheat or other abandoned property Laws, and CHS shall have no Liability with respect thereto.

(d) Equity Incentive Programs . Effective upon the Distribution, CHS shall take, or cause to be taken, all actions necessary so that each outstanding CHS Option, CHS Restricted Stock Award, and CHS RSU Award (each as defined in the Employee Matters Agreement) granted under a CHS Stock Program (as defined in the Employee Matters Agreement) shall be adjusted as provided in Section 5.01 of the Employee Matters Agreement.

Section 3.04. Sole Discretion of CHS . Notwithstanding anything to the contrary set forth in this Agreement or in any Ancillary Agreement, until the Effective Time, CHS shall have the sole discretion to determine whether to proceed with the Distribution and any and all terms of the Distribution, including the form, structure and terms of any transaction(s) or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution. In addition, CHS may, in its sole discretion, determine the Distribution Date and may, at any time and from time to time until the Effective Time, modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of the Distribution.

Section 3.05. Conditions to the Distribution .

(a) The Conditions . In addition to CHS’ rights under Section 3.04 , the Distribution shall not occur unless each of the following conditions shall have been satisfied (or waived by CHS, in whole or in part, in its sole discretion):

(i) the Separation shall have been completed in accordance with the Plan of Separation, including the transfer to QHC of the QHC Assets (other than any Delayed QHC Assets) and the assumption by QHC of the QHC Liabilities (other than any Delayed QHC Liability), as well as the transfer to QHC of the permits, licenses and registrations relating to the QHC Business, except for such steps as CHS in its sole discretion shall have determined may be completed after the Distribution Date;

 

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(ii) the Registration Statement shall have been declared effective by the Commission; no stop-order shall be in effect with respect thereto; no Proceeding for that purpose shall have been instituted or threatened by the Commission; and the Information Statement shall have been made available to the Record Holders;

(iii) the QHC Financing Transactions shall have been completed and QHC shall have made the distributions of cash and senior notes in accordance with Schedule 2.07 ;

(iv) the QHC Common Stock to be distributed in the Distribution shall have been accepted for listing on the NYSE, subject to official notice of issuance;

(v) no order, injunction or decree issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of all or any portion of the Distribution or any of the other transactions related thereto, including the Separation, contemplated by this Agreement or any Ancillary Agreement shall be pending, threatened, issued or in effect, and no other event shall have occurred or failed to occur that prevents the consummation of all or any portion of the Distribution;

(vi) CHS shall have obtained an opinion from its outside tax advisor that remains in effect as of the distribution date, in form and substance satisfactory to CHS, as to the satisfaction of certain requirements necessary for the distribution, together with certain related transactions, to qualify as generally tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code;

(vii) the CHS Board shall have approved the Separation and the Distribution, which approval may be given or withheld at its absolute and sole discretion, and no other events or developments shall have occurred or exist that, in the judgment of the CHS Board, in its sole discretion, makes it inadvisable to effect the Separation, the Distribution or the other transactions contemplated by this Agreement or any Ancillary Agreement;

(viii) the Parties shall have executed and delivered or, where applicable, shall have caused their respective Subsidiaries to execute and deliver, the Ancillary Agreements that are contemplated by this Agreement to be executed and delivered on or prior to the Effective Time;

(ix) an independent appraisal firm acceptable to CHS shall have delivered one or more opinions to the CHS Board confirming the solvency and financial viability of CHS before the consummation of the Distribution and each of CHS and QHC after consummation of the Distribution, and such opinions shall be acceptable to CHS in form and substance in CHS’ sole discretion and such opinions shall not have been withdrawn or rescinded;

(x) all permits, registrations and Consents necessary to consummate the Distribution shall have been received;

(xi) QHC and/or the designated QHC Subsidiaries shall have received the Transferred Cash Amount;

 

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(xii) CHS shall have taken all necessary action, in the judgment of the CHS Board, to cause the board of directors of QHC to consist of the individuals identified in the Information Statement as directors of QHC; and

(xiii) all necessary actions shall have been taken to adopt the Certificate of Incorporation and the By-laws.

(b) Conditions for Benefit of CHS . The foregoing conditions are for the sole benefit of CHS and not for the benefit of any other Person and shall not give rise to nor create any duty on the part of CHS or the CHS Board to waive or not waive any such condition or in any way limit CHS’ right to terminate this Agreement as set forth in Article IX or alter the consequences of any such termination from those specified in such Article IX . Any determination made by CHS prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.05 shall be conclusive and binding on the Parties hereto. If CHS waives any material condition, it shall promptly issue a press release disclosing such fact and file a report on Form 8-K with the Commission describing such waiver.

ARTICLE IV

MUTUAL RELEASES; INDEMNIFICATION

Section 4.01. Releases .

(a) QHC Release of CHS . Except as provided in Section 4.01(c) and in the provisos to this Section 4.01(a) , effective as of the Effective Time, QHC does hereby, for itself, each of the QHC Subsidiaries, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been directors, officers, agents or employees of QHC or any of the QHC Subsidiaries (in each case, in their respective capacities as such), remise, release and forever discharge: (1) CHS, each CHS Subsidiary, and their respective successors and assigns; (2) all Persons who at any time are or have been shareholders, directors, officers, agents or employees of CHS or a CHS Subsidiary (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns; and (3) all Persons who at any time prior to the Effective Time are or have been shareholders, directors, officers, agents or employees of a Transferred Entity and who are not, as of immediately following the Effective Time, directors, officers or employees of QHC or a QHC Subsidiary, in each such case from:

(i) all QHC Liabilities; and

(ii) any other Liabilities existing or arising: (A) in connection with the implementation of the Separation and the Distribution; or (B) from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the QHC Business, the QHC Assets or the QHC Liabilities;

 

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provided , however , that nothing in this Section 4.01(a)  shall release the Persons described in this Section 4.01(a)  from: (x) any Liability expressly allocated to CHS or a CHS Subsidiary in this Agreement (including the indemnification obligations in Section 4.03 and the contribution obligations in Section 4.07 ), any Ancillary Agreement or any other agreement, arrangement, commitment or understanding to the extent expressly preserved pursuant to Section 2.08(b) ; (y) any Intercompany Account that is not settled, capitalized, cancelled, assigned or assumed by QHC or one or more QHC Subsidiaries prior to the Effective Time; or (z) any Liability the release of which would result in the release of any Person other than the Persons described in this Section 4.01(a) , and, provided , further , that nothing in this Section 4.01(a)  shall relieve any Person released in this Section 4.01(a)  who, after the Effective Time, is a director, officer or employee of QHC or a QHC Subsidiary and is no longer a director, officer or employee of CHS or a CHS Subsidiary from Liabilities arising out of, relating to or resulting from his or her service as a director, officer or employee of QHC or any of the QHC Subsidiaries after the Effective Time.

(b) CHS Release of QHC . Except as provided in Section 4.01(c)  and in the proviso to this Section 4.01(b) , effective as of the Effective Time, CHS does hereby, for itself, each of the CHS Subsidiaries, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been directors, officers, agents or employees of CHS or any of the CHS Subsidiaries (in each case, in their respective capacities as such), remise, release and forever discharge QHC, each QHC Subsidiary and their respective successors and assigns from:

(i) all CHS Liabilities; and

(ii) any other Liabilities existing or arising: (A) in connection with the implementation of the Separation and the Distribution; or (B) from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the CHS Business, the CHS Assets or the CHS Liabilities;

provided , however , that nothing in this Section 4.01(b)  shall release the Persons described in this Section 4.01(b) from: (x) any Liability expressly allocated to QHC or a QHC Subsidiary in this Agreement (including the indemnification obligations in Section 4.02 and the contribution obligations in Section 4.07 ), any Ancillary Agreement or any other agreement, arrangement, commitment or understanding to the extent expressly preserved pursuant to Section 2.08(b) ; (y) any Intercompany Account that is not settled, capitalized, cancelled, assigned or assumed by QHC or one or more QHC Subsidiaries prior to the Effective Time; or (z) any Liability the release of which would result in the release of any Person other than the Persons released in this Section 4.01(b) .

(c) CHS Obligations Not Affected . Nothing contained in this Article IV shall release CHS or a CHS Subsidiary from honoring its obligations existing immediately prior to the Effective Time to (i) indemnify any director, officer or employee of QHC or a QHC Subsidiary who was a director, officer or employee of CHS or a CHS Subsidiary or Quorum Health

 

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Resources on or prior to the Effective Time, to the extent such director, officer or employee was entitled in such capacity to such indemnification pursuant to obligations existing immediately prior to the Effective Time; provided that if a director of QHC receives indemnification payments from CHS or QHC, as the case may be, with respect to a particular Liability for which such director is entitled to indemnification, such director shall not be entitled to receive indemnification payments from the other Party with respect to the same Liability to the extent of the indemnification payments previously received by such director from CHS or QHC, as the case may be; provided , further , that (A) to the extent the events underlying an indemnification claim would give rise to a CHS Liability, then CHS shall have primary responsibility for the administration of the indemnification claim and (B) to the extent that the events underlying an indemnification claim would give rise to a QHC Liability, then QHC shall have primary responsibility for the administration of the indemnification claim; or (ii) provide any employment, post-employment or retirement benefits to any director, officer or employee of QHC or a QHC Subsidiary who was a director, officer or employee of CHS or a CHS Subsidiary on or prior to the Effective Time, to the extent such director, officer or employee was entitled to such benefits pursuant to obligations existing immediately prior to the Effective Time, except as otherwise provided in the Employee Matters Agreement.

(d) No QHC Claims . Without limiting the rights of either Party under Section 4.04 , 4.05 or 4.06 , QHC shall not make, and shall not permit a QHC Subsidiary to make, any claim or demand, or commence any Proceeding asserting any claim or demand, including any claim of contribution or indemnification, against CHS or a CHS Subsidiary or any other Person released pursuant to Section 4.01(a) , with respect to any Liabilities released pursuant to Section 4.01(a) .

(e) No CHS Claims . Without limiting the rights of either Party under Section 4.04 , 4.05 or 4.06 , CHS shall not make, and shall not permit a CHS Subsidiary to make, any claim or demand, or commence any Proceeding asserting any claim or demand, including any claim of contribution or indemnification, against QHC or a QHC Subsidiary or any other Person released pursuant to Section 4.01(b) , with respect to any Liabilities released pursuant to Section 4.01(b) .

(f) Subsidiary Releases . At any time at or after the Effective Time, at the request of either Party, the other Party shall cause its Subsidiaries to execute and deliver releases reflecting the provisions of this Section 4.01 .

Section 4.02. Indemnification by QHC . Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, QHC and each of the QHC Subsidiaries shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless each of the CHS Indemnitees from and against all QHC Indemnity Obligations, including, to the fullest extent permitted by Law, the advancement and reimbursement of expenses, including attorneys’ fees and costs, incurred with respect to a QHC Indemnity Obligation; provided , however , that the indemnity in this Section 4.02 for QHC Liabilities shall not extend to a past, present or future director, officer, employee or agent of QHC or a QHC Subsidiary to the extent such Person would not be eligible for indemnification under the terms of (i) CHS’ certificate of incorporation or bylaws in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter; or (ii) the directors’ and

 

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officers’ insurance policy of CHS would not cover such Person in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter. Notwithstanding the foregoing, the indemnification provided for in this Section 4.02 shall exclude, and QHC shall have no responsibility for, Liability arising out of or relating to acts, practices or omissions engaged in after the Distribution Date by CHS or any of its respective Subsidiaries or Affiliates.

Section 4.03. Indemnification by CHS . Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, CHS and each of the CHS Subsidiaries shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless each of the QHC Indemnitees from and against all CHS Indemnity Obligations, including, to the fullest extent permitted by Law, the advancement and reimbursement of expenses, including attorneys’ fees and costs, incurred with respect to a CHS Indemnity Obligation; provided , however , that the indemnity in this Section 4.03 for CHS Liabilities shall not extend to a past, present or future director, officer, employee or agent of CHS or a CHS Subsidiary to the extent such Person would not be eligible for indemnification under the terms of (i) the Certificate of Incorporation or the By-laws in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter or (ii) the directors’ and officers’ insurance policy of QHC would not cover such Person in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter. Notwithstanding the foregoing, the indemnification provided for in this Section 4.03 shall exclude, and CHS shall have no responsibility for, Liability arising out of or relating to acts, practices or omissions engaged in after the Distribution Date by QHC or any of its respective Subsidiaries or Affiliates.

Section 4.04. Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

(a) Insurance Proceeds and Other Amounts . The Parties intend that any Losses subject to indemnification or contribution pursuant to this Agreement or any Ancillary Agreement: (i) shall be reduced by any Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of any indemnifiable Losses; (ii) shall not be increased to take into account any Tax costs incurred by the Indemnitee arising from any Indemnity Payments received from the Indemnifying Party (as defined below); and (iii) shall not be reduced to take into account any Tax benefit received by the Indemnitee arising from the incurrence or payment of any Indemnity Payment; provided that Sections 4.04(a)(ii) and 4.04(a)(iii) shall not apply to Indemnity Payments made pursuant to the Tax Matters Agreement. Accordingly, the amount which either Party against whom a claim is made for indemnification under this Agreement (an “ Indemnifying Party ”) is required to pay to any Indemnitee shall be reduced by any Insurance Proceeds or any other amounts theretofore actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) by or on behalf of the Indemnitee in respect of the related Loss. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Loss (an “ Indemnity Payment ”) and subsequently receives Insurance Proceeds or any other amounts in respect of the related Loss, then the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been

 

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due if the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or expenses incurred in the collection thereof) had been received, realized or recovered before the Indemnity Payment was made.

(b) Insurers and Other Third Parties Not Relieved . The Parties hereby agree that an insurer or other Third Party that would otherwise be obligated to pay any amount shall not be relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto by virtue of any provision contained in this Agreement or any Ancillary Agreement, and that no insurer or any other Third Party shall be entitled to a “windfall” (e.g., a benefit they would not be entitled to receive in the absence of the indemnification or release provisions) by virtue of any provision contained in this Agreement or any Ancillary Agreement. Each Party shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to collect or recover, or allow the Indemnifying Party to collect or recover, any Insurance Proceeds that may be collectible or recoverable respecting the Losses for which indemnification may be available under this Article IV . Notwithstanding the foregoing, an Indemnifying Party may not delay making any indemnification payment required under the terms of this Agreement, or otherwise satisfying any indemnification obligation, pending the outcome of any Proceeding to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Ancillary Agreement.

Section 4.05. Procedures for Indemnification of Third Party Claims .

(a) Notice of Claims . If, at or following the date of this Agreement, an Indemnitee receives notice or otherwise learns of the assertion or commencement by a Third Party of any Proceeding against the Indemnitee with respect to which the Indemnitee believes that QHC (in the case of a CHS Indemnitee) or CHS (in the case of a QHC Indemnitee) is obligated to provide indemnification to such Indemnitee pursuant to this Agreement or any Ancillary Agreement (collectively, a “ Third Party Claim ”), such Indemnitee shall give such Indemnifying Party Notice thereof within ten (10) days (or sooner if the nature of the Third Party Claim so requires) after becoming aware of such Third Party Claim. The Notice must describe the Third Party Claim in reasonable detail or, in the alternative, include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim. Notwithstanding the foregoing, the failure of any Indemnitee to give the Notice as provided in this Section 4.05(a)  shall not relieve the related Indemnifying Party of its obligations under this Article IV , except to the extent that such Indemnifying Party is actually prejudiced by such failure to give the Notice in accordance with this Section 4.05(a) .

(b) Control of Defense . An Indemnifying Party may elect to defend (and seek to settle or compromise), at its own expense and with its own counsel, any Third Party Claim. Within thirty (30) days after the receipt of a Notice from an Indemnitee in accordance with Section 4.05(a)  (or sooner, if the nature of the Third Party Claim so requires), the Indemnifying Party shall provide a Notice to the Indemnitee indicating whether the Indemnifying Party shall assume responsibility for defending the Third Party Claim and specifying any reservations or exceptions to its defense. If an Indemnifying Party elects not to assume responsibility for defending any Third Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a Notice from an Indemnitee as provided in Section 4.05(a) , then the Indemnitee that is the subject of such Third Party Claim shall be entitled to continue to conduct and control the defense of such Third Party Claim.

 

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(c) Allocation of Defense Costs . If an Indemnifying Party has elected to assume the defense of a Third Party Claim, whether with or without any reservations or exceptions with respect to such defense, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred during the course of its defense of such Third Party Claim, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense. If an Indemnifying Party elects not to assume responsibility for defending any Third Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a Notice from an Indemnitee as provided in Section 4.05(a) , and the Indemnitee conducts and controls the defense of such Third Party Claim, then the Indemnifying Party shall be liable for all reasonable fees and expenses incurred by the Indemnitee in connection with the defense of such Third Party Claim.

(d) Right to Monitor and Participate . An Indemnitee that does not conduct and control the defense of any Third Party Claim, or an Indemnifying Party that has failed to elect to defend any Third Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third Party Claim for which it is a potential Indemnitee or Indemnifying Party, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 4.05(c)  shall not apply to such fees and expenses. Notwithstanding the foregoing, subject to Sections 7.06 and 7.07 , such Party shall cooperate with the Party entitled to conduct and control the defense of such Third Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto as are reasonably required by the controlling Party. In addition to the foregoing, if any Indemnitee shall in good faith determine that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of such counsel for all Indemnitees.

(e) No Settlement . Neither Party may settle or compromise any Third Party Claim for which either Party is seeking to be indemnified hereunder without the prior written consent of the other Party, which consent may not be unreasonably withheld, unless such settlement or compromise is solely for monetary damages, does not involve any finding or determination of wrongdoing or violation of Law by the other Party and provides for a full, unconditional and irrevocable release of the other Party from all Liability in connection with the Third Party Claim. The Parties hereby agree that if a Party presents the other Party with a Notice containing a proposal to settle or compromise a Third Party Claim for which either Party is seeking to be indemnified hereunder and the Party receiving such proposal does not respond in any manner to the Party presenting such proposal within thirty (30) days (or within any such

 

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shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Party receiving such proposal shall be deemed to have consented to the terms of such proposal.

(f) Pending Third Party Claims . The provisions of this Article IV shall apply to Third Party Claims that are already pending or asserted as well as Third Party Claims brought or asserted after the date of this Agreement. There shall be no requirement under this Section 4.05 to give a Notice with respect to any Third Party Claims that exist as of the Effective Time.

(g) Allocation of Proceeding Liabilities . The Parties acknowledge that Liabilities for Proceedings (regardless of the parties to the applicable Proceeding) may be partly CHS Liabilities and partly QHC Liabilities. In such event, the Parties shall cooperate in good faith in regard to the evaluation, defense, prosecution, and/or pursuit in respect of such Proceeding. If the Parties cannot agree on an allocation of any such Liabilities for Proceedings, they shall resolve the matter pursuant to the procedures set forth in Article VIII . Neither Party shall, nor shall either Party permit its Subsidiaries to, file Third Party claims or cross-claims against the other Party or its Subsidiaries in a Proceeding in which a Third Party Claim is being resolved.

Section 4.06. Additional Matters .

(a) Timing of Payments . Indemnity Payments or contribution payments in respect of any Losses for which an Indemnitee is entitled to indemnification or contribution under this Article IV shall be paid reasonably promptly (but in any event within sixty (60) days of the final determination of the amount that the Indemnitee is entitled to indemnification or contribution under this Article IV)  by the Indemnifying Party to the Indemnitee as such Losses are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such Indemnity Payments or contribution payments, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Losses. The indemnity and contribution provisions contained in this Article IV shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; and (ii) the knowledge by the Indemnitee of Losses for which it might be entitled to indemnification or contribution hereunder.

(b) Notice of Direct Claims . Any claim for indemnification under this Agreement or any Ancillary Agreement which does not result from a Third Party Claim (a “ Direct Claim ”) must be asserted by a Notice given by the Indemnitee to the applicable Indemnifying Party; provided , that the failure by an Indemnitee to so assert any such Direct Claim shall not prejudice the ability of the Indemnitee to do so at a later time except to the extent (if any) that the Indemnifying Party is prejudiced thereby. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such Notice within which to respond thereto. If such Indemnifying Party does not respond within such thirty (30)-day period, such Direct Claim specified in such Notice shall be conclusively deemed a Liability of the Indemnifying Party under this Section 4.06(b) or, in the case of any Notice in which the amount of the Direct Claim (or any portion thereof) is estimated, on such later date when the amount of such Direct Claim

 

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(or such portion thereof) becomes finally determined. If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such Indemnitee as contemplated by this Agreement or the Ancillary Agreements, as applicable, without prejudice to its continuing rights to pursue indemnification or contribution hereunder.

(c) Subrogation . In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(d) Pursuit of Claims Against Third Parties . If (i) a Party incurs any Liability arising out of this Agreement or any Ancillary Agreement; (ii) an adequate legal or equitable remedy is not available for any reason against the other Party to satisfy the Liability incurred by the incurring Party; and (iii) a legal or equitable remedy may be available to the other Party against a Third Party for such Liability, then the other Party shall use its commercially reasonable efforts to cooperate with the incurring Party, at the incurring Party’s expense, to permit the incurring Party to obtain the benefits of such legal or equitable remedy against the Third Party.

(e) Substitution . In any Proceeding in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the named defendant if they conclude that substitution is desirable and practicable. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Proceeding as set forth in Section 4.05 and this Section 4.06 , and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Proceeding (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement.

Section 4.07. Right of Contribution .

(a) Contribution . If any right of indemnification contained in Section 4.02 or 4.03 is held unenforceable or is unavailable for any reason, or is insufficient to hold harmless an Indemnitee in respect of any Loss for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts paid or payable by the Indemnitees as a result of such Loss (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and its Subsidiaries, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.

 

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(b) Allocation of Relative Fault . Solely for purposes of determining relative fault pursuant to this Section 4.07 : (i) any fault associated with the business conducted with Delayed QHC Assets or Delayed QHC Liabilities (except for the gross negligence or intentional misconduct of CHS or a CHS Subsidiary) or with the ownership, operation or activities of the QHC Business prior to the Effective Time shall be deemed to be the fault of QHC and the QHC Subsidiaries, and no such fault shall be deemed to be the fault of CHS or a CHS Subsidiary; and (ii) any fault associated with the business conducted with Delayed CHS Assets or Delayed CHS Liabilities (except for the gross negligence or intentional misconduct of QHC or a QHC Subsidiary) or with the ownership, operation or activities of the CHS Business prior to the Effective Time shall be deemed to be the fault of CHS and the CHS Subsidiaries, and no such fault shall be deemed to be the fault of QHC or a QHC Subsidiary.

(c) Contribution Procedures . The provisions of Sections 4.04 through 4.10 and Sections 6.03 through 6.06 shall govern any contribution claims.

Section 4.08. Covenant Not to Sue . Each Party hereby covenants and agrees that none of it, its Subsidiaries or any Person claiming through it shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, neutral mediator or administrative agency anywhere in the world, alleging that: (a) the assumption of any QHC Liabilities by QHC and the QHC Subsidiaries on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; (b) the retention of any CHS Liabilities by CHS and the CHS Subsidiaries on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason, or (c) the provisions of this Article IV are void or unenforceable for any reason.

Section 4.09. Remedies Cumulative . The remedies provided in this Article IV shall be cumulative and, subject to the provisions of Sections 4.08 and 8.01 , shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 4.10. Survival of Indemnities . The rights and obligations of each of the Parties and their respective Indemnitees under this Article IV shall survive (a) the sale or other transfer by either Party or any of its respective Subsidiaries of any assets or businesses or the assignment by it of any Liabilities; or (b) any merger, consolidation, business combination, sale of all or substantially all of the Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any of its respective Subsidiaries.

Section 4.11. Coordination with Ancillary Agreements .

(a) The provisions of Sections 4.2 through 4.10 hereof shall not apply with respect to Taxes or Tax matters (including the control of Tax related proceedings), which shall be governed by the Tax Matters Agreement. In the case of any conflict between this Agreement and the Tax Matters Agreement in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall control.

 

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(b) The provisions of Sections 4.2 through 4.10 hereof shall not apply (except as expressly set forth in the applicable Ancillary Agreement) with respect to the representations, warranties, covenants and agreements set forth in the Transition Services Agreements or the Employee Matters Agreement, which shall be governed by the applicable terms of such Ancillary Agreement, respectively.

ARTICLE V

INSURANCE MATTERS

Section 5.01. Insurance Matters .

(a) CHS and QHC agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Effective Time. In no event shall CHS, any other member of the CHS Group or any CHS Indemnitee have Liability or obligation whatsoever to any member of the QHC Group in the event that any insurance policy or other contract or policy of insurance is terminated or otherwise cease to be in effect for any reason, is unavailable or inadequate to cover any Liability of any member of the QHC Group for any reason whatsoever, or is not be renewed or extended beyond the current expiration date. Furthermore, QHC acknowledges and agrees, on its own behalf and on behalf of each of the QHC Subsidiaries, that, from and after the Effective Time, neither QHC nor any of the QHC Subsidiaries shall have any rights to or under any of CHS’ or the CHS Subsidiaries’ insurance policies, other than any insurance policies acquired prior to the Effective Time directly by and in the name of a member of QHC or any of the QHC Subsidiaries or as expressly provided in this Section 5.01 or in the Employee Matters Agreement.

(b) All insurance policies and programs acquired prior to the Effective Time by or held in the name of Quorum Health Resources (the “ QHR Policies ”) shall be retained by Quorum Health Resources and Quorum Health Resources shall retain responsibility for and have the exclusive right to control Insurance Administration with respect to the QHR Policies and any and all other rights with respect to the QHR Policies.

(c) Notwithstanding Section 5.01(a) and except as provided in Section 5.01(b) , from and after the Effective Time, with respect to any losses, damages and Liability incurred by any member of the QHC Group prior to the Effective Time:

(i) QHC shall report any claim to CHS, as promptly as practicable, and in any event in sufficient time so that CHS may make such claim in accordance with CHS’ claim reporting procedures then in effect;

(ii) Except to the extent such loss is a CHS Indemnity Obligation, QHC and the members of the QHC Group shall indemnify, hold harmless and reimburse CHS and the members of the CHS Group for any deductibles, self-insured retention (other than any such retention under a CHS Group captive insurance arrangement), fees and expenses incurred by CHS or any members of the CHS Group to the extent resulting from any claims made by CHS or any other members of the CHS Group under any CHS Insurance Policy, including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by CHS, its employees or third Persons (it being understood that amounts recovered under a CHS Group captive insurance arrangement shall not be deemed to be fees and expenses incurred by CHS or any member of the CHS Group); and

 

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(iii) Except to the extent such loss is a CHS Indemnity Obligation, QHC shall exclusively bear (and neither CHS nor any members of the CHS Group shall have any obligation to repay or reimburse QHC or any member of the QHC Group for) and shall be liable for all uninsured, uncovered, unavailable or uncollectible amounts of any claims made by CHS or any member of the CHS Group under the CHS Insurance Policies. In the event an insurance policy aggregate is exhausted, or believed likely to be exhausted, due to noticed claims, the QHC Group, on the one hand, and the CHS Group, on the other hand, shall be responsible for their pro rata portion of the reinstatement premium, if any, based upon the losses of such Group submitted to CHS’ insurance carrier(s) (including any submissions prior to the Effective Time). To the extent that the CHS Group or the QHC Group is allocated more than its pro rata portion of such premium due to the timing of losses submitted to CHS’ insurance carrier(s), the other party shall promptly pay the first party an amount so that each Group shall be properly allocated its pro rata portion of the reinstatement premium. Subject to the following sentence, CHS may elect not to reinstate the policy aggregate. In the event that CHS elects not to reinstate the policy aggregate, it shall provide prompt written notice to QHC, and QHC may direct CHS in writing to, and CHS shall, in such case, reinstate the policy aggregate; provided, that QHC shall then be responsible for all reinstatement premiums and other costs associated with such reinstatement.

In the event that any member of the CHS Group incurs any losses, damages or Liability prior to or in respect of the period prior to the Effective Time for which such member of the CHS Group is entitled to coverage under QHC’s insurance policies, the same process pursuant to this Section 5.01(c) shall apply, substituting “CHS” for “QHC” and “QHC” for “CHS.”

(d) Any payments, costs and adjustments required pursuant to Section 5.01(c)  shall be billed by CHS, on behalf of itself and the CHS Subsidiaries, to QHC on a monthly basis and QHC, on behalf of itself and the QHC Subsidiaries, shall pay such payments, costs and adjustments to CHS within thirty (30) days from receipt of invoice. If CHS incurs costs to enforce QHC’s obligations under this Section 5.01 , QHC agrees to indemnify CHS for such enforcement costs, including reasonable attorneys’ fees.

(e) From and after the Effective Time, neither QHC nor any member of the QHC Group shall have any rights to or under any of the insurance policies of CHS or any other member of the CHS Group. Such CHS insurance programs include general liability, commercial auto liability, workers’ compensation, employers liability, product liability, professional services and malpractice liability, property, cargo, employment practices liability, employee dishonesty/crime, aircraft hull and liability, directors’ and officers’ liability, fiduciary liability and special accident. At the Effective Time, QHC shall have in effect all insurance programs required to comply with QHC’s statutory and contractual obligations and such other insurance policies as reasonably necessary or customary for companies operating a business similar to the QHC Business.

(f) Neither QHC nor any member of the QHC Group, in connection with making a claim under any insurance policy of CHS or any member of the CHS Group pursuant to this Section 5.01 , shall take any action (other than the act of making the claim) that would be

 

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reasonably likely to (i) have an adverse impact on the then-current relationship between CHS or any member of the CHS Group, on the one hand, and the applicable insurance company, on the other hand; (ii) result in the applicable insurance company terminating or reducing coverage, or increasing the amount of any premium owed by CHS or any member of the CHS Group under the applicable insurance policy; or (iii) otherwise compromise, jeopardize or interfere with the rights of CHS or any member of the CHS Group under the applicable insurance policy. CHS and the other members of the CHS Group, in connection with reporting, administering or handling a claim on behalf of QHC or any member of the QHC Group under any insurance policy of CHS or any member of the CHS Group pursuant to this Section 5.01 , will use commercially reasonable efforts to avoid taking any action (other than the act of making the claim) that would be reasonably likely to have an adverse impact on the then-current relationship between QHC or any member of the QHC Group, on the one hand, and the applicable insurance company, on the other hand, if such insurance company is also an insurer of QHC or any member of the QHC Group.

(g) CHS shall retain responsibility for and have the exclusive right to control Insurance Administration of its insurance policies and programs and any and all other rights with respect to its insurance policies and programs, including the right to exhaust, settle, release, commute, buyback or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any QHC Liabilities and/or claims QHC has made or could make in the future, and no member of the QHC Group shall (without the prior written consent of CHS) erode, exhaust, settle, release, commute, buyback or otherwise resolve disputes with CHS’ insurers with respect to any of CHS’ insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs. QHC shall cooperate with CHS and share such information as is reasonably necessary to permit CHS to manage and conduct its insurance matters as it deems appropriate.

(h) QHC shall, and shall cause the members of the QHC Group to, use commercially reasonable efforts, at CHS’ reasonable request, to assist CHS in making claims under the CHS Insurance Policies. CHS shall, to the extent such recovery relates to a CHS Indemnity Obligation, promptly (and in any event within thirty (30) days after CHS’ receipt thereof) pay over to QHC or the applicable member of the QHC Group any Insurance Proceeds that are received by CHS or any member of the CHS Group in respect of such claims.

(i) Neither CHS nor any of the CHS Subsidiaries shall have any obligation to secure stand-alone policies or additional extending reporting coverage for any claims under any of CHS’ or the CHS Subsidiaries’ claims-made or occurrence-reported liability policies for any acts or omissions by QHC or any QHC Subsidiary incurred prior to the Effective Time.

(j) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of either CHS or any CHS Subsidiary in respect of any of the CHS insurance policies and programs or any other contract or policy of insurance.

(k) QHC does hereby, for itself and each other member of the QHC Group, agree that no member of the CHS Group shall have any liability whatsoever as a result of the

 

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insurance policies and practices of CHS and the members of the CHS Group as in effect at any time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.

(l) The Parties shall utilize the procedures set forth in Article VIII to resolve any disputes regarding the submission or pursuit of any claim under any CHS Insurance Policy.

ARTICLE VI

CERTAIN OTHER MATTERS

Section 6.01. Late Payments . Except as provided in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of the date of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.

Section 6.02. Treatment of Payments for Tax Purposes . For all Tax purposes, the Parties agree to treat (i) any payment required by this Agreement (other than payments with respect to interest accruing after the Effective Time) as either a contribution by CHS to QHC or a distribution by QHC to CHS, as the case may be, occurring immediately prior to the Effective Time or as a payment of an assumed or retained Liability; and (ii) any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise required by applicable Law.

Section 6.03. Inducement . QHC acknowledges and agrees that CHS’ willingness to cause, effect and consummate the Separation and the Distribution has been conditioned upon and induced by QHC’s covenants and agreements in this Agreement and the Ancillary Agreements, including QHC’s assumption of the QHC Liabilities pursuant to the Separation and the provisions of this Agreement and QHC’s covenants and agreements contained in Article IV .

Section 6.04. Post-Effective Time Conduct . The Parties acknowledge that, after the Effective Time, each Party shall be independent of the other Party, with responsibility for its own actions and inactions and its own Liabilities relating to, arising out of or resulting from the conduct of its business, operations and activities following the Effective Time, except as may otherwise be provided in any Ancillary Agreement, and each Party shall (except as otherwise provided in Article IV, including Sections 4.02 and 4.03 ) use commercially reasonable efforts to prevent such Liabilities from being inappropriately borne by the other Party.

Section 6.05. Non-Solicitation of Employees .

(a) Except as expressly set forth in this Agreement or the Employee Matters Agreement, each Party covenants, agrees and undertakes for itself and each other member of the Group to which such Party belongs, that, except with the written approval of the other Party, no Party nor any member of the Group to which such Party belongs shall, for a period of twenty-four (24) months following the Distribution Date, enter into any employment, consulting,

 

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independent contractor or similar arrangement with any employee or former employee of the other Party or employee or former employee of any member of the Group to which such other Party belongs except in accordance with Section 2.04(b) of the Employee Matters Agreement; provided , however, that from and after the one (1) year anniversary of the Distribution Date, the foregoing shall not prohibit either Party from hiring any employee or former employee of the other Party who responds to general solicitations made by the hiring Party to the public or the industry generally through advertising or electronic listings which are not targeted at employees of the other Party so long as such person has ceased to be an employee of the other Party for a period of at least sixty (60) days prior to the date of hire by the hiring Party. Notwithstanding the foregoing, this Section 6.05(a) shall only apply to management employees of the CHS Group or QHC Group, that also qualify as exempt employees under the federal Fair Labor Standards Act and as a Supervisor under Section 2(11) of the National Labor Relations Act.

(b) Each Party understands and agrees that the other Party shall suffer irreparable and substantial harm in the event that such Party breaches any of its obligations under this Section 6.04 and that monetary damages shall be inadequate to compensate for the breach. Accordingly, each Party agrees that, in the event of a breach or threatened breach by such Party of any of the provisions of this Section 6.04 , the other Party, in addition to and not in limitation of any other rights, remedies or damages available to the other Party under applicable Law or in equity, shall be entitled to equitable remedies, including provisional, interlocutory and permanent injunctive relief in order to prevent or to restrain any such breach by such Party or by any or all of such Party’s Group members, employees, agents, representatives and any and all Persons directly or indirectly acting for, on behalf of or with such Party.

ARTICLE VII

EXCHANGE OF INFORMATION; CONFIDENTIALITY

Section 7.01. Agreement for Exchange of Information .

(a) Exchange of Information . Except as otherwise provided in any Ancillary Agreement, each of CHS and QHC, on behalf of itself and its respective Subsidiaries and Affiliates, shall use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party, at any time before or after the Effective Time, as soon as reasonably practicable after written request therefor, any Information (or a copy thereof) in the possession or under the control of either Party or any of its Subsidiaries to the extent that (i) such Information relates to the QHC Business, or any QHC Asset or QHC Liability, if QHC is the requesting Party, or to the CHS Business, or any CHS Asset or CHS Liability, if CHS is the requesting Party; (ii) such Information is required by the requesting Party to comply with its obligations under this Agreement or any Ancillary Agreement; or (iii) such Information is required by the requesting Party to comply with any obligation imposed by any Governmental Authority. Notwithstanding the foregoing, this  Section 7.01  shall not require the Party to whom the request has been made to provide such information if such Party determines that doing so would, in the reasonable good faith judgment of such Party, reasonably be expected to result in any violation of any Law or agreement or waive any privilege available under applicable Law, including any attorney-client privilege;  provided , that the Parties shall use commercially reasonable efforts to cooperate in seeking to find a way to permit compliance with

 

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such obligations to the extent and in a manner that avoids such consequence. The Party providing Information pursuant to this Section 7.01(a)  shall only be obligated to provide such Information in the form, condition and format in which it then exists and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such Information, and nothing in this Section 7.01(a)  shall expand the obligations of the Parties under Section 7.03 .

(b) Access to Specified Information . Without limiting the generality of the foregoing, until the first QHC fiscal year end occurring after the Effective Time (and for a reasonable period of time afterwards as required for each of CHS and QHC to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each of CHS and QHC shall use its commercially reasonable efforts to cooperate with the other Party’s Information requests to enable (i) the other Party to meet its timetable for dissemination of its earnings releases, financial statements and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated under the Exchange Act; and (ii) the other Party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder and any other applicable Laws.

(c) Financial Reporting and Proxy Materials . Without limiting the generality of the foregoing, each Party shall deliver to the other Party a reasonably complete draft (to the extent practicable) of (i) its first annual report on Form 10-K to be filed with the Commission that includes its respective annual financial statements in the form expected to be covered by the audit report of such Party’s independent auditor and (ii) the proxy materials to be filed with the Commission in respect of such Party’s first annual meeting of stockholders following the Distribution Date (the documents described in clauses (i) and (ii), the “ Financial Reporting and Proxy Materials ”) at least fifteen (15) days prior to the expected date of filing and to deliver to the other Party any supplements, amendments or significant revisions following such delivery. Each Party shall notify the other Party as soon as reasonably practicable after it becomes aware of any material accounting differences between its Financial Reporting and Proxy Materials and the other Party’s Financial Reporting and Proxy Materials with respect to transactions or activities conducted prior to or at the Effective Time, and the Parties shall subsequently confer and use commercially reasonable efforts to consult with each other in good faith and resolve such differences prior to the filing of the applicable Financial Reporting and Proxy Materials.

(d) Medical Records and Patient Confidentiality . The Parties agree that in the performance of any obligation set forth in this Section 7.01 , the Parties shall protect the confidentiality of all patient records in accordance with the standards of all applicable local, state and federal laws and regulations relating to the patient records, specifically including the privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and the regulations promulgated thereunder and state requirements and in compliance with any applicable BA Agreement.

 

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(e) Compensation for Providing Information . Subject to any Ancillary Agreement or any other agreement between the Parties, the Party requesting Information agrees to reimburse the other Party for the reasonable costs, if any, of creating, gathering, copying, transporting and otherwise complying with the request with respect to such Information (including any reasonable costs and expenses incurred in any review of Information for purposes of protecting the Privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested Information). Except as may be otherwise specifically provided elsewhere in this Agreement or in any Ancillary Agreement, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.

Section 7.02. Ownership of Information . The provision of any Information pursuant to Section 7.01 shall not affect the ownership of such Information (which shall be determined solely in accordance with the terms of this Agreement and the Ancillary Agreements), or constitute the grant of rights in or to any such Information.

Section 7.03. Stored Records .

(a) The Parties agree and acknowledge that it is not practicable to separate all Tangible Information belonging to the Parties, and that following the Effective Time, each Party will have some of the Tangible Information of the other Party stored at internal or Third Party records storage locations (each, a “ Records Facility ”). Tangible Information held in a Records Facility maintained or arranged for by the Party other than the Party that owns such Tangible Information is referred to as “ Stored Records ”. The Party that maintains the Records Facility where Stored Records are held is referred to as the “ Custodial Party ” and the Party that owns the Stored Records held in the other Party’s Records Facility is referred to as the “ Non-Custodial Party ”.

(b) Each Party shall use commercially reasonable efforts: (i) to maintain the Stored Records as to which it is the Custodial Party in accordance with its regular records retention policies and procedures and the terms of this Section 7.03 ; (ii) to comply with the requirements of any applicable BA Agreement and any applicable privacy or security regulations promulgated under the Health Insurance Portability and Accountability Act of 1996, as amended; and (iii) to comply with the requirements of any “Litigation Hold” that relates to Stored Records as to which it is the Custodial Party that relate to (x) any Proceeding that is pending as of the Effective Time; or (y) any Proceeding that arises or becomes threatened or reasonably anticipated after the Effective Time as to which the Custodial Party has received a Notice of the applicable “Litigation Hold” from the Non-Custodial Party.

Section 7.04. Limitations of Liability . Neither Party shall have any Liability to the other Party in the event that any Information exchanged or provided pursuant to this Agreement is found to be inaccurate unless such inaccuracy is caused by the gross negligence or willful misconduct of the Party providing such Information. Neither Party shall have any Liability to any other Party if any Information is destroyed after commercially reasonable efforts by such Party to comply with the provisions of this Article VII .

 

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Section 7.05. Other Agreements Providing for Exchange of Information; Retention of Records .

(a) The rights and obligations set forth under this Article VII are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any Ancillary Agreement.

(b) Either Party that receives, pursuant to a request for Information in accordance with this Article VII , Tangible Information that is not relevant to its request shall (i) return it to the providing Party or, at the providing Party’s request, destroy such Tangible Information; and (ii) deliver to the providing Party a certificate certifying that such Tangible Information was returned or destroyed, as the case may be, which certificate shall be signed by an authorized Representative of the requesting Party.

(c) When any Tangible Information provided by one Party to the other Party (other than Tangible Information provided pursuant to Section 7.03 ) is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement or is no longer required to be retained by applicable Law, the receiving Party shall promptly, after request of the other Party, either return to the other Party all Tangible Information in the form in which it was originally provided (including all copies thereof and all notes, extracts or summaries based thereon) or, if the providing Party has requested that the other Party destroy such Tangible Information, certify to the other Party that it has destroyed such Tangible Information (and such copies thereof and such notes, extracts or summaries based thereon); provided that this obligation to return or destroy such Tangible Information shall not apply to any Tangible Information solely related to the receiving Party’s business, Assets, Liabilities, operations or activities.

(d) Except when a longer period is required by Law or is specifically provided for herein or in any Ancillary Agreement, each Party hereto shall take all necessary action to keep, or cause to be kept, in its original form or a copy thereof, for a period equal to the time required by the applicable CHS document retention policy, following the Distribution Date, all material Information relating to such Party’s Group and its operations prior to the Distribution Date; provided, however, that any party hereto may offer in writing to deliver to the other parties all or a portion of such information as it relates to the offering Party’s Group and, if such offer is accepted in writing within 90 days after receipt thereof, the offering Party shall promptly arrange for the delivery of such information (or copies thereof) to each accepting Party (at the expense of such accepting Party). If such offer is not so accepted, the offered information may be destroyed or otherwise disposed of by the offering Party at any time thereafter. With regard to patient records, each Party hereto shall maintain the patient records held at each of its Facilities (or delivered to it pursuant hereto) relating to periods prior to the Distribution Date in accordance with applicable Law, and requirements of relevant insurance carriers, and in a manner consistent with its maintenance of patient records generated at its Facilities after the Distribution Date. Each Party acknowledges that as a result of operating the Facilities it will gain access to patient and other information which is subject to rules and regulations regarding confidentiality, and agrees to abide by such rules and regulations with regard to such confidential information.

 

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Notwithstanding the foregoing, in the event any Party has notified the other in writing of any Proceeding with respect to with the other Party may have applicable books, records or other documents, the notified Party shall take commercially reasonable efforts to identify and preserve such books, records or other documents in accordance with the notified Party’s litigation hold/document preservation policies or such time as specified in writing by the notifying Party.

Section 7.06. Production of Witnesses; Records; Cooperation .

(a) After the Effective Time, except in the case of an adversarial Proceeding or Dispute between CHS and QHC or as prohibited by applicable Law, each Party shall use its reasonable best efforts (which shall not impose undue burden on such Party) to make available to the other Party, upon written request, the former and then-current directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its possession, custody or control, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Proceeding in which the requesting Party (or member of its Group) may from time to time be involved, regardless of whether such Proceeding is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all reasonable out-of-pocket costs and expenses in connection therewith.

(b) If an Indemnifying Party chooses to defend any Third Party Claim, the other Party shall make available to such Indemnifying Party (without undue burden to such other Party), upon written request, the former and then-current directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its possession, custody or control, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise cooperate in such defense, or such prosecution, evaluation or pursuit, as the case may be.

(c) Without limiting the foregoing, the Parties shall cooperate and consult with each other to the extent reasonably necessary with respect to any Proceedings.

(d) The obligation of the Parties to provide witnesses pursuant to this  Section 7.06  is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses employees and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict (subject to the exception set forth in the first sentence of  Section 7.06(a) ).

Section 7.07. Privileged Matters .

(a) The Parties recognize that legal and other professional services that have been and shall be provided prior to the Effective Time have been and shall be rendered for the collective benefit of the Parties and their respective Subsidiaries, and that each Party and its respective Subsidiaries should be deemed to be the client with respect to such services for the purposes of asserting all privileges and immunities that may be asserted under applicable Law in connection therewith.

 

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(b) The Parties agree as follows:

(i) CHS shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates primarily to the CHS Business, whether or not the Privileged Information is in the possession or under the control of CHS or a CHS Subsidiary or QHC or a QHC Subsidiary. CHS shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates primarily to any CHS Liabilities resulting from any Proceedings that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of CHS or a CHS Subsidiary or QHC or a QHC Subsidiary.

(ii) QHC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates primarily to the QHC Business, whether or not the Privileged Information is in the possession or under the control of QHC or a QHC Subsidiary or CHS or a CHS Subsidiary. QHC shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates primarily to any QHC Liabilities resulting from any Proceedings that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of QHC or a QHC Subsidiary or CHS or a CHS Subsidiary.

(iii) If CHS and QHC do not agree as to whether certain Information is Privileged Information, then the Information shall be treated as Privileged Information, and the Party who believes such Information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such Information unless the Parties otherwise agree. The Parties shall utilize the procedures set forth in Article VIII to resolve any disputes as to whether any Information relates primarily to the CHS Business, primarily to the QHC Business, or to both the CHS Business and the QHC Business.

(c) Subject to Sections 7.07(d) and 7.07(e) , the Parties agree that they shall have a shared privilege or immunity with respect to all privileges not allocated pursuant to Section 7.07(b) and all privileges and immunities relating to any Proceedings or other matters that involve both Parties (or one or more of their respective Subsidiaries) and in respect of which both Parties have Liabilities under this Agreement, and that no such shared privilege or immunity may be waived by either Party without the consent of the other Party.

(d) If any Dispute arises between CHS and QHC, or any of their respective Subsidiaries, regarding whether a privilege or immunity should be waived to protect or advance the interests of either Party and/or their respective Subsidiaries, each Party agrees that it shall (i) negotiate with the other Party in good faith; (ii) endeavor to minimize any prejudice to the rights of the other Party; and (iii) not unreasonably withhold consent to any request for waiver by the other Party. Further, each Party specifically agrees that it shall not withhold its consent to the waiver of a privilege or immunity for any purpose except to protect its own legitimate interests.

 

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(e) In the event of any adversarial Proceeding or Dispute between CHS and QHC, or any members of their respective Groups, in which CHS or QHC, or any member of their respective Groups, intend to make use of any Privileged Information with respect to which the other Party or member of such other Party’s Group has a shared privilege, each Party agrees that the Party making use of such Privileged Information shall do so in a manner reasonably calculated to preserve and not waive any privilege held by the other Party or member of such other Party’s Group with respect to such Privileged Information, including but not limited to filing or submitting such Privileged Information to a court or arbitrator under seal, and the Parties shall take all reasonable efforts to preserve the privilege and to protect against any waiver of the shared privilege with respect to any Third Party.

(f) Upon receipt by either Party, or by any member of its respective Group, of any subpoena, discovery or other request (or of written notice that it will or has received such subpoena, discovery or other request) that may reasonably be expected to result in the production or disclosure of Privileged Information subject to a shared privilege or immunity or as to which another Party has the sole right hereunder to assert a privilege or immunity, or if either Party obtains knowledge or becomes aware that any of its, or any member of its respective Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests (or have received written notice that they will or have received such subpoena, discovery or other requests) that may reasonably be expected to result in the production or disclosure of such Privileged Information, such Party shall promptly notify the other Party of the existence of the request (which notice shall be delivered to such other Party no later than five (5) business days following the receipt of (or of written notice that it will or has received) any such subpoena, discovery or other request) and shall provide the other Party a reasonable opportunity to review the Privileged Information and to assert any rights it or they may have, under this  Section 7.07  or otherwise, to prevent the production or disclosure of such Privileged Information;  provided , that if such Party is prohibited by applicable Law from disclosing the existence of the request, such Party shall provide written notice of such related information for which disclosure is not prohibited by applicable Law and use commercially reasonable efforts to inform the other Party of any related information such Party determines, in its discretion, is necessary or appropriate for the other Party to be informed of to enable the other Party to review the Privileged Information and to assert its rights, under this  Section 7.07  or otherwise, to prevent the production or disclosure of such Privileged Information

(g) Any furnishing of, or access to, Information pursuant to this Agreement is made in reliance on the agreement of CHS and QHC set forth in this Section 7.07 and in Section 7.08 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities. The Parties agree that their respective rights to any access to information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of Privileged Information between the Parties and members of their respective Groups pursuant to this Agreement, shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise. The Parties further agree that (i) the exchange by one Party to the other Party of any Privileged Information that should not have been transferred pursuant to the terms of this Article VII shall not be deemed to constitute a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise with respect to such Privileged Information; and (ii) the Party receiving such Privileged Information shall promptly return such Privileged Information to the Party who has the right to assert the privilege or immunity.

 

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(h) In furtherance of, and without limitation to, the Parties’ agreement under this Section 7.07 , CHS and QHC shall, and shall cause their applicable Subsidiaries to, use reasonable efforts to maintain their respective separate and joint privileges and immunities, including by executing joint defense and/or common interest agreements where necessary or useful for this purpose.

Section 7.08. Confidentiality .

(a) Confidentiality . From and after the Effective Time, subject to Section 7.09 and except as contemplated by or otherwise provided in this Agreement or any Ancillary Agreement, CHS, on behalf of itself and each of the CHS Subsidiaries, and QHC, on behalf of itself and each of the QHC Subsidiaries, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives (each, a “ Representative ”) to hold, in strict confidence, with at least the same degree of care that applies to CHS’ confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective businesses) that is either in its possession (including confidential and proprietary information in its possession prior to the Effective Time) or furnished by the other Party or the other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement or any Ancillary Agreement, and shall not use any such confidential and proprietary information other than for such purposes as may be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential and proprietary information has been: (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement; (ii) later lawfully acquired from other sources by such Party or any of its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information; or (iii) independently developed or generated without reference to or use of the respective proprietary or confidential information of the other Party or any of its Subsidiaries. If any confidential and proprietary information of one Party or any of its Subsidiaries is disclosed to another Party or any of its Subsidiaries in connection with providing services to such first Party or any of its Subsidiaries under this Agreement or any Ancillary Agreement, then such disclosed confidential and proprietary information shall be used only as required to perform such services.

(b) No Release; Return or Destruction . Each Party agrees not to release or disclose, or permit to be released or disclosed, any information addressed in Section 7.08(a)  to any other Person, except its Representatives who need to know such information in their capacities as such, and except in compliance with Section 7.09 . Information furnished by the other Party after the Effective Time pursuant to this Agreement or any Ancillary Agreement shall be subject to the provisions of Section 7.03 . Without limiting the foregoing, when any such information is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, each Party shall, at its option and as promptly as practicable after receiving a written request from the other Party, either (i) return to the other Party all such information in a

 

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tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or (ii) certify to the other Party that it has destroyed such information (and such copies thereof and such notes, extracts or summaries based thereon);  provided , that such Party’s Representatives may retain one (1) copy of such information to the extent required by applicable Law or professional standards, and shall not be required to destroy any such information located in back-up, archival electronic storage).

(c) Third-Party Information; Privacy or Data Protection Laws . Each Party acknowledges that it and its respective Subsidiaries may presently have and, following the Effective Time, may gain access to or possession of confidential or proprietary information of, or personal information relating to, Third Parties (i) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or the other Party’s Subsidiaries, on the other hand, prior to the Effective Time, including a BA Agreement; or (ii) that, as between the two Parties, was originally collected by the other Party or the other Party’s Subsidiaries and that may be subject to and protected by privacy, data protection or other applicable Laws, including applicable privacy or security regulations promulgated under the Health Insurance Portability and Accountability Act of 1996, as amended. As may be provided in more detail in an applicable Ancillary Agreement, each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or personal information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among the other Party or the other Party’s Subsidiaries, on the one hand, and such Third Parties, on the other hand.

Section 7.09. Protective Arrangements . In the event that either Party or any of its Subsidiaries is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law to disclose or provide any confidential or proprietary information of the other Party (other than with respect to any such information furnished pursuant to the provisions of Sections 7.01 through 7.07 ), as applicable, that is subject to the confidentiality provisions hereof, such Party shall provide the other Party with Notice of such request or demand as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s own cost and expense. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.

 

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ARTICLE VIII

DISPUTE RESOLUTION

Section 8.01. Good-Faith Negotiation . Subject to  Section 8.03 , either Party seeking resolution of any dispute, controversy or claim arising out of or relating to this Agreement or Ancillary Agreement (including regarding whether any Assets are QHC Assets, any Liabilities are QHC Liabilities or the validity, interpretation, breach or termination of this Agreement or any Ancillary Agreement) (a “ Dispute ”), shall provide written notice thereof to the other Party (the “ Initial Notice ”), and within thirty (30) days of the delivery of the Initial Notice, the Parties shall attempt in good faith to negotiate a resolution of the Dispute. The negotiations shall be conducted by executives who hold, at a minimum, the title of senior vice president or general counsel and who have authority to settle the Dispute. All such negotiations shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. If the Parties are unable for any reason to resolve a Dispute within thirty (30) days after the delivery of such notice or if a Party reasonably concludes that the other Party is not willing to negotiate as contemplated by the preceding sentences of this  Section 8.01 , the Dispute shall be submitted to arbitration in accordance with Section 8.02 .

Section 8.02. Arbitration; Litigation .

(a) In the event that a Dispute has not been resolved within thirty (30) days after receipt by a Party of an Initial Notice provided in Section 8.01 , or within such longer period of good faith negotiation as the Parties may agree to in writing, then, unless the Dispute involves primarily non-monetary relief (in which case such Dispute shall be addressed in accordance with  Section 8.02(e) ), such Dispute shall, upon the written request of a Party (an “ Arbitration Request ”) be submitted to be finally resolved by binding arbitration pursuant to the then current CPR Arbitration Commercial Arbitration Rules of the American Arbitration Association (the “ Arbitration Rules ”). The arbitration shall be held in Williamson County, Tennessee. Unless otherwise agreed by the Parties in writing, any Dispute to be decided by binding arbitration pursuant to this  Section 8.02 will be decided (i) before a sole independent arbitrator if the amount in dispute, inclusive of all claims and counterclaims, totals $25 million or less; or (ii) by a panel of three (3) arbitrators if the amount in dispute, inclusive of all claims and counterclaims, totals more than $25 million.

(b) The panel of three (3) arbitrators will be chosen as follows: (i) within fifteen (15) days from the date of the receipt of the Arbitration Request, each Party will name an arbitrator; and (ii) the two (2) Party-appointed arbitrators will thereafter, within thirty (30) days from the date on which the second of the two (2) arbitrators was named, name a third, independent arbitrator who will act as chairperson of the arbitral tribunal. In the event that either Party fails to name an arbitrator within fifteen (15) days from the date of receipt of the Arbitration Request, then upon written application by either Party, that arbitrator shall be appointed pursuant to the Arbitration Rules. In the event that the two (2) Party-appointed arbitrators fail to appoint the third, then the third, independent arbitrator will be appointed pursuant to the Arbitration Rules. If the arbitration will be before a sole independent arbitrator, then the sole independent arbitrator will be appointed by agreement of the Parties within fifteen (15) days of the date of receipt of the Arbitration Request. If the Parties cannot agree to a sole independent arbitrator, then upon written application by either party, the sole independent arbitrator will be appointed pursuant to the Arbitration Rules.

 

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(c) If the amount in dispute, inclusive of all claims and counterclaims, totals $25 million or less, then each Party shall provide the arbitrator with its respective resolution of the Dispute, including the net amount to be paid or received by such Party, together with the supporting calculations and analyses prepared with respect thereto, and the arbitrator shall select either the resolution of the Dispute as proposed by CHS or by QHC;  provided , that the arbitrator may award only one or the other of the net amounts so submitted. If the amount in dispute, inclusive of all claims and counterclaims, totals more than $25 million, the arbitrator(s) will have the right to award, on an interim basis, or include in the final award, any monetary relief which it deems proper in the circumstances, including money damages (with interest on unpaid amounts from the due date) and attorneys’ fees and costs. The arbitrator(s) will decide the substance of all claims in accordance with applicable Law, including recognized principles of equity, and will honor all claims of privilege recognized by Law. In no event shall the arbitrator(s) award any relief not specifically requested by the parties or award any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim). Upon selection of the arbitrator(s) following any grant of interim relief by a special arbitrator or court pursuant to  Section 8.03 , the arbitrator(s) may affirm or disaffirm that relief, and the parties will seek modification or rescission of the order entered by the court as necessary to accord with the decision of the arbitrator(s). The award of the arbitrator(s) shall be final and binding on the Parties, and may be enforced in any court of competent jurisdiction. The Parties shall share equally the administration and arbitrator fees associated with the arbitration.

(d) The initiation of arbitration pursuant to this  Article VIII will toll the applicable statute of limitations for the duration of any such proceedings.

(e) If the Dispute involves primarily non-monetary relief, then such Dispute shall not be submitted to arbitration, and either Party may commence litigation in the Tennessee Court of Chancery located in Williamson County, Tennessee (or, if such court does not have subject matter jurisdiction thereof, any other federal or state court located in the Middle District of the State of Tennessee with subject matter jurisdiction).

Section 8.03. Litigation and Unilateral Commencement of Arbitration . Notwithstanding the foregoing provisions of this Article VIII , (a) a Party may seek preliminary provisional or injunctive judicial relief with respect to a Dispute without first complying with the procedures set forth in Sections 8.01  and 8.02 if such action is reasonably necessary to avoid irreparable damage and (b) either Party may initiate arbitration before the expiration of the periods specified in Section 8.02 if such Party has submitted an Arbitration Request and the other Party has failed to comply with Section 8.02 in good faith with respect to commencement and engagement in arbitration. In such event, the other Party may commence and prosecute such arbitration unilaterally in accordance with the Arbitration Rules. Immediately following the issuance of any preliminary provisional or injunctive relief pursuant to clause (a) of the immediately preceding sentence, the Party seeking such relief will consent to the stay of any judicial proceedings pending the resolution of the Dispute pursuant to the procedures set forth in Section 8.01 .

Section 8.04. Conduct During Dispute Resolution Process . Unless otherwise agreed in writing, the Parties shall, and shall cause their respective members of their Group to, continue to

 

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honor all commitments under this Agreement and each Ancillary Agreement to the extent required by such agreements during the course of dispute resolution pursuant to the provisions of this  Article VIII , unless such commitments are the specific subject of the Dispute at issue.

Section 8.05. Consent to Jurisdiction . CHS and QHC each hereby expressly (a) submits and consents in advance to the jurisdiction of any Tennessee State Court sitting in Williamson County, Tennessee or the United States District Court for the Middle District of Tennessee with respect to any Proceeding arising out of or relating to this Agreement, (b) waives any objection which it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens , (c) agrees that all claims with respect to such Proceedings may be heard and determined in any Tennessee State Court sitting in Williamson County, Tennessee or the United States District Court for the Middle District of Tennessee, (d) agrees not to commence any Proceeding relating to this Agreement other than in a Tennessee State Court sitting in Williamson County, Tennessee or the United States District Court for the Middle District of Tennessee, and (e) agrees that a final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Section 8.06. Waiver of Jury Trial . EACH OF CHS AND QHC ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.06 .

ARTICLE IX

TERMINATION

Section 9.01. Termination . This Agreement and all Ancillary Agreements may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Effective Time by and in the sole discretion of CHS without the approval of any other Person, including QHC. In the event of such termination, this Agreement shall become null and void and no Party, nor any of its directors, officers or employees, shall have any Liability of any kind to any Person by reason of this Agreement. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by a duly authorized officer of each of the Parties.

 

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ARTICLE X

MISCELLANEOUS

Section 10.01. Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures .

(a) Counterparts . This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement.

(b) Entire Agreement . This Agreement, the Ancillary Agreements and the exhibits, schedules and annexes hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. It is the intention of the Parties that the Conveyance and Assumption Instruments shall be consistent with the terms of this Agreement and the other Ancillary Agreements. In the event of any conflict between the Conveyance and Assumption Instruments and this Agreement, the provisions of this Agreement shall control. The Parties agree that the Conveyance and Assumption Instruments are not intended and shall not be construed in any way to enhance, modify or decrease any of the rights or obligations of CHS, any CHS Subsidiary, QHC or any QHC Subsidiary from those contained in this Agreement and the other Ancillary Agreements.

(c) Corporate Power . CHS represents on behalf of itself and, to the extent applicable, each CHS Subsidiary and QHC represents on behalf of itself and, to the extent applicable, each QHC Subsidiary as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

(ii) this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

(d) Signatures and Delivery . Each Party acknowledges that it and the other Party may execute this Agreement and any Ancillary Agreement by manual, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement or any Ancillary Agreement. Each Party expressly adopts and confirms a stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind such Party to the

 

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same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it shall as promptly as reasonably practicable cause each such Agreement and Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 10.02. Governing Law . This Agreement and, unless expressly provided therein, each Ancillary Agreement, shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws and principles of the State of Delaware, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

Section 10.03. Assignability . Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the Parties and the parties thereto, respectively, and their respective successors and permitted assigns; provided , however , that neither Party nor any other party thereto may assign its rights or delegate its obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other Party hereto or the other parties thereto. Notwithstanding the foregoing, no such consent shall be required for the assignment of a Party’s rights and obligations under this Agreement or the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole in connection with a Change of Control of a Party, so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant Party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party. Nothing herein is intended to, or shall be construed to, prohibit either Party or any of its Subsidiaries from being party to or undertaking a Change of Control.

Section 10.04. Third Party Beneficiaries . Except (a) for the indemnification rights under this Agreement of a CHS Indemnitee or QHC Indemnitee in their respective capacities as such under Article IV ; and (b) for the releases under Section 4.01 of any Person provided therein, (i) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and their respective Subsidiaries, after giving effect to the Distribution, and their permitted successors and assigns, and are not intended to confer upon any Person except the Parties and their respective Subsidiaries, after giving effect to the Distribution, and their permitted successors and assigns, any rights or remedies hereunder; and (ii) there are no other third-party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

 

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Section 10.05. Notices . All Notices under this Agreement, and to the extent applicable and unless otherwise provided therein, under each of the Ancillary Agreements, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a Notice):

If to CHS:

Community Health Systems, Inc.

4000 Meridian Boulevard

Franklin, Tennessee 37067

Attn: General Counsel

If to QHC:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attn: General Counsel

Either Party may, by Notice to the other Party, change the address to which such Notices are to be given.

Section 10.06. Severability . In the event that any one or more of the terms or provisions of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or any Ancillary Agreement, or the application of such term or provision to Persons or circumstances or in jurisdictions other than those as to which it has been determined to be invalid, illegal or unenforceable, and the Parties shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement (or the applicable Ancillary Agreement) which, insofar as practicable, implement the purposes and intent of the Parties. Any term or provision of this Agreement or any Ancillary Agreement held invalid or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid or unenforceable to the extent consistent with the intent of the parties as reflected by this Agreement. To the extent permitted by applicable Law, each party waives any term or provision of Law which renders any term or provision of this Agreement to be invalid, illegal or unenforceable in any respect.

Section 10.07. Force Majeure . Neither Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for failure to fulfill any obligation so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide Notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement or any Ancillary Agreement as soon as reasonably practicable.

 

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Section 10.08. No Set Off . Except as set forth in any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any of its Subsidiaries shall have any right of set off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or any Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement or any Ancillary Agreement.

Section 10.09. Responsibility for Expenses .

(a) Expenses Incurred on or Prior to the Effective Time. Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, all costs and expenses incurred on or prior to the Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement and any Ancillary Agreement, the Registration Statement, the Separation, and the Distribution and the consummation of the transactions contemplated hereby and thereby shall be charged to and paid by CHS.

(b) Expenses Incurred or Accrued After the Effective Time . Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, each Party shall bear its own costs and expenses incurred or accrued after the Effective Time; provided that, except as provided in the Transition Services Agreement, any costs and expenses incurred in obtaining any Consent or novation from a Third Party in connection with the assignment to and assumption by a Party or its Subsidiary of any contracts, commitments or understandings in connection with the Separation shall be borne by the Party or its Subsidiary to which such contract, commitment or understanding is being assigned.

Section 10.10. Headings . The Article, Section and Paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

Section 10.11. Survival of Covenants . Except as expressly set forth in this Agreement or any Ancillary Agreement, the covenants and other agreements contained in this Agreement and each Ancillary Agreement, and liability for the breach of any obligations contained herein or therein, shall survive the Effective Time and shall remain in full force and effect thereafter in accordance with their terms.

Section 10.12. Performance . CHS will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the CHS Group. QHC will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the QHC Group. Each Party (including its permitted successors and assigns) further agrees that it will (a) give timely notice of the terms, conditions and continuing obligations contained in this Agreement and any applicable Ancillary Agreement to all of the other members of its Group and (b) cause all of the other members of its Group not to take any action or fail to take any such action inconsistent with such Party’s obligations under this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby.

 

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Section 10.13. Waivers of Default . Waiver by either Party of any default by the other Party of any provision of this Agreement or any Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 10.14. Amendments . No provisions of this Agreement or any Ancillary Agreement shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of both Parties or their relevant Subsidiaries, as the case may be. No provisions of this Agreement or any Ancillary Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party or relevant Subsidiary against whom it is sought to be enforced.

Section 10.15. Interpretation . Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and thereto) and not to any particular provision of this Agreement. Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise specified. Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. Unless otherwise specified in a particular case, the word “days” refers to calendar days. References herein to this Agreement or any Ancillary Agreement shall be deemed to refer to this Agreement or such Ancillary Agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified. References to the performance, discharge or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability has terms. If the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

Section 10.16. Public Announcements . From and after the Effective Time, CHS and QHC shall consult with each other before issuing, and give each other the opportunity to review and comment upon, that portion of any press release or other public statements that relates to the transactions contemplated by this Agreement or the Ancillary Agreements, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system.

 

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Section 10.17. Specific Performance . Subject to the provisions of Article VIII , in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement or the Ancillary Agreements, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Proceeding for specific performance that a remedy at Law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

Section 10.18. Limitations of Liability . Notwithstanding anything in this Agreement to the contrary, neither QHC or any member of the QHC Group, on the one hand, nor CHS or any member of the CHS Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability to the extent payable to a Third Party with respect to a Third Party Claim).

Section 10.19. Mutual Drafting . This Agreement and the Ancillary Agreements shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

 

COMMUNITY HEALTH SYSTEMS, INC.     QUORUM HEALTH CORPORATION
By:  

/s/ W. Larry Cash

    By:  

/s/ Michael J. Culotta

Name:   W. Larry Cash     Name:   Michael J. Culotta
Title:   President of Financial Services and Chief Financial Officer     Title:   Executive Vice President and Chief Financial Officer

 

Signature Page to Separation and Distribution Agreement

Exhibit 2.2

TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT dated as of April 29, 2016, is by and between COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (“ CHS ”), and QUORUM HEALTH CORPORATION, a Delaware corporation (“ Spinco ” and, together with CHS, the “Parties”, and each individually, a “Party”).

WHEREAS, as of the date hereof, CHS is the common parent of an affiliated group of domestic corporations within the meaning of Section 1504(a) of the Code (the “ Affiliated Group ”), and the members of the Affiliated Group have heretofore joined in filing consolidated federal Income Tax Returns;

WHEREAS, CHS intends to distribute all of the outstanding shares of stock of Spinco pro rata to the holders of CHS common stock in a transaction that qualifies under Section 355 of the Code; and

WHEREAS, as a result of the Distribution, the Parties desire to enter into this Tax Matters Agreement to provide for certain Tax matters, including the assignment of responsibility for the preparation and filing of Tax Returns, the payment of and indemnification for Taxes (including Taxes with respect to the Distribution and related transactions as contemplated in the Distribution Agreement and the other Ancillary Agreements), entitlement to refunds of Taxes, and the prosecution and defense of any Tax controversies;

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. General . Capitalized terms used in this Agreement and not defined herein shall have the meanings that such terms have in the Distribution Agreement. As used in this Agreement, the following terms shall have the following meanings:

Affiliated Group ” is defined in the preamble hereof.

Agreement ” means this Tax Matters Agreement.

Business Day ” or “ Business Days ” means a day which is not a Saturday, Sunday or a day on which banks in New York City are authorized or required by law to close.

CHS ” is defined in the preamble hereof.

CHS Business ” is defined in the Distribution Agreement.

CHS Group ” means CHS and all CHS Subsidiaries.


CHS Subsidiary ” means any Subsidiary of CHS other than Spinco or any Spinco Subsidiary.

Closing of the Books Method ” means the apportionment of items between portions of a taxable period based on a closing of the books and records on the Distribution Date (as if the Distribution Date was the end of the taxable period).

Code ” means the United States Internal Revenue Code of 1986, as amended.

Covered Spinco State Income Tax Return ” means any state or local Income Tax Return of Spinco or any Spinco Subsidiary for any taxable period ending on or before the Distribution Date that Spinco is legally obligated to file after the Distribution Date according to the laws of the relevant taxing jurisdiction.

Consolidated Return ” means any Income Tax Return filed pursuant to Section 1502 of the Code, or any comparable combined, consolidated, or unitary group Income Tax Return filed under state or local Tax law with respect to which CHS or any CHS Subsidiary is the parent entity.

Corresponding Portion of the Tax Detriment ” means the product of the Tax Detriment and a fraction the numerator of which is the amount of the related Tax Benefit for a taxable period and the denominator of which is the sum of the related Tax Benefits for all of the relevant taxable periods.

Distribution ” is defined in the Distribution Agreement.

Distribution Agreement ” means the agreement entitled “Separation and Distribution Agreement” entered into by CHS and Spinco dated as of April 29, 2016.

Distribution Date ” means the Business Day on which the Distribution is effected.

Final Determination ” means the final resolution of liability for any Tax for any taxable period, including any related interest or penalties, by or as a result of: (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or comparable agreement under the laws of other jurisdictions which resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax; or (iv) any other final disposition.

Force Majeure ” is defined in the Distribution Agreement.

Group ” means the CHS Group or the Spinco Group, or both, as the context requires

Included Party ” is defined in Section 3.3(b) hereof.

 

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Income Tax ” means any income, franchise or similar Taxes imposed on (or measured by) net income or net profits.

Income Tax Returns ” means all Tax Returns relating to Income Taxes.

Indemnified Liability ” means any liability subject to indemnification pursuant to Section 4.3 .

IRS ” means the United States Internal Revenue Service.

Opinion ” means the opinion delivered by Deloitte Tax LLP pursuant to Section 3.05(a)(vi) of the Distribution Agreement.

Other Tax ” means any Tax other than an Income Tax.

Party ” is defined in the preamble hereof.

Payment Period ” is defined in Section 2.4(c) hereof.

Preparing Party ” is defined in Section 3.3(b) hereof.

Prime Rate ” is defined in the Distribution Agreement.

Proceeding ” means any audit, examination or other proceeding brought by a Taxing Authority with respect to Taxes.

Prohibited Acts ” is defined in Section 4.2 hereof.

Restricted Period ” means the two year period commencing on the Distribution Date.

Ruling ” means the private letter ruling issued by the IRS to CHS dated December 21, 2016 and any supplemental rulings related thereto.

Spinco ” is defined in the preamble hereof.

Spinco Business ” is defined in the Distribution Agreement.

Spinco Group ” means Spinco and any Spinco Subsidiary.

Spinco’s Share ” is defined in Section 2.1(b) hereof.

Spinco Subsidiary ” means (i) any Subsidiary of Spinco after the Distribution Date and (ii) any Subsidiary of Spinco before the Distribution Date the successor of which is described in (i) above.

 

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Subsidiary ” means, with respect to any Person, a corporation, partnership, limited liability company or other entity in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, has either (i) a majority ownership in the equity thereof, (ii) the power, under ordinary circumstances, to elect, or to direct the election of, a majority of the board of directors or other governing body of such entity or (iii) the title or function of general partner, or the right to designate the Person having such title or function.

Stub Taxable Period ” is defined in Section 3.3(a) hereof.

Tax ” or “ Taxes ” means any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, imposed by any Taxing Authority.

Taxing Authority ” means any governmental authority (whether United States or non-United States, and including, any state, municipality, political subdivision or governmental agency) responsible for the imposition of any Tax.

Tax Benefit ” means the reduction in Tax that should result from any item of loss, deduction (including from depreciation or amortization), or credit (or any other item), whether or not an actual reduction in Tax occurs, including any interest with respect thereto or interest that would have been payable but for such item, net of any Tax on such interest. For purposes of calculating the amount of any Tax Benefit, the maximum statutory rate (or rates, in the case of an item that affects more than one Tax) applicable to each item of income, gain, loss, deduction, or credit (or any other item) shall be used.

Tax Detriment ” means the increase in Tax that should result from any item of income or gain (or any other item), whether or not an actual increase in Tax occurs, including any interest with respect thereto, net of any Tax savings attributable to such interest. For purposes of calculating the amount of any Tax Detriment, the maximum statutory rate (or rates, in the case of an item that affects more than one Tax) applicable to each item of income, gain, loss, deduction, or credit (or any other item) shall be used.

Tax Dispute ” is defined in Section 5.6 hereof.

Tax Package ” is defined in Section 3.3(b) hereof.

Tax Returns ” means all reports or returns (including information returns and amended returns) required to be filed or that may be filed for any period with any Taxing Authority in connection with any Tax or Taxes (whether domestic or foreign).

Section 1.2. References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include,” “includes” and “including” when used in this Agreement

 

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shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, such Agreement. Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

ARTICLE II

ALLOCATION OF TAX LIABILITIES

Section 2.1. Payment of Taxes .

(a) Income Taxes . With respect to any Income Tax Return required to be filed after the Distribution Date, the Party responsible for the filing thereof pursuant to Sections 3.1 and 3.2 shall pay to the relevant Taxing Authority all Taxes due or payable in connection with filing such Income Tax Return and shall be entitled to any refunds (including, for the avoidance of doubt, any similar credit or offset against Taxes) in connection therewith. Notwithstanding the foregoing, (i) CHS shall be liable for, and shall be entitled to any refunds of, Taxes with respect to any Covered Spinco State Income Tax Return and (ii) with respect to any state or local Income Tax Return of Spinco or any Spinco Subsidiary for any taxable period that includes but does not end on the Distribution Date, CHS shall be liable for, and shall be entitled to any refunds of, Taxes relating to the portion of the taxable period ending on the Distribution Date and Spinco shall be liable for, and shall be entitled to any refunds of, Taxes relating to the portion of the taxable period beginning after the Distribution Date. For the purpose of (ii) above, Taxes shall be apportioned between the two portions of such taxable period in accordance with the Closing of the Books Method.

(b) Adjusted Income Taxes . Notwithstanding Section 2.1(a) , in the event of any subsequent adjustment to the amount of any Income Taxes relating to a taxable period beginning before the Distribution Date, Spinco shall be liable for its share of any increase in Taxes and shall be entitled to its share of any refunds (Spinco’s share of any increase in Taxes or refunds, “ Spinco’s Share ”), and CHS shall be liable for all other increases in Taxes and shall be entitled to all other refunds. Spinco’s Share shall be determined in the reasonable discretion of CHS in accordance with the following principles:

(i) In the case of any Income Tax Return that relates solely to the Spinco Business, Spinco’s Share shall include any increase in Taxes or refunds attributable to such Income Tax Return; and

(ii) In the case of any Income Tax Return that relates to both the Spinco Business and the CHS Business, Spinco’s Share shall be determined by comparing the amount of Taxes that would be owed on (x) Tax items relating to the Spinco Business and (y) Tax items not specifically related to either the Spinco Business or the CHS Business (including, without limitation, corporate overhead) allocable to Spinco based on a methodology reasonably determined by CHS, with and without the adjustments relating to the items listed in (x) and (y) above.

 

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(c) Other Taxes . Except as otherwise specifically provided in any of the Agreements contemplated by the Distribution Agreement, and subject to Section 2.1(f) , Spinco shall be liable for, and shall be entitled to any refunds of, all Other Taxes (excluding any such Taxes covered by Section 4.4 (g) ) which Spinco or any Spinco Subsidiary is required to pay, or is entitled to receive, after the Distribution Date under applicable law. CHS shall be liable for, and shall be entitled to any refunds of, all Other Taxes (excluding any such Taxes covered by Section 4.4 (g) ) which CHS or any CHS Subsidiary is required to pay, or is entitled to receive, after the Distribution Date under applicable law.

(d) Distribution Taxes . Notwithstanding anything in this Section 2.1 to the contrary, and except as provided in Article IV, CHS shall be liable for, and shall be entitled to any refunds of, any Income Taxes imposed or incurred as a result of (i) the Distribution failing to qualify under Section 355 of the Code, (ii) the stock of Spinco distributed in the Distribution failing to be treated as qualified property pursuant to Section 355(d) or 355(e) of the Code or (iii) CHS otherwise recognizing any income or gain in connection with the Distribution (including, for the avoidance of doubt, the internal restructuring and other transactions undertaken in connection with the Distribution).

(e) State Combinations . Notwithstanding anything in this Section 2.1 to the contrary, CHS shall be liable for any incremental state Income Taxes, and shall be entitled to receive the benefit of any reduction in state Income Taxes, resulting from a Final Determination after the Distribution Date requiring CHS or any of its Subsidiaries that file on a separate basis to file a combined, consolidated, or unitary group Tax Return for a taxable period beginning before the Distribution Date.

(f) Transfer Taxes . Notwithstanding anything herein to the contrary, CHS shall bear any and all stamp, duty, transfer, sales and use or similar Taxes incurred in connection with the Distribution or the internal restructuring and other transactions undertaken in connection with the Distribution.

Section 2.2. Indemnity .

(a) Subject to Article IV, CHS shall indemnify Spinco from all liability for Taxes for which CHS is responsible pursuant to Section 2.1 , and (ii) any Taxes for periods ending on or before the Distribution Date, except to the extent such Taxes are allocated to Spinco pursuant to Section 2.1.

(b) Spinco shall indemnify CHS from all liability for Taxes for which Spinco is responsible pursuant to Section 2.1 .

(c) Unless otherwise agreed in writing, the indemnifying Party shall pay to the indemnified Party the amount required to be paid pursuant to Section 2.2(a) or (b)  above within thirty (30) days of being notified of the amount due by the indemnified Party, provided, however,

 

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that in no event shall the indemnifying party be required to make payment any earlier than two Business Days prior to the date payment of such amount is required to be made to the applicable Taxing Authority. The notice by the indemnified Party requesting such payment shall be accompanied by the calculations and other information used to determine the indemnifying Party’s obligations hereunder. Such payment shall be paid by the indemnifying Party to the indemnified Party by wire transfer of immediately available funds to an account designated by the indemnified Party by written notice to the indemnifying Party prior to the due date of such payment.

(d) If an adjustment to Income Taxes pursuant to a Final Determination in a Proceeding results in an adjustment described in Section 2.1(b) , the indemnifying Party shall pay to the indemnified Party the amount computed pursuant to Section 2.1(b) within fifteen (15) days of the Final Determination, unless otherwise agreed in writing.

Section 2.3. Contests .

(a) Subject to Article IV, the right to control the conduct of any Proceeding shall belong to the Party (the “Controlling Party”) responsible, pursuant to Sections 3.1 and 3.2 , for the filing of the Tax Return to which such Proceeding relates; provided, however, that any Income Tax Proceeding commencing before the Distribution Date shall be controlled by CHS. If the Party not controlling a Proceeding could have an indemnification obligation (an “Indemnifying Party”) for an adjustment to Tax pursuant to such Proceeding, such Indemnifying Party shall be entitled to participate in (but not control) such Proceeding at its own cost and expense. Such participation rights shall be similar to those set forth in Section 4.4(a) ; provided, however, the Party controlling a Proceeding covered by this Section 2.3 shall obtain consent from the Indemnifying Party only with respect to an item or matter that materially and disproportionately adversely affects such Indemnifying Party in a manner that does not similarly affect the Controlling Party, and any such consent shall not to be unreasonably withheld and shall be obtained prior to settling or agreeing to finalize any determination which may result in an indemnification obligation.

(b) After the Distribution Date, each Party shall promptly notify the other Party in writing upon receipt of written notice of the commencement of any Proceeding or of any demand or claim upon it, which, if determined adversely, would be grounds for indemnification from such other Party pursuant to Section 2.2 or could reasonably be expected to have an adverse Tax effect on the other Party. Each Party shall, on a timely basis, keep the other Party informed of all developments in the Proceeding and provide such other Party with copies of all pleadings, briefs, orders, and other correspondence pertaining thereto.

Section 2.4. Treatment of Payments ; After Tax Basis .

(a) CHS and Spinco agree to treat any indemnification payments (other than payments of interest pursuant to Section 2.4(e) ) pursuant to this Agreement as either a capital contribution or a distribution, as the case may be, between CHS and Spinco occurring immediately prior to the Distribution. If the receipt or accrual of any such payment (other than payments of interest pursuant to Section 2.4(e) ) results in taxable income to the indemnified

 

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Party, such payment shall be increased so that, after the payment of any Taxes with respect to the payment, the indemnified Party shall have realized the same net amount it would have realized had the payment not resulted in taxable income.

(b) To the extent that any liability for Taxes, that is subject to indemnification under Section 2.2 , gives rise to a deduction, credit or other Tax Benefit to the indemnified Party, the amount of any payment made under Section 2.2 shall be decreased by taking into account any actual reduction in Taxes of the indemnified Party resulting from such Tax Benefit. If a reduction in Taxes of the indemnified Party occurs in a taxable period following the period in which the indemnification payment is made, the indemnified Party shall promptly repay the indemnifying Party the amount of such reduction when actually realized.

(c) Notwithstanding Sections 2.1 and 2.2 , if as a result of a Final Determination, any adjustment shall be made to any Tax Return relating, in whole or in part, to Tax for which any member of the CHS Group is responsible, and if such adjustment results in both (x) a Tax Detriment to any member of the CHS Group for any taxable period and (y) a Tax Benefit to any member of the Spinco Group for any Post-Distribution Period, then Spinco shall pay to CHS an amount equal to the lesser of (i) the excess of the Tax Benefit for each taxable period over the portion of such Tax Benefit attributable to Spinco’s Share for such period determined pursuant to Section 2.1(b) , and (ii) the Corresponding Portion of the Tax Detriment.

(d) Notwithstanding Sections 2.1 and 2.2, if as a result of a Final Determination, any adjustment shall be made to any Tax Return relating, in whole or in part, to Tax for which any member of the Spinco Group is responsible, and if such adjustment results in both (x) a Tax Detriment to any member of the Spinco Group for any Post-Distribution Period and (y) a Tax Benefit to any member of the CHS Group for any taxable period, then CHS shall pay to Spinco an amount equal to the lesser of the Tax Benefit for such taxable period and the Corresponding Portion of the Tax Detriment.

(e) Payments made pursuant to this Agreement that are not made within the period prescribed in this Agreement or, if no period is prescribed, within thirty (30) days after demand for payment is made (the “ Payment Period ”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a rate of simple interest per annum equal to the Prime Rate. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due.

Section 2.5. Deductions Attributable to Equity Awards . Solely the member of the CHS Group or Spinco Group for which the relevant individual is currently employed or, if such individual is not currently employed by a member of either group, was most recently employed, at the time of the vesting, exercise, disqualifying disposition, payment or other relevant taxable event, as appropriate, in respect of equity awards and other incentive compensation of such individual described in Section 5.01 of the Employee Matters Agreement, shall be entitled to claim any income Tax deduction in respect of such equity awards and other incentive compensation on its respective Tax Return associated with such event. To the extent any Tax deduction that is described in the first sentence of this Section 2.4 and claimed by any member of

 

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the CHS Group is disallowed to any and all members of the CHS Group and a Taxing Authority makes a Final Determination that a member of the Spinco Group is entitled to such deduction, CHS shall notify Spinco of the receipt of such Final Determination, promptly after receipt thereof, and Spinco shall pay to CHS the lesser of the amount of its Tax Benefit and the amount of the corresponding Tax Detriment in accordance with Section 2.3 . To the extent any Tax deduction that is described in the first sentence of this Section 2.4 and claimed by any member of the Spinco Group is disallowed to any and all members of the Spinco Group and a Taxing Authority makes a Final Determination that a member of the CHS Group is entitled to such deduction, Spinco shall notify CHS of the receipt of such Final Determination, promptly after receipt thereof, and CHS shall pay to Spinco the lesser of the amount of its Tax Benefit and the amount of the corresponding Tax Detriment in accordance with Section 2.3 .

ARTICLE III

PREPARATION AND FILING OF TAX RETURNS

Section 3.1. CHS’s Responsibility for the Preparation and Filing of Tax Returns .

(a) CHS shall prepare or cause to be prepared (i) all Consolidated Returns, (ii) all other Tax Returns that it is legally obligated to file after the Distribution Date according to the laws of the relevant taxing jurisdiction and (iii) all Covered Spinco State Income Tax Returns; provided, however, that Spinco shall have the right to review and comment with respect to items on such Tax Returns if and to the extent such items directly relate to Taxes for which Spinco would be liable under Section 2.1 , (a return that includes such an item, an “Indemnifiable Return”), such comment not to be unreasonably rejected. CHS shall provide to Spinco for its review a copy of any Indemnifiable Return at least forty-five (45) days prior to the due date thereof (including extensions), and Spinco shall provide comments to CHS within thirty (30) days after its receipt thereof. CHS shall file or cause to be filed all Tax Returns referred to in (i) and (ii) above and shall submit all Tax Returns referred to in (iii) above to Spinco for filing pursuant to Section 3.2 at least five (5) days prior to the due date thereof (including extensions).

(b) To the extent that Spinco or any Spinco Subsidiary is included in any Consolidated Return for a taxable period that includes the Distribution Date, CHS shall include in such Consolidated Return the results of Spinco and the Spinco Subsidiaries on the basis of the closing of the books method as provided in Treas. Reg. Section 1.1502-76(b)(2)(i).

(c) If Spinco reasonably so requests, CHS, at Spinco’s expense, shall file for and pursue any refund to which Spinco is entitled under this Agreement.

Section 3.2. Spinco’s Responsibility for the Preparation and Filing of Tax Returns . Spinco shall prepare or cause to be prepared all Tax Returns that it is legally obligated to file after the Distribution Date according to the laws of the relevant taxing jurisdiction, other than Covered Spinco State Income Tax Returns; provided, however, that CHS shall have the right to review and comment with respect to items on such Tax Returns if and to the extent such items directly relate to Taxes for which CHS would be liable under Section 2.1 , such comment not to be unreasonably rejected. Spinco shall file or cause to be filed all Tax Returns that it is legally obligated to file after the Distribution Date according to the laws of the relevant taxing

 

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jurisdiction (including, for the avoidance of doubt, all Covered Spinco State Income Tax Returns prepared by CHS pursuant to Section 3.1(a)). If CHS reasonably so requests, Spinco, at CHS’s expense, shall file for and pursue any refund to which CHS is entitled under this Agreement.

Section 3.3. Manner of Preparation .

(a) To the extent permitted by law, any taxable period of Spinco or any Spinco Subsidiary for any state or local Income Tax purposes that would otherwise include but not end on the Distribution Date shall be bifurcated into two separate taxable periods, one ending on the Distribution Date and the other beginning on the day following the Distribution Date (each a “ Stub Taxable Period ”), and a separate Income Tax Return for each Stub Taxable Period shall be prepared and filed by the Party responsible for such preparation and filing pursuant to Sections 3.1 and 3.2 .

(b) To the extent any Tax Return required to be prepared by CHS pursuant to Section 3.1 contains items relating to the Spinco Business or any Tax Return required to by prepared by Spinco pursuant to Section 3.2 contains items relating to the CHS Business, the Party not responsible for preparing such Tax Return (the “ Included Party ”) shall, at its own cost and expense, prepare and deliver to the Party responsible for preparing such Tax Return (the “ Preparing Party ”) a true and correct accounting of all relevant Tax Items relating to the Included Party (or any of its Subsidiaries) for the taxable period covered by such Tax Return (a “ Tax Package ”). Such Tax Package shall be provided in a timely manner consistent with the past practices of the Parties and their Affiliates. In the event an Included Party does not fulfill its obligations pursuant to this Section 3.3(b) , the Preparing Party shall be entitled, at the sole cost and expense of the Included Party, to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Tax Return.

(c) All Tax Returns for taxable periods beginning before the Distribution Date that are required to be filed after the Distribution Date shall be prepared in a manner consistent with past practices (e.g., accounting methods and accelerating deductions through bonus depreciation or otherwise) and the Preparing Party shall, at the Included Party’s request, share with the Included Party any part of such Tax Returns relating to the Included Party (or any of its Subsidiaries) after the filing thereof.

(d) All Income Tax Returns filed on or after the Distribution Date shall be prepared in a manner that is consistent with the Ruling and the Opinion, or any other rulings obtained from other Taxing Authorities in connection with the Distribution (in the absence of a Final Determination to the contrary) and shall be filed on a timely basis (including pursuant to extensions) by the Party responsible for such filing pursuant to Sections 3.1 and 3.2 . In the absence of a Final Determination to the contrary or a change in law, all Income Tax Returns of Spinco and its Subsidiaries for taxable periods beginning before the Distribution Date shall be prepared consistent with the Tax Returns of the Affiliated Group.

(e) Except to the extent required by law, Spinco shall not amend any Income Tax Return relating to a taxable period (or portion thereof) ending on or before to the Distribution Date without the written consent of CHS, not to be unreasonably withheld.

 

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Section 3.4. Carrybacks . To the extent permitted by law, Spinco and its Subsidiaries shall elect to forego a carryback of any net operating losses, capital losses or credits for any taxable period ending after the Distribution Date to a taxable period, or portion thereof, ending on or before the Distribution Date. Notwithstanding anything herein to the contrary, Spinco and its Subsidiaries shall not have any right to receive the benefit of any carryback of Tax attributes created in a taxable period beginning after the Distribution Date into a Consolidated Return.

Section 3.5. Retention of Records ; Access .

(a) CHS and Spinco shall, and shall cause each of their Subsidiaries to, retain adequate records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by CHS or Spinco and for any Proceeding relating to such Tax Returns or to any Taxes payable by CHS or Spinco (collectively, “Tax Records”).

(b) CHS and Spinco shall, and shall cause each of their Subsidiaries to, provide reasonable access to (i) all Tax Records, and (ii) its personnel and premises, for the purpose of the preparation, review or audit of such Tax Returns, or in connection with any Proceeding, as reasonably requested by either CHS or Spinco.

(c) The obligations set forth above in Sections 3.5(a) and 3.5(b) shall continue for as long as such Tax Records are material to the administration of any matter under applicable Tax law. After such time, a Party wishing to destroy Tax Records shall provide thirty (30) days prior written notice to the other Party describing, in reasonable detail, the Tax Records to be destroyed; if such other Party objects, such other Party shall be allowed to take possession of the Tax Records.

Section 3.6. Confidentiality ; Ownership of Information ; Privileged Information . The provisions of Article VII of the Distribution Agreement relating to confidentiality of information, ownership of information, privileged information and related matters shall apply with equal force to any records and information prepared and/or shared by and among the Parties in carrying out the intent of this Agreement.

ARTICLE IV

DISTRIBUTION AND RELATED TAX MATTERS

Notwithstanding anything herein to the contrary, the provisions of this Article IV shall govern all matters among the parties hereto related to an Indemnified Liability.

Section 4.1. Compliance with the Ruling and the Opinion . CHS and Spinco hereby confirm and agree to comply with any and all covenants, agreements and representations in the Ruling and the Opinion applicable to CHS and Spinco, respectively. CHS hereby covenants that Spinco has received true and complete copies of all IRS submissions, representation letters, and other documentation related to the Ruling and the Opinion through the Distribution Date.

 

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Section 4.2. Opinion Requirement for Major Transactions Undertaken by Spinco During the Restricted Period . Other than pursuant to the transactions contemplated by the Distribution Agreement, Spinco agrees that during the Restricted Period it will not (i) merge or consolidate with or into any other corporation, (ii) liquidate or partially liquidate (within the meaning of such terms as defined in Section 346 and Section 302, respectively, of the Code), (iii) sell or transfer all or substantially all of its assets (within the meaning of Rev. Proc. 77-37,1977-2 C.B. 568) in a single transaction or series of related transactions, or sell or transfer any portion of Spinco’s assets that would violate the “continuity of business enterprise” requirement of Treas. Reg. Section 1.368-1(d), (iv) redeem or otherwise repurchase any of its capital stock other than pursuant to open market stock repurchase programs meeting the requirements of section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696, (v) cease the active conduct of its trade or business within the meaning of Section 355(b) of the Code, which for purposes of the Distribution shall be considered the health care and hospital management and operations related to Affinity Medical Center, located in Massillon, Ohio, (vi) enter into any negotiations, agreements or arrangements with respect to transactions or events (including any transactions described in Sections 4.2(i)-(iv)  (and, for this purpose, including any redemptions made pursuant to open market stock repurchase programs), stock issuances (pursuant to the exercise of options or otherwise), option grants, capital contributions or acquisitions, entering into any partnership or joint venture arrangements, or a series of such transactions or events, but excluding the Distribution) that may cause the Distribution to be treated as part of a plan pursuant to which one or more persons acquire directly or indirectly stock of Spinco representing a “50 percent or greater interest” therein within the meaning of Section 355(d)(4) of the Code, or (vii) take any other action, or permit any Spinco Subsidiary to take any such action, where the taking of such action could reasonably be expected to cause the Distribution to fail to qualify under Section 355 of the Code or cause the stock of Spinco distributed in the Distribution to fail to be treated as qualified property pursuant to Section 355(e) of the Code (the acts listed in (i)-(vii) collectively, the “ Prohibited Acts ”). Notwithstanding the foregoing, Spinco may take any of the Prohibited Acts, subject to Section 4.3 , if (x) Spinco first obtains (at its expense) an opinion in form and substance reasonably acceptable to CHS of a nationally recognized law firm or a “big four” accounting firm reasonably acceptable to CHS, which opinion may be based on usual and customary factual representations (reasonably acceptable to CHS) or (y) at Spinco’s request, CHS (at the expense of Spinco) obtains a supplemental ruling from the IRS, that such Prohibited Act or Acts, and any transaction related thereto, will not (a) affect any of the conclusions set forth in the Opinion or the Ruling, including (i) the qualification of the Distribution and certain internal transactions preceding the Distribution under Sections 355 and 368 of the Code and (ii) the nonrecognition of gain to CHS in the Distribution, or (b) cause the stock of Spinco distributed in the Distribution to fail to be treated as qualified property pursuant to Sections 355(d) or 355(e) of the Code. Spinco may also take any of the Prohibited Acts, subject to Section 4.3 , with the consent of CHS in its sole and absolute discretion. During the Restricted Period, Spinco shall provide all information reasonably requested by CHS relating to any transaction involving an acquisition (directly or indirectly) of Spinco stock within the meaning of Section 355(e) of the Code.

Section 4.3. Indemnification by Spinco . If, after the Distribution, Spinco or any of its Affiliates takes any action or enters into any agreement to take any action, including any of the Prohibited Acts as defined in Section 4.2 of this Agreement, or if there is a breach by Spinco of

 

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Section 4.1 hereof, or if there is any direct or indirect acquisition of Spinco stock, and as a result (i) the Distribution shall fail to qualify under Section 355 of the Code, (ii) the stock of Spinco distributed in the Distribution shall fail to be treated as qualified property pursuant to Section 355(d) or 355(e) of the Code or (iii) CHS otherwise recognizes any gain in connection with the Distribution (including, for the avoidance of doubt, the related internal transactions described in the Ruling), then Spinco shall indemnify and hold harmless CHS against any and all Taxes imposed upon or incurred by CHS (and any Taxes of CHS shareholders to the extent CHS is liable with respect to such Taxes, whether to a Taxing Authority, to a shareholder or to any other person) as a result, unless such Taxes would, in any event, have been imposed upon or incurred by CHS without regard to such actions, breaches or events, as determined at such time. CHS shall be indemnified and held harmless under this Section 4.3 without regard to whether an opinion or supplemental ruling pertaining to the action pursuant to Section 4.2 was obtained, and without regard to whether CHS gave its consent to such action pursuant to Section 4.2 or otherwise.

Section 4.4. Procedural Matters .

(a) Notice . If either Spinco or CHS receives any written notice of deficiency, claim or adjustment or any other written communication from a Taxing Authority that may result in an Indemnified Liability, the Party receiving such notice or communication shall promptly give written notice thereof to the other Party, provided that any delay by CHS in so notifying Spinco shall not relieve Spinco of any liability to CHS hereunder except to the extent Spinco is materially and adversely prejudiced by such delay. CHS undertakes and agrees that from and after such time as CHS obtains knowledge that any representative of a Taxing Authority has begun to investigate or inquire into the Distribution (whether or not such investigation or inquiry is a formal or informal investigation or inquiry), CHS shall (i) notify Spinco thereof, provided that any delay by CHS in so notifying Spinco shall not relieve Spinco of any liability to CHS hereunder except to the extent Spinco is materially and adversely prejudiced by such delay, (ii) consult with Spinco from time to time as to the conduct of such investigation or inquiry, (iii) provide Spinco with copies of all correspondence between CHS or its representatives and such Taxing Authority or any representative thereof pertaining to such investigation or inquiry, (iv) cooperate with Spinco to permit a representative (reasonably satisfactory to CHS) of Spinco to be present at, and participate in (but not control), all meetings with such Taxing Authority or any representative thereof pertaining to such investigation or inquiry, provided, that any costs relating to Spinco’s representation at such meetings shall be borne by Spinco, and (v) obtain Spinco’s consent, such consent not to be unreasonably withheld, to any final agreement or resolution on any or all related issues, prior to settling or agreeing to finalize any determination which may result in any economic consequence to Spinco.

(b) Tax Proceedings Controlled by CHS . With respect to any Proceeding that may result in an Indemnified Liability, CHS shall assume and direct the defense or settlement of such Proceeding, provided that Spinco shall be entitled to participate in such Proceeding at its own cost and expense; provided, however, that CHS shall not settle, compromise or concede any such Proceeding without Spinco’s consent, not to be unreasonably withheld.

 

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(c) Tax Proceedings Controlled by Spinco . If Spinco withholds consent to the settlement, compromise or concession of any Proceeding that is the subject of Section 4.4(b) , Spinco may, upon confirmation in writing to CHS that the liability asserted in such Proceeding would, if imposed upon or incurred by CHS or its Subsidiaries, be an Indemnified Liability, assume and direct the defense or settlement of the Proceeding, subject to the participation and consultation of CHS, provided that, if CHS reasonably determines that Spinco has failed to prosecute the Proceeding in a reasonable and diligent manner, CHS may (at Spinco’s expense and subject to the provisions in Section 4.4(d)) reassume and direct the defense or settlement of the Proceeding. The following provisions shall apply to any Proceeding control of which is assumed by Spinco pursuant to the preceding sentence.

(i) Upon request, during the course of the Proceeding, Spinco shall from time to time furnish CHS with evidence reasonably satisfactory to CHS of its ability to pay the full amount of the Indemnified Liability. If at any time during such Proceeding, CHS reasonably determines, after due investigation, that Spinco may not be able to pay the full amount of the Indemnified Liability, if required, then Spinco shall be required to furnish a guarantee or performance bond satisfactory to CHS in an amount equal to the amount of the Indemnified Liability asserted by the Taxing Authority. If Spinco fails to furnish such guarantee or bond, CHS may reassume control of the Proceedings in accordance with Section 4.4(d).

(ii) Spinco shall pay all expenses directly related to the Indemnified Liability, including but not limited to reasonable fees for attorneys, accountants, expert witnesses or other consultants retained by it.

(iii) CHS shall, at Spinco’s sole cost (including but not limited to any reasonable out-of-pocket-costs incurred by CHS), take such action as Spinco may reasonably request (including but not limited to the execution of powers of attorney for one or more persons designated by Spinco) in contesting the Indemnified Liability. Spinco shall, on a timely basis, keep CHS informed of all developments in the Proceeding and provide CHS with copies of all pleadings, briefs, orders, and other written papers pertaining thereto.

(iv) Subject to satisfaction of the conditions herein set forth, Spinco may direct CHS to settle the Indemnified Liability on such terms and for such amount as Spinco may direct. CHS may condition such settlement on receipt, prior to the settlement, from Spinco of the indemnity payment with respect to the Indemnified Liability less any amounts to be paid directly by Spinco to the Taxing Authority. Spinco may direct CHS, at Spinco’s expense, to pay an asserted deficiency for the Indemnified Liability out of funds provided by Spinco, and to file a claim for refund. If Spinco withholds consent to the settlement, compromise or concession of any Proceeding that is the subject of Section 4.4(b) and does not assume control of such Proceeding pursuant to this Section 4.4(c) within thirty (30) days following the request by CHS for such consent, such Proceeding shall be controlled and directed exclusively by CHS.

 

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(d) Resumption by CHS of Control of Tax Proceedings . With respect to any Proceeding control of which is assumed by Spinco pursuant to Section 4.4(c) , should (i) Spinco fail within thirty (30) days following request therefor to furnish to CHS evidence of its ability to pay the full amount of the Indemnified Liability, (ii) CHS reasonably believe after due investigation that Spinco may not be able to pay the full amount of the Indemnified Liability, if required, and Spinco fails to furnish a guarantee or performance bond satisfactory to CHS in an amount equal to the amount of the Indemnified Liability then being asserted by the Taxing Authority, or (iii) CHS reasonably determine that Spinco has failed to prosecute the Proceeding in a reasonable and diligent manner, then CHS may reassume control of the Proceeding and may settle such Proceeding in its discretion.

(e) Time and Manner of Payment . Unless otherwise agreed in writing, Spinco shall pay to CHS the amount with respect to an Indemnified Liability determined pursuant to a Final Determination (less any amount paid directly by Spinco to the Taxing Authority or made available to CHS under Section 4.4(d) ) at least two Business Days prior to the date payment of the Indemnified Liability is required to be made to the Taxing Authority. Such payment shall be paid by Spinco to CHS by wire transfer of immediately available funds to an account designated by CHS by written notice to Spinco prior to the due date of such payment.

(f) Refund of Amounts Paid by Spinco . Should CHS or any other member of the Affiliated Group receive a refund in respect of amounts paid by Spinco to any Taxing Authority on CHS’s behalf or paid by Spinco to CHS for payment to a Taxing Authority with respect to an Indemnified Liability, or should any such amounts that would otherwise be refundable to CHS be applied or credited by the Taxing Authority to obligations of CHS unrelated to an Indemnified Liability, then CHS shall, promptly following receipt (or notification of credit), remit such refund (including any statutory interest that is included in such refund or credited amount) to Spinco.

(g) Cooperation . Subject to the provisions of Section 3.6 , CHS and Spinco shall reasonably cooperate with one another in a timely manner in any Proceeding involving any matter that may result in an Indemnified Liability. CHS and Spinco agree that such cooperation shall include, without limitation, making available to the other Party, during normal business hours, all books, records and information, officers and employees (without substantial interruption of employment) necessary or useful in connection with any such judicial or administrative Proceeding. The Party requesting or otherwise entitled to any books, records, information, officers or employees pursuant to this Section 4.4(h) shall bear all reasonable out-of-pocket costs and expenses (except reimbursement of salaries, employee benefits and general overhead) incurred in connection with providing such books, records, information, officers or employees.

(h) Supplemental Rulings . CHS shall provide Spinco a copy of and an opportunity to comment upon any supplemental ruling sought from the IRS with respect to the Ruling and no supplemental ruling request shall be made without Spinco’s consent if such supplemental ruling would materially expand Spinco’s indemnification obligations under Section 4.3 .

 

15


Section 4.5. Protective Section 336(e) Election . If CHS determines, in its sole discretion, that a protective election under Section 336(e) of the Code (a “ Section 336(e) Election ”) shall be made with respect to the Distribution, Spinco shall (and shall cause the relevant member of the Spinco Group to) join with CHS or the relevant member of the CHS Group in the making of such election and shall take any action reasonably requested by CHS or that is otherwise necessary to give effect to such election (including making any other related election). If a Section 336(e) Election is made with respect to the Distribution, then this Agreement shall be amended in such a manner as is determined by CHS in good faith to take into account such Section 336(e) Election (including by requiring that, in the event the Distribution fails to qualify under Section 355 of the Code and CHS is not entitled to indemnification for the Tax-related losses pursuant to this Agreement arising from such failure, Spinco shall pay over to CHS any Tax Benefits actually realized in cash by the Spinco Group or any member of the Spinco Group arising from the step-up in Tax basis resulting from the Section 336(e) Election); provided , such amounts payable shall be reduced by all reasonable costs incurred by Spinco to amend any Tax Returns or other governmental filings related to such Section 336(e) Election.

ARTICLE V.

MISCELLANEOUS

Section 5.1. Notices . All Notices under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice):

If to CHS:

Community Health Systems, Inc.

4000 Meridian Boulevard

Franklin, Tennessee 37067

Attn: General Counsel

Copy to: Vice President of Tax

If to Spinco:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attn: General Counsel

Copy to: Vice President of Tax

Either Party may, by Notice to the other Party, change the address to which such Notices are to be given.

 

16


Section 5.2. Amendment and Waiver . This Agreement may not be altered or amended, nor may any rights hereunder be waived, except by an instrument in writing executed by the Party or Parties to be charged with such amendment or waiver. No waiver of any terms, provision or condition of or failure to exercise or delay in exercising any rights or remedies under this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver of any other term, provision or condition of this Agreement.

Section 5.3. Entire Agreement . This Agreement constitutes the entire understanding of the Parties hereto with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter.

Section 5.4. Assignment; Successors and Assigns . Neither of the Parties may assign its rights or delegate any of its duties under this Agreement without the prior written consent of each other Party. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties hereto and their respective successors and permitted assigns.

Section 5.5. Severability . In the event that any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the Parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 5.6. Dispute Resolution . The Parties desire that collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in good faith all disagreements regarding their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (a “ Tax Dispute ”) between any member of the CHS Group and any member of the Spinco Group as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Tax departments of the respective Parties shall negotiate in good faith to resolve the Tax Dispute. If such good faith negotiations do not resolve the Tax Dispute, then the matter, upon written request of either Party, will be referred for resolution in accordance with Article VIII of the Separation and Distribution Agreement. Nothing in this Section 5.6 will prevent either Party from seeking injunctive relief if any delay resulting from the efforts to resolve the Tax Dispute could result in serious and irreparable injury to either Party. Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, CHS and Spinco are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of CHS and Spinco will cause its respective Group members not to commence any dispute resolution procedure other than through such party as provided in this Section 5.6.

Section 5.7. Governing Law; Jurisdiction . This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware, without regard to the

 

17


conflicts of law rules of such state. If any dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, each of the Parties (a) consents to submit itself to the personal jurisdiction of the courts of the State of Tennessee or any federal court with subject matter jurisdiction located in the Middle District of Tennessee (and any appeals court therefrom) in the event any dispute arises out of this Agreement or any transaction contemplated hereby, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any transaction contemplated hereby in any court other than such courts.

Section 5.8. Waiver of Jury Trial . EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.8.

Section 5.9. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same Agreement.

Section 5.10. Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third-parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

Section 5.11. Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force Majeure condition and (b) use reasonable best efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.

Section 5.12. Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

 

18


IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

COMMUNITY HEALTH SYSTEMS, INC.     QUORUM HEALTH CORPORATION
By:  

/s/ W. Larry Cash

    By:  

/s/ Michael J. Culotta

Name:   W. Larry Cash     Name:   Michael J. Culotta
Title:  

President of Financial Services

and Chief Financial Officer

    Title:  

Executive Vice President and

Chief Financial Officer

 

Signature Page to Tax Matters Agreement

Exhibit 2.3

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN

COMMUNITY HEALTH SYSTEMS, INC.

AND

QUORUM HEALTH CORPORATION

DATED AS OF APRIL 29, 2016


Table of Contents

 

         Page  

ARTICLE I DEFINITIONS

     1   

Section 1.01

  Defined Terms      1   

ARTICLE II GENERAL PRINCIPLES

     10   

Section 2.01

  Allocation of Employment Related Liabilities      10   

Section 2.02

  Employment with QHC      11   

Section 2.03

  Establishment of QHC Plans      12   

Section 2.04

  Post-Distribution Employment Transfers      13   

Section 2.05

  Individual Agreements      14   

ARTICLE III QUALIFIED AND NON-QUALIFIED RETIREMENT PLANS

     14   

Section 3.01

  WCH Cash Balance Pension Plan      14   

Section 3.02

  Retirement Savings Plans      16   

Section 3.03

  Supplemental Executive Retirement Plan      18   

Section 3.04

  Deferred Compensation Plan      19   

ARTICLE IV WELFARE AND FRINGE BENEFIT PLANS

     21   

Section 4.01

  Health and Welfare Plans      21   

Section 4.02

  Waiver of Cost-Sharing Amounts      23   

Section 4.03

  COBRA      23   

Section 4.04

  Vacation, Holidays and Leaves of Absence      23   

Section 4.05

  Severance and Unemployment Compensation      23   

Section 4.06

  Workers’ Compensation      24   

ARTICLE V EQUITY, INCENTIVE, AND EXECUTIVE COMPENSATION PROGRAMS

     24   

Section 5.01

  Equity Incentive Programs      24   

Section 5.02

  Annual Incentive Plans      27   

ARTICLE VI MISCELLANEOUS

     28   

Section 6.01

 

Transfer of Records

     28   

Section 6.02

 

Employee Recoupment Assets

     29   

Section 6.03

 

Compliance

     29   

Section 6.04

 

Preservation of Rights

     30   

Section 6.05

 

Fiduciary Matters

     30   

Section 6.06

 

Further Assurances

     30   

Section 6.07

 

Not a Change in Control

     30   

Section 6.08

 

Notices

     30   

Section 6.09

 

Limitation on Enforcement; Third Party Beneficiaries

     31   

Section 6.10

 

Disputes

     31   

Section 6.11

 

Schedules

     31   

Section 6.12

 

Interpretation

     31   

Section 6.13

 

Counterparts; Entire Agreement, Conflicts; Corporate Power; Facsimile Signatures

     32   

Section 6.14

 

Governing Law

     33   

Section 6.15

 

Assignability

     33   

Section 6.16

 

Severability

     33   

Section 6.17

 

Force Majeure

     33   

 

i


Section 6.18

 

No Set Off

     34   

Section 6.19

 

Headings

     34   

Section 6.20

 

Survival of Covenants

     34   

Section 6.21

 

Waivers of Default

     34   

Section 6.22

 

Amendments

     34   

Section 6.23

 

Limitations of Liability

     34   

Section 6.24

 

Mutual Drafting

     34   

Schedules:

Schedule 2.03(a)      -      Establishment of QHC Benefit Plans

Addenda:

Employee Benefit Plans Addendum

 

ii


EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT dated as of April 29, 2016 and effective as of the Effective Time (as defined below) is by and between COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (“ CHS ”), and QUORUM HEALTH CORPORATION, a Delaware corporation (“ QHC ”).

R E C I T A L S:

WHEREAS, the CHS Board (as defined below) has determined that it is appropriate and advisable to separate (i) thirty-eight (38) of CHS’s hospitals and related business operations and (ii) Quorum Health Resources, LLC, a hospital management and consulting services business, from CHS’s other hospitals and businesses;

WHEREAS, to effectuate the foregoing, CHS and QHC have entered into a Separation and Distribution Agreement (as defined below) which provides for, among other things, the contribution from CHS to QHC of certain Assets (as defined below), the assumption by QHC of certain liabilities from CHS, the distribution by CHS of QHC Common Stock (as defined below) to CHS shareholders, and the execution and delivery of certain other agreements to facilitate and provide for the foregoing, in each case subject to the terms and conditions set forth therein;

WHEREAS, the Employees (as defined below) of the QHC Business (as defined below) have been employed by the CHS Group (as defined below) and are to be Employees of the QHC Group (as defined below) after the Separation (as defined below); and

WHEREAS, this Agreement describes the principal employment, compensation, equity award and employee benefit plan arrangements between the Parties (as defined below).

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

AGREEMENT

ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms . The following capitalized terms as used in this Agreement shall have the meaning set forth below unless otherwise specified herein:

Adjusted CHS Award ” means an Adjusted CHS Option, Adjusted CHS Restricted Stock Award, or Adjusted CHS RSU Award.

Adjusted CHS Option ” means an option to purchase one or more CHS Common Shares adjusted in accordance with Section 5.01 .


Adjusted CHS Restricted Stock Award ” means a CHS Restricted Stock Award adjusted in accordance with Section 5.01 .

Adjusted CHS RSU Award ” means a restricted stock unit award granted pursuant to a CHS Stock Program or the Directors’ Fees Deferral Plan adjusted in accordance with Section 5.01 .

Adjusted QHC Stock Value ” means the quotient obtained by dividing (i) the QHC Stock Value by (ii) the Distribution Ratio.

Affiliate ” has the meaning set forth in the Separation and Distribution Agreement.

Agreement ” means this Employee Matters Agreement and each of the Schedules hereto.

Ancillary Agreements ” has the meaning set forth in the Separation and Distribution Agreement.

Assets ” has the meaning set forth in the Separation and Distribution Agreement.

Benefit Plan ” means any (i) “employee benefit plan,” as defined in ERISA Section 3(3) (whether or not such plan is subject to ERISA); and (ii) employment, compensation, severance, salary continuation, bonus, incentive, retirement, thrift, savings, pension, termination benefit (including termination notice requirements), termination indemnity, other indemnification, supplemental unemployment benefit, severance pay, profit sharing, deferred compensation, stock ownership, stock purchase, stock option, stock appreciation right, restricted stock, “phantom” stock, performance share, restricted stock unit, other stock-based incentive, change in control, paid time off, perquisite, fringe benefit, vacation, disability, life, or other insurance, death benefit, hospitalization, medical, or other compensatory or benefit plan, program, fund, agreement, arrangement, or policy of any kind (whether written or oral, qualified or nonqualified, funded or unfunded, foreign or domestic, currently effective or terminated), and any trust, escrow or similar agreement related thereto, whether or not funded, excluding any plan, program, fund, agreement, arrangement, or policy that is mandated by and maintained solely pursuant to applicable Law; provided , however , the term “Benefit Plan” does not include any government-sponsored benefits, such as workers’ compensation, government-sponsored retirement plans, unemployment or any similar plans, programs or policies or any Individual Agreement.

Change of Control ” has the meaning set forth in the Separation and Distribution Agreement.

CHS ” has the meaning set forth in the first sentence of this Agreement.

CHS Benefit Plan ” means a Benefit Plan sponsored by, maintained by, or contributed to by the CHS Group.

CHS Board ” means the CHS board of directors.

 

2


CHS Common Shares ” has the meaning set forth in the Separation and Distribution Agreement.

CHS Compensation Committee ” means the compensation committee of the CHS Board.

CHS DCP ” means the CHS/Community Health Systems, Inc. Deferred Compensation Plan.

CHS Former Employee ” means a Former Employee who is not a QHC Former Employee.

CHS GHP ” means the Community Health Systems Group Health Plan.

CHS Group ” means CHS and the CHS Subsidiaries.

CHS Health and Welfare Plans ” means a Health and Welfare Plans sponsored by, maintained by, or contributed to by the CHS Group; provided , however , that such term shall not include any of the plans listed on Schedule 2.03(a) hereto.

CHS Nonqualified Plans ” means, collectively, the CHS DCP, CHS NQDCP, CHS SSP, and HMA TAWP.

CHS Nonqualified Trusts ” means, collectively, the CHS/Community Health Systems, Inc. Deferred Compensation Plan Trust, the Trust Under the CHS NQDCP, the Trust Under the CHS 401(k) Supplemental Savings Plan, and the Rabbi Trust Established Under the Health Management Associates, Inc. Tax Advantaged Wealth Plan.

CHS NQDCP ” means the CHS NQDCP.

CHS Option ” means an option to purchase one or more CHS Common Shares granted under a CHS Stock Program and outstanding immediately prior to the Distribution Date (whether or not then exercisable).

CHS Pre-Distribution Stock Value ” means the volume-weighted average closing price of a CHS Common Share, as reported on the NYSE, traded regular way over the five (5) trading days ending on the Distribution Date.

CHS Post-Distribution Stock Value ” means the opening per-share price, as reported on the NYSE, of a CHS Common Share on the first trading day following the Distribution Date.

CHSPSC ” means CHSPSC, LLC, a Delaware limited liability company.

CHS Restricted Stock Award ” means a restricted stock award granted pursuant to a CHS Stock Program and outstanding immediately prior to the Distribution Date.

CHS Retained Employee ” means any Employee other than a QHC Employee.

 

3


CHS Retirement Committee ” means the CHS/Community Health Systems, Inc. Retirement Committee.

CHS RIP ” means the CHS/Community Health Systems, Inc. Retirement Income Plan.

CHS RIP Trust ” means the CHS/Community Health Systems, Inc. Retirement Income Plan Trust.

CHS RSU Award ” means a restricted stock unit award granted pursuant to a CHS Stock Program or the Directors’ Fees Deferral Plan and outstanding immediately prior to the Distribution Date.

CHS RSU Award Multiplier ” means the sum of one plus the quotient obtained by dividing (i) the Adjusted QHC Stock Value by (ii) the difference between (A) the CHS Pre-Distribution Stock Value and (B) the Adjusted QHC Stock Value (rounded (general rule) to the third decimal place).

CHS Savings Plans ” means, collectively, the CHS/Community Health Systems, Inc. Retirement Savings Plan, the CHS/Community Health Systems Inc. Standard 401(k) Plan, and the Health Management Associates, Inc. Retirement Savings Plan.

CHS SERP ” means the CHS/Community Health Systems, Inc. Supplemental Executive Retirement Plan.

CHS SSP ” means the CHS 401(k) Supplemental Savings Plan.

CHS Stock Programs ” means, collectively, the Community Health Systems, Inc. 2000 Stock Option and Award Plan, as amended and restated as of March 20, 2013, the Community Health Systems, Inc. 2009 Stock Option and Award Plan, as amended and restated as of March 19, 2014, and any incentive compensation program or arrangement that governs the terms of equity-based incentive awards assumed by the CHS Group in connection with a corporate transaction and that is maintained by the CHS Group immediately prior to the Distribution Date (excluding any plan maintained solely by QHC or any QHC Subsidiary), and any sub-plans established under those programs.

CHS Stock Value ” means value of the CHS Common Shares that are subject to CHS Options immediately before the Distribution for purposes of Section 409A of the Code, and shall be determined to be the sum of the fair market value of the CHS Common Shares prior to the Distribution (determined in the manner set forth by the Committee) and the Adjusted QHC Stock Value.

CHS Subsidiary ” means any Subsidiary of CHS prior to, at or after the Effective Time (including, prior to the Effective Time, QHC and the QHC Subsidiaries).

COBRA ” means coverage required by Code Section 4980B or ERISA Section 601 et. seq.

 

4


Code ” means the U.S. Internal Revenue Code of 1986, as amended.

Conveyance and Assumption Instruments ” has the meaning set forth in the Separation and Distribution Agreement.

Directors’ Fees Deferral Plan ” means the Community Health Systems, Inc. Director’s Fees Deferral Plan adopted as of December 14, 2004 Amended and Restated as of Decmeber 10, 2008, as amended.

Distribution ” has the meaning set forth in the Separation and Distribution Agreement.

Distribution Date ” has the meaning set forth in the Separation and Distribution Agreement.

Distribution Ratio ” means the number of shares of CHS Common Stock in respect of which one QHC Common Share is distributed in the Distribution.

Effective Time ” means 12:01 a.m. Eastern Time on the Distribution Date.

Employee ” means an employee on the payroll of CHS, a CHS Subsidiary, QHC or a QHC Subsidiary (not including any Former Employee), including any employee absent from work on account of vacation, jury duty, funeral leave, personal leave, sickness, short-term disability, long-term disability or workers’ compensation leave (in each case, unless treated as a separated employee for employment purposes), military leave, family leave, pay continuation leave, or other approved leave of absence or for whom an obligation to recall, rehire or otherwise return to employment exists under a contractual obligation or Law.

Employee Agreement ” means an employment contract between a member of the CHS Group and an Employee, including, without limitation, the standard-form employee agreement customarily signed by certain Employees of the CHS Group.

Employee Recoupment Asset ” means an employer’s right to repayment from an employee in respect of a sign-on bonus payment, relocation expense payment, tuition payment, reimbursement, loan, or other similar item, including any agreement related thereto; provided, however, that Employee Recoupment Assets shall not include an employer’s right to recover the amount and/or value of any compensatory payment or award received by an employee, and/or gains realized by such employee in connection with such awards, pursuant to any “clawback” or similar policy of such employer related to the misconduct of such employee.

Employment Tax ” means withholding, payroll, social security, workers’ compensation, unemployment, disability and any similar tax imposed by any Tax Authority or social security authority, and any interest, penalties, additions to tax, or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined, or unitary group of taxpayers. With respect to any Employment Tax, the term “Tax Authority” means the governmental entity or political subdivision thereof that imposes such Employment Tax, and the agency (if any) charged with the collection of such Employment Tax for such entity or subdivision.

 

5


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

Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

Force Majeure ” has the meaning set forth in the Separation and Distribution Agreement.

Former Employee ” means any individual whose employment with the CHS Group or the QHC Group terminated on or prior to the Distribution Date for whom no obligation to recall, rehire or otherwise return to employment exists under a contractual obligation or Law.

Governmental Authority ” has the meaning set forth in the Separation and Distribution Agreement.

Group ” means the CHS Group or the QHC Group, as the context requires.

Health and Welfare Plans ” means any Benefit Plans established or maintained to provide, for Employees or Former Employees or their beneficiaries, through the purchase of insurance or otherwise, medical, dental, prescription, vision, short-term disability, long-term disability, death benefits, life insurance, accidental death and dismemberment insurance, business travel accident insurance, employee assistance program, group legal services, wellness, cafeteria (including premium payment, health care flexible spending account, and dependent care flexible spending account components), travel reimbursement, transportation, vacation benefits, apprenticeship or other training programs, day care centers, or prepaid legal services benefits, including any “employee welfare benefit plan” (as defined in ERISA Section 3(1)) that is not a severance plan.

HMA TAWP ” means the Health Management Associates, Inc. Tax Advantaged Wealth Plan.

Incurred Claim ” means a Liability related to services or benefits provided under a Benefit Plan, and shall be deemed to be incurred: (i) with respect to medical, dental, vision, and prescription drug benefits, upon the rendering of services giving rise to such Liability; (ii) with respect to death benefits, life insurance, accidental death and dismemberment insurance, and business travel accident insurance, upon the occurrence of the event giving rise to such Liability; (iii) with respect to disability benefits, upon the date of disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such Liability; (iv) with respect to a period of continuous hospitalization, upon the date of admission to the hospital; and (v) with respect to tuition reimbursement or adoption assistance, upon completion of the requirements for such reimbursement or assistance, whichever is applicable.

Individual Agreement ” shall mean any individual (i) offer letter or employment contract, (ii) retention, severance or change of control agreement, (iii) proprietary information and/or inventions agreement or (iv) any agreement containing restrictive covenants (including confidentiality, intellectual property assignment, license, waiver and disclosure provisions, non-competition and non-solicitation provisions) between a member of the CHS Group or QHC

 

6


Group and a QHC Employee or any QHC Former Employee, or between a member of the CHS Group or QHC Group and a CHS Employee or any CHS Former Employee, as applicable, as in effect immediately prior to the Effective Time.

Law ” has the meaning set forth in the Separation and Distribution Agreement.

Liabilities ” has the meaning set forth in the Separation and Distribution Agreement.

Notice ” means any written notice, request, demand or other communication specifically referencing this Agreement and given in accordance with Section 6.08 .

Parties ” means the parties to this Agreement.

Person ” has the meaning set forth in the Separation and Distribution Agreement.

Post-Distribution QHC Employee ” means a QHC Employee whose intended transfer from the CHS Group to the QHC Group in connection with the Distribution is to occur after the Distribution Date.

Proceeding ” has the meaning set forth in the Separation and Distribution Agreement.

QDRO ” means a qualified domestic relations order within the meaning of ERISA Section 206(d) and Code Section 414(p).

QHC ” has the meaning set forth in the first sentence of this Agreement.

QHC Annual Bonus Plan ” has the meaning set forth in Section 5.02(b)(i) .

QHC Award ” means a QHC Restricted Stock Award issued pursuant to Section 5.01 .

QHC Benefit Plan ” means, following the Distribution, each Benefit Plan sponsored by, maintained by, or contributed to by the QHC Group.

QHC Board ” means the QHC board of directors.

QHC Business ” has the meaning set forth in the Separation and Distribution Agreement.

QHCCS ” means QHCCS, LLC, a Delaware limited liability company.

QHC Common Stock ” has the meaning set forth in the Separation and Distribution Agreement.

QHC DCP ” means the Quorum Health Nonqualified Deferred Compensation Plan.

 

7


QHC DCP Trust ” means the Rabbi Trust Established Under the Quorum Health Nonqualified Deferred Compensation Plan.

QHC Employee ” means any Employee who is (i) employed by the QHC Group as of immediately prior to the Distribution Date, (ii) designated prior to the Distribution Date by CHS as an individual whose employment is to transfer (referred to internally by the Parties as “map”) to the QHC Group, or (iii) designated as a QHC Employee by joint agreement of the Parties (in all cases, other than an Employee who is designated by CHS prior to the Distribution Date as intended not to transfer to the QHC Group).

QHC Former Employee ” means a Former Employee who either (i) was designated by CHS as an Employee whose employment was to transfer (“map”) to the QHC Group or (ii) if no such designation was made, was primarily employed or engaged in the QHC Business immediately prior to such individual’s termination of employment.

QHC Group ” means QHC and the QHC Subsidiaries.

QHC Health and Welfare Plans ” means, following the Distribution, Health and Welfare Plans sponsored by, maintained by, or contributed to by the QHC Group.

QHC ISP ” means the Quorum Health Corporation 2016 Stock Award Plan.

QHC Restricted Stock Award ” means a restricted stock award granted by QHC in accordance with Section 5.01 .

QHC Savings Plans ” means, following the Distribution, retirement plans sponsored by, maintained by, or contributed to by the QHC Group that are intended to be qualified under Code Section 401(a) that also provide for a cash-or-deferred arrangement or contain a qualified Roth contribution arrangement.

QHC SERP ” means the Quorum Health Supplemental Executive Retirement Plan.

QHC Stock Value ” means the volume weighted average of the closing price of QHC Common Stock, as reported on the NYSE, traded on a when-issued basis over the five (5) trading days ending on the Distribution Date.

QHC Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

Rehired Employee ” means (i) a Transferred Employee who terminates employment with the QHC Group after the Distribution Date and is subsequently rehired by the CHS Group during the Transition Period (including an individual whose employment is transferred pursuant to the procedures contemplated by Section 2.04(b) ); (ii) a CHS Retained Employee who terminates employment with the CHS Group after the Distribution Date and is subsequently hired by the QHC Group during the Transition Period (including an individual whose employment is transferred pursuant to the procedures contemplated by Section 2.04(b) ); or (iii) a Former Employee who commences employment with the CHS Group or the QHC Group during the Transition Period.

 

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Securities Act ” means the Securities Act of 1933, as amended.

Separation ” has the meaning set forth in the Separation and Distribution Agreement.

Separation and Distribution Agreement ” means the Separation and Distribution Agreement by and between the Parties, dated as of April 29, 2016.

Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

Third Party ” has the meaning set forth in the Separation and Distribution Agreement.

Third Party Claim ” has the meaning set forth in the Separation and Distribution Agreement.

Transition Services Agreements ” has the meaning set forth in the Separation and Distribution Agreement.

Transfer Date ” means, with respect to each (i) QHC Employee (other than a Post-Distribution QHC Employee), the Distribution Date; and (ii) Post-Distribution QHC Employee, the date on which such person first becomes employed by the QHC Group following the Distribution Date.

Transferred Employee ” has the meaning set forth in Section 2.02(a)(i) .

Transferred Flexible Spending Account Balances ” has the meaning set forth in Section 4.01(d)(ii) .

Transition Period ” means the period beginning on the Distribution Date and ending on the date that is the 24-month anniversary of the Distribution Date. Notwithstanding the foregoing, for purposes of the CHS Savings Plans and the QHC Savings Plans, “Transition Period” means the period beginning on the Distribution Date and ending on December 31, 2017.

Transition Services Agreement ” has the meaning set forth in the Separation and Distribution Agreement.

WCH Cash Balance Pension Plan ” means the Watsonville Community Hospital Cash Balance Pension Plan.

 

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ARTICLE II

GENERAL PRINCIPLES

Section 2.01 Allocation of Employment Related Liabilities .

(a) QHC Liabilities . Effective as of the Effective Time, and except as expressly provided in this Agreement, QHC hereby assumes (or retains) and agrees to pay, perform, fulfill, and discharge, or to cause the applicable QHC Subsidiaries to assume (or retain) and agree to pay, perform, fulfill and discharge, all Liabilities to the extent relating to, arising out of, or resulting from:

(i) the employment (or termination of employment) of any QHC Employee by the CHS Group up to the applicable Transfer Date and by the QHC Group on and after the applicable Transfer Date (including, in each case, all Liabilities relating to, arising out of, or resulting from Employment Taxes, any CHS Benefit Plan or any QHC Benefit Plan);

(ii) the employment (or termination of employment) of any QHC Former Employee (including, in each case, all Liabilities relating to, arising out of, or resulting from Employment Taxes, any CHS Benefit Plan or any QHC Benefit Plan); and

(iii) obligations, Liabilities, and responsibilities expressly assumed or retained by QHC or the applicable QHC Subsidiaries pursuant to this Agreement.

(b) CHS Liabilities . Effective as of the Effective Time, and except as expressly provided in this Agreement, CHS hereby retains (or assumes) and agrees to pay, perform, fulfill, and discharge, or to cause the applicable CHS Subsidiaries to assume (or retain) and agree to pay, perform, fulfill and discharge, all Liabilities to the extent relating to, arising out of, or resulting from:

(i) the employment (or termination of employment) of any CHS Retained Employee by the CHS Group prior to, on, or after the Distribution Date (including all Liabilities to the extent relating to, arising out of, or resulting from Employment Taxes or any CHS Benefit Plan);

(ii) the employment (or termination of employment) of any CHS Former Employee (including all Liabilities to the extent relating to, arising out of, or resulting from Employment Taxes or any CHS Benefit Plan); and

(iii) obligations, Liabilities, and responsibilities expressly retained or assumed by CHS or the applicable CHS Subsidiaries pursuant to this Agreement.

(c) Unaddressed Liabilities . To the extent that this Agreement does not address particular Liabilities under any Benefit Plan or with respect to any Employees and the Parties later determine that they should be allocated in connection with the Separation, the Parties shall agree in good faith on the allocation, taking into account the handling of comparable Liabilities under this Agreement.

 

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Section 2.02 Employment with QHC .

(a) Employment Transfers . The Parties intend for QHC Employees to transfer to the QHC Group and shall use commercially reasonable efforts and cooperate with each other to effectuate this intent. The Parties shall cooperate in good faith to identify clearly the Employees designated for transfer to the QHC Group.

(i) Except as otherwise mutually agreed upon by the Parties, as of each QHC Employee’s Transfer Date, the QHC Group shall: (A) continue to employ (on a basis consistent with Section 2.02(b) ) each QHC Employee employed in a jurisdiction where employment continues automatically by operation of Law (and such individual does not object, where such right exists under applicable Law); and (B) offer to employ (on a basis consistent with Section 2.02(b) ) each QHC Employee employed in a jurisdiction where employment does not continue automatically by operation of Law. Each QHC Employee who accepts an offer of employment with the QHC Group, or who continues employment with the QHC Group following his or her Transfer Date automatically by operation of Law (and does not object where such right exists under applicable Law), as the case may be, including each Post-Distribution QHC Employee who so accepts an offer or so continues employment, will be referred to in this Agreement as a “ Transferred Employee .”

(ii) Within ninety (90) days following the intended Transfer Date, the CHS Group may terminate the employment of any QHC Employee who does not become a Transferred Employee as of his or her intended Transfer Date. QHC will be responsible for, and will indemnify the CHS Group from and against, any Liabilities incurred (including any severance payments made): (A) in connection with the termination of a QHC Employee pursuant to this Section 2.02(a)(ii) ; and (B) arising from or in connection with a refusal by any QHC Employee to become a Transferred Employee.

(b) Compensation and Benefits .

(i) With the exception of the CHS Stock Programs or as otherwise expressly provided in this Agreement or in local Conveyance and Assumption Instruments, no QHC Employee or QHC Former Employee shall participate in any CHS Benefit Plan after December 31, 2015.

(ii) Except as expressly provided in this Agreement, the QHC Group shall provide to each Transferred Employee as of his or her Transfer Date (A) base salary at the same rate as provided to that Transferred Employee immediately prior to the Transfer Date, (B) cash incentive compensation opportunities that are substantially similar to those offered under the corresponding CHS Benefit Plan(s) immediately prior to the Transfer Date, and (C) benefits under the other QHC Benefit Plans that are substantially similar, as of January 1, 2016, to benefits provided under the corresponding CHS Benefit Plans as of December 31, 2015; provided, however, that the QHC Benefit Plans shall not be required to include benefits substantially similar to the benefits provided under the CHS Stock Programs prior to the Distribution Date. Nothing in the preceding sentence shall prevent the QHC Group from modifying the compensation and benefits of a Transferred Employee after such Transferred Employee’s Transfer Date.

 

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(c) Service Credit. Except as otherwise expressly provided in this Agreement or to the extent it would result in a duplication of benefits, (i) QHC and each QHC Benefit Plan shall give each QHC Employee, including an Employee who becomes a QHC Employee during the Transition Period, credit for all service with the CHS Group and shall calculate such service as it would be calculated by CHS or under the corresponding CHS Benefit Plan, and (ii) CHS and each CHS Benefit Plan shall give each Rehired Employee employed by CHS credit for service with the QHC Group (as contemplated under Section 2.04 ) and shall calculate such service as it would be calculated by QHC or under the corresponding QHC Benefit Plan as of the rehire date.

Section 2.03 Establishment of QHC Plans .

(a) Generally. Except as otherwise provided in Section 3.04 with respect to the QHC DCP, prior to January 1, 2016, QHC or an Affiliate shall adopt Benefit Plans (and related trusts, if applicable, as determined by the Parties) with terms substantially similar to those of the corresponding CHS Benefit Plans, including in particular those listed in Schedule 2.03(a) ; provided , however , that QHC may limit participation in any QHC Benefit Plan to QHC Employees and, if applicable, QHC Former Employees who participated in a corresponding CHS Benefit Plan as of December 31, 2015, as well as Employees of CHSPSC as of December 31, 2015, who will become Employees of QHCCS after January 1, 2016, but prior to the Distribution Date. Notwithstanding the foregoing, QHC Employees who were participants in the CHS SERP shall not accrue additional benefits under the QHC SERP unless and until such additional accrued benefits are approved by the QHC Board in its sole discretion following the Distribution Date.

(b) Plan Information and Operation . CHS shall provide QHC with information describing each CHS Benefit Plan election made by a QHC Employee or QHC Former Employee that may have application following December 31, 2015. Except as otherwise required under the Code or applicable Law, QHC shall determine, in its sole discretion, whether to administer the QHC Benefit Plans using those elections or to require QHC Employees to submit new elections with respect to the QHC Benefit Plans. Except as provided in this Agreement, the Distribution and the transfer of any Employee’s employment to the QHC Group shall not cause a distribution from or payment of benefits under any CHS Benefit Plan. Each Party shall, upon reasonable request, provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.

(c) Employee Benefit Plans Addendum . In addition to the provisions of this Section 2.03, Article III, and Article IV, the Parties also agree to the terms of the attached Employee Benefit Plans Addendum, which further describes the Benefit Plan arrangements between CHS and QHC.

 

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Section 2.04 Post-Distribution Employment Transfers .

(a) No-Hire. The Parties agree that, during the Transition Period, neither Party nor any of such Party’s Affiliates shall hire an Employee of the other Party and its Affiliates without the express written consent of each Party’s head of human resources (or such individual’s delegate) in accordance with Section 2.04(b) ; provided, however, that from and after the one (1) year anniversary of the Distribution Date and for the remainder of the Transition Period, the foregoing shall not prohibit either Party from hiring an Employee of the other Party or its Affiliates that responds to general solicitations made by the hiring Party to the public or the industry generally through advertising or electronic listings which are not targeted at employees of the other Party or its Affiliates so long as such person has ceased to be an Employee of the other Party or its Affiliates for a period of at least sixty (60) days prior to date of hire by the hiring Party. This Section 2.04(a) shall only apply to management employees of the CHS Group or QHC Group, that also qualify as exempt employees under the federal Fair Labor Standards Act and as a Supervisor under Section 2(11) of the National Labor Relations Act.

(b) Transition Period; Transfers by Mutual Agreement . The Parties recognize that, during the Transition Period, they may determine it to be in their mutual best interests to transfer an individual classified as a CHS Retained Employee to the QHC Group or to transfer an individual classified as a Transferred Employee to the CHS Group. With the express written consent of each Party’s head of human resources (or such individual’s delegate), such CHS Retained Employee’s or Transferred Employee’s, as applicable, employment will be terminated by the CHS Group or the QHC Group, as applicable, and such Employee will be immediately hired by the other Party (such terminations and hires are referred to in this Section 2.04(b) as “transfers”). CHS Retained Employees (with such status being determined as of immediately following the Distribution Date) who are subsequently transferred to the QHC Group pursuant to this Section 2.04(b) shall be treated as CHS Retained Employees for all purposes hereof during their time as Employees of the CHS Group until their actual transfer to the QHC Group, upon and following which the Parties shall use commercially reasonable efforts to provide that they are treated as Transferred Employees for all purposes hereof. Transferred Employees (with such status being determined as of immediately following the applicable Transfer Date) who are subsequently transferred to the CHS Group pursuant to this Section 2.04(b) shall be treated as Transferred Employees for all purposes hereof during their time as Employees of the QHC Group until their actual transfer to the CHS Group, upon and following which the Parties shall use commercially reasonable efforts to provide that they are treated as CHS Retained Employees for all purposes hereof. Without limiting the generality of the foregoing, except as provided in Section 2.02(c) , each Rehired Employee whose employment is transferred pursuant to this Section 2.04(b) shall be deemed for all purposes to have been continuously employed by the applicable entity hiring such Employee for all prior periods of time that such Employee was employed by either the CHS Group or the QHC Group. Nothing in this paragraph requires (i) the hiring Party to make whole any Rehired Employee if such Employee leaves behind unvested equity awards or other benefits that were granted after the Distribution Date, or (ii) the former employer to waive vesting requirements with respect to any unvested equity awards or other benefits held by any Rehired Employee that were granted after the Distribution Date.

(c) Rehired Employees . Each Rehired Employee whose rehire does not occur in connection with a transfer pursuant to Section 2.04(b) shall be subject to the hiring Party’s

 

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general rules and Benefit Plan terms applicable to rehires. Such Rehired Employee shall be deemed, for purposes of applying such rules, including break-in-service and service crediting rules, except as provided in Section 2.02(c) , to have been employed by the applicable entity hiring him or her for all prior periods of time that he or she was employed by either the CHS Group or the QHC Group.

Section 2.05 Individual Agreements .

(a) Assignment by CHS . To the extent necessary, CHS shall assign, or cause an applicable member of the CHS Group to assign, to QHC or another member of the QHC Group, as designated by QHC, all Individual Agreements between such member of the CHS Group and any QHC Employee or QHC Former Employee, with such assignment to be effective as of the Effective Time; provided, however, that to the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Effective Time, each member of the QHC Group shall be considered to be a successor to each member of the CHS Group for purposes of, and a third-party beneficiary with respect to, such Individual Agreement, such that each member of the QHC Group shall enjoy all of the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary and the right to enforce any such agreement), with respect to the business operations of the QHC Group; provided, further, that in no event shall CHS be permitted to enforce any Individual Agreement (including any agreement containing non-competition or non-solicitation covenants) against a QHC Employee or QHC Former Employee for action taken in such individual’s capacity as a QHC Employee or QHC Former Employee unless the Parties mutually agree that such action is commercially reasonable under the circumstances as they exist at such time.

(b) Assumption by QHC . Effective as of the Effective Time, QHC will assume and honor, or will cause a member of the QHC Group to assume and honor, any Individual Agreement to which any QHC Employee or QHC Former Employee is a party with any member of the CHS Group, and all obligations and responsibilities of the applicable member of the CHS Group thereunder; provided , however , that CHS and the CHS Group shall retain all rights or obligations under each Employee Agreement or applicable Law to the extent that such rights or obligations are unrelated to the QHC Business.

ARTICLE III

QUALIFIED AND NON-QUALIFIED RETIREMENT PLANS

Section 3.01 WCH Cash Balance Pension Plan.

(a) Establishment of WCH Cash Balance Pension Plan . Effective as of December 28, 2015, QHC or an Affiliate shall establish the WCH Cash Balance Pension Plan, which shall be substantially similar to, and shall include a benefit formula that is the same as the benefit formula in effect under, the WCH Cash Balance Pension Plan portion of the CHS RIP as of December 27, 2015. As soon as practicable after December 28, 2015, and upon receipt by CHS of (i) a copy of the WCH Cash Balance Pension Plan; and (ii) copies of certified resolutions of the QHC Board or an Affiliate evidencing adoption of the WCH Cash Balance Pension Plan

 

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and any related trust(s) and the assumption by the WCH Cash Balance Pension Plan of the Liabilities described in Section 3.01(b), CHS shall direct the trustee of the CHS RIP Trust to transfer from the portion of the CHS RIP Trust that holds assets of the WCH Cash Balance Pension Plan portion of the CHS RIP to the WCH Cash Balance Pension Plan Trust the amounts described in Section 3.01(b) .

(b) ERISA Section 4044 Transfer . As soon as practicable following December 28, 2015, QHC or an Affiliate shall cause the WCH Cash Balance Pension Plan to accept Assets and assume all Liabilities under the WCH Cash Balance Pension Plan portion of the CHS RIP and the CHS RIP shall transfer all such Assets and be relieved of such Liabilities. The amount of Assets to be transferred from the CHS RIP to the WCH Cash Balance Pension Plan in such transfer (or transfers) shall be determined as of the December 28, 2015, in accordance with, and shall comply with, Code Section 414(l) and, to the extent deemed applicable by the Parties, ERISA Section 4044. Assumptions used to determine the value (or amount) of the Assets to be transferred shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under U.S. Department of Labor Regulations Section 4044.51-57 and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report most recently prepared prior to the transfer by the actuary for the CHS RIP. The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between December 28, 2015, and an assessment date set by CHS that is as close as practicable, taking into account the timing and reporting of valuation of assets in the CHS RIP Trust, to the date upon which Assets equal in value to the transfer amount are actually transferred from the CHS RIP to the WCH Cash Balance Pension Plan.

(c) WCH Cash Balance Pension Plan Provisions . The WCH Cash Balance Pension Plan shall provide that:

(i) all eligible Employees, current participants, and past participants covered under the WCH Cash Balance Pension Plan portion of the CHS RIP shall (A) be eligible to participate in the WCH Cash Balance Pension Plan as of December 28, 2015, to the extent they were eligible to participate in the CHS RIP as of December 27, 2015, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the CHS RIP as of December 28, 2015, as if that service had been rendered to QHC or an Affiliate;

(ii) the compensation paid by the CHS Group to a participant in the WCH Cash Balance Pension Plan portion of the CHS RIP that is recognized under the CHS RIP as of December 28, 2015, shall be credited and recognized for all applicable purposes under the WCH Cash Balance Pension Plan as though it were compensation from the QHC Group;

(iii) the accrued benefit of each participant under the WCH Cash Balance Pension Plan portion of the CHS RIP as of December 28, 2015, shall be payable under the WCH Cash Balance Pension Plan at the time and in a form that would have been permitted under the CHS RIP as in effect as of December 28, 2015, with employment by the CHS Group prior to December 28, 2015, treated as employment by the QHC Group under the WCH Cash Balance Pension Plan for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms; and

 

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(iv) the WCH Cash Balance Pension Plan shall assume and honor the terms of all QDROs in effect under the WCH Cash Balance Pension Plan portion of the CHS RIP as of December 28, 2015.

(d) Determination Letter Request . QHC or an Affiliate shall submit an application to the Internal Revenue Service as soon as practicable (but no later than the last day of the remedial amendment period as defined in applicable Code provisions) for a determination letter regarding the qualification of the WCH Cash Balance Pension Plan and the tax status of its related trust and shall make any amendments reasonably requested by the Internal Revenue Service to receive a favorable determination letter regarding the WCH Cash Balance Pension Plan.

(e) CHS RIP after December 27, 2015 . After December 27, 2015, no Employees of the QHC Group shall accrue any benefits under the CHS RIP. Without limiting the generality of the foregoing, QHC Employees shall cease to be active participants in the CHS RIP effective immediately prior to December 28, 2015.

(f) Plan Fiduciaries . For all periods after December 27, 2015, the Parties agree that the applicable fiduciaries of each of the CHS RIP and the WCH Cash Balance Pension Plan, respectively, shall have the authority with respect to the CHS RIP and the WCH Cash Balance Pension Plan, respectively, to determine the plan investments and such other matters as are within the scope of their duties under ERISA Section 404.

(g) No Loss of Unvested Benefits; No Distributions . No QHC Employee will lose unvested benefits under the CHS RIP or the WCH Cash Balance Pension Plan and no QHC Employee shall be entitled to a distribution of his or her benefit under the CHS RIP as a result of the transactions contemplated in this Agreement.

Section 3.02 Retirement Savings Plans .

(a) Establishment of QHC Savings Plans . Effective as of January 1, 2016, QHC or an Affiliate shall establish the QHC Savings Plans. The terms of the QHC Savings Plans shall be substantially similar, with respect to the applicable QHC Employees and QHC Former Employees, to the terms of the applicable CHS Savings Plans as of the December 31, 2015 (except as described in Section 3.02(f) ). On or prior to January 1, 2016, QHC shall provide CHS with (i) a copy of the QHC Savings Plans and (ii) a copy of certified resolutions of the QHC Board (or its authorized committee or other delegate) evidencing adoption of the QHC Savings Plans and the related trusts and the assumption by the QHC Savings Plans of the Liabilities described in Section 3.02(b) .

(b) Transfer of Account Balances . As soon as practicable after the establishment of the QHC Savings Plans, CHS or an Affiliate shall cause the trustees of the CHS Savings Plans to transfer from the trusts that form applicable parts of the CHS Savings Plans to the trusts that form applicable parts of the QHC Savings Plans amounts equal to the account

 

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balances of the QHC Employees and QHC Former Employees (including account balances in respect of beneficiaries and alternate payees established in relation to such individuals) under the CHS Savings Plans, determined as of the date of the transfer. Such transfers shall be made in cash, promissory notes evidencing outstanding loans and other Assets or any combination thereof in cash or in kind, as instructed by the CHS Retirement Committee. QHC shall cause the transferred amounts to be allocated among the QHC Employees’ and QHC Former Employees’ (and beneficiaries’ and/or alternate payees’, as applicable) QHC Savings Plans accounts and to such investment funds in the same manner in which those amounts were allocated under the CHS Savings Plans. Any Asset and Liability transfers pursuant to this Section 3.02 shall comply in all respects with Code Sections 414(l) and 411(d)(6).

(c) 2015 Plan Year Employer Matching Contributions . QHC will be responsible for, and will indemnify the CHS Group from and against, any Liabilities incurred in connection with any unfunded employer matching contributions accrued as of December 31, 2015, under the CHS Savings Plans with respect to QHC Employees and QHC Former Employees.

(d) QHC Savings Plans Provisions. The QHC Savings Plans shall provide that:

(i) QHC Employees and QHC Former Employees shall (A) be eligible to participate in one of the QHC Savings Plans as of January 1, 2016, to the extent they were eligible to participate in one of the CHS Savings Plans as of December 31, 2015, and (B) receive credit for vesting purposes for all service credited for that purpose under the CHS Savings Plans as if that service had been rendered to QHC; and

(ii) the account balance of each Transferred Employee and QHC Former Employee under the applicable CHS Savings Plan as of the date of the transfer of Assets from the applicable CHS Savings Plans (including any outstanding promissory notes) shall be credited to such individual’s account balance under one of the QHC Savings Plans.

(e) Determination Letter Request. QHC or an Affiliate shall submit applications to the Internal Revenue Service as soon as practicable (but no later than the last day of the remedial amendment period as defined in applicable Code provisions) for determinations regarding the qualification of the QHC Savings Plans and the tax-exempt status of the related trusts and shall make any amendments reasonably requested by the Internal Revenue Service to receive favorable determination letters regarding the QHC Savings Plans.

(f) CHS Savings Plans after December 31, 2015. After December 31, 2015, (i) the CHS Savings Plans shall continue to be responsible for Liabilities in respect of CHS Retained Employees and CHS Former Employees, and (ii) no Employees of the QHC Group (other than Post-Distribution QHC Employees) or QHC Former Employees shall accrue any benefits under the CHS Savings Plans. With the exception of Employees of CHSPSC as of December 31, 2015, who will become Employees of QHCCS after January 1, 2016, but prior to the Distribution Date, QHC Employees shall cease to be active participants in the CHS Savings Plans effective immediately prior to January 1, 2016.

 

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(g) Plan Fiduciaries. For all periods after December 31, 2015, the Parties agree that the applicable fiduciaries of each of the CHS Savings Plans and the QHC Savings Plans, respectively, shall have the authority with respect to the CHS Savings Plans and the QHC Savings Plans, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA Section 404.

(h) No Loss of Unvested Benefits; No Distributions. No QHC Employee will lose unvested benefits under the CHS Savings Plans or the QHC Savings Plans and no QHC Employee shall be entitled to a distribution of his or her benefit under the CHS Savings Plans as a result of the transactions contemplated in this Agreement.

(i) Subsequent Transfers. If, after December 31, 2015, a participant in one of the CHS Savings Plans becomes employed by the QHC Group or a participant in one of the QHC Savings Plans becomes employed by the CHS Group, any additional allocations shall occur under the CHS Savings Plans or the QHC Savings Plans, as applicable. If such participant’s employment by the CHS Group or the QHC Group commences during the Transition Period, the CHS Savings Plans or the QHC Savings Plans, as applicable, shall permit the applicable participant to roll over a distribution of such participant’s account (including any outstanding loans) from the QHC Savings Plans or the CHS Savings Plans, as applicable, all in accordance with the terms of the CHS Savings Plans and the QHC Savings Plans and/or plan administrative procedures, as applicable. Notwithstanding the preceding sentence, if agreement is reached prior to such participant transferring employment from CHS to QHC, or vice versa, the parties may agree to transfer such participant’s entire account balance from one of the CHS Savings Plans or the QHC Savings Plans to one of the other QHC Savings Plans or CHS Savings Plans, in a plan-to-plan transfer on such terms as the parties may agree.

Section 3.03 Supplemental Executive Retirement Plan .

(a) Establishment of QHC SERP. Effective no later than the effective date of the Separation, QHC or an Affiliate shall establish the QHC SERP.

(b) Assumption of SERP Liabilities and Transfer from CHS SERP. Except as provided below, QHC or an Affiliate shall, and shall cause the QHC SERP to, assume all Liabilities for all obligations under the CHS SERP for the benefits of QHC Employees (the “ Assumed SERP Liability ”), and CHS and the CHS SERP shall be relieved of all Liabilities for those benefits. CHS shall retain the Liabilities for all obligations under the CHS SERP for the benefits for CHS Retained Employees and Former Employees.

(c) QHC SERP Provisions. The QHC SERP shall provide that:

(i) the Assumed SERP Liability shall be payable under the QHC SERP at the time and in a form that would have been permitted under the CHS SERP as in effect as of the effective date of the QHC SERP, with employment by the CHS Group prior to the effective date of the QHC SERP treated as employment by the QHC Group under the QHC SERP for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms;

 

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(ii) except as otherwise may be determined by QHC in its sole discretion, other than the Assumed SERP Liability, no additional benefits shall accrue under the QHC SERP;

(iii) the compensation paid by the CHS Group to a Transferred Employee that was recognized under the CHS SERP as of immediately prior to the effective date of the QHC SERP, shall be credited and recognized for all applicable purposes under the QHC SERP as though it were compensation from the QHC Group; and

(iv) the QHC SERP shall assume and honor the terms of all arrangements relating to beneficiaries and alternate payees in effect and honored under the CHS SERP as of immediately prior to the effective date of the QHC SERP with respect to QHC Employees.

(d) CHS SERP after Effectiveness of QHC SERP. Upon and following the effective date of the QHC SERP, QHC Employees shall not participate in or accrue any benefits under the CHS SERP. Without limiting the generality of the foregoing, each QHC Employee shall cease to participate in the CHS SERP effective immediately prior to the effective date of the QHC SERP. The CHS SERP shall continue to be responsible for Liabilities in respect of CHS Retained Employees and Former Employees and their beneficiaries and/or alternate payees.

Section 3.04 Deferred Compensation Plan .

(a) Establishment of QHC DCP. No later than January 1, 2017, QHC or an Affiliate shall establish the QHC DCP, with terms substantially similar to those of the CHS NQDCP at such time.

(b) Assumption and Transfer of Liabilities of Eligible QHC Employees from the CHS Nonqualified Plans to the QHC DCP. As soon as administratively practicable after December 31, 2016:

(i) QHC or an Affiliate shall, and shall cause the QHC DCP to assume all Liabilities for all obligations under the CHS Nonqualified Plans for the benefit of all QHC Employees who are eligible to participate in the QHC DCP as of January 1, 2017, and the beneficiaries and/or alternate payees of such eligible QHC Employees, as such Liabilities are determined as of December 31, 2016 (including any Liabilities in connection with any deferral elections applicable to any bonuses earned but not yet paid by December 31, 2016), plus earnings or losses thereon through the date of such assumption. After the date of such assumption of such Liabilities by the QHC DCP, CHS and the CHS Nonqualified Plans shall be relieved of all such Liabilities owing to the eligible QHC Employees whose benefits under the CHS Nonqualified Plans are assumed by the QHC DCP in the manner described herein.

(ii) The Parties shall cooperate to cause the accounts of all QHC Employees who are eligible to participate in the QHC DCP as of January 1, 2017, in the CHS Nonqualified Plans to be transferred to the QHC DCP. QHC, or an Affiliate, shall credit each such eligible QHC Employee’s account in the QHC DCP with (1) the amount

 

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deferred by such individual into the CHS Nonqualified Plans through December 31, 2016 (including any deferral election applicable to any bonus earned but not yet paid by December 31, 2016), plus (2) any employer contributions, whether vested or unvested, deemed to have been made in relation to the amount described in (1), including, in each case, any earnings thereon through the date of such transfer.

(c) CHS Nonqualified Plans before January 1, 2017 .

(i) QHC Employees who either (A) have an existing balance under one or more of the CHS Nonqualified Plans as of December 31, 2015, or (B) are determined by CHS to be eligible to defer compensation earned after December 31, 2015, under one of the CHS Nonqualified Plans shall continue to participate in the applicable CHS Nonqualified Plans through December 31, 2016.

(ii) QHC shall honor any deferral elections under the CHS Nonqualified Plans with respect to compensation earned after December 31, 2015, and shall cause the amounts withheld from the compensation of QHC Employees pursuant to such elections to be transferred to CHS or the CHS Nonqualified Trusts, as instructed by CHS (including any deferral elections applicable to (A) any bonus earned in 2015 but not yet paid by December 31, 2015, and (B) any bonus earned in 2016 but not paid by December 31, 2016).

(d) CHS Nonqualified Plans after December 31, 2016. After December 31, 2016:

(i) With the exception of QHC Employees who experience a separation from service with the QHC Group on or before December 31, 2016, no QHC Employees shall participate in or accrue any benefits under any of the CHS Nonqualified Plans.

(ii) The CHS Nonqualified Plans shall continue to be responsible for Liabilities in respect of CHS Retained Employees, Former Employees, and QHC Employees who experience a separation from service with the QHC Group on or before December 31, 2016, and their beneficiaries and/or alternate payees.

(e) Establishment of QHC DCP Trust. As soon as administratively practicable after the effective date of the QHC DCP, QHC or an Affiliate shall establish the QHC DCP Trust, with terms and financing arrangements substantially similar to those of the CHS Nonqualified Trusts as of such time.

(f) Transfer of Assets from the CHS Nonqualified Trusts. As soon as administratively practicable after December 31, 2016, CHS shall, and shall cause each of the CHS Nonqualified Trusts to transfer Assets to the QHC DCP Trust in an amount approximately equal to the total Assets in each such CHS Nonqualified Trust multiplied by a fraction, the numerator of which is the total amount of the Liabilities in each of the CHS Nonqualified Plans supported by such trust are assumed by the QHC DCP pursuant to the provisions of Section 3.04(b), and the denominator of which is the total amount of Liabilities under each such CHS Nonqualified Plan as of the date of such transfer; in each case, disregarding any Liabilities attributable to any deferral election applicable to any bonus earned but not yet paid as of December 31, 2016).

 

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ARTICLE IV

WELFARE AND FRINGE BENEFIT PLANS

Section 4.01 Health and Welfare Plans .

(a) Establishment of QHC Health and Welfare Plans . Effective as of January 1, 2016, QHC shall establish the QHC Health and Welfare Plans, with terms substantially similar to those of the corresponding CHS Health and Welfare Plans as of January 1, 2016, unless otherwise provided in this Article IV .

(b) Waiver of Conditions; Benefit Maximums . QHC shall use commercially reasonable efforts to cause the QHC Health and Welfare Plans to:

(i) with respect to initial enrollment, waive

(A) all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any QHC Employee, other than limitations that were in effect with respect to the QHC Employee under the applicable CHS Health and Welfare Plan as of January 1, 2016, and

(B) any waiting period limitation or evidence of insurability requirement applicable to a QHC Employee other than limitations or requirements that were in effect with respect to such QHC Employee under the applicable CHS Health and Welfare Plans as of January 1, 2016; and

(ii) take into account with respect to aggregate annual, lifetime, or similar maximum benefits available under the QHC Health and Welfare Plans, a QHC Employee’s prior claims experience under the CHS Health and Welfare Plans and any Benefit Plan that provides leave benefits.

(c) Allocation of Health and Welfare Assets and Liabilities.

(i) General Principles . Except as otherwise specifically provided in this Agreement, (A) CHS shall retain all Liabilities relating to Incurred Claims under the CHS Health and Welfare Plans, and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, subrogation rights, rights of reimbursement, rights of offset, and similar items) associated with such Incurred Claims; and (B) QHC shall be responsible for all Liabilities relating to Incurred Claims under any QHC Health and Welfare Plan and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, subrogation rights, rights of reimbursement, rights of offset, and similar items) associated with such Incurred Claims.

 

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(ii) Flexible Spending Accounts .

(A) 2015 Plan Year . The Parties shall use commercially reasonable efforts to ensure that, effective as of January 1, 2016, (1) any remaining positive health care and dependent care flexible spending accounts, determined as of the end of December 31, 2015, of QHC Employees (the “Transferred Flexible Spending Account Balances”) under the applicable CHS Health and Welfare Plan shall be transferred to the corresponding QHC Health and Welfare Plan; and (2) the applicable QHC Employees shall be eligible for reimbursement from the QHC Health and Welfare Plan on the same basis and the same terms and conditions as under the corresponding CHS Health and Welfare Plan. As soon as practicable after December 31, 2015, and in any event within 30 business days after the amount of the Transferred Flexible Spending Account Balances is determined, CHS shall pay QHC the net aggregate amount of the Transferred Flexible Spending Account Balances. With respect to Transferred Employees whose Transfer Date occurs after January 1, 2016, the Parties shall cooperate in good faith to provide for transfers and/or reimbursement after the applicable Transfer Date with respect to the health care and dependent care flexible spending accounts of such Transferred Employees in accordance with procedures mutually agreed to by the Parties.

(B) 2016 Plan Year . Prior to January 1, 2016, CHS or its Affiliate shall, as required by the flexible spending account administrator, cause an amount equal to two percent (2%) of the annual flexible spending account elections of the QHC Employees for the 2016 Plan Year (the “2016 FSA Prefunding Amount”) to be transferred to the flexible spending account administrator. QHC shall reimburse CHS or its Affiliate, as applicable, for the 2016 FSA Prefunding Amount by March 31, 2016.

(C) Offset . The Parties may agree to offset the amounts described in Sections 4.01(c)(ii)(A) and (B) in determining the net amount due to either CHS or QHC.

(d) CHS Health and Welfare Plans after December 31, 2015 . With the exception of Employees of CHSPSC as of December 31, 2015, who will become Employees of QHCCS after January 1, 2016, but prior to the Distribution Date, QHC Employees and, if applicable, QHC Former Employees shall cease to participate in the CHS Health and Welfare Plans effective immediately prior to January 1, 2016.

(e) Group Health Plan. The Parties acknowledge that CHS, through a CHS Subsidiary, has maintained the CHS GHP, which is composed of several benefit packages made available under the CHS GHP, and that certain benefit packages provided under the CHS GHP are designed to provide grandfathered health plan coverage within the meaning of Department of Labor Regulation Section 2550.715-1251(a)(1)(ii). As part of this Agreement, CHS agrees to direct the CHS Subsidiary to transfer the benefit packages related to the Transferred Employees to QHC or to its Affiliates, as directed by QHC, with the understanding that such benefit packages shall be maintained by QHC and/or its Affiliates as a continuation of the CHS GHP. To

 

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the extent a benefit package is maintained as grandfathered health plan coverage, the plan or plans maintained by QHC and/or its Affiliates shall be administered and operated with the intent of maintaining its (or their) status as a grandfathered health plan and any provision in this Agreement or otherwise that conflicts with that intent shall be deemed amended to comport with that intent.

Section 4.02 Waiver of Cost-Sharing Amounts . For the period beginning on January 1, 2016 and ending on December 31, 2017, and in a manner consistent with the write-off policy, as of December 31, 2015, of CHS or its Affiliates for covered medical services and supplies provided by and billed by a CHS-affiliated hospital or a QHC-affiliated hospital, (a) QHC shall cause the members of the QHC Group to write-off and waive applicable co-payments, co-insurance, and deductibles that would otherwise apply to CHS Retained Employees (and their covered dependents) in connection with covered medical services or supplies provided by and billed by members of QHC Group; and (b) CHS shall cause the members of the CHS Group to write-off and waive applicable co-payments, co-insurance, and deductibles that would otherwise apply to QHC Employees (and their covered dependents) in connection with covered medical services or supplies provided by members of the CHS Group. The CHS Group and the QHC Group shall reflect the write-off and waiver of applicable co-payments, co-insurance, and deductibles in their group health plans.

Section 4.03 COBRA . CHS shall continue to be responsible for compliance with the health care continuation requirements of COBRA and the corresponding provisions of the CHS Health and Welfare Plans with respect to any CHS Retained Employees (and their covered dependents) and any CHS Former Employees (and their covered dependents). Effective as of January 1, 2016, QHC shall assume responsibility for compliance with the health care continuation requirements of COBRA and the corresponding provisions of the QHC Health and Welfare Plans with respect to any QHC Employees (and their covered dependents) and any QHC Former Employees (and their covered dependents). The Parties agree that the consummation of the transactions contemplated by the Separation and Distribution Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA.

Section 4.04 Vacation, Holidays and Leaves of Absence . Effective as of the applicable Transfer Date, QHC shall assume all Liabilities of the CHS Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each QHC Employee. CHS shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each CHS Retained Employee.

Section 4.05 Severance and Unemployment Compensation . Effective as of the Distribution Date, QHC shall be responsible for any and all Liabilities to, or relating to, QHC Employees and QHC Former Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred prior to, on, or following the Distribution Date. CHS shall be responsible for any and all Liabilities to, or relating to, CHS Retained Employees and CHS Former Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred prior to, on, or following the Distribution Date.

 

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Section 4.06 Workers’ Compensation. With respect to claims for workers compensation in the United States, (a) claims of QHC Employees and QHC Former Employees arising before the Distribution Date shall be CHS Liabilities (as that term is defined in the Separation and Distribution Agreement), (b) claims of QHC Employees and QHC Former Employees arising on or after the Distribution Date shall be QHC Liabilities (as that term is defined in the Separation and Distribution Agreement); and claims of CHS Employees and CHS Former Employees arising either before or after the Distribution Date shall be CHS Liabilities.

ARTICLE V

EQUITY, INCENTIVE, AND EXECUTIVE COMPENSATION PROGRAMS

Section 5.01 Equity Incentive Programs .

(a) Adjustments . The Parties shall use commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding CHS Option, CHS Restricted Stock Award, or CHS RSU Award granted under a CHS Stock Program shall be adjusted as set forth in this Section 5.01 .

(i) CHS Options . As determined by the CHS Compensation Committee pursuant to its authority under the applicable CHS Stock Program, each CHS Option, regardless of by whom held, whether vested or unvested, shall be converted on the Distribution Date into an Adjusted CHS Option and shall, except as otherwise provided in this Section 5.01 , be subject to the same terms and conditions (including with respect to vesting) after the Distribution Date as applicable to such CHS Option immediately prior to the Distribution Date; provided , however , that from and after the Distribution Date:

(A) the number of CHS Common Shares subject to such Adjusted CHS Option shall be equal to the number of CHS Common Shares subject to such CHS Option immediately prior to the Distribution Date; and

(B) the per share exercise price of such Adjusted CHS Option, rounded up to the nearest cent, shall be equal to the price obtained by (1) reducing the per share exercise price of such CHS Option immediately prior to the Distribution Date by (2) the Adjusted QHC Stock Value;

provided , however , that the exercise price and the number of CHS Common Shares subject to such options, and the terms and conditions of exercise of such options shall be determined (or adjusted) in a manner consistent with the requirements of Code Section 409A, including the determination of the CHS Stock Value, CHS Post Distribution Stock Value and Adjusted QHC Stock Value as provided herein; provided, further, that, in the case of any CHS Option to which Code Section 421 applies by reason of its qualification under Code Section 422 as of immediately prior to the Distribution Date, the exercise price, the number of CHS Common Shares and shares of QHC Common Stock subject to such option, and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Code Section 424(a).

 

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(ii) CHS Restricted Stock Awards . Each holder of an outstanding CHS Restricted Stock Award immediately prior to the Distribution Date shall receive, as of the Distribution Date, a QHC Restricted Stock Award for such number of shares as determined by applying the Distribution Ratio in the same way as if the outstanding CHS Restricted Stock Award were comprised of fully vested CHS Common Shares as of the Distribution Date (rounded down to the nearest whole share). Except as set forth in this Section 5.01(a)(ii) , the Adjusted CHS Restricted Stock Award and the QHC Restricted Stock Award issued in accordance with this Section 5.01(a)(ii) both shall be subject to substantially the same terms and conditions (including with respect to vesting, except to the extent that performance vesting requirements are adjusted as a result of the Distribution) immediately following the Distribution Date as applicable to the CHS Restricted Stock Award immediately prior to the Distribution Date.

(iii) CHS RSU Awards . Each CHS RSU Award, regardless of by whom held, whether vested or unvested, shall be converted on the Distribution Date into an Adjusted CHS RSU Award and shall, except as otherwise provided in this Section 5.01 , be subject to the same terms and conditions (including with respect to vesting) after the Distribution Date as applicable to such CHS RSU Award immediately prior to the Distribution Date; provided , however , that from and after the Distribution Date, the number of CHS Common Shares subject to such Adjusted CHS RSU Award shall be equal to the number of CHS Common Shares subject to such CHS RSU Award immediately prior to the Distribution Date multiplied by the CHS RSU Award Multiplier, rounded down to the nearest whole share (except that the number of CHS Common Shares subject to such Adjusted CHS RSU Award granted pursuant to the Directors’ Fees Deferral Plan should be rounded down to the third decimal place); provided further , that the Committee may further adjust the number of CHS Common Shares subject to any Adjusted CHS RSU Award in such manner as may be required by Code Section 409A.

(b) Miscellaneous Award Terms .

(i) After the Distribution Date, Adjusted CHS Awards, regardless of by whom held, shall be settled by CHS, and QHC Restricted Stock Awards, regardless of by whom held, shall be settled by QHC.

(ii) Except as otherwise provided in this Agreement (such as in Section 2.02 and the proviso to this subsection), with respect to grants adjusted pursuant to this Section 5.01 , (A) employment with the CHS Group shall be treated as employment with QHC with respect to QHC Restricted Stock Awards held by CHS Retained Employees, and (B) employment with the QHC Group shall be treated as employment with CHS with respect to Adjusted CHS Awards held by QHC Employees, and (C) none of the Separation, the Distribution, or any employment transfer described in Section 2.04(b) shall constitute a termination of employment for any Employee for purposes of any Adjusted CHS Award or any QHC Restricted Stock Award; provided , however , two-thirds (2/3) of the number of shares of CHS Restricted Stock (and the shares of QHC Restricted Stock that are related thereto) subject to Adjusted CHS Restricted Stock Awards that were CHS Restricted Stock Awards granted by CHS on March 1, 2016 (the “2016 Grants”) to any QHC Employee shall be automatically

 

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canceled and forfeited immediately following the Distribution Date, and the remaining shares of CHS Restricted Stock (and the related QHC Restricted Stock) subject to the 2016 Grants and held by any QHC Employee shall vest on March 1, 2017, subject to the other conditions set forth in the applicable award agreements.

(iii) Following the Distribution Date, for any award adjusted under this Section 5.01 , any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or CHS Stock Program applicable to such award (A) with respect to Adjusted CHS Awards, shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or CHS Stock Program (a “CHS Change of Control”), and (B) with respect to QHC Awards, shall be deemed to refer to a “Change in Control” as defined in the QHC ISP (an “QHC Change of Control”). Without limiting the foregoing, with respect to provisions related to vesting of awards, a CHS Change of Control shall be treated as a QHC Change of Control under the QHC ISP for purposes of QHC Awards held by CHS Retained Employees, and a QHC Change of Control shall be treated as a CHS Change of Control under the CHS Stock Program for purposes of Adjusted CHS Awards held by QHC Employees.

(c) Tax Reporting and Withholding . Following the Distribution Date, (I) CHS will be responsible for all income, payroll and other tax remittance and reporting related to income of CHS Retained Employees, CHS Former Employees, and individuals who are or were CHS non-employee directors in respect of Adjusted CHS Awards and QHC Awards; and (ii) QHC will be responsible for all income, payroll and other tax remittance and reporting related to income of QHC Employees and QHC Former Employees in respect of Adjusted CHS Awards and QHC Awards. CHS or QHC, as applicable, shall facilitate performance by the other Party of its obligations hereunder by promptly remitting, in cash, the amount required to be withheld in conjunction with a transfer of shares (or lapse of restrictions applicable to such shares) pursuant to such Party’s equity plan, or cash, either (as mutually agreed by the Parties) directly to the applicable taxing authority or to the other Party for remittance to such taxing authority. The Parties will cooperate and communicate with each other and with third-party providers to effectuate withholding and remittance of taxes, the related cancellation or transfer of any shares in any “net share withholding” process in compliance with applicable Laws, as well as required tax reporting, in a timely, efficient and appropriate manner.

(d) Registration and Other Regulatory Requirements . QHC agrees to file Form S-1 and Form S-8 registration statements with respect to, and to cause to be registered pursuant to the Securities Act, the shares of QHC Common Stock authorized for issuance under the QHC ISP, as required pursuant to the Securities Act, before the date of issuance of any shares of QHC Common Stock pursuant to the QHC ISP. The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 5.01 . CHS agrees to facilitate the adoption and approval of the QHC ISP consistent with the requirements of Treasury Regulations Section 1.162-27(f)(4)(iii).

(e) Discretion to Adjust . Effective immediately prior to the Distribution, the CHS Compensation Committee may provide for different adjustments with respect to some or all equity incentive awards to the extent that the CHS Compensation Committee deems such

 

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adjustments necessary and appropriate. Any adjustments made by the CHS Compensation Committee pursuant to the foregoing sentence shall be deemed incorporated by reference herein as if fully set forth below and shall be binding on the Parties.

(f) Cooperation . Each of the Parties shall establish an appropriate administration system in order to handle in an orderly manner the settlement of Adjusted CHS Awards and QHC Awards and provide to the other Party such information as such other Party may reasonably request in order to implement the provisions of this Article V . Without limiting the foregoing provisions of this Section 5.01(f) , each of the Parties will work together to unify and consolidate all indicative data and payroll and employment information on regular timetables and make certain that each applicable entity’s data and records in respect of such awards are correct and updated on a timely basis, including employment status and information required for tax withholding/remittance, compliance with trading windows and compliance with the requirements of the Exchange Act and other applicable Laws. The Parties hereby acknowledge that the provisions of this Article V are intended to achieve certain tax, legal and accounting objectives and, in the event such objectives are not achieved, the Parties agree to negotiate in good faith regarding such other actions that may be necessary or appropriate to achieve such objectives.

(g) Plan Administrator . Until at least sixty (60) days after the date at which all CHS Adjusted Awards held by QHC Employees are fully vested in accordance with their terms, QHC shall retain the same third-party stock plan administrator with respect to such QHC Awards as CHS.

Section 5.02 Annual Incentive Plans .

(a) Annual Bonuses Generally . The QHC Group shall be responsible for all annual bonus payments to Transferred Employees in respect of any plan year, the payment date for which occurs on or after the applicable Transferred Employee’s Transfer Date.

(b) QHC 2016 Performance Incentive Plan .

(i) Effective as of April 1, 2016, QHC established the QHC 2016 Performance Incentive Plan (the “ QHC Annual Bonus Plan ”). Any Transferred Employee’s eligibility to participate in the QHC Annual Bonus Plan shall be determined by QHC in accordance with such plan.

(ii) No Transferred Employee shall have any right to participate in the CHS 2004 Employee Performance Incentive Plan, or otherwise receive any bonus payment from CHS, with respect to the plan year thereof during which the Distribution Date falls. Each Transferred Employee’s bonus opportunities for all periods ending after the Distribution Date shall be administered solely by QHC under the QHC Annual Bonus Plan following the Distribution Date, and QHC shall be solely responsible for paying all cash bonus payments due to such Transferred Employee with respect to each QHC Annual Bonus Plan year ending after the Distribution Date.

 

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ARTICLE VI

MISCELLANEOUS

Section 6.01 Transfer of Records .

(a) Sharing of Information . Subject to and in compliance with any limitations imposed by applicable Law, CHS and QHC (acting directly or through members of the CHS Group or the QHC Group, respectively) shall provide to the other and their respective authorized agents and vendors all information necessary (including information for purposes of determining benefit eligibility, participation, vesting and calculation of benefits) on a timely basis under the circumstances for the parties to perform their respective duties under this Agreement. To the extent that such information is maintained by a third party vendor, each party shall use its commercially reasonable best efforts to require the third party vendor to provide the necessary information and assist in resolving discrepancies or obtaining missing data.

(b) Transfer of Personnel Records and Authorization . Subject to and in compliance with any limitation imposed by applicable Law and to the extent that it has not done so before the Effective Time, CHS shall transfer to QHC any and all employment records (including any Form I-9, Form W-2 or other Internal Revenue Service and relevant tax forms applicable in any non-U.S. jurisdiction) with respect to QHC Employees and QHC Former Employees and other records reasonably required by QHC to enable QHC properly to carry out its obligations under this Agreement. Subject to and in compliance with any limitation imposed by applicable Law and to the extent that it has not done so before the Effective Time, QHC shall transfer to CHS any and all employment records (including any Form I-9, Form W-2 or other Internal Revenue Service and relevant Tax forms applicable in any non-U.S. jurisdiction) with respect to CHS Employees and CHS Former Employees and other records reasonably required by CHS to enable CHS properly to carry out its obligations under this Agreement. The transfer of records generally shall occur as soon as administratively practicable at or after the Effective Time. Each Party will permit the other Party reasonable access to Employee records, to the extent reasonably necessary for such accessing Party to carry out its obligations hereunder.

(c) Access to Records . To the extent not inconsistent with this Agreement, the Separation and Distribution Agreement or any applicable privacy protection Laws or regulations, reasonable access to Employee-related and benefit plan-related records after the Effective Time will be provided to members of the CHS Group and members of the QHC Group pursuant to the terms and conditions of Article VII of the Separation and Distribution Agreement.

(d) Maintenance of Records . With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, CHS and QHC shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, claims, actions, and damages that arise from a failure (by the indemnifying Party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations and internal policies applicable to such information.

 

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(e) Cooperation . Each Party shall use commercially reasonable efforts to cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, resolutions, government filings, data, payroll, employment and benefit plan information on regular timetables and cooperate as needed with respect to (I) any claims or reasonable inquiry under or audit of or litigation with respect to any employee benefit plan, policy or arrangement contemplated by this Agreement, (ii) efforts to seek a determination letter, private letter ruling or advisory opinion from the Internal Revenue Service or U.S. Department of Labor, or other comparable non-U.S. letter, ruling or opinion from any other Governmental Authority as applicable, in any such case on behalf of any employee benefit plan, policy or arrangement contemplated by this Agreement, (iii) any filings that are required to be made or supplemented to the Internal Revenue Service, U.S. Pension Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental Authority and (iv) any audits by a Governmental Authority or corrective actions in either case, relating to any Benefit Plan, labor or payroll practices, including but not limited to with respect to any Employment Taxes, and (v) reconciliation and administration of post-closing compensation, benefit, employment, and payroll issues; provided, however, that requests for cooperation must be reasonable and not interfere with daily business operations.

(f) Confidentiality . Notwithstanding anything in this Agreement to the contrary, all confidential records and data relating to Employees to be shared or transferred pursuant to this Agreement shall be subject to Section 7.08 of the Separation and Distribution Agreement and the requirements of applicable Law.

(g) Interaction with Other Agreements . To the extent not inconsistent with this Agreement or any applicable privacy protection Laws or regulations, the foregoing rights and obligations of this Section 6.01 shall be in addition to any similar or related rights and obligations that may be provided or applicable to members of the CHS Group or members of the QHC Group, as applicable, under the Separation and Distribution Agreement, Tax Matters Agreement and/or the Transition Services Agreements, if and as applicable.

Section 6.02 Employee Recoupment Assets . Effective as of the applicable Transfer Date, the CHS Group shall be entitled to all Employee Recoupment Assets in respect of CHS Retained Employees and CHS Former Employees, and the QHC Group shall be entitled to all Employee Recoupment Assets in respect of QHC Employees and QHC Former Employees. Without limiting the generality of the foregoing, the CHS Group hereby assigns to the QHC Group, effective as of the applicable Transfer Date, all rights and obligations relating to any Employee Recoupment Assets of the CHS Group in respect of any QHC Employee or QHC Former Employee. Notwithstanding the foregoing, the CHS Group shall retain for itself and not assign to the QHC Group any right to recover the amount and/or value of any compensatory payment or award received by any QHC Employee or QHC Former Employee that was previously an officer of CHS, and/or gains realized by such employee in connection with such awards, pursuant to any “clawback” or similar policy of the CHS Group related to the misconduct of such employee prior to the Effective Time.

Section 6.03 Compliance . The agreements and covenants of the Parties hereunder shall at all times be subject to the requirements and limitations of applicable Law and collective bargaining agreements. Where an agreement or covenant of a Party hereunder cannot be effected

 

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in compliance with applicable Law or an applicable collective bargaining agreement, the Parties agree to negotiate in good faith to modify such agreement or covenant to the least extent possible in keeping with the original agreement or covenant in order to comply with applicable Law or such applicable collective bargaining agreement. Each provision of this Agreement is subject to and qualified by this Section 6.03 , whether or not such provision expressly states that it is subject to or limited by applicable Law or by applicable collective bargaining agreements. Each reference to the Code, ERISA, or the Securities Act or any other Law shall be deemed to include the rules, regulations, and guidance issued thereunder.

Section 6.04 Preservation of Rights . Unless expressly provided otherwise in this Agreement, nothing herein shall be construed as a limitation on the right of the CHS Group or the QHC Group to (a) amend or terminate any Benefit Plan or (b) terminate the employment of any Employee.

Section 6.05 Fiduciary Matters . CHS and QHC each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (which determination may include, but shall not be required to be, based on advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

Section 6.06 Further Assurances . Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 6.07 Not a Change in Control . The Parties acknowledge and agree that the transactions contemplated by the Separation and Distribution Agreement and this Agreement do not constitute a “change in control” or a “change of control” for purposes of any Benefit Plan or any agreement entered into in respect of a Benefit Plan.

Section 6.08 Notices . All Notices under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a Notice):

If to CHS:

Community Health Systems, Inc.

4000 Meridian Boulevard

Franklin, Tennessee 37067

Attn: General Counsel

 

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If to QHC:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attn: General Counsel

Either Party may, by Notice to the other Party, change the address to which such Notices are to be given.

Section 6.09 Limitation on Enforcement; Third Party Beneficiaries . This Agreement is an agreement solely between the Parties. Nothing in this Agreement, whether express or implied, shall be construed to: (a) confer upon any current or former Employee of the CHS Group or the QHC Group, or any other person any rights or remedies, including, but not limited to any right to (i) employment or recall; (ii) continued employment or continued service for any specified period; or (iii) claim any particular compensation, benefit or aggregation of benefits, of any kind or nature; or (b) create, modify, or amend any Benefit Plan. The provisions of this Agreement are solely for the benefit of the Parties and their respective Subsidiaries, after giving effect to the Distribution, and their permitted successors and assigns, and are not intended to confer upon any Person except the Parties and their respective Subsidiaries, after giving effect to the Distribution, and their permitted successors and assigns, any rights or remedies hereunder. There are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any other Third Party with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, independent contractor, consultant, or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement.

Section 6.10 Disputes . The Parties agree to use commercially reasonable efforts to resolve in an amicable manner any and all controversies, disputes and claims between them arising out of or related in any way to this Agreement. The Parties agree that any controversy, dispute or claim (whether arising in contract, tort or otherwise) arising out of or related in any way to this Agreement that cannot be amicably resolved informally will be resolved pursuant to the dispute resolution procedures set forth in Article VIII of the Separation and Distribution Agreement.

Section 6.11 Schedules . As of the Distribution Date, the Parties shall update any schedule to this Agreement, as necessary.

Section 6.12 Interpretation . Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and thereto) and not to any particular provision of this Agreement.

 

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Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise specified. Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. Unless otherwise specified in a particular case, the word “days” refers to calendar days. References herein to this Agreement shall be deemed to refer to this Agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified. References to the performance, discharge or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability has terms. If the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

Section 6.13 Counterparts; Entire Agreement, Conflicts; Corporate Power; Facsimile Signatures .

(a) Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement.

(b) Entire Agreement, Conflicts. This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements (including the Conveyance and Assumption Instruments), and the exhibits, schedules and annexes hereto and thereto, contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

(c) Corporate Power. CHS represents on behalf of itself and, to the extent applicable, each CHS Subsidiary, and QHC represents on behalf of itself and, to the extent applicable, each QHC Subsidiary, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby and thereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

(d) Signatures and Delivery. Each Party acknowledges that it and the other Party may execute this Agreement by manual, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Party expressly adopts and confirms a stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF))

 

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made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it shall as promptly as reasonably practicable cause each such Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 6.14 Governing Law . This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws and principles of the State of Tennessee, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

Section 6.15 Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided , however , that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto. Notwithstanding the foregoing, no such consent shall be required for the assignment of a Party’s rights and obligations under this Agreement in whole in connection with a Change of Control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant Party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party. Nothing herein is intended to, or shall be construed to prohibit either Party or any of its Subsidiaries from being party to or undertaking a Change of Control.

Section 6.16 Severability . In the event that any one or more of the terms or provisions of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement, or the application of such term or provision to Persons or circumstances or in jurisdictions other than those as to which it has been determined to be invalid, illegal or unenforceable, and the Parties shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement which, insofar as practicable, implement the purposes and intent of the Parties. Any term or provision of this Agreement held invalid or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid or unenforceable to the extent consistent with the intent of the parties as reflected by this Agreement. To the extent permitted by applicable Law, each party waives any term or provision of Law which renders any term or provision of this Agreement to be invalid, illegal or unenforceable in any respect.

Section 6.17 Force Majeure . Neither Party shall be deemed in default of this Agreement for failure to fulfill any obligation so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide Notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.

 

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Section 6.18 No Set Off . Except as mutually agreed to in writing by the Parties, neither Party nor any of its Subsidiaries shall have any right of set off or other similar rights with respect to (a) any amounts received pursuant to this Agreement; or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement.

Section 6.19 Headings . The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 6.20 Survival of Covenants . Except as expressly set forth in this Agreement, the covenants and other agreements contained in this Agreement, and liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.

Section 6.21 Waivers of Default . Waiver by either Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.

Section 6.22 Amendments . No provisions of this Agreement shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of both Parties or their relevant Subsidiaries, as the case may be. No provisions of this Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party or relevant Subsidiary against whom it is sought to be enforced.

Section 6.23 Limitations of Liability . Notwithstanding anything in this Agreement to the contrary, neither QHC or any member of the QHC Group, on the one hand, nor CHS or any member of the CHS Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third Party Claim).

Section 6.24 Mutual Drafting . This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

* * * * *

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their authorized representatives.

 

COMMUNITY HEALTH SYSTEMS, INC.     QUORUM HEALTH CORPORATION
By:  

/s/ W. Larry Cash

    By:  

/s/ Michael J. Culotta

Name:   W. Larry Cash     Name:   Michael J. Culotta
Title:  

President of Financial

Services and Chief

Financial Officer

    Title:  

Executive Vice President and

Chief Financial Officer

 

Signature Page to Employee Matters Agreement

Exhibit 2.4

COMPUTER AND DATA PROCESSING

TRANSITION SERVICES AGREEMENT

This COMPUTER AND DATA PROCESSING TRANSITION SERVICES AGREEMENT (this “Agreement”) dated as of 29 th day of April, 2016, is by and between CHSPSC, LLC, a Delaware limited liability company (“ CHSPSC ”), and QHCCS, LLC , a Delaware limited liability company (together with its successors and permitted assigns, hereinafter sometimes referred to as “ Customer ”).

W I T N E S S E T H:

WHEREAS , the board of directors of Community Health Systems, Inc., a Delaware corporation (“CHS”), has determined that it is appropriate and advisable to separate (i) thirty-eight (38) of CHS’s hospitals and related business operations and (ii) Quorum Health Resources, LLC, a hospital management and consulting services business, from CHS’s other hospitals and businesses;

WHEREAS , in order to effectuate the foregoing, CHS and Quorum Health Corporation, a Delaware corporation (“QHC”), have entered into a Separation and Distribution Agreement, dated as of April 29, 2016 (the “Separation and Distribution Agreement”), which provides for, among other things, the contribution from CHS to QHC of certain assets, the assumption by QHC of certain liabilities from CHS, the distribution by CHS of QHC common stock to CHS shareholders, and the execution and delivery of certain agreements in order to facilitate and provide for the foregoing, in each case subject to the terms and conditions set forth therein; and

WHEREAS , in order to facilitate and provide for an orderly transition under the Separation and Distribution Agreement, the Parties (as defined herein) desire to enter into this Agreement to set forth the terms and conditions pursuant to which CHSPSC shall provide to Customer the services described in this Agreement.

NOW, THEREFORE , in consideration of the premises and the mutual covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, CHSPSC and Customer agree as follows:

1. Definitions . The following terms shall have the meanings set forth below:

Additional Services. See the definition in Section 3(a).

Affiliate. Any person or entity that Controls, is Controlled by or is under common Control with another person or entity.

Business Associate Agreement or BAA. The Business Associate Agreement between CHSPSC and Customer dated April 29, 2016.

Calculation Period. See the definition set forth in Section 2(h) below.


CHS Entities. Collectively, Community Health Systems, Inc., a Delaware corporation (“CHS”), its successors (if any), and Affiliates of CHS that receive information technology services from CHSPSC.

CHSPSC Software. The software listed in Schedule A hereto and identified as being owned by CHSPSC and any other software owned by CHSPSC that is used to provide any Services at any time during the Term, including Enhancements, upgrades and custom development to any of such software.

CHSPSC Update. See definition in Section 3(c) below.

Communication Lines. The telephone communication and diagnostic lines for data transmission with the Data Center and/or CHSPSC, whether dedicated or not.

Consumer Price Index. All Items of the United States Consumer Price Index published by the United States Department of Labor, All Cities Average (1986=100) or such other successor index as the Parties shall agree in writing.

Contract Entity. An Affiliate of Customer or an entity that is a party to a contractual relationship with Customer if the relationship involves more than providing information technology services (such as a party to a joint venture or a lease, management or general services arrangement with respect to a hospital or other entity that is not an Affiliate of Customer). The Contract Entities to receive the Services and/or license the Software are set forth in Schedule A to this Agreement, which Schedule may be amended from time to time as provided herein.

Control. The ability, directly or indirectly, to elect a majority of the Board of Directors or similar governing body of an entity or to otherwise direct the management of the entity and/or the use of all or substantially all of its assets. This definition shall also apply to the terms “Controlling” and “Controlled by.”

Cure Period. See the definition set forth in Section 11(c) below.

Customer Data. See the definition set forth in Section 8(a) below.

Customizations. See the definition set forth in Section 3(b) below.

Data Center. The CHSPSC Data Center(s) located in Franklin, Tennessee and/or any of CHSPSC’s Data Centers containing computer processing equipment and the Software used by CHSPSC to provide the Services, or such other facilities as CHSPSC may establish from time to time.

Divested Facility. See definition in Section 12(d).

 

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Documentation. The description of how to use the Services and their functionality and the related security policies and procedures with respect to the Services as most recently updated by CHSPSC pursuant to this Agreement.

Effective Date. April 29, 2016.

Equipment. The computer hardware located at the Facilities and, to the extent used in connection with the Services, the computer hardware located at any Affiliate or Contract Entity.

Facility/Facilities. The hospitals and other healthcare providers that are Affiliates of Customer or are owned by Customer or Affiliates of Customer. The Facilities to receive the Services and/or license the Software are set forth in Schedule A to this Agreement, which Schedule may be amended from time to time as provided herein.

HIPAA. The Health Insurance Portability and Accountability Act of 1996, Public Law 104-191.

HIPAA Rules. The rules and regulations implementing the transaction and code set, privacy, security and other requirements set forth in the administrative simplification provisions of HIPAA.

Malicious Code. See definition in Section 9(g) below.

Monthly Fees. The fees for monthly service under this Agreement as more fully set forth in Section 2 and Schedule B .

New Software. See definition in Section 3(d) below.

Operational Customer Data. See definition in Section 8(a) below.

Parties. Collectively the individual entities which execute this Agreement.

Services. The installation, support, training, maintenance, data processing and other services provided to Customer by CHSPSC pursuant to this Agreement. “Services” includes the Wide Area Network and the Communications Lines.

Software. The computer software identified in Schedule A hereto as either CHSPSC Software or Third Party Software (and any future additional software and/or replacement software) which is used by CHSPSC in providing the Services to Customer, including Enhancements, upgrades and custom development.

Systems. The Equipment and Software functioning together, located at one or more Facilities, Affiliates and Contract Entities.

 

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Term. The period beginning at the Effective Date of this Agreement as set forth above and ending five (5) years after the Effective Date, unless earlier terminated pursuant to this Agreement.

Third-Party Software. The software owned by any third party that is licensed or otherwise made available to CHSPSC and used to perform Services now and in the future, including the software listed on Schedule A hereto and software used by third parties as application service providers.

Third-Party Updates. See the definition set forth in Section 3(c)(1).

Wide Area Network. The proprietary wide area network currently provided by CHSPSC for use by Customer, its Facilities, Contract Entities and Affiliates that receive Services hereunder and CHS Entities to deliver CHSPSC products and/or services (for example, e-mail, host application access, file transmission).

2. Services, Systems, Data, Payment.

(a) CHSPSC shall provide, and Customer shall purchase from CHSPSC, the Services and/or licenses to the Software described in the Schedules hereto, upon the terms and subject to the conditions of this Agreement, for the benefit of Customer and the Facilities, Contract Entities and Affiliates that Customer may designate from time to time with respect to all or a portion of the Services. CHSPSC shall prepare a statement of work with respect to any new Facilities, Contract Entities or Affiliates proposed by Customer to be added to this Agreement, for review and acceptance by Customer. Upon acceptance by Customer, information regarding the new Facility, Contract Entity or Affiliate will be reflected in the Schedules to this Agreement. The invoices provided hereunder for the Services shall identify the Facilities, Affiliates and Contract Entities and the Monthly Fees for each for the month which is the subject of the invoice. The parties shall promptly work together in good faith to resolve any disagreement regarding which Facilities, Affiliates or Contract Entities are then to receive all or a portion of the Services.

(b) Except as otherwise required by HIPAA, the HIPAA Rules, the Business Associate Agreement, other federal incentive programs or the requirements of payers, CHSPSC shall designate certain coding and naming conventions for the form of Customer Data and shall provide to Customer the coding requirements for transmitting Customer Data to the Data Center and the treatment given to different account and processing codes used by CHSPSC. CHSPSC reserves the right to make changes in operating procedures, coding and naming conventions, hardware and network configurations and applications and systems programming. CHSPSC shall provide Customer with notice of such changes as far in advance as possible, but in no event less than thirty (30) days. Customer shall be responsible for, and bear the cost of, (i) coding and transmitting Customer Data to the Data Center, (ii) supervising the conversion of its financial data into a form that can be processed by CHSPSC in accordance with the foregoing, (iii) determining whether it has complied with applicable accounting practices, (iv) determining

 

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whether it has complied with applicable state and federal regulations governing financial reporting obligations, (v) verifying the accuracy of Customer Data generated by Customer if, in Customer’s sole discretion, it chooses to perform such verification and (vi) maintaining prudent internal controls of reports and Customer Data.

(c) Customer shall pay the Monthly Fees to CHSPSC on behalf of the Facilities, Affiliates and Contract Entities for the Services rendered and licenses granted in accordance with the terms and subject to the conditions contained herein and in the Schedules hereto. CHSPSC grants licenses only related to CHSPSC Software such as CAPS and AUTOCA. The prices set forth on Schedule B are subject to change as set forth in Section 2(i) below. The Monthly Fees set forth in Schedule B and payable pursuant to subsection 2(g) below shall be the only fees and costs payable hereunder other than (i) amounts payable for travel under subsection (e) below, (ii) interface development and deployment, which shall be charged in accordance with Schedule C , (iii) fees agreed upon in separate work orders signed by both Parties and (iv) fees (if any) that become due under Section 3 below. Except as otherwise provided in Section 3(d), all third party costs due hereunder shall be allocated on an equitable basis (i.e., based upon net revenues) among Customer, CHSPSC, all CHS Entities and any other customers of CHSPSC.

(d) In the event that Customer makes a written request for the performance of on-site Services by CHSPSC, Customer shall pay the reasonable and customary travel expenses of CHSPSC personnel performing such Services for Customer, in accordance with CHSPSC’s standard business travel policies.

(e) Unless otherwise provided herein, payment is due within thirty (30) days of the date of receipt of an invoice except to the extent that such amounts are the subject of a good faith dispute. Without limiting CHSPSC’s rights hereunder, any amounts not paid within thirty (30) days of the due date shall be subject to a late charge equal to the lesser of twelve percent (12%) per annum or the maximum amount allowed by applicable law; provided, however, that no late charge shall apply with respect to amounts reasonably disputed by Customer if written notice of such dispute is given to CHSPSC within fourteen (14) days of receipt of invoice; provided, however, that the interest on any disputed charges that are ultimately resolved against Customer shall accrue from the date payment would have otherwise been due. Disputes under this Section will be resolved pursuant to the procedure set forth in Section 12(f).

(f) Customer’s Monthly Fees are indicated in Schedule B and shall be charged with respect to each Facility, Affiliate and Contract Entity then designated by Customer to receive the Services in accordance with the scope of Services then designated by Customer to be received by such entity pursuant to Section 2(a) above.

(g) The parties acknowledge that Customer may add or divest Facilities from time to time during the Term of this Agreement. With respect to divested Facilities, CHSPSC shall provide Services as described in Section 12(d). For divested Facilities, Customer’s Monthly Fees shall be reduced beginning on the date of such Facility’s last use of the System hereunder.

 

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In the event that, during the Term of this Agreement, Customer acquires from a third party, or constructs, a hospital or health care provider establishment, such an establishment shall become a Facility and shall receive Services hereunder if and to the extent designated pursuant to Section 2(a). Customer shall not be required to add a new hospital or other health care provider establishment to this Agreement.

(h) No more than once annually and effective on January 1 during the Term, CHSPSC may increase the monthly labor fees charged pursuant to Schedule B by an amount equal to the percentage increase in the Consumer Price Index for the Calculation Period immediately preceding the January 1 on which such change shall become effective. As used herein, the “Calculation Period” means the twelve month period beginning on July 1 and ending on June 30 of the year preceding the year for which the price increase shall become effective. Notice of any fee increase with respect to a Calculation Period must be received by Customer by September 15 immediately following the Calculation Period so that Customer may advise its Affiliates of the fee increase that will affect their budgets. For example, labor fees may be increased effective January 1, 2017 by an amount equal to the percentage increase in the Consumer Price Index for the Calculation Period beginning on July 1, 2015 and ending on June 30, 2016 if CHSPSC gives written notice of such increase to Customer by September 15, 2016. In addition, CHSPSC may at any time pass through to Customer any fee increases actually charged to CHSPSC for Third-Party Software.

3.  New Services and Systems; Updates .

(a)  Additional Services. From time to time, CHSPSC may offer to perform and Customer may request CHSPSC to perform certain new activities for Customer (similar to, but not included in the Services provided hereunder) for such additional Monthly Fees, costs, and charges as may be negotiated by the parties, which Customer may purchase in its discretion (the “Additional Services”). These Additional Services may require Customer to pay additional fees, purchase additional Equipment or Communications Lines or license additional software, all of which shall be disclosed by CHSPSC to Customer in writing when it proposes or responds to Customer’s request for Additional Services. CHSPSC shall respond to Customer’s request for Additional Services within thirty (30) days after Customer’s written request. Customer shall not be obligated to accept any Additional Services except to the extent that Customer authorizes CHSPSC in writing to perform the Additional Services.

(b) Customizations. From time to time, Customer may request that CHSPSC create enhancements, improvements, or other changes to the Software Systems (each a “Customization”). A “Customization” may include, without limitation, a new feature or function which improves the operation, performance, or efficiency of the Software, Equipment or infrastructure standards. CHSPSC shall respond to Customer’s request for Customizations within thirty (30) days after Customer’s written request. CHSPSC or the Third-Party Software vendor may reject Customer’s request for Customizations. In particular, CHSPSC will not make changes to the System which will result in variation to its standard software configurations. Fees

 

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for Customizations shall be agreed upon in advance and paid for by Customer consistent with the terms of this Agreement and any amendment, work order, or other similar document agreed upon by the Parties.

(c) Updates.

(1) From time to time, CHSPSC may update the Third Party Software or provide updates received from the licensor for Third Party Software (a “Third Party Update”). As used herein, the term “Third Party Update” means any fix, change or modification which affects the operating performance or efficiency of the Third Party Software, but does not alter the basic functions that it performs. At the request of CHSPSC and at a mutually agreed time consistent with past practices (typically after all CHS Entities have implemented the Third Party Update), but not to exceed sixty (60) days after the last CHS Entity has implemented the Third Party Update, Customer will discontinue use of the then-current version of the Third Party Software and work with CHSPSC to implement and use the Third Party Update in accordance with the Documentation. In the event that Customer fails to use the Third Party Update as described herein, CHSPSC shall not be required to maintain or support the related Third Party Software.

(2) From time to time, CHSPSC may update the CHSPSC Software (a “CHSPSC Update”). As used herein, the term “CHSPSC Update” means any fix, change or modification which affects the operating performance or efficiency of the CHSPSC Software. At the request of CHSPSC and at a mutually agreed time consistent with past practices (typically after all CHS Entities have implemented the CHSPSC Update), but not to exceed sixty (60) days after the last CHS Entity has implemented the CHSPSC Update, Customer will discontinue use of the then-current version of the CHSPSC Software and work with CHSPSC to implement and use the CHSPSC Update in accordance with the Documentation. In the event that Customer fails to use the CHSPSC Software as described herein, CHSPSC shall not be required to maintain or support the related CHSPSC Software.

(3) From time to time, Customer may be required to accept and pay for the costs associated with a Third Party Update or a CHSPSC Update if: (A) acceptance of the Third Party Update is necessary to maintain support for the Third Party Software being utilized by Customer; (B) acceptance of the Third Party Update or the CHSPSC Update is necessary to protect the Systems from outside and internal security risks; (C) acceptance of the Third Party Update or the CHSPSC Update is necessary to ensure stable operations for the Systems; or (D) acceptance of the Third Party Update or CHSPSC Update is necessary to ensure compliance with changes in regulatory requirements.

(d)  New Software. CHSPSC may, in its sole discretion, migrate to new Software (“New Software”) to replace any CHSPSC Software or Third Party Software which

 

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shall be offered to Customer by CHSPSC at a price to be determined by CHSPSC below at the time of such offering. If the Customer elects not to purchase such New Software, CHSPSC shall, at its option, either (1) continue to support the current Software utilized by Customer at prices to be reasonably determined by CHSPSC, or (2) permit Customer to contract with a third party to obtain support for the current Software utilized by Customer. The Customer shall make such election within 60 days after CHSPSC provides an offer describing such New Software and specifying the pricing for same.

(e) Notice of Change. CHSPSC shall give Customer written notice of any proposed change in the Software at or above the level of a material new release (including the proposed use of Third-Party Software instead of CHSPSC Software but not fixes and regulatory updates to any current Software) and any proposed new Services as soon as CHSPSC is aware of the proposed change or new Services and in no event shall such notice be given later than internal CHSPSC approval of the change or new Service. For purposes of this Section 3(e), a new release shall not be considered material if it is routine or if it does not change the functionality of the software or the manner in which it is used by a majority of the users. CHSPSC shall also provide the opportunity for Customer to send a Customer employee as a representative to CHSPSC strategic planning sessions at least as often as quarterly so that Customer can stay abreast of and provide input on proposed changes to the Systems.

4. Software and Wide Area Network; Prohibited Uses .

(a) The use of the CHSPSC Wide Area Network is expressly restricted to accessing the Software, Customer Data and Services provided by CHSPSC in the manner described in the Documentation. Customer acknowledges that the Wide Area Network provided by CHSPSC to support Customer’s operation is proprietary. Customer and CHSPSC shall each comply with the Documentation, which describes the responsibilities and duties of CHSPSC and the Customer in respect of the Wide Area Network. Customer shall not reverse engineer the Wide Area Network in order to obtain access to proprietary data or for any other purpose not specifically authorized herein. Customer shall not perform any of the following activities or any other activities not conforming to the stated use of the Wide Area Network and agrees to provide reasonable notification to employees at the Facilities that they shall not:

 

    Place any equipment on the Wide Area Network for the purpose of recording CHSPSC electronic communications or deciphering the content and structure of CHSPSC electronic communications;

 

    Access any piece or segment of the CHSPSC Wide Area Network of computing infrastructure via any telecommunications utility, for example, without limitation, Telnet and TCP/IP, other than as specified in the Documentation; or

 

    Take any other action which would have the effect of impeding or prohibiting normal operation of the Wide Area Network.

 

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In addition to the foregoing, Customer will obtain approval from CHSPSC prior to adding any additional equipment or connections to the Wide Area Network. Customer acknowledges and agrees that access to the CHSPSC Wide Area Network may be temporarily terminated at CHSPSC’s sole discretion (with notice to Customer) under the following circumstances:

 

    Customer engages in unauthorized use of the Wide Area Network as indicated in this Agreement;

 

    A Customer site generates a condition that interferes with the normal operation of the Wide Area Network, for example, without limitation, a hardware problem generating excessive network traffic or conflicting IP addresses are added to the network; or

 

    A non-Customer site generates a condition that interferes with the normal operation of the Wide Area Network and a Customer site is taken down as part of the process of identifying and remediating the problem.

With respect to any event caused other than by a malicious act of Customer or by unauthorized use of the Wide Area Network at a Customer Facility, CHSPSC will use its reasonable best efforts to ensure that access to the Wide Area Network is restored in a timely manner. With respect to any event caused by a malicious act or the unauthorized use of the Wide Area Network, access will be restored to the specific area in which the malicious act of the unauthorized use occurred when CHSPSC has received reasonable assurance from Customer that such acts or unauthorized use will not occur again, but all access will be restored to all other areas as if the event had been caused by another type of event. CHSPSC will determine assurance in its reasonable discretion, recognizing that an interruption in service is likely to cause substantial harm.

(b) Subject to the terms in each of the licenses for Third-Party Software granted to CHSPSC and as set forth elsewhere in this Agreement, CHSPSC grants to Customer, for the Term of this Agreement, a non-transferable, non-exclusive license to use the Software as contemplated in this Agreement. In this context, “use” includes use by Customer, its Facilities, Contract Entities and/or Affiliates and medical service providers accessing directly or remotely the Software in the manner permitted by such Software and the Documentation.

(c) Customer shall have no rights to the Software or to information (other than Customer Data) obtained from the Wide Area Network not expressly granted under this Agreement. Without limiting the generality of the foregoing, Customer shall have no right to (i) alter the Software, (ii) create derivative works, (iii) distribute or sublicense the Software copies to third parties, (iv) incorporate additional software into the Software at the operating system or any other level, (v) incorporate the Software into any publicly available data base or (vi) reproduce the Software without CHSPSC’s prior written consent. Customer shall not breach the terms of any Third-Party Software license.

 

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(d) Nothing herein shall be deemed to grant to Customer any ownership interest in the Software unless specifically granted by CHSPSC Software.

(e) Customer shall not use the Software for any purpose other than as specifically permitted by this Agreement. Customer shall not alter or delete any copyright or other proprietary notices in the Software.

(f) Customer shall have the right to copy Documentation to support use of the Software.

5. Equipment, Installation .

(a) If Customer purchases and installs Equipment (other than Equipment currently installed at each Facility and Contract Entity as of the date hereof), then Customer shall comply with the parameters set forth below and the installation guidelines in the Documentation. CHSPSC shall be fully responsible for the Communication Lines and the Wide Area Network. Selection of the most appropriate installation site for any additional Equipment within the Facility is Customer’s responsibility. At Customer’s request, CHSPSC will assist Customer in identifying installation sites, provided that in giving such assistance, CHSPSC makes no representation that any installation site is the appropriate site for Equipment. Proper installation may require the removal of walls or other alterations to the premises. Customer shall be responsible for any costs incurred in modifying the premises to accommodate the installation of any Equipment. Any damage to Customer’s Equipment and Software resulting from inadequate or incomplete site preparation for Equipment may not be covered by applicable maintenance agreements.

(b) With respect to any purchases and installations of new Equipment and Communication Lines, Customer shall perform the following to ensure adequate site preparation:

(1) When reasonably required by CHSPSC, provide the CHSPSC representative with appropriate drawings indicating:

i. the location and lay-out of the installation site;

ii. the location of existing and proposed site wiring (power and communications) and the paths and lengths thereof; and

iii. the location of other equipment capable of generating electrical noise, electromagnetic interference, heat, etc.;

(2) Make alterations to the premises as reasonably necessary to meet wiring and other site requirements;

 

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(3) Provide and install all communication cables, wall jacks, special connectors and associated hardware;

(4) Install all necessary power distribution boxes, conduits, grounds, lightening protection and associated hardware;

(5) Install all required auxiliary power protection and air conditioning;

(6) Provide reasonably required storage or service areas;

(7) Use commercially reasonable efforts to ensure the environmental requirements of the Equipment are met;

(8) Provide floor coverings and environmental systems that reasonably control static electricity build-up and discharge; and

(9) Comply with all applicable federal, state and municipal laws, codes and regulations (including, without limitation, electrical, building, safety and health laws) with respect to activities to be performed hereunder by Customer.

Clauses (1) through (9) above set forth only the minimum standards, are not intended to be comprehensive and do not modify the obligations of Customer to follow the reasonable instructions and recommendations of CHSPSC relating to the use of the Software and the Systems.

If CHSPSC determines that purchase or replacement of Equipment is mandated for CHSPSC facilities, then it will be mandated for Customer Facilities. If purchase or replacement of Equipment is determined by CHSPSC to be optional for CHSPSC facilities, then it will be optional for Customer Facilities. Customer acknowledges that if it elects not to purchase or replace Equipment as requested by CHSPSC, Customer shall not hold CHSPSC responsible for any loss of functionality or performance to the extent that such loss of functionality or performance is caused by the failure to purchase or replace Equipment as requested by CHSPSC.

6. Maintenance and Support Services .

(a) CHSPSC shall provide maintenance services for the Equipment through CHSPSC’s third-party maintenance providers.

(b) Subject to availability, CHSPSC will provide additional on-site installation support to Customer as provided in Schedule C . CHSPSC will provide customer assistance through its customer support center in a manner consistent with that provided to CHS Entities that receive similar services. Customer shall follow support request procedures as identified in Schedule D and fulfill Customer responsibilities in documenting support request and other Customer responsibilities as defined in Schedule D .

 

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(c) CHSPSC shall not be required to provide maintenance or support Services to any portion of the Software that has been altered by Customer (without the prior written approval of CHSPSC or as permitted under this Agreement or the Documentation) if such alteration adversely affects CHSPSC’s ability to provide such Services, as determined by CHSPSC in its reasonable discretion.

(d) Customer, at its sole cost and expense, may utilize other vendors of computer systems requiring interface with the Systems provided hereunder and, upon prior written notice to and approval by CHSPSC, CHSPSC shall cooperate with such vendors or Customer in the development and maintenance of necessary interfaces with the Systems, provided that CHSPSC shall have the first right to provide programming support in respect of such interfaces. If CHSPSC is interested in providing an interface, a cost estimate will be provided by CHSPSC to Customer for its approval. If approved, the work will be scheduled by CHSPSC. The interface will be provided by CHSPSC to Customer for testing and sign off. Payment shall be due to CHSPSC thirty (30) days after receipt of the invoice for the work. CHSPSC will work with a third party vendor selected by Customer to supply, implement and test any CHSPSC existing interface transactions on a time and materials basis. Where feasible, CHSPSC will also adapt existing interfaces to add existing accessible data elements to transactions on a time and materials basis. CHSPSC will review data elements that do not exist on CHSPSC systems for potential additions on a time and materials basis but retains the right to reject such additions in its sole discretion. All costs and expenses incurred by CHSPSC pursuant to this Section shall be reimbursed by Customer based on statement of work estimates provided by CHSPSC in accordance with Schedule C. Except as provided in this paragraph, CHSPSC shall have no obligation to provide Services for systems provided by a person other than CHSPSC or a vendor preferred by CHSPSC. All such Services shall be Customer’s responsibility and at Customer’s cost.

(e) The provision of Services may result in the disclosure to CHSPSC of third-party confidential or proprietary information in possession of Customer and in which CHSPSC has no rights. Customer shall indemnify and hold harmless CHSPSC from the failure of Customer to obtain any third-party consents that may be required so that CHSPSC may provide the Services.

(f) In the event Customer requires services beyond those provided in this Agreement, or as a result of Customer’s use of Software or Systems other than in conformity with applicable specifications, then to the extent that CHSPSC agrees to provide additional services, the services shall be provided based on statement of work estimates provided by CHSPSC in accordance with Schedule C .

(g) CHSPSC agrees to make its Wide Area Network available to Customer for access and use by Customer and by the Facilities, Contract Entities and Affiliates of Customer that Customer may designate from time to time.

 

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(h) CHSPSC has provided Customer with a copy of its current disaster recovery plan. CHSPSC shall maintain a commercially reasonable disaster recovery plan in effect with respect to the Services throughout the Term and shall give Customer written notice from time to time of the individual named as disaster recovery administrator to manage the plan. CHSPSC shall promptly advise Customer of any material changes in the disaster recovery plan. The purpose of the disaster recovery plan will be to provide a cost-effective means to reduce the amount of the time required to restore the Services and system functionality in the event of a catastrophic failure at a single data center versus completely rebuilding the computing infrastructure and to satisfy the requirements of HIPAA. The plan will be periodically tested, and the results made available to Customer upon request. Upon Customer’s reasonable advance request, such testing will include one or more Facilities at mutually agreed dates and times, consistent with the operational needs, plans and abilities of both parties. The results of disaster recovery plan testing with respect to any Facility will be promptly provided to Customer. CHSPSC shall allow Customer to designate one employee of Customer to attend the periodic CHSPSC meetings at which it reviews the disaster recovery plan and the results of testing. CHSPSC shall provide Customer with reasonable advance written notice of such meetings and allow the designated Customer employee to participate by conference call at Customer’s request.

7. Customer Linkage . The QHC IT Liaison (the “QHC IT Liaison”), or such other person as may be designated from time to time by CHSPSC, will support the Customer and provide account management services. The QHC IT Liaison and Customer will conduct a joint effort to define overall Customer objectives and develop an information technology plan whereby CHSPSC can assist in meeting these objectives. This process will allow for long-range planning and budgeting for system growth, system requirements and resource planning to meet stated objectives. CHSPSC shall continue to cooperate and work with Customer to address confidentiality, security and privilege requirements, to satisfy the need to produce electronically stored information that is generated, transferred or maintained using the Services and to help implement such strategies and procedures as Customer may adopt from time to time to more effectively address its information management needs. The QHC IT Liaison and a Customer representative shall meet monthly to review service performance, remediation efforts, invoice/billing issues, and planned events.

8. Confidentiality; Proprietary Rights .

Notwithstanding the following or any other provision of this Agreement, the Business Associate Agreement shall take precedence over and supersede this Section 8 and any other provision of this Agreement to the extent of any conflict or inconsistency between the terms of the Business Associate Agreement and the terms of this Agreement.

(a) As between CHSPSC and Customer, any and all PHI, data, e-mails, information, reports and materials of or relating to Customer, any of its Facilities, Contract Entities or Affiliates or any of their patients stored by CHSPSC, transmitted by CHSPSC or generated by CHSPSC (except as provided below) in the course of performing the Services and all portions, versions (whether de-identified or not), compilations or aggregations thereof

 

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(collectively, “Customer Data”) are and shall remain the sole and exclusive property of Customer; provided, however, that all e-mails, reports and other materials that CHSPSC generates solely for its internal purposes in connection with performing its obligations hereunder or administering this Agreement shall not be considered “Customer Data”. CHSPSC shall have the right to use the Operational Customer Data (as defined below) as reasonably necessary to perform Services hereunder and to document its overall disaster recovery planning and other compliance activities. As used herein, “Operational Customer Data” means any Customer Data regarding the Services and Systems that are included in records of CHSPSC maintained in the ordinary course of its business, such as the results of any disaster recovery testing involving Customer Facilities. CHSPSC shall provide all Customer Data (or portions thereof) to Customer within thirty (30) days of the receipt of Customer’s request for such data or materials; provided, however, that CHSPSC may retain a copy of the Operational Customer Data (subject to the confidentiality provisions of this Agreement and the Business Associate Agreement) solely for compliance with applicable laws and regulations and resolution of any dispute arising under this Agreement until the applicable limitations period has expired, at which time CHSPSC shall, at Customer’s request, either return all of the Operational Customer Data to Customer or certify in writing to Customer that all of it has been destroyed. Notwithstanding the foregoing, (i) CHSPSC shall maintain copies of Customer Data for such periods of time as are required under this Agreement and for such other periods of time as CHSPSC, in its sole discretion, shall deem to be advisable.

(b) CHSPSC warrants that it will retain all information belonging to Customer in confidence and will neither use it nor disclose it to anyone without the prior written consent of Customer. Notwithstanding the foregoing, to the extent that CHSPSC is requested (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any information required to be kept confidential pursuant to this Section 8, CHSPSC agrees to maintain the confidentiality of such information and to provide prompt notice to Customer, so that Customer may seek an appropriate protective order or waive compliance by CHSPSC with this Section 8. If, in the absence of a protective order or the receipt of a waiver by Customer hereunder, CHSPSC in good faith determines that it is legally required to disclose such information, CHSPSC may disclose such information, and CHSPSC shall not be liable pursuant to this Section 8; provided, that (i) CHSPSC shall furnish only that portion of the information which it is advised by counsel to disclose and (ii) CHSPSC shall exercise its reasonable efforts to obtain assurance that confidential treatment will be accorded to the disclosed portion of the information.

 

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(c) CHSPSC will provide, and Customer agrees to comply with, reasonable security measures and procedures designed to (i) limit access to the Software and Customer Data to authorized personnel and (ii) minimize the possibility of unauthorized access. CHSPSC reserves the right to issue and change security procedures from time to time with notice to Customer, including passwords and user identification numbers, which may require acquisition and installation of additional applications, tools and/or equipment at Customer cost. Customer shall be responsible for safeguarding and controlling the use of passwords and user identification numbers assigned by CHSPSC. CHSPSC shall promptly provide Customer with written notice of any data breach or unauthorized access after CHSPSC becomes aware such actions have occurred.

(d) During the Term of this Agreement and thereafter, Customer shall keep confidential all information pertaining to the use or operation of the Software, disclosing such information only to those persons who need to have such information in order to utilize the Systems. Each party shall promptly inform the other of any suit or action instituted against it based upon a claim that the Software, Services or any portion thereof misappropriates or infringes a patent, copyright, trade secret or other proprietary right of a third party.

(e) The Software may include proprietary and copyrighted data or programs of third parties. Such data and programs are supplied to Customer pursuant to express authority of such third parties in licenses and agreements with CHSPSC.

(f) CHSPSC understands that Customer may from time to time evaluate how information is accessed, stored and transmitted using the Services with respect to a variety of legal requirements, including confidentiality, privilege and search ability. As part of the Services, CHSPSC shall work with client to implement such changes as Customer may reasonably request from time to time in order to better satisfy these needs.

9. Warranties . Subject to the limitations of this section and Section 10 hereof and subject to such limitations as are expressly provided elsewhere in this Agreement, CHSPSC represents and warrants that:

(a) CHSPSC will provide the Services in good faith and with due care consistent with the care that it exercises in performing such Services for itself. Customer acknowledges and agrees that CHSPSC does not regularly provide Services to third parties as part of its business, and, except as specifically stated elsewhere herein, CHSPSC does not otherwise warrant or assume any responsibility for its performance of the Services.

(b) CHSPSC has the legal right to license or sublicense to Customer the Software and to perform the Services. CHSPSC makes no warranties of any kind in connection with the services provided by any telephone company. CHSPSC makes no warranties of any kind with respect to the Equipment. Customer must look solely to the manufacturer of such Equipment for any warranties relating thereto.

 

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(c) CHSPSC owns all right, title and interest in and to the Software, Documentation and other proprietary material provided under this Agreement, or otherwise has the right to grant to Customer the license to use same as set forth in this Agreement without violating, misappropriating or infringing upon any rights of any third party and without breach of any third-party license to CHSPSC.

(d) There is currently no actual or, to the knowledge of CHSPSC, threatened suit by any third party based on an alleged violation, infringement, misappropriation or breach by CHSPSC of the rights of any third party. CHSPSC shall not interfere with use of the Software and the Documentation in accordance with this Agreement and Customer shall not be disturbed or interfered with during the continuation of the license granted hereunder.

(e) The Software shall perform in accordance with the Documentation; provided, however, if a Customer makes an unauthorized modification to the Software, then this warranty shall not apply to the extent that the problem was caused by the unauthorized modification. CHSPSC will assist Customer with gaining priority or escalation of services from Third Party vendors providing service to both CHSPSC and Customer in order to meet all regulatory requirements by mandated deadlines.

(f) Each of CHSPSC’s employees, agents or representatives assigned to perform services hereunder shall have the proper skill, training and background so as to be able to perform in a competent and professional manner and all work will be so performed in a manner compatible with Customer’s business operations at its premises.

(g) The Software provided under this Agreement, at the time it is supplied and throughout the Term hereof, shall be free of any virus, rouge program, time bomb, turn off instruction, or any other device however characterized that is potentially damaging to the Software, materials provided, other programs, data, computer hardware, computer software, telecommunications equipment or any other material or device in any manner whatsoever (collectively, “Malicious Code”). Throughout the Term of this Agreement, CHSPSC shall use commercially reasonable efforts to check the Software for Malicious Code and take appropriate action to prevent the propagation of Malicious Code in connection with the Services. CHSPSC shall promptly provide Customer’s employees or agents with written notice of the existence of any Malicious Code after CHSPSC becomes aware that Malicious Code is present in the Software.

(h) Customer is not an alpha or a beta site for the Software and will not be for any new services unless the prior written consent of Customer’s Chief Information Officer, Chief Executive Officer or Chief Financial Officer is obtained; provided, however, that notwithstanding the foregoing, the Facilities will become beta sites for certain CHSPSC Software such as CAPS and Autoca.

(i) The Documentation accurately reflects the functionality of the Services and the security policies and procedures as of the Effective Date and shall be promptly updated

 

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by CHSPSC during the Term of this Agreement to reflect any changes in the Services. The Documentation shall be complete and of a quality which shall enable a trained user to utilize the Services as contemplated by this Agreement. CHSPSC shall give Customer advance notice of any material changes in the Documentation with respect to new releases and any material changes in the security policies and procedures included therein. Changes in Documentation shall not adversely affect the scope of the warranty set forth in Section 9(a) above except for changes in Documentation that are made to reflect changes made in the Software pursuant to Section 3 above.

(j) The Services include data backup, disaster recovery and other functionality sufficient to enable Customer to satisfy the HIPAA Rules with respect to privacy and security.

CHSPSC shall use commercially reasonable efforts to develop modifications to the System to comply with changes in United States federal regulatory requirements. Such federal regulatory modifications will be developed and cost shared between CHSPSC and Customer facilities based on a “Fair Share Basis” of cost allocation. This will include, where possible, any direct costs associated with specific facilities and allocation of central cost to facilities based on net revenue proration, so long as Customer is entitled to receive Services under this Agreement. At Customer’s request, CHSPSC shall use all commercially reasonable efforts to modify the System to comply with state and local regulatory modifications.

THE FOREGOING WARRANTIES ARE THE EXCLUSIVE WARRANTIES UNDER THIS AGREEMENT AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EXCEPT FOR THE EXPRESS WARRANTIES AND COVENANTS HEREIN, CUSTOMER EXPRESSLY WAIVES AND SHALL NOT MAKE ANY CLAIM OF ANY KIND AGAINST CHSPSC ARISING OUT OF THE FAILURE OF PERFORMANCE OF ANY PIECE OF EQUIPMENT OF CHSPSC SOFTWARE OR THIRD-PARTY SOFTWARE, OR ARISING OUT OF THE BREACH OF ANY WARRANTY PROVIDED BY THE MANUFACTURER OF SAID EQUIPMENT. CHSPSC SHALL PASS THROUGH TO CUSTOMER THE BENEFITS OF ANY EXPRESS WARRANTIES RELATING TO THE EQUIPMENT AND THE THIRD-PARTY SOFTWARE, AND SHALL ASSIST CUSTOMER WITH ANY SUCH WARRANTY CLAIMS.

10. Limitation of Liability .

(a) Neither Party shall be liable to the other for any failure or delay in the performance of its obligations under this Agreement if such failure or delay arises out of a cause beyond the reasonable control of such party. Such causes beyond the reasonable control of a Party may include, without limitation, acts of God, a public enemy, civil or military authority, fires or other catastrophes, delays in transportation, riots or war. Failure to comply with the terms

 

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of this Agreement or the Documentation may result in serious damage to Customer’s Equipment, Software and Facilities. CHSPSC shall have no liability for damage to the extent that it resulted from Customer’s failure to comply with the terms of this Agreement or the Documentation provided by CHSPSC to Customer. Should the Software and/or the Services hereunder be made the subject of any claim alleging misappropriation or infringement of any patent, copyright, trade secret, trademark or other intellectual property rights of any third person, CHSPSC’s sole liability shall be, at its option, to procure the right to use the Software and provide the Services free of such liability or to replace or modify the Software and the Services to make them non-infringing while maintaining equivalent functionality. No person providing data or programs in the Software shall be deemed thereby to be engaging in the practice of medicine or dispensing medical services.

IN THE EVENT OF DELAYS, ERRORS OR OMISSIONS IN PROCESSING OR IN PROVIDING OR FAILING TO PROVIDE ANY OTHER SERVICES PROVIDED BY CHSPSC HEREUNDER, CHSPSC SHALL USE ITS REASONABLE BEST EFFORTS TO CORRECT SUCH ERRORS OR OMISSIONS, TO MAKE SUCH SERVICES AVAILABLE AND/OR RESUME PERFORMING SUCH SERVICES AS PROMPTLY AS REASONABLY PRACTICABLE AND AT NO ADDITIONAL CHARGE, PROVIDED THAT NOTICE OF SUCH ERROR OR OMISSION IS GIVEN WITHIN SEVENTY-TWO (72) HOURS AFTER PRODUCTION OF ANY REPORT. OTHERWISE, CHSPSC SHALL HAVE NO OTHER OBLIGATIONS OR LIABILITY FOR SUCH ERRORS, DELAYS OR OMISSIONS. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF THE PERFORMANCE OR BREACH OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF DATA OR BUSINESS INTERRUPTION. FURTHERMORE, EACH PARTY’S LIABILITY TO THE OTHER FOR ANY SUCH DAMAGES CAUSED BY OR RESULTING FROM THE PERFORMANCE OR BREACH OF THIS AGREEMENT, WHETHER IN TORT, CONTRACT OR OTHERWISE, SHALL BE LIMITED IN EACH CASE TO AN AMOUNT EQUAL TO $100,000 PER FACILITY AND $500,000 IN THE AGGREGATE, WHICH SUMS SHALL BE APPLIED AS A CREDIT AGAINST FEES.

(b) Notwithstanding the foregoing, the limitations of liability shall not apply to (i) the indemnification obligations set forth in this Section 10, (ii) breach of the confidentiality provisions set forth in Section 8 hereof or (iii) any act or omission that constitutes fraud, willful or wanton misconduct, gross negligence or other egregious conduct.

(c) Customer shall indemnify and hold harmless CHSPSC from and against any loss, damage or liabilities (including, without limitation, attorneys’ fees) resulting from claims, actions or lawsuits (“Losses”) asserted by or on behalf of third parties or which result from governmental action or are otherwise asserted against CHSPSC only to the extent that such Losses are determined to have resulted primarily from Customer’s fraud, willful misconduct,

 

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negligence or breach of the confidentiality provisions set forth in Section 8 hereof. CHSPSC will indemnify and hold harmless Customer from and against any Losses asserted by or on behalf of third parties or which result from governmental action or are otherwise asserted against Customer only to the extent that such Losses are determined to have resulted primarily from CHSPSC’s fraud, willful misconduct, negligence or breach of the confidentiality provisions set forth in Section 8 hereof or any breach of the Business Associate Agreement.

11. Term; Termination; Breach .

(a) This Agreement shall become effective at the Effective Date and shall continue during the Term, unless earlier terminated pursuant to the provisions of this Section 11, in which event this Agreement shall terminate upon the effective date of termination, as described in paragraph (b) below.

(b) This Agreement, and the Services and Systems provided hereunder, may be terminated prior to the expiration of the Term only as follows:

(1) by either Party with cause (if not cured within the cure period after notice as described in paragraph (c) below), by the giving of written notice by either party, in which event such termination shall be effective sixty (60) days after the giving of such notice; or

(2) by either Party in the event that the non-terminating Party files a proceeding, or has an order for relief entered with respect to it, under any federal or state bankruptcy laws now or hereafter in effect, by the giving of written notice by the other Party, in which event such termination shall be effective sixty (60) days after the giving of such notice.

(c) In the event of a breach of any obligation or covenant under this Agreement by Customer or CHSPSC, other than the obligation to pay money (other than payments disputed by Customer or CHSPSC in good faith), the party not in breach may give the party in breach written notice of the specifics of the breach and the party in breach shall have sixty (60) days (the “Cure Period”) in which to cure such breach or cause the breach to be cured. If the breach is not cured, or waived by the non-breaching party, within the Cure Period, then the non-breaching party shall be entitled to pursue any remedies it may have by reason of such breach. The non-breaching party’s remedy with respect to any breach which is not cured or waived within the Cure Period shall include, without limitation, terminating this Agreement with cause and/or commencing legal action against the other party for damages related to such breach. Failure to terminate this Agreement shall not serve to waive any breach hereof. If either party commences legal action alleging any breach of this Agreement, the non-prevailing party shall pay all costs and reasonable attorneys’ fees incurred by the prevailing party in connection therewith.

(d) If Services will no longer be provided under this Agreement due to the expiration of this Agreement or termination under any other circumstances, Customer shall have the right to immediately begin an orderly de-installation of the Services and the Systems as set

 

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forth herein; provided, however, that such a de-installation shall not otherwise relieve Customer and CHSPSC of their respective obligations stated elsewhere in this Agreement. CHSPSC shall continue to provide all Services hereunder and shall provide (as Additional Services) reasonable assistance to Customer to transition to another service provider or to provide the services itself.

(e) Following the termination of this Agreement and upon CHSPS’s request, unless CHSPSC has granted a license to Customer for CHSPSC Software or Customer has obtained a separate license for Third-Party Software, Customer shall deliver to CHSPSC all Software and related documentation (including copies thereof) or, at CHSPSC’s option, shall deliver to CHSPSC a sworn statement certifying that all Software and related documentation have been destroyed except for an archival copy that may be retained in order to (i) defend or assert any claim of CHSPSC or any third party, (ii) access and/or transition the Customer Data to a new system and/or (iii) to satisfy the requirements of applicable laws and regulations.

12. Miscellaneous

(a) Assignment . Except as set forth herein, neither this Agreement, nor any of the rights, licenses or duties set forth herein, may be Assigned (as defined below) by Customer without the prior written consent of CHSPSC. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors and permitted assigns.

(b) Access to Books and Records . Upon written request of the Secretary of Health and Human Services or the Comptroller General or any of their duly authorized representatives, CHSPSC shall make available to the requesting party those contracts, books, documents and records necessary to verify the nature and extent of the cost of providing its services. CHSPSC shall cause such materials to be available for inspection for at least four (4) years after the rendering of such Services and Systems. If CHSPSC carries out any of the duties of this Agreement with a value of $10,000 or more over a twelve (12) month period through a subcontract with a related individual organization, CHSPSC shall include this requirement in all such subcontracts. The parties agree that any attorney-client, accountant/client or any other legal privilege shall not be deemed waived by virtue of the provisions of this Section 12.

(c) Taxes . The prices and amounts specified to be payable by Customer hereunder do not, unless otherwise noted, include any sales, use, excise, value added, utility or other similar tax or charge which may be or hereafter become applicable to the Services and Systems provided hereunder. Consequently, in addition to such prices and amounts, the amount of any such taxes or charges which may be or hereafter become applicable shall also be payable by Customer to CHSPSC, except that Customer shall have no responsibility for payment of taxes on CHSPSC’ income or for payment of franchise taxes related to authorization of CHSPSC to conduct business in any state. In lieu of paying any such taxes that may otherwise be due, Customer may provide CHSPSC with a tax exemption certificate acceptable to the taxing authorities. Customer shall be given prompt written notice of any tax assessment against

 

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CHSPSC for which Customer is liable hereunder, and Customer shall have the right, at its own expense, to contest any such assessment prior to its payment by CHSPSC. In the event Customer exercises such right, it shall indemnify and hold harmless CHSPSC from liability for all interest and penalties relating to such contest. Customer shall control any such contest and CHSPSC shall provide information and assistance in connection with such contest to the extent reasonably requested by and at the expense of Customer.

(d) Divestiture of Facility . In the event that, during the Term of this Agreement, Customer divests any Facility or Affiliate that is then receiving any Systems or Services hereunder (each a “Divested Facility”), then in such event, Customer and the purchaser may elect to have the purchaser of such Divested Facility enter into a new agreement with CHSPSC for the provision of Services and Systems on the same terms as this Agreement (other than the Term), at which time this Agreement shall terminate with respect to such Divested Facility and the fees charged hereunder with respect to the Divested Facility shall no longer be charged. CHSPSC shall provide the Services and Systems to the purchaser of the Divested Facility pursuant to a separate agreement for up to six (6) months after the closing of the divestiture at the same prices as would apply under this Agreement. CHSPSC shall also promptly enter into good faith negotiations with the purchaser of the Divested Facility for either a transition to another provider or a continuation of the Services and Systems after the term selected by the purchaser and shall propose to the purchaser a time period and fees for such transition or continuing services prior to closing of the divestiture. Any legal or other expenses reasonably incurred by CHSPSC in connection with actions taken in relation to Customer’s divestiture of a Facility shall be paid by Customer.

(e) Acquired Facility. In the event that, during the Term of this Agreement, Customer acquires any Facility or Affiliate then Customer may request services for the acquired Facility or Affiliate using the process described in Schedule C . If Customer desires to have CHSPSC conduct a pre-conversion assessment to determine the statement of work costs and time line, Customer will receive a statement of work for assessment costs. Customer will approve the assessment costs prior to the assessment being conducted. Conversion estimates are different from standard projects as defined in Schedule C in that preparation of full conversion statement of work efforts are extensive and CHSPSC must be compensated for the estimation costs.

(f) Hiring . During the Term of this Agreement neither party shall recruit, hire, offer employment to or refer for employment any of the employees of the other party, without such party’s prior written permission.

(g) Disputes . In the event that a dispute arises between CHSPSC and Customer which cannot be resolved in the normal course, the following dispute resolution procedure shall be followed: (i) within ten (10) business days of a written request by either party, then Customer’s Chief Information Officer (or designee) and CHSPSC’s QHC IT Liaison shall meet and resolve the issue; if these parties cannot resolve the issue within ten (10) business days of the meeting, then (ii) the issue shall be submitted to Customer’s CFO or designee and

 

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CHSPSC’s Senior Vice President and Chief Information Officer; if these parties cannot resolve the issue within fifteen (15) business days of submission to them, the parties may seek whatever other remedies are available. Notwithstanding anything to the contrary set forth in this Agreement, (A) during the pendency of any dispute, whether being resolved pursuant to the foregoing process, litigation or otherwise, the Parties shall each continue to perform all of their respective obligations hereunder during the pendency of the dispute (including the payment of undisputed fees) and (B) the obligation to escalate disputes in accordance with this subsection (f) shall not preclude either Party from seeking an injunction or other equitable relief with respect to breaches of confidentiality or other matters that have a risk of irreparable harm that may not be compensable with money damages.

(h) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Tennessee without regard to its conflict of law provisions. Any dispute hereunder shall be resolved in the state or federal courts having jurisdiction located in Nashville, Tennessee. CHSPSC and Customer each hereby expressly submits and consents in advance the jurisdiction of the United States District Court for the Middle District of Tennessee and each hereby waives any objection which it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens .

13. Notices . All notices or other communications required or permitted under this Agreement shall be in writing and sufficient if sent by nationally recognized overnight courier (for next business day delivery, receipt requested), or certified mail, return receipt requested, to CHSPSC or Customer at the following addresses:

CHSPSC, LLC

4000 Meridian Boulevard

Franklin, TN 37067

Attention: SVP & CIO

And

QHCCS, LLC

1573 Mallory Lane, Suite 100

Brentwood, TN 37027

Attention: SVP and CIO

Any party may change the person and address to which notices or other communications are to be sent to it by giving written notice of any such change in the manner provided herein.

14. Entire Agreement; Amendment . This Agreement, together with the Schedules hereto, sets forth the entire agreement and understanding of the parties hereto in respect of the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof. No party hereto has relied upon any oral or

 

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written statement, representation, warranty, covenant, condition, understanding or agreement made by any other party or any representative, agent or employee thereof, except for those expressly set forth in this Agreement or in the Schedules or other documents delivered pursuant hereto. This Agreement may be amended, modified, superseded or supplemented only by an instrument in writing executed and delivered by CHSPSC and Customer.

15. Headings . The section headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

16. Rights Cumulative; Waiver . All rights and remedies conferred under this Agreement or by any other instrument or law shall be cumulative and may be exercised singularly or concurrently. The failure by either party to enforce any term shall not be deemed to be a waiver of future enforcement of that or any other term of this Agreement.

17. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall be deemed to constitute an original, but which together shall constitute one and the same instrument.

18. Severability. In the event that any provision hereof is prohibited or unenforceable in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or unenforceability of such provision in any other jurisdiction.

19. Survival . Termination of this Agreement shall not affect the respective rights and responsibilities of the Parties to the extent that they arose prior to such termination. Unless otherwise provided herein, all provisions of this Agreement shall remain in full force and effect during any Wind-Down Period. The following Sections of this Agreement shall survive its termination (in addition to any Section which, by its terms, continues in effect after termination): Section 1 (Definitions), Section 8 (Confidentiality; Proprietary Rights), the Business Associate Agreement referenced in Section 8, Section 10 (Limitation of Liability), Section 12(b) (Access to Books and Records), Section 12 (f) (Disputes), Section 12(g) (Governing Law), Section 13 (Notices), Section 14 (Entire Agreement), Section 15 (Headings), Section 16 (Rights Cumulative; Waiver), Section 17 (Counterparts), Section 18 (Severability) and Section 19 (Survival).

 

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IN WITNESS WHEREOF, the parties have caused this Computer and Data Processing Transition Services Agreement to be executed by their duly authorized representatives as of the day and date first referenced above.

 

CHSPSC, LLC
By:  

/s/ Martin G. Schweinhart

  Martin G. Schweinhart
  Executive Vice President of Administration
QHCCS, LLC
By:  

/s/ Michael J. Culotta

  Michael J. Culotta
  Executive Vice President
  and Chief Financial Officer

 

Signature Page to

Computer and Data Processing

Transition Services Agreement

Exhibit 2.5

RECEIVABLES COLLECTION AGREEMENT

THIS RECEIVABLES COLLECTION AGREEMENT (the “Agreement”) is made and entered into effective as of the 29 th day of April, 2016, by and between Professional Account Services, Inc., a Tennessee corporation (“PASI”), and QHCCS, LLC, a Delaware limited liability company (“QHCCS”).

RECITALS:

A. Affiliates of PASI and QHCCS are parties to a Separation and Distribution Agreement dated April 29, 2016 (the “Separation and Distribution Agreement”), pursuant to which, among other things, affiliates of QHCCS are acquiring control of the operations of the hospitals listed in Exhibit A hereto (individually a “Hospital” and collectively, the “Hospitals”), together with certain related assets and businesses (collectively, the “Facilities”). QHCCS has entered into this Agreement on behalf of its subsidiaries and affiliates that own and operate the Facilities. Terms used but not defined herein shall have the meanings ascribed to such terms in the Separation and Distribution Agreement.

B. PASI and QHCCS desire to make provision for PASI to collect certain of the accounts receivable and bad debt receivables of the Facilities pursuant to the terms and conditions of this Agreement.

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

1. Definitions . “Accounts Receivable” shall mean certain active accounts receivable and accounts written off to bad debt referred by the Facilities, from time to time, to PASI for collection, including self-pay accounts and balances after insurance, certain commercial insurance follow-up accounts, litigation accounts, payment arrangement accounts, and third party liability accounts in respect of services rendered by the Facilities. Accounts Receivable shall not include any such accounts subsequently returned to QHCCS pursuant to Section 4.6.

2. Collection of Accounts Receivable . For so long as this Agreement remains in effect, PASI shall collect the Accounts Receivable on behalf of QHCCS on the following terms and conditions:

2.1 Unbilled Accounts Receivable . PASI or its designee shall prepare and send to appropriate third parties (whether patients or payors or both) billing statements with respect to any unbilled Accounts Receivable (the “Unbilled Accounts Receivable”). QHCCS shall have sole responsibility for coding the Unbilled Accounts Receivable and shall follow compliance safeguards with respect to documentation. PASI shall have no obligation to verify, check or otherwise inspect the coding. QHCCS agrees to indemnify and hold PASI harmless against any and all liability, loss, damages, costs and expenses which PASI may be required to pay, directly or indirectly, by reason of QHCCS’ coding or because of any error or omission in such coding which directly or indirectly results in any liability, loss and/or damage to PASI.

2.2 Billed Accounts Receivable . With respect to those Accounts Receivable that have been coded and billed prior to the date of this Agreement (“Billed Accounts Receivable”), PASI shall continue the collection of such Accounts Receivable pursuant to the terms of this Agreement.


2.3 Books and Records . During the term of this Agreement, PASI shall maintain books and records relating to the Accounts Receivable separate and distinct from all books and records relating to the other business of PASI. PASI shall maintain all such books and records at a secure location designated in advance by PASI and shall maintain and update such records in a reasonable manner.

2.4 Level of Effort . QHCCS acknowledges and agrees that PASI does not regularly provide collection services to third parties as part of its business but PASI is actively engaged in the collection of receivables using similar processes for its affiliates, and, except as specifically stated elsewhere herein, PASI does not otherwise warrant or assume any responsibility for its performance of the collection services. In connection with PASI’s collection efforts, PASI shall (i) use at least the same level of skill, diligence, effort and resources that PASI applies in the collection of its affiliates’ accounts receivable and bad debt receivables; and (ii) comply with all applicable laws, rules, and regulations. See Exhibit B hereto in respect of a description of the services to be rendered by PASI pursuant to this Agreement. See Exhibit C hereto for a description of the duties that are to sole responsibility of QHCCS. Notwithstanding anything contained herein to the contrary, PASI does not guarantee the extent to which any Accounts Receivable will be collected .

2.5 Information to be Furnished .

(a) Within fifteen (15) days following the end of each month during which this Agreement is in effect, PASI shall furnish to QHCCS:

(1) An accounting of all amounts received under this Agreement that relate to the Accounts Receivable during such month and during the term of this Agreement to the most recent month end;

(2) A schedule of all Accounts Receivable (net of credit balances) then outstanding, with an aging report; and

(3) A reconciliation report reconciling the cash collections, net of any applicable credits, such as overpayments and refunds, to the cash deposited in the account referenced in Section 3.1.

(b) PASI shall promptly furnish QHCCS with such other information and in such form(s) or format(s) as may be reasonably requested by QHCCS and which is reasonably available with respect to the matters covered by this Agreement.

2.6 Deposit of Funds .

(a) PASI shall deposit all moneys received under this Agreement with respect to the Accounts Receivable into a separate trust account maintained at a commercial bank. PASI shall remit moneys to QHCCS via an electronic funds transfer transaction to a bank account designated by QHCCS on a monthly basis with the reports furnished by PASI to QHCCS pursuant to Section 2.5.

 

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(b) QHCCS hereby irrevocably appoints PASI as QHCCS’ agent and attorney-in-fact to endorse the name of QHCCS or any d/b/a or other name used by QHCCS including the name of the Hospital or any unit thereof, on any notes, acceptances, checks, drafts, money orders or other evidence of proceeds from the Accounts Receivable, but only to deposit such funds into the account specified in accordance with Section 2.6(a), all in accordance with the terms of this Agreement.

2.7 Secondary Placement Process .

(a) Account Selection . Accounts are selected by PASI monthly to be placed with a “Secondary Agency” for additional collection efforts. An account qualifies based on the circumstances or “events” that have occurred during the collection cycle. An account will qualify for placement only if (i) there has been no payment on the account for 180 days after placement to PASI; (ii) such account is not in a payment disposition, i.e., post-dated payment, promise to pay, pursuit of garnishment, etc. and (iii) PASI has been collecting on such account in the normal course of business for 180 days. This qualification can be accelerated if an account is deemed uncollectible earlier in the collection cycle (i.e. no demographics supplied or discovered during skiptracing efforts) or the time period can be extended (i.e. payments were received for several months and then the debtor discontinued paying due to financial issues). Accounts with a “Propensity to Pay” score greater than 800 shall be held for up to two (2) years due to the probability of obtaining future payments.

(b) Account Placement . Accounts are selected on a monthly basis that meet the criteria of “Account Selection” above. An electronic file is generated which is subsequently sent to the Secondary Agency to load. A detailed listing of accounts is sent to the Business Office Manager of the Facility or a CHSPSC, LLC Shared Service Center (“SSC”) representative at the time the file is sent and accounts are placed. The Business Office Manager or SSC representative should also receive an acknowledgement report from the Secondary Agency confirming receipt of accounts received from PASI.

3. Disposition of Collections; Application of Payments.

3.1 Funds Deposit . Accounts Receivable collected by PASI pursuant to this Agreement shall be deposited into the account specified in accordance with Section 2.6 hereof within one (1) business day of the receipt of such amounts. QHCCS agrees to provide PASI on a daily basis records of all payments received and/or adjustments made by QHCCS on Accounts Receivable referred to PASI.

3.2 Application of Payments . Accounts Receivable collected by PASI shall be applied to the account and relevant time period as specified in or with the payment transmittal(s). To the extent PASI receives a payment from an insuror with respect to a patient having multiple outstanding accounts with the Hospital and such payment does not specify the outstanding account to which it applies, PASI shall contact the payor for account information to allow for proper crediting. Should any amount remain thereafter and for any payment received from any other source, such amount shall be applied to the oldest outstanding account first.

 

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4. Cooperation . PASI shall cooperate with QHCCS in order to collect the Accounts Receivable. Further, QHCCS shall cooperate with PASI to enable PASI to collect the Accounts Receivable. Such cooperation shall include (but shall not be limited to) the following:

4.1 Access by QHCCS . PASI shall permit QHCCS or QHCCS’ designee reasonable access to PASI’s books and records relating to the Accounts Receivable upon reasonable notice at any time during normal business hours and shall make its staff available during normal business hours to assist QHCCS as may be reasonably required in connection with the Accounts Receivable. Such access shall include, without limitation, access to such information technology records and reports, books and records by QHCCS’ internal and/or external auditors, attorneys, or representatives.

4.2 Copying . QHCCS may, at QHCCS’ expense, copy any such records described in Section 4.1.

4.3 Representative . QHCCS shall make a representative of QHCCS available at PASI’s reasonable request as may be necessary to answer questions and provide information to PASI in connection with PASI’s activities under this Agreement, and PASI shall cooperate with QHCCS’s representative in the exchange of information concerning the Accounts Receivable. Likewise, PASI shall make a representative of PASI available to answer questions and provide information to QHCCS in connection with PASI’s activities under this Agreement.

4.4 Access by PASI . QHCCS agrees to provide to PASI from time to time copies of information (i.e., EOBs, detailed billing, UB-40s, etc.) which PASI requires for insurance filings. QHCCS, whenever possible, will endeavor to do so by electronic means. During the term of this Agreement, QHCCS shall provide PASI with reasonable access during regular business hours to all other documents, records, correspondence, work papers and other documents relating to the Accounts Receivable (the “Receivables Records”). PASI shall return the Receivables Records (in electronic and paper format, and will include the number of accounts and dollar amounts of such accounts) to QHCCS following the termination of this Agreement as soon as reasonably practicable to both parties. QHCCS shall bear all third party delivery expenses related to the return of the Receivables Records.

4.5 Application of Historical Procedures . PASI shall apply the historical procedures of the Facilities in the collection of the Accounts Receivable and in applying any discounts or adjustments, unless instructed by QHCCS to follow other specified procedures. Any process change will be implemented upon mutual agreement to the proposed change.

4.6 Return of Accounts . Upon QHCCS’ request, PASI will return to QHCCS (a) any account within three (3) business days after PASI is notified to do so by QHCCS; (b) accounts that are paid in full; and (c) accounts with respect to which it is reasonably determined by PASI or QHCCS that the debtor is deceased and there are no assets or an estate or any other liable party.

 

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5. Service Fee .

5.1 PASI shall receive a service fee (the “Service Fee”) as provided in Exhibit D hereto. The Service Fee for each month will be deducted by PASI from the amount remitted to QHCCS pursuant to Section 2.6(a)

5.2 If any Accounts Receivable collected by PASI are subsequently repaid by QHCCS for good cause to the applicable payor during the term of this Agreement or within twelve (12) months of termination of this Agreement, PASI shall, promptly after QHCCS provides written notice of such repayment to PASI, repay to QHCCS the Service Fee associated with such account.

6. Initiating Litigation . PASI shall not initiate litigation or other legal proceedings relating to its collection services hereunder unless the Facility CFO has not objected to the initiation of such litigation after review of the accounts to be processed, following the procedures specified in Exhibit B .

7. Audit . QHCCS or QHCCS’ designee may, during the term of this Agreement or at any time thereafter, cause an audit and/or inspection to be made of PASI’s records and materials in order to verify PASI’s compliance with this Agreement. Any audit will be conducted during regular business hours at PASI’s facilities. QHCCS shall give PASI ten (10) business days notice of its intent to perform an audit. PASI shall be entitled to have a representative present during the audit. PASI agrees to provide QHCCS’ designated audit or inspection team access to the relevant records and materials.

8. Independent Contractor . It is expressly understood and agreed by the parties that PASI will at all times act as an independent contractor, not as an employee of QHCCS. It is expressly understood and agreed by the parties that nothing contained in this Agreement will be construed to create a joint venture, partnership, association or other such affiliation.

9. Indemnification .

(a) Claims by Third Parties . QHCCS hereby agrees to indemnify, defend, and hold PASI, its affiliates, employees and agents harmless from and against any and all claims asserted by a third party and expenses related thereto, including court costs and attorneys’ fees to which PASI is subjected arising out of or attributed, directly or indirectly, to: (i) any misrepresentation or breach of warranty by QHCCS under this Agreement, and (ii) any breach by QHCCS of, or any failure by QHCCS to perform any covenant or agreement of, or required to be performed by, QHCCS under this Agreement. Likewise, PASI hereby agrees to indemnify, defend, and hold QHCCS, its affiliates, employees and agents harmless from and against any and all claims asserted by a third party and expenses related thereto, including court costs and attorneys’ fees to which QHCCS is subjected arising out of or attributed, directly or indirectly, to: (i) any misrepresentation or breach of warranty by PASI under this Agreement, and (ii) any breach by PASI of, or any failure by PASI to perform any covenant or agreement of, or required to be performed by, PASI under this Agreement (collectively, the foregoing are “Third Party Claims”).

(b) Limitation on Claims by QHCCS Against PASI . Except with respect to Third Party Claims, QHCCS shall not be entitled to assert a claim, and no cause of action shall exist by QHCCS against PASI for any claims of negligence unless such negligence claim results from PASI’s willful misconduct or gross negligence.

 

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10. Limitation of Liability . IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF.

11. Arbitration . Any controversy, dispute or claim arising out of or relating to this Agreement, or the breach thereof, will be settled by binding arbitration in accordance with the Rules of Procedure for Arbitration of the Alternative Dispute Resolution Service of the American Health Lawyers Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Such arbitration shall occur in Nashville, Tennessee. The parties will jointly appoint a mutually acceptable arbitrator. If the parties are unable to agree upon such an arbitrator within thirty (30) days after a party has given the other party written notice of its desire to submit a dispute for arbitration, then each party shall appoint an arbitrator of its choice and the appointed arbitrators will select a third arbitrator, and the panel of three arbitrators will hear the parties and settle the dispute. Each arbitrator shall be experienced in health care finance. Each party shall be responsible for its own attorneys’ fees and costs. The compensation and expenses of the arbitrator(s) and any administrative fees or costs shall be borne equally by the parties. Arbitration shall be the exclusive remedy for the settlement of disputes arising under this Agreement. The decision of the arbitrator(s) shall be final, conclusive and binding, and no action at law or in equity may be instituted by either party other than to enforce the award of the arbitrator(s).

12. Termination . This Agreement shall remain in effect for a period of five (5) years. At the termination of this Agreement, any uncollected Accounts Receivable will remain with PASI for a period of one (1) year at which time PASI shall facilitate the transition of the performance of the collection activities to QHCCS or QHCCS’ designee. Notwithstanding the foregoing, all Accounts Receivable in litigation at the time of termination shall not be returned to QHCCS, and PASI will continue to work such accounts until completion of such litigation or otherwise agreed in writing by the parties. PASI shall be entitled to the Service Fees which have been accrued but are unpaid as of the date of termination, and a Service Fee with respect to any Accounts Receivable other than Time Pay/Billing Services collected within thirty (30) days following the termination of this Agreement.

13. Conflict . In the event of a conflict between the provisions of this Agreement and the provisions of the Separation and Distribution Agreement, the terms of this Agreement shall prevail.

14. Survival . Upon termination or expiration of this Agreement, PASI will terminate its collection activities hereunder. After the termination of this Agreement, only Sections 2.3, 4.4, 5.2, 7, 9, 10, 11, 12, 13, 14, 15, 17, 18, 19, 20, 21, 22, 23 and 24 shall continue to be in full force and effect.

15. Protected Health Information . PASI shall use its best efforts to protect the confidentiality of all patient records in accordance with the standards of all applicable local, state and federal laws and regulations relating to the patient records, specifically including the privacy

 

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requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 and state requirements. PASI shall comply with the Business Associate Agreement by and between QHCCS and CHSPSC, LLC and the other parties named therein dated as of the date of this Agreement.

16. Force Majeure . If any party’s performance is prevented, hindered or delayed by reason of any cause(s) beyond such party’s reasonable control which cannot be overcome by reasonable diligence, including, without limitation, war, labor disputes, civil disorders, governmental acts, epidemics, quarantines, embargoes, fires, earthquakes, storms, or acts of God, such party shall be excused from performance to the extent that it is prevented, hindered or delayed thereby, during the continuance of such cause(s); and such party’s obligations hereunder shall be excused so long as and to the extent that such cause(s) prevent or delay performance.

17. Legal Fees and Costs . In the event a party elects to incur legal expenses to enforce or interpret any provision of this Agreement by judicial proceedings, the prevailing party will be entitled to recover such legal expenses, including, without limitation, reasonable attorneys’ fees, costs, and necessary disbursements at all court levels, in addition to any other relief to which such party shall be entitled.

18. Choice of Law . The parties agree that this Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without regard to conflict of laws principles.

19. Benefit/Assignment . Subject to provisions herein to the contrary, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors, and assigns. No party may assign this Agreement without the prior written consent of the other parties, which consent shall not be unreasonably withheld; provided, however, that any party may, without the prior written consent of the other parties, assign its rights and delegate its duties hereunder to one or more affiliates of such party.

20. Notice . Any notice, demand, or communication required, permitted, or desired to be given hereunder shall be deemed effectively given when personally delivered, when received by receipted overnight delivery, or five (5) days after being deposited in the United States mail, with postage prepaid thereon, certified mail, return receipt requested, addressed as follows:

 

PASI:   

Professional Account Services, Inc.

7100 Commerce, Suite 100

Brentwood, Tennessee 37027

Attention: President

With a simultaneous copy to:   

CHSPSC, LLC

4000 Meridian Boulevard

Franklin, Tennessee 37067

Attention: General Counsel

To QHCCS:   

QHCCS, LLC

1573 Mallory Lane, Suite 100

Brentwood, TN 37027

Attention: President

 

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With a simultaneous copy to:   

QHCCS, LLC

1573 Mallory Lane, Suite 100

Brentwood, TN 37027

Attention: General Counsel

or to such other address, and to the attention of such other person or officer as any party may designate, with copies thereof to the respective counsel thereof as notified by such party.

21. Severability . In the event any provision of this Agreement is held to be invalid, illegal or unenforceable for any reason and in any respect, such invalidity, illegality, or unenforceability shall in no event affect, prejudice, or disturb the validity of the remainder of this Agreement, which shall be and remain in full force and effect, enforceable in accordance with its terms.

22. Gender and Number . Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

23. Divisions and Headings . The divisions of this Agreement into sections and subsections and the use of captions and headings in connection therewith are solely for convenience and shall have no legal effect in construing the provisions of this Agreement.

24. Acquisitions and Dispositions . QHCCS may add acquired facilities and discontinue divested facilities through an amendment to this Agreement, with the prior written consent of PASI.

25. Entire Agreement/Amendment . This Agreement supersedes all previous contracts or understandings and constitutes the entire agreement of whatsoever kind or nature existing between or among the parties respecting the within subject matter, and no party shall be entitled to benefits other than those specified herein. As between or among the parties, no oral statements or prior written material not specifically incorporated herein shall be of any force and effect. The parties specifically acknowledge that in entering into and executing this Agreement, the parties rely solely upon the representations and agreements contained in this Agreement and no others. All prior representations or agreements, whether written or verbal, not expressly incorporated herein are superseded, and no changes in or additions to this Agreement shall be recognized unless and until made in writing and signed by all parties hereto. This Agreement may be executed in two or more counterparts, each and all of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

 

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

 

PROFESSIONAL ACCOUNT SERVICES, INC.
By:  

/s/ Martin G. Schweinhart

  Martin G. Schweinhart
  President
QHCCS, LLC
By:  

/s/ Michael J. Culotta

  Michael J. Culotta
  Executive Vice President and Chief Financial Officer

 

Signature Page to Receivables Collection Agreement (PASI)

Exhibit 2.6

BILLING AND COLLECTION AGREEMENT

THIS BILLING AND COLLECTION AGREEMENT (the “Agreement”) is made and entered into effective as of the 29 th day of April, 2016, by and between PHYSICIAN PRACTICE SUPPORT, LLC , a Delaware limited liability company (“PPS”), and QHCCS, LLC , a Delaware limited liability company (“QHCCS”).

RECITALS:

A. WHEREAS, certain affiliates of QHCCS and PPS are parties to a Separation and Distribution Agreement dated April 29, 2016 (the “Separation and Termination Agreement”), pursuant to which, among other things, affiliates of QHCCS are acquiring control of the operations of the hospitals listed on Exhibit A hereto (individually a “Hospital” and collectively, the “Hospitals”), together with certain related businesses and other health care facilities, including certain clinics providing health care services (individually a “Clinic” and collectively, the “Clinics”). QHCCS has entered into this Agreement on behalf of its subsidiaries and affiliates that own and operate the Hospitals and the Clinics. Terms used but not defined herein shall have the meanings ascribed to such terms in the Separation and Distribution Agreement.

B. WHEREAS, PPS and QHCCS desire to make provision for PPS to bill and collect the accounts receivable generated in the performance of professional services rendered by physicians and mid-level providers on behalf of the Hospitals and the Clinics pursuant to the terms and conditions of this Agreement.

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

1. Definitions . “Accounts Receivable” shall mean all of the accounts receivable generated in the performance of professional services rendered by physicians and mid-level providers on behalf of the Hospitals and the Clinics which have been assigned to PPS for collection. “Accounts Receivable” shall include Billed Accounts Receivable and Unbilled Accounts Receivable as such terms are defined below. “Accounts Receivable” shall not include any accounts receivable placed with third parties for collection as of the date of this Agreement.

2. Collection of Accounts Receivable . Pursuant to the terms of this Agreement, PPS shall collect the Accounts Receivable on behalf of QHCCS through the billing, tracking, rebilling, follow-up and collection activities relating to such accounts on the following terms and conditions:

2.1. Unbilled Accounts Receivable . PPS shall prepare and send to appropriate third parties (whether patients or payors or both) billing statements with respect to Accounts Receivable which have not been billed as of the Effective Time (the “Unbilled Accounts Receivable”). QHCCS shall have sole responsibility for coding the Unbilled Accounts Receivable and shall follow compliance safeguards with respect to documentation. PPS shall have no obligation to verify, check or otherwise inspect the coding. QHCCS agrees to indemnify and hold PPS harmless against any and all liability, loss, damages, costs and expenses which PPS may be required to pay, directly or indirectly, by reason of QHCCS’ coding or because of any error or omission in such coding which directly or indirectly results in any liability, loss and/or damage to PPS.

 

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2.2. Billed Accounts Receivable . With respect to those Accounts Receivable that have been coded and billed prior to the Effective Time (“Billed Accounts Receivable”), PPS shall continue the collection of such Accounts Receivable after the Effective Time pursuant to the terms of this Agreement.

2.3. Books and Records . During the term of this Agreement, PPS shall maintain books and records relating to the Accounts Receivable separate and distinct from all books and records relating to the business of PPS (“Records”). PPS shall maintain the Records at a secure location and shall maintain and update such Records in a reasonable manner. Such Records shall be maintained in detail supported by reports equivalent to the detail and reports generated by PPS with respect to its own accounts receivable for periods on and after the Effective Time so that QHCCS will be able to have reasonably detailed information with respect to (i) the reconciliation of the amount of cash collected for the Accounts Receivable, net of applicable credits, such as overpayments and refunds, and the application of any discounts, (ii) the billing and collection efforts used for the Accounts Receivable, (iii) appropriate aging reports that are generated from time to time for the Accounts Receivable, and (iv) such other information in such forms or formats as may be reasonably requested by QHCCS. Upon termination of this Agreement, PPS shall deliver in a reasonably orderly and usable fashion the Records to QHCCS at a site selected by QHCCS. Both parties shall have access to each other’s records. Such access shall include, without limitation, access to such information technology records and reports and other books and records relating to the Accounts Receivable by QHCCS’ internal and/or external auditors, attorneys, or representatives.

2.4. Level of Effort . QHCCS acknowledges that PPS does not regularly provide collection services to unaffiliated third parties as a part of its business. PPS hereby agrees to provide the services in connection with the billing and collections of QHCCS as outlined on Exhibit B attached hereto and incorporated herein by reference (the “Billing Services”). QHCCS or the Clinics shall have sole responsibility to perform the duties described on Exhibit C attached hereto. With respect to PPS’s efforts to collect the Accounts Receivable, PPS shall (i) use at least the same level of skill, diligence, effort and resources that PPS applies in the collection of its own accounts receivable, (ii) use the same billing and collection procedures used by PPS as of the Effective Time (subject to compliance with applicable law and specific direction by QHCCS); and (iii) comply with all applicable laws, rules, and regulations. During the term of this Agreement, PPS will not place any accounts with an attorney or other third party, nor will take any form of legal action, nor threaten legal action against any debtor of any of the Accounts Receivable without the written consent of QHCCS. Further, PPS shall not use any methods or tactics endeavoring to collect the Accounts Receivable which would constitute a breach of any civil or criminal law or regulations or which would otherwise cause liability to QHCCS. Notwithstanding anything contained herein to the contrary, PPS does not guarantee the extent to which any Accounts Receivable will be collected.

 

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2.5. Remittance of Funds and Application of Payments .

(a) All funds collected for such Accounts Receivable shall be deposited directly in the bank account established in the name of QHCCS in conjunction with the billing software vendor, AthenaHealth.

(b) QHCCS hereby irrevocably appoints PPS as QHCCS’ agent and attorney-in-fact to endorse the name of QHCCS or any d/b/a or other name used by QHCCS, on any notes, acceptances, checks, drafts, money orders or other evidence of proceeds from the Accounts Receivable, but only to deposit such funds into the account specified in Section 2.5(a) in accordance with the terms of this Agreement.

(c) Accounts Receivable collected by PPS shall be applied to the account and relevant time period as specified in or with the payment transmittal(s). To the extent PPS receives a payment from an insuror with respect to a patient having multiple outstanding accounts with QHCCS and such payment does not specify the outstanding account to which it applies, PPS shall contact the payor for account information to allow for proper crediting. Should any amount remain thereafter and for any payment received from any other source, such amount shall be applied to the oldest outstanding account first.

2.6. Assignment of Collection of Accounts Receivable . PPS may not delegate any of its rights, duties or obligations hereunder, or designate a substitute collection agent, without the prior written consent of QHCCS.

3. Fees .

3.1. PPS shall receive service fees (the “Service Fees”) as identified in Exhibit D . The Service Fees are expressed as a percentage of the Accounts Receivable collected during each month. Payment of the monthly Service Fees shall be made, without set-off or deduction, within thirty (30) days after receipt of the monthly reports. Except as noted on Exhibit D , PPS acknowledges and agrees that it is solely responsible for the payment of all expenses incurred by it in connection with its collection activities hereunder.

3.2. If any Accounts Receivable collected by PPS are subsequently repaid by QHCCS for good cause to the applicable payor during the term of this Agreement or within twelve (12) months of termination of this Agreement, PPS shall, promptly after QHCCS provides written notice of such repayment to PPS, repay to QHCCS the Service Fees associated with such account.

4. Term and Termination . This Agreement shall remain in effect for a period of five (5) years following the date of this Agreement (the “Termination Date”).

4.1. Post Termination Obligations . Following the Termination Date, PPS will provide any reasonable follow-up (informational) obligations to payors, as requested by such payors.

4.2. Transition Matters . Following the Termination Date, PPS will transition the performance of the collection of all Accounts Receivable to QHCCS or QHCCS’ designee. If

 

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required in order to facilitate the transition of the collection efforts relating to Accounts Receivable, PPS shall provide QHCCS with connectivity to its computer system and/or data conversion services, make available its staff for consultation with respect to factual information and collection procedures associated with the Accounts Receivable as well as all documentation relating to the Accounts Receivable for a reasonable period of time following the Termination Date not to exceed thirty (30) days. QHCCS, at its sole cost and expense, will notify all payors of the change of address and remittance information associated with the transition to QHCCS. PPS will also continue to remit any payments it receives for the Accounts Receivable to QHCCS, less any applicable Service Fees, as provided in Section 2.5 (subject to Section 3 and Section 4).

4.3. Termination for Breach . Notwithstanding the foregoing, either party may terminate this Agreement at any time if the other party has materially breached the terms of this Agreement and there is a failure to cure such breach within thirty (30) days after receipt of written notice reasonably describing such breach.

5. Cooperation . QHCCS and PPS shall cooperate with each other in order to collect the Accounts Receivable. Such cooperation shall include (but shall not be limited to) the following:

5.1. Copying . QHCCS may, at its expense, copy any such records described in Section 2.3.

5.2. Representative . PPS shall make the Senior Director of Physician Business Services or his or her designee available to answer questions and provide information to QHCCS in connection with PPS’s activities under this Agreement.

5.3. Notice of Write-offs and Disputed Accounts Receivable . QHCCS and PPS acknowledge that the employees of PPS who will be engaged in collecting the Accounts Receivable are familiar with the procedures utilized by the Hospitals and the Clinics prior to the Effective Time to evaluate and write-off appropriate accounts. PPS shall apply QHCCS’ procedures in the collection of the Accounts Receivable (subject to compliance with applicable law) and in applying any discounts or adjustments. PPS may write off as bad debt accounts which have balances of less than $300 in accordance with QHCCS’ policies and procedures. Additionally, PPS may, with QHCCS’ written consent, write off accounts which have balances of $300 or more after having furnished QHCCS reasonable information with respect to such accounts. Furthermore, PPS shall notify QHCCS if it receives notice from any payor or patient, whether orally or in writing, stating that an account in excess of $500 is in dispute, including in such notice, to the extent known, a reasonably detailed description of the amount and nature of the dispute.

6. Independent Contractor . It is expressly understood and agreed by the parties that PPS will at all times act as an independent contractor, not as an employee, of QHCCS. It is expressly understood and agreed by the parties that nothing contained in this Agreement will be construed to create a joint venture, partnership, association or other such affiliation.

7. Force Majeure . If any party’s performance is prevented, hindered or delayed by reason of any cause(s) beyond such party’s reasonable control which cannot be overcome by

 

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reasonable diligence, including, without limitation, war, labor disputes, civil disorders, governmental acts, epidemics, quarantines, embargoes, fires, earthquakes, storms, or acts of God, such party shall be excused from performance to the extent that it is prevented, hindered or delayed thereby, during the continuance of such cause(s); and such party’s obligations hereunder shall be excused so long as and to the extent that such cause(s) prevent or delay performance.

8. Protected Health Information . PPS shall use its best efforts to protect the confidentiality of all records of QHCCS in accordance with the standards of all applicable local, state and federal laws and regulations relating to the records, specifically including the privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 and state requirements. PPS and QHCCS shall comply with the terms and obligations pursuant to and in accordance with the Business Associate Agreement by and between CHSPSC, LLC, QHCCS, and the other parties named therein dated as of the date of this Agreement.

9. Entire Agreement/Amendment . This Agreement supersedes all previous contracts or understandings and constitutes the entire agreement of whatsoever kind or nature existing between or among the parties respecting the within subject matter, and no party shall be entitled to benefits other than those specified herein. As between or among the parties, no oral statements or prior written material not specifically incorporated herein shall be of any force and effect. The parties specifically acknowledge that in entering into and executing this Agreement, the parties rely solely upon the representations and agreements contained in this Agreement and no others. All prior representations or agreements, whether written or verbal, not expressly incorporated herein are superseded, and no changes in or additions to this Agreement shall be recognized unless and until made in writing and signed by all parties hereto. This Agreement may be executed in two or more counterparts, each and all of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

10. Confidentiality . By operation of and performance under this Agreement, the parties may have access to information that is confidential or proprietary to the other party. It includes both information that is marked as “Confidential” or “Proprietary” and also information or data of a party disclosed to or learned by the other party that a reasonable person in like circumstances would understand to be confidential or proprietary information of the disclosing party. Each party agrees, both during the Term of this Agreement and after termination, to hold the other party’s Proprietary or Confidential Information in strict confidence. Each party agrees not to make the other party’s Proprietary or Confidential Information available in any form to any third party or to use the other party’s Proprietary or Confidential Information for any purpose other than for the purposes explicitly permitted by this Agreement. The receiving party agrees to take all reasonable steps to ensure that Proprietary or Confidential Information of the disclosing party is not disclosed or distributed by the receiving party’s employees, agents or consultants in violation of the provisions of this Agreement.

Notwithstanding the foregoing, a disclosing party’s Proprietary or Confidential Information shall not include information that:

10.1. Is or becomes a part of the public domain through no act or omission of the receiving party;

 

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10.2. Was in the receiving party’s lawful possession prior to the time such information was disclosed to or learned by the receivQHing party from or by access to the disclosing party, and at the time of such prior possession the receiving party was not under a duty of confidentiality to the disclosing party with respect thereto;

10.3. Is lawfully disclosed to the receiving party by a third party without restriction imposed by the third party on the receiving party’s further disclosure of such information; or

10.4. Is independently developed by the receiving party by its personnel not having access to such Proprietary or Confidential Information.

Nothing in this Agreement shall prohibit any disclosure of Proprietary or Confidential Information by the receiving party when disclosure is required by law, regulation or court order, but only to the extent so required. The receiving party shall inform the disclosing party of the requirement and shall cooperate with the disclosing party in obtaining a protective order and other reasonable protections for the Proprietary or Confidential Information subject to disclosure.

11. Survival . After the Termination Date, only Sections 2.3, 3.2, 4.1, 4.2, 4.3 and Sections 8 and 10 through 21 shall continue to be in full force and effect.

12. Legal Fees and Costs . In the event a party elects to incur legal expenses to enforce or interpret any provision of this Agreement by judicial proceedings, the prevailing party will be entitled to recover such legal expenses, including, without limitation, reasonable attorneys’ fees, costs, and necessary disbursements at all court levels, in addition to any other relief to which such party shall be entitled.

13. Choice of Law . The parties agree that this Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without regard to conflict of laws principles.

14. Benefit/Assignment . Subject to provisions herein to the contrary, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors, and assigns. No party may assign this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld.

15. Notice . Any notice, demand, or communication required, permitted, or desired to be given hereunder shall be deemed effectively given when personally delivered, when received by receipted overnight delivery, or five (5) days after being deposited in the United States mail, with postage prepaid thereon, certified mail, return receipt requested, addressed as follows:

 

PPS:    Physician Practice Support, LLC
   4000 Meridian Boulevard
   Franklin, Tennessee 37067
   Attention: VP, Business Services

 

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With a simultaneous copy to:    CHSPSC, LLC
   4000 Meridian Boulevard
   Franklin, Tennessee 37067
   Attention: General Counsel
QHCCS:    QHCCS, LLC
   1573 Mallory Lane, Suite 100
   Brentwood, TN 37027
   Attention: President
With a simultaneous copy to:    QHCCS, LLC
   1573 Mallory Lane, Suite 100
   Brentwood, TN 37027
   Attention: General Counsel

or to such other address, and to the attention of such other person or officer as any party may designate, with copies thereof to the respective counsel thereof as notified by such party.

16. Severability . In the event any provision of this Agreement is held to be invalid, illegal or unenforceable for any reason and in any respect, such invalidity, illegality, or unenforceability shall in no event affect, prejudice, or disturb the validity of the remainder of this Agreement, which shall be and remain in full force and effect, enforceable in accordance with its terms.

17. Gender and Number . Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

18. Divisions and Headings . The divisions of this Agreement into sections and subsections and the use of captions and headings in connection therewith are solely for convenience and shall have no legal effect in construing the provisions of this Agreement.

19. Indemnification .

(a) Claims by Third Parties . QHCCS hereby agrees to indemnify, defend, and hold PPS, its affiliates, employees and agents harmless from and against any and all claims asserted by a third party and expenses related thereto, including court costs and attorneys’ fees to which PPS is subjected arising out of or attributed, directly or indirectly, to: (i) any misrepresentation or breach of warranty by QHCCS under this Agreement, and (ii) any breach by QHCCS of, or any failure by QHCCS to perform any covenant or agreement of, or required to be performed by, QHCCS under this Agreement. Likewise, PPS hereby agrees to indemnify, defend, and hold QHCCS, its affiliates, employees and agents harmless from and against any and all claims asserted by a third party and expenses related thereto, including court costs and attorneys’ fees to which QHCCS is subjected arising out of or attributed, directly or indirectly, to: (i) any misrepresentation or breach of warranty by PPS under this Agreement, and (ii) any breach by PPS of, or any failure by PPS to perform any covenant or agreement of, or required to be performed by, PPS under this Agreement (collectively, the foregoing are “Third Party Claims”).

 

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(b) Limitation on Claims by QHCCS Against PPS . Except with respect to Third Party Claims, QHCCS shall not be entitled to assert a claim, and no cause of action shall exist by QHCCS against PPS for any claims of negligence unless such negligence claim results from PPS’s willful misconduct or gross negligence.

20. Limitation of Liability . IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF.

21. Arbitration . Any controversy, dispute or claim arising out of or relating to this Agreement, or the breach thereof, will be settled by binding arbitration in accordance with the Rules of Procedure for Arbitration of the Alternative Dispute Resolution Service of the American Health Lawyers Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Such arbitration shall occur in Nashville, Tennessee. The parties will jointly appoint a mutually acceptable arbitrator. If the parties are unable to agree upon such an arbitrator within thirty (30) days after a party has given the other party written notice of its desire to submit a dispute for arbitration, then each party shall appoint an arbitrator of its choice and the appointed arbitrators will select a third arbitrator, and the panel of three arbitrators will hear the parties and settle the dispute. Each arbitrator shall be experienced in health care finance. Each party shall be responsible for its own attorneys’ fees and costs. The compensation and expenses of the arbitrator(s) and any administrative fees or costs shall be borne equally by the parties. Arbitration shall be the exclusive remedy for the settlement of disputes arising under this Agreement. The decision of the arbitrator(s) shall be final, conclusive and binding, and no action at law or in equity may be instituted by either party other than to enforce the award of the arbitrator(s).

SIGNATURES ON THE FOLLOWING PAGE

 

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

 

PHYSICIAN PRACTICE SUPPORT, LLC
By:  

/s/ Martin G. Schweinhart

  Martin G. Schweinhart
  Executive Vice President

 

QHCCS, LLC
By:  

/s/ Michael J. Culotta

  Michael J. Culotta
  Executive Vice President
  and Chief Financial Officer

 

Signature Page to Billing and Colleciton Agreement

Exhibit 2.7

ELIGIBILITY SCREENING SERVICES AGREEMENT

This Services Agreement (this “Agreement”) entered into this 29 th day of April, 2016 by and between Eligibility Screening Services, LLC, a Delaware limited liability company (“Vendor”), and QHCCS, LLC, a Delaware limited liability company (“Client”).

A. Affiliates of Vendor and Client are parties to a Separation and Distribution Agreement dated April 29, 2016 (the “Separation and Distribution Agreement”), pursuant to which, among other things, affiliates of Client are acquiring control of the operations of the hospitals listed in Exhibit A hereto (individually a “Hospital” and collectively, the “Hospitals”), together with certain related assets and businesses (collectively, the “Facilities”). Client has entered into this Agreement on behalf of its subsidiaries and affiliates that own and operate the Facilities. Terms used but not defined herein shall have the meanings ascribed to such terms in the Separation and Distribution Agreement.

B. Vendor and Client desire to make provision for Vendor to screen “self-pay” patients, Medicare inpatients with no supplemental insurance and other patients referred to Vendor by Client, for third-party eligibility and certification services of the Facilities pursuant to the terms and conditions of this Agreement.

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

 

I. OBLIGATIONS

During the term of this Agreement, Vendor shall provide to Client the services described in Exhibit B attached hereto. Client shall have the sole responsibility to perform the duties described on Exhibit C attached hereto. A summary of the scope of services of Vendor and Client is included as Exhibit D attached hereto. Client acknowledges that this Agreement is an exclusive service agreement and that Client may not enter into similar agreements with any other third parties for the provision of services similar or identical to those provided by Vendor on behalf of Client and its affiliates. Client acknowledges that Vendor has an automated process for extracting daily placements and will not interfere or change the placement criteria.

 

II. FEES FOR SERVICES

 

  A. As compensation for the services to be provided hereunder by Vendor, Client agrees to pay Vendor the fees set forth in Exhibit E attached hereto.

 

  B.

No more than once annually and effective on January 1 during the term of this Agreement, Vendor may increase the monthly fees charged pursuant to Exhibit E by an amount equal to the percentage increase in the Consumer Price Index for the Calculation Period immediately preceding the January 1 on which such change shall become effective; provided, however, that such increase shall not exceed three percent (3%) in any year. As used herein, “Consumer Price Index” shall refer to All Items of the United States Consumer Price Index, published by the United States Department of Labor, All Cities Average (1986=100). As used herein, the


  “Calculation Period” means the twelve month period beginning on July 1 and ending on June 30 of the year preceding the year for which the price increase shall become effective. Notice of any fee increase with respect to a Calculation Period must be received by Client by September 15 immediately following the Calculation Period so that Client may advise its affiliates of the fee increase that will affect their budgets. For example, the monthly fees may be increased effective January 1, 2017 by an amount equal to the percentage increase in the Consumer Price Index for the Calculation Period beginning on July 1, 2015 and ending on June 30, 2016 if Vendor gives written notice of such increase to Client by September 15, 2016 (subject to the 3% annual cap).

 

  C. Vendor will invoice Client monthly. Client agrees to pay all invoices within thirty (30) days of receipt.

 

  D. Vendor shall include with the monthly billing report any sales taxes that are to be paid on insurance accounts for which reimbursements are recovered in the state of the Facility. Vendor shall forward these amounts to the appropriate state official on behalf of Client on a quarterly basis, or as otherwise required by law.

 

III. INDEMNIFICATION

 

  A. Client hereby agrees to indemnify, defend, and hold Vendor, its affiliates, employees and agents harmless from and against any and all claims asserted by a third party and expenses related thereto, including court costs and attorneys’ fees to which Vendor is subjected arising out of or attributed, directly or indirectly, to: (i) any misrepresentation or breach of warranty by Client under this Agreement, and (ii) any breach by Client of, or any failure by Client to perform any covenant or agreement of, or required to be performed by, Client under this Agreement. Likewise, Vendor hereby agrees to indemnify, defend, and hold Client, its affiliates, employees and agents harmless from and against any and all claims asserted by a third party and expenses related thereto, including court costs and attorneys’ fees to which Client is subjected arising out of or attributed, directly or indirectly, to: (i) any misrepresentation or breach of warranty by Vendor under this Agreement, and (ii) any breach by Vendor of, or any failure by Vendor to perform any covenant or agreement of, or required to be performed by, Vendor under this Agreement (collectively, the foregoing are “Third Party Claims”).

 

  B. Except with respect to Third Party Claims, Client shall not be entitled to assert a claim, and no cause of action shall exist by Client against Vendor for any claims of negligence unless such negligence claim results from Vendor’s willful misconduct or gross negligence.

 

  C. EXCEPT FOR BREACHES OF VENDOR’S CONFIDENTIALITY OR SECURITY OBLIGATIONS, INCLUDING WITHOUT LIMITATION THE BUSINESS ASSOCIATE AGREEMENT INCORPORATED HEREIN BY REFERENCE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF.

 

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IV. APPLICABLE LAW

This Agreement shall be governed by the laws of the State of Tennessee.

 

V. NOTICES

Notices required to be given by either party to the other under this Agreement shall be in writing and sent by national overnight courier or certified-mail with return receipt requested, or personally delivered to the other party at the address set forth below:

To Vendor:

Eligibility Screening Services, LLC

4000 Meridian Blvd.

Franklin, TN 37067

Attn: Executive Director

with copy to:

CHSPSC, LLC

4000 Meridian Blvd.

Franklin, TN 37067

Attn: Vice President, Patient Financial Services

To Client:

QHCCS, LLC

1573 Mallory Lane, Suite 100

Brentwood, TN 37027

Attn: President

with copy to:

QHCCS, LLC

1573 Mallory Lane, Suite 100

Brentwood, TN 37027

Attn: General Counsel

 

VI. TERM

 

  A. This Agreement shall be in effect as of the date written above, and shall replace and supersede any existing agreements on the subject matter hereof, and continue in effect for a period of five (5) years from the effective date of this Agreement.

 

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  B. Upon expiration of this Agreement, Vendor shall return all cases referred to it other than those for which a Medical Assistance or other third party payment application has been filed. Unless this Agreement is terminated for cause, Vendor may keep all previously placed accounts and continue working such for up to 180 days and will continue to be entitled to payment for such services as set forth on Exhibit E attached hereto.

 

  C. Upon notice of termination being given by either party, Client agrees to continue furnishing Vendor with information necessary to determine fees owed to Vendor for services provided under this Agreement.

 

  D. All original records furnished to Vendor shall remain the property of Client and will not be removed from Client’s premises. All information, records, documentation and other work products developed by Vendor shall remain the property of Vendor, and shall be kept by Vendor.

 

  E. If Vendor is operating on-site at time of termination, Client agrees to continue to provide Vendor relevant reports, same office space, supplies, equipment, phone service, computer access, postage, copy service and all other items provided prior to termination necessary for Vendor to perform the described services for a period of 180 days from effective date of termination.

 

VII. CONFIDENTIAL INFORMATION

 

  A. Client acknowledges that Vendor’s employees, agents and subcontractors are prohibited from disclosing any trade secrets and hereby agrees not to solicit, either directly or indirectly, any Vendor trade secrets. All files, records, documents, custom designed software, drawings, specifications, equipment, and similar items relating to the business of Vendor, whether prepared by Vendor’s employees, agents or subcontractors, is the exclusive property of Vendor and shall not be removed from the offices of Vendor by Client, under any circumstances, without the prior written consent of Vendor.

 

  B. Except as required by law, each party shall not disclose any confidential or proprietary information and materials of the other party (“Confidential Information”). Confidential Information shall not include information which (a) is or becomes generally available to the public other than as a result of a wrongful disclosure by the recipient, (b) was in the recipient’s possession and not known to be the Confidential Information of the other Party prior to its disclosure to the recipient by the other Party or (c) was independently developed by the recipient. Confidential Information shall be protected by each party in a manner no less protective than the standard of care which such Party then uses to protect its own similar Confidential Information, but in no event less than reasonable care.

 

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VIII. LEGAL CONSTRUCTION

In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such cause of action shall not affect any other provision herein and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein;

 

IX. BUSINESS ASSOCIATE AGREEMENT

Vendor shall protect the confidentiality of all patient records in accordance with the standards of all applicable local, state and federal laws and regulations relating to the patient records, specifically including the privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and the regulations promulgated thereunder (“HIPAA”) and state requirements . The parties agree that Vendor is considered a business associate (as defined in HIPAA) of Client with respect to its performance hereunder, and as such Vendor and Client shall comply with the terms and obligations pursuant to and in accordance with that certain Business Associate Agreement by and between Vendor, Client, and other parties named therein dated as of the date of this Agreement.

 

X. ASSIGNMENT

Neither party may assign this agreement without the expressed written consent of the other.

[THIS AREA INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF , the parties hereto have caused this agreement to be executed by their duly authorized officers as of the day and year first written above.

CLIENT:

 

QHCCS, LLC
By:  

/s/ Michael J. Culotta

  Michael J. Culotta
  Executive Vice President
  and Chief Financial Officer

 

VENDOR:
ELIGIBILITY SCREENING SERVICES, LLC
By:  

/s/ Martin G. Schweinhart

  Martin G. Schweinhart
  Executive Vice President

 

S ignature Page to Elig ibility Screening Services Agreement

Exhibit 2.8

EMPLOYEE SERVICE CENTER/HRIS

TRANSITION SERVICES AGREEMENT

THIS EMPLOYEE SERVICE CENTER/HRIS TRANSITION SERVICES AGREEMENT (this “ Agreement ”) is made and entered into as of 29 th day of April, 2016 (the “ Effective Date ”), by and between CHSPSC, LLC , a Delaware limited liability company (“ CHSPSC ”), and QHCCS, LLC , a Delaware limited liability company (“ QHCCS ”).

Recitals

WHEREAS, Affiliates of CHSPSC and QHCCS are parties to a Separation and Distribution Agreement dated April 29, 2016 (the “Separation and Distribution Agreement”), pursuant to which, among other things, affiliates of QHCCS are acquiring control of the operations of the hospitals listed in Exhibit A hereto (individually a “Hospital” and collectively, the “Hospitals”), together with certain related assets and businesses (collectively, the “Facilities”). QHCCS has entered into this Agreement on behalf of its subsidiaries and affiliates that own and operate the Facilities. Terms used but not defined herein shall have the meanings ascribed to such terms in the Separation and Distribution Agreement.

WHEREAS, to assist in the transition of the ownership of the Facilities to affiliates of QHCCS pursuant to the Separation and Distribution Agreement, QHCCS desires that CHSPSC provide, and CHSPSC is willing to so provide, the services described below, in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, for and in consideration of the premises, and the agreements, covenants, representations and warranties hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of all of which are forever acknowledged and confessed, the parties hereby agree as follows:

1. Transition Services . During the Term (defined below), CHSPSC shall provide to QHCCS the services described on Exhibit B attached hereto (collectively, the “ Transition Services ”). All of the Transition Services shall be provided by employees of CHSPSC, except that CHSPSC may, upon notice to QHCCS, subcontract to third parties the provision of all or part of such services.

2. Term . Unless earlier terminated as provided herein, the term of this Agreement (the “ Term ”) shall commence as of the Effective Date and shall remain in effect for a period of five (5) years following the Effective Date. The Term may be extended upon the written agreement of QHCCS and CHSPSC.

3. Default . If either QHCCS or CHSPSC fails to perform its obligations in accordance with this Agreement, the non-breaching party may give the party in breach written notice of such failure and the party in breach shall have thirty (30) days from the date of such notice (the “ Cure Period ”) to cure such failure to the reasonable satisfaction of the non-breaching party. If the party in breach does not cure such failure within the Cure Period, then the non-breaching party, at its option, may terminate this Agreement.


4. Payment for Transition Services .

(a) As compensation for the Transition Services to be provided hereunder by CHSPSC, QHCCS agrees to pay CHSPSC the compensation set forth on Exhibit C . CHSPSC shall, on a monthly basis, submit to QHCCS for payment its billing invoice setting forth the amount of fees for the Transition Services actually rendered in the immediately preceding month (the “ Monthly Transition Services Invoice ”). Payments in respect of any Monthly Transition Services Invoice shall be made, without setoff or deduction, within thirty (30) days after the date of receipt thereof.

(b) No more than once annually and effective on January 1 during the Term, CHSPSC may increase the monthly fees charged pursuant to Exhibit C by an amount equal to the percentage increase in the Consumer Price Index for the Calculation Period immediately preceding the January 1 on which such change shall become effective; provided, however, that such increase shall not exceed three percent (3%) in any year. As used herein, “Consumer Price Index” shall refer to All Items of the United States Consumer Price Index, published by the United States Department of Labor, All Cities Average (1986=100). As used herein, the “Calculation Period” means the twelve month period beginning on July 1 and ending on June 30 of the year preceding the year for which the price increase shall become effective. Notice of any fee increase with respect to a Calculation Period must be received by QHCCS by September 15 immediately following the Calculation Period so that QHCCS may advise its Affiliates of the fee increase that will affect their budgets. For example, the monthly fees may be increased effective January 1, 2017 by an amount equal to the percentage increase in the Consumer Price Index for the Calculation Period beginning on July 1, 2015 and ending on June 30, 2016 if CHSPSC gives written notice of such increase to QHCCS by September 15, 2016 (subject to the 3% annual cap).

5. Books and Records .

(a) Availability to Secretary and Others . If required by applicable law, CHSPSC agrees that until the expiration of four (4) years after the furnishing of services under this Agreement, it will make available to the Secretary of the United States Department of Health and Human Services and the United States Comptroller General, and their duly authorized representatives, this Agreement and all books, documents and records necessary to certify the nature and extent of the costs of the goods and services provided under this Agreement. No attorney-client, accountant-client or other legal privilege shall be deemed to have been waived by the parties by virtue of this provision.

(b) Right to Inspect . QHCCS shall have the right, at its expense, during normal business hours and with reasonable advance notice, to review and photocopy CHSPSC’s books and records that pertain directly to the fees payable to CHSPSC or the Transition Services provided hereunder.

6. Standard of Care; Limitation of Liability; Indemnity .

(a) CHSPSC will provide the Transition Services in good faith and with due care consistent with the care CHSPSC exercises in performing such Transition Services for itself. QHCCS acknowledges and agrees that CHSPSC does not regularly provide the Transition

 

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Services to third parties as part of its business, and, except as specifically stated elsewhere herein, CHSPSC does not otherwise warrant or assume any responsibility for its performance of the Transition Services. Except as otherwise expressly set forth in this Agreement, CHSPSC MAKES NO REPRESENTATION OR WARRANTY, AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, IMPLIED OR STATUTORY, WITH RESPECT TO THE TRANSITION SERVICES OR THE PROVISION THEREOF.

(b) CHSPSC shall be responsible for any direct compensatory damages suffered by QHCCS in the event of a breach by CHSPSC or its obligations set forth herein which breach results from CHSPSC’s intentional misconduct or gross negligence. Except for the limited warranties provided hereunder, CHSPSC shall have no liability to QHCCS under this Agreement and QHCCS’ remedies under this Section 6 shall constitute its sole and exclusive remedies under this Agreement; provided that QHCCS shall be entitled to preliminary and other injunctive relief against any willful breach by CHSPSC of this Agreement. Under no circumstances shall CHSPSC be liable for consequential, exemplary, indirect, special, incidental or punitive damages, including loss of profits, revenues, data or use, incurred by QHCCS or its affiliates or any third party (even if any such party has been advised of the possibility of such damages), whether based on contract, tort or any other legal theory, arising out of or related to this Agreement or the Transition Services provided hereunder. QHCCS hereby acknowledges that CHSPSC does not regularly provide Transition Services to third parties as part of its business and that CHSPSC has agreed to provide the Transition Services under this Agreement only to assist QHCCS in its transition to operation as an independent public company.

(c) QHCCS shall defend, indemnify and hold harmless CHSPSC and its directors, officers, employees, agents and affiliates from and against any and all losses, liabilities, claims and costs, including, but not limited to, reasonable attorneys’ fees and legal costs arising from any lawsuits, administrative agency or other actions by third parties (collectively, “ Losses ”) to which CHSPSC is subjected arising out of or attributed, directly or indirectly, to the performance or non-performance of any of the Transition Services under this Agreement. Notwithstanding the foregoing, QHCCS shall not be required to defend, indemnify and hold harmless CHSPSC and its directors, officers, employees, agents and affiliates in respect of any such Losses that have resulted from CHSPSC’s intentional misconduct or gross negligence.

7. Force Majeure . Neither party shall be responsible for the performance of any of its obligations to the extent that it is delayed or hindered by warfare, riot, strike, lockout, boycott, governmental regulations, act of God, natural calamity or any other cause beyond its reasonable control that cannot be overcome by reasonable diligence.

8. Compliance with Laws . Each party shall perform its obligations hereunder in material compliance with all applicable federal, state and local laws, ordinances and regulations.

9. Confidentiality .

(a) Definition . “ Confidential Information ” means all information, data and materials furnished or made available by one party to the other party in connection with this

 

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Agreement, including, without limitation, the identity of patients, the content of any medical records, financial and tax information, and information regarding Medicare and Medicaid claims submission and reimbursements.

(b) Obligation to Observe Confidentiality . The party receiving the Confidential Information (the “ Receiving Party ”) from the party who owns or holds in confidence such Confidential Information (the “ Owning Party ”) may use the Confidential Information solely for the purpose of performing its obligations or enforcing its rights under this Agreement.

(c) Protection . The Receiving Party shall not disclose any of the Confidential Information, except to those persons having a need to know for the purpose of performing its obligations or enforcing its rights under this Agreement. Each party shall take appropriate action, by instruction to or agreement with its affiliates, employees, agents and subcontractors, to maintain the confidentiality of the Confidential Information. The Receiving Party shall promptly notify the Owning Party in the event that the Receiving Party learns of an unauthorized release of Confidential Information.

(d) Exceptions . The Receiving Party shall have no obligation with respect to (i) Confidential Information made available to the general public without restriction by the Owning Party or by an authorized third party; (ii) Confidential Information known to the Receiving Party independently of disclosures by the Owning Party under this Agreement; (iii) Confidential Information independently developed by the Receiving Party; or (iv) Confidential Information that the Receiving Party may be required to disclose pursuant to subpoena or other lawful process; provided, however, that the Receiving Party notifies the Owning Party in a timely manner to allow the Owning Party to appear and protect its interests.

(e) Return of Confidential Information . Upon the termination or expiration of this Agreement, each party shall (a) immediately cease to use the other party’s Confidential Information, (b) return to the other party or destroy such Confidential Information and all copies thereof within ten (10) days of the termination, unless otherwise provided in this Agreement, and (c) upon request, certify in writing to the other party that it has complied with its obligations set forth in this Section 9(e), unless otherwise provided in this Agreement.

(f) Availability of Equitable Remedies . The parties acknowledge that monetary remedies may be inadequate to protect rights in Confidential Information and that, in addition to legal remedies otherwise available, injunctive relief is an appropriate judicial remedy to protect such rights.

10. Protected Health Information . CHSPSC shall use its best efforts to protect the confidentiality of all records of the Facilities in accordance with the standards of all applicable local, state and federal laws and regulations relating to the records of the Facilities, specifically including the privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 and state requirements. CHSPSC shall comply with the Business Associate Agreement by and between QHCCS and CHSPSC and the other parties named therein dated as of the Effective Date.

 

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11. Choice of Law .

(a) THIS AGREEMENT AND THE PARTIES’ RESPECTIVE RIGHTS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TENNESSEE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY TO ENFORCE ANY TERM OR CONDITION OF THIS AGREEMENT.

(b) The parties hereto agree to unconditionally and irrevocably submit to the exclusive jurisdiction of any federal or state court located in Tennessee and any appellate court from any thereof, for the resolution of any such claim or dispute. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 15.

12. Exclusion from Participation . CHSPSC hereby represents and warrants to QHCCS that neither it nor any of its officers, directors, employees, agents, subcontractors or others performing Transition Services (collectively, “CHSPSC Parties”) under this Agreement has been excluded from participation in any applicable Federal or State health benefits program (including, without limitation, Medicare or Medicaid). CHSPSC shall promptly notify QHCCS in writing if any CHSPSC Party becomes excluded from program participation. Notwithstanding any other provision of this Agreement to the contrary, QHCCS shall have the right to terminate, without further liability, this Agreement upon the exclusion or sanction of any CHSPSC Party from any such program.

13. Assignment . No assignment of this Agreement or of any rights or obligations hereunder may be made by any party (by operation of law or otherwise) without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void.

14. Patient Referrals . No part of this Agreement shall be construed to induce or encourage the referral of patients. The parties acknowledge that there is no requirement under this Agreement or any other agreement between QHCCS and CHSPSC that QHCCS refer any patients to CHSPSC or any of its Affiliates. Additionally, no payment made under this Agreement shall be in return for the referral of patients or in return for the purchasing, leasing, or ordering of any products or services from QHCCS or any of its Affiliates.

15. Notices . Any notice, demand, or communication required, permitted, or desired to be given hereunder shall be deemed effectively given when personally delivered, when

 

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received by receipted overnight delivery, or five (5) days after being deposited in the United States mail, with postage prepaid thereon, certified or registered mail, return receipt requested, addressed as follows:

 

QHCCS:    QHCCS, LLC
   1573 Mallory Lane, Suite 100
   Brentwood, TN 37027
   Attention: President
With a simultaneous copy to:    QHCCS, LLC
   1573 Mallory Lane, Suite 100
   Brentwood, TN 37027
   Attention: General Counsel
CHSPSC:    CHSPSC, LLC
   4000 Meridian Boulevard
   Franklin, Tennessee 37067
   Attention: Chief Executive Officer
With a simultaneous copy to:    CHSPSC, LLC
   4000 Meridian Boulevard
   Franklin, Tennessee 37067
   Attention: General Counsel

or to such other address, and to the attention of such other person or officer as any party may designate, with copies thereof to the respective counsel thereof as notified by such party.

16. Severability . In the event any provision of this Agreement is held to be invalid, illegal or unenforceable for any reason and in any respect, such invalidity, illegality or unenforceability shall in no event affect, prejudice or disturb the validity of the remainder of this Agreement, which shall be and remain in full force and effect, enforceable in accordance with its terms.

17. Independent Contractor . Each party shall perform its duties and obligations hereunder for the other party in the capacity of an independent contractor and not as an employee of such party. Nothing contained in this Agreement shall be construed to create a partnership or joint venture between any of the parties hereto. Personnel supplied by CHSPSC hereunder, whether or not located on QHCCS’s premises, are not QHCCS’s employees or agents and shall not hold themselves out as such, and CHSPSC assumes full responsibility for their acts and for compliance with any applicable employment and tax laws with respect to such employees.

18. Waiver . Failure by any party at any time to exercise any right or remedy granted herein or established by law shall not be deemed to operate as a waiver of its right to exercise such right or remedy at any other future time.

19. Enforcement of Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in

 

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accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions (without the need to post bond or other security) to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

20. Entire Agreement/Amendment . This Agreement supersedes all prior agreements, whether written or oral, between the parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by the parties hereto.

21. Further Assurances . Each party, upon reasonable request from the other party, will from time to time during the Term of this Agreement, take all actions and execute and deliver all such instruments and documents as may be reasonably requested to carry out the intent of this Agreement.

22. Execution of this Agreement . This Agreement may be executed in multiple counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.

SIGNATURE PAGE FOLLOWS

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized officers as of the date above written.

 

CHSPSC, LLC
By:  

/s/ Martin G. Schweinhart

  Martin G. Schweinhart
  Executive Vice President of Administration
QHCCS, LLC
By:  

/s/ Michael J. Culotta

  Michael J. Culotta
  Executive Vice President and Chief Financial Officer

 

Signature Page to

Employee Service Center/HRIS

Transition Services Agreement

Exhibit 2.9

SHARED SERVICE CENTERS

TRANSITION SERVICES AGREEMENT

THIS SHARED SERVICE CENTERS TRANSITION SERVICES AGREEMENT (this “ Agreement ”) is made and entered into as of 29 th day of April, 2016 (the “ Effective Date ”), by and between REVENUE CYCLE SERVICE CENTER, LLC , a Delaware limited liability company (“ RCSC ”), and QHCCS, LLC , a Delaware limited liability company (“ CLIENT ”).

Recitals

WHEREAS, Affiliates of RCSC and CLIENT are parties to a Separation and Distribution Agreement dated April 29, 2016 (the “Separation and Distribution Agreement”), pursuant to which, among other things, affiliates of CLIENT are acquiring control of the operations of the hospitals listed in Exhibit A hereto (individually a “Hospital” and collectively, the “Hospitals”), together with certain related assets and businesses (collectively, the “Facilities”). CLIENT has entered into this Agreement on behalf of its subsidiaries and affiliates that own and operate the Facilities. Terms used but not defined herein shall have the meanings ascribed to such terms in the Separation and Distribution Agreement.

WHEREAS, to assist in the transition of the ownership of the Facilities to affiliates of CLIENT pursuant to the Separation and Distribution Agreement, CLIENT desires that RCSC provide, and RCSC is willing to so provide, the services described below, in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, for and in consideration of the premises, and the agreements, covenants, representations and warranties hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of all of which are forever acknowledged and confessed, the parties hereby agree as follows:

1. Services . During the Term (defined below), RCSC shall provide to CLIENT the services described on Exhibit B attached hereto (collectively, the “ Services ”). All of the Services shall be provided by employees of RCSC, except that RCSC may, upon notice to CLIENT, subcontract to third parties the provision of all or part of such services.

2. Term . Unless earlier terminated as provided herein, the term of this Agreement (the “ Term ”) shall commence as of the Effective Date and shall remain in effect for a period of five (5) years following the Effective Date. The Term may be extended upon the written agreement of CLIENT and RCSC.

3. Default . If either CLIENT or RCSC fails to perform its obligations in accordance with this Agreement, the non-breaching party may give the party in breach written notice of such failure and the party in breach shall have thirty (30) days from the date of such notice (the “ Cure Period ”) to cure such failure to the reasonable satisfaction of the non-breaching party. If the party in breach does not cure such failure within the Cure Period, then the non-breaching party, at its option, may terminate this Agreement.

4. Payment for Services . As compensation for the Services to be provided hereunder by RCSC, CLIENT agrees to pay RCSC the compensation set forth on Exhibit C .


RCSC shall, on a monthly basis, submit to CLIENT for payment its billing invoice setting forth the amount of fees for the Services actually rendered in the immediately preceding month (the “ Monthly Services Invoice ”) . Payments in respect of any Monthly Services Invoice shall be made, without setoff or deduction, within thirty (30) days after the date of receipt thereof.

5. Books and Records .

(a) Availability to Secretary and Others . If required by applicable law, RCSC agrees that until the expiration of four (4) years after the furnishing of services under this Agreement, it will make available to the Secretary of the United States Department of Health and Human Services and the United States Comptroller General, and their duly authorized representatives, this Agreement and all books, documents and records necessary to certify the nature and extent of the costs of the goods and services provided under this Agreement. No attorney-client, accountant-client or other legal privilege shall be deemed to have been waived by the parties by virtue of this provision.

(b) Right to Inspect . CLIENT shall have the right, at its expense, during normal business hours and with reasonable advance notice, to review and photocopy RCSC’s books and records that pertain directly to the fees payable to RCSC or the Services provided hereunder.

6. Standard of Care; Limitation of Liability; Indemnity .

(a) RCSC will provide the Services in good faith and with due care consistent with the care RCSC exercises in performing such Services for itself. CLIENT acknowledges and agrees that RCSC does not regularly provide the Services to third parties as part of its business, and, except as specifically stated elsewhere herein, RCSC does not otherwise warrant or assume any responsibility for its performance of the Services. Except as otherwise expressly set forth in this Agreement, RCSC MAKES NO REPRESENTATION OR WARRANTY, AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, IMPLIED OR STATUTORY, WITH RESPECT TO THE SERVICES OR THE PROVISION THEREOF.

(b) RCSC shall be responsible for any direct compensatory damages suffered by CLIENT in the event of a breach by RCSC or its obligations set forth herein which breach results from RCSC’s intentional misconduct or gross negligence. Except for the limited warranties provided hereunder, RCSC shall have no liability to CLIENT under this Agreement and CLIENT’ remedies under this Section 6 shall constitute its sole and exclusive remedies under this Agreement; provided that CLIENT shall be entitled to preliminary and other injunctive relief against any willful breach by RCSC of this Agreement. Under no circumstances shall RCSC be liable for consequential, exemplary, indirect, special, incidental or punitive damages, including loss of profits, revenues, data or use, incurred by CLIENT or its affiliates or any third party (even if any such party has been advised of the possibility of such damages), whether based on contract, tort or any other legal theory, arising out of or related to this Agreement or the Services provided hereunder. CLIENT hereby acknowledges that RCSC does not regularly provide Services to third parties as part of its business and that RCSC has agreed to provide the Services under this Agreement only to assist CLIENT in its transition to operation as an independent public company.

 

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(c) CLIENT shall defend, indemnify and hold harmless RCSC and its directors, officers, employees, agents and affiliates from and against any and all losses, liabilities, claims and costs, including, but not limited to, reasonable attorneys’ fees and legal costs arising from any lawsuits, administrative agency or other actions by third parties (collectively, “ Losses ”) to which RCSC is subjected arising out of or attributed, directly or indirectly, to the performance or non-performance of any of the Services under this Agreement. Notwithstanding the foregoing, CLIENT shall not be required to defend, indemnify and hold harmless RCSC and its directors, officers, employees, agents and affiliates in respect of any such Losses that have resulted from RCSC’s intentional misconduct or gross negligence.

7. Force Majeure . Neither party shall be responsible for the performance of any of its obligations to the extent that it is delayed or hindered by warfare, riot, strike, lockout, boycott, governmental regulations, act of God, natural calamity or any other cause beyond its reasonable control that cannot be overcome by reasonable diligence.

8. Compliance with Laws . Each party shall perform its obligations hereunder in material compliance with all applicable federal, state and local laws, ordinances and regulations.

9. Confidentiality .

(a) Definition . “ Confidential Information ” means all information, data and materials furnished or made available by one party to the other party in connection with this Agreement, including, without limitation, the identity of patients, the content of any medical records, financial and tax information, and information regarding Medicare and Medicaid claims submission and reimbursements.

(b) Obligation to Observe Confidentiality . The party receiving the Confidential Information (the “ Receiving Party ”) from the party who owns or holds in confidence such Confidential Information (the “ Owning Party ”) may use the Confidential Information solely for the purpose of performing its obligations or enforcing its rights under this Agreement.

(c) Protection . The Receiving Party shall not disclose any of the Confidential Information, except to those persons having a need to know for the purpose of performing its obligations or enforcing its rights under this Agreement. Each party shall take appropriate action, by instruction to or agreement with its affiliates, employees, agents and subcontractors, to maintain the confidentiality of the Confidential Information. The Receiving Party shall promptly notify the Owning Party in the event that the Receiving Party learns of an unauthorized release of Confidential Information.

(d) Exceptions . The Receiving Party shall have no obligation with respect to (i) Confidential Information made available to the general public without restriction by the Owning Party or by an authorized third party; (ii) Confidential Information known to the Receiving Party independently of disclosures by the Owning Party under this Agreement; (iii) Confidential Information independently developed by the Receiving Party; or

 

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(iv) Confidential Information that the Receiving Party may be required to disclose pursuant to subpoena or other lawful process; provided, however , that the Receiving Party notifies the Owning Party in a timely manner to allow the Owning Party to appear and protect its interests.

(e) Return of Confidential Information . Upon the termination or expiration of this Agreement, each party shall (a) immediately cease to use the other party’s Confidential Information, (b) return to the other party or destroy such Confidential Information and all copies thereof within ten (10) days of the termination, unless otherwise provided in this Agreement, and (c) upon request, certify in writing to the other party that it has complied with its obligations set forth in this Section 9(e), unless otherwise provided in this Agreement.

(f) Availability of Equitable Remedies . The parties acknowledge that monetary remedies may be inadequate to protect rights in Confidential Information and that, in addition to legal remedies otherwise available, injunctive relief is an appropriate judicial remedy to protect such rights.

10. Protected Health Information . RCSC shall use its best efforts to protect the confidentiality of all records of the Facilities in accordance with the standards of all applicable local, state and federal laws and regulations relating to the records of the Facilities, specifically including the privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 and state requirements. RCSC shall comply with the Business Associate Agreement by and between CLIENT and CHSPSC, LLC and the other parties named therein dated as of the Effective Date.

11. Choice of Law .

(a) THIS AGREEMENT AND THE PARTIES’ RESPECTIVE RIGHTS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TENNESSEE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY TO ENFORCE ANY TERM OR CONDITION OF THIS AGREEMENT.

(b) The parties hereto agree to unconditionally and irrevocably submit to the exclusive jurisdiction of any federal or state court located in Tennessee and any appellate court from any thereof, for the resolution of any such claim or dispute. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 15.

12. Exclusion from Participation . RCSC hereby represents and warrants to CLIENT that neither it nor any of its officers, directors, employees, agents, subcontractors or others performing Services (collectively, “RCSC Parties”) under this Agreement has been excluded

 

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from participation in any applicable Federal or State health benefits program (including, without limitation, Medicare or Medicaid). RCSC shall promptly notify CLIENT in writing if any RCSC Party becomes excluded from program participation. Notwithstanding any other provision of this Agreement to the contrary, CLIENT shall have the right to terminate, without further liability, this Agreement upon the exclusion or sanction of any RCSC Party from any such program.

13. Assignment . No assignment of this Agreement or of any rights or obligations hereunder may be made by any party (by operation of law or otherwise) without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void.

14. Patient Referrals . No part of this Agreement shall be construed to induce or encourage the referral of patients. The parties acknowledge that there is no requirement under this Agreement or any other agreement between CLIENT and RCSC that CLIENT refer any patients to RCSC or any of its Affiliates. Additionally, no payment made under this Agreement shall be in return for the referral of patients or in return for the purchasing, leasing, or ordering of any products or services from CLIENT or any of its Affiliates.

15. Notices . Any notice, demand, or communication required, permitted, or desired to be given hereunder shall be deemed effectively given when personally delivered, when received by receipted overnight delivery, or five (5) days after being deposited in the United States mail, with postage prepaid thereon, certified or registered mail, return receipt requested, addressed as follows:

 

CLIENT:    QHCCS, LLC
   1573 Mallory Lane, Suite 100
   Brentwood, TN 37027
   Attention: President
With a simultaneous copy to:    QHCCS, LLC
   1573 Mallory Lane, Suite 100
   Brentwood, TN 37027
   Attention: General Counsel
RCSC:    Revenue Cycle Service Center, LLC
   4000 Meridian Boulevard
   Franklin, TN 37067
   Attention: Chief Executive Officer
With a simultaneous copy to:    CHSPSC, LLC
   4000 Meridian Boulevard
   Franklin, TN 37067
   Attention: General Counsel

or to such other address, and to the attention of such other person or officer as any party may designate, with copies thereof to the respective counsel thereof as notified by such party.

 

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16. Severability . In the event any provision of this Agreement is held to be invalid, illegal or unenforceable for any reason and in any respect, such invalidity, illegality or unenforceability shall in no event affect, prejudice or disturb the validity of the remainder of this Agreement, which shall be and remain in full force and effect, enforceable in accordance with its terms.

17. Independent Contractor . Each party shall perform its duties and obligations hereunder for the other party in the capacity of an independent contractor and not as an employee of such party. Nothing contained in this Agreement shall be construed to create a partnership or joint venture between any of the parties hereto. Personnel supplied by RCSC hereunder, whether or not located on CLIENT’s premises, are not CLIENT’s employees or agents and shall not hold themselves out as such, and RCSC assumes full responsibility for their acts and for compliance with any applicable employment and tax laws with respect to such employees.

18. Waiver . Failure by any party at any time to exercise any right or remedy granted herein or established by law shall not be deemed to operate as a waiver of its right to exercise such right or remedy at any other future time.

19. Enforcement of Agreement . The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions (without the need to post bond or other security) to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

20. Entire Agreement/Amendment . This Agreement supersedes all prior agreements, whether written or oral, between the parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by the parties hereto.

21. Further Assurances . Each party, upon reasonable request from the other party, will from time to time during the Term of this Agreement, take all actions and execute and deliver all such instruments and documents as may be reasonably requested to carry out the intent of this Agreement.

22. Execution of this Agreement . This Agreement may be executed in multiple counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.

SIGNATURE PAGE FOLLOWS

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized officers as of the date above written.

 

REVENUE CYCLE SERVICE CENTER, LLC
By:  

/s/ Martin G. Schweinhart

  Martin G. Schweinhart
  Executive Vice President
QHCCS, LLC
By:  

/s/ Michael J. Culotta

  Michael J. Culotta
  Executive Vice President and Chief Financial Officer

 

Signature Page to

Shared Service Centers

Transition Services Agreement

Exhibit 2.10

SUPPLEMENTAL MEDICAID SERVICES TRANSITION SERVICES AGREEMENT

THIS SUPPLEMENTAL MEDICAID SERVICES TRANSITION SERVICES AGREEMENT, dated as of April 29, 2016, is by and between CHSPSC, LLC, a Delaware limited liability company (“ CHSPSC ”), an indirect wholly owned subsidiary of CHS (as defined below), and QUORUM HEALTH CORPORATION, a Delaware corporation (“ QHC ”).

R E C I T A L S:

WHEREAS, the board of directors of Community Health Systems, Inc., a Delaware corporation (“ CHS ”) has determined that it is appropriate and advisable to separate (i) thirty-eight (38) of CHS’ hospitals and related business operations and (ii) Quorum Health Resources, LLC, a hospital management and consulting services business, from CHS’ other hospitals and businesses;

WHEREAS, in order to effectuate the foregoing, CHS and QHC have entered into a Separation and Distribution Agreement, dated as of April 29, 2016 (the “ Separation and Distribution Agreement ”), which provides for, among other things, the contribution from CHS to QHC of certain assets, the assumption by QHC of certain Liabilities (as defined in the Separation and Distribution Agreement) from CHS, the distribution by CHS of QHC common stock to CHS shareholders, and the execution and delivery of certain agreements in order to facilitate and provide for the foregoing, in each case subject to the terms and conditions set forth therein; and

WHEREAS, in order to facilitate and provide for an orderly transition under the Separation and Distribution Agreement, the Parties (as defined herein) desire to enter into this Agreement to set forth the terms and conditions pursuant to which each of the Parties shall provide to the other the Services (as defined herein) for a transitional period.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement (as defined herein), the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . Reference is made to Section 8.09 regarding the interpretation of certain words and phrases used in this Agreement. In addition, for the purpose of this Agreement, the following terms shall have the meanings set forth below:

Affiliate ” has the meaning set forth in the Separation and Distribution Agreement.

Agreement ” means this Transition Services Agreement and each of the Schedules hereto.

Change of Control ” has the meaning set forth in the Separation and Distribution Agreement.

Charges ” has the meaning set forth in Section 2.03 .


CHS ” has the meaning set forth in the Recitals.

CHSPSC ” has the meaning set forth in the Preamble.

Dispute ” has the meaning set forth in Section 8.07(a) .

Effective Time ” has the meaning set forth in the Separation and Distribution Agreement.

Force Majeure ” has the meaning set forth in the Separation and Distribution Agreement.

Governmental Authority ” has the meaning set forth in the Separation and Distribution Agreement.

Information ” has the meaning set forth in the Separation and Distribution Agreement.

Interest Payment ” has the meaning set forth in Section 4.02 .

Law ” has the meaning set forth in the Separation and Distribution Agreement.

Liabilities ” has the meaning set forth in the Separation and Distribution Agreement.

Losses ” has the meaning set forth in Section 7.03 .

Notice ” means any written notice, request, demand or other communication specifically referencing this Agreement and given in accordance with Section 8.17 .

Parties ” means the parties to this Agreement.

Person ” has the meaning set forth in the Separation and Distribution Agreement.

Personal Data ” means data that can be used by itself or in combination with other available data to identify a specific individual.

Prime Rate ” has the meaning set forth in the Separation and Distribution Agreement.

Privileged Information ” has the meaning set forth in the Separation and Distribution Agreement.

Proceeding ” has the meaning set forth in the Separation and Distribution Agreement.

Provider ” means, with respect to any Service, the entity or entities identified on the applicable subsection of Schedule 1 hereto as the “Service Provider.”

QHC ” has the meaning set forth in the Preamble.

QHC Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.


Recipient ” means, with respect to any Service, the entity or entities identified on the applicable subsection of Schedule 1 hereto as the “Service Recipient.”

Representatives ” has the meaning set forth in the Separation and Distribution Agreement.

Separation ” has the meaning set forth in the Separation and Distribution Agreement.

Separation and Distribution Agreement ” has the meaning set forth in the Recitals.

Service Period ” means, with respect to any Service, the period commencing at the Effective Time and ending on the earlier of (i) the period set forth on Schedule 1 hereto as the “Term” as to such Service; or (ii) the date the Recipient terminates the provision of such Service pursuant to Section 5.02 .

Services ” has the meaning set forth in Section 2.01.

Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

Tax ” has the meaning set forth in the Separation and Distribution Agreement.

Tax Authority ” has the meaning set forth in the Separation and Distribution Agreement.

Third Party ” has the meaning set forth in the Separation and Distribution Agreement.

ARTICLE II

SERVICES

Section 2.01 Services . Commencing as of the Effective Time, the Provider agrees to provide or to cause one of its Subsidiaries or Affiliates to provide, to the Recipient, or any Subsidiary of the Recipient, the applicable services (the “ Services ”) set forth on each of the subsections of Schedule 1 hereto.

Section 2.02 Performance of Services .

(a) The Provider shall perform and cause its Subsidiaries and Affiliates to perform all Services to be provided by the Provider in good faith and with due care consistent with the care that it exercises in performing such Services for itself. Recipient acknowledges and agrees that neither the Provider nor its Subsidiaries or Affiliates regularly provides the Services to be provided hereunder to Third Parties as part of its business, and, except as specifically stated elsewhere herein, the Provider does not otherwise warrant or assume any responsibility for the performance of the Services by it, its Subsidiaries or Affiliates.

(b) (i) Neither the Provider nor any of its Subsidiaries or Affiliates shall be required to perform or to cause to be performed any of the Services for the benefit of any Third Party or any other Person other than the Recipient or its Subsidiaries, and (ii) EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 2.02 , EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL SERVICES AND PRODUCTS ARE PROVIDED ON AN “AS-IS”


BASIS, THAT THE RECIPIENT ASSUMES ALL RISK AND LIABILITY ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES, AND THAT THE PROVIDER MAKES NO OTHER REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH RESPECT TO THE SERVICES AND PRODUCTS. EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

(c) Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance under this Agreement. No Party shall knowingly take any action in violation of any such applicable Law that results in Liability being imposed on the other Party. If a change in or addition to Law applicable to the Provider or the Recipient causes the Provider to change the Services provided or incur additional expenses in providing such Services, the Provider shall use commercially reasonable efforts to promptly advise the Recipient of such additional expenses, and the Provider and the Recipient will mutually seek an alternative that minimizes such additional expenses. The Recipient shall be responsible for any and all such additional expenses.

Section 2.03 Charges for Services . The Recipient shall pay the Provider of each Service the fee set forth on Schedule 1 for such Service (or category of Services, as applicable) after the “Fee” heading (each fee constituting a “ Charge ” and, collectively, “ Charges ”). All Charges shall be invoiced and collected in accordance with Article IV . During the term of this Agreement, the amount of a Charge for any Services may be adjusted to the extent of: (a) any adjustments mutually agreed to by the Parties; and (b) any adjustment in the rates or charges imposed by any Third-Party provider that is providing Services in accordance with Section 2.07 (proportional to the respective use of such Services by each Party);  provided , that the rates or charges imposed by such Third-Party provider shall be passed through to the Recipient without adding any margin or mark-up 1 . Together with any monthly invoice for Charges, the Provider shall provide the Recipient with reasonable documentation, including any additional documentation reasonably requested by the Recipient to the extent such documentation is in the Provider’s or its Subsidiaries’ or its Affiliates’ possession or control, to support the calculation of such Charges.

Section 2.04 Reimbursement for Out-of-Pocket Expenses and Compensation Costs . The Recipient shall reimburse the Provider for (i) reasonable out-of-pocket costs and expenses incurred by the Provider or any of its Subsidiaries or Affiliates in connection with providing the Services (including reasonable travel-related expenses) and (ii) the portion of all Provider employee compensation and benefits (calculated at twenty percent (20%) of salary) incurred in connection with or allocable directly to the performance of the Services hereunder, in each case, to the extent that such costs, expenses, compensation and benefits are not reflected in the Charges for such Services set forth on Schedule; 1. Any authorized travel-related expenses incurred in performing the Services shall be incurred and charged to the Recipient in accordance with the Provider’s then applicable business travel policies.


Section 2.05 Changes to Services . Except as provided in Section 2.07 and subject to the performance standards set forth in this Article II , the Provider may make changes from time to time in the manner of performing the Services if the Provider is making similar changes in performing analogous services for itself and if the Provider furnishes to the Recipient reasonable prior Notice (in content and timing) respecting such changes.

Section 2.06 Transitional Nature of Services . The Parties acknowledge the transitional nature of the Services and agree to cooperate using good faith efforts to effectuate a smooth transition of the Services from the Provider to the Recipient (or its designee).

Section 2.07 Use of Third Parties to Provide Services . The Provider may perform its obligation to provide a Service through the use of one or more Third Parties without the consent of the Recipient; provided , that, subject to  Section 2.02 , (a) the hiring or engagement of such Third Party does not materially decrease the quality or level of Services provided to the Recipient to below that provided by the Provider, (b) the use of such Third Party will not materially increase the Charges payable by the Recipient in connection with such Services, (c) the use of such Third Party will not change the manner in which the Services are delivered in a way that materially increases the Recipient’s costs of receiving the Services; provided , further , that if such Third Party has been engaged by Provider to perform the same or similar services to Provider or Recipient prior to the Effective Time, then clauses (a), (b) and (c) shall be deemed satisfied. The Provider shall in all cases remain primarily responsible for all of its obligations under this Agreement with respect to the Services, except that if a Third Party provides all or part of any Service pursuant to a written agreement with the Recipient, the Recipient agrees to be bound by, and to cause its Affiliates to comply with, those obligations that such agreement places on the Recipient, and the Provider shall not be responsible for its obligations under this Agreement that are specified in such agreement to be obligations of the Third Party provider.

ARTICLE III

OTHER ARRANGEMENTS

Section 3.01 Access .

(a) QHC shall, and shall cause its Subsidiaries to, allow CHSPSC and its Subsidiaries or Affiliates and their respective Representatives reasonable access to the facilities of QHC and its Subsidiaries that is necessary for CHSPSC and its Subsidiaries or Affiliates to fulfill their obligations under this Agreement. In addition to the foregoing right of access, QHC shall, and shall cause its Subsidiaries to, afford CHSPSC, its Subsidiaries and Affiliates and their respective Representatives, upon reasonable advance notice, reasonable access during normal business hours to the facilities, information, systems, infrastructure and personnel of QHC and its Subsidiaries as reasonably necessary for CHSPSC to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by QHC or its Subsidiaries, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of QHC or any of its Subsidiaries and (ii) in the event that QHC determines that providing such access could violate any Law or agreement, or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such harm or


consequence. CHSPSC agrees that all of its and its Subsidiaries’ and Affiliates’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of QHC and its Subsidiaries, or when given access to any facilities, information, systems, infrastructure or personnel of QHC and its Subsidiaries, conform to the policies and procedures of CHSPSC in effect on the Effective Time.

(b) CHSPSC shall, and shall cause its Subsidiaries and Affiliates to, afford QHC, its Subsidiaries and their respective Representatives, upon reasonable advance notice, reasonable access during normal business hours to the facilities, information, systems, infrastructure, and personnel of CHSPSC and its Subsidiaries or Affiliates as reasonably necessary for QHC to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by CHSPSC or its Subsidiaries or Affiliates, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of CHSPSC or any of its Subsidiaries and (ii) in the event that CHSPSC determines that providing such access could violate any Law or agreement, or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such harm or consequence. QHC agrees that all of its and its Subsidiaries’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of CHSPSC and its Subsidiaries or Affiliates, or when given access to any facilities, information, systems, infrastructure or personnel of CHSPSC and its Subsidiaries or Affiliates, conform to the policies and procedures of CHSPSC in effect on the Effective Time.

ARTICLE IV

BILLING; TAXES

Section 4.01 Procedure . Charges for the Services shall be charged to and payable by the Recipient. Amounts payable pursuant to the terms of this Agreement shall be paid by wire transfer (or such other method of payment as may be agreed between the Parties) to the Provider, as directed by the Provider, on a monthly basis, which amounts shall be due within thirty (30) days after the date of invoice. All amounts due and payable hereunder shall be invoiced and paid in U.S. dollars.

Section 4.02 Late Payments . Charges not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of the date of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%, or the maximum legal rate, whichever is lower (the “ Interest Payment ”).

Section 4.03 Taxes . Without limiting any provisions of this Agreement, the Recipient shall bear any and all Taxes and other similar charges (and any related interest and penalties) imposed on, or payable with respect to, any fees or charges, including any Charges, payable by it pursuant to this Agreement, including all sales, use, value-added, and similar Taxes, but excluding Taxes based on the Provider’s net income. Notwithstanding anything to the contrary in the previous sentence or elsewhere in this Agreement, the Recipient shall be entitled to withhold from any payments to the Provider any such Taxes that the Recipient is required by Law to withhold and shall pay such Taxes to the applicable Tax Authority.


Section 4.04 No Set-Off . Except as mutually agreed to in writing by CHSPSC and QHC, no Party or any of its Affiliates shall have any right of set off or other similar rights with respect to (a) any amounts received pursuant to this Agreement; or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement.

ARTICLE V

TERM AND TERMINATION

Section 5.01 Term . This Agreement shall commence at the Effective Time and shall terminate upon the earlier to occur of; (a) the last date on which either Party is obligated to provide any Service to the other Party as set forth on Schedule 1; or (b) the mutual written agreement of the Parties to terminate this Agreement in its entirety. Unless otherwise terminated pursuant to Section 5.02, this Agreement shall terminate with respect to any Service at the close of business on the last day of the Service Period for such Services as set forth on Schedule 1 under “Term” as to such Service. To the extent that the Provider’s ability to provide a Service is dependent on the continuation of a specified Service, the Provider’s obligation to provide such dependent Service shall terminate automatically with the termination of such supporting Service.

Section 5.02 Early Termination .

(a) Without prejudice to the Recipient’s rights with respect to a Force Majeure, the Recipient may from time to time terminate this Agreement with respect to the entirety of any individual Service but not a portion thereof:

(i) for any reason or no reason, upon the giving of ten (10) business days’ advance Notice to the Provider of such Service; or

(ii) immediately upon giving Notice to the Provider of such Service, if the Provider of such Service has failed to perform any of its material obligations under this Agreement with respect to such Service in a manner constituting intentional misconduct or gross negligence; and provided , further , that the Recipient shall not be entitled to terminate the Agreement with respect to the applicable Service if there remains a good faith Dispute between the Parties (undertaken in accordance with the terms of S ection 8.07 as to whether such breach by Provider constitutes intentional misconduct or gross negligence.

(b) The Provider may terminate this Agreement with respect to any individual Service, but not a portion thereof, at any time upon prior Notice to the Recipient if the Recipient has failed to perform any of its material obligations under this Agreement relating to such Service in a manner constituting intentional misconduct or gross negligence, which shall include a failure to make payment of Charges for such Service when due, and such failure shall continue uncured for a period of ten (10) business days after receipt by the Recipient of a Notice of such failure from the Provider; and provided , further , that the Provider shall not be entitled to terminate the Agreement with respect to the applicable Service if there remains a good faith Dispute between the Parties (undertaken in accordance with the terms of Section 8.07 ) as to whether such breach by Recipient constitutes intentional misconduct or gross negligence. The relevant subsection of Schedule 1 hereto shall be updated to reflect any terminated Service.


(c) Either Party may terminate this Agreement if the other party (i) is bankrupt or insolvent or takes the benefit of any statute in force for bankrupt or insolvent debtors, or (ii) files a proposal or takes any action or proceeding before any court of competent jurisdiction for its dissolution, winding-up or liquidation, or for the liquidation of its assets, or a receiver is appointed in respect of its assets, which order, filing or appointment is not rescinded within ten (10) business days.

Section 5.03 Modification to Services . The Recipient may from time to time request a modification in part of the scope or amount of any Service. If requested to do so by the Recipient, the Parties shall discuss in good faith appropriate adjustments to the relevant Charges in light of all relevant factors. If, after such discussions, the Parties do not approve any requested modification of the Service and the relevant Charges in connection therewith, then (a) there shall be no change to the Charges under this Agreement and (b) unless the Parties otherwise agree in writing, there shall be no change to the scope or amount of any Services under this Agreement. If, after such discussions, the Parties agree to any modification of Service, such modification of Service shall be documented in a written agreement executed by the Parties. Additionally, in connection with any such modification of Service, the Parties may agree to an appropriate modification to the Charges related to the applicable modified Service.

Section 5.04 Interdependencies . The Parties acknowledge and agree that (i) there may be interdependencies among the Services being provided under this Agreement, (ii) upon the request of either Party, the Parties shall cooperate and act in good faith to determine whether (A) any such interdependencies exist with respect to the particular Service that a Party is seeking to terminate or modify, as applicable, in accordance with Section 5.02 , or Section 5.03 , respectively, and (B) in the case of a termination or modification, the Provider’s ability to provide a particular Service in accordance with this Agreement would be materially and adversely affected by such termination or modification of another Service, as applicable, in accordance with Section 5.02 or Section 5.03 , respectively, prior to the expiration of the then current Service Period for such Service, and (iii) in the event that the Parties have determined that such interdependencies exist (and, in the case of a termination or modification, as applicable, that the Provider’s ability to provide a particular Service in accordance with this Agreement would be materially and adversely affected by the termination or modification of another Service, as applicable, in accordance with Section 5.02 or Section 5.03 , respectively, prior to the expiration of then current Service Period for such Service), the Parties shall negotiate in good faith to amend Schedule 1 hereto relating to the termination dates of such impacted Service, which amendment shall be consistent with the terms of comparable Services.

Section 5.05 Effect of Termination . Upon the termination of any Service pursuant to this Agreement, the Provider of the terminated Service shall have no further obligation to provide the terminated Service, and the Recipient shall have no obligation to pay any future Charges relating to any such Service; provided , however , that the Recipient shall remain obligated to the Provider for the Charges owed and payable in respect of Services provided prior to the effective date of termination for such Service. In connection with the termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall


survive any such termination, and in connection with a termination of this Agreement, Article I , this Article V , Article VII and Article VIII , all confidentiality obligations under this Agreement and Liability for all due and unpaid Charges, shall continue to survive indefinitely.

Section 5.06 Information Transmission . The Provider, on behalf of itself and its respective Subsidiaries and Affiliates, shall provide or make available, or cause to be provided or made available, to the Recipient, in accordance with Section 7.01(a) of the Separation and Distribution Agreement, any Information received or computed by the Provider for the benefit of the Recipient concerning the relevant Service during the Service Period; provided , however , that, except as otherwise agreed to in writing by the Parties (a) the Provider shall not have any obligation to provide or cause to provide Information in any non-standard format, (b) the Provider and its Subsidiaries and Affiliates shall be reimbursed for their reasonable costs in accordance with Section 7.01(e) of the Separation and Distribution Agreement for creating, gathering, copying, transporting and otherwise providing such Information, and (c) the Provider shall maintain any such Information in accordance with Section 7.03 of the Separation and Distribution Agreement.

ARTICLE VI

CONFIDENTIALITY; PROTECTIVE ARRANGEMENTS

Section 6.01 CHS and QHC Obligations . Subject to Section 6.04 , CHSPSC, on behalf of itself and each of its Subsidiaries and Affiliates, and QHC, on behalf of itself and each of the QHC Subsidiaries, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to CHSPSC’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective businesses) that is either in its possession (including confidential and proprietary information in its possession prior to the Effective Time) or furnished by the other Party or the other Party’s Subsidiaries or Affiliates or their respective Representatives at any time pursuant to this Agreement, and shall not use any such confidential and proprietary information other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such confidential and proprietary information has been (a) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or Affiliates or any of their respective Representatives in violation of this Agreement; (b) later lawfully acquired from other sources by such Party or any of its Subsidiaries or Affiliates, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information; or (c) independently developed or generated without reference to or use of the respective proprietary or confidential information of the other Party or any of its Subsidiaries or Affiliates. If any confidential and proprietary information of CHSPSC or any of its Subsidiaries or Affiliates is disclosed to QHC or any of its Subsidiaries in connection with providing the Services, then such disclosed confidential and proprietary information shall be used only as required to perform the Services. If any confidential and proprietary information of QHC or any of its Subsidiaries is disclosed to CHSPSC or any of its Subsidiaries or Affiliates in connection with providing the Services, then such disclosed confidential and proprietary information shall be used only as required to perform such Services.


Section 6.02 No Release . Each Party agrees (a) not to release or disclose, or permit to be released or disclosed, any information addressed in Section 6.01 to any other Person, except its Representatives who need to know such information in their capacities as such, and except in compliance with Section 6.04 and (b) to maintain any such information in accordance with Section 7.03 of the Separation and Distribution Agreement.

Section 6.03 Third Party Information; Privacy and Data Protection Laws . Each Party acknowledges that it and its respective Subsidiaries and Affiliates may presently have and, following the Effective Time, may gain access to or possession of confidential or proprietary information of, or personal information relating to, Third Parties (a) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and another Party or another Party’s Subsidiaries or Affiliates, on the other hand, prior to the Effective Time; or (b) that, as between the Parties, was originally collected by another Party or another Party’s Subsidiaries or Affiliates and that may be subject to and protected by privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and Affiliates and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or personal information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among such other Party or such other Party’s Subsidiaries or Affiliates, on the one hand, and such Third Parties, on the other hand.

Section 6.04 Protective Arrangements . In the event that either Party or any of its Affiliates is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law to disclose or provide any confidential or proprietary information of the other Party that is subject to the confidentiality provisions hereof, or to disclose or provide any Personal Data that it processes on behalf of the other Party in accordance with the data protection agreement to be entered into between CHSPSC and QHC as of the Effective Time, such Party shall, unless prohibited by such request or requirement of the applicable Governmental Authority or under applicable Law, provide the other Party with Notice of such request or demand as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s own cost and expense. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.


ARTICLE VII

LIMITED LIABILITY AND INDEMNIFICATION

Section 7.01 Limitations on Liability .

(a) SUBJECT TO SECTION 7.02 , EXCEPT IN THE EVENT OF WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PROVIDER, THE LIABILITIES OF THE PROVIDER AND ITS SUBSIDIARIES AND THEIR RESPECTIVE REPRESENTATIVES, COLLECTIVELY, UNDER THIS AGREEMENT FOR ANY ACT OR FAILURE TO ACT IN CONNECTION HEREWITH (INCLUDING THE PERFORMANCE OR BREACH OF THIS AGREEMENT), OR FROM THE SALE, DELIVERY, PROVISION OR USE OF ANY SERVICES PROVIDED UNDER OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, SHALL NOT EXCEED THE AGGREGATE CHARGES PAID AND PAYABLE TO SUCH PROVIDER AND ITS SUBSIDIARIES AND AFFILIATES FOR ALL SERVICES BY THE RECIPIENT PURSUANT TO THIS AGREEMENT THROUGHOUT THE TERM OF THIS AGREEMENT. IN THE EVENT OF WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PROVIDER, THEN THE PROVIDER SHALL BE LIABLE FOR ACTUAL COMPENSATORY DAMAGES SUFFERRED BY THE RECIPIENT.

(b) IN NO EVENT SHALL EITHER PARTY, ITS SUBSIDIARIES OR THEIR RESPECTIVE REPRESENTATIVES BE LIABLE TO THE OTHER PARTY FOR INDIRECT, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, ITS SUBSIDIARIES AND ITS REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, INCLUDING ANY CLAIM FOR PROPERTY DAMAGE OR LOST PROFITS, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE. QHC HEREBY ACKNOWLEDGES THAT CHSPSC DOES NOT REGULARLY PROVIDE SERVICES TO THIRD PARTIES AS PART OF ITS BUSINESS AND THAT CHSPSC HAS AGREED TO PROVIDE THE SERVICES UNDER THIS AGREEMENT ONLY TO ASSIST QHC IN ITS TRANSITION TO OPERATION AS AN INDEPENDENT PUBLIC COMPANY.

(c) The limitations in Section 7.01(a) and Section 7.01(b) shall not apply in respect of any Liability arising out of or in connection with Recipient’s obligations under Section 7.03 .

Section 7.02 Warranty; Sole Remedy . The warranties stated in Section 2.02 above are in lieu of any and exclusive of all other representations and warranties of any kind whatsoever. Except for the limited warranties provided hereunder, the Provider shall have no liability to the Recipient under this Agreement and the Recipient’s remedies under this Article VII shall constitute its sole and exclusive remedies under this Agreement; provided that the Recipient shall be entitled to preliminary and other injunctive relief against any willful breach by the Provider of this Agreement.


Section 7.03 Indemnification . The Recipient shall, to the fullest extent permitted by law, defend, indemnify and hold harmless the Provider and its directors, officers, employees, agents and affiliates from and against any and all losses, liabilities, claims and costs, including, but not limited to, attorneys’ fees and legal costs arising from any lawsuits, administrative agency or other actions by third parties (collectively, “ Losses ”) to which the Provider is subjected arising out of or attributed, directly or indirectly, to the performance or non-performance of any of the Services under this Agreement. Notwithstanding the foregoing, the Recipient shall not be required to defend, indemnify and hold harmless the Provider and its directors, officers, employees, agents and affiliates in respect of any such Losses that are determined by a judgment of a court that is binding, final and not subject to review on appeal to have resulted from the Provider’s intentional misconduct or gross negligence.

Section 7.04 Indemnification Procedures . The provisions of Article IV of the Separation and Distribution Agreement shall govern claims for indemnification under this Agreement; provided that, for purposes of this Section 7.04 , in the event of any conflict between the provisions of Article IV of the Separation and Distribution Agreement and this Article VII , the provisions of this Agreement shall control.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Mutual Cooperation . The Parties and their respective Subsidiaries and Affiliates shall cooperate with each other in connection with the performance of the Services hereunder; provided, however, that such cooperation shall not unreasonably disrupt the normal operations of the Parties and their respective Subsidiaries and Affiliates; and, provided , further , that this Section 8.01 shall not require either Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in this Agreement or otherwise agreed to in writing by the Parties.

Section 8.02 Title to Intellectual Property . Except as expressly provided for under the terms of this Agreement, the Recipient acknowledges that it shall acquire no right, title or interest (including any license rights or rights of use) in any intellectual property which is owned or licensed by the Provider, by reason of the provision of the Services provided hereunder. The Recipient shall not remove or alter any copyright, trademark, confidentiality or other proprietary notices that appear on any intellectual property owned or licensed by the Provider, and the Recipient shall not reproduce any such notices on any and all copies thereof. The Recipient shall not attempt to decompile, translate, reverse engineer or make excessive copies of any intellectual property owned or licensed by the Provider, and the Recipient shall promptly notify the Provider of any such attempt, regardless of whether by the Recipient or any Third Party, of which the Recipient becomes aware.

Section 8.03 Force Majeure . No Party shall be deemed in default of this Agreement for failure to fulfill any obligation so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay unless this Agreement has previously been terminated under Article V or under this Section 8.03 . A


Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide Notice to the Recipient or the Provider of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable unless this Agreement has previously been terminated under Article V or under this Section 8.03 . During the period of a Force Majeure, the Recipient shall be (i) relieved of the obligation to pay Charges for such Service(s) throughout the duration of such Force Majeure and (ii) entitled to permanently terminate such Service(s) (and shall be relieved of the obligation to pay Charges for such Service(s) throughout the duration of such Force Majeure) if a Force Majeure shall continue to exist for more than thirty (30) consecutive days, it being understood that the Recipient shall not be required to provide any advance notice of such termination to the Provider.

Section 8.04 Independent Contractors . The Parties each acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons. The relationships of the Parties hereunder are those of independent contractors and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship. Employees performing services hereunder do so on behalf of, under the direction of, and as employees of, the Provider, and the Recipient shall have no right, power or authority to direct such employees.

Section 8.05 Third Party Beneficiaries . Except as provided in Article VII with respect to any person entitled to indemnification thereunder, the provisions of this Agreement are solely for the benefit of the Parties, their Subsidiaries, their Affiliates, and their permitted successors and assigns, and are not intended to confer upon any other Person except the Parties, their Subsidiaries, their Affiliates and their permitted successors and assigns, any rights or remedies hereunder. There are no other Third Party beneficiaries of this Agreement and this Agreement shall not provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 8.06 Governing Law . This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Tennessee, irrespective of the choice of Laws principles of the State of Tennessee, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

Section 8.07 Dispute Resolution .

(a) In the event of any controversy, dispute or claim (a “ Dispute ”) arising out of or relating to any Party’s rights or obligations under this Agreement (whether arising in contract, tort or otherwise) or calculation or allocation of the costs of any Service, or otherwise arising out of or relating in any way to this Agreement (including the interpretation or validity of this Agreement), such Dispute shall be resolved in accordance with the dispute resolution process referred to in Section 8.01 of the Separation and Distribution Agreement.

(b) In any Dispute regarding the amount of a Charge, if such Dispute is finally resolved pursuant to the dispute resolution process set forth or referred to in Section 8.07(a) and it is determined that the Charge the Provider has invoiced the Recipient, and which the Recipient


has paid to the Provider, is greater or less than the amount the Charge should have been, then (i) if it is determined that the Recipient has overpaid the Charge, the Provider shall within five (5) business days after such determination reimburse the Recipient an amount of cash equal to such overpayment, plus the Interest Payment, accruing from the date of payment by the Recipient to the time of reimbursement by the Provider; and (ii) if it is determined that the Recipient has underpaid the Charge, the Recipient shall within five (5) business days after such determination reimburse the Provider an amount of cash equal to such underpayment, plus the Interest Payment, accruing from the date such payment originally should have been made by the Recipient to the time of payment by the Recipient.

Section 8.08 Specific Performance . Subject to Section 8.07 , in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at Law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Proceeding for specific performance that a remedy at Law would be adequate is waived. Unless otherwise agreed in writing, the Parties shall continue to provide Services and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of Section 8.07 and this Section 8.08 with respect to all matters subject to such Dispute; provided , however , that this obligation shall only exist during the term of this Agreement.

Section 8.09 Interpretation . Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules hereto and thereto) and not to any particular provision of this Agreement. Section, and Schedule references are to the Sections, and Schedules to this Agreement unless otherwise specified. Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. Unless otherwise specified in a particular case, the word “days” refers to calendar days. References herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified. References to the performance, discharge or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability has terms. If the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

Section 8.10 Headings . The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.


Section 8.11 Amendment . No provisions of this Agreement, including any Schedule hereto, shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of each of CHSPSC and QHC. No provisions of this Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party against whom it is sought to be enforced.

Section 8.12 Assignability . This Agreement shall not be assigned without the prior written consent of CHSPSC and QHC, except that:

(a) each Party may assign all of its rights and obligations under this Agreement to any of its Subsidiaries or Affiliates; provided , however , that no such assignment shall release the assigning Party from any Liability under this Agreement; and

(b) in connection with (i) either Party’s divestiture of all or substantially all of its assets to a Third Party or (ii) a Change of Control of either Party, such Party may assign to such Third Party its rights and obligations under this Agreement; provided , however , that (x) no such assignment shall release the assigning Party from any Liability under this Agreement, (y) any and all costs and expenses incurred by either Party in connection with such assignment (including in connection with clause (z) of this proviso) shall be borne solely by the assigning Party, and (z) the Parties shall in good faith negotiate any amendments to this Agreement, including the Schedules to this Agreement, that may be reasonably necessary in order to assign such Services.

Section 8.13 Audit Assistance . Each of the Parties and their respective Subsidiaries and Affiliates are or may be subject to regulation and audit by a Governmental Authority, standards organizations, customers or other parties to contracts with such Parties or their respective Subsidiaries or Affiliates under applicable Law, standards or contract provisions. If a Governmental Authority, standards organization, customer or other party to a contract with a Party or its Subsidiary or Affiliate exercises its right to examine or audit such Party’s or its Subsidiary’s or Affiliate’s books, records, documents or accounting practices and procedures pursuant to such applicable Law, standards or contract provisions, and such examination or audit relates to the Services, then the other Party shall provide, at the sole cost and expense of the requesting Party, all assistance reasonably requested by the Party that is subject to the examination or audit in responding to such examination or audits or requests for information, to the extent that such assistance or information is within the reasonable control of the cooperating Party and is related to the Services.

Section 8.14 Survival of Covenants . Except as expressly set forth in this Agreement, the covenants and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.

Section 8.15 Subsidiaries . CHSPSC shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by a Subsidiary or Affiliate of CHSPSC and QHC shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by a QHC Subsidiary.


Section 8.16 Waivers of Default . Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.

Section 8.17 Notices . All Notices under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a Notice):

If to CHSPSC:

CHSPSC, LLC

4000 Meridian Boulevard

Franklin, Tennessee 37067

Attn: General Counsel

If to QHC:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attn: General Counsel

Either Party may, by Notice to the other Party, change the address to which such Notices are to be given.

Section 8.18 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement.

Section 8.19 Entire Agreement . This Agreement and the exhibits and schedules hereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

Section 8.20 Corporate Power . CHSPSC represents on behalf of itself and, to the extent applicable, each Subsidiary and Affiliate of CHSPSC, and QHC represents on behalf of itself and, to the extent applicable, each QHC Subsidiary, as follows:

(a) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and


(b) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

Section 8.21 Signatures and Delivery . Each of CHSPSC and QHC acknowledges that it may execute this Agreement by manual, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each of CHSPSC and QHC expressly adopts and confirms a stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind it to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date hereof) and delivered in person, by mail or by courier.

Section 8.22 Severability . In the event that any one or more of the terms or provisions of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement, or the application of such term or provision to Persons or circumstances or in jurisdictions other than those as to which it has been determined to be invalid, illegal or unenforceable, and the Parties shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement which, insofar as practicable, implement the purposes and intent of the Parties. Any term or provision of this Agreement held invalid or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid or unenforceable to the extent consistent with the intent of the Parties as reflected by this Agreement. To the extent permitted by applicable Law, each Party waives any term or provision of Law which renders any term or provision of this Agreement to be invalid, illegal or unenforceable in any respect.

Section 8.23 Further Assurances . Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 8.24 Public Announcements . From and after the Effective Time, the Parties shall consult with each other before issuing, and give each other the opportunity to review and comment upon, that portion of any press release or other public statement that relates to the transactions contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except (a) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system; or (b) as otherwise set forth on Schedule 10.16 to the Separation and Distribution Agreement.


Section 8.25 Mutual Drafting . This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

* * * * *


IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

 

CHSPSC, LLC     QUORUM HEALTH CORPORATION
By:  

/s/ Martin G. Schweinhart

    By:  

/s/ Michael J. Culotta

Name:   Martin G. Schweinhart     Name:   Michael J. Culotta
Title:   Executive Vice President of Administration     Title:   Executive Vice President and Chief Financial Officer

 

Signature Page to Supplemental Medicaid Services Transition Services Agreement

Exhibit 2.11

SHORT-TERM TRANSITION SERVICES AGREEMENT

THIS SHORT-TERM TRANSITION SERVICES AGREEMENT, dated as of April 29, 2016, is by and between CHSPSC, LLC, a Delaware limited liability company (“ CHSPSC ”), an indirect wholly owned subsidiary of CHS (as defined below), and QUORUM HEALTH CORPORATION, a Delaware corporation (“ QHC ”).

R E C I T A L S:

WHEREAS, the board of directors of Community Health Systems, Inc., a Delaware corporation (“ CHS ”) has determined that it is appropriate and advisable to separate (i) thirty-eight (38) of CHS’ hospitals and related business operations and (ii) Quorum Health Resources, LLC, a hospital management and consulting services business, from CHS’ other hospitals and businesses;

WHEREAS, in order to effectuate the foregoing, CHS and QHC have entered into a Separation and Distribution Agreement, dated as of April 29, 2016 (the “ Separation and Distribution Agreement ”), which provides for, among other things, the contribution from CHS to QHC of certain assets, the assumption by QHC of certain Liabilities (as defined in the Separation and Distribution Agreement) from CHS, the distribution by CHS of QHC common stock to CHS shareholders, and the execution and delivery of certain agreements in order to facilitate and provide for the foregoing, in each case subject to the terms and conditions set forth therein; and

WHEREAS, in order to facilitate and provide for an orderly transition under the Separation and Distribution Agreement, the Parties (as defined herein) desire to enter into this Agreement to set forth the terms and conditions pursuant to which each of the Parties shall provide to the other the Services (as defined herein) for a transitional period.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement (as defined herein), the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . Reference is made to Section 8.09 regarding the interpretation of certain words and phrases used in this Agreement. In addition, for the purpose of this Agreement, the following terms shall have the meanings set forth below:

Affiliate ” has the meaning set forth in the Separation and Distribution Agreement.

Agreement ” means this Transition Services Agreement and each of the Schedules hereto.

Change of Control ” has the meaning set forth in the Separation and Distribution Agreement.

Charges ” has the meaning set forth in Section 2.03 .


CHS ” has the meaning set forth in the Recitals.

CHSPSC ” has the meaning set forth in the Preamble.

Dispute ” has the meaning set forth in Section 8.07(a) .

Effective Time ” has the meaning set forth in the Separation and Distribution Agreement.

Force Majeure ” has the meaning set forth in the Separation and Distribution Agreement.

Governmental Authority ” has the meaning set forth in the Separation and Distribution Agreement.

Information ” has the meaning set forth in the Separation and Distribution Agreement.

Interest Payment ” has the meaning set forth in Section 4.02 .

Law ” has the meaning set forth in the Separation and Distribution Agreement.

Liabilities ” has the meaning set forth in the Separation and Distribution Agreement.

Losses ” has the meaning set forth in Section 7.03 .

Notice ” means any written notice, request, demand or other communication specifically referencing this Agreement and given in accordance with Section 8.17 .

Parties ” means the parties to this Agreement.

Person ” has the meaning set forth in the Separation and Distribution Agreement.

Personal Data ” means data that can be used by itself or in combination with other available data to identify a specific individual.

Prime Rate ” has the meaning set forth in the Separation and Distribution Agreement.

Privileged Information ” has the meaning set forth in the Separation and Distribution Agreement.

Proceeding ” has the meaning set forth in the Separation and Distribution Agreement.

Provider ” means, with respect to any Service, the entity or entities identified on the applicable subsection of Schedule 1 hereto as the “Service Provider.”

QHC ” has the meaning set forth in the Preamble.

QHC Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.


Recipient ” means, with respect to any Service, the entity or entities identified on the applicable subsection of Schedule 1 hereto as the “Service Recipient.”

Representatives ” has the meaning set forth in the Separation and Distribution Agreement.

Separation ” has the meaning set forth in the Separation and Distribution Agreement.

Separation and Distribution Agreement ” has the meaning set forth in the Recitals.

Service Period ” means, with respect to any Service, the period commencing at the Effective Time and ending on the earlier of (i) the period set forth on Schedule 1 hereto as the “Term” as to such Service; or (ii) the date the Recipient terminates the provision of such Service pursuant to Section 5.02 .

Services ” has the meaning set forth in Section 2.01.

Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

Tax ” has the meaning set forth in the Separation and Distribution Agreement.

Tax Authority ” has the meaning set forth in the Separation and Distribution Agreement.

Third Party ” has the meaning set forth in the Separation and Distribution Agreement.

ARTICLE II

SERVICES

Section 2.01 Services . Commencing as of the Effective Time, the Provider agrees to provide, or to cause one of its Subsidiaries or Affiliates to provide, to the Recipient, or any Subsidiary of the Recipient, the applicable services (the “ Services ”) set forth on each of the subsections of Schedule 1 hereto.

Section 2.02 Performance of Services .

(a) The Provider shall perform and cause its Subsidiaries and Affiliates to perform all Services to be provided by the Provider in good faith and with due care consistent with the care that it exercises in performing such Services for itself. Recipient acknowledges and agrees that neither the Provider nor its Subsidiaries or Affiliates regularly provides the Services to be provided hereunder to Third Parties as part of its business, and, except as specifically stated elsewhere herein, the Provider does not otherwise warrant or assume any responsibility for the performance of the Services by it, its Subsidiaries or Affiliates.

(b) (i) Neither the Provider nor any of its Subsidiaries or Affiliates shall be required to perform or to cause to be performed any of the Services for the benefit of any Third Party or any other Person other than the Recipient or its Subsidiaries, and (ii) EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 2.02 , EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL SERVICES AND PRODUCTS ARE PROVIDED ON AN “AS-IS”


BASIS, THAT THE RECIPIENT ASSUMES ALL RISK AND LIABILITY ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES, AND THAT THE PROVIDER MAKES NO OTHER REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH RESPECT TO THE SERVICES AND PRODUCTS. EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

(c) Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance under this Agreement. No Party shall knowingly take any action in violation of any such applicable Law that results in Liability being imposed on the other Party. If a change in or addition to Law applicable to the Provider or the Recipient causes the Provider to change the Services provided or incur additional expenses in providing such Services, the Provider shall use commercially reasonable efforts to promptly advise the Recipient of such additional expenses, and the Provider and the Recipient will mutually seek an alternative that minimizes such additional expenses. The Recipient shall be responsible for any and all such additional expenses.

Section 2.03 Charges for Services . The Recipient shall pay the Provider of each Service the fee set forth on Schedule 1 for such Service (or category of Services, as applicable) after the “Fee” heading (each fee constituting a “ Charge ” and, collectively, “ Charges ”). All Charges shall be invoiced and collected in accordance with Article IV . During the term of this Agreement, the amount of a Charge for any Services may be adjusted to the extent of: (a) any adjustments mutually agreed to by the Parties; and (b) any adjustment in the rates or charges imposed by any Third-Party provider that is providing Services in accordance with Section 2.07 (proportional to the respective use of such Services by each Party);  provided , that the rates or charges imposed by such Third-Party provider shall be passed through to the Recipient without adding any margin or mark-up. Together with any monthly invoice for Charges, the Provider shall provide the Recipient with reasonable documentation, including any additional documentation reasonably requested by the Recipient to the extent such documentation is in the Provider’s or its Subsidiaries’ or its Affiliates’ possession or control, to support the calculation of such Charges.

Section 2.04 Reimbursement for Out-of-Pocket Expenses and Compensation Costs . The Recipient shall reimburse the Provider for (i) reasonable out-of-pocket costs and expenses incurred by the Provider or any of its Subsidiaries or Affiliates in connection with providing the Services (including reasonable travel-related expenses) and (ii) the portion of all Provider employee compensation and benefits (calculated at twenty percent (20%) of salary) incurred in connection with or allocable directly to the performance of the Services hereunder, in each case, to the extent that such costs, expenses, compensation and benefits are not reflected in the Charges for such Services set forth on Schedule 1 . Any authorized travel-related expenses incurred in performing the Services shall be incurred and charged to the Recipient in accordance with the Provider’s then applicable business travel policies.


Section 2.05 Changes to Services . Except as provided in Section 2.07 and subject to the performance standards set forth in this Article II , the Provider may make changes from time to time in the manner of performing the Services if the Provider is making similar changes in performing analogous services for itself and if the Provider furnishes to the Recipient reasonable prior Notice (in content and timing) respecting such changes.

Section 2.06 Transitional Nature of Services . The Parties acknowledge the transitional nature of the Services and agree to cooperate using good faith efforts to effectuate a smooth transition of the Services from the Provider to the Recipient (or its designee).

Section 2.07 Use of Third Parties to Provide Services . The Provider may perform its obligation to provide a Service through the use of one or more Third Parties without the consent of the Recipient; provided , that, subject to  Section 2.02 , (a) the hiring or engagement of such Third Party does not materially decrease the quality or level of Services provided to the Recipient to below that provided by the Provider, (b) the use of such Third Party will not materially increase the Charges payable by the Recipient in connection with such Services, (c) the use of such Third Party will not change the manner in which the Services are delivered in a way that materially increases the Recipient’s costs of receiving the Services; provided , further , that if such Third Party has been engaged by Provider to perform the same or similar services to Provider or Recipient prior to the Effective Time, then clauses (a), (b) and (c) shall be deemed satisfied. The Provider shall in all cases remain primarily responsible for all of its obligations under this Agreement with respect to the Services, except that if a Third Party provides all or part of any Service pursuant to a written agreement with the Recipient, the Recipient agrees to be bound by, and to cause its Affiliates to comply with, those obligations that such agreement places on the Recipient, and the Provider shall not be responsible for its obligations under this Agreement that are specified in such agreement to be obligations of the Third Party provider.

ARTICLE III

OTHER ARRANGEMENTS

Section 3.01 Access .

(a) QHC shall, and shall cause its Subsidiaries to, allow CHSPSC and its Subsidiaries or Affiliates and their respective Representatives reasonable access to the facilities of QHC and its Subsidiaries that is necessary for CHSPSC and its Subsidiaries or Affiliates to fulfill their obligations under this Agreement. In addition to the foregoing right of access, QHC shall, and shall cause its Subsidiaries to, afford CHSPSC, its Subsidiaries and Affiliates and their respective Representatives, upon reasonable advance notice, reasonable access during normal business hours to the facilities, information, systems, infrastructure and personnel of QHC and its Subsidiaries as reasonably necessary for CHSPSC to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by QHC or its Subsidiaries, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of QHC or any of its Subsidiaries and (ii) in the event that QHC determines that providing such access could violate any Law or agreement, or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such harm or


consequence. CHSPSC agrees that all of its and its Subsidiaries’ and Affiliates’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of QHC and its Subsidiaries, or when given access to any facilities, information, systems, infrastructure or personnel of QHC and its Subsidiaries, conform to the policies and procedures of CHSPSC in effect on the Effective Time.

(b) CHSPSC shall, and shall cause its Subsidiaries and Affiliates to, afford QHC, its Subsidiaries and their respective Representatives, upon reasonable advance notice, reasonable access during normal business hours to the facilities, information, systems, infrastructure, and personnel of CHSPSC and its Subsidiaries or Affiliates as reasonably necessary for QHC to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by CHSPSC or its Subsidiaries or Affiliates, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of CHSPSC or any of its Subsidiaries and (ii) in the event that CHSPSC determines that providing such access could violate any Law or agreement, or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such harm or consequence. QHC agrees that all of its and its Subsidiaries’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of CHSPSC and its Subsidiaries or Affiliates, or when given access to any facilities, information, systems, infrastructure or personnel of CHSPSC and its Subsidiaries or Affiliates, conform to the policies and procedures of CHSPSC in effect on the Effective Time.

ARTICLE IV

BILLING; TAXES

Section 4.01 Procedure . Charges for the Services shall be charged to and payable by the Recipient. Amounts payable pursuant to the terms of this Agreement shall be paid by wire transfer (or such other method of payment as may be agreed between the Parties) to the Provider, as directed by the Provider, on a monthly basis, which amounts shall be due within thirty (30) days after the date of invoice. All amounts due and payable hereunder shall be invoiced and paid in U.S. dollars.

Section 4.02 Late Payments . Charges not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of the date of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%, or the maximum legal rate, whichever is lower (the “ Interest Payment ”).

Section 4.03 Taxes . Without limiting any provisions of this Agreement, the Recipient shall bear any and all Taxes and other similar charges (and any related interest and penalties) imposed on, or payable with respect to, any fees or charges, including any Charges, payable by it pursuant to this Agreement, including all sales, use, value-added, and similar Taxes, but excluding Taxes based on the Provider’s net income. Notwithstanding anything to the contrary in the previous sentence or elsewhere in this Agreement, the Recipient shall be entitled to withhold from any payments to the Provider any such Taxes that the Recipient is required by Law to withhold and shall pay such Taxes to the applicable Tax Authority.


Section 4.04 No Set-Off . Except as mutually agreed to in writing by CHSPSC and QHC, no Party or any of its Affiliates shall have any right of set off or other similar rights with respect to (a) any amounts received pursuant to this Agreement; or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement.

ARTICLE V

TERM AND TERMINATION

Section 5.01 Term . This Agreement shall commence at the Effective Time and shall terminate upon the earlier to occur of: (a) the last date on which either Party is obligated to provide any Service to the other Party as set forth on Schedule 1 ; or (b) the mutual written agreement of the Parties to terminate this Agreement in its entirety. Unless otherwise terminated pursuant to Section 5.02 , this Agreement shall terminate with respect to any Service at the close of business on the last day of the Service Period for such Service as set forth on Schedule 1 under “Term” as to such Service. To the extent that the Provider’s ability to provide a Service is dependent on the continuation of a specified Service, the Provider’s obligation to provide such dependent Service shall terminate automatically with the termination of such supporting Service.

Section 5.02 Early Termination .

(a) Without prejudice to the Recipient’s rights with respect to a Force Majeure, the Recipient may from time to time terminate this Agreement with respect to the entirety of any individual Service but not a portion thereof:

(i) for any reason or no reason, upon the giving of ten (10) business days’ advance Notice to the Provider of such Service; or

(ii) immediately, upon giving Notice to the Provider of such Service, if the Provider of such Service has failed to perform any of its material obligations under this Agreement with respect to such Service in a manner constituting intentional misconduct or gross negligence; and provided , further , that the Recipient shall not be entitled to terminate the Agreement with respect to the applicable Service if there remains a good faith Dispute between the Parties (undertaken in accordance with the terms of Section 8.07 ) as to whether such breach by Provider constitutes intentional misconduct or gross negligence.

(b) The Provider may terminate this Agreement with respect to any individual Service, but not a portion thereof, at any time upon prior Notice to the Recipient if the Recipient has failed to perform any of its material obligations under this Agreement relating to such Service in a manner constituting intentional misconduct or gross negligence, which shall include a failure to make payment of Charges for such Service when due, and such failure shall continue uncured for a period of ten (10) business days after receipt by the Recipient of a Notice of such failure from the Provider; and provided , further , that the Provider shall not be entitled to terminate the Agreement with respect to the applicable Service if there remains a good faith Dispute between the Parties (undertaken in accordance with the terms of Section 8.07 ) as to whether such breach by Recipient constitutes intentional misconduct or gross negligence. The relevant subsection of Schedule 1 hereto shall be updated to reflect any terminated Service.


(c) Either Party may terminate this Agreement if the other party (i) is bankrupt or insolvent or takes the benefit of any statute in force for bankrupt or insolvent debtors, or (ii) files a proposal or takes any action or proceeding before any court of competent jurisdiction for its dissolution, winding-up or liquidation, or for the liquidation of its assets, or a receiver is appointed in respect of its assets, which order, filing or appointment is not rescinded within ten (10) business days.

Section 5.03 Modification to Services . The Recipient may from time to time request a modification in part of the scope or amount of any Service. If requested to do so by the Recipient, the Parties shall discuss in good faith appropriate adjustments to the relevant Charges in light of all relevant factors. If, after such discussions, the Parties do not approve any requested modification of the Service and the relevant Charges in connection therewith, then (a) there shall be no change to the Charges under this Agreement and (b) unless the Parties otherwise agree in writing, there shall be no change to the scope or amount of any Services under this Agreement. If, after such discussions, the Parties agree to any modification of Service, such modification of Service shall be documented in a written agreement executed by the Parties. Additionally, in connection with any such modification of Service, the Parties may agree to an appropriate modification to the Charges related to the applicable modified Service.

Section 5.04 Interdependencies . The Parties acknowledge and agree that (i) there may be interdependencies among the Services being provided under this Agreement, (ii) upon the request of either Party, the Parties shall cooperate and act in good faith to determine whether (A) any such interdependencies exist with respect to the particular Service that a Party is seeking to terminate or modify, as applicable, in accordance with Section 5.02 , or Section 5.03 , respectively, and (B) in the case of a termination or modification, the Provider’s ability to provide a particular Service in accordance with this Agreement would be materially and adversely affected by such termination or modification of another Service, as applicable, in accordance with Section 5.02 or Section 5.03 , respectively, prior to the expiration of the then current Service Period for such Service, and (iii) in the event that the Parties have determined that such interdependencies exist (and, in the case of a termination or modification, as applicable, that the Provider’s ability to provide a particular Service in accordance with this Agreement would be materially and adversely affected by the termination or modification of another Service, as applicable, in accordance with Section 5.02 or Section 5.03 , respectively, prior to the expiration of then current Service Period for such Service), the Parties shall negotiate in good faith to amend Schedule 1 hereto relating to the termination dates of such impacted Service, which amendment shall be consistent with the terms of comparable Services.

Section 5.05 Effect of Termination . Upon the termination of any Service pursuant to this Agreement, the Provider of the terminated Service shall have no further obligation to provide the terminated Service, and the Recipient shall have no obligation to pay any future Charges relating to any such Service; provided , however , that the Recipient shall remain obligated to the Provider for the Charges owed and payable in respect of Services provided prior to the effective date of termination for such Service. In connection with the termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall


survive any such termination, and in connection with a termination of this Agreement, Article I , this Article V , Article VII and Article VIII , all confidentiality obligations under this Agreement and Liability for all due and unpaid Charges, shall continue to survive indefinitely.

Section 5.06 Information Transmission . The Provider, on behalf of itself and its respective Subsidiaries and Affiliates, shall provide or make available, or cause to be provided or made available, to the Recipient, in accordance with Section 7.01(a) of the Separation and Distribution Agreement, any Information received or computed by the Provider for the benefit of the Recipient concerning the relevant Service during the Service Period; provided , however , that, except as otherwise agreed to in writing by the Parties (a) the Provider shall not have any obligation to provide or cause to provide Information in any non-standard format, (b) the Provider and its Subsidiaries and Affiliates shall be reimbursed for their reasonable costs in accordance with Section 7.01(e) of the Separation and Distribution Agreement for creating, gathering, copying, transporting and otherwise providing such Information, and (c) the Provider shall maintain any such Information in accordance with Section 7.03 of the Separation and Distribution Agreement.

ARTICLE VI

CONFIDENTIALITY; PROTECTIVE ARRANGEMENTS

Section 6.01 CHS and QHC Obligations . Subject to Section 6.04 , CHSPSC, on behalf of itself and each of its Subsidiaries and Affiliates, and QHC, on behalf of itself and each of the QHC Subsidiaries, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to CHSPSC’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective businesses) that is either in its possession (including confidential and proprietary information in its possession prior to the Effective Time) or furnished by the other Party or the other Party’s Subsidiaries or Affiliates or their respective Representatives at any time pursuant to this Agreement, and shall not use any such confidential and proprietary information other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such confidential and proprietary information has been (a) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or Affiliates or any of their respective Representatives in violation of this Agreement; (b) later lawfully acquired from other sources by such Party or any of its Subsidiaries or Affiliates, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information; or (c) independently developed or generated without reference to or use of the respective proprietary or confidential information of the other Party or any of its Subsidiaries or Affiliates. If any confidential and proprietary information of CHSPSC or any of its Subsidiaries or Affiliates is disclosed to QHC or any of its Subsidiaries in connection with providing the Services, then such disclosed confidential and proprietary information shall be used only as required to perform the Services. If any confidential and proprietary information of QHC or any of its Subsidiaries is disclosed to CHSPSC or any of its Subsidiaries or Affiliates in connection with providing the Services, then such disclosed confidential and proprietary information shall be used only as required to perform such Services.


Section 6.02 No Release . Each Party agrees (a) not to release or disclose, or permit to be released or disclosed, any information addressed in Section 6.01 to any other Person, except its Representatives who need to know such information in their capacities as such, and except in compliance with Section 6.04 and (b) to maintain any such information in accordance with Section 7.03 of the Separation and Distribution Agreement.

Section 6.03 Third Party Information; Privacy and Data Protection Laws . Each Party acknowledges that it and its respective Subsidiaries and Affiliates may presently have and, following the Effective Time, may gain access to or possession of confidential or proprietary information of, or personal information relating to, Third Parties (a) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and another Party or another Party’s Subsidiaries or Affiliates, on the other hand, prior to the Effective Time; or (b) that, as between the Parties, was originally collected by another Party or another Party’s Subsidiaries or Affiliates and that may be subject to and protected by privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and Affiliates and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or personal information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among such other Party or such other Party’s Subsidiaries or Affiliates, on the one hand, and such Third Parties, on the other hand.

Section 6.04 Protective Arrangements . In the event that either Party or any of its Affiliates is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law to disclose or provide any confidential or proprietary information of the other Party that is subject to the confidentiality provisions hereof, or to disclose or provide any Personal Data that it processes on behalf of the other Party in accordance with the data protection agreement to be entered into between CHSPSC and QHC as of the Effective Time, such Party shall, unless prohibited by such request or requirement of the applicable Governmental Authority or under applicable Law, provide the other Party with Notice of such request or demand as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s own cost and expense. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.


ARTICLE VII

LIMITED LIABILITY AND INDEMNIFICATION

Section 7.01 Limitations on Liability .

(a) SUBJECT TO SECTION 7.02 , EXCEPT IN THE EVENT OF WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PROVIDER, THE LIABILITIES OF THE PROVIDER AND ITS SUBSIDIARIES AND THEIR RESPECTIVE REPRESENTATIVES, COLLECTIVELY, UNDER THIS AGREEMENT FOR ANY ACT OR FAILURE TO ACT IN CONNECTION HEREWITH (INCLUDING THE PERFORMANCE OR BREACH OF THIS AGREEMENT), OR FROM THE SALE, DELIVERY, PROVISION OR USE OF ANY SERVICES PROVIDED UNDER OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, SHALL NOT EXCEED THE AGGREGATE CHARGES PAID AND PAYABLE TO SUCH PROVIDER AND ITS SUBSIDIARIES AND AFFILIATES FOR ALL SERVICES BY THE RECIPIENT PURSUANT TO THIS AGREEMENT THROUGHOUT THE TERM OF THIS AGREEMENT. IN THE EVENT OF WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PROVIDER, THEN THE PROVIDER SHALL BE LIABLE FOR ACTUAL COMPENSATORY DAMAGES SUFFERRED BY THE RECIPIENT.

(b) IN NO EVENT SHALL EITHER PARTY, ITS SUBSIDIARIES OR THEIR RESPECTIVE REPRESENTATIVES BE LIABLE TO THE OTHER PARTY FOR INDIRECT, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, ITS SUBSIDIARIES AND ITS REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, INCLUDING ANY CLAIM FOR PROPERTY DAMAGE OR LOST PROFITS, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE. QHC HEREBY ACKNOWLEDGES THAT CHSPSC DOES NOT REGULARLY PROVIDE SERVICES TO THIRD PARTIES AS PART OF ITS BUSINESS AND THAT CHSPSC HAS AGREED TO PROVIDE THE SERVICES UNDER THIS AGREEMENT ONLY TO ASSIST QHC IN ITS TRANSITION TO OPERATION AS AN INDEPENDENT PUBLIC COMPANY.

(c) The limitations in Section 7.01(a) and Section 7.01(b) shall not apply in respect of any Liability arising out of or in connection with Recipient’s obligations under Section 7.03 .

Section 7.02 Warranty; Sole Remedy . The warranties stated in Section 2.02 above are in lieu of any and exclusive of all other representations and warranties of any kind whatsoever. Except for the limited warranties provided hereunder, the Provider shall have no liability to the Recipient under this Agreement and the Recipient’s remedies under this Article VII shall constitute its sole and exclusive remedies under this Agreement; provided that the Recipient shall be entitled to preliminary and other injunctive relief against any willful breach by the Provider of this Agreement.

Section 7.03 Indemnification . The Recipient shall, to the fullest extent permitted by law, defend, indemnify and hold harmless the Provider and its directors, officers, employees, agents and affiliates from and against any and all losses, liabilities, claims and costs, including, but not limited to, attorneys’ fees and legal costs arising from any lawsuits, administrative agency or other actions by third parties (collectively, “ Losses ”) to which the Provider is


subjected arising out of or attributed, directly or indirectly, to the performance or non-performance of any of the Services under this Agreement. Notwithstanding the foregoing, the Recipient shall not be required to defend, indemnify and hold harmless the Provider and its directors, officers, employees, agents and affiliates in respect of any such Losses that are determined by a judgment of a court that is binding, final and not subject to review on appeal to have resulted from the Provider’s intentional misconduct or gross negligence.

Section 7.04 Indemnification Procedures . The provisions of Article IV of the Separation and Distribution Agreement shall govern claims for indemnification under this Agreement; provided that, for purposes of this Section 7.04 , in the event of any conflict between the provisions of Article IV of the Separation and Distribution Agreement and this Article VII , the provisions of this Agreement shall control.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Mutual Cooperation . The Parties and their respective Subsidiaries and Affiliates shall cooperate with each other in connection with the performance of the Services hereunder; provided, however, that such cooperation shall not unreasonably disrupt the normal operations of the Parties and their respective Subsidiaries and Affiliates; and, provided , further , that this Section 8.01 shall not require either Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in this Agreement or otherwise agreed to in writing by the Parties.

Section 8.02 Title to Intellectual Property . Except as expressly provided for under the terms of this Agreement, the Recipient acknowledges that it shall acquire no right, title or interest (including any license rights or rights of use) in any intellectual property which is owned or licensed by the Provider, by reason of the provision of the Services provided hereunder. The Recipient shall not remove or alter any copyright, trademark, confidentiality or other proprietary notices that appear on any intellectual property owned or licensed by the Provider, and the Recipient shall not reproduce any such notices on any and all copies thereof. The Recipient shall not attempt to decompile, translate, reverse engineer or make excessive copies of any intellectual property owned or licensed by the Provider, and the Recipient shall promptly notify the Provider of any such attempt, regardless of whether by the Recipient or any Third Party, of which the Recipient becomes aware.

Section 8.03 Force Majeure . No Party shall be deemed in default of this Agreement for failure to fulfill any obligation so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay unless this Agreement has previously been terminated under Article V or under this Section 8.03 . A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide Notice to the Recipient or the Provider of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable unless this Agreement has previously been terminated under Article V or under this


Section 8.03 . During the period of a Force Majeure, the Recipient shall be (i) relieved of the obligation to pay Charges for such Service(s) throughout the duration of such Force Majeure and (ii) entitled to permanently terminate such Service(s) (and shall be relieved of the obligation to pay Charges for such Service(s) throughout the duration of such Force Majeure) if a Force Majeure shall continue to exist for more than [thirty (30) consecutive days], it being understood that the Recipient shall not be required to provide any advance notice of such termination to the Provider.

Section 8.04 Independent Contractors . The Parties each acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons. The relationships of the Parties hereunder are those of independent contractors and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship. Employees performing services hereunder do so on behalf of, under the direction of, and as employees of, the Provider, and the Recipient shall have no right, power or authority to direct such employees.

Section 8.05 Third Party Beneficiaries . Except as provided in Article VII with respect to any person entitled to indemnification thereunder, the provisions of this Agreement are solely for the benefit of the Parties, their Subsidiaries, their Affiliates, and their permitted successors and assigns, and are not intended to confer upon any other Person except the Parties, their Subsidiaries, their Affiliates and their permitted successors and assigns, any rights or remedies hereunder. There are no other Third Party beneficiaries of this Agreement and this Agreement shall not provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 8.06 Governing Law . This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Tennessee, irrespective of the choice of Laws principles of the State of Tennessee, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

Section 8.07 Dispute Resolution .

(a) In the event of any controversy, dispute or claim (a “ Dispute ”) arising out of or relating to any Party’s rights or obligations under this Agreement (whether arising in contract, tort or otherwise) or calculation or allocation of the costs of any Service, or otherwise arising out of or relating in any way to this Agreement (including the interpretation or validity of this Agreement), such Dispute shall be resolved in accordance with the dispute resolution process referred to in Section 8.01 of the Separation and Distribution Agreement.

(b) In any Dispute regarding the amount of a Charge, if such Dispute is finally resolved pursuant to the dispute resolution process set forth or referred to in Section 8.07(a) and it is determined that the Charge the Provider has invoiced the Recipient, and which the Recipient has paid to the Provider, is greater or less than the amount the Charge should have been, then (i) if it is determined that the Recipient has overpaid the Charge, the Provider shall within five (5) business days after such determination reimburse the Recipient an amount of cash equal to such overpayment, plus the Interest Payment, accruing from the date of payment by the Recipient to the time of reimbursement by the Provider; and (ii) if it is determined that the Recipient has


underpaid the Charge, the Recipient shall within five (5) business days after such determination reimburse the Provider an amount of cash equal to such underpayment, plus the Interest Payment, accruing from the date such payment originally should have been made by the Recipient to the time of payment by the Recipient.

Section 8.08 Specific Performance . Subject to Section 8.07 , in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at Law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Proceeding for specific performance that a remedy at Law would be adequate is waived. Unless otherwise agreed in writing, the Parties shall continue to provide Services and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of Section 8.07 and this Section 8.08 with respect to all matters subject to such Dispute; provided , however , that this obligation shall only exist during the term of this Agreement.

Section 8.09 Interpretation . Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules hereto and thereto) and not to any particular provision of this Agreement. Section and Schedule references are to the Sections and Schedules to this Agreement unless otherwise specified. Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. Unless otherwise specified in a particular case, the word “days” refers to calendar days. References herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified. References to the performance, discharge or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability has terms. If the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

Section 8.10 Headings . The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 8.11 Amendment . No provisions of this Agreement, including any Schedule hereto, shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of each of CHSPSC and QHC. No provisions of this Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party against whom it is sought to be enforced.


Section 8.12 Assignability . This Agreement shall not be assigned without the prior written consent of CHSPSC and QHC, except that:

(a) each Party may assign all of its rights and obligations under this Agreement to any of its Subsidiaries or Affiliates; provided , however , that no such assignment shall release the assigning Party from any Liability under this Agreement; and

(b) in connection with (i) either Party’s divestiture of all or substantially all of its assets to a Third Party or (ii) a Change of Control of either Party, such Party may assign to such Third Party its rights and obligations under this Agreement; provided , however , that (x) no such assignment shall release the assigning Party from any Liability under this Agreement, (y) any and all costs and expenses incurred by either Party in connection with such assignment (including in connection with clause (z) of this proviso) shall be borne solely by the assigning Party, and (z) the Parties shall in good faith negotiate any amendments to this Agreement, including the Schedules to this Agreement, that may be reasonably necessary in order to assign such Services.

Section 8.13 Audit Assistance . Each of the Parties and their respective Subsidiaries and Affiliates are or may be subject to regulation and audit by a Governmental Authority, standards organizations, customers or other parties to contracts with such Parties or their respective Subsidiaries or Affiliates under applicable Law, standards or contract provisions. If a Governmental Authority, standards organization, customer or other party to a contract with a Party or its Subsidiary or Affiliate exercises its right to examine or audit such Party’s or its Subsidiary’s or Affiliate’s books, records, documents or accounting practices and procedures pursuant to such applicable Law, standards or contract provisions, and such examination or audit relates to the Services, then the other Party shall provide, at the sole cost and expense of the requesting Party, all assistance reasonably requested by the Party that is subject to the examination or audit in responding to such examination or audits or requests for information, to the extent that such assistance or information is within the reasonable control of the cooperating Party and is related to the Services.

Section 8.14 Survival of Covenants . Except as expressly set forth in this Agreement, the covenants and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.

Section 8.15 Subsidiaries . CHSPSC shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by a Subsidiary or Affiliate of CHSPSC and QHC shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by a QHC Subsidiary.

Section 8.16 Waivers of Default . Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.


Section 8.17 Notices . All Notices under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a Notice):

If to CHSPSC:

CHSPSC, LLC

4000 Meridian Boulevard

Franklin, Tennessee 37067

Attn: General Counsel

If to QHC:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attn: General Counsel

Either Party may, by Notice to the other Party, change the address to which such Notices are to be given.

Section 8.18 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement.

Section 8.19 Entire Agreement . This Agreement and the exhibits and schedules hereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

Section 8.20 Corporate Power . CHSPSC represents on behalf of itself and, to the extent applicable, each Subsidiary and Affiliate of CHSPSC, and QHC represents on behalf of itself and, to the extent applicable, each QHC Subsidiary, as follows:

(a) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(b) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

Section 8.21 Signatures and Delivery . Each of CHSPSC and QHC acknowledges that it may execute this Agreement by manual, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be


effective as delivery of such executed counterpart of this Agreement. Each of CHSPSC and QHC expressly adopts and confirms a stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind it to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date hereof) and delivered in person, by mail or by courier.

Section 8.22 Severability . In the event that any one or more of the terms or provisions of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement, or the application of such term or provision to Persons or circumstances or in jurisdictions other than those as to which it has been determined to be invalid, illegal or unenforceable, and the Parties shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement which, insofar as practicable, implement the purposes and intent of the Parties. Any term or provision of this Agreement held invalid or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid or unenforceable to the extent consistent with the intent of the Parties as reflected by this Agreement. To the extent permitted by applicable Law, each Party waives any term or provision of Law which renders any term or provision of this Agreement to be invalid, illegal or unenforceable in any respect.

Section 8.23 Further Assurances . Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 8.24 Public Announcements . From and after the Effective Time, the Parties shall consult with each other before issuing, and give each other the opportunity to review and comment upon, that portion of any press release or other public statement that relates to the transactions contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except (a) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system; or (b) as otherwise set forth on Schedule 10.16 to the Separation and Distribution Agreement.

Section 8.25 Mutual Drafting . This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

* * * * *


IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

 

CHSPSC, LLC     QUORUM HEALTH CORPORATION
By:  

/s/ Martin G. Schweinhart

    By:  

/s/ Michael J. Culotta

Name:   Martin G. Schweinhart     Name:   Michael J. Culotta
Title:   Executive Vice President of Administration     Title:   Executive Vice President and Chief Financial Officer

 

Signature Page to Short-Term Transition Services Agreement

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

QUORUM HEALTH CORPORATION

Quorum Health Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:

(1) The name of the Corporation is Quorum Health Corporation.

(2) The Corporation’s original certificate of incorporation was filed with the Secretary of the State of Delaware on July 27, 2015.

(3) This Amended and Restated Certificate of Incorporation, which restates, integrates and further amends the certificate of incorporation of the Corporation, was duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”).

(4) Pursuant to Section 103(d) of the DGCL, this Amended and Restated Certificate of Incorporation shall become effective at 12:01 a.m. (Eastern Time) on April 29, 2016 (the “Effective Time”).

(5) The text of the Amended and Restated Certificate of Incorporation of the Corporation as further amended hereby is restated to read in its entirety as follows:

ARTICLE I

NAME

The name of the Corporation is Quorum Health Corporation (the “Corporation”).

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the registered office of the Corporation in the State of Delaware is 2711 Centerville Rd Suite 400, in the City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at that address is Corporation Service Company.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL.


ARTICLE IV

CAPITAL STOCK

A. Authorized Shares . The total number of all shares of all classes of capital stock which the Corporation shall have the authority to issue is 400,000,000 shares, divided into two classes, of which 300,000,000 shares of par value $0.0001 per share shall be designated Common Stock, and 100,000,000, shares of par value $0.0001 per share shall be designated Preferred Stock.

B. Recapitalization . Upon the effectiveness of this Amended and Restated Certificate of Incorporation, each of the 1,000 shares of Common Stock that are issued and outstanding immediately before such effectiveness shall be reclassified, subdivided and changed into 28,438.547 shares of Common Stock.

C. Common Stock .

1. Dividends . Subject to the preferential rights, if any, of the Preferred Stock, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property, or in shares of Common Stock.

2. Voting Rights . Except as otherwise required by law, or this Amended and Restated Certificate of Incorporation, every holder of Common Stock shall be entitled to one vote on each matter properly submitted to the stockholders of the Corporation for their vote, in person or by proxy, for each share of Common Stock standing in such holder’s name on the books of the Corporation; provided , however , that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Amended and Restated Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock).

D. Preferred Stock .

1. Issuance . The Board of Directors of the Corporation is authorized, subject to limitations prescribed by law, to provide for the issuance of shares of the Preferred Stock of the Corporation from time to time in one or more series, each of which series shall have such distinctive designation or title as shall be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it, all in accordance with the laws of the State of Delaware. The number of authorized shares of Preferred Stock may be increased or

 

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decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Certificate of Designation relating to any series of Preferred Stock.

2. Amendment . Except as may otherwise be required by law or this Amended and Restated Certificate of Incorporation, the terms of any series of Preferred Stock may be amended without consent of the holders of any other series of Preferred Stock or of any class of Common Stock of the Corporation.

ARTICLE V

MEETINGS OF STOCKHOLDERS

A. No Stockholder Action by Written Consent . Unless otherwise provided by statute, any action required to be taken or which may be taken at any annual or special meeting of the stockholders of the Corporation may be taken only upon the voting of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

B. Special Meetings . Special meetings of stockholders, for any purpose or purposes, unless otherwise prescribed by statute may only be called by the Board of Directors, the Chairman of the Board of Directors, if one shall have been elected, or the Chief Executive Officer.

ARTICLE VI

BOARD OF DIRECTORS

The business and affairs of the Corporation shall be managed by and under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or this Amended and Restated Certificate of Incorporation directed or required to be exercised or done by the stockholders.

A. Number of Directors . Except as otherwise fixed by or pursuant to the provisions of this Amended and Restated Certificate of Incorporation relating to the rights of the holders of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the directors then in office, but in no event shall the number of directors be fewer than three. No director need be a stockholder.

B. Term of Office . Each director shall hold office for a term expiring at the next annual meeting of stockholders and until a successor is duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification or removal.

C. Newly-Created Directorships and Vacancies . Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or any other cause shall,

 

3


unless otherwise provided by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, even if less than a quorum is then in office, or by the sole remaining director, and shall not be filled by stockholders. Directors elected to fill a newly created directorship or other vacancies shall hold office until such director’s successor has been duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification or removal.

D. Removal of Directors . Subject to the rights of the holders of any series of Preferred Stock then outstanding, the directors or any director may be removed from office at any time, either with or without cause, at a meeting called for that purpose, and only by the affirmative vote of the holders of at least a majority of the voting power of all issued and outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class.

E. Rights of Holders of Preferred Stock . Notwithstanding the foregoing provisions of this Article VI , whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the rights and preferences of such Preferred Stock as set forth in this Amended and Restated Certificate of Incorporation or in the resolution or resolutions of the Board of Directors relating to the issuance of such Preferred Stock.

F. Written Ballot Not Required . Elections of directors need not be by written ballot unless the By-laws of the Corporation shall otherwise provide.

G. Advance Notice . Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the By-laws of the Corporation.

ARTICLE VII

LIMITATION OF LIABILITY

To the fullest extent permitted under the law of the State of Delaware, including the DGCL, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director. Any amendment to or repeal of this Article VII shall not adversely affect any right or protection of any director of the Corporation with respect to any acts or omissions of such director occurring prior to such amendment or repeal. In the event that the DGCL is hereafter amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be so eliminated or limited to the fullest extent permitted by the DGCL as so amended without further action by either the Board of Directors or the stockholders of the Corporation.

ARTICLE VIII

INDEMNIFICATION

Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any threatened, pending or completed

 

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action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (“Proceeding”), brought by reason of the fact that such person (the “Indemnitee”) is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such Proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as such a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of the State of Delaware in effect on the date hereof, or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against all expense, liability, losses and claims (including attorneys’ fees, judgments, fines, excise taxes under the Employee Retirement Income Security Act of 1974, as amended from time to time, penalties and amounts to be paid in settlement) actually incurred or suffered by such Indemnitee in connection with such Proceeding.

ARTICLE IX

BY-LAWS

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, repeal, alter, amend or rescind the By-laws of the Corporation. In addition, the By-laws of the Corporation may be adopted, repealed, altered, amended or rescinded by the affirmative vote of the holders of at least a majority of the voting power of all of the issued and outstanding shares of the capital stock of the Corporation entitled to vote thereon.

ARTICLE X

AMENDMENTS

The Corporation reserves the right to repeal, alter, amend or rescind any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.

ARTICLE XI

FORUM FOR ADJUDICATION OF DISPUTES

Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within Delaware, or if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware). Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XI .

 

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ARTICLE XII

SEVERABILITY .

If any provision of this Amended and Restated Certificate of Incorporation is held to be illegal, invalid or unenforceable under any present or future law, such provision shall be fully separable, and this Amended and Restated Certificate of Incorporation shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, the remaining provisions of this Amended and Restated Certificate of Incorporation shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Notwithstanding the foregoing, if any provision or provisions of this Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable, but only as applied to any person or entity or specific circumstance, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and the application of such provision to other persons or entities shall not in any way be affected or impaired thereby.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation as of this 29 th day of April, 2016.

 

QUORUM HEALTH CORPORATION
By:  

/s/ Michael J. Culotta

  Name:   Michael J. Culotta
  Title:   Executive Vice President and Chief Financial Officer

[Signature Page to the QHC Amended and Restated Certificate of Incorporation]

Exhibit 3.2

AMENDED AND RESTATED BY-LAWS

OF

QUORUM HEALTH CORPORATION

(As of April 29, 2016)

ARTICLE I

OFFICES

Section 1. Registered Office . The registered office of Quorum Health Corporation (the “Corporation”) within the State of Delaware shall be in the City of Wilmington, County of New Castle.

Section 2. Other Offices . The Corporation may also have an office or offices other than said registered office at such place or places, either within or without the State of Delaware, as the Board of Directors shall from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Place of Meetings . All meetings of the stockholders for the election of directors or for any other purpose shall be held at any such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2. Annual Meetings . Annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver thereof. At such annual meetings, a nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Section 13 of Article II of these Amended and Restated By-laws and (ii) such nomination has not been withdrawn by such stockholder on or before the tenth day before the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. At such annual meetings, the stockholders shall also transact such other business as may properly be brought before the meeting in accordance with these Amended and Restated By-laws.

Section 3. Special Meetings . Special meetings of stockholders, for any purpose or purposes, unless otherwise prescribed by statute may only be called by the Board of Directors, the Chairman of the Board of Directors, if one shall have been elected, or the Chief Executive Officer.


Section 4. Notice of Meetings . Except as otherwise expressly required by statute, notice of each annual and special meeting of stockholders stating the date, place and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the date of the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Subject to the requirements of applicable law, notice may be provided by mail, private carrier, facsimile transmission or other form of wire, wireless or other means of electronic transmission. Subject to the requirements of applicable law, notice provided to a stockholder’s e-mail address as indicated on the records of the Corporation shall be deemed proper notice for any purpose set forth in these By-laws. Notice by mail shall be deemed given at the time when the same shall be deposited in the United States mail, postage prepaid. Notice of any meeting shall not be required to be given to any person who attends such meeting (except when such person attends the meeting in person or by proxy for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened) or who, either before or after the meeting, shall submit a signed written waiver of notice, in person or by proxy. Neither the business to be transacted at, nor the purpose of, an annual or special meeting of stockholders need be specified in any written waiver of notice.

Section 5. Organization . At each meeting of stockholders, the Chairman of the Board, if one shall have been elected, or, in the event of such person’s absence or if one shall not have been elected, the Chief Executive Officer, shall act as chairman of the meeting. The Secretary or, in the event of such person’s absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting, shall act as secretary of the meeting and keep the minutes thereof.

Section 6. Conduct of Business . The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of the meeting shall have the right and authority to convene and to recess and/or adjourn the meeting in accordance with applicable legal requirements, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) rules and procedures for maintaining order at the meeting and the safety of those present; (ii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iii) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (iv) limitations on the time allotted to questions or comments by participants. The chairman of the meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a nomination or matter or business was not properly brought before the meeting and if such chairman should determine, such chairman shall so declare to the meeting and any such nomination or matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

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Section 7. Quorum, Adjournments . The holders of a majority of the voting power of the issued and outstanding shares of capital stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders, except as otherwise provided by statute or by the Amended and Restated Certificate of Incorporation. If, however, such quorum shall not be present or represented by proxy at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented by proxy. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty (30) days, or, if after adjournment a new record date is set, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 8. Voting . Except as otherwise provided by statute or the Amended and Restated Certificate of Incorporation and these Amended and Restated By-laws, each stockholder of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of capital stock of the Corporation standing in such stockholder’s name on the record of stockholders of the Corporation:

(a) on the date fixed pursuant to the provisions of Section 7 of Article V of these Amended and Restated By-laws as the record date for the determination of the stockholders who shall be entitled to notice of and to vote at such meeting; or

(b) if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given, or, if notice is waived, at the close of business on the date next preceding the day on which the meeting is held.

Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for such stockholder by a proxy signed by such stockholder or such stockholder’s attorney-in-fact, or as otherwise authorized in accordance with the Delaware General Corporation Law, but no proxy shall be voted after three (3) years from its date, unless the proxy provides for a longer period. Any such proxy shall be delivered to the secretary of the meeting at or prior to the time designated in the order of business for so delivering such proxies. When a quorum is present at any meeting, the affirmative vote of the holders of a majority of the voting power of the shares of the Corporation which are present in person or represented by proxy at the meeting and entitled to vote thereon, shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Amended and Restated Certificate of Incorporation or of these Amended and Restated By-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by such stockholder’s proxy, if there be such proxy.

 

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Section 9. List of Stockholders Entitled to Vote . At least ten (10) days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder shall be prepared. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, as required by the Delaware General Corporation Law. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

Section 10. Inspectors . The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may appoint one or more inspectors. Each inspector, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of such inspector’s ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be stockholders.

Section 11. No Stockholder Action by Written Consent . Unless otherwise provided by statute or in the Amended and Restated Certificate of Incorporation, any action required to be taken or which may be taken at any annual or special meeting of the stockholders of the Corporation may be taken only upon the voting of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

Section 12. Business at Annual and Special Meetings . No business may be transacted at an annual or special meeting of stockholders other than business that is:

(a) specified in a notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or an authorized committee thereof,

(b) otherwise brought before the meeting by or at the direction of the Board of Directors or an authorized committee thereof, or

(c) otherwise brought before the meeting by a “Noticing Stockholder” who complies with the notice procedures set forth in Section 13 of Article II of these Amended and Restated By-laws.

 

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A “ Noticing Stockholder ” must be either a “Record Holder” or a “Nominee Holder.” A “ Record Holder ” is a stockholder that holds of record stock of the Corporation entitled to vote at the meeting on the business (including any election of a director) to be appropriately conducted at the meeting. A “ Nominee Holder ” is a stockholder that holds such stock through a nominee or “street name” holder of record and can demonstrate to the Corporation such indirect ownership of such stock and such Nominee Holder’s entitlement to vote such stock on such business. Clause (c) of Section 12 of this Article II shall be the exclusive means for a Noticing Stockholder to make director nominations or submit other business before a meeting of stockholders (other than proposals brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and included in the Corporation’s notice of meeting, which proposals are not governed by these Amended and Restated By-laws). Notwithstanding anything in these Amended and Restated By-laws to the contrary, no business shall be conducted at a stockholders’ meeting except in accordance with the procedures set forth in Section 12 of this Article II of these Amended and Restated By-laws and Section 13 of this Article II .

Section 13. Notice of Stockholder Business to be Conducted at a Meeting of Stockholders . In order for a Noticing Stockholder to properly bring any item of business before a meeting of stockholders, any such business must be a proper matter for stockholder action, and the Noticing Stockholder must give timely notice thereof in writing to the Secretary of the Corporation in compliance with the requirements of this Section 13 of Article II . This Section 13 of Article II shall constitute an “advance notice provision” for annual meetings for purposes of Rule 14a-4(c)(1) under the Exchange Act.

(a) To be timely, a Noticing Stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation:

(i) in the case of an annual meeting of stockholders, not earlier than the close of business on the one hundred twentieth (120 th ) day and not later than the close of business on the ninetieth (90 th ) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one-hundred twentieth (120 th ) day prior to the date of such annual meeting and not later than the close of business on the later of the ninetieth (90 th ) day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than one hundred (100) days prior to the date of such annual meeting, the tenth (10 th ) day following the day on which public announcement of the date of such meeting is first made by the Corporation; and

(ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the date on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. In no event shall any adjournment or (to the extent permitted by applicable law) postponement of an annual meeting, or the announcement thereof, commence a new time period for the giving of a stockholder’s notice as described above.

 

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(b) To be in proper form, whether in regard to a nominee for election to the Board of Directors or other business, a Noticing Stockholder’s notice to the Secretary must:

(i) Set forth, as to the Noticing Stockholder and, if the Noticing Stockholder holds for the benefit of another, the beneficial owner on whose behalf the nomination or proposal is made, the following information together with a representation as to the accuracy of the information:

A. the name and address of the Noticing Stockholder as they appear on the Corporation’s books and, if the Noticing Stockholder holds for the benefit of another, the name and address of such beneficial owner (collectively “ Holder ”) and any Stockholder Associated Person thereof covered by clauses (B) – (D) below,

B. the class or series and number of shares of the Corporation that are, directly or indirectly, owned beneficially and/or of record by the Holder and any Stockholder Associated Person thereof, and the date such ownership was acquired,

C. any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not the instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “ Derivative Instrument ”) that is directly or indirectly owned beneficially by the Holder and any Stockholder Associated Person thereof, and any other direct or indirect opportunity held by such person to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation,

D. any proxy, contract, arrangement, understanding, or relationship pursuant to which the Holder or any Stockholder Associated Person thereof has a right to vote or has granted a right to vote any shares of any security of the Corporation,

E. any short interest held by the Holder or any Stockholder Associated Person in any security of the Corporation (for purposes of these Amended and Restated By-laws a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security),

F. any rights to dividends on the shares of the Corporation owned beneficially by the Holder or any Stockholder Associated Person that are separated or separable from the underlying shares of the Corporation,

G. any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or limited liability company or similar entity in which the Holder or any Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, is the manager, managing member or directly or indirectly beneficially owns an interest in the manager or managing member of a limited liability company or similar entity,

 

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H. any performance-related fees (other than an asset-based fee) that the Holder or any Stockholder Associated Person is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any,

I. any arrangements, rights, or other interests described in Sections 13(b)(i)(C)-(H)  of Article II held by members of such Holder’s immediate family sharing the same household,

J. a representation that the Noticing Stockholder or a Qualified Representative (as defined below) intends to appear in person or by proxy at the meeting to nominate the person(s) named or propose the business specified in the notice and whether or not such stockholder intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding shares required to approve the nomination(s) or the business proposed and/or otherwise to solicit proxies from stockholders in support of the nomination(s) or the business proposed,

K. a certification regarding whether or not such Holder and Stockholder Associated Persons have complied with all applicable federal, state and other legal requirements in connection with such Holder’s and/or Stockholder Associated Persons’ acquisition of shares or other securities of the Corporation and/or such Holder’s and/or Stockholder Associated Persons’ acts or omissions as a stockholder of the Corporation,

L. any other information relating to the Holder or any Stockholder Associated Person thereof that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder, and

M. any other information as reasonably requested by the Corporation.

(ii) If the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, the notice must set forth:

A. a brief description of the business desired to be brought before the meeting (including the text of any resolutions proposed for consideration), the reasons for conducting such business at the meeting, and any material direct or indirect interest of the Holder or any Stockholder Associated Person in such business, and

B. a description of all agreements, arrangements and understandings, direct and indirect, between the Holder or any Stockholder Associated Person, and any other person or persons (including their names) in connection with the proposal of such business by the Holder.

 

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(iii) Set forth, as to each person, if any, whom the Holder proposes to nominate for election or reelection to the Board of Directors:

A. all information relating to the nominee (including, without limitation, the nominee’s name, age, business and residence address and principal occupation or employment and the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the nominee) that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected),

B. a description of any agreements, arrangements and understandings between or among such Holder or any Stockholder Associated Person, on the one hand, and any other persons (including any Stockholder Associated Person), on the other hand, in connection with the nomination of such person for election as a director, and

C. a description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the Holder and respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the Holder making the nomination or on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of Item 404 and the nominee were a director or executive officer of such registrant.

(iv) With respect to each nominee for election or reelection to the Board of Directors, the Noticing Stockholder shall include a completed and signed questionnaire, representation, and agreement required by Section 14 of Article II of these Amended and Restated By-laws. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of the proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of the nominee.

(v) A Noticing Stockholder providing notice of a nomination or business proposed to be brought before a meeting in accordance with this Section 13 of Article II shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 13 of Article II shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary of the Corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than five (5) business days prior to the date for the meeting, or if practicable (or, if not practicable, on the first practicable date prior to), any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

 

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(c) Notwithstanding anything contained herein to the contrary, if a Noticing Stockholder (or a Qualified Representative thereof) does not appear at a meeting of stockholders of the Corporation to present a nomination or business proposed pursuant to this Section 13 of Article II , or any Rule 14a-8 stockholder proposal, as applicable, unless otherwise determined by the Corporation in advance of such meeting, the Chairman of the meeting may determine and declare that such nomination shall be disregarded and such proposed business or Rule 14a-8 proposal shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 13(c) of Article II , to be considered a “Qualified Representative” of the Noticing Stockholder, a person must be a duly authorized officer or other agent of such Noticing Stockholder, or must be authorized by a writing executed by such Noticing Stockholder or an electronic transmission delivered by such Noticing Stockholder to act for such Noticing Stockholder as proxy at the meeting of stockholders in accordance with applicable law, and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(d) Notwithstanding anything in Section 13(a) of Article II to the contrary, if the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by these Amended and Restated By-laws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which the public announcement naming all nominees or specifying the size of the increased Board of Directors is first made by the Corporation.

(e) For purposes of this Section 13 of Article II of these Amended and Restated By-laws, “ public announcement ” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act and the rules and regulations thereunder. As used in these Amended and Restated By-laws, the term “ Stockholder Associated Person ” means, with respect to any stockholder, (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person controlling, controlled by or under common control with any stockholder, or any Stockholder Associated Person identified in clauses (i) or (ii) above. An “ affiliate ” is any “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 ” is defined as the “possession, direct or indirect, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract, or otherwise.” The term “ associate ” of a person means: (i) any corporation or organization (other than the registrant or a majority-owned subsidiary of the registrant) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities, (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of the registrant or any of its parents or subsidiaries.

 

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(f) Only those persons who are nominated in accordance with the procedures set forth in these Amended and Restated By-laws shall be eligible to serve as directors. Only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in these Amended and Restated By-laws. If (i) any information required to be provided pursuant to this Section 13 or Section 14 of Article II , in connection with any proposed director nomination or business (the “ Required Information ”), is not provided, (ii) any Required Information is inaccurate in any material respect, or (iii) the Noticing Stockholder and/or any Stockholder Associated Person thereof have not acted in accordance with the representations made in the Required Information, then, as applicable, the nomination proposed by any such Noticing Stockholder shall be deemed not to have been provided in accordance with these Amended and Restated By-Laws, and the business proposed by any such Noticing Stockholder shall be deemed not to properly before the meeting in accordance with these Amended and Restated By-laws. Except as otherwise provided by law, the Amended and Restated Certificate of Incorporation, or these Amended and Restated By-laws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in compliance with the procedures set forth in these Amended and Restated By-laws and, if he should determine that any proposed nomination or business is not in compliance with these Amended and Restated By-laws, he shall so declare to the meeting and any such nomination or business not properly brought before the meeting shall be disregarded or not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

(g) Notwithstanding the foregoing provisions of these Amended and Restated By-laws, a Noticing Stockholder also shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these Amended and Restated By-laws; provided, however, that any references in these Amended and Restated By-laws to the Exchange Act or the rules thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 12 or this Section 13 of Article II .

(h) Nothing in these Amended and Restated By-laws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act. Notice of stockholder proposals that are, or that the Noticing Stockholder intends to be, governed by Rule 14a-8 under the Exchange Act are not governed by these Amended and Restated By-laws.

 

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Section 14. Submission of Questionnaire, Representation and Agreement . To be eligible to be a nominee for election or reelection as a director of the Corporation by a Holder, a person must complete and deliver (in accordance with the time periods prescribed for delivery of notice under Section 13 of Article II of these Amended and Restated By-laws) to the Secretary at the principal executive offices of the Corporation a written questionnaire providing the information requested about the background and qualifications of such person and the background of any other person or entity on whose behalf the nomination is being made and a written representation and agreement (the questionnaire, representation, and agreement to be in the form provided by the Secretary upon request) that such person:

(a) is not and will not become a party to:

(i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the person, if elected as director of the Corporation, will act or vote on any issue or question (a “ Voting Commitment ”) that has not been disclosed to the Corporation, or

(ii) any Voting Commitment that could limit or interfere with the person’s ability to comply, if elected as a director of the Corporation, with the person’s fiduciary duties under applicable law, and

(b) in the person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as director of the Corporation, with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines of the Corporation, including the Corporation’s policy on director resignations following such person’s failure to receive the required vote for re-election at any future meeting at which such person would face re-election, as set forth in the Corporation’s Governance Guidelines.

ARTICLE III

DIRECTORS

Section 1. Place of Meetings . Meetings of the Board of Directors shall be held at such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be specified in the notice of any such meeting.

Section 2. Annual Meeting . The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such other time or place (within or without the State of Delaware) as shall be specified in a notice thereof given as hereinafter provided in Section 5 of this Article III .

Section 3. Regular Meetings . Regular meetings of the Board of Directors shall be held at such time and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day.

Section 4. Special Meetings . Special meetings of the Board of Directors may be called by the Chairman of the Board, if one shall have been elected, or by two or more directors of the Corporation or by the Chief Executive Officer.

 

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Section 5. Notice of Meetings . Notice of regular meetings of the Board of Directors need not be given except as otherwise required by law or these Amended and Restated By-laws. Notice of each special meeting of the Board of Directors for which notice shall be required, shall be given by the Secretary as hereinafter provided in this Section 5 , in which notice shall be stated the time and place of the meeting. Except as otherwise required by these Amended and Restated By-laws, such notice need not state the purposes of such meeting. Notice of any special meeting, and of any regular or annual meeting for which notice is required, shall be given to each director at least (a) four (4) hours before the meeting if by telephone or by being personally delivered or sent by telex, telecopy, electronic transmission or similar means or (b) two (2) days before the meeting if delivered by mail to the director’s residence or usual place of business. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, or similar means. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Any director may waive notice of any meeting by a writing signed by the director entitled to the notice and filed with the minutes or corporate records. The attendance at or participation of the director at a meeting shall constitute waiver of notice of such meeting, unless the director at the beginning of the meeting or promptly upon such director’s arrival objects to holding the meeting or transacting business at the meeting.

Section 6. Organization . At each meeting of the Board of Directors, the Chairman of the Board, if one shall have been elected, or, in the absence of the Chairman of the Board or if one shall not have been elected, the Chief Executive Officer (or, in the Chief Executive Officer’s absence, another director chosen by a majority of the directors present) shall act as chairman of the meeting and preside thereat. The Secretary or, in such person’s absence, any person appointed by the chairman shall act as secretary of the meeting and keep the minutes thereof.

Section 7. Quorum and Manner of Acting . A majority of the entire Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except as otherwise expressly required by statute or the Amended and Restated Certificate of Incorporation or these Amended and Restated By-laws, the affirmative vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to all of the directors unless such time and place were announced at the meeting at which the adjournment was taken, in which case such notice need only be given to the directors who were not present thereat. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. The directors shall act only as a Board and the individual directors shall have no power as such.

Section 8. Action by Consent . Unless restricted by the Amended and Restated Certificate of Incorporation, any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission(s), and the writing or writings or electronic transmission(s) are filed with the minutes of the proceedings of the Board of Directors or such committee, as the case may be.

 

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Section 9. Telephonic Meeting . Unless restricted by the Amended and Restated Certificate of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting.

Section 10. Committees . The Board of Directors (i) may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, including an executive committee, each committee to consist of one or more of the directors of the Corporation, and (ii) shall during such period of time as any securities of the Corporation are listed on the New York Stock Exchange (the “NYSE”), by resolution passed by a majority of the entire Board of Directors, designate all committees required by the rules and regulations of the NYSE. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member, subject to any applicable requirements of the NYSE.

Each such committee, to the extent provided in the resolution creating it, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which require it; provided , however , that no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval or (b) adopting, amending or repealing any by-law of the Corporation. Each such committee shall serve at the pleasure of the Board of Directors and have such name as may be determined from time to time by resolution adopted by the Board of Directors or as required by the rules and regulations of the NYSE, if applicable. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors.

Section 11. Fees and Compensation . Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board of Directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 12. Resignations . Any director of the Corporation may resign at any time by giving written notice of such director’s resignation to the Corporation. Any such resignation shall take effect at the time, or upon the happening of an event, specified therein or, if the time or happening of an event when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

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ARTICLE IV

OFFICERS

Section 1. General . The executive officers of the Corporation shall be chosen by the Board of Directors and shall include a Chief Executive Officer, one or more Presidents, one or more Vice Presidents (including Senior, Executive, Group or other classifications of Vice Presidents), a Treasurer and a Secretary. The Board of Directors, in its discretion, may also choose as an officer of the Corporation the Chairman of the Board and any Vice Chairman of the Board. The Chief Executive Officer shall appoint other officers (including, one or more Presidents, Vice Presidents, Assistant Secretaries and one or more Assistant Treasurers) as may be necessary or desirable. The officers of the Corporation shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors or, to the extent appointed by the Chief Executive Officer, the Chief Executive Officer. The Board of Directors may also delegate to any officer of the Corporation the power to appoint such other officers and to proscribe their respective duties and powers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Amended and Restated Certificate of Incorporation or these Amended and Restated By-laws.

Section 2. Term . All officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors, except that any vacancy in any office that has been appointed by the Chief Executive Officer or any other officer of the Corporation may be filled by the person who has the authority to fill that office.

Section 3. Resignations . Any officer of the Corporation may resign at any time by giving written notice of such officer’s resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective.

Section 4. Removal . Any officer may be removed at any time by the Board of Directors with or without cause, except that any officer appointed by the Chief Executive Officer or any other officer of the Corporation may also be removed at any time by the Chief Executive Officer or any other officer who had appointed that officer with or without cause.

Section 5. Compensation . Compensation of all executive officers shall be approved by the Board of Directors, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the Corporation; provided , however , that compensation of some or all executive officers may be determined by a committee established for that purpose if so authorized by the Board of Directors or as required by applicable law or regulation, including any exchange or market upon which the Corporation’s securities are then listed for trading or quotation.

Section 6. Chairman of the Board . The Chairman of the Board, if one shall have been elected, shall be a member of the Board, an officer of the Corporation (if the Board of Directors, in its discretion, chooses to make the Chairman of the Board an officer of the Corporation) and, if present, shall preside at each meeting of the Board of Directors or the stockholders. The

 

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Chairman of the Board shall advise and counsel with the Chief Executive Officer, and in the Chief Executive Officer’s absence with other executives of the Corporation, and shall perform such other duties as may from time to time be assigned to the Chairman of the Board by the Board of Directors.

ARTICLE V

STOCK CERTIFICATES AND THEIR TRANSFER

Section 1. Stock Certificates . The shares of capital stock of the Corporation may be uncertificated or may be represented by certificates. The Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s capital stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares registered in certificate form.

Section 2. Facsimile Signatures . Any or all of the signatures on a certificate may be a facsimile, engraved or printed. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person was such officer, transfer agent or registrar at the date of issue.

Section 3. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares . The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed. When authorizing such issuance, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or the owner’s legal representative, to give the Corporation a bond in such sum as it may direct sufficient to indemnify it against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate, as applicable.

Section 4. Transfers of Stock . The capital stock of the Corporation shall be transferred only upon the books of the Corporation either (a) if such shares are certificated, by the surrender to the Corporation or its transfer agent of the old stock certificate therefor properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, or (b) if such shares are uncertificated, upon proper instructions from the holder thereof (or such holder’s attorney lawfully constituted in writing), in each case with such proof of the authenticity of instruction and/or signature as the Corporation or its transfer agent may reasonably require. Prior to due presentment for registration of transfer of a security (whether certificated or uncertificated), the Corporation shall treat the registered owner of such security as the person exclusively entitled to vote, receive notifications and dividends, and otherwise to exercise all the rights and powers of such security.Whenever any transfer of

 

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stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificates are presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so.

Section 5. Transfer Agents and Registrars . The Board of Directors may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars.

Section 6. Regulations . The Board of Directors may make such additional rules and regulations, not inconsistent with these Amended and Restated By-laws, as it may deem expedient concerning the issue, transfer and registration of stock certificates or uncertificated shares of the Corporation.

Section 7. Fixing the Record Date . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board of Directors may fix a new record date for the adjourned meeting.

Section 8. Registered Stockholders . The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 1. General . Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any threatened, pending or completed action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (“ Proceeding ”) brought by reason of the fact that such person (the “ Indemnitee ”) is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such Proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as such a director or officer, shall be indemnified and held harmless by the Corporation (unless such Proceeding was brought by or in the right of the Indemnitee without the prior written approval of the Board of Directors) to the fullest extent permitted by the laws of the State of Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification,

 

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against all expenses, liabilities, losses and claims (including attorneys’ fees, judgments, fines, excise taxes under the Employee Retirement Income Security Act of 1974, as amended from time to time, penalties and amounts to be paid in settlement) actually incurred or suffered by such Indemnitee in connection with such Proceeding (collectively, “ Losses ”). Without diminishing the scope of the indemnification provided by this Section 1 , the rights of indemnification of an Indemnitee provided hereunder shall include but not be limited to those rights set forth in this Article VI .

Section 2. Derivative Actions . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any Proceeding brought by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person (also an “ Indemnitee ”) is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, against Losses actually incurred or suffered by the Indemnitee in connection with the defense or settlement of such action or suit if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, provided that no indemnification shall be made in respect of any claim, issue or matter as to which Delaware law expressly prohibits such indemnification by reason of an adjudication of liability of the Indemnitee unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 3. Indemnification in Certain Cases . Notwithstanding any other provision of this Article VI , to the extent that an Indemnitee has been wholly successful on the merits or otherwise in any Proceeding referred to in Sections 1 or 2 of this Article VI on any claim, issue or matter therein, the Indemnitee shall be indemnified against Losses actually incurred or suffered by the Indemnitee in connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Corporation shall indemnify the Indemnitee, against Losses actually incurred or suffered by the Indemnitee in connection with each successfully resolved claim, issue or matter. In any review or Proceeding to determine such extent of indemnification, the Corporation shall bear the burden of proving any lack of success and which amounts sought in indemnity are allocable to claims, issues or matters which were not successfully resolved. For purposes of this Section 3 and without limitation, the termination of any such claim, issue or matter by dismissal with or without prejudice shall be deemed to be a successful resolution as to such claim, issue or matter.

Section 4. Procedure .

(a) Any indemnification under Sections 1 and 2 of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Indemnitee is proper (except that the right of the Indemnitee to receive payments pursuant to Section 5 of this Article VI shall not be subject to this Section 4 ) in the circumstances because the Indemnitee has met the applicable standard of

 

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conduct. Such determination shall be made promptly, but in no event later than sixty (60) days after receipt by the Corporation of the Indemnitee’s written request for indemnification. The Secretary of the Corporation shall, promptly upon receipt of the Indemnitee’s request for indemnification, advise the Board of Directors that the Indemnitee has made such request for indemnification.

(b) The entitlement of the Indemnitee to indemnification shall be determined, with respect to a person who is a director or officer at the time of such determination, in the specific case (1) by the Board of Directors by a majority vote of the directors who are not parties to such Proceeding (the “ Disinterested Directors ”), even though less than a quorum, or (2) by a committee of the Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum, or (3) if there are no Disinterested Directors, or if such Disinterested Directors so direct, by independent legal counsel, or (4) by the stockholders. The entitlement of the Indemnitee to indemnification shall be determined with respect to any person who is not a director or officer at the time of such determination by any means reasonably determined by the Corporation.

(c) In the event the determination of entitlement is to be made by independent legal counsel, such independent legal counsel shall be selected by the Board of Directors and approved by the Indemnitee. Upon failure of the Board of Directors to so select such independent legal counsel or upon failure of the Indemnitee to so approve, such independent legal counsel shall be selected by the American Arbitration Association in New York, New York or such other person as such Association shall designate to make such selection.

(d) If a determination is made pursuant to Section 4(b) of this Article VI that the Indemnitee is not entitled to indemnification to the full extent of the Indemnitee’s request, the Indemnitee shall have the right to seek entitlement to indemnification in accordance with the procedures set forth in Section 6 of this Article VI .

(e) If a determination pursuant to Section 4(b) of this Article VI with respect to entitlement to indemnification shall not have been made within sixty (60) days after receipt by the Corporation of such request, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be absolutely entitled to such indemnification, absent (i) misrepresentation by the Indemnitee of a material fact in the request for indemnification or (ii) a final judicial determination that all or any part of such indemnification is expressly prohibited by law.

(f) The termination of any proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, adversely affect the rights of the Indemnitee to indemnification hereunder except as may be specifically provided herein, or create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation or create a presumption that (with respect to any criminal action or proceeding) the Indemnitee had reasonable cause to believe that the Indemnitee’s conduct was unlawful.

(g) For purposes of any determination of good faith hereunder, the Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s action is based on the records or

 

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books of account of the Corporation or an affiliate, including financial statements, or on information supplied to the Indemnitee by the officers of the Corporation or an affiliate in the course of their duties, or on the advice of legal counsel for the Corporation or an affiliate or on information or records given or reports made to the Corporation or an affiliate by an independent certified public accountant or by an appraiser or other expert selected with reasonable care to the Corporation or an affiliate. The Corporation shall have the burden of establishing the absence of good faith. The provisions of this Section 4(g) of this Article VI shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in these Amended and Restated By-laws.

(h) The knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Corporation or an affiliate shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under these Amended and Restated By-laws.

Section 5. Advances for Expenses and Costs . All expenses (including attorneys fees) incurred by or on behalf of the Indemnitee (or reasonably expected by the Indemnitee to be incurred by the Indemnitee within three months) in connection with any Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding within twenty (20) days after the receipt by the Corporation of a statement or statements from the Indemnitee requesting from time to time such advance or advances whether or not a determination to indemnify has been made under Section 4 of this Article VI . The Indemnitee’s entitlement to such advancement of expenses shall include those incurred in connection with any Proceeding by the Indemnitee seeking an adjudication or award in arbitration pursuant to these Amended and Restated By-laws. The financial ability of an Indemnitee to repay an advance shall not be a prerequisite to the making of such advance. Such statement or statements shall reasonably evidence such expenses incurred (or reasonably expected to be incurred) by the Indemnitee in connection therewith and shall include or be accompanied by a written undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified therefor pursuant to the terms of this Article VI .

Section 6. Remedies in Cases of Determination not to Indemnify or to Advance Expenses .

(a) In the event that (i) a determination is made that the Indemnitee is not entitled to indemnification hereunder, (ii) advances are not made pursuant to Section 5 of this Article VI or (iii) payment has not been timely made following a determination of entitlement to indemnification pursuant to Section 4 of this Article VI , the Indemnitee shall be entitled to seek a final adjudication either through an arbitration proceeding or in an appropriate court of the State of Delaware or any other court of competent jurisdiction of the Indemnitee’s entitlement to such indemnification or advance.

(b) In the event a determination has been made in accordance with the procedures set forth in Section 4 of this Article VI , in whole or in part, that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration referred to in paragraph (a) of this Section 6 shall be de novo and the Indemnitee shall not be prejudiced by reason of any such prior determination that the Indemnitee is not entitled to indemnification, and the Corporation shall bear the burdens of proof specified in Sections 3 and 4 of this Article VI in such proceeding.

 

19


(c) If a determination is made or deemed to have been made pursuant to the terms of Sections 4 or 6 of this Article VI that the Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding or arbitration in the absence of (i) a misrepresentation of a material fact by the Indemnitee or (ii) a final judicial determination that all or any part of such indemnification is expressly prohibited by law.

(d) To the extent deemed appropriate by the court, interest shall be paid by the Corporation to the Indemnitee at a reasonable interest rate for amounts which the Corporation indemnifies or is obliged to indemnify the Indemnitee for the period commencing with the date on which the Indemnitee requested indemnification (or reimbursement or advancement of expenses) and ending with the date on which such payment is made to the Indemnitee by the Corporation.

Section 7. Rights Non-Exclusive . The indemnification and advancement of expenses provided by, or granted pursuant to, the other Sections of this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

Section 8. Insurance . The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI .

Section 9. Definition of Corporation . For purposes of this Article VI , references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, shall stand in the same position under this Article VI with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

Section 10. Other Definitions . For purposes of this Article VI , references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a

 

20


director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VI .

Section 11. Survival of Rights . The indemnification and advancement of expenses provided by, or granted pursuant to this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. No amendment, alteration, rescission or replacement of these Amended and Restated By-laws or any provision hereof shall be effective as to an Indemnitee with respect to any action taken or omitted by such Indemnitee in Indemnitee’s position with the Corporation or any other entity which the Indemnitee is or was serving at the request of the Corporation prior to such amendment, alteration, rescission or replacement.

Section 12. Indemnification of Employees and Agents of the Corporation . The Corporation may, by action of the Board of Directors from time to time, grant rights to indemnification and advancement of expenses to employees and agents of the Corporation with the same scope and effect as the provisions of this Article VI with respect to the indemnification of directors and officers of the Corporation.

Section 13. Savings Clause . If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person entitled to indemnification under the first paragraph of this Article VI as to all losses actually and reasonably incurred or suffered by such person and for which indemnification is available to such person pursuant to this Article VI to the full extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the full extent permitted by applicable law.

ARTICLE VII

GENERAL PROVISIONS

Section 1. Dividends . Subject to the provisions of statute and the Amended and Restated Certificate of Incorporation, dividends upon the shares of capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of stock of the Corporation, unless otherwise provided by statute or the Amended and Restated Certificate of Incorporation.

Section 2. Reserves . Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserve in the manner in which it was created.

 

21


Section 3. Seal . The seal of the Corporation shall be in such form as shall be approved by the Board of Directors.

Section 4. Fiscal Year . The fiscal year of the Corporation shall be the calendar year and may be changed by resolution of the Board of Directors.

Section 5. Checks, Notes, Drafts, Etc . All checks, notes, drafts or other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation.

Section 6. Execution of Contracts, Deeds, Etc . The Board of Directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.

Section 7. Voting of Stock in Other Corporations . Unless otherwise provided by resolution of the Board of Directors, the Chairman of the Board or the Chief Executive Officer, from time to time, may (or may appoint one or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other corporation. In the event one or more attorneys or agents are appointed, the Chairman of the Board or the Chief Executive Officer may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent. The Chairman of the Board or the Chief Executive Officer may, or may instruct the attorneys or agents appointed to, execute or cause to be executed in the name and on behalf of the Corporation and under its seal or otherwise, such written proxies, consents, waivers or other instruments as may be necessary or proper in the circumstances.

ARTICLE VIII

FORUM FOR ADJUDICATION OF DISPUTES

Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within Delaware, or if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware). Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VIII .

 

22


ARTICLE IX

AMENDMENTS

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, repeal, alter, amend or rescind the By-laws of the Corporation. In addition, the By-laws of the Corporation may be adopted, repealed, altered, amended or rescinded by the affirmative vote of the holders of at least a majority of the voting power of all of the issued and outstanding shares of the capital stock of the Corporation entitled to vote thereon.

ARTICLE X

SEVERABILITY

If any provision of these Amended and Restated By-Laws is held to be illegal, invalid or unenforceable under any present or future law, such provision shall be fully separable, and these Amended and Restated By-Laws shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, the remaining provisions of these Amended and Restated By-Laws shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Notwithstanding the foregoing, if any provision or provisions of these Amended and Restated By-Laws shall be held to be invalid, illegal or unenforceable, but only as applied to any person or entity or specific circumstance, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and the application of such provision to other persons or entities shall not in any way be affected or impaired thereby.

 

23

Exhibit 4.1

Supplemental Indenture

SUPPLEMENTAL INDENTURE, (this “ Supplemental Indenture ”) dated as of April 29, 2016, by and among Quorum Health Corporation, a Delaware corporation (“Issuer”), the parties that are signatories hereto as Guarantors (each a “ Guaranteeing Subsidiary ”) and Regions Bank, as Trustee under the Indenture referred to below.

W I T N E S S E T H :

WHEREAS, each of the Issuer, the Guarantors and the Trustee have heretofore executed and delivered an indenture dated as of April 22, 2016 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance on such date of an aggregate principal amount of $400,000,000 of 11.625% Senior Notes due 2023 (the “ Notes ”) of the Issuer;

WHEREAS, the Indenture provides that the Guaranteeing Subsidiaries shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiaries shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”), each on the terms and conditions set forth herein; and

WHEREAS, pursuant to Section 9.1 of the Indenture, the Issuer, any Guarantor and the Trustee are authorized to execute and deliver this Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Guaranteeing Subsidiaries and the Trustee mutually covenant and agree for the benefit of the Trustee and the Holders of the Notes as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Defined Terms . As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

SECTION 2.1. Agreement to be Bound . Each of the Guaranteeing Subsidiaries hereby becomes a party to the Indenture as a “Guarantor” and as such will have all of the rights and be subject to all of the obligations and agreements of a “Guarantor” under the Indenture.

SECTION 2.2. Guarantee . Each of the Guaranteeing Subsidiaries agrees, on a joint and several basis with all the existing Guarantors, to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Guaranteed Obligations pursuant to Article X of the Indenture as and to the extent provided for therein.

ARTICLE III

MISCELLANEOUS

SECTION 3.1. Notices . All notices and other communications to the Guarantors shall be given as provided in the Indenture.

 

1


SECTION 3.2. Merger and Consolidation . Each Guaranteeing Subsidiary shall not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into, another Person (other than the Issuer or any Restricted Subsidiary that is a Guarantor or becomes a Guarantor concurrently with the transaction) except in accordance with Section 4.1(e) of the Indenture.

SECTION 3.3. Release of Guarantee . The Guarantees of the Notes hereunder may be released in accordance with Section 10.2 of the Indenture.

SECTION 3.4. Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.

SECTION 3.5. Governing Law . This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 3.6. Severability . In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.7. Benefits Acknowledged . Each Guaranteeing Subsidiary’s Guarantee of the Notes is subject to the terms and conditions set forth in the Indenture. Each Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to its Guarantee of the Notes are knowingly made in contemplation of such benefits.

SECTION 3.8. Ratification of Indenture; Supplemental Indentures Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

SECTION 3.9. The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

SECTION 3.10. Counterparts . The parties hereto may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or other electronic transmission shall be deemed to be their original signatures for all purposes.

SECTION 3.11. Execution and Delivery . Each Guaranteeing Subsidiary agrees that its Guarantee of the Notes shall remain in full force and effect notwithstanding any absence on each Note of a notation of any such Guarantee of the Notes.

SECTION 3.12. Headings . The headings of the Articles and the Sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

 

2


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

 

By:  

/s/ Michael J. Culotta

Name:   Michael J. Culotta
Title:   President
  Acting on behalf of each of the Guarantors set forth below

 

Anna Hospital Corporation    Massillon Community Health System LLC
Big Bend Hospital Corporation    Massillon Health System LLC
Big Spring Hospital Corporation    Massillon Holdings, LLC
Blue Island Hospital Company, LLC    McKenzie Tennessee Hospital Company, LLC
Blue Island Illinois Holdings, LLC    MMC of Nevada, LLC
Blue Ridge Georgia Holdings, LLC    Monroe HMA, LLC
Centre Hospital Corporation    MWMC Holdings, LLC
Clinton Hospital Corporation    National Healthcare of Mt. Vernon, Inc.
CSRA Holdings, LLC    Phillips Hospital Corporation
Deming Hospital Corporation    QHC California Holdings, LLC
DHSC, LLC    QHG of Massillon, Inc.
Evanston Hospital Corporation    Quorum Health Investment Company, LLC
Forrest City Arkansas Hospital Company, LLC    Quorum Health Resources, LLC
Forrest City Hospital Corporation    Red Bud Hospital Corporation
Fort Payne Hospital Corporation    Red Bud Illinois Hospital Company, LLC
Galesburg Hospital Corporation    San Miguel Hospital Corporation
Granite City Hospital Corporation    Sunbury Hospital Company, LLC
Granite City Illinois Hospital Company, LLC    Tooele Hospital Corporation
Greenville Hospital Corporation    Triad of Oregon, LLC
Hamlet H.M.A., LLC    Watsonville Hospital Corporation
Hospital of Barstow, Inc.    Waukegan Hospital Corporation
Hospital of Louisa, Inc.    Waukegan Illinois Hospital Company, LLC
Jackson Hospital Corporation (KY)    Williamston Hospital Corporation
Lexington Hospital Corporation    Winder HMA, LLC
Marion Hospital Corporation   


Acknowledged by:

 

QUORUM HEALTH CORPORATION
By:  

/s/ Thomas D. Miller

Name:   Thomas D. Miller
Title:   President and Chief Executive Officer


REGIONS BANK,
as Trustee
By:  

/s/ Wallace L. Duke, Jr.

Name:   Wallace L. Duke, Jr.
Title:   Vice President

Exhibit 4.2

EXECUTION VERSION

Quorum Health Corporation

$400,000,000 11.625% Senior Notes due 2023

REGISTRATION RIGHTS JOINDER

April 29, 2016

C REDIT S UISSE S ECURITIES (USA) LLC,

  As Representative of the several Initial Purchasers,

         C / O C REDIT S UISSE S ECURITIES (USA) LLC

Eleven Madison Avenue

New York, New York 10010

Ladies and Gentlemen:

Reference is made to the Registration Rights Agreement (the “ Registration Rights Agreement ”) dated April 22, 2016, among Quorum Health Corporation, a Delaware corporation (the “ Issuer ” or the “ Company ”), and the several Initial Purchasers listed on Schedule A thereto (the “ Initial Purchasers ”), for whom Credit Suisse Securities (USA) LLC is acting as representative (in such capacity, the “ Representative ”), concerning certain registration rights provisions with respect to the $400,000,000 aggregate principal amount of 11.625% Senior Notes due 2023 issued by the Issuer. Capitalized terms used and not otherwise defined herein have the meanings ascribed to them in the Registration Rights Agreement. This agreement (this “ Registration Rights Joinder ”) is the “Registration Rights Joinder” referred to in the Registration Rights Agreement.

Each of the Guarantors, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agrees to join, and to become bound by the terms, conditions, covenants, agreements, indemnities and other provisions of, the Registration Rights Agreement as a “Guarantor”, in each case with all attendant rights, duties and obligations stated therein, with the same force and effect as if originally a party thereto, and as if such party executed the Registration Rights Agreement on the date thereof.


If the foregoing is in accordance with your understanding, please indicate your acceptance of this Registration Rights Joinder by signing in the space provided below.

 

        Very truly yours,
    By:    

/s/ Michael J. Culotta

    Name:     Michael J. Culotta
    Title:     President
        Acting on behalf of each of the Guarantors set
        forth below
Anna Hospital Corporation       Massillon Community Health System LLC
Big Bend Hospital Corporation       Massillon Health System LLC
Big Spring Hospital Corporation       Massillon Holdings, LLC
Blue Island Hospital Company, LLC       McKenzie Tennessee Hospital Company, LLC
Blue Island Illinois Holdings, LLC       MMC of Nevada, LLC
Blue Ridge Georgia Holdings, LLC       Monroe HMA, LLC
Centre Hospital Corporation       MWMC Holdings, LLC
Clinton Hospital Corporation       National Healthcare of Mt. Vernon, Inc.
CSRA Holdings, LLC       Phillips Hospital Corporation
Deming Hospital Corporation       QHC California Holdings, LLC
DHSC, LLC       QHG of Massillon, Inc.
Evanston Hospital Corporation       Quorum Health Investment Company, LLC
Forrest City Arkansas Hospital Company, LLC       Quorum Health Resources, LLC
Forrest City Hospital Corporation       Red Bud Hospital Corporation
Fort Payne Hospital Corporation       Red Bud Illinois Hospital Company, LLC
Galesburg Hospital Corporation       San Miguel Hospital Corporation
Granite City Hospital Corporation       Sunbury Hospital Company, LLC
Granite City Illinois Hospital Company, LLC       Tooele Hospital Corporation
Greenville Hospital Corporation       Triad of Oregon, LLC
Hamlet H.M.A., LLC       Watsonville Hospital Corporation
Hospital of Barstow, Inc.       Waukegan Hospital Corporation
Hospital of Louisa, Inc.       Waukegan Illinois Hospital Company, LLC
Jackson Hospital Corporation (KY)       Williamston Hospital Corporation
Lexington Hospital Corporation       Winder HMA, LLC
Marion Hospital Corporation      

 

[Signature Page to the Registration Rights Agreement Joinder]


The foregoing Registration Rights Joinder

is hereby accepted as of the date first above written.

 

C REDIT S UISSE S ECURITIES (USA) LLC,
By:  

/s/ Priyanka Verma

Name:   Priyanka Verma
Title:   Director
 

Acting on behalf of itself and as Representative

of the several Initial Purchasers

 

[Signature Page to the Registration Rights Agreement Joinder]

Exhibit 10.1

 

 

 

CREDIT AGREEMENT

dated as of

April 29, 2016

among

QUORUM HEALTH CORPORATION,

THE LENDERS PARTY HERETO

and

CREDIT SUISSE AG,

as Administrative Agent and Collateral Agent

 

 

CREDIT SUISSE SECURITIES (USA) LLC,

UBS SECURITIES LLC,

CITIGROUP GLOBAL MARKETS, INC.,

JPMORGAN CHASE BANK, N.A.,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

RBC CAPITAL MARKETS 1 ,

SUNTRUST ROBINSON HUMPHREY, INC.

and

WELLS FARGO SECURITIES, LLC,

as Joint Bookrunners and Joint Lead Arrangers

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, DEUTSCHE BANK

SECURITIES INC., FIFTH THIRD BANK and WHITNEY BANK,

as Co-Managers

 

 

 

[CS&M Ref. No. 7865-194]

 

1   RBC Capital Markets is a brand name for the capital markets activities of Royal Bank of Canada and its affiliates.


Reference is made to the ABL Intercreditor Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto, UBS AG, STAMFORD BRANCH, as ABL Agent (as defined therein), and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Term Loan/Cash Flow Revolver Agent (as defined therein). Each Lender hereunder (a) consents to the subordination of Liens provided for in the ABL Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement and (c) authorizes and instructs the Administrative Agent to enter into the ABL Intercreditor Agreement as Term Loan/Cash Flow Revolver Agent and on behalf of such Lender. The foregoing provisions are intended as an inducement to the Lenders under this Agreement to extend credit and such Lenders are intended third party beneficiaries of such provisions and the provisions of the ABL Intercreditor Agreement.


Table of Contents

 

         Page  
ARTICLE I   
Definitions   

SECTION 1.01.

 

Defined Terms

     1   

SECTION 1.02.

 

Terms Generally

     41   

SECTION 1.03.

 

Pro Forma Calculations

     41   

SECTION 1.04.

 

Classification of Loans and Borrowings

     42   

SECTION 1.05.

 

Effectuation of Transactions

     42   

SECTION 1.06.

 

Excluded Swap Obligations

     42   
ARTICLE II   
The Credits   

SECTION 2.01.

 

Commitments

     43   

SECTION 2.02.

 

Loans

     44   

SECTION 2.03.

 

Borrowing Procedure

     46   

SECTION 2.04.

 

Evidence of Debt; Repayment of Loans

     46   

SECTION 2.05.

 

Fees

     47   

SECTION 2.06.

 

Interest on Loans

     48   

SECTION 2.07.

 

Default Interest

     48   

SECTION 2.08.

 

Alternate Rate of Interest

     49   

SECTION 2.09.

 

Termination and Reduction of Commitments

     49   

SECTION 2.10.

 

Conversion and Continuation of Borrowings

     50   

SECTION 2.11.

 

Repayment of Term Borrowings

     51   

SECTION 2.12.

 

Optional Prepayment

     52   

SECTION 2.13.

 

Mandatory Prepayments

     53   

SECTION 2.14.

 

Reserve Requirements; Change in Circumstances

     55   

SECTION 2.15.

 

Change in Legality

     56   

SECTION 2.16.

 

Indemnity

     57   

SECTION 2.17.

 

Pro Rata Treatment

     58   

SECTION 2.18.

 

Sharing of Setoffs

     58   

SECTION 2.19.

 

Payments

     58   

SECTION 2.20.

 

Taxes

     59   

SECTION 2.21.

 

Assignment of Commitments Under Certain Circumstances; Duty to Mitigate

     61   

SECTION 2.22.

 

Reserved

     63   

SECTION 2.23.

 

Letters of Credit

     63   

SECTION 2.24.

 

Incremental Term Loans

     68   

SECTION 2.25.

 

Loan Modification Offers; Replacement Revolving Credit Facility

     70   

SECTION 2.26.

 

Revolving Credit Commitment Increases

     72   

SECTION 2.27.

 

Term Loan Pricing Protection

     74   

SECTION 2.28.

 

Refinancing Term Facilities

     74   


Table of Contents

(continued)

 

         Page  
ARTICLE III   
Representations and Warranties   

SECTION 3.01.

 

Organization; Powers

     76   

SECTION 3.02.

 

Authorization

     76   

SECTION 3.03.

 

Enforceability

     77   

SECTION 3.04.

 

Governmental Approvals

     77   

SECTION 3.05.

 

Financial Statements

     77   

SECTION 3.06.

 

No Material Adverse Change

     77   

SECTION 3.07.

 

Title to Properties; Possession Under Leases

     77   

SECTION 3.08.

 

Subsidiaries

     78   

SECTION 3.09.

 

Litigation; Compliance with Laws

     78   

SECTION 3.10.

 

Agreements

     79   

SECTION 3.11.

 

Federal Reserve Regulations

     79   

SECTION 3.12.

 

Investment Company Act

     79   

SECTION 3.13.

 

Use of Proceeds

     79   

SECTION 3.14.

 

Tax Returns

     79   

SECTION 3.15.

 

No Material Misstatements

     79   

SECTION 3.16.

 

Employee Benefit Plans

     80   

SECTION 3.17.

 

Environmental Matters

     80   

SECTION 3.18.

 

Insurance

     80   

SECTION 3.19.

 

Security Documents

     80   

SECTION 3.20.

 

Location of Real Property and Leased Premises

     81   

SECTION 3.21.

 

Labor Matters

     82   

SECTION 3.22.

 

Solvency

     82   

SECTION 3.23.

 

Sanctions; FCPA

     83   
  ARTICLE IV   
  Conditions of Lending   

SECTION 4.01.

 

All Credit Events

     84   

SECTION 4.02.

 

First Credit Event

     84   
  ARTICLE V   
  Affirmative Covenants   

SECTION 5.01.

 

Existence; Compliance with Laws; Businesses and Properties

     87   

SECTION 5.02.

 

Insurance

     88   

SECTION 5.03.

 

Obligations and Taxes

     88   

SECTION 5.04.

 

Financial Statements, Reports, etc

     88   

SECTION 5.05.

 

Litigation and Other Notices

     90   

SECTION 5.06.

 

Information Regarding Collateral

     91   

 

ii


Table of Contents

(continued)

 

         Page  

SECTION 5.07.

 

Maintaining Records; Access to Properties and Inspections; Maintenance of Ratings

     91   

SECTION 5.08.

 

Use of Proceeds

     91   

SECTION 5.09.

 

Employee Benefits

     92   

SECTION 5.10.

 

Compliance with Environmental Laws

     92   

SECTION 5.11.

 

Reserved

     92   

SECTION 5.12.

 

Further Assurances

     92   

SECTION 5.13.

 

Proceeds of Certain Dispositions

     93   

SECTION 5.14.

 

Operation of Facilities

     94   

SECTION 5.15.

 

Anti-Corruption Laws

     94   
ARTICLE VI   
Negative Covenants   

SECTION 6.01.

 

Indebtedness

     94   

SECTION 6.02.

 

Liens

     98   

SECTION 6.03.

 

Sale and Lease-Back Transactions

     102   

SECTION 6.04.

 

Investments, Loans and Advances

     102   

SECTION 6.05.

 

Mergers, Consolidations, Sales of Assets and Acquisitions

     106   

SECTION 6.06.

 

Restricted Payments; Restrictive Agreements

     108   

SECTION 6.07.

 

Transactions with Affiliates

     111   

SECTION 6.08.

 

Business of the Borrower and Subsidiaries

     111   

SECTION 6.09.

 

Other Indebtedness

     111   

SECTION 6.10.

 

Practice Guarantees

     112   

SECTION 6.11.

 

Reserved

     112   

SECTION 6.12.

 

Reserved

     112   

SECTION 6.13.

 

Maximum Secured Net Leverage Ratio

     112   

SECTION 6.14.

 

Fiscal Year

     112   
ARTICLE VII   
Events of Default   
ARTICLE VIII   
The Administrative Agent and the Collateral Agent   
ARTICLE IX   
Miscellaneous   

SECTION 9.01.

 

Notices

     120   

SECTION 9.02.

 

Survival of Agreement

     122   

SECTION 9.03.

 

Binding Effect

     122   

SECTION 9.04.

 

Successors and Assigns

     122   

SECTION 9.05.

 

Expenses; Indemnity

     127   

 

iii


Table of Contents

(continued)

 

         Page  

SECTION 9.06.

 

Right of Setoff

     129   

SECTION 9.07.

 

Applicable Law

     129   

SECTION 9.08.

 

Waivers; Amendment

     130   

SECTION 9.09.

 

Certain Releases of Guarantees and Security Interests

     131   

SECTION 9.10.

 

Interest Rate Limitation

     133   

SECTION 9.11.

 

Entire Agreement

     133   

SECTION 9.12.

 

WAIVER OF JURY TRIAL

     133   

SECTION 9.13.

 

Severability

     134   

SECTION 9.14.

 

Reserved

     134   

SECTION 9.15.

 

Headings

     134   

SECTION 9.16.

 

Jurisdiction; Consent to Service of Process

     134   

SECTION 9.17.

 

Confidentiality

     135   

SECTION 9.18.

 

USA PATRIOT Act Notice

     135   

SECTION 9.19.

 

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     135   

SECTION 9.20.

 

Pari Passu Obligations and Other Junior Secured Debt

     137   

SECTION 9.21.

 

No Fiduciary Relationship

     139   

 

iv


Table of Contents

(continued)

 

SCHEDULES

    

Schedule 1.01(a)

  -       

Existing Letters of Credit

Schedule 1.01(b)

  -       

Subsidiary Guarantors

Schedule 1.01(c)

  -       

Hospitals

Schedule 1.01(d)

  -       

Mortgaged Properties

Schedule 1.01(e)

  -       

Certain Permitted Joint Ventures

Schedule 1.01(f)

  -       

Certain Subsidiaries

Schedule 1.01(g)

  -       

Non-Significant Subsidiaries

Schedule 2.01

  -       

Initial Lenders and Commitments

Schedule 3.08

  -       

Subsidiaries

Schedule 3.18

  -       

Insurance

Schedule 3.19(a)

  -       

UCC Filing Offices

Schedule 3.19(c)

  -       

Mortgage Filing Offices

Schedule 3.21

  -       

Collective Bargaining Agreements

Schedule 4.02(b)

  -       

Local Counsel

Schedule 6.01(a)

  -       

Existing Indebtedness

Schedule 6.02(a)

  -       

Existing Liens

Schedule 6.04(h)

  -       

Certain Permitted Acquisitions

Schedule 6.05(b)

  -       

Certain Syndication Transactions

Schedule 6.07

  -       

Certain Affiliate Transactions

EXHIBITS     

Exhibit A

  -           

Form of ABL Intercreditor Agreement

Exhibit B

  -           

Form of Administrative Questionnaire

Exhibit C

  -           

Form of Assignment and Acceptance

Exhibit D

  -           

Form of Borrowing Request

Exhibit E

  -           

Form of Guarantee and Collateral Agreement

Exhibit F

  -           

Form of Mortgage

Exhibit G-1

  -           

Form of Opinion of Bass, Berry & Sims PLC

Exhibit G-2

  -           

Form of Opinion of General Counsel of the Borrower

Exhibit G-3

  -           

Form of Local Counsel Opinion

 

v


CREDIT AGREEMENT dated as of April 29, 2016 (this “ Agreement ”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “ Borrower ”), the Lenders (as defined in Article I), and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as administrative agent (in such capacity, the “ Administrative Agent ”) and as collateral agent (in such capacity, the “ Collateral Agent ”) for the Lenders.

PRELIMINARY STATEMENT

Community Health Systems, Inc. (“ CHS ”) shall undertake a series of transactions on or prior to the Closing Date pursuant to which the Equity Interests of certain direct and indirect subsidiaries of CHS shall be contributed or otherwise transferred to the Borrower or its subsidiaries (the “ Contribution ”), and the Equity Interests of the Borrower shall be distributed to the shareholders of CHS (the “ Distribution ”), immediately after which, the Borrower shall constitute a separate public company (collectively, the “ Spin-Off ”).

The Borrower has requested that the Lenders extend credit in the form of (a) Term Loans to the Borrower on the Closing Date, in an aggregate principal amount of $880,000,000, and (b) Revolving Loans to the Borrower after the Closing Date, in an aggregate principal amount of up to $100,000,000 as provided herein and ending on the Revolving Credit Maturity Date. The Borrower has requested that the Issuing Banks issue Letters of Credit to support payment obligations incurred in the ordinary course of business by the Borrower and the Subsidiaries. The proceeds of the Term Loans made on the Closing Date are to be used by the Borrower solely (a) to pay a dividend to CHS in an aggregate amount not to exceed $1,225,000,000.00 (the “ CHS Dividend ”), (b) to pay fees and expenses incurred in connection with the Spin-Off and (c) for working capital and general corporate purposes. The proceeds of the Revolving Loans made after the Closing Date are to be used by the Borrower solely for working capital and general corporate purposes. Letters of Credit will be used for general corporate purposes of the Borrower and the Subsidiaries.

The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01.  Defined Terms . As used in this Agreement, the following terms shall have the meanings specified below:

ABL Facility Credit Agreement ” shall mean (a) the ABL Credit Agreement dated as of the Closing Date, among the Borrower, the lenders from time to time party thereto, and UBS AG, Stamford Branch, as administrative agent and collateral agent, as the same may be amended, restated, amended and restated, supplemented or otherwise


modified from time to time in accordance with this Agreement and the ABL Intercreditor Agreement and (b) one or more loan agreements among the Borrower and other parties from time to time party thereto pursuant to which the Indebtedness under the credit agreement referenced in clause (a) above has been refinanced, repaid, prepaid, repurchased, redeemed, replaced, renewed, refunded on increased in whole or in part in accordance with, and subject to, the provisions of this Agreement (including Section 6.01(y)) and the ABL Intercreditor Agreement.

ABL Facility First Priority Collateral ” shall have the meaning specified in the ABL Intercreditor Agreement.

ABL Facility Loan Documents ” shall mean the “Loan Documents” (or any similar term) under the ABL Facility Credit Agreement.

ABL Facility Loans ” shall mean the “Loans” under the ABL Facility Credit Agreement.

ABL Intercreditor Agreement ” shall mean an Intercreditor Agreement among the Borrower, the other Loan Parties, the Collateral Agent and the collateral agent under the ABL Facility Loan Documents, substantially in the form of Exhibit A.

ABL Lenders ” shall have the meaning assigned to such term in the ABL Intercreditor Agreement.

ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, is bearing interest at a rate determined by reference to the Alternate Base Rate.

Accepting Lenders ” shall have the meaning assigned to such term in Section 2.25(a).

Acquired Entity ” shall have the meaning assigned to such term in Section 6.04(h).

Adjusted LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to the product of (a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.

Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.05(b).

Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit B, or such other form as may be supplied from time to time by the Administrative Agent.

Affected Class ” shall have the meaning assigned to such term in Section 2.25(a).

 

2


Affiliate ” shall mean, when used with respect to a specified 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; provided, however , that, for purposes of Section 6.07, the term “Affiliate” shall also include any person that directly or indirectly owns 10% or more of any class of Equity Interests of the person specified.

Aggregate Revolving Credit Exposure ” shall mean the aggregate amount of the Lenders’ Revolving Credit Exposures.

Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted LIBO Rate in effect at approximately 11:00 a.m. (London time) on such day for a one month Interest Period commencing on the second Business Day after such day plus 1%; provided that in no event shall the Alternate Base Rate be less than (x) in the case of Term Loans, 2.00%, and (y) in the case of Revolving Loans, 0.00%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or the Adjusted LIBO Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of the term Federal Funds Effective Rate, the Alternate Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, as the case may be.

Alternative Incremental Facility Indebtedness ” shall mean any Indebtedness which (a) is in the form of one or more series of senior or junior secured notes or senior unsecured notes or senior or junior secured bridge loans or senior unsecured bridge loans or junior secured loans, (b) is issued, incurred, created, assumed or guaranteed by any Loan Party, (c) is not an obligation of, or otherwise Guaranteed by, any Subsidiary of the Borrower that is not a Loan Party, (d) to the extent the same is secured, is not secured by any Lien on any asset of the Borrower or any Subsidiary other than any asset constituting Collateral, (e) to the extent the same is secured, is subject to the ABL Intercreditor Agreement (if applicable) and a Pari Passu Intercreditor Agreement (or, in the case of junior secured notes, junior secured bridge loans or junior secured loans, a Junior Lien Intercreditor Agreement), (f) matures on or after, and requires no scheduled payments of principal prior to, the Latest Term Loan Maturity Date in effect at the time such Indebtedness is incurred (which, in the case of bridge loans, shall be determined by reference to the loans or notes into which such bridge loans are converted at maturity) (other than pursuant to customary offers to purchase upon a change of control, payments required to prevent any such Indebtedness from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code, asset sale or event of loss and customary acceleration rights after an event of default), unless 100% of the Net Cash Proceeds thereof are used to prepay or repay outstanding Term Loans, in

 

3


which case such Indebtedness shall mature on or after the latest maturity date of the Term Loans so prepaid or repaid, (g) contains no financial maintenance covenants and (h) contains terms and conditions (excluding pricing) that are no more favorable to the investors providing such Indebtedness that those applicable to the Loans (except for covenants or other provisions applicable only to periods after the latest final maturity date of the Loans existing under this Agreement at the time of incurrence of such Indebtedness).

Anti-Corruption Laws ” shall have the meaning assigned to such term in Section 5.08.

Applicable Percentage ” shall mean, for any day, (a) with respect to the Revolving Credit Commitment Fee, 0.50% per annum (the “ Revolving Credit Commitment Fee Rate ”), (b) with respect to any Eurodollar Term Loan or ABR Term Loan, 5.75% per annum and 4.75% per annum, respectively, and (c) with respect to any Eurodollar Revolving Loan and ABR Revolving Loan, 2.75% per annum and 1.75% per annum, respectively.

Approved Fund ” shall mean any person (other than a natural person) that is engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and 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.

Arrangers ” shall mean Credit Suisse Securities (USA) LLC, UBS Securities LLC, Citigroup Global Markets, Inc., JPMorgan Chase Bank N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC.

Asset Sale ” shall mean the sale, transfer or other disposition (by way of merger, casualty, condemnation or otherwise) by the Borrower or any of the Subsidiaries to any person other than the Borrower or any Subsidiary Guarantor of (a) any Equity Interests of any of the Subsidiaries (other than directors’ qualifying shares) or (b) any other assets of the Borrower or any of the Subsidiaries, other than:

(i) inventory, damaged, obsolete or worn out assets, scrap, surplus and Permitted Investments, in each case disposed of in the ordinary course of business;

(ii) donations of assets by the Borrower or any Subsidiary (whether of real or personal property (including cash and Equity Interests)) to state or local municipalities (or other Governmental Authorities), nonprofit organizations, foundations, charities or similar entities of the Borrower’s or such Subsidiary’s choice, with an aggregate fair market value not to exceed $10,000,000 in any fiscal year of the Borrower;

(iii) dispositions by any Subsidiary that is not a Subsidiary Guarantor to the Borrower or any other Subsidiary;

 

4


(iv) sales or other dispositions of (x) Receivables of the Borrower or any of the Subsidiaries that are more than 180 days past due or are written-off at the time of such sale or disposition or (y) any Receivables of the Borrower or any of the Subsidiaries that are self-pay accounts receivable and that are reasonably determined by the Borrower to be unable to be paid in full within 150 days of the related service date, provided that the face value of all such Receivables sold or disposed of on or after the Closing Date does not exceed $25,000,000;

(v) sales or other dispositions of property (including like-kind exchanges) to the extent that (x) such property is exchanged for credit against the purchase price of similar or replacement property or (y) the proceeds of such sale or disposition are applied to the purchase price of such property, provided that, if the property so sold or exchanged constituted Collateral, then the property so received shall also constitute Collateral;

(vi) leases or sub-leases of any real property or personal property in the ordinary course of business;

(vii) dispositions of investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in the joint venture arrangements and similar binding arrangements;

(viii) licensings and sublicensings of intellectual property of the Borrower or any Subsidiary in the ordinary course of business;

(ix) sales, transfers, leases or other dispositions of property in the ordinary course of business consisting of the abandonment of intellectual property rights which, in the reasonable good faith determination of the Borrower, are not material to the conduct of the business of the Borrower and the Subsidiaries;

(x) dispositions of Equity Interests of any Subsidiary as contemplated by clause (b) of the definition of Permitted Joint Venture;

(xi) dispositions consisting of the granting of Liens permitted by Section 6.02; and

(xii) any sale, transfer or other disposition or series of related sales, transfers or other dispositions (in each case other than of a Hospital or Hospitals) having a value not in excess of $15,000,000.

Asset Sale Reinvestment Trigger Date ” shall mean the first date to occur after the Closing Date on which the Borrower or any of its Subsidiaries consummates an Asset Sale and, after giving pro forma effect to such Asset Sale, the Secured Net Leverage Ratio (determined after giving effect to the proceeds from such Asset Sale and any application thereof, but without netting any proceeds not applied) does not exceed 2.75 to 1.00.

 

5


Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent.

Available Amount ” shall mean, as at any date of determination, an amount (if positive) equal to (a) for each fiscal year of the Borrower commencing with the fiscal year ending December 31, 2016, for which Excess Cash Flow shall have been positive, the Excess Cash Flow for such years that is retained by the Borrower after application of Section 2.13(c), minus (b) the aggregate amount of all Restricted Payments made in reliance on Section 6.06(a)(vii) prior to such date, minus (c) the aggregate amount paid in reliance on Section 6.09(b)(iii) prior to such date, minus (d) the aggregate amount of all investments made in reliance on Section 6.04(y)(i) prior to such date.

Available Declined Proceeds Amount ” shall mean, as at any date of determination, an amount (if positive) equal to (a) the aggregate amount of Declined Proceeds retained by the Borrower after the Closing Date, minus (b) the aggregate amount paid in reliance on Section 6.09(b)(iv) prior to such date, minus (c) the aggregate amount of all investments made in reliance on Section 6.04(y)(ii) prior to such date.

Breakage Event ” shall have the meaning assigned to such term in Section 2.16.

Board ” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

Borrower Materials ” shall have the meaning assigned to such term in Section 9.01.

Borrowing ” shall mean Loans of the same Class and Type made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

Borrowing Request ” shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit D, or such other form as shall be approved by the Administrative Agent.

Business Day ” shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close; provided , however , that when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

Capital Expenditures ” shall mean, for any period, the additions to property, plant and equipment and other capital expenditures of the Borrower and its consolidated subsidiaries (including all amounts expended or capitalized under Capital Lease Obligations, but excluding any amount representing capitalized interest) that are (or should be) set forth in a consolidated statement of cash flows of the Borrower for such period prepared in accordance with GAAP, but excluding in each case any such expenditure (i) made with insurance proceeds, condemnation awards or damage recovery

 

6


proceeds, (ii) made with the proceeds of the issuance of Equity Interests, (iii) to the extent such expenditure is made with proceeds that would have constituted Net Cash Proceeds under clause (a) of the definition of the term “Net Cash Proceeds” (but for the application of the provisos to such clause (a)), (iv) to the extent of the credit against the gross purchase price of newly acquired equipment granted by the seller of such newly acquired equipment for other equipment that is simultaneously traded-in at the time of purchase of such newly acquired equipment, (v) is accounted for as a capital expenditure pursuant to GAAP but that actually is paid for by a third party (excluding the Borrower or any Subsidiary) and for which neither the Borrower nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period) or (vi) constituting the purchase price of any Permitted Acquisition or any investment permitted under Sections 6.04(a), 6.04(i), 6.04(j), 6.04(k), 6.04(y) or 6.04(z).

Capital Lease Obligations ” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP (excluding any lease that would be required to be so classified as a result of a change in GAAP after the Closing Date), and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

Captive Insurance Subsidiary ” shall mean a Subsidiary established for the purpose of insuring the healthcare businesses or Facilities owned or operated by the Borrower or any of the Subsidiaries, any joint venture of the Borrower or any of the Subsidiaries or any physician or other personnel employed by or on the medical staff of any such business or Facility.

Cash Management Obligations ” shall mean the obligations owed by the Borrower or any Subsidiary to the Administrative Agent, any Arranger, any Lender or an Affiliate of any of the foregoing in respect of any overdraft protections, netting services and similar arrangements arising from treasury, depository and cash management services, any automated clearing house transfers of funds or any credit card or similar services, in each case in the ordinary course of business.

A “ Change in Control ” shall be deemed to have occurred if (a) any “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the Closing Date), shall own, directly or indirectly, beneficially or of record, shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower (other than a transaction following which holders of securities that represented 100% of such aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower immediately prior to such transaction (or other securities into which such securities are converted as part of such transaction) own, directly or indirectly, shares representing at least a majority of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the surviving Person in such transaction immediately after such transaction), (b) a majority of the seats (other than vacant seats) on the board of

 

7


directors of the Borrower shall at any time be occupied by persons who were neither (i) nominated by the board of directors of the Borrower, (ii) appointed by directors so nominated or (iii) approved by the board of directors of the Borrower as director candidates prior to their election to such board of directors, or (c) any change in control (or similar event, however denominated) with respect to the Borrower or any Subsidiary shall occur under and as defined in any indenture or agreement in respect of Material Indebtedness to which the Borrower or any Subsidiary is a party (other than under any indenture or agreement in respect of Material Indebtedness assumed in connection with a Permitted Acquisition, any change in control triggered by the Permitted Acquisition pursuant to which such Indebtedness was assumed). For the avoidance of doubt, the consummation of the Distribution and the Spin-Off on the Closing Date shall not constitute a Change in Control.

Change in Law ” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.14, by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any policy, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

CHS ” shall have the meaning assigned to such term in the Preliminary Statement.

CHS Dividend ” shall have the meaning assigned to such term in the Preliminary Statement.

Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Other Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit Commitment, a Term Loan Commitment or any Incremental Term Loan Commitment.

Closing Date ” shall mean the first date on which the conditions precedent set forth in Section 4.02 are satisfied or waived in accordance with Section 9.08(b).

Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

8


Collateral ” shall mean all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties.

Commitment ” shall mean, with respect to any Lender, such Lender’s Revolving Credit Commitment, Term Loan Commitment and/or Incremental Term Loan Commitment.

Commitment Fees ” shall mean the Revolving Credit Commitment Fees.

Confidential Information Memorandum ” shall mean the Confidential Information Memorandum of the Borrower dated March 2016.

Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period plus (a) without duplication and (except in the case of clause (a)(x) below) to the extent deducted (and not added back) in determining such Consolidated Net Income, the sum of :

(i) interest expense (net of interest income), including amortization and write offs of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with (x) letters of credit, (y) obtaining or unwinding Hedging Agreements or (z) surety bonds for financing activities, in each case for such period,

(ii) provision for taxes based on income, profits or capital and franchise taxes, including Federal, foreign, state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period, including any penalties and interest relating to any tax examinations for such period,

(iii) depreciation and amortization expenses including acceleration thereof and including the amortization of the increase in inventory resulting from the application of Statement of Financial Accounting Standards No. 141 (“FASB 141”) for transactions contemplated hereby, including Permitted Acquisitions, for such period,

(iv) non-cash compensation expenses arising from the sale of Equity Interests, the granting of options to purchase Equity Interests, the granting of appreciation rights in respect of Equity Interests and similar arrangements for such period,

(v) the excess of the expense in respect of post-retirement benefits and post-employment benefits accrued under Statement of Financial Accounting Standards No. 106 (“FASB 106”) and Statement of Financial Accounting Standards No. 112 (“FASB 112”) over the cash expense in respect of such post-retirement benefits and post-employment benefits for such period,

(vi) minority interest (to the extent distributions are not required to be made and are not made in respect thereof),

(vii) upfront fees or charges arising from any Permitted Receivables Transaction for such period, and any other amounts for such period comparable to or in the nature of interest under any Permitted Receivables Transaction, and losses on dispositions of Receivables and related assets in connection with any Permitted Receivables Transaction for such period,

 

9


(viii) fees and expenses for such period incurred or paid in connection with the Transactions,

(ix) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that such amount is reasonably likely to be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of the relevant event (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events,

(x) proceeds of received business interruption insurance,

(xi) any fees and expenses incurred during such period in connection with any acquisition, investment, recapitalization, asset disposition, issuance or repayment of debt, issuance of Equity Interests, Permitted Receivables Transaction, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction undertaken but not completed),

(xii) any (w) severance costs, relocation costs, integration and facilities opening costs, signing costs, retention or completion bonuses and transition costs incurred during such period, (x) cash restructuring related or nonrecurring cash merger costs and expenses incurred during such period as a result of any acquisition, investment, recapitalization, or asset disposition permitted hereunder; provided , that the aggregate amount added to or included in Consolidated EBITDA pursuant to this subclause (x) for any period of four consecutive fiscal quarters shall not exceed an amount equal to 20% of Consolidated EBITDA, calculated prior to giving effect to any amounts added to or included in Consolidated EBITDA pursuant to this subclause (x) and prior to giving effect to any additions to Consolidated EBITDA in respect of such period pursuant to Section 1.03, (y) other nonrecurring cash losses and charges for such period and (z) fees, expenses and charges incurred during such period in respect of litigation (including legal fees) against the Borrower or any of its Subsidiaries, and

(xiii) any other non-cash charges, write-downs, expenses, losses or items reducing such Consolidated Net Income during such period including any impairment charges or the impact of purchase accounting; provided that if any non-cash charge or other item referred to in this clause (xiii) represents an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA in such future period to such extent paid, and minus

(b) without duplication, (i) non-recurring gains (including any non-cash gains as a result of the consummation of any Offer) and (ii) all cash payments made during such period on account of reserves, restructuring charges and other non-cash charges added to

 

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Consolidated Net Income pursuant to clause (a)(xiii) (other than any such non-cash charges that if originally paid in cash and so not taken as non-cash charges would have been added to Consolidated Net Income above pursuant to clause (a)(xii)) in a previous period.

For purposes of determining Consolidated EBITDA under this Agreement, Consolidated EBITDA for the fiscal quarters ended March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015, shall be deemed to be $59,913,000, $69,988,000, $59,484,000 and $76,907,000, respectively (which amounts, for the avoidance of doubt shall be subject, without duplication, to add-backs and adjustments pursuant to this definition and shall give effect to calculations made on a pro forma basis in accordance with Section 1.03 that in each case may become applicable due to actions taken on or after the Closing Date after giving effect to the consummation of the Transactions).

Consolidated Interest Expense ” shall mean, for any period, the sum of (a) the interest expense paid in cash (including imputed interest expense in respect of Capital Lease Obligations and Synthetic Lease Obligations) of the Borrower and the Subsidiaries for such period, net of interest income, determined on a consolidated basis in accordance with GAAP and (b) the dividends paid in cash during such period by the Borrower and the Subsidiaries on a consolidated basis in respect of Disqualified Stock, but excluding, however, to the extent otherwise included therein, (i) fees and expenses associated with the consummation of the Transactions, (ii) annual agency fees paid to the Administrative Agent, (iii) costs associated with obtaining or unwinding any Hedging Agreements, (iv) fees and expenses associated with any investment permitted pursuant to Section 6.04, issuances of Equity Interests or Indebtedness, Permitted Receivables Transactions or amendments of any Indebtedness (whether or not consummated), (v) penalties and interest relating to Taxes and (vi) all non-recurring cash interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations and financing fees. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by the Borrower or any Subsidiary with respect to interest rate Hedging Agreements.

Consolidated Net Income ” shall mean, for any period, the net income or loss ((i) excluding extraordinary gains and losses, and gains and losses arising from the proposed or actual disposition of material assets and (ii) excluding the cumulative effect of changes in accounting principles) of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded the income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by the Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to such Subsidiary. Notwithstanding the foregoing, the amount of any cash dividends paid by any Unrestricted Subsidiary and received by the Borrower or the Subsidiaries during any such period shall be included, without duplication, in the calculation of Consolidated Net Income for such period. There shall be excluded from Consolidated Net Income for any period (i) gains and losses, including unrealized gains and losses, for such period attributable to (v) the early

 

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extinguishment of Indebtedness, (w) discontinued operations, (x) facilities to be closed within one year of the date of recognition of such gain or loss, (y) obtaining or unwinding Hedging Agreements and (z) except as provided above, interests in Unrestricted Subsidiaries, (ii) all deferred financing costs written off or amortized and premiums paid or other expenses incurred directly in connection with any extinguishment of Indebtedness and any net gain (loss) from any write-off or forgiveness of Indebtedness and (iii) the effects of purchase accounting adjustments to inventory, property, equipment and intangible assets and deferred revenue in component amounts required or permitted by GAAP, as a result of the Transactions or the amortization or write-off of any amounts thereof.

Contractual Obligation ” shall mean, as to any person, any provision of any security issued by such person or of any agreement, instrument or undertaking to which such person is a party or by which it or any of the property owned by it is bound.

Contribution ” shall have the meaning assigned to such term in the Preliminary Statement.

Control ” shall mean 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 ownership of voting securities, by contract or otherwise, and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

Credit Event ” shall have the meaning assigned to such term in Section 4.01.

Credit Facilities ” shall mean the revolving credit, letter of credit and term loan facilities provided for by this Agreement.

Current Assets ” shall mean, at any time, the consolidated current assets (other than cash, cash equivalents and Permitted Investments and current and deferred tax assets) of the Borrower and the Subsidiaries.

Current Liabilities ” shall mean, at any time, the consolidated current liabilities of the Borrower and the Subsidiaries at such time, but excluding, without duplication, (a) the current portion of any long-term Indebtedness, (b) current accrued and deferred income taxes and accrued interest, (c) outstanding Revolving Loans and (d) outstanding ABL Facility Loans.

Declined Proceeds ” shall have the meaning assigned to such term in Section 2.13(f).

Default ” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

Defaulting Lender ” shall mean any Lender that (a) defaults in its obligation to make any Loan or fulfill any obligation required to be made or fulfilled by it hereunder in the case of any funding requirement within two Business Days of the date such Loans were required to be funded by it hereunder, unless such Lender notifies the

 

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Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in such writing) has not been satisfied, (b) has notified the Administrative Agent or any Loan Party in writing that it does not intend to satisfy any such obligations, (c) has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that if a Lender would be a “Defaulting Lender” solely by reason of events relating to a parent company of such Lender or solely because a Governmental Authority has been appointed as receiver, conservator, trustee or custodian for such Lender, such Lender shall not be a “Defaulting Lender” if and for so long as such Lender confirms in writing, upon request by the Administrative Agent, that it will continue to comply with its obligations to make Loans and fulfill all other obligations required to be made and fulfilled by it hereunder, or (d) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action (as defined in Section 9.19).

Designated Non-Cash Consideration ” shall mean the fair market value (as determined in good faith by the Borrower) of non-cash consideration received by the Borrower or one of its Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to an officer’s certificate, setting forth the basis of such valuation, less the amount of cash or cash equivalents (including Permitted Investments) received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with Section 6.05(b).

Disqualified Stock ” shall mean any 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 (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (except (i) as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments or (ii) pursuant to any put option with respect to any Equity Interests of a Permitted Syndication Subsidiary granted in favor of any Permitted Syndication Transaction Partner), or is redeemable at the option of the holder thereof, in whole or in part, in each case at any time on or prior to the first anniversary of the Latest Term Loan Maturity

 

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Date in effect at the time such Equity Interest is issued, or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) Indebtedness or (ii) any Equity Interest referred to in clause (a) above, in each case at any time prior to the first anniversary of the Latest Term Loan Maturity Date in effect at the time such Equity Interest is issued.

Distribution ” shall have the meaning assigned to such term in the Preliminary Statement.

dollars ” or “ $ ” shall mean lawful money of the United States of America.

Domestic Subsidiaries ” shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.

Effective Yield ” shall mean, as of any date of determination with respect to any term loan, the sum of (i) the higher of (A) the “Adjusted LIBO rate” on such date for a deposit in dollars with a maturity of one month and (B) the “LIBOR floor”, if any, with respect thereto as of such date, (ii) the interest rate margin as of such date (with such interest rate margin to be determined by reference to the “Adjusted LIBO rate”) and (iii) the amount of original issue discount and upfront fees thereon (converted to yield assuming a four-year average life and without any present value discount but excluding any arrangement, structuring, syndication, commitment or other fees in connection therewith that are not shared with all providers of such financing).

Eligible Assignee ” shall mean any commercial bank, insurance company, investment or mutual fund or other entity (but not any natural person) that is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933, as amended) that extends credit or invests in bank loans as one of its businesses; provided that in any event, “Eligible Assignee” shall not include (x) the Borrower or any Affiliate (which for this purpose shall not include the Administrative Agent or any of its branches or Affiliates engaged in the business of making commercial loans) thereof (it being understood that that the Borrower shall be permitted to repurchase Term Loans pursuant to Section 2.12(e)) or (y) any Defaulting Lender.

Engagement Letter ” shall mean the Engagement Letter dated as of March 23, 2016, among the Borrower and Credit Suisse Securities (USA) LLC.

Environmental Laws ” shall mean all former, current and future Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), and legally binding agreements in each case, relating to protection of the environment, natural resources, occupational health and safety or Hazardous Materials.

Environmental Liability ” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or

 

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non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment, recycling, arrangement for disposal, or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the presence or Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Equity Interest s ” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any person, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event ” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) a failure by any Plan to meet the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived, (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan, (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code), (e) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (f) the receipt by the Borrower or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (g) the receipt by the Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Borrower or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA, (h) the occurrence of a “prohibited transaction” with respect to which the Borrower or any of the Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with respect to which the Borrower or any such Subsidiary could otherwise be liable or (i) any other event or condition with respect to a Plan or Multiemployer Plan that could result in liability of the Borrower or any Subsidiary.

 

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Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

Event of Default ” shall have the meaning assigned to such term in Article VII.

Excess Cash Flow ” shall mean, for any fiscal year of the Borrower (beginning with the fiscal year ending December 31, 2016), the excess of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) an amount equal to the amount of all non-cash charges or losses to the extent deducted in arriving at such Consolidated Net Income, (iii) an amount equal to the provision for Taxes based on income, profits or capital of the Borrower and the Subsidiaries, including Federal, foreign, state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period to the extent deducted in arriving at such Consolidated Net Income, (iv) [reserved], (v) reductions to noncash working capital of the Borrower and the Subsidiaries for such fiscal year ( i.e. , the decrease, if any, in Current Assets minus Current Liabilities from the beginning to the end of such fiscal year, excluding decreases resulting from any Permitted Acquisition or disposition occurring during such fiscal year) and (vi) an amount equal to all anticipated payments deducted from Excess Cash Flow pursuant to clause (b)(vi) in any prior period that the Borrower has determined will not be made, or that were not made during the applicable four fiscal quarter period, and that have not previously been added back to Excess Cash Flow pursuant to this clause (a)(vi) over (b) the sum, without duplication, of (i) the amount of any Taxes (including penalties and interest) payable in cash by the Borrower and the Subsidiaries with respect to such fiscal year, (ii) Capital Expenditures made in cash during such fiscal year, except to the extent financed with the proceeds of Indebtedness (other than Revolving Loans and ABL Facility Loans), equity issuances, casualty proceeds or condemnation proceeds to the extent such proceeds would not be included in Consolidated Net Income, (iii) permanent repayments of Indebtedness (other than mandatory prepayments of Loans under Section 2.13 and Voluntary Prepayments) made in cash by the Borrower and the Subsidiaries during such fiscal year, but only to the extent that the Indebtedness so prepaid by its terms cannot be reborrowed or redrawn and such prepayments do not occur in connection with a refinancing of all or any portion of such Indebtedness, (iv) payments by the Borrower and the Subsidiaries during such fiscal year in respect of long-term liabilities of the Borrower and the Subsidiaries other than Indebtedness, (v) the aggregate amount of cash consideration paid by the Borrower and the Subsidiaries (on a consolidated basis) in connection with Permitted Acquisitions or other investments permitted pursuant to Section 6.04 (other than Section 6.04(b)), except to the extent any such Permitted Acquisition or investment is financed with the proceeds of Indebtedness (other than Revolving Loans and ABL Facility Loans) or equity issuances, to the extent such proceeds would not be included in Consolidated Net Income, (vi) the aggregate amount of cash consideration required to be paid by the Borrower and the Subsidiaries (on a consolidated basis) in the subsequent first four fiscal quarters following such fiscal year pursuant to binding contracts related to Permitted Acquisitions and Capital Expenditures entered into during such fiscal year, (vii) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower or the Subsidiaries during such period that are required to be made in connection with any

 

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prepayment of Indebtedness to the extent not deducted in determining Consolidated Net Income for such fiscal year, (viii) cash expenditures in respect of Hedging Agreements to the extent not deducted in determining Consolidated Net Income for such fiscal year, (ix) additions to noncash working capital for such fiscal year ( i.e. , the increase, if any, in Current Assets minus Current Liabilities from the beginning to the end of such fiscal year, excluding increases resulting from any Permitted Acquisition or disposition occurring during such fiscal year), (x) an amount equal to the amount of all non-cash credits or gains to the extent included in arriving at such Consolidated Net Income and the amount related to items that were added to or not deducted from net income or loss in calculating Consolidated Net Income to the extent such items represented a cash payment or cash expenditure (which had not reduced Excess Cash Flow in a prior fiscal year) and (xi) the aggregate amount of cash expenditures paid by the Borrower and the Subsidiaries (on a consolidated basis) pursuant to Section 6.06(a)(iii), (v) and (ix) (except to the extent any such cash expenditure is financed with the proceeds of Indebtedness (other than Revolving Loans and ABL Facility Loans) or equity issuances, to the extent such proceeds would not be included in Consolidated Net Income); provided that in no event shall the calculation of Excess Cash Flow include any insurance proceeds or proceeds of any condemnation, taking or similar occurrence.

“Excluded Assets” shall mean, (a) any fee-owned real property acquired after the Closing Date with a fair market value of less than $5,000,000 and all leasehold interests; (b) motor vehicles and other assets subject to certificates of title (other than to the extent a security interest in such assets can be perfected by filing a Uniform Commercial Code financing statement); (c) Excluded Equity Interests; (d) Commercial Tort Claims with a value of less than $1,000,000; (e) any lease, license or other agreement or any property subject to a purchase money security interest or similar arrangement not prohibited by this Agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money security interest or similar arrangement or create a right of termination in favor of any other party thereto (other than the Borrower or any Subsidiary Guarantor) (after giving effect to Section 9-406, 9-407, 9-408 and any other anti-assignment provisions of the Uniform Commercial Code or other applicable law and rules of equity), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code notwithstanding such prohibition; (f) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Lenders of the security to be afforded thereby; (g) promissory notes issued by employees of any grantor; and (h) “intent-to-use” trademark applications.

Excluded Equity Interests” shall mean (a) voting Equity Interests issued by any Foreign Subsidiary in excess of 66% of the outstanding voting Equity Interests of such Foreign Subsidiary, (b) Equity Interests issued by any Person other than wholly-owned Subsidiaries of the Borrower or any Subsidiary Guarantor to the extent a pledge over such Equity Interests is not permitted by such Person’s organizational or joint-venture documents, (c) Equity Interests issued by any Permitted Syndication Subsidiary to the extent a pledge over such Equity Interests is not permitted by a Contractual Obligation that is not prohibited by this Agreement or is not permitted under any requirement of law

 

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(after giving effect to Section 9-406, 9-407, 9-408 and any other anti-assignment provisions of the Uniform Commercial Code or other applicable law and rules of equity) and (d) Equity Interests issued by any Securitization Subsidiary to the extent the pledge of such Equity Interests is prohibited by a Contractual Obligation that is not prohibited by this Agreement or is not permitted under any requirement of law (after giving effect to Section 9-406, 9-407, 9-408 and any other anti-assignment provisions of the Uniform Commercial Code or other applicable law and rules of equity).

Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction 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 of America or any similar tax imposed by any other jurisdiction described in clause (a) above and (c) in the case of the Administrative Agent or a Lender (other than an assignee pursuant to a request by the Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts payable to such Administrative Agent or Lender as a result of any law in effect (including FATCA) at the time such Administrative Agent or Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Administrative Agent or Lender’s failure to comply with Section 2.20(e), except to the extent that such Administrative Agent or 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 the Borrower with respect to such withholding tax pursuant to Section 2.20(a).

Existing Letter of Credit ” shall mean each Letter of Credit previously issued for the account of any of the Loan Parties that is outstanding on the Closing Date and is listed on Schedule 1.01(a).

Extended OID ” shall have the meaning assigned to such term in Section 2.27.

Facility ” shall mean any Hospital, outpatient clinic, long-term care facility, ambulatory center, nursing home or rehabilitation center and related medical office building or other facility owned or used by the Borrower or any Subsidiary in connection with their respective business.

FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any regulations or official interpretations thereof issued after the date of this Agreement.

FCPA ” shall mean the United States Foreign Corrupt Practices Act of 1977.

Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank

 

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of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. If the Federal Funds Effective Rate is less than zero, it shall be deemed to be zero hereunder.

Fees ” shall mean the Commitment Fees, the Administrative Agent Fees, the L/C Participation Fees and the Issuing Bank Fees.

Financial Officer ” of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person.

Foreign Subsidiary ” shall mean any Subsidiary that is not a Domestic Subsidiary.

GAAP ” shall mean United States generally accepted accounting principles.

Governmental Authority ” shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

Granting Lender ” shall have the meaning assigned to such term in Section 9.04(i).

Guarantee ” of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided , however , that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) Practice Guarantees. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount (based on the maximum reasonably anticipated net liability in respect thereof as determined by the Borrower in good faith) of the primary obligation or portion thereof in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated net liability in respect thereof (assuming such person is required to perform thereunder) as determined by the Borrower in good faith.

Guarantee and Collateral Agreement ” shall mean the Guarantee and Collateral Agreement, substantially in the form of Exhibit E, dated as of the Closing Date among the Borrower, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties.

 

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Hazardous Materials ” shall mean (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances, medical, biological and animal wastes and (b) without limitation of the foregoing, any other chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

Health Care Associates ” shall have the meaning assigned to such term in Section 6.04(e).

Hedging Agreement ” shall mean any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

Hospital ” shall mean each hospital now or hereafter owned, leased or operated by the Borrower or any of the Subsidiaries or in which the Borrower or any of the Subsidiaries owns an equity interest. Set forth on Schedule 1.01(c) is a list of all Hospitals in existence on the Closing Date owned or used by the Borrower and the Subsidiaries.

Increasing Revolving Credit Lender ” shall have the meaning assigned to such term in Section 2.26(a).

Incremental Acquisition Revolving Credit Commitment Increase ” shall mean a Revolving Credit Commitment Increase designated as an “Incremental Acquisition Revolving Credit Commitment Increase” by the Borrower, the Administrative Agent and the applicable Increasing Revolving Credit Lenders in the applicable Revolving Credit Commitment Increase Amendment, the effectiveness of which is conditioned upon the consummation of a Permitted Acquisition (including the refinancing of Indebtedness in connection therewith (to the extent required in connection with such Permitted Acquisition) and the payment of related fees and expenses).

Incremental Acquisition Term Loan shall mean an Incremental Term Loan designated as an “Incremental Acquisition Term Loan” by the Borrower, the Administrative Agent and the applicable Incremental Term Lenders in the applicable Incremental Term Loan Assumption Agreement, the making of which is conditioned upon the consummation of, and the proceeds of which will be used to finance, a Permitted Acquisition (including the refinancing of Indebtedness in connection therewith and the payment of related fees and expenses).

Incremental Amount ” shall mean, at any time, the excess, if any, of (a) the greater of (x) $100,000,000 and (y) an amount equal to the maximum principal amount of Indebtedness that, if fully drawn at such time, would not cause the Secured Net Leverage Ratio to exceed 3.35:1.00 (calculated on a pro forma basis in accordance with Section 1.03 after giving effect to the incurrence of such Indebtedness and without giving effect to any cash proceeds thereof, but including the application of such proceeds) over (b) the sum of (i) the aggregate amount of all Incremental Term Loan Commitments

 

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established after the Closing Date and prior to such time pursuant to Section 2.24 (whether in respect of Other Term Loans or otherwise), (ii) the aggregate amount of all Revolving Credit Commitment Increases established after the Closing Date and prior to such time pursuant to Section 2.26, (iii) the aggregate amount of all revolving credit commitments established after the Closing Date and prior to such time in accordance with Section 6.01(r) and (iv) the aggregate principal amount of Indebtedness incurred pursuant to Section 6.01(w) after the Closing Date and prior to such time; provided , however , that, to the extent the proceeds of any Incremental Term Loans or any Alternative Incremental Facility Indebtedness are used concurrently with the incurrence thereof to prepay then-outstanding Term Loans, the establishment of such Incremental Term Loan Commitments or the incurrence of such Alternative Incremental Facility Indebtedness, as the case may be, shall not reduce the Incremental Amount.

Incremental Term Borrowing shall mean a Borrowing comprised of Incremental Term Loans.

Incremental Term Lender ” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.

Incremental Term Loan Assumption Agreement ” shall mean an Incremental Term Loan Assumption Agreement among, and in form and substance reasonably satisfactory to, the Borrower, the Administrative Agent and one or more Incremental Term Lenders.

Incremental Term Loan Commitment ” shall mean the commitment of any Lender, established pursuant to Section 2.24, to make Incremental Term Loans to the Borrower.

Incremental Term Loan Maturity Date ” shall mean the final maturity date of any Incremental Term Loan, as set forth in the applicable Incremental Term Loan Assumption Agreement.

Incremental Term Loan Repayment Dates ” shall mean the dates scheduled for the repayment of principal of any Incremental Term Loan, as set forth in the applicable Incremental Term Loan Assumption Agreement.

Incremental Term Loans ” shall mean Term Loans made by one or more Lenders to the Borrower pursuant to Section 2.01(c). Incremental Term Loans may be made in the form of additional Term Loans or, to the extent permitted by Section 2.24 and provided for in the relevant Incremental Term Loan Assumption Agreement, Other Term Loans.

Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or with respect to deposits or advances of any kind (other than customer deposits and interest payable thereon in the ordinary course of business), (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 or assets purchased by such person, (d) all

 

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obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business and deferred payment for services to employees or former employees incurred in the ordinary course of business and payable in accordance with customary practices and other deferred compensation arrangements), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness 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 obligations secured thereby have been assumed, (f) all Guarantees by such person of Indebtedness of others, (g) all Capital Lease Obligations and Synthetic Lease Obligations of such person, (h) all obligations of such person as an account party in respect of letters of credit, (i) all obligations of such person in respect of bankers’ acceptances, (j) all obligations of such person pursuant to any Permitted Receivables Transaction and (k) the aggregate liquidation preference of all outstanding Disqualified Stock issued by such person; provided that in all cases (w) Practice Guarantees, (x) earnouts, unless not paid after becoming due and payable, and working capital adjustments under acquisition or disposition agreements, (y) deferred or prepaid revenue and (z) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, shall be excluded from the definition of “Indebtedness”. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner.

Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

Indemnitee ” shall have the meaning assigned to such term in Section 9.05(b).

Interest Payment Date ” shall mean (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing.

Interest Period ” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter or, with the consent of each applicable Lender, 12 months thereafter, as the Borrower may elect; provided , however , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

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ISP ” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

Issuing Bank ” shall mean, as the context may require, except as provided in clause (ii) of the penultimate sentence of Section 2.23(a), (a) each of the Revolving Credit Lenders with an L/C Commitment set forth on Schedule 2.01, in each case acting through any of its Affiliates or branches, in its capacity as an issuer of Letters of Credit hereunder, (b) with respect to each Existing Letter of Credit, the Lender that issued such Existing Letter of Credit, and (c) any other Lender that may become an Issuing Bank pursuant to Section 2.23(i) or 2.23(k), with respect to Letters of Credit issued by such Lender. Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates or branches of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate or branch with respect to Letters of Credit issued by such Affiliate or branch.

Issuing Bank Fees ” shall have the meaning assigned to such term in Section 2.05(c).

Junior Lien Intercreditor Agreement ” shall mean any intercreditor agreement, collateral trust agreement or similar agreement governing the relative priorities of the holders of the Obligations and Other Senior Secured Debt, on the one hand, and the holders of Other Junior Secured Debt, on the other hand, provided that such agreement (a) provides for such Indebtedness to be secured by Liens on the Collateral having junior priority to the Liens securing the Obligations and (b) is otherwise on terms reasonably acceptable to the Administrative Agent and the Borrower.

Latest Term Loan Maturity Date ” shall mean, at any date of determination, the latest maturity date applicable to any Term Loans or Term Loan Commitment hereunder at such time.

L/C Commitment ” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit hereunder. The initial amount of each Issuing Bank’s L/C Commitment is set forth on Schedule 2.01, or if an Issuing Bank has entered into an Assignment and Assumption or became an Issuing Bank pursuant to an agreement designating it as contemplated by Section 2.23(i) or 2.23(k), the amount set forth for such Issuing Bank as its L/C Commitment in the Register maintained by the Administrative Agent or in such agreement.

L/C Disbursement ” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit.

L/C Exposure ” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The L/C Exposure of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the aggregate L/C Exposure at such time.

 

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L/C Participation Fee ” shall have the meaning assigned to such term in Section 2.05(c).

Lenders ” shall mean (a) the persons listed on Schedule 2.01 (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any person that has become a party hereto pursuant to an Assignment and Acceptance, a Revolving Accession Agreement or an Incremental Term Loan Assumption Agreement.

Letter of Credit ” shall mean any letter of credit issued pursuant to Section 2.23 and any Existing Letter of Credit.

LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate of interest appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to such service as determined by the Administrative Agent) as the London interbank offered rate administered by ICE Benchmark Administration Limited for deposits in dollars for a term comparable to such Interest Period, at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the commencement of such Interest Period; provided that in no event shall the LIBO Rate be less than (x) in the case of Term Loans, 1.00%, and (y) in the case of Revolving Loans, 0.00%; provided further that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the rate shall be, at any time, the rate per annum determined by the Administrative Agent (the “ Interpolated Rate ”) (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Rate for the longest period (for which that LIBO Rate is available in Dollars) that is shorter than the Interest Period and (b) the LIBO Rate for the shortest period (for which that LIBO Rate is available for Dollars) that exceeds the Interest Period, in each case, at such time; provided that if the Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset. For the avoidance of doubt, the term “Lien” shall not be deemed to include any license of intellectual property.

Loan Documents ” shall mean this Agreement, the Letters of Credit (including any application in respect thereof referenced to in Section 2.23(b)), the Security Documents, each Incremental Term Loan Assumption Agreement, the ABL Intercreditor Agreement, any Pari Passu Intercreditor Agreement, any Junior Lien Intercreditor Agreement, any Loan Modification Agreement, any Revolving Accession Agreement, any Revolving Credit Commitment Increase Amendment and the promissory notes, if any, executed and delivered pursuant to Section 2.04(e).

 

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Loan Modification Agreement ” shall mean a Loan Modification Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, among the Borrower, the other Loan Parties, one or more Accepting Lenders and the Administrative Agent.

Loan Modification Offer ” shall have the meaning specified in Section 2.25(a).

Loan Parties ” shall mean the Borrower and the Subsidiary Guarantors.

Loans ” shall mean the Revolving Loans and the Term Loans.

Margin Stock ” shall have the meaning assigned to such term in Regulation U.

Material Adverse Effect ” shall mean (a) a materially adverse effect on the business, assets, operations, financial condition or operating results of the Borrower and the Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Document to which they are or will be a party or (c) a material impairment of the rights and remedies of or benefits available to the Lenders under the Loan Documents.

Material Indebtedness ” shall mean Indebtedness (other than the Loans and intercompany loans), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower or any Subsidiary in an aggregate principal amount exceeding $35,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

Material Subsidiary ” shall mean any Subsidiary other than any (a) Permitted Joint Venture Subsidiary, (b) Permitted Syndication Subsidiary, (c) Securitization Subsidiary, (d) Foreign Subsidiary, (e) Captive Insurance Subsidiary or (f) Non-Significant Subsidiary.

Moody’s ” shall mean Moody’s Investors Service, Inc., or any successor thereto.

Mortgaged Properties ” shall mean, initially, the owned real properties of the Loan Parties specified on Schedule 1.01(d), and shall include each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.12.

Mortgages ” shall mean the mortgages, deeds of trust, assignments of leases and rents, modifications and other security documents delivered pursuant to Section 5.12 of this Agreement, each substantially in the form of Exhibit F.

Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

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Net Cash Proceeds ” shall mean (a) with respect to any Asset Sale (other than Receivables sold in a Permitted Receivables Transaction), the aggregate cash proceeds received in respect of such Asset Sale, and any cash payments received in respect of promissory notes or other non-cash consideration delivered in respect of such Asset Sale, net of (without duplication) (i) the reasonable expenses (including legal fees and brokers’ and underwriters’ commissions paid to third parties which are not Subsidiaries or Affiliates of the Borrower) incurred in effecting such Asset Sale, (ii) any taxes reasonably attributable to such Asset Sale and, in the case of an Asset Sale in a foreign jurisdiction, any taxes reasonably attributable to the repatriation of the proceeds of such Asset Sale reasonably estimated by the Borrower to be actually payable, (iii) any amounts payable to a Governmental Authority triggered as a result of any such Asset Sale, (iv) any Indebtedness or Contractual Obligation of the Borrower and the Subsidiaries (other than the Loans, other Obligations and any Other Senior Secured Debt) required to be paid or retained in connection with such Asset Sale or to the extent such Indebtedness is required to be repaid because the asset sold is removed from a borrowing base supporting such Indebtedness and (v) the aggregate amount of reserves required in the reasonable judgment of the Borrower or the applicable Subsidiary to be maintained on the books of the Borrower or such Subsidiary in order to pay contingent liabilities with respect to such Asset Sale (so long as amounts deducted from aggregate proceeds pursuant to this clause (v) and not actually paid by the Borrower or any of the Subsidiaries in liquidation of such contingent liabilities shall be deemed to be Net Cash Proceeds received at such time as such contingent liabilities shall cease to be obligations of the Borrower or any of the Subsidiaries); provided , however , that, from and after the Asset Sale Reinvestment Trigger Date, if (x) the Borrower intends to reinvest such proceeds in assets of a kind then used or usable in the business of the Borrower and the Subsidiaries or in Permitted Acquisitions or other investments permitted pursuant to Section 6.04 (other than Sections 6.04(a) and 6.04(b)) within 15 months of receipt of such proceeds and (y) no Default or Event of Default shall have occurred and shall be continuing at the time of such receipt, such proceeds shall not constitute Net Cash Proceeds except to the extent not so used at the end of such 15-month period, at which time such proceeds shall be deemed to be Net Cash Proceeds; provided further that if during such 15-month period the Borrower or a Subsidiary enters into a written agreement committing it to so apply all or a portion of such proceeds, such 15-month period will be extended with respect to the amount of proceeds for an additional six months, at which time such proceeds shall be deemed to be Net Cash Proceeds; (b) with respect to any issuance or incurrence of Indebtedness (other than Indebtedness incurred pursuant to any Receivables Transaction), the cash proceeds thereof, net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith; and (c) with respect to any sale of Receivables in a Receivables Transaction, the initial cash proceeds thereof (and any subsequent cash proceeds therefrom to the extent resulting from an increase in the Receivables Transaction Amount above the highest previous Receivables Transaction Amount balance), in each case received by the applicable originators net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith.

New Loan Margin ” shall have the meaning assigned to such term in Section 2.27.

 

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New Term Loan ” shall mean any Pari Passu Debt in the form of term loans secured by Liens on the Collateral having the same priority as the Liens securing the Term Loans (but excluding, for the avoidance of doubt, any Incremental Term Loans), made to the Borrower or any of its subsidiaries, the proceeds of which will be used to finance, in whole or in part, one or more Permitted Acquisitions.

New Term Loan OID ” shall have the meaning assigned to such term in Section 2.27.

New Term Loan Yield Differential ” shall have the meaning assigned to such term in Section 2.27.

Non-Significant Subsidiary ” shall mean at any time, any Subsidiary (a) which at such time has total assets book value (including the total assets book value of any subsidiaries of such Subsidiary), or for which the Borrower or any of the Subsidiaries shall have paid (including the assumption of Indebtedness) in connection with the acquisition of Equity Interests or the total assets of such Subsidiary, less than $10,000,000 or (b) which does not and will not itself or through its subsidiaries own a Hospital or an interest in a Hospital or manage or operate a Hospital; provided that the total assets of all Non-Significant Subsidiaries at any time does not exceed 5.0% of the total assets of the Borrower and the Subsidiaries on a consolidated basis. Schedule 1.01(g) contains, as of the Closing Date, a true, correct and complete list of all Non-Significant Subsidiaries.

Notice of Increase ” shall have the meaning assigned to such term in Section 2.26(a).

Obligations ” shall mean all obligations defined as “Bank Loan Obligations” in the Guarantee and Collateral Agreement and the other Security Documents.

OFAC ” shall have the meaning assigned to such term in Section 3.23.

OID ” shall have the meaning assigned to such term in Section 2.24(b).

Offer ” shall have the meaning assigned to such term in Section 2.12(e)(i).

Offer Loans ” shall have the meaning assigned to such term in Section 2.12(e)(i).

Other Junior Secured Debt ” shall mean Indebtedness secured by Liens on the Collateral having a priority junior to that of the Liens securing the Obligations (excluding, for the avoidance of doubt, the ABL Facility Loans).

Other Senior Secured Debt ” shall mean Pari Passu Debt and Alternative Incremental Facility Indebtedness, in each case secured by Liens on the Collateral having the same priority as the Liens securing the Obligations (excluding, for the avoidance of doubt, the ABL Facility Loans).

 

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Other Taxes ” shall mean any and 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.

Other Term Loan Margin ” shall have the meaning assigned to such term in Section 2.24(b).

Other Term Loan Reference Margin ” shall have the meaning assigned to such term in Section 2.24(b).

Other Term Loans ” shall have the meaning assigned to such term in Section 2.24(a).

Pari Passu Debt ” shall mean Indebtedness which (a) is issued, incurred, created, assumed or guaranteed by any Loan Party, (b) is not an obligation of, or otherwise Guaranteed by, any Subsidiary of the Borrower that is not a Loan Party, (c) is not secured by any Lien on any asset of the Borrower or any Subsidiary other than any asset constituting Collateral, (d) does not amortize at a rate per annum in excess of 1.00% during any period of four consecutive fiscal quarters commencing on or after the date such Pari Passu Debt is incurred by any Loan Party, (e) is subject to a Pari Passu Intercreditor Agreement and (f) is issued, incurred, created or assumed (i) to finance, or otherwise in connection with, a Permitted Acquisition, (ii) in order to extend, renew, refinance or replace existing Pari Passu Debt, provided that (A) the principal amount of such Pari Passu Debt is not increased (except by an amount not to exceed (1) the amount of unpaid accrued interest and premium on the existing Pari Passu Debt so extended, renewed, refinanced or replaced, plus (2) other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement) and (B) neither the final maturity nor the weighted average life to maturity of such Pari Passu Debt is decreased thereby or (iii) in order to obtain Net Cash Proceeds, 100% of which (if not used in the manner set forth in the foregoing clauses (i) and (ii)) are used by the Borrower, not later than the fifth Business Day following the receipt thereof, to prepay outstanding Term Loans in the manner set forth in Section 2.13(g).

Pari Passu Debt Obligations ” shall have the meaning assigned to such term in the Guarantee and Collateral Agreement.

Pari Passu Intercreditor Agreement ” shall mean any intercreditor agreement, collateral trust agreement or similar agreement governing the relative priorities of the holders of the Obligations, on the one hand, and the holders of the Pari Passu Debt Obligations, on the other hand, provided that such agreement (a) contains terms that are not less favorable to the holders of the Obligations than to the holders of the Pari Passu Debt Obligations, (b) provides for the Pari Passu Debt Obligations to be secured by Liens on the Collateral having the same priority as, or junior priority to, the Liens securing the Obligations and (c) is otherwise on terms reasonably acceptable to the Administrative Agent and the Borrower; provided , however , that for purposes of the use of the term “Pari Passu Intercreditor Agreement” in the definition of Pari Passu Debt, the term shall mean a Pari Passu Intercreditor Agreement other than the Collateral and Guarantee Agreement and the Mortgages.

 

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Participant Register ” shall have the meaning assigned to such term in Section 9.04(f).

PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

Permitted Acquisition ” shall have the meaning assigned to such term in Section 6.04(h).

Permitted Additional Debt ” of any Loan Party shall mean any unsecured Indebtedness of such Loan Party or an unsecured or subordinated Guarantee of or by such Loan Party, in each case which (a) matures on or after, and requires no scheduled payments of principal prior to, the date that is 91 days after the Latest Term Loan Maturity Date in effect at the time such Indebtedness is incurred (which, in the case of bridge loans, shall be determined by reference to the loans or notes into which such bridge loans are converted at maturity) (other than pursuant to customary offers to purchase upon a change of control, payments required to prevent any such Indebtedness from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code, asset sale or event of loss and customary acceleration rights after an event of default), (b) contains no financial maintenance covenants unless such financial maintenance covenants are added to this Agreement for the benefit of the Lenders hereunder and (c) to the extent the same is subordinated to any Indebtedness, is subordinate or junior in right of payment to the Obligations, pursuant to a written agreement on terms customary for similar Indebtedness at the time of issuance.

Permitted Amendments ” shall have the meaning assigned to such term in Section 2.25(c).

Permitted Interest Transfer ” shall mean a sale, issuance or other transfer of securities of a Subsidiary or of assets of any Subsidiary to a new Subsidiary, or sale, issuance or transfer of securities of a Subsidiary to another person if after such sale, issuance or other transfer, such Subsidiary shall meet the applicable requirements of the definition of “Permitted Joint Venture Subsidiary”, “Non-Significant Subsidiary” or “Permitted Syndication Subsidiary”; provided that (a) the aggregate fair market value (determined at the time of and after giving effect to any Permitted Interest Transfer) of all Permitted Interest Transfers made to, or in connection with the establishment of, a Permitted Joint Venture shall not exceed $100,000,000 and (b) at the time of and after giving effect to any Permitted Interest Transfer the total book value of the assets, calculated as of the date of the applicable Permitted Interest Transfer, of all Subsidiaries (other than Loan Parties) that become Permitted Joint Venture Subsidiaries or Permitted Syndication Subsidiaries after the Closing Date as a result of a Permitted Interest Transfer made after the Closing Date shall not exceed (i) 10% of the total book value of the assets of the Borrower and the Subsidiaries on a consolidated basis, calculated as of the date of the applicable Permitted Interest Transfer, in the case of Permitted Joint

 

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Venture Subsidiaries, and (ii) 10% of the total book value of the assets of the Borrower and the Subsidiaries on a consolidated basis, calculated as of the date of the applicable Permitted Interest Transfer, in the case of Permitted Syndication Subsidiaries.

Permitted Investments ” shall mean:

(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

(e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (d) above; and

(f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments of a type analogous to the foregoing.

Permitted Joint Venture Subsidiary ” shall mean a partially owned Subsidiary pursuant to which the Borrower or such Subsidiary conducts a Permitted Joint Venture.

Permitted Joint Ventures ” shall mean (a) acquisitions (by merger, purchase, lease (including any lease that contains upfront payments or buy out options) or otherwise), not constituting Permitted Acquisitions, by the Borrower or any of the Subsidiaries of interests in any of the assets of, or shares of the capital stock of or other Equity Interests in, a person or division or line of business of any person engaged in the same business as the Borrower and the Subsidiaries or in a related business, (b) sales, issuances or other transfers of securities of a Subsidiary to a Person other than a Loan Party if after such sale, issuance or other transfer, such Subsidiary shall meet the applicable requirements of the definition of “Permitted Joint Venture Subsidiary” or (c) other investments in and loans and advances to Permitted Joint Venture Subsidiaries; provided that (x) no Default or Event of Default shall have occurred and be continuing

 

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and (y) except for the Permitted Joint Ventures listed on Schedule 1.01(e), the aggregate value of the investments, loans and advances made by the Borrower and the Subsidiaries in (including assets transferred to) any Permitted Joint Venture, in each case, measured as of the date of each such investment, loan or advance (net of any repayments or return of capital in respect thereof actually received in cash by the Borrower or the Subsidiaries (net of applicable Taxes) after the Closing Date) (the “ Net Investment Amount ”), when added to the aggregate Net Investment Amounts of all Permitted Joint Ventures consummated after the Closing Date, shall not exceed $250,000,000.

Permitted Real Estate Indebtedness ” shall have the meaning assigned to such term in Section 6.01(f).

Permitted Receivables Transaction ” shall have the meaning assigned to such term in Section 6.05(b)(ii).

Permitted Refinancing Indebtedness ” shall have the meaning assigned to such term in Section 6.01(w)(ii).

Permitted Syndication Subsidiary ” shall mean a partially owned Subsidiary of the Borrower which, after giving effect to a Permitted Syndication Transaction, owns, leases or operates the Hospital which is the subject of such Permitted Syndication Transaction.

Permitted Syndication Transaction ” shall have the meaning assigned to such term in Section 6.05(b)(iii).

Permitted Syndication Transaction Partner ” shall mean one or more persons (other than the Borrower or any Subsidiary) that owns a minority interest in a Permitted Syndication Subsidiary.

person ” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership, Governmental Authority or other entity.

Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, sponsored, maintained or contributed to by the Borrower or any ERISA Affiliate.

Platform ” shall have the meaning assigned to such term in Section 9.01.

Practice Guarantees ” shall mean admitting physician practice guarantees pursuant to which the Borrower or any of the Subsidiaries guarantees to pay an admitting physician on the medical staff of a Hospital the difference between such admitting physician’s monthly net revenue from professional fees and a minimum monthly guaranteed amount.

 

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Prime Rate ” shall mean the rate of interest per annum determined from time to time by Credit Suisse AG as its prime rate in effect at its principal office in New York City and notified to the Borrower.

Pro Rata Percentage ” of any Revolving Credit Lender at any time shall mean the percentage of the Total Revolving Credit Commitment represented by such Lender’s Revolving Credit Commitment. In the event the Revolving Credit Commitments shall have expired or been terminated, the Pro Rata Percentages shall be determined on the basis of the Revolving Credit Commitments most recently in effect, giving effect to any subsequent assignments.

Public Lender ” shall have the meaning assigned to such term in Section 9.01.

Qualified Capital Stock ” of any person shall mean any Equity Interest of such person that is not Disqualified Stock.

Receivables ” shall mean a right to receive payment arising from a sale or lease of goods or the performance of services by a person pursuant to an arrangement with another person by which such other person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit, and all proceeds thereof and rights (contractual or other) and collateral related thereto, and shall include, in any event, any items of property that would be classified as accounts receivable on the balance sheet of the Borrower or any of the Subsidiaries prepared in accordance with GAAP or an “account”, “chattel paper”, an “instrument”, a “general intangible” or a “payment intangible” under the Uniform Commercial Code as in effect in the State of New York and any “supporting obligations” or “proceeds” (as so defined) of any such items.

Receivables Transaction ” shall mean, with respect to the Borrower and/or any of the Subsidiaries, any transaction or series of transactions of sales, factoring or securitizations involving Receivables pursuant to which the Borrower or any Subsidiary may sell, convey or otherwise transfer to a Securitization Subsidiary or any other Person, and may grant a corresponding security interest in, any Receivables (whether now existing or arising in the future) of the Borrower or any Subsidiary, and any assets related thereto including collateral securing such Receivables, contracts and all Guarantees or other obligations in respect of such Receivables, the proceeds of such Receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted, in connection with sales, factoring or securitizations involving Receivables.

Receivables Transaction Amount ” shall mean (a) in the case of any Receivables securitization (but excluding any sale or factoring of Receivables), the amount of obligations outstanding under the legal documents entered into as part of such Receivables securitization on any date of determination that would be characterized as principal if such Receivables securitization were structured as a secured lending transaction rather than as a purchase and (b) in the case of any sale or factoring of Receivables, the cash purchase price paid by the buyer in connection with its purchase of

 

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Receivables (including any bills of exchange) less the amount of collections received in respect of such Receivables and paid to such buyer, excluding any amounts applied to purchase fees or discount or in the nature of interest, in each case as determined in good faith and in a consistent and commercially reasonable manner by the Borrower ( provided that if such method of calculation is not applicable to such sale or factoring of Receivables, the amount of Receivables Transaction Amount associated therewith shall be determined in a manner mutually acceptable to the Borrower and the Administrative Agent).

Received Exercise Proceeds Amount ” shall mean, as at any date of determination, an amount equal to (a) the aggregate net cash proceeds received by the Borrower in respect of any issuance of Equity Interests to employees or directors after the Closing Date, including payments in connection with the exercise of stock options, minus (b) the aggregate amount of all Restricted Payments made in reliance on Section 6.06(a)(viii) prior to such date.

Reference Margin ” shall have the meaning assigned to such term in Section 2.27.

Refinanced Indebtedness ” shall have the meaning assigned to such term in Section 6.01(w)(ii).

Refinancing Facility Agreement ” shall mean a Refinancing Facility Agreement, in form and substance reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Refinancing Term Lenders, establishing Refinancing Term Loan Commitments and effecting such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.28.

Refinancing Term Lender ” shall have the meaning assigned to such term in Section 2.28(a).

Refinancing Term Loan Commitments ” shall have the meaning assigned to such term in Section 2.28(a).

Refinancing Term Loans ” shall have the meaning assigned to such term in Section 2.28(a).

Register ” shall have the meaning assigned to such term in Section 9.04(d).

Regulation T ” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation   X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

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Related Parties ” shall mean, with respect to any specified person, such person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such person and such person’s Affiliates.

Release ” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

Repayment Date ” shall mean a Term Loan Repayment Date or an Incremental Term Loan Repayment Date.

Replacement Revolving Credit Facility ” shall have the meaning assigned to such term in Section 2.25(d).

Required Lenders ” shall mean, at any time, Lenders having Loans, L/C Exposure and unused Revolving Credit Commitments and Term Loan Commitments representing more than 50% of the sum of all Loans outstanding, L/C Exposure, unused Revolving Credit Commitments and Term Loan Commitments at such time; provided that the Revolving Loans, L/C Exposure and unused Revolving Credit Commitments of any Defaulting Lender shall be disregarded in the determination of the Required Lenders at any time.

Required Revolving Lenders ” shall mean, at any time, at least two Revolving Credit Lenders (or, if at any time there is only one Revolving Credit Lender, such Revolving Credit Lender) having Revolving Loans, L/C Exposure and unused Revolving Credit Commitments representing more than 50% of the sum of all Revolving Loans, L/C Exposure and unused Revolving Credit Commitments at such time; provided that the Revolving Loans, L/C Exposure and unused Revolving Credit Commitments of any Defaulting Lender shall be disregarded in the determination of the Required Revolving Lenders at any time.

Responsible Officer ” of any person shall mean any executive officer, executive vice president or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.

Restricted Indebtedness ” shall mean Indebtedness of the Borrower or any Subsidiary, the payment, prepayment, repurchase or defeasance of which is restricted under Section 6.09(b).

Restricted Payment ” shall mean any dividend or other distribution (whether in cash, securities or other property (other than Qualified Capital Stock of the person making such dividend or distribution)) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property (other than Qualified Capital Stock of the person making such dividend or distribution)), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary (other than, in each case, capital contributions to, or the purchase of Equity Interests in, any Subsidiary).

 

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Revolving Accession Agreement ” shall have the meaning assigned to such term in Section 2.26(a).

Revolving Credit Borrowing ” shall mean a Borrowing comprised of Revolving Loans.

Revolving Credit Commitment ” shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans hereunder (and to acquire participations in Letters of Credit as provided for herein) as set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Credit Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09, (b) increased from time to time pursuant to Section 2.26 and (c) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.

Revolving Credit Commitment Fee ” shall have the meaning assigned to such term in Section 2.05(a).

Revolving Credit Commitment Fee Rate ” shall have the meaning assigned to such term in the definition of the term “Applicable Percentage”.

Revolving Credit Commitment Increase ” shall have the meaning assigned to such term in Section 2.26(a).

Revolving Credit Commitment Increase Amendment ” shall have the meaning assigned to such term in Section 2.26(b).

Revolving Credit Exposure ” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s L/C Exposure.

Revolving Credit Lender ” shall mean a Lender with a Revolving Credit Commitment or an outstanding Revolving Loan.

Revolving Credit Maturity Date ” shall mean April 29, 2021; provided that if such day is not a Business Day the Revolving Credit Maturity Date shall be the Business Day immediately preceding such day.

Revolving Loans ” shall mean the revolving loans made by the Lenders to the Borrower pursuant to Section 2.01(b).

S&P ” shall mean Standard & Poor’s Ratings Service, or any successor thereto.

Sanctions ” shall have the meaning assigned to such term in Section 3.23.

 

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SEC ” shall mean the U.S. Securities and Exchange Commission or any Governmental Authority succeeding to any or all of its functions.

Secured Net Leverage Ratio ” shall mean, on any date, the ratio of (a) (i) Total Secured Debt minus (ii) the aggregate amount of unrestricted cash, cash equivalents and Permitted Investments that is included on the consolidated balance sheet of the Borrower and the Subsidiaries on such date, to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date for which financial statements have been delivered (or were required to be delivered) pursuant to Section 5.04(a) or (b). In any period of four consecutive fiscal quarters in which any Permitted Acquisition or any Significant Asset Sale occurs, the Secured Net Leverage Ratio shall be determined on a pro forma basis in accordance with Section 1.03.

Secured Net Leverage Ratio Condition ” shall mean, on any date, after giving pro forma effect to any Specified Transaction to occur on such date as contemplated by Section 1.03, that the Secured Net Leverage Ratio shall not be greater than 3.35 to 1.00.

Secured Parties ” shall have the meaning assigned to such term in the Guarantee and Collateral Agreement.

Securitization Subsidiary ” shall mean any special purpose Subsidiary that acquires Receivables generated by the Borrower or any of the Subsidiaries and that engages in no operations or activities other than those related to a Permitted Receivables Transaction.

Security Documents ” shall mean the Mortgages, the Guarantee and Collateral Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.12 or 9.20.

Senior Note Indenture ” shall mean each indenture under which Senior Notes are issued, as the same may be amended, restated, substituted, replaced, refinanced, supplemented or otherwise modified from time to time in accordance with Section 6.01(a).

Senior Notes ” shall mean the Borrower’s 11.625% Senior Notes due 2023 issued on or prior to the Closing Date, as the same may be amended, restated, substituted, replaced, refinanced, supplemented or otherwise modified from time to time in accordance with Section 6.01(a).

Separation Documents ” shall mean the Separation and Distribution Agreement, the Computer and Data Processing Transition Services Agreement, the Receivables Collection Agreement, the Billing and Collection Agreement, the Eligibility Screening Services Agreement, the Employee Service Center/HRIS Transition Services Agreement, the Shared Services Center Transition Services Agreement, the Supplemental Medicaid Program Services Agreement, certain other short-term transition services agreements that may be entered into on or following the Distribution Date, the Tax Matters Agreement and the Employee Matters Agreement, among CHS and its subsidiaries (not including the

 

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Borrower and its Subsidiaries), on the one hand, and the Borrower and its Subsidiaries, on the other hand, with respect to services and transactions relating to the separation of the Borrower and its Subsidiaries from CHS.

Shared Collateral Agent ” shall have the meaning assigned to such term in Section 9.20(b).

Significant Asset Sale ” shall mean the sale, transfer, lease or other disposition by the Borrower or any Subsidiary to any person other than the Borrower or a Subsidiary Guarantor of any Hospital or all or substantially all of the assets of, or a majority of the Equity Interests in, a person, or a division or line of business or other business unit of a person.

SPC ” shall have the meaning assigned to such term in Section 9.04(i).

Specified Representations ” shall mean the representations and warranties made in Sections 3.01, 3.02(a) and (b)(i)(A) and (B) (with respect to the Loan Documents), 3.03, 3.11, 3.12, 3.19, 3.22 and 3.23.

Specified Transaction ” shall mean (a) the consummation of a Permitted Acquisition or other acquisition permitted pursuant to Section 6.04, (b) the investment in a Permitted Joint Venture or an Unrestricted Subsidiary, or (c) the incurrence or assumption of Indebtedness pursuant to Section 6.01(m) or (v) and the use of proceeds thereof.

Spin-Off ” shall have the meaning assigned to such term in the Preliminary Statement.

Statutory Reserves ” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D of the Board). Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D of the Board) and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

subsidiary ” shall mean, as to any person, a corporation, partnership or other entity of which Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, directly or indirectly, or the management of which is otherwise Controlled, directly or indirectly, or both, by such person.

 

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Subsidiary ” shall mean any subsidiary of the Borrower; provided , however , that Unrestricted Subsidiaries shall be deemed not to be Subsidiaries for any purpose of this Agreement or the other Loan Documents.

Subsidiary Guarantor ” shall mean each Subsidiary listed on Schedule 1.01(b), and each other Subsidiary that is or becomes a party to the Guarantee and Collateral Agreement pursuant to Section 5.12 (it being understood and agreed that no (i) Foreign Subsidiary, (ii) Non-Significant Subsidiary, (iii) Permitted Syndication Subsidiary, (iv) Securitization Subsidiary, (v) Captive Insurance Subsidiary, (vi) Permitted Joint Venture Subsidiary or (vii) Subsidiary listed on Schedule 1.01(f), shall, in any case, be required to enter into the Guarantee and Collateral Agreement pursuant to Section 5.12, unless the Borrower elects to make any such Permitted Joint Venture Subsidiary a Subsidiary Guarantor and any Equity Interests issued by such Permitted Joint Venture Subsidiary and owned by any other Subsidiary Guarantor is pledged under the Guarantee and Collateral Agreement).

Syndication Proceeds ” shall have the meaning assigned to such term in Section 6.05(b)(iii).

Syndication Transaction ” shall mean a transaction (or series of transactions) whereby the Borrower or a Subsidiary sells, transfers or otherwise disposes of part, but not all, of its interest in a Subsidiary that owns, leases or operates a Hospital to one or more third parties or of its interest in a Hospital to a partially owned Subsidiary.

Synthetic Lease ” shall mean, as to any person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such person is the lessor.

Synthetic Lease Obligations ” shall mean, as to any person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.

Synthetic Purchase Agreement ” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which the Borrower or any Subsidiary is or may become obligated to make (a) any payment in connection with a purchase by any third party from a person other than the Borrower or any Subsidiary of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness; provided that no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of the Borrower or the Subsidiaries (or to their heirs and estates) shall be deemed to be a Synthetic Purchase Agreement.

 

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Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term Borrowing ” shall mean a Borrowing comprised of Term Loans or Incremental Term Loans.

Term Lender ” shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan.

Term Loan Commitment ” shall mean, with respect to each Term Lender, the commitment of such Term Lender to make Term Loans hereunder as set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender assumed its Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. Unless the context shall otherwise require, the term “ Term Loan Commitments ” shall include the Incremental Term Loan Commitments.

Term Loan Maturity Date ” shall mean April 29, 2022; provided that if such day is not a Business Day the Term Loan Maturity Date shall be the Business Day immediately preceding such day.

Term Loan Repayment Date ” shall have the meaning assigned to such term in Section 2.11(a).

Term Loans ” shall mean the term loans made by the Lenders to the Borrower pursuant to clause (a) of Section 2.01. Unless the context shall otherwise require, the term “ Term Loans ” shall include any Incremental Term Loans.

Total Debt ” shall mean, at any time, (a) the total Indebtedness of the Borrower and the Subsidiaries at such time (excluding (i) Indebtedness of the type described in clause (h) of the definition of such term or under performance or surety bonds, in each case except to the extent of any unreimbursed drawings thereunder and (ii) Indebtedness of the type described in clauses (c), (d), (e), (i), (j) and (k) of the definition of such term) minus (b) the aggregate amount of unrestricted cash, cash equivalents and Permitted Investments that is included on the consolidated balance sheet of the Borrower and the Subsidiaries at such time.

Total Leverage Ratio ” shall mean, on any date, the ratio of Total Debt on such date to Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date for which financial statements have been delivered (or were required to be delivered) pursuant to Section 5.04(a) or (b). In any period of four consecutive fiscal quarters in which any Permitted Acquisition or any Significant Asset Sale occurs, the Total Leverage Ratio shall be determined on a pro forma basis in accordance with Section 1.03.

 

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Total Revolving Credit Commitment ” shall mean, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time. As of the Closing Date, the Total Revolving Credit Commitment is $100,000,000.

Total Secured Debt ” shall mean, at any time the total Indebtedness of the Borrower and the Subsidiaries at such time (excluding (i) Indebtedness of the type described in clause (h) of the definition of such term or under performance or surety bonds, in each case except to the extent of any unreimbursed drawings thereunder and (ii) Indebtedness of the type described in clauses (c), (d), (e), (i), (j) and (k) of the definition of such term) that is secured by Liens on any property or asset of the Borrower and the Subsidiaries at such time.

Transactions ” shall mean, collectively, (a) the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder on the Closing Date, (b) the execution, delivery and performance by each Loan Party of each ABL Facility Loan Document to which it is to be party, (c) the Spin-Off, (d) the CHS Dividend, (e) the Contribution, (f) the Distribution, (g) all related transactions to occur on, prior to or after the Closing Date and (h) the payment of fees and expenses related to the foregoing.

Type ”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “ Rate ” shall mean the Adjusted LIBO Rate and the Alternate Base Rate.

Unrestricted Subsidiary ” shall mean any Subsidiary organized or acquired directly or indirectly by the Borrower after the Closing Date that the Borrower designates as an “Unrestricted Subsidiary” by written notice to the Administrative Agent. No Unrestricted Subsidiary may own any Equity Interests of a Subsidiary; provided that, so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower may redesignate any Unrestricted Subsidiary as a “Subsidiary” by written notice to the Administrative Agent and by complying with the applicable provisions of Section 5.12.

USA PATRIOT Act ” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

Voluntary Prepayment ” shall mean a prepayment of principal of Term Loans pursuant to Section 2.12 in any year to the extent that such prepayment reduces the scheduled installments of principal due in respect of Term Loans in any subsequent year.

wholly owned Subsidiary ” of any person shall mean a subsidiary of such person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the Equity Interests are, at the time any determination is being made, owned, Controlled or held by such person or one or more wholly owned Subsidiaries of such person or by such person and one or more wholly owned Subsidiaries of such person.

 

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Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Withholding Agent ” shall mean any Loan Party or the Administrative Agent.

Yield Differential ” shall have the meaning assigned to such term in Section 2.24(b).

SECTION 1.02.  Terms Generally . The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided , however , that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article VI or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article VI or any related definition for such purpose), then the Borrower’s compliance with such covenant shall at all times be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.

SECTION 1.03.  Pro Forma Calculations .  With respect to any period of four consecutive fiscal quarters during which any Permitted Acquisition, other acquisition permitted pursuant to Section 6.04 or Significant Asset Sale occurs, each of the Total Leverage Ratio and the Secured Net Leverage Ratio, and, without duplication, Consolidated EBITDA, shall, for all purposes set forth herein, be calculated with respect to such period on a pro forma basis after giving effect to such Permitted Acquisition, acquisition or Significant Asset Sale (and any related repayment of Indebtedness) (including, without duplication, (a) all pro forma adjustments permitted or required by Article 11 of Regulation S-X under the Securities Act of 1933, as amended, (b) pro forma adjustments for designation of any Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Subsidiary in accordance with the definition of “Unrestricted Subsidiary” (a “ Subsidiary Designation ”), and (c) pro forma adjustments for cost savings and synergies (net of continuing associated expenses) to the extent such cost savings and

 

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synergies are reasonably identifiable, reasonably supportable, are expected to have a continuing impact and have been realized or are reasonably expected to be realized within 12 months following any such Permitted Acquisition or acquisition (which cost savings and synergies shall be calculated on a pro forma basis as though they had been realized on the first day of such period); provided that at the election of the Borrower, such pro forma adjustment shall not be required to be determined for any Permitted Acquisition or other acquisition if the aggregate consideration paid in connection with such acquisition is less than $50,000,000; provided further that all such adjustments shall be set forth in a reasonably detailed certificate of a Financial Officer of the Borrower), assuming, for purposes of making such calculations, such Permitted Acquisition, Subsidiary Designation, acquisition permitted pursuant to Section 6.04 or Significant Asset Sale (and related repayment of Indebtedness), and any other Permitted Acquisitions and Significant Asset Sales (and related repayment of Indebtedness) that have been consummated during the period, had been consummated on the first day of such period; provided , further , that the aggregate amount added to or included in Consolidated EBITDA above in respect of synergies for any period of four consecutive fiscal quarters shall not exceed an amount equal to 20% of Consolidated EBITDA, calculated prior to giving effect to such additions and any other prior additions in respect of such period pursuant to this Section 1.03. In addition, solely for purposes of determining whether a Specified Transaction is permitted hereunder (including whether such Specified Transaction would result in a Default or Event of Default and whether the Secured Net Leverage Ratio Condition would be met), the Secured Net Leverage Ratio shall be calculated on a pro forma basis as provided in the preceding sentence.

SECTION 1.04.  Classification of Loans and Borrowings .   For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “Revolving Loan”) or by Type ( e.g. , a “Eurodollar Loan”) or by Class and Type ( e.g ., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class ( e.g ., a “Revolving Borrowing”) or by Type ( e.g., a “Eurodollar Borrowing”) or by Class and Type ( e.g. , a “Eurodollar Revolving Borrowing”).

SECTION 1.05.  Effectuation of Transactions . All references herein to the Borrower and the Subsidiaries shall be deemed to be references to such persons, and all the representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Spin-Off and the other Transactions to occur on the Closing Date, unless the context otherwise requires.

SECTION 1.06.  Excluded Swap Obligations.  (a) Notwithstanding any provision of this Agreement or any other Loan Document, no Guarantee by any Loan Party under any Loan Document shall include a Guarantee of any Obligation that, as to such Loan Party, is an Excluded Swap Obligation and no Collateral provided by any Loan Party shall secure any Obligation that, as to such Loan Party, is an Excluded Swap Obligation. In the event that any payment is made by, or any collection is realized from, any Loan Party as to which any Obligations are Excluded Swap Obligations, or from any Collateral provided by such Loan Party, the proceeds thereof shall be applied to pay the Obligations of such Loan Party as otherwise provided herein without giving effect to such Excluded Swap Obligations and each reference in this Agreement or any other Loan Document to the ratable application of such amounts as among the Obligations or any specified portion of the Obligations that would otherwise include such Excluded Swap Obligations shall be deemed so to provide.

 

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(b) The following terms shall for purposes of this Section 1.06 have the meanings set forth below:

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

Excluded Swap Obligation ” means, with respect to each Subsidiary Guarantor, any Swap Obligation if, and to the extent that, the Guarantee by such Subsidiary Guarantor of, or the grant by such Subsidiary Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Subsidiary Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Subsidiary Guarantor becomes effective with respect to such related Swap Obligation.

Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Subsidiary Guarantor that has total assets exceeding $10,000,000 or that otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder at the time such Swap Obligation is incurred (including as a result of any agreement in the Guarantee and Collateral Agreement or any other Guarantee or other support agreement in respect of the obligations of such Subsidiary Guarantor by the Borrower or another Person that constitutes an “eligible contract participant”).

Swap Obligation ” means, with respect to any Subsidiary Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

ARTICLE II

The Credits

SECTION 2.01.  Commitments .

(a) Term Loans . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Term Lender agrees, severally and not jointly, to make a Term Loan to the Borrower on the Closing Date in a principal amount not to exceed its Term Loan Commitment. Amounts paid or prepaid in respect of the Term Loans may not be reborrowed.

(b) The Revolving Credit Commitments . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Revolving Credit Lender agrees, severally and not jointly, to make Revolving Loans to the Borrower, at any time and from time to time after the Closing Date, and until the

 

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earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Credit Commitment. Within the limits set forth in the preceding sentence and subject to the terms, conditions and limitations set forth herein, the Borrower may borrow, pay or prepay and reborrow Revolving Loans.

(c) The Incremental Term Loan Commitments . Subject to the terms and conditions and relying upon the representations and warranties set forth herein and in the applicable Incremental Term Loan Assumption Agreement, each Lender having an Incremental Term Loan Commitment agrees, severally and not jointly, to make Incremental Term Loans to the Borrower, in an aggregate principal amount not to exceed its Incremental Term Loan Commitment. Amounts paid or prepaid in respect of Incremental Term Loans may not be reborrowed.

SECTION 2.02.  Loans . (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided , however , that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1,000,000 and not less than $3,000,000 (except, with respect to any Incremental Term Borrowing, to the extent otherwise provided in the related Incremental Term Loan Assumption Agreement) or (ii) equal to the remaining available balance of the applicable Commitments.

(b) Subject to Sections 2.02(f), 2.08 and 2.15, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided , however, that the Borrower shall not be entitled to request any Borrowing that, if made, would result in more than five Eurodollar Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

(c) Except with respect to Loans made pursuant to Section 2.02(f), each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 1:00 p.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account designated by the Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

 

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(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower to but excluding the date such amount is repaid to the Administrative Agent at a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error). If such Lender shall not repay to the Administrative Agent such corresponding amount within three Business Days after demand by the Administrative Agent, then the Administrative Agent shall be entitled to recover such amount with interest thereon at the rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing, on demand, from the Borrower. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

(e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Revolving Credit Borrowing if the Interest Period requested with respect thereto would end after the Revolving Credit Maturity Date.

(f) If an Issuing Bank shall not have received from the Borrower the payment required to be made by Section 2.23(e) within the time specified in such Section, such Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit Lender shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Lender’s Pro Rata Percentage of such L/C Disbursement (it being understood that (i) if the conditions precedent to borrowing set forth in Sections 4.01(b) and 4.01(c) have been satisfied, such amount shall be deemed to constitute an ABR Revolving Loan of such Lender and, to the extent of such payment, the obligations of the Borrower in respect of such L/C Disbursement shall be discharged and replaced with the resulting ABR Revolving Credit Borrowing, and (ii) if such conditions precedent to borrowing have

 

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not been satisfied, then any such amount paid by any Revolving Credit Lender shall not constitute a Loan and shall not relieve the Borrower from its obligation to reimburse such L/C Disbursement), and the Administrative Agent will promptly pay to such Issuing Bank amounts so received by it from the Revolving Credit Lenders. The Administrative Agent will promptly pay to applicable Issuing Bank any amounts received by it from the Borrower pursuant to Section 2.23(e) prior to the time that any Revolving Credit Lender makes any payment pursuant to this paragraph (f); any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made such payments and to the applicable Issuing Bank, as their interests may appear. If any Revolving Credit Lender shall not have made its Pro Rata Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Lender and the Borrower severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of the applicable Issuing Bank at (i) in the case of the Borrower, a rate per annum equal to the interest rate applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such Lender, for the first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base Rate.

SECTION 2.03.  Borrowing Procedure . In order to request a Borrowing (other than a deemed Borrowing pursuant to Section 2.02(f), as to which this Section 2.03 shall not apply), the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon), New York City time, three Business Days before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of a proposed Borrowing; provided that the request for the initial Borrowing of Term Loans on the Closing Date may be made not later than the time specified therefor by the Administrative Agent. Each such telephonic Borrowing Request shall be irrevocable, and shall be confirmed promptly by hand delivery or fax to the Administrative Agent of a written Borrowing Request and shall specify the following information: (i) whether the Borrowing then being requested is to be a Term Borrowing, an Incremental Term Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto; provided , however , that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Lender’s portion of the requested Borrowing.

SECTION 2.04.  Evidence of Debt; Repayment of Loans . (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender (i) the principal amount of each Term Loan of such Lender as provided in Section 2.11 and (ii) the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Credit Maturity Date.

 

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(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Class and Type thereof and, if applicable, the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Subsidiary Guarantor and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided , however , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms.

(e) Any Lender may request that Loans made by it hereunder be evidenced by a promissory note. In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form and substance reasonably acceptable to the Administrative Agent and the Borrower. Notwithstanding any other provision of this Agreement, in the event any Lender shall request and receive such a promissory note, the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns.

SECTION 2.05.  Fees . (a) The Borrower agrees to pay to each Revolving Credit Lender, through the Administrative Agent, on the last Business Day of March, June, September and December in each year and on each date on which any Revolving Credit Commitment of such Lender shall expire or be terminated as provided herein, a commitment fee (a “ Revolving Credit Commitment Fee ”) equal to the Revolving Credit Commitment Fee Rate per annum on the daily unused amount of the Revolving Credit Commitment of such Lender during the preceding quarter (or other period ending with the Revolving Credit Maturity Date or the date on which the Revolving Credit Commitments of such Lender shall expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(b) The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Engagement Letter at the times and in the amounts specified therein (the “ Administrative Agent Fees ”).

 

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(c) The Borrower agrees to pay (i) to each Revolving Credit Lender, through the Administrative Agent, on the last Business Day of March, June, September and December of each year and on the date on which the Revolving Credit Commitment of such Lender shall be terminated as provided herein, a fee (an “ L/C Participation Fee ”) calculated on such Lender’s Pro Rata Percentage of the daily aggregate L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter (or shorter period ending with the Revolving Credit Maturity Date or the date on which all Letters of Credit have been canceled or have expired and the Revolving Credit Commitments of all Lenders shall have been terminated) at a rate per annum equal to the Applicable Percentage from time to time used to determine the interest rate on Revolving Credit Borrowings comprised of Eurodollar Loans pursuant to Section 2.06, and (ii) to each Issuing Bank with respect to each Letter of Credit the standard fronting, issuance, amendment, renewal, extension and drawing fees specified from time to time by such Issuing Bank (the “ Issuing Bank Fees ”); provided that each such fronting fee charged from time to time shall not exceed 0.25% per annum of the aggregate undrawn face amount of the then outstanding Letters of Credit. All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid directly to the applicable Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06.  Interest on Loans . (a) Subject to the provisions of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be) at a rate per annum equal to the Alternate Base Rate plus the Applicable Percentage in effect from time to time.

(b) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Percentage in effect from time to time.

(c) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.07.  Default Interest . If the Borrower shall default in the payment of any principal of or interest on any Loan or any other amount due hereunder, by acceleration or otherwise, or under any other Loan Document, then, until such defaulted amount shall have been paid in full, to the extent permitted by law, such defaulted amount shall bear interest (after as well as before judgment), payable on demand, (a) in the case of principal, at the rate otherwise

 

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applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) equal to the rate that would be applicable to an ABR Loan of the applicable Class plus 2.00% per annum.

SECTION 2.08.  Alternate Rate of Interest . In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined that dollar deposits in the principal amounts of the Loans comprising such Borrowing are not generally available in the London interbank market, or that the rates at which such dollar deposits are being offered will not adequately and fairly reflect the cost to any Lender of making or maintaining its Eurodollar Loan during such Interest Period, or that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Borrower and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each determination by the Administrative Agent under this Section 2.08 shall be conclusive absent manifest error.

SECTION 2.09.  Termination and Reduction of Commitments . (a) The Term Loan Commitments (other than any Incremental Term Commitments, which shall terminate as provided in the related Incremental Term Loan Assumption Agreement) shall automatically terminate upon the making of the Term Loans on the Closing Date. The Revolving Credit Commitments shall automatically terminate on the Revolving Credit Maturity Date.

(b) Upon at least three Business Days’ prior written or fax notice to the Administrative Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Revolving Credit Commitments; provided , however , that (i) each partial reduction of the Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $3,000,000, and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount that is less than the Aggregate Revolving Credit Exposure at the time. Each notice delivered by the Borrower pursuant to this Section 2.09 shall be irrevocable; provided that a notice of termination of the Revolving Credit Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or any other event, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(c) Each reduction in the Revolving Credit Commitments hereunder shall be made ratably among the Lenders in accordance with their respective applicable Commitments. The Borrower shall pay to the Administrative Agent for the account of the applicable Lenders, on the date of each termination or reduction, the Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction.

 

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SECTION 2.10.  Conversion and Continuation of Borrowings . The Borrower shall have the right at any time upon prior irrevocable notice to the Administrative Agent (a) not later than 11:00 a.m., New York City time, on the date of conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 12:00 (noon), New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest Period, and (c) not later than 12:00 (noon), New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing to another permissible Interest Period, subject in each case to the following:

(i) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing;

(ii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type;

(iii) each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the Borrower at the time of conversion;

(iv) if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;

(v) any portion of a Borrowing of any Loans maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing;

(vi) any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing;

(vii) no Interest Period may be selected for any Eurodollar Term Borrowing that would end later than a Repayment Date occurring on or after the first day of such Interest Period if, after giving effect to such selection, the aggregate outstanding amount of (A) the Eurodollar Term Borrowings comprised of Term Loans or Other Term Loans, as applicable, with Interest Periods ending on or prior to such Repayment Date and (B) the ABR Term Borrowings comprised of Term Loans or Other Term Loans, as applicable, would not be at least equal to the principal amount of Term Borrowings to be paid on such Repayment Date; and

(viii) upon notice to the Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan.

 

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Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, then, the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender’s portion of any converted or continued Borrowing. If the Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be continued into an ABR Borrowing.

SECTION 2.11.  Repayment of Term Borrowings . (a) (i) The Borrower shall pay to the Administrative Agent, for the account of the Term Lenders, (A) on the last Business Day of each March, June, September and December, commencing with the last Business Day of June 2016 (each such date being called a “ Term Loan Repayment Date ”), a principal amount of the Term Loans (as adjusted from time to time pursuant to Sections 2.12, 2.13(g) and 2.24(d)) equal to 0.25% of the aggregate principal amount of all Term Loans outstanding on the Closing Date and (B) on the Term Loan Maturity Date, the aggregate principal amount of all Term Loans outstanding on such date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.

(ii) The Borrower shall pay to the Administrative Agent, for the account of the Incremental Term Lenders in respect of Incremental Term Loans incurred after the Closing Date, on each Incremental Term Loan Repayment Date, a principal amount of the Other Term Loans (as adjusted from time to time pursuant to Sections 2.12, 2.13(g) and 2.24(d)) equal to the amount set forth for such date in the applicable Incremental Term Loan Assumption Agreement, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.

(b) To the extent not previously paid, (i) all Term Loans shall be due and payable on the Term Loan Maturity Date and (ii) all Other Term Loans shall be due

 

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and payable on the Incremental Term Loan Maturity Date applicable thereto, in each case together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment.

(c) All repayments pursuant to this Section 2.11 shall be subject to Section 2.16, but shall otherwise be without premium or penalty.

SECTION 2.12.  Optional Prepayment . (a) Subject to paragraph (d) below, the Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days’ prior written or fax notice (or telephone notice promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or written or fax notice (or telephone notice promptly confirmed by written or fax notice) at least one Business Day prior to the date of prepayment in the case of ABR Loans, to the Administrative Agent before 11:00 a.m., New York City time; provided , however , that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $3,000,000.

(b) Optional prepayments of Term Loans shall be applied as directed by the Borrower, and if no such direction is provided, pro rata against the remaining scheduled installments of principal due in respect of the Term Loans to be prepaid under Section 2.11.

(c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing by the amount stated therein on the date stated therein; provided that a notice of prepayment may state that such notice is conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or any other event, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. All prepayments under this Section 2.12 shall be subject to Section 2.16 but otherwise without premium or penalty, except as expressly provided in Section 2.12(d). All prepayments under this Section 2.12 (other than prepayments of ABR Revolving Loans that are not made in connection with the termination or permanent reduction of the Revolving Credit Commitments) shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

(d) If, prior to the date that is six months after the Closing Date, (i) all or any portion of the Term Loans are prepaid out of the proceeds of a substantially concurrent issuance or incurrence of secured term loans and the Effective Yield of such secured term loan financing is less than the Effective Yield of the Term Loans or (ii) a Term Lender must assign its Term Loans pursuant to Section 2.21 as a result of its failure to consent to an amendment that would reduce the Effective Yield then in effect with respect to such Term Loans then in each case the aggregate principal amount so prepaid or assigned will be subject to a fee payable by the Borrower, in each case equal to 1.0% of the principal amount thereof; provided that this Section 2.12(d) shall not apply to any prepayment of the Term Loans upon the occurrence of a Change in Control.

 

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(e) Notwithstanding anything to the contrary contained in this Section 2.12, so long as no Default has occurred and is continuing or would result therefrom, the Borrower may repurchase outstanding Term Loans on the following basis:

(i) the Borrower may make one or more offers (each, an “ Offer ”) to repurchase all or any portion of the Term Loans (the “ Offer Loans ”); provided that (A) the Borrower delivers to the Administrative Agent (for distribution to such Lenders) a notice of the aggregate principal amount of the Offer Loans that will be subject to such Offer no later than 12:00 (noon), New York City time, at least five Business Days (or such shorter period as may be agreed to by the Administrative Agent) in advance of the proposed consummation date of such Offer indicating (1) the last date on which such Offer may be accepted, (2) the maximum principal amount of the Offer Loans the Borrower is willing to repurchase in the Offer, (3) the Class of such Offer Loans, (4) the range of discounts to par at which the Borrower is willing to repurchase the Offer Loans and (5) the instructions, consistent with this Section 2.12(e) with respect to the Offer, that a Term Lender must follow in order to have its Offer Loans repurchased; (B) the maximum dollar amount of each Offer shall be no less than $10,000,000 or whole multiples of $1,000,000 in excess thereof; (C) the Borrower shall hold such Offer open for a minimum period of three Business Days; (D) a Term Lender who elects to participate in the Offer may choose to tender all or part of such Term Lender’s Offer Loans; (E) the proceeds of Revolving Loans or ABL Facility Loans may not be used to fund any repurchase under this Section 2.12(e); (F) the Offer shall be made to the Term Lenders holding the Offer Loans on a pro rata basis in accordance with the respective principal amount of the Offer Loans then due and owing to the applicable Term Lenders; and (G) the Offer shall be conducted pursuant to such procedures as the Administrative Agent may reasonably establish; and

(ii) following a repurchase pursuant to this Section 2.12(e) by the Borrower, (A) the Offer Loans so repurchased shall, without further action by any person, be deemed cancelled for all purposes and no longer outstanding for all purposes of this Agreement and all the other Loan Documents and (B) the Borrower will promptly advise the Administrative Agent of the total amount of Offer Loans that were repurchased from each Lender who elected to participate in the Offer.

SECTION 2.13.  Mandatory Prepayments . (a) In the event of any termination of all the Revolving Credit Commitments, the Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Credit Borrowings and replace or cause to be canceled (or make other arrangements satisfactory to the Administrative Agent and the Issuing Banks with respect to) all outstanding Letters of Credit. If, after giving effect to any partial reduction of the Revolving Credit Commitments or at any other time, the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment, then the Borrower shall, on the date of such reduction or at such other time, repay or prepay Revolving Credit Borrowings and, after the Revolving Credit Borrowings shall have been repaid or prepaid in full, replace or cause to be canceled (or make other arrangements satisfactory to the Administrative Agent and the Issuing Banks with respect to) Letters of Credit in an amount sufficient to eliminate such excess.

 

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(b) Not later than the fifth Business Day after the receipt of Net Cash Proceeds in respect of any Asset Sale (other than, for the avoidance of doubt, sales of Receivables in a Permitted Receivables Transaction), the Borrower shall apply 100% of such Net Cash Proceeds received (and not yet used to prepay Term Loans pursuant to this Section 2.13(b)) to prepay outstanding Term Loans in accordance with Section 2.13(g); provided that the Borrower may use a portion of such Net Cash Proceeds to prepay or repurchase Other Senior Secured Debt to the extent any applicable credit agreement, indenture or other agreement governing such Other Senior Secured Debt requires the Borrower to prepay or make an offer to purchase such Other Senior Secured Debt with the proceeds of such Asset Sale, in each case in an amount not to exceed the product of (A) the amount of such Net Cash Proceeds and (B) a fraction, the numerator of which is the outstanding principal amount of such Other Senior Secured Debt and the denominator of which is the sum of the outstanding principal amount of such Other Senior Secured Debt and the outstanding principal amount of Term Loans.

(c) No later than 95 days after the end of each fiscal year of the Borrower (beginning with the fiscal year ending December 31, 2016), the Borrower shall prepay outstanding Term Loans in accordance with Section 2.13(g) in an aggregate principal amount equal to (x) 50% of Excess Cash Flow for the fiscal year then ended minus (y) Voluntary Prepayments made during such fiscal year; provided that such percentage shall be reduced to 25% if the Secured Net Leverage Ratio as of the end of such fiscal year was less than 2.35 to 1.00 but equal to or greater than 1.85 to 1.00 and such percentage shall be reduced to zero (i.e., no payments shall be required pursuant to this Section 2.13(c)) if the Secured Net Leverage Ratio as of the end of such fiscal year was less than 1.85 to 1.00.

(d) In the event that the Borrower or any of its subsidiaries shall receive Net Cash Proceeds from the issuance or incurrence of Indebtedness for money borrowed (other than any cash proceeds from the issuance of Indebtedness for money borrowed permitted pursuant to Section 6.01), the Borrower shall, substantially simultaneously with (and in any event not later than the fifth Business Day next following) the receipt of such Net Cash Proceeds by the Borrower or such subsidiary, apply an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Term Loans in accordance with Section 2.13(g).

(e) [Intentionally Omitted].

(f) Notwithstanding the foregoing, any Term Lender may elect, by written notice delivered to the Administrative Agent not later than 5:00 p.m. New York City time one Business Day after the date of such Lender’s receipt of notice regarding such prepayment (or, if different, at the time and in the manner otherwise specified by the Administrative Agent in such notice of prepayment), to decline all (but not less than all) of any mandatory prepayment of its Term Loans pursuant to this Section 2.13 (such

 

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declined amounts, the “ Declined Proceeds ”). To the extent Term Lenders elect to decline their pro rata shares of such Declined Proceeds, such remaining Declined Proceeds may be retained by the Borrower.

(g) Mandatory prepayments of outstanding Term Loans under this Agreement shall be allocated pro rata among the Term Loans and the Other Term Loans and first applied in order of maturity of the scheduled installments of principal due in respect of the Term Loans and the Other Term Loans under Sections 2.11(a)(i) and 2.11(a)(ii). The amount of any mandatory prepayment in respect of Term Loans of any Class shall be applied first to Term Loans of such Class that are ABR Loans to the full extent thereof before application to Term Loans of such Class that are Eurodollar Loans, in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant to Section 2.16.

(h) The Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.13(b), (c) or (d), as applicable, (i) a certificate signed by a Financial Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the extent practicable, at least two days prior written notice of such prepayment. Each notice of prepayment shall specify the prepayment date, the Type of each Loan being prepaid and the principal amount of each Loan (or portion thereof) to be prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject to Section 2.16, but shall otherwise be without premium or penalty, and shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment (which interest amounts shall reduce the amount of Net Cash Proceeds required to be applied to prepay the Loans).

SECTION 2.14.  Reserve Requirements; Change in Circumstances . (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender or Issuing Bank (except any such reserve requirement which is reflected in the Adjusted LIBO Rate), shall subject any Lender, any Issuing Bank or the Administrative Agent to any Taxes (other than (i) Indemnified Taxes imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (ii) Excluded Taxes) on its Loans, Commitments or other obligations or its deposits, reserves, other liabilities or capital attributable thereto or shall impose on such Lender or Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender or Issuing Bank of making or maintaining any Eurodollar Loan or increase the cost to any Lender or Issuing Bank of issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or Issuing Bank to be material, then the Borrower will pay to such Lender or Issuing Bank, as the case may be, from time to time such additional amount or amounts as will compensate such Lender or Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

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(b) If any Lender or Issuing Bank shall have determined that any Change in Law regarding capital adequacy or liquidity has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made or participations in Letters of Credit purchased by such Lender pursuant hereto or the Letters of Credit issued by an Issuing Bank pursuant hereto to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy or liquidity) by an amount deemed by such Lender or Issuing Bank to be material, then from time to time the Borrower shall pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or Issuing Bank the amount shown as due on any such certificate delivered by it within 30 days after its receipt of the same.

(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be under any obligation to compensate any Lender or Issuing Bank under paragraph (a) or (b) above with respect to increased costs or reductions with respect to any period prior to the date that is 180 days prior to such request if such Lender or Issuing Bank knew or could reasonably have been expected to know of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions; provided further that the foregoing limitation shall not apply to any increased costs or reductions arising out of the retroactive application of any Change in Law within such 180-day period. The protection of this Section shall be available to each Lender and Issuing Bank regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.

SECTION 2.15.  Change in Legality . (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower and to the Administrative Agent:

(i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods) and ABR Loans will not thereafter (for

 

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such duration) be converted into Eurodollar Loans, whereupon any request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and

(ii) such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans.

(b) For purposes of this Section 2.15, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower.

SECTION 2.16.  Indemnity . The Borrower shall indemnify each Lender against any loss or expense (but not against any lost profits) that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this clause (a) being called a “ Breakage Event ”) or (b) any default in the making of any payment or prepayment of any Eurodollar Loan required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrower and shall be conclusive absent manifest error.

 

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SECTION 2.17.  Pro Rata Treatment . Except as required under Section 2.13(f) or 2.15, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each reduction of the Term Loan Commitments or the Revolving Credit Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole dollar amount.

SECTION 2.18.  Sharing of Setoffs . Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Borrower or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means (excluding means expressly contemplated elsewhere in this Agreement), obtain payment (voluntary or involuntary) in respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid principal portion of its Loans and participations in L/C Disbursements shall be proportionately less than the unpaid principal portion of the Loans and participations in L/C Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans and L/C Exposure of such other Lender, so that the aggregate unpaid principal amount of the Loans and L/C Exposure and participations in Loans and L/C Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans and L/C Exposure then outstanding as the principal amount of its Loans and L/C Exposure prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans and L/C Exposure outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided , however , that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Borrower expressly consents to the foregoing arrangements and agree that any Lender holding a participation in a Loan or L/C Disbursement deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such participation.

SECTION 2.19.  Payments . (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any L/C Disbursement or any Fees or other amounts) hereunder and under any other Loan Document not later than 1:00 p.m., New York City time, on the date when due in immediately available dollars, without setoff, defense or counterclaim. Each such payment (other than Issuing Bank Fees, which shall be paid directly to the applicable Issuing Bank) shall be made to the Administrative Agent at its offices at Eleven Madison Avenue, New York, NY 10010. The Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender.

 

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(b) Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

(c) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or an Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuing Bank, as the case may be, the amount due. In such event, if the Borrower does not in fact make such payment, then each of the Lenders or Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, and to pay interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error).

SECTION 2.20.  Taxes . (a) Any and all payments by or on account of any obligation of the Borrower or any other Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that, if the Borrower or any other Loan Party shall be required by applicable law to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such Loan Party shall make such deductions and (iii) the Borrower or such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes that are payable or paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower or any other Loan Party hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under

 

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this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto; provided that the Borrower shall not be obligated to so indemnify any Lender, the Administrative Agent or any Issuing Bank in respect of interest or penalties attributable to any Indemnified Taxes or Other Taxes to the extent that such interest or penalties resulted solely from the gross negligence or willful misconduct of the Administrative Agent, such Lender or such Issuing Bank. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on behalf of itself or a Lender, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes, Excluded Taxes or Other Taxes by the Borrower or any other Loan Party to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) (i) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate.

(ii) If a payment made to a Lender or Issuing Bank under this Agreement or any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender or Issuing Bank 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 or Issuing Bank shall deliver to the Withholding Agent, at the time or times prescribed by law and at such other time or times reasonably requested by the Withholding 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 Withholding Agent as may be necessary for the Withholding Agent to comply with its obligations under FATCA, to determine that such Lender or Issuing Bank has complied with such Lender’s or Issuing Bank’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (ii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender and Issuing Bank agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

 

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(f) Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(f) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided , that this paragraph (f) shall not create any additional obligation of the Borrower hereunder. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (f).

(g) Each party’s obligations under this Section 2.20 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments, the cancellation or expiration of any Letter of Credit, and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(h) For purposes of this Section 2.20, the term “Lender” includes any Issuing Bank.

SECTION 2.21.  Assignment of Commitments Under Certain Circumstances; Duty to Mitigate . (a) In the event (i) any Lender or Issuing Bank delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in Section 2.15, (iii) the Borrower is required to pay any additional amount to any Lender or Issuing Bank or any Governmental Authority on account of any Lender or Issuing Bank pursuant to Section 2.20, (iv) any Lender refuses to consent to any amendment, waiver or other modification of any Loan Document requested by the Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, (v) any Lender refuses to consent to any Loan Modification Offer, and such Loan Modification Offer is consented to by Lenders holding a majority in interest of the Affected Class or (vi) any Lender becomes a Defaulting Lender, then, in each case, the Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender or Issuing Bank, as the case may be, and the Administrative Agent, require such Lender or Issuing Bank to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement (or, in the case of clause (iv), (v) or (vi) above, all of its interests, rights and obligations with respect to the Class of Loans or Commitments that is the subject of the related consent,

 

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amendment, waiver or other modification or in respect of which such Lender is a Defaulting Lender, as the case may be) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iv) or (v) above, shall consent to such requested amendment, waiver or other modification of any Loan Document (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing Banks), which consents shall not unreasonably be withheld or delayed, and (z) the Borrower or such Eligible Assignee shall have paid to the affected Lender or Issuing Bank in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans or L/C Disbursements of such Lender or Issuing Bank, respectively, plus all Fees (except, in the case of a Defaulting Lender, any Fees not required to be paid to such Defaulting Lender pursuant to the express provisions of this Agreement) and other amounts accrued for the account of such Lender or Issuing Bank hereunder with respect thereto (including any amounts under Sections 2.14 and 2.16); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s or Issuing Bank’s claim for compensation under Section 2.14, notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender or Issuing Bank to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender or Issuing Bank pursuant to paragraph (b) below), or if such Lender or Issuing Bank shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification or shall cease to be a Defaulting Lender, as the case may be, then such Lender or Issuing Bank shall not thereafter be required to make any such transfer and assignment hereunder. Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.21(a).

(b) If (i) any Lender or Issuing Bank shall request compensation under Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower is required to pay any additional amount to any Lender or Issuing Bank or any Governmental Authority on account of any Lender or Issuing Bank, pursuant to Section 2.20, then such Lender or Issuing Bank shall use reasonable efforts (which shall not require such Lender or Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in

 

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writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or Issuing Bank in connection with any such filing or assignment, delegation and transfer.

SECTION 2.22.  Reserved .

SECTION 2.23.  Letters of Credit . (a) General.   Subject to the terms and conditions herein set forth, the Borrower may request the issuance of a standby Letter of Credit for its own account or for the account of any of the Subsidiaries (in which case the Borrower and such Subsidiary shall be co-applicants with respect to such Letter of Credit), in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time while the L/C Commitment remains in effect (it being understood that no Issuing Bank shall be required to issue any commercial letter of credit (unless otherwise agreed to by such Issuing Bank)). This Section shall not be construed to impose an obligation upon any Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement, including any obligation to issue any Letter of Credit the proceeds of which would be made available to any Person in violation of Section 5.08. Notwithstanding anything to the contrary contained in this Section 2.23 or elsewhere in this Agreement, (i) in the event that a Revolving Credit Lender is a Defaulting Lender, no Issuing Bank shall be required to issue any Letter of Credit unless such Issuing Bank has entered into arrangements reasonably satisfactory to it and the Borrower to eliminate such Issuing Bank’s risk with respect to the participation in Letters of Credit by all such Defaulting Lenders, including by cash collateralizing each such Defaulting Lender’s Pro Rata Percentage of the applicable L/C Exposure, (ii) if agreed to between the Borrower and any Issuing Bank in writing, the obligation of such Issuing Bank (and its Affiliates) to issue, extend or renew any Letters of Credit under this Agreement may be terminated (in whole or in part) as provided therein and (iii) in no event shall the L/C Exposure in respect of Letters of Credit (including Existing Letters of Credit) on the Closing Date exceed $10,000,000. With respect to any Letter of Credit that, by its terms or the terms of any letter of credit application related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall (other than for purposes of Section 2.05(c)) be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions .  In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), the Borrower shall hand deliver, fax or transmit through other electronic communication to an Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension but in any event not less than three Business Days prior) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of

 

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Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit. If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any such request. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application, the terms and conditions of this Agreement shall control. A Letter of Credit shall be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that, after giving effect to such issuance, amendment, renewal or extension (i) the L/C Exposure shall not exceed $40,000,000, (ii) the portion of the L/C Exposure attributable to Letters of Credit issued by any Issuing Bank will not exceed the L/C Commitment of such Issuing Bank (unless otherwise agreed to by such Issuing Bank), (iii) the Revolving Credit Exposure of any Lender will not exceed such Lender’s Revolving Credit Commitment and (iv) the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment. The Borrower may, at any time and from time to time, reduce the L/C Commitment of any Issuing Bank with the consent of such Issuing Bank; provided that the Company shall not reduce the L/C Commitment of any Issuing Bank if, after giving effect to such reduction, the conditions set forth in clause (ii) above shall not be satisfied. Each Issuing Bank may assume that the conditions set forth in Article IV have been satisfied unless such Issuing Bank is notified by the Administrative Agent or Required Lenders that they have not been.

(c) Expiration Date .  Each Letter of Credit shall expire at the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit and the date that is five Business Days prior to the Revolving Credit Maturity Date, unless such Letter of Credit expires by its terms on an earlier date; provided , however , that a Letter of Credit may, upon the request of the Borrower, include a provision whereby such Letter of Credit shall be renewed automatically for additional consecutive periods of 12 months or less (but not beyond the date that is five Business Days prior to the Revolving Credit Maturity Date) unless the applicable Issuing Bank notifies the beneficiary thereof at least 30 days (or such longer period as may be specified in such Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed.

(d) Participations . By the issuance of a Letter of Credit and without any further action on the part of the applicable Issuing Bank or the Lenders, the Issuing Bank that is the issuer thereof hereby grants to each Revolving Credit Lender, and each such Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance of such Letter of Credit or, in the case of the Existing Letters of Credit, effective upon the Closing Date. In consideration

 

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and in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Bank, such Lender’s Pro Rata Percentage of each L/C Disbursement made by such Issuing Bank and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.02(f). Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement .  If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall pay to the Administrative Agent an amount equal to such L/C Disbursement not later than 1:00 p.m., New York City time, on the immediately following Business Day after the Issuing Bank notifies the Borrower thereof.

(f) Obligations Absolute . The Borrower’s obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of:

(i) any lack of validity or enforceability of any Letter of Credit or any Loan Document, or any term or provision therein;

(ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Loan Document;

(iii) the existence of any claim, setoff, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or other Affiliate thereof or any other person may at any time have against the beneficiary under any Letter of Credit, any Issuing Bank, the Administrative Agent or any Lender or any other person, whether in connection with this Agreement, any other Loan Document or any other related or unrelated agreement or transaction;

(iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and

(vi) any other act or omission to act or delay of any kind of the Issuing Banks, the Lenders, the Administrative Agent or any other person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.

 

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Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of the Borrower hereunder to reimburse L/C Disbursements will not be excused by the gross negligence or willful misconduct of an Issuing Bank. However, the foregoing shall not be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are determined by a court of competent jurisdiction by final judgment to have resulted primarily from such Issuing Bank’s gross negligence, bad faith or willful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. It is further understood and agreed that an Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (i) such Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute gross negligence or willful misconduct of such Issuing Bank.

(g) Disbursement Procedures .  Any Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall as promptly as possible give telephonic notification, confirmed by fax, to the Administrative Agent and the Borrower of such demand for payment and whether such Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank and the Revolving Credit Lenders with respect to any such L/C Disbursement.

(h) Interim Interest . If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, then, unless the Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid amount thereof shall bear interest for the account of such Issuing Bank, for each day

 

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from and including the date of such L/C Disbursement, to but excluding the earlier of the date of payment by the Borrower or the date on which interest shall commence to accrue thereon as provided in Section 2.02(f), at the rate per annum that would apply to such amount if such amount were an ABR Revolving Loan.

(i) Resignation or Removal of an Issuing Bank . An Issuing Bank may resign at any time by giving 30 days’ prior written notice to the Administrative Agent, the Lenders and the Borrower, and may be removed at any time by the Borrower by notice to the Issuing Banks, the Administrative Agent and the Lenders. Upon the acceptance of any appointment as Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank. At the time such removal or resignation shall become effective, the Borrower shall pay all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment as Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of an Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization .  If any Event of Default shall occur and be continuing, the Borrower shall, on the Business Day it receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit) thereof and of the amount to be deposited, deposit in an account with the Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C Exposure as of such date. Such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the Obligations. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits in Permitted Investments, which investments shall be made at the option and sole discretion of the Collateral Agent, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall (i) automatically be applied by the Administrative Agent to reimburse the Issuing Banks for L/C Disbursements for

 

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which they have not been reimbursed, (ii) be held for the satisfaction of the reimbursement obligations of the Borrower for the L/C Exposure at such time and (iii) if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit), be applied to satisfy the Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. Notwithstanding the foregoing, following the incurrence by the Borrower or any Subsidiary of any Other Senior Secured Debt, the treatment and application of any amounts provided by the Borrower as cash collateral hereunder shall be subject to the terms and provisions of any applicable Pari Passu Intercreditor Agreement and, in the event of any conflict between the terms of such Pari Passu Intercreditor Agreement and the terms of this paragraph (j), the terms of such Pari Passu Intercreditor Agreement shall govern.

(k) Additional Issuing Banks .  The Borrower may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this Agreement. Any Lender designated as an issuing bank pursuant to this paragraph (k) shall be deemed to be an “Issuing Bank” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Bank and such Lender.

SECTION 2.24.  Incremental Term Loans . (a) The Borrower may, by written notice to the Administrative Agent from time to time, request Incremental Term Loan Commitments in an amount not to exceed the Incremental Amount from one or more Incremental Term Lenders, which may include any existing Lender; provided that each Incremental Term Lender, if not already a Lender hereunder or Affiliate of a Lender or an Approved Fund, shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld or delayed). Such notice shall set forth (i) the amount of the Incremental Term Loan Commitments being requested (which shall be in minimum increments of $1,000,000 and a minimum amount of $25,000,000 or such lesser amount equal to the remaining Incremental Amount), (ii) the date on which such Incremental Term Loan Commitments are requested to become effective, and (iii) whether such Incremental Term Loan Commitments are commitments to make additional Term Loans or commitments to make term loans with terms different from the Term Loans (“ Other Term Loans ”).

(b) The Borrower and each Incremental Term Lender shall execute and deliver to the Administrative Agent an Incremental Term Loan Assumption Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Incremental Term Loan Commitment of each Incremental Term Lender. Each Incremental Term Loan Assumption Agreement shall specify the terms of the

 

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Incremental Term Loans to be made thereunder; provided that, without the prior written consent of the Required Lenders, (i) the final maturity date of any Other Term Loans shall be no earlier than the Latest Term Loan Maturity Date in effect at the time the Incremental Term Loan Commitments with respect to such Other Term Loans become effective (or, in the case of Other Term Loans all of the proceeds of which will be used to repay existing Term Loans, the latest maturity date of such refinanced Term Loans), (ii) the average life to maturity of the Other Term Loans shall be no shorter than the then remaining average life to maturity of any other Class of Loans (or, in the case of Other Term Loans all of the proceeds of which will be used to repay existing Term Loans, the then remaining average life to maturity of such refinanced Term Loans) and (iii) if the initial yield (excluding upfront or arrangement or similar fees payable to the arranger, if any, of such loan) on such Other Term Loans (as determined by the Administrative Agent to be equal to the sum of (x) the margin above the Adjusted LIBO Rate on such Other Term Loans (the “ Other Term Loan Margin ”) (which shall be increased by the amount that any “LIBOR floor” applicable to such Other Term Loans on the date such Other Term Loans are made would exceed the Adjusted LIBO Rate that would be in effect for a three-month Interest Period commencing on such date) and (y) if such Other Term Loans are initially made at a discount or the Lenders making the same (as opposed to the arranger, if any, thereof) receive a fee directly or indirectly from the Borrower or any Subsidiary for doing so (the amount of such discount or fee, expressed as a percentage of the Other Term Loans, being referred to herein as “ OID ”), the amount of such OID divided by the lesser of (A) the average life to maturity of such Other Term Loans and (B) four) exceeds by more than 50 basis points the sum of (1) the margin applicable for Eurodollar Term Loans of any Class (other than any Class of Term Loans that does not elect to be subject to this clause (iii) in its Incremental Term Loan Assumption Agreement or Loan Modification Agreement) (which margin shall be the sum of the Applicable Percentage for Eurodollar Term Loans of such Class (such margin, the “ Other Term Loan Reference Margin ”) increased by the amount that any “LIBOR floor” applicable to such Eurodollar Term Loans on such date would exceed the Adjusted LIBO Rate that would be in effect for a three-month Interest Period commencing on such date) plus (2) the OID (if any) initially paid in respect of such Term Loans (for any Class of Term Loans, the applicable amount of such excess above 50 basis points being referred to herein as the “ Yield Differential ”) then the Applicable Percentage then in effect for such Class of Term Loans shall automatically be increased to the Other Term Loan Reference Margin plus the applicable Yield Differential (or, in the case of that portion, if any, of the Yield Differential resulting from the “LIBOR floor” applicable to such Other Term Loans being greater than that applicable to such Class of Term Loans on the date such Other Term Loans are made, by first increasing or (if no “LIBOR floor” is applicable to such Class of Term Loans at such time) by adding a “LIBOR floor” with respect to such portion of the Yield Differential). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Incremental Term Loan Assumption Agreement. Each of the parties hereto hereby agrees that, upon the effectiveness of any Incremental Term Loan Assumption Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Incremental Term Loan Commitment and the Incremental Term Loans evidenced thereby.

 

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(c) Notwithstanding the foregoing, no Incremental Term Loan Commitment shall become effective under this Section 2.24 unless (i) on the date of such effectiveness, the applicable conditions set forth in paragraphs (b) and (c) of Section 4.01 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Borrower and (ii) except as otherwise specified in the applicable Incremental Term Loan Assumption Agreement, the Administrative Agent shall have received legal opinions, board resolutions and other closing certificates reasonably requested by the Administrative Agent and consistent with those delivered on the Closing Date under Section 4.02.

(d) Each of the parties hereto hereby agrees that the Administrative Agent may, in consultation with the Borrower, take any and all action as may be reasonably necessary to ensure that all Incremental Term Loans (other than Other Term Loans), when originally made, are included in each Borrowing of outstanding Term Loans on a pro rata basis. This may be accomplished by requiring each outstanding Eurodollar Term Borrowing to be converted into an ABR Term Borrowing on the date of each Incremental Term Loan, or by allocating a portion of each Incremental Term Loan to each outstanding Eurodollar Term Borrowing on a pro rata basis. Any conversion of Eurodollar Term Loans to ABR Term Loans required by the preceding sentence shall be subject to Section 2.16. If any Incremental Term Loan is to be allocated to an existing Interest Period for a Eurodollar Term Borrowing, then the interest rate thereon for such Interest Period and the other economic consequences thereof shall be as set forth in the applicable Incremental Term Loan Assumption Agreement. In addition, to the extent any Incremental Term Loans are not Other Term Loans, the scheduled amortization payments under Section 2.11(a)(i) required to be made after the making of such Incremental Term Loans shall be ratably increased by the aggregate principal amount of such Incremental Term Loans (adjusted as necessary for any prior amortization or prepayments of the existing Term Loans in order for such Incremental Term Loans and existing Term Loans to participate ratably in such scheduled amortization payments).

SECTION 2.25.  Loan Modification Offers; Replacement Revolving Credit Facility . (a) The Borrower may, by written notice to the Administrative Agent from time to time after the Closing Date, make one or more offers (each, a “ Loan Modification Offer ”) to all the Lenders of one or more Classes of Loans and/or Commitments (each Class subject to such a Loan Modification Offer, an “ Affected Class ”) to make one or more Permitted Amendments pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Borrower. Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and/or Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and/or Commitments of such Affected Class as to which such Lender’s acceptance has been made.

 

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(b) The Borrower and each Accepting Lender shall execute and deliver to the Administrative Agent a Loan Modification Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the acceptance of the Permitted Amendments and the terms and conditions thereof. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each of the parties hereto hereby agrees that, upon the effectiveness of any Loan Modification Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Permitted Amendment evidenced thereby and only with respect to the applicable Loans and/or Commitments of the Accepting Lenders of the Affected Class, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders of the Affected Class as a new “Class” of loans and/or commitments hereunder. Notwithstanding the foregoing, no Permitted Amendment shall become effective unless the Administrative Agent, to the extent reasonably requested by the Administrative Agent, shall have received legal opinions, board resolutions, officer’s and secretary’s certificates and other customary documentation consistent with those delivered on the Closing Date.

(c) “ Permitted Amendments ” means any or all of the following: (i) an extension of the final maturity date and/or amortization applicable to the applicable Loans and/or Commitments of the Accepting Lenders, (ii) a change in the Applicable Percentage with respect to the applicable Loans and/or Commitments of the Accepting Lenders, (iii) a change in the Fees payable to (or the inclusion of additional fees to be payable to) the Accepting Lenders, (iv) changes to any prepayment premiums with respect to the applicable Loans and Commitments, (v) such amendments to this Agreement and the other Loan Documents as shall be appropriate, in the reasonable judgment of the Administrative Agent, to provide the rights and benefits of this Agreement and other Loan Documents to each new “Class” of loans and/or commitments resulting therefrom and (vi) additional amendments to the terms of this Agreement applicable to the applicable Loans and/or Commitments of the Accepting Lenders that are less favorable to such Accepting Lenders than the terms of this Agreement prior to giving effect to such Permitted Amendments and that are reasonably acceptable to the Administrative Agent; provided, that, if any such Permitted Amendment shall create a new Class of Revolving Credit Commitments, (A) the allocation of the participation exposure with respect to any then-existing or subsequently issued or made Letter of Credit as between the commitments of such new “Class” and the Commitments of the then-existing Revolving Credit Lenders shall be made on a ratable basis as between the commitments of such new “Class” and the Commitments of the then-existing Revolving Credit Lenders and (B) the L/C Commitment may not be extended without the prior written consent of the applicable Issuing Bank.

(d) Notwithstanding anything to the contrary contained herein, this Agreement may be amended with the written consent of the Administrative Agent, the

 

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Borrower and the Lenders providing the relevant Replacement Revolving Credit Facility (as defined below) to effect the refinancing of all the Revolving Credit Commitments with a replacement facility under this Agreement (a “ Replacement Revolving Credit Facility ”); provided that (a) the aggregate amount of commitments under such Replacement Revolving Facility Commitments shall not exceed the aggregate amount of the replaced Revolving Credit Commitments and (b) the maturity date of such Replacement Revolving Credit Facility shall not be earlier than the latest Revolving Credit Maturity Date at the time of such replacement. Each of the parties hereto hereby agrees that, upon the effectiveness of any Replacement Revolving Credit Facility, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Replacement Revolving Credit Facility evidenced thereby. Notwithstanding the foregoing, (i) no Replacement Revolving Credit Facility shall become effective unless the Administrative Agent, to the extent reasonably requested by the Administrative Agent, shall have received legal opinions, board resolutions, officer’s and secretary’s certificates and other documentation consistent with those delivered on the Closing Date and (ii) an Issuing Bank shall not be obligated to continue to issue Letters of Credit, respectively, under the Replacement Revolving Credit Facility except to the extent it agrees in writing to do so at or prior to the effectiveness of the Replacement Revolving Credit Facility. Without limiting the foregoing, in the event that the initial Replacement Revolving Credit Facility is in an aggregate principal amount less than the aggregate principal amount of the Revolving Credit Commitments being replaced, this Agreement may be further amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the relevant additional commitments under the Replacement Revolving Credit Facility (and subject to the same limitations and requirements provided above in this paragraph (d)) to include additional commitments under the Replacement Revolving Credit Facility that will not cause the aggregate amount of the commitments thereunder to exceed the aggregate amount of the replaced Revolving Credit Commitments.

SECTION 2.26.  Revolving Credit Commitment Increases . (a) The Borrower may from time to time after the Closing Date, by written notice (a “ Notice of Increase ”) to the Administrative Agent (which shall promptly deliver a copy to each of the Revolving Credit Lenders), request that new Revolving Credit Commitments of any Class be extended or existing Revolving Credit Commitments of any Class be increased by one or more financial institutions, which may include any Revolving Credit Lender (any such financial institution, an “ Increasing Revolving Credit Lender ”) (any such extension or increase, a “ Revolving Credit Commitment Increase ”); provided that (i) the terms of the Revolving Credit Commitments under the Revolving Credit Commitment Increase shall be identical to the existing Revolving Credit Commitments of the applicable Class, except for any upfront fees paid to Increasing Revolving Credit Lenders; (ii) at the time of effectiveness of any Revolving Credit Commitment Increase effected pursuant to this paragraph the amount of such Revolving Credit Commitment Increase shall not exceed the Incremental Amount; (iii) each Revolving Credit Commitment Increase shall be in an aggregate principal amount of not less than $25,000,000, except to the extent necessary to utilize the remaining unused amount of increase permitted under this Section 2.26(a); (iv) prior to any such Revolving Credit Commitment Increase, except as otherwise specified in the applicable Revolving Accession Agreement, the Administrative Agent shall have received

 

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legal opinions, board resolutions and other closing certificates reasonably requested by the Administrative Agent and consistent with those delivered on the Closing Date under Section 4.02 and (v) at the time of each such Revolving Credit Commitment Increase request and immediately after giving effect to the effectiveness of each such Revolving Credit Commitment Increase, the applicable conditions set forth in paragraphs (b) and (c) of Section 4.01 shall be satisfied and the Administrative Agent shall have received certificates to that effect dated such dates and executed by a Financial Officer of the Borrower. Such Notice of Increase shall set forth the amount of the requested Revolving Credit Commitment Increase and the date on which such Revolving Credit Commitment Increase is requested to become effective. The Borrower may arrange for one or more Revolving Credit Lenders or one or more other financial institutions to act as Increasing Revolving Credit Lenders with respect to the proposed Revolving Credit Commitment Increase; provided that each Increasing Revolving Credit Lender shall be subject to the approval of the Administrative Agent, each Issuing Bank (which approvals shall not be unreasonably withheld, conditioned or delayed) and each Increasing Revolving Credit Lender shall become a party to this Agreement by completing and delivering to the Administrative Agent a duly executed accession agreement in a form reasonably satisfactory to the Administrative Agent and the Borrower (a “ Revolving Accession Agreement ”). Revolving Credit Commitment Increases shall become effective on the date specified in the Notice of Increase delivered pursuant to this paragraph (but not prior to, for any Increasing Revolving Credit Lender that is not already a Revolving Credit Lender, execution and delivery by such Increasing Revolving Credit Lender of a Revolving Accession Agreement). Upon the effectiveness of any Revolving Accession Agreement to which any Increasing Revolving Credit Lender is a party, such Increasing Revolving Credit Lender shall thereafter be deemed to be a party to this Agreement and shall be entitled to all rights, benefits and privileges, and subject to all obligations, of a Revolving Credit Lender hereunder.

(b) Each of the parties hereto hereby agrees that, upon the effectiveness of any Revolving Credit Commitment Increase, this Agreement may be amended (such amendment, a “ Revolving Credit Commitment Increase Amendment ”) without the consent of any Lender to the extent (but only to the extent) necessary to reflect the existence and terms of the Revolving Credit Commitment Increase evidenced thereby. Upon the effectiveness of each Revolving Credit Commitment Increase pursuant to this Section 2.26, (i) each Revolving Credit Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Increasing Revolving Credit Lender providing a portion of such Revolving Credit Commitment Increase, and each such Increasing Revolving Credit Lender will automatically and without further act be deemed to have assumed, a portion of such Revolving Credit Lender’s participations hereunder in outstanding Letters of Credit such that, after giving effect to such Revolving Credit Commitment Increase and each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding participations hereunder in Letters of Credit held by each Revolving Credit Lender (including each such Increasing Revolving Credit Lender) will equal such Lender’s Pro Rata Percentage and (ii) if, on the date of such Revolving Credit Commitment Increase, there are any Revolving Loans outstanding, such Revolving Loans shall on or prior to the effectiveness of such Revolving Credit Commitment Increase be prepaid from the proceeds of additional Revolving Loans made hereunder (reflecting such Revolving Credit Commitment Increase), which prepayment shall be

 

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accompanied by accrued interest on the Revolving Loans being prepaid and any costs incurred by any Lender in accordance with Section 2.12. The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

SECTION 2.27.  Term Loan Pricing Protection . From and after the Closing Date, if the initial yield on any New Term Loans incurred on or after such date (as determined by the Administrative Agent and to be equal to the sum of (x) the margin above the adjusted LIBO or eurocurrency rate on such New Term Loans (the “ New Loan Margin ”) (which shall be increased by the amount that any “LIBOR floor” applicable to such New Term Loans on the date such New Term Loans are made would exceed the adjusted LIBO or eurocurrency rate that would be in effect for a three-month Interest Period commencing on such date) and (y) if such New Term Loans are initially made at a discount or the lenders making the same (as opposed to the arrangers, if any, thereof) receive a fee directly or indirectly from the Borrower or any subsidiary of the Borrower for doing so (the amount of such discount or fee, expressed as a percentage of the New Term Loans, being referred to herein as “ New Term Loan OID ”), the amount of such New Term Loan OID divided by the lesser of (A) the average life to maturity of such New Term Loans and (B) four) exceeds by more than 50 basis points the sum of (1) the margin applicable to the Eurodollar Term Loans (which margin shall be the sum of the Applicable Percentage for Term Loans (such margin, the “ Reference Margin ”) increased by the amount that any “LIBOR floor” applicable to such Eurodollar Term Loans on such date would exceed the Adjusted LIBO Rate that would be in effect for a three-month Interest Period commencing on such date) plus (2) if such Term Loans were initially made at a discount or the Lenders making the same (as opposed to the arranger, if any, thereof) received a fee directly or indirectly from the Borrower or any Subsidiary for doing so (the amount of such discount or fee, expressed as a percentage of the Term Loans and calculated on a weighted average basis, being referred to herein as “ Extended OID ”), the amount of such Extended OID divided by four (such excess above 50 basis points being referred to herein as the “ New Term Loan Yield Differential ”) then the Applicable Percentage then in effect for such Term Loans shall automatically be increased to the Reference Margin plus the applicable New Term Loan Yield Differential (or, in the case of that portion, if any, of the New Term Loan Yield Differential resulting from the “LIBOR floor” applicable to such New Term Loans being greater than that applicable to such Term Loans on the date such New Term Loans are made, by first increasing or (if no “LIBOR floor” is applicable to such Term Loans at such time) by adding a “LIBOR floor” with respect to such portion of the New Term Loan Yield Differential).

SECTION 2.28.  Refinancing Term Facilities .   (a)The Borrower may, on one or more occasions after the Closing Date, by written notice to the Administrative Agent, request the establishment hereunder of one or more additional Classes of term loan commitments (the “ Refinancing Term Loan Commitments ”) pursuant to which each person providing such a commitment (a “ Refinancing Term Lender ”) will make term loans to the Borrower (the “ Refinancing Term Loans ”); provided that each Refinancing Term Lender shall be an Eligible Assignee and, if not already a Lender, shall otherwise be reasonably acceptable to the Administrative Agent.

 

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(b) The Refinancing Term Loan Commitments shall be effected pursuant to one or more Refinancing Facility Agreements executed and delivered by the Borrower, each Refinancing Term Lender providing such Refinancing Term Loan Commitments and the Administrative Agent; provided that no Refinancing Term Loan Commitments shall become effective unless (i) no Default shall have occurred and be continuing on the date of effectiveness thereof, (ii) on the date of effectiveness thereof, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct (A) in the case of the representations and warranties qualified as to materiality, in all respects and (B) otherwise, in all material respects, in each case on and as of such date, except in the case of any such representation and warranty that specifically relates to an earlier date, in which case such representation and warranty shall be so true and correct on and as of such earlier date, (iii) the Borrower shall have delivered to the Administrative Agent such legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other documents as shall reasonably be requested by the Administrative Agent in connection with any such transaction and (iv) substantially concurrently with the effectiveness thereof, the Borrower shall obtain Refinancing Term Loans thereunder and shall repay or prepay then outstanding Term Borrowings of any Class in an aggregate principal amount equal to the aggregate amount of such Refinancing Term Loan Commitments (less the aggregate amount of accrued and unpaid interest with respect to such outstanding Term Borrowings and any reasonable fees, premium and expenses relating to such refinancing) (and any such prepayment of Term Borrowings of any Class shall be applied to reduce the subsequent scheduled repayments of Term Borrowings of such Class to be made pursuant to Section 2.11 in the inverse order of maturity and, in the case of a prepayment of Eurodollar Term Borrowings, shall be subject to Section 2.16.

(c) The Refinancing Facility Agreement shall set forth, with respect to the Refinancing Term Loan Commitments established thereby and the Refinancing Term Loans and other extensions of credit to be made thereunder, to the extent applicable, the following terms thereof: (i) the designation of such Refinancing Term Loan Commitments and Refinancing Term Loans as a new “Class” for all purposes hereof, (ii) the stated termination and maturity dates applicable to the Refinancing Term Loan Commitments or Refinancing Term Loans of such Class; provided that such stated termination and maturity dates shall not be earlier than the Latest Term Loan Maturity Date, (iii) any amortization applicable thereto and the effect thereon of any prepayment of such Refinancing Term Loans; provided , that the weighted average life to maturity applicable to the Refinancing Term Loans shall not be shorter than the weighted average life to matrurity of the Term Loans so refinanced, (iv) the interest rate or rates applicable to the Refinancing Term Loans of such Class, (v) the fees applicable to the Refinancing Term Loans of such Class, (vi) any original issue discount applicable thereto, (vii) the initial Interest Period or Interest Periods applicable to Refinancing Term Loans of such Class, (viii) any voluntary or mandatory prepayment requirements applicable to Refinancing Term Loan Commitments or Refinancing Term Loans of such Class (which prepayment requirements may provide that such Refinancing Term Loans may participate in any mandatory prepayment on a pro rata basis with the Term Loans, but may not provide for prepayment requirements that are more favorable to the Lenders holding such Refinancing Term Loans than to the

 

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Lenders holding Term Loans) and any restrictions on the voluntary or mandatory reductions or prepayments of Refinancing Term Loan Commitments or Refinancing Term Loans of such Class and (ix) any financial covenant with which the Borrower shall be required to comply ( provided that any such financial covenant for the benefit of any Class of Refinancing Term Lenders shall also be for the benefit of all other Lenders). Except as contemplated by the preceding sentence, the terms of the Refinancing Term Loan Commitments and Refinancing Term Loans shall be substantially the same as the terms of the Term Loan Commitments and the Term Loans. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Facility Agreement. Each Refinancing Facility Agreement may, without the consent of any Lender other than the applicable Refinancing Term Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section, including any amendments necessary to treat the applicable Refinancing Term Loan Commitments and Refinancing Term Loans as a new “Class” of loans and/or commitments hereunder.

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Banks and each of the Lenders that:

SECTION 3.01.  Organization; Powers . Each of the Loan Parties (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, except, with respect to Loan Parties other than the Borrower, to the extent that the failure of such Loan Parties to be in good standing could not reasonably be expected to have a Material Adverse Effect, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, except to the extent that the failure to possess such power and authority could not reasonably be expected to result in a Material Adverse Effect, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and, in the case of the Borrower, to borrow hereunder.

SECTION 3.02.  Authorization . The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of the Borrower or any Subsidiary, (B) any order of any Governmental Authority or (C) any provision of any indenture, agreement or other instrument to which the Borrower or any Subsidiary is a party or by which any of them or any of their property is or may be bound, except as could not reasonably be expected to result in a Material Adverse Effect, (ii) be in conflict with, result in a breach of or

 

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constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument, except as could not reasonably be expected to result in a Material Adverse Effect or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary (other than any Lien created hereunder or under the Security Documents or permitted pursuant to Section 6.02 or under any ABL Facility Loan Document).

SECTION 3.03.  Enforceability . This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document constitutes, a legal, valid and binding obligation of the Borrower enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

SECTION 3.04.  Governmental Approvals . No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder, except for (a) the filing of Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of Mortgages and other filings and recordings in respect of Liens created pursuant to the Security Documents, (c) such as have been made or obtained and are in full force and effect and (d) such actions, consents, approvals, registrations or filings which the failure to obtain or make could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.05.  Financial Statements . The Borrower has heretofore furnished to the Lenders its consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Borrower as of and for the fiscal year ended December 31, 2015, audited by and accompanied by the opinion of Deloitte & Touche LLP, independent public accountant, and (ii) as of and for each 2016 fiscal quarter of the Borrower thereafter ended at least 45 days prior to the Closing Date. Such financial statements present fairly in all material respects the financial condition and results of operations and cash flows of the Borrower and its consolidated subsidiaries as of such dates and for such periods. Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of the Borrower and its consolidated subsidiaries as of the dates thereof in accordance with GAAP in all material respects. Such financial statements were prepared in accordance with GAAP applied on a consistent basis in all material respects, subject, in the case of unaudited financial statements, to year-end audit adjustments and the absence of footnotes.

SECTION 3.06.  No Material Adverse Change . No event, change or condition has occurred that has had, or could reasonably be expected to have, a material adverse effect on the business, assets, operations, financial condition or operating results of the Borrower and the Subsidiaries, taken as a whole, since December 31, 2015.

SECTION 3.07.  Title to Properties; Possession Under Leases . (a) Each of the Borrower and the Subsidiaries has good and marketable title to, or valid leasehold interests in, or

 

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a right to use, all its properties and assets (including all Mortgaged Property), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title or other interest could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02.

(b) As of the Closing Date, the Borrower has not received any notice of, and does not have any knowledge of, any pending or contemplated material condemnation proceeding affecting the Mortgaged Properties in any material respect or any sale or disposition thereof in lieu of condemnation.

(c) As of the Closing Date, neither the Borrower nor any of the Subsidiaries is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any material interest therein, except for customary rights of first refusal granted to the prior owners of such Mortgaged Property or their Affiliates.

SECTION 3.08.  Subsidiaries . Schedule 3.08 sets forth as of the Closing Date a list of all Subsidiaries and the percentage ownership interest of the Borrower therein. The shares of capital stock or other ownership interests so indicated on Schedule 3.08 are, in the case of corporations, fully paid and non-assessable and are owned by the Borrower, directly or indirectly, free and clear of all Liens (other than Liens created under the Security Documents and any ABL Facility Loan Document or permitted pursuant to Section 6.02).

SECTION 3.09.  Litigation; Compliance with Laws . (a) Except as disclosed in the periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC prior to the Closing Date, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of the Borrower through receipt of written notice or proceeding, threatened against or affecting the Borrower or any Subsidiary or any business, property or rights of any such person as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

(b) Neither the Borrower nor any of the Subsidiaries nor any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any occupational safety and health, health care, pension, certificate of need, Medicare, Medicaid, insurance fraud or similar law, zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.10.  Agreements . Neither the Borrower nor any of the Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11.  Federal Reserve Regulations . (a) Neither the Borrower nor any of the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, U or X.

SECTION 3.12.  Investment Company Act.   Neither the Borrower nor any Subsidiary is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.13.  Use of Proceeds . The Borrower will (a) use the proceeds of the Loans and will request the issuance of Letters of Credit only for the purposes specified in the Preliminary Statement to this Agreement and (b) use the proceeds of Incremental Term Loans only for the purposes specified in the applicable Incremental Term Loan Assumption Agreement.

SECTION 3.14.  Tax Returns . The Borrower and each of the Subsidiaries has filed or caused to be filed, or has timely requested an extension to file or has received an approved extension to file, all Federal, state, local and foreign Tax returns or materials that to the Borrower’s best knowledge are required to have been filed by it and has paid or caused to be paid all Taxes due and payable by it and all assessments received by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, shall have set aside on its books reserves in accordance with GAAP and except any such filings or Taxes, fees or charges, the failure of which to make or pay, could not reasonably be expected to have a Material Adverse Effect.

SECTION 3.15.  No Material Misstatements . None of (a) the Confidential Information Memorandum or (b) any other written information, report, financial statement, exhibit or schedule (other than estimates and information of a general economic or general industry nature) heretofore or contemporaneously furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto, when furnished and taken as a whole, contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading in light of the circumstances under which such statements were made; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, the Borrower represents only that it acted in good faith and utilized assumptions that the Borrower believed to be reasonable at the time made.

 

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SECTION 3.16.  Employee Benefit Plans . Each of the Borrower and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect. The present value of all benefit liabilities under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 715) did not, as of the last annual valuation date applicable thereto, exceed the fair market value of the assets of such Plan in such amount that could reasonably be expected to result in a Material Adverse Effect, and the present value of all benefit liabilities of all underfunded Plans (based on the assumptions used for purposes of Financial Accounting Standards Board Accounting Standards Codification Topic 715) did not, as of the last annual valuation dates applicable thereto, exceed the fair market value of the assets of all such underfunded Plans in such amount that could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.17.  Environmental Matters . Except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

SECTION 3.18.  Insurance . Schedule 3.18 sets forth a true, complete and correct description, in all material respects, of all insurance maintained by the Borrower for itself or the Subsidiaries as of the Closing Date. As of the Closing Date, such insurance is in full force and effect and all premiums have been duly paid. The Borrower and the Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice.

SECTION 3.19.  Security Documents . (a) The Guarantee and Collateral Agreement creates in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Guarantee and Collateral Agreement) and the proceeds thereof, subject to the effects of bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general equitable principles, and (i) with respect to all Pledged Collateral (as defined in the Guarantee and Collateral Agreement) to be delivered to the Collateral Agent or, in the case of Pledged Collateral (as defined in the Guarantee and Collateral Agreement) that is ABL Facility First Priority Collateral, the collateral agent under the ABL Facility Credit Agreement, the Lien created under the Guarantee and Collateral Agreement will constitute, a fully perfected first priority Lien (or, with respect to the ABL Facility First Priority Collateral, a fully perfected second priority Lien) on, and security interest in, all right, title and interest of the Loan Parties in such Pledged Collateral as to which perfection may be obtained by such actions, in each case prior and superior in right to any other person (other than the rights of persons pursuant to (x) Liens permitted by Section 6.02(z) and (y) Liens permitted by Section 6.02 having priority by operation of law), and (ii) with the filing of financing statements in appropriate form to be filed in the offices specified on Schedule 3.19(a) (as such schedule may be updated from time to time; provided , that such schedules shall be deemed to be

 

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updated when the Borrower provides the relevant information in accordance with the Guarantee and Collateral Agreement), the Lien created under the Guarantee and Collateral Agreement will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral (other than Intellectual Property, as defined in the Guarantee and Collateral Agreement) as to which perfection may be obtained by such filings, in each case prior and superior in right to any other person, other than with respect to Liens expressly permitted by Section 6.02 and, with respect to the ABL Facility First Priority Collateral, the ABL Lenders.

(b) The Guarantee and Collateral Agreement (or a short form security agreement in form and substance reasonably satisfactory to the Borrower and the Collateral Agent), together with the filings to be made pursuant to the Guarantee and Collateral Agreement with the United States Patent and Trademark Office and the United States Copyright Office and the financing statements to be filed in the offices specified on Schedule 3.19(a) (as such schedule may be updated from time to time; provided that such schedules shall be deemed to be updated when the Borrower provides the relevant information in accordance with the Guarantee and Collateral Agreement), will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the Guarantee and Collateral Agreement) in which a security interest may be perfected by filing security agreements in the United States and its territories and possessions, in each case prior and superior in right to any other person other than with respect to Liens permitted pursuant to Section 6.02 (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the Loan Parties after the Closing Date).

(c) The Mortgages are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties (as defined therein) a legal, valid and enforceable Lien on all of the Loan Parties’ right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and the Mortgages constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other person, other than with respect to the rights of persons pursuant to Liens expressly permitted by Section 6.02.

SECTION 3.20.  Location of Real Property and Leased Premises . (a) Schedule 1.01(c) lists completely and correctly as of the Closing Date all Hospitals owned by the Borrower and the Subsidiaries and the addresses thereof. The Borrower and the Subsidiaries own in fee all the real property set forth on Schedule 1.01(c).

(b) Schedule 1.01(c) lists completely and correctly as of the Closing Date all Hospitals leased by the Borrower and the Subsidiaries and the addresses thereof. The Borrower and the Subsidiaries have valid leases in all the material real property set forth on Schedule 1.01(c).

 

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SECTION 3.21.  Labor Matters . Except as set forth on Schedule 3.21, as of the Closing Date, there are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower by delivery of written notice or proceeding, threatened. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound. Except as set forth on Schedule 3.21, as of the Closing Date, neither the Borrower nor any Subsidiary is a party to any collective bargaining agreement or other labor contract applicable to persons employed by it at any Facility.

SECTION 3.22.  Solvency . After giving effect to the consummation of the Subject Transactions, (i) each of the Fair Value and the Present Fair Salable Value of the assets of the Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities; (ii) the Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital; and (iii) the Borrower and its Subsidiaries taken as a whole can pay their Stated Liabilities and Identified Contingent Liabilities as they mature. For purposes of this Section 3.22, the following terms shall have the meanings specified:

Subject Transactions ” shall mean the consummation of the Transactions and the other transactions to occur on the Closing Date (including the effectiveness of this Agreement, the making of the Loans to be made on the Closing Date, the use of proceeds of such Loans on the Closing Date and the payment of the CHS Dividend).

Fair Value ” shall mean the amount at which the assets (both tangible and intangible), in their entirety, of the Borrower and its Subsidiaries taken as a whole would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

Present Fair Salable Value ” shall mean the amount that could be obtained by an independent willing seller from an independent willing buyer if the assets (both tangible and intangible) of the Borrower and its Subsidiaries taken as a whole are sold on a going concern basis with reasonable promptness in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.

Stated Liabilities ” shall mean the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Borrower and its Subsidiaries taken as a whole, as of the date hereof after giving effect to the consummation of Subject Transactions, determined in accordance with GAAP consistently applied.

Identified Contingent Liabilities ” shall mean the maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of the Borrower and its Subsidiaries taken as a whole after giving effect to the Subject Transactions (including all fees and expenses related thereto but

 

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exclusive of such contingent liabilities to the extent reflected in Stated Liabilities), as identified and explained in terms of their nature and estimated magnitude by responsible officers of the Borrower.

Do not have Unreasonably Small Capital ” shall mean the Borrower and its Subsidiaries taken as a whole after giving effect to the Subject Transactions have sufficient capital to ensure that it is a going concern.

Can pay their Stated Liabilities and Identified Contingent Liabilities as they mature ” shall mean the Borrower and its Subsidiaries taken as a whole after giving effect to the Subject Transactions have sufficient assets and cash flow to pay their respective Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or (in the case of contingent liabilities) otherwise become payable.

SECTION 3.23.  Sanctions; FCPA . (a) None of the Borrower, any other Loan Party or any or their subsidiaries nor, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate of the Borrower, any Loan Party or any of their subsidiaries is (i) a person on the list of “Specially Designated Nationals and Blocked Persons” or (ii) subject to the limitations and prohibitions or any sanctions under or administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”), the U.S. State Department or any other relevant sanctions authority to whose jurisdiction the Borrower, any Loan Party or any of their subsidiaries is subject (collectively, “ Sanctions ”) and each is currently in compliance with all rules and regulations promulgated by OFAC, the U.S. State Department and each other relevant Sanctions authority to whose jurisdiction the Borrower, any Loan Party or any of their subsidiaries is subject. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower and its Subsidiaries and their respective directors, officer, employees and agents with Anti-Corruption Laws and Sanctions.

(b)None of the Borrower, any other Loan Party or any or their subsidiaries nor, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate of the Borrower, any Loan Party or any of their subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any applicable provision of the FCPA, OFAC or any Sanctions or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

ARTICLE IV

Conditions of Lending

The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions:

 

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SECTION 4.01.  All Credit Events . On the date of each Borrowing (other than a conversion or a continuation of a Borrowing), including on the date of each issuance of or increase to a Letter of Credit (each such event being called a “ Credit Event ”):

(a) The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.02) or, in the case of the issuance of or increase to a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of or increase to such Letter of Credit as required by Section 2.23(b).

(b) (i) In the case of an Incremental Acquisition Term Loan or Incremental Acquisition Revolving Credit Commitment Increase, the Specified Representations, and (ii) in all other cases, the representations and warranties set forth in Article III and in each other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(c) Except in the case of any Incremental Acquisition Term Loan or Incremental Acquisition Revolving Credit Commitment Increase, at the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing.

Each Credit Event shall be deemed to constitute a representation and warranty by the Borrower on the date of such Credit Event as to the applicable matters specified in paragraphs (b) and (c) of this Section 4.01.

SECTION 4.02.  First   Credit Event . On or prior to the Closing Date:

(a) The Administrative Agent shall have received from each party to this Agreement (i) a counterpart of this Agreement signed on behalf of each such party or (ii) evidence satisfactory to the Administrative Agent (which may include a facsimile or other electronic imaging transmission) that such party has signed such a counterpart.

(b) The Administrative Agent shall have received, on behalf of itself and the Lenders, a favorable written opinion of (i) Bass, Berry & Sims PLC, counsel for the Borrower, substantially to the effect set forth in Exhibit G-1, (ii) the general counsel of the Borrower, substantially to the effect set forth in Exhibit G-2, and (iii) each local counsel listed on Schedule 4.02(b), substantially to the effect set forth in Exhibit G-3, in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent and the Lenders, and (C) covering such matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and the Borrower hereby requests such counsel to deliver such opinions.

 

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(c) The Administrative Agent shall have received a copy of an opinion addressed to CHS from its outside tax advisor, subject to customary assumptions and limitations, as to the satisfaction of certain requirements necessary for the Distribution, together with certain related transactions, to qualify as generally tax-free for U.S. Federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code.

(d) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or its equivalent) of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above; and (iv) such other documents as the Lenders or the Administrative Agent may reasonably request.

(e) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer of the Borrower, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01 and paragraph (j) of this Section 4.02.

(f) The Administrative Agent shall have received all Administrative Agent Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.

(g) The Security Documents shall have been duly executed by each Loan Party that is to be a party thereto and shall be in full force and effect on the Closing Date. The Collateral Agent on behalf of the Secured Parties shall have a security interest in the Collateral of the type and priority described in each Security Document.

 

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(h) The Collateral Agent shall have received the results of a search of the Uniform Commercial Code filings (or equivalent filings) made with respect to the Loan Parties in the states (or other jurisdictions) of formation of such persons as indicated on the applicable schedules to the Guarantee and Collateral Agreement, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Collateral Agent that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 6.02 or have been or will be contemporaneously released or terminated.

(i) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Collateral Agent as additional insured.

(j) The Spin-Off (including the Contribution and the Distribution) shall have been, or substantially simultaneously with the initial funding of Loans on the Closing Date shall be, consummated in accordance with applicable law and as described in the Form 10 filed by the Borrower with the SEC and declared effective on April 4, 2016. The CHS Dividend shall be paid substantially simultaneously with the initial funding of Loans on the Closing Date.

(k) The Lenders shall have received the financial statements and opinion referred to in Section 3.05.

(l) The Administrative Agent shall have received (i) a solvency certificate from the chief financial officer of the Borrower on behalf of the Borrower in form and substance satisfactory to the Administrative Agent certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the Transactions to occur on the Closing Date, are solvent and (ii) a solvency certificate from the chief financial officer of CHS on behalf of CHS in form and substance satisfactory to the Administrative Agent certifying that CHS and its subsidiaries, on a consolidated basis after giving effect to the Transactions to occur on the Closing Date, are solvent.

(m) The Administrative Agent shall have received correct and complete copies of the Separation Documents.

(n) The Borrower and each Subsidiary shall cease to have any obligations under the Third Amended and Restated Credit Agreement dated as of July 25, 2007, as amended and restated as of November 5, 2010, February 2, 2012, and January 27, 2014, among CHS, CHS/Community Health Systems, Inc., the lenders party thereto and Credit Suisse AG, as administrative agent, or any other “Loan Document” or other agreement referred to therein or entered into in connection therewith.

 

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(o) The Lenders shall have received, at least five Business Days prior to the Closing Date, to the extent requested, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

(p) The ABL Facility Credit Agreement and the documents to be executed pursuant to the terms thereof shall have become effective in accordance with their terms.

ARTICLE V

Affirmative Covenants

The Borrower covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan and all Fees, all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been cancelled or have expired and all amounts drawn thereunder have been reimbursed in full or other arrangements acceptable to the applicable Issuing Bank and the Administrative Agent have been made with respect thereto, unless the Required Lenders shall otherwise consent in writing, the Borrower will, and will cause (i) in the case of Sections 5.01 and 5.02, each of the Material Subsidiaries, and (ii) in the case of Sections 5.03 through 5.14, each of the Subsidiaries to:

SECTION 5.01.  Existence; Compliance with Laws; Businesses and Properties . (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05.

(b) (i) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises and authorizations material to the conduct of its business, except as could not reasonably be expected to have a Material Adverse Effect; (ii) comply in all material respects with all applicable laws, rules, regulations and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except as could not reasonably be expected to have a Material Adverse Effect; and (iii) at all times maintain and preserve all tangible property material to the conduct of such business and keep such property in good repair, working order and condition (subject to ordinary wear and tear, casualty and condemnation) and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times, except as could not reasonably be expected to have a Material Adverse Effect.

(c) Comply with each Separation Document to which it is party, except if the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

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SECTION 5.02.  Insurance . (a) Maintain with financially sound and reputable insurers insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations, including hospital liability (which shall include general liability, medical professional liability, contractual liability and druggists’ liability), workers’ compensation, employers’ liability, automobile liability and physical damage coverage, environmental impairment liability, all risk property, business interruption, fidelity and crime insurance and public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; provided that the Borrower may implement programs of self insurance in the ordinary course of business and in accordance with industry standards for a company of similar size so long as reserves are maintained in accordance with GAAP for the liabilities associated therewith.

(b) Cause all casualty and property policies covering any Collateral to name the Collateral Agent as lender loss payee or mortgagee, and/or additional insured, and each provider of any such insurance shall agree, by endorsement upon such policies issued by it, that it will give the Administrative Agent 30 days prior written notice before any such policy or policies shall be altered or canceled.

(c) If at any time the area in which the Premises (as defined in the Mortgages) are located is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time.

SECTION 5.03.  Obligations and Taxes . Pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, could reasonably be expected to give rise to a Lien upon such properties or any part thereof; provided , however , that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (i) the validity or amount thereof shall be contested in good faith by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP or (ii) the failure to pay and discharge such Tax, assessment, charge, levy or claim could not reasonably be expected to have a Material Adverse Effect.

SECTION 5.04.  Financial Statements, Reports, etc . In the case of the Borrower, furnish to the Administrative Agent, which shall furnish to each Lender:

(a) within 90 days after the end of each fiscal year, its consolidated balance sheet and related statements of income, stockholders’ equity and cash flows showing the financial condition of the Borrower and its consolidated subsidiaries as of the close of such fiscal year and the results of its operations and

 

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the operations of such subsidiaries during such year, together with comparative figures for the immediately preceding fiscal year, all audited by Deloitte & Touche LLP or other independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which opinion shall be without a “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements fairly present in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP;

(b) within 50 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated balance sheet and related statements of income, stockholders’ equity and cash flows showing the financial condition of the Borrower and its consolidated subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, and comparative figures for the same periods in the immediately preceding fiscal year all certified by one of its Financial Officers as fairly presenting in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments;

(c) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, (ii) setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenant contained in Section 6.13 and, with respect to any Permitted Acquisition consummated during the preceding quarter for total consideration in excess of $50,000,000, 6.04(h), (iii) setting forth the identity and value of any Hospital acquired in fee by the Borrower or any Subsidiary during the preceding quarter and not previously identified to the Administrative Agent if the fair market value thereof is in excess of $5,000,000 and (iv) setting forth computations in reasonable detail satisfactory to the Administrative Agent of the Secured Net Leverage Ratio and the Total Leverage Ratio and, in the case of a certificate delivered with the financial statements required by paragraph (a) above, setting forth the Borrower’s calculation of Excess Cash Flow;

(d) within 120 days after the beginning of each fiscal year of the Borrower, a detailed consolidated budget for such fiscal year (including a projected consolidated balance sheet and related statements of projected operations and cash flows as of the end of and for such fiscal year and setting forth the assumptions used for purposes of preparing such budget) and, promptly when available, any significant revisions of such budget;

 

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(e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national securities exchange, or distributed to its shareholders, as the case may be;

(f) promptly after the request by any Lender (made through the Administrative Agent), all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act;

(g) promptly after the request by the Administrative Agent or any Lender, copies of (i) any documents described in Section 101(k)(1) of ERISA that the Borrower or any of its ERISA Affiliates may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l)(1) of ERISA that the Borrower or any of its ERISA Affiliates may request with respect to any Multiemployer Plan; provided that if the Borrower or any of its ERISA Affiliates has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower or the applicable ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof;

(h) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent may reasonably request (on behalf of itself or any Lender); and

(i) substantially contemporaneously with each designation of a Subsidiary as an “Unrestricted Subsidiary” and each redesignation of an Unrestricted Subsidiary as a “Subsidiary”, provide written notice of such designation or redesignation, as applicable, to the Administrative Agent (who shall promptly notify the Lenders).

SECTION 5.05.  Litigation and Other Notices . Furnish to the Administrative Agent, the Issuing Banks and each Lender, promptly after obtaining knowledge thereof, written notice of the following:

(a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

(b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrower or any Subsidiary that could reasonably be expected to result in a Material Adverse Effect; and

(c) any event or occurrence that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

 

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SECTION 5.06.  Information Regarding Collateral . Furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s corporate name, (ii) in any Loan Party’s jurisdiction of organization or formation, (iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan Party’s Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. The Borrower also agrees promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.

SECTION 5.07.  Maintaining Records; Access to Properties and Inspections; Maintenance of Ratings . (a) Keep books of record and account in which full, true and correct entries in all material respects are made of all dealings and transactions in relation to its business and activities which permit financial statements to be prepared in conformity with GAAP and all requirements of law. Each Loan Party will, and will cause each of its subsidiaries to, permit any representatives designated by the Administrative Agent or the Required Lenders to visit and inspect the financial records and the properties of such person at reasonable times and as often as reasonably requested upon reasonable notice and to make extracts from and copies of such financial records (in each case excluding patient medical records and any other material which is confidential pursuant to any laws, rules, regulations and decrees and orders of any Governmental Authority) and permit any representatives designated by the Administrative Agent or the Required Lenders to discuss the affairs, finances and condition of such person with the officers thereof and independent accountants therefor (with a senior officer of the Borrower present); provided that, excluding any such visits and inspections during the continuation of an Event of Default, only one such visit during any fiscal year shall be at the Borrower’s expense.

(b) In the case of the Borrower, use commercially reasonable efforts to cause the Credit Facilities to be continuously rated by S&P and Moody’s, and to maintain a corporate rating from S&P and a corporate family rating from Moody’s, in each case in respect of the Borrower.

SECTION 5.08.  Use of Proceeds . Use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes specified in the Preliminary Statement to this Agreement. The Borrower will not directly or indirectly use the proceeds of the Loans or request the issuance of Letters of Credit or otherwise make available such proceeds to any person for the purpose of financing the activities of any person currently subject to any Sanctions. The Borrower will not directly or indirectly use the proceeds of the Loans or request the issuance of Letters of Credit or otherwise make available such proceeds to any person in any country, territory or region that is subject to, or the target of, any Sanctions. No part of the proceeds of the Loans and no Letter of Credit shall be used directly or indirectly by the Borrower in violation

 

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of the FCPA or any similar laws, rules or regulations issued, administered or enforced by any Governmental Authority to whose jurisdiction the Borrower or any Subsidiary is subject (including, if so applicable, the United Kingdom Bribery Act of 2010, as amended) (collectively, the “ Anti-Corruption Laws ”) or in any manner that would result in a violation of any Sanctions by any party to this Agreement.

SECTION 5.09.  Employee Benefits . (a) Comply in all material respects with the applicable provisions of ERISA and the Code, except as would not reasonably be expected to have a Material Adverse Effect, and (b) furnish to the Administrative Agent as soon as possible after, and in any event within ten days after any Responsible Officer of the Borrower or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrower or any ERISA Affiliate in an aggregate amount exceeding $10,000,000, a statement of a Financial Officer of the Borrower setting forth details as to such ERISA Event and the action, if any, that the Borrower proposes to take with respect thereto.

SECTION 5.10.  Compliance with Environmental Laws . Comply, and cause all lessees and other persons occupying its properties to comply, in all material respects with all Environmental Laws applicable to its operations and properties; obtain and renew all material environmental permits necessary for its operations and properties; and promptly conduct any remedial action in accordance with Environmental Laws; provided , however , that neither the Borrower nor any Subsidiary shall be required to undertake any remedial action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

SECTION 5.11.  Reserved .

SECTION 5.12.  Further Assurances . (a) Execute any and all further documents, financing statements, agreements and instruments, and take all further action (including filing Uniform Commercial Code and other financing statements, mortgages and deeds of trust) that may be required under applicable law, or that the Required Lenders, the Administrative Agent or the Collateral Agent may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and priority of the security interests created or intended to be created by the Security Documents. The Borrower will cause any subsequently acquired or organized Material Subsidiary (or any Subsidiary that becomes a Material Subsidiary) to become a Loan Party by executing the Guarantee and Collateral Agreement and each applicable Security Document in favor of the Collateral Agent. The Borrower may, in its discretion, elect to cause a Permitted Joint Venture Subsidiary to become a Loan Party by complying with the foregoing sentence. In addition, except with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by written notice to the Borrower), the cost or other consequences (including any Tax consequence) of doing so shall be excessive in view of the benefits to be obtained by the Lenders therefrom and subject to applicable limitations set forth in the Security Documents, from time to time, the Borrower will, at its cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties as the Administrative Agent or the Required Lenders shall designate (it

 

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being understood that it is the intent of the parties that the Obligations shall be secured by substantially all the assets of the Borrower and the Subsidiary Guarantors (including assets acquired subsequent to the Closing Date), except this Section 5.12 shall not require the Borrower or any Subsidiary Guarantor to (i) pledge any Excluded Equity Interests, (ii) grant security interests in any Excluded Assets, (iii) deliver any certificates evidencing Equity Interests issued by Non-Significant Subsidiaries, (iv) enter into or deliver any control agreements or control or similar arrangements with respect to deposit accounts or securities accounts (except to the extent required under the ABL Facility Loan Documents), (v) take steps to perfect any security interest with respect to letter of credit rights and commercial tort claims (except to the extent perfected through the filing of Uniform Commercial Code financing statements) or (vi) enter into or deliver security documents governed by laws of a jurisdiction other than the United States or any State thereof or the District of Columbia. Such security interests and Liens will be created under the Security Documents and other security agreements, mortgages, deeds of trust and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent, and the Borrower shall deliver or cause to be delivered to the Lenders all such instruments and documents (including legal opinions, title insurance policies and lien searches) as the Collateral Agent shall reasonably request to evidence compliance with this Section. Any requirement to mortgage real property pursuant to this Section 5.12 shall be limited to real property owned in fee by a Loan Party that (A) in the case of real property acquired after the Closing Date, has a fair market value equal to or exceeding $5,000,000 and (B) is not subject to a Lien permitted under Section 6.02(c), (n) or (s) (for so long as such Lien exists). No appraisals, environmental reports or surveys shall be required to be obtained in connection with any mortgage of real property pursuant to this Section 5.12. The Borrower agrees to provide such evidence as the Collateral Agent shall reasonably request as to the perfection and priority status of each such security interest and Lien.

(b) Notwithstanding anything to the contrary herein, within 60 days after the Closing Date (or such later date as the Administrative Agent in its sole discretion may permit), the Borrower shall deliver, with respect to each Mortgaged Property set forth on Schedule 1.01(d), a mortgage, deed of trust or other applicable instrument which shall create and perfect a first-priority lien on and security interest in such parcels of real property securing the Obligations under this Agreement, subject only to Liens permitted by Section 6.02 hereof, together with opinions by local counsel regarding the enforceability of each such Mortgage, title insurance policies insuring such Mortgage as a valid first-priority lien, subject only to Liens permitted by Section 6.02 hereof and “life of loan” flood determinations, including, to the extent indicated by such flood determination that a Mortgaged Property is located in a special flood hazard area, Borrower’s written acknowledgment of receipt of such notice thereof from the Administrative Agent, flood insurance and other related documentation, in each case as required by Regulation H and other applicable laws, each of the foregoing being in all respects reasonably acceptable to the Administrative Agent.

SECTION 5.13.  Proceeds of Certain Dispositions . If, as a result of the receipt of any cash proceeds by the Borrower or any Subsidiary in connection with any sale, transfer, lease or other disposition of any asset the Borrower would be required by the terms of any Senior Note Indenture or the documentation governing any other Material Indebtedness that is unsecured or secured by Liens junior to the Liens securing the Obligations to make an offer to purchase any of

 

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the Indebtedness thereunder, then, prior to the first day on which the Borrower would be required to commence such an offer to purchase, (i) prepay Loans in accordance with Section 2.12 or 2.13, provided that the Borrower may use a portion of such cash proceeds to prepay or repurchase Other Senior Secured Debt to the extent any applicable credit agreement, indenture or other agreement governing such Other Senior Secured Debt requires the Borrower to prepay or make an offer to purchase such Other Senior Secured Debt with such cash proceeds, in each case in an amount not to exceed the product of (A) the amount of such cash proceeds and (B) a fraction, the numerator of which is the outstanding principal amount of such Other Senior Secured Debt and the denominator of which is the sum of the outstanding principal amount of such Other Senior Secured Debt and the outstanding principal amount of Term Loans, or (ii) acquire assets or make investments in a manner that is permitted hereby, in each case in a manner that will eliminate any such requirement to make such an offer to purchase.

SECTION 5.14.  Operation of Facilities . Use commercially reasonable efforts to operate, and cause the Subsidiaries to operate, the Facilities owned, leased or operated by the Borrower or any of the Subsidiaries now or in the future in a manner believed by the Borrower to be consistent with prevailing health care industry standards in the locations where the Facilities exist from time to time, except to the extent failure to do so would not have a Material Adverse Effect.

SECTION 5.15.  Anti-Corruption Laws . Each Loan Party shall (i) conduct its businesses in compliance with applicable Anti-Corruption Laws and (ii) maintain policies and procedures reasonably designed to promote and achieve compliance with such Anti-Corruption Laws.

ARTICLE VI

Negative Covenants

The Borrower covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been cancelled or have expired and all amounts drawn thereunder have been reimbursed in full or other arrangements acceptable to the applicable Issuing Bank and the Administrative Agent have been made with respect thereto, unless the Required Lenders shall otherwise consent in writing, the Borrower will not, nor will it cause or permit any of the Subsidiaries to:

SECTION 6.01.  Indebtedness . Incur, create, assume or permit to exist any Indebtedness, except:

(a) Indebtedness existing on the Closing Date and set forth in Schedule 6.01(a) and any extensions, renewals, refinancings or replacements of such Indebtedness to the extent the principal amount of such Indebtedness is not increased (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement), neither the

 

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final maturity nor the weighted average life to maturity of such Indebtedness is decreased, such Indebtedness, if subordinated to the Obligations, remains so subordinated on terms no less favorable to the Lenders, and the obligors thereof, if not the original obligors in respect of such Indebtedness, are Loan Parties;

(b) Indebtedness created hereunder and under the other Loan Documents;

(c) intercompany Indebtedness of the Borrower and the Subsidiaries to the extent permitted by Section 6.04(c);

(d) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement); provided that (i) such Indebtedness is incurred prior to or within 270 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this Section 6.01(d), when combined with the aggregate principal amount of all Capital Lease Obligations and Synthetic Lease Obligations incurred pursuant to Section 6.01(e), shall not exceed $50,000,000 at any time outstanding;

(e) Capital Lease Obligations and Synthetic Lease Obligations in an aggregate principal amount, when combined with the aggregate principal amount of all Indebtedness incurred pursuant to Section 6.01(d), not in excess of $50,000,000 at any time outstanding;

(f) Indebtedness (including Capital Lease Obligations) of any Subsidiary secured by one or more Facilities owned or leased by such Subsidiary, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement); provided that (i) when incurred, such Indebtedness shall not exceed the fair market value of the Facilities securing the same and (ii) the aggregate principal amount of all such Indebtedness incurred pursuant to this Section 6.01(f) shall not exceed $50,000,000 at any time outstanding (such Indebtedness meeting the criteria of this Section 6.01(f) being referred to herein as “ Permitted Real Estate Indebtedness ”);

(g) Indebtedness under performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations, or with respect to workers’ compensation claims, in each case incurred in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;

 

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(h) [reserved];

(i) Indebtedness in respect of Hedging Agreements permitted by Section 6.04(g);

(j) Cash Management Obligations;

(k) Indebtedness incurred by Foreign Subsidiaries in an aggregate principal amount not exceeding $25,000,000 at any time outstanding;

(l) [reserved];

(m) Indebtedness incurred to finance, or assumed in connection with, one or more Permitted Acquisitions, and any extensions, renewals, refinancings or replacements of such Indebtedness to the extent the principal amount of such Indebtedness is not increased (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement plus unused committed amounts), neither the final maturity nor the weighted average life to maturity of such Indebtedness is decreased, such Indebtedness, if subordinated to the Obligations, remains so subordinated on terms no less favorable to the Lenders, and the obligors thereof, if not the original obligors in respect of such Indebtedness, are Loan Parties;

(n) Indebtedness owed to a seller in a Permitted Acquisition or any other acquisition permitted under Section 6.04, or a Permitted Joint Venture or to a buyer in a disposition permitted under Section 6.05 that (i) relates to post-closing adjustments with respect to accounts receivable, accounts payable, net worth and/or similar items or earnouts or (ii) relates to indemnities granted to the seller or buyer in such transactions;

(o) Permitted Additional Debt; provided that, at the time of incurrence of such Permitted Additional Debt, and after giving pro forma effect thereto and to the use of the proceeds thereof, the Total Leverage Ratio shall not be greater than 5.50 to 1.00;

(p) Indebtedness in the nature of letters of credit (other than Letters of Credit and letters of credit issued pursuant to the ABL Facility Credit Agreement) issued for the account of the Borrower or any Subsidiary (and related reimbursement obligations) not to exceed an aggregate face amount of $20,000,000;

(q) without duplication of any other Indebtedness, non-cash accruals of interest, accretion or amortization of original issue discount and/or pay-in-kind interest on Indebtedness otherwise permitted hereunder;

(r) from and after the latest Revolving Credit Maturity Date (including the final maturity date of any Replacement Revolving Credit Facility), Indebtedness

 

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to finance the general needs of the Borrower and the Subsidiaries incurred after such latest Revolving Credit Maturity Date in an aggregate principal amount not to exceed, when taken together with the aggregate principal amount of all other outstanding Indebtedness incurred in reliance on this paragraph (r), $100,000,000 at any time outstanding; provided that the Borrower shall have (i) repaid all Revolving Loans and reimbursed, if any, all L/C Disbursements and made arrangements acceptable to the applicable Issuing Bank and the Administrative Agent with respect to any outstanding Letters of Credit and (ii) paid all related fees and expenses, each in accordance with the terms of this Agreement;

(s) Indebtedness consisting of obligations to pay insurance premiums;

(t) except as otherwise expressly provided herein, Guarantees by the Borrower or the Subsidiaries of Indebtedness of the Borrower and the Subsidiaries permitted to be incurred hereunder;

(u) other Indebtedness incurred after the Closing Date of the Borrower or the Subsidiaries in an aggregate principal amount not exceeding $75,000,000 at any time outstanding;

(v) (x) Pari Passu Debt, provided that, either (i) at the time of incurrence of such Pari Passu Debt, and after giving effect thereto and to the use of the proceeds thereof, (A) no Default or Event of Default shall have occurred and be continuing and (B) the Secured Net Leverage Ratio Condition shall be satisfied or (ii) not later than the fifth Business Day following the incurrence thereof, 100% of the Net Cash Proceeds thereof are used by the Borrower to prepay Term Loans in the manner set forth in Section 2.13(g) and (y) Pari Passu Debt or Permitted Additional Debt that refinances or replaces any existing Pari Passu Debt; provided that the principal amount of such Pari Passu Debt is not increased (except by an amount not to exceed (1) the amount of unpaid accrued interest and premium on the existing Pari Passu Debt so refinanced or replaced, plus (2) other reasonable amounts paid and fees and expenses incurred in connection with such refinancing or replacement plus unused commitments);

(w) (i) Alternative Incremental Facility Indebtedness; provided that (x) at the time of incurrence of such Alternative Incremental Facility Indebtedness the principal amount of such Alternative Incremental Facility Indebtedness does not exceed the Incremental Amount and (y) either (A) at the time of incurrence of such Alternative Incremental Facility Indebtedness, and after giving effect thereto and to the use of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing, (B) 100% of the Net Cash Proceeds thereof are used within five Business Days of the incurrence thereof to prepay then-outstanding Term Loans pursuant to Section 2.12 or (C) such Indebtedness is incurred in connection with a Permitted Acquisition; and (ii) any extensions, renewals, refinancings and replacements of Indebtedness permitted to be incurred pursuant to this Section 6.01(w) (the Indebtedness being extended, renewed, refinanced or replaced being referred to herein as the “ Refinanced Indebtedness ”; and the

 

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Indebtedness incurred under this subclause (ii) being referred to herein as “ Permitted Refinancing Indebtedness ”); provided that (x) the principal amount of the Permitted Refinancing Indebtedness is not increased (except by an amount equal to the accrued interest and premium on, or other amounts paid, and fees and expenses incurred, in connection with such extension, renewal, refinancing or replacement plus any unused commitments) and (y) the Permitted Refinancing Indebtedness complies with clauses (a) through (g) of the definition of the term “Alternative Incremental Facility Indebtedness”;

(x) (1) Other Junior Secured Debt of Loan Parties, provided that, at the time of incurrence of such Other Junior Secured Debt, (A) after giving effect thereto and to the use of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing and (B) after giving pro forma effect thereto and to the use of the proceeds thereof, the Secured Net Leverage Ratio shall not be greater than 3.35 to 1.00, and (2) Other Junior Secured Debt of Loan Parties that refinances or replaces any existing Other Junior Secured Debt of Loan Parties; provided that the principal amount of such Other Junior Secured Debt is not increased (except by an amount not to exceed (x) the amount of unpaid accrued interest and premium on the existing Other Junior Secured Debt so refinanced or replaced, plus (y) other reasonable amounts paid and fees and expenses incurred in connection with such refinancing or replacement plus unused commitments); and

(y) (i) Indebtedness under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $150,000,000 (plus the aggregate principal amount of any protective advances or overadvances made under the ABL Facility Credit Agreement); provided that such Indebtedness is secured only by Liens permitted under Section 6.02(cc), or (ii) in lieu of Indebtedness under the foregoing clause (i), Indebtedness pursuant to any Permitted Receivables Transaction incurred in accordance with Section 6.05(b).

SECTION 6.02.  Liens . Create, incur, assume or permit to exist any Lien on any property or assets (including Equity Interests or other securities of any person, including the Borrower or any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

(a) Liens on property or assets of the Borrower and the Subsidiaries existing on the Closing Date and set forth in Schedule 6.02(a); provided that such Liens shall secure only those obligations which they secured on the Closing Date and extensions, renewals and replacements thereof permitted hereunder;

(b) any Lien created under the Loan Documents;

(c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or assets of any person that becomes a Subsidiary after the Closing Date prior to the time such person becomes a Subsidiary, as the case may be; provided that (i) such Lien is

 

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not created in contemplation of or in connection with such acquisition or such person becoming a Subsidiary, (ii) such Lien does not apply to any other property or assets of the Borrower or any Subsidiary (other than affixed or incorporated into the property covered by such Lien) and (iii) such Lien secures only those obligations which it secures on the date of such acquisition or the date such person becomes a Subsidiary, as the case may be, and any extensions, renewals, refinancings or replacements of such obligations;

(d) Liens, assessments or governmental charges or claims for taxes not yet delinquent or which are not required to be paid pursuant to Section 5.03;

(e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business and securing obligations that are not delinquent or which are not required to be paid under Section 5.03;

(f) Liens incurred and pledges and deposits made in the ordinary course of business in connection with any self-retention or self-insurance, or with respect to workmen’s compensation, unemployment insurance, general liability, medical malpractice, professional liability or property insurance and other social security laws or regulations;

(g) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, government contracts, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(h) zoning restrictions, easements, rights-of-way, rights of first refusal, restrictions on use of real property, minor defects or irregularities in title and other similar charges or encumbrances which, in the aggregate, do not interfere in any material respect with the business of the Borrower and the Subsidiaries, taken as a whole;

(i) zoning, building codes and other land use laws, regulations and ordinances regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such real property which are not violated by the current use or occupancy of such real property or the operation of the business of the Borrower or any of the Subsidiaries or any violation of which would not have a Material Adverse Effect;

(j) ground leases in respect of real property on which Facilities owned or leased by the Borrower or any of the Subsidiaries are located;

(k) any interest or title of a lessor or secured by a lessor’s interest under any lease permitted hereunder;

(l) leases or subleases granted to others not interfering in any material respect with the business of the Borrower and the Subsidiaries, taken as a whole;

 

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(m) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(n) Liens securing Indebtedness to finance the acquisition, construction or improvement of fixed or capital assets; provided that (i) such security interests secure Indebtedness permitted by Section 6.01, (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 270 days after such acquisition, construction or improvement, and (iii) such security interests do not apply to any other property or assets of the Borrower or any Subsidiary, except for accessions to the property financed with the proceeds of such Indebtedness and the proceeds and the products thereof; provided that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment provided by such lender secured by a Lien permissibly incurred pursuant to this Section 6.02(n);

(o) Liens arising out of judgments or awards that do not constitute an Event of Default under paragraph (i) of Article VII;

(p) Liens pursuant to Receivables Transactions incurred in accordance with Section 6.05(b), including Liens on the assets of any Securitization Subsidiary created pursuant to a Receivables Transaction and Liens incurred by the Borrower and the Subsidiaries on Receivables to secure obligations owing by them in respect of any such Receivables Transaction, provided that any Receivables not transferred to a Securitization Subsidiary in connection with such Receivables Transaction to the extent constituting intercompany indebtedness required to be pledged pursuant to the Guarantee and Collateral Agreement shall be and remain subject to the perfected Lien and security interest granted to the Collateral Agent in favor of the Lenders in accordance with the Guarantee and Collateral Agreement; provided further , that no Liens shall be permitted under this clause (p) to the extent that any Liens are then outstanding under Section 6.02(cc) below;

(q) Liens on assets of Foreign Subsidiaries; provided that (i) such Liens do not extend to, or encumber, assets that constitute Collateral or the Equity Interests of the Borrower or any of the Domestic Subsidiaries, and (ii) such Liens extending to the assets of any Foreign Subsidiary secure only Indebtedness incurred by such Foreign Subsidiary pursuant to Section 6.01(k);

(r) Liens (i) of a collecting bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business; and (iii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set off);

 

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(s) Liens on one or more Facilities owned or leased by any Subsidiary to secure Permitted Real Estate Indebtedness incurred by such Subsidiary pursuant to Section 6.01(f);

(t) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;

(u) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale or purchase of goods entered into by the Borrower or any of the Subsidiaries in the ordinary course of business permitted hereunder;

(v) Liens solely on any cash earnest money deposits made by the Borrower or any of the Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(w) Liens securing insurance premiums financing arrangements, provided that such Liens are limited to the applicable unearned insurance premiums;

(x) other Liens that do not, individually or in the aggregate, secure obligations in excess of $50,000,000 at any one time;

(y) Liens on the Collateral which (i) secure Indebtedness incurred pursuant to Section 6.01(r) and (ii) have the same priority as, or junior priority to, the Liens securing the Obligations;

(z) Liens on the Collateral which (i) secure Pari Passu Debt Obligations and/or Alternative Incremental Facility Indebtedness and (ii) have the same priority as, or junior priority to, the Liens securing the Obligations;

(aa) Liens on the Collateral which (i) secure Indebtedness incurred pursuant to Section 6.01(m) if, at the time of the incurrence or assumption thereof, the Secured Net Leverage Ratio Condition is met, (ii) have the same priority as, or junior priority to, the Liens securing the Obligations and (iii) are subject to the Pari Passu Intercreditor Agreement or a Junior Lien Intercreditor Agreement;

(bb) Liens on the Collateral which (i) secure Other Junior Secured Debt incurred pursuant to Section 6.01(x) that is not secured by any asset other than Collateral that secures the Obligations, (ii) have junior priority to the Liens securing the Obligations and (iii) are subject to a Junior Lien Intercreditor Agreement; and

 

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(cc) Liens on the Collateral which secure (i) Indebtedness incurred pursuant to Section 6.01(y), (ii) ABL Designated Cash Management Obligations (as defined in the ABL Intercreditor Agreement) and (iii) ABL Designated Hedging Obligations (as defined in the ABL Intercreditor Agreement); provided that such Liens shall be subject to the ABL Intercreditor Agreement.

SECTION 6.03.  Sale and Lease-Back Transactions . Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred unless (a) the sale or transfer of such property is permitted by Section 6.05 and (b) any Capital Lease Obligations, Synthetic Lease Obligations, Permitted Real Estate Indebtedness or Liens arising in connection therewith are permitted by Sections 6.01 and 6.02, as the case may be.

SECTION 6.04.  Investments, Loans and Advances . Purchase, hold or acquire any Equity Interests, evidences of indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment or any other interest in, any other person, except:

(a) (i) investments by the Borrower and the Subsidiaries existing on the Closing Date in the Borrower and the Subsidiaries, (ii) additional investments by the Borrower and the Subsidiaries in the Borrower and the Subsidiaries and any Unrestricted Subsidiaries and (iii) additional investments by the Borrower and the Subsidiaries in Permitted Joint Ventures (subject to the limitations on such investments referred to in the definition of the term “Permitted Joint Ventures”); provided that (x) any Equity Interests held by a Loan Party shall be pledged to the extent required by Section 5.12 and the Guarantee and Collateral Agreement and (y) any such investments made pursuant to clause (ii) above made by a Loan Party to a Subsidiary that is not a Loan Party, or made by the Borrower or any Subsidiary to an Unrestricted Subsidiary, may only be made if (A) no Default or Event of Default shall have occurred and be continuing and (B) the aggregate amount of all such investments made by Loan Parties in Subsidiaries that are not Loan Parties, or by the Borrower or any Subsidiary in an Unrestricted Subsidiary and outstanding at any time (without regard to any write-downs or write-offs thereof, and valued net in the case of intercompany loans and transferred liabilities) shall not exceed $50,000,000 after the Closing Date plus the amount of dividends, distributions and other returns of capital actually received in cash by any Loan Party with respect to any such investments; for purposes of the foregoing, if the Borrower designates a Subsidiary as an Unrestricted Subsidiary in accordance with the definition of the term “Unrestricted Subsidiary”, the Borrower will be deemed to have made an investment at that time in the resulting Unrestricted Subsidiary in an aggregate amount equal to the fair market value of the net assets of such Unrestricted Subsidiary;

(b) Permitted Investments;

 

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(c) (i) loans or advances in respect of intercompany accounts attributable to the operation of the Borrower’s cash management system (including with respect to intercompany self-insurance arrangements), (ii) loans or advances made by the Borrower or any of the Subsidiaries to a Permitted Syndication Subsidiary for working capital needs evidenced by a promissory note that is pledged to the Collateral Agent so long as such loans or advances constitute Indebtedness of the primary obligor that is not subordinate to any other Indebtedness of such obligor, and (iii) loans or advances made by the Borrower to any Subsidiary and by any Subsidiary to the Borrower or any other Subsidiary; provided , however , that (x) any such loans and advances made by a Loan Party that are evidenced by a promissory note shall be pledged to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to the Guarantee and Collateral Agreement (and any such loans and advances made by a Loan Party to a Subsidiary that is not a Loan Party shall be so evidenced and pledged) and (y) any such loan or advance made by a Loan Party to a Subsidiary that is not a Loan Party or by the Borrower or any Subsidiary to an Unrestricted Subsidiary shall be subject to the requirements and limitations described in clause (y) of the first proviso to Section 6.04(a), except to the extent that (1) such loan or advance shall be secured by a fully perfected, first-priority Lien on substantially all of the assets of the recipient of such loan or advance and its subsidiaries (in each case of a type that would have constituted Collateral if such recipient were party to the applicable Security Documents) and (2) such Lien is collaterally assigned to the Collateral Agent for the benefit of the Secured Parties, all on terms reasonably satisfactory to the Collateral Agent;

(d) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

(e) the Borrower and the Subsidiaries may make loans and advances in the ordinary course of business to their respective employees, officers, consultants and agents (including payroll advances, travel and entertainment advances and relocation loans in the ordinary course of business to employees, officers and agents of the Borrower or any such Subsidiary (or to any physician or other health care professional associated with or agreeing to become associated with the Borrower or any Subsidiary or any Hospital owned or leased or operated by the Borrower or any Subsidiary (“ Health Care Associates ”)));

(f) Guarantees to third parties made in the ordinary course of business in connection with the relocation of employees or agents of Health Care Associates of the Borrower or any of the Subsidiaries;

(g) the Borrower and the Subsidiaries may enter into Hedging Agreements that are not speculative in nature;

(h) the Borrower or any Subsidiary may acquire (including by any lease that contains upfront payments and/or buyout options) all or substantially all the assets of a person or line of business of such person, or directly acquire and

 

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beneficially own (and retain the right to vote) more than 50% of the aggregate ordinary voting power and aggregate equity value represented by the outstanding capital stock or other Equity Interests of any acquired or newly formed corporation or other entity that acquires or leases such person, division or line of business (referred to herein as the “ Acquired Entity ”); provided that (i) as of the consummation thereof, such acquisition shall have been approved by the board of directors of the Acquired Entity; (ii) the Acquired Entity shall be in a similar, related, incidental or complementary line of business as that of the Borrower and the Subsidiaries as conducted during the current and most recent calendar year; and (iii) at the time of such transaction (A) [Reserved], (B) if the total consideration paid in connection with such acquisition and any other acquisitions pursuant to this Section 6.04(h) after the Closing Date (including any Indebtedness of the Acquired Entity that is assumed by the Borrower or any Subsidiary following such acquisition and any payments following such acquisition pursuant to earn-out provisions or similar obligations) shall exceed $50,000,000 in the aggregate (excluding the total consideration paid in respect of Permitted Acquisitions listed on Schedule 6.04(h) and consideration consisting of, or funded with the proceeds of, Qualified Capital Stock), then the Borrower would be in compliance with the covenant set forth in Section 6.13 on the last day of the most recently ended fiscal quarter for which financial statements have been or were required to be delivered, after giving pro forma effect to such transaction and to any other event occurring after such period as to which pro forma recalculation is appropriate (including any other transaction described in this Section 6.04(h) occurring after such period) as if such transaction had occurred as of the first day of such period, (C) [Reserved], (D) the Borrower shall comply, and shall cause the Acquired Entity to comply, with the applicable provisions of Section 5.12 and the Security Documents within a period after consummation of such transaction agreed to by the Administrative Agent (other than, in each case, any Captive Insurance Subsidiary or Securitization Subsidiary), and (E) the aggregate consideration paid in connection with all such acquisitions of Acquired Entities that become Foreign Subsidiaries (or, in the case of an acquisition of assets, such assets are not directly acquired by Loan Parties), shall not exceed $10,000,000 (any acquisition of an Acquired Entity meeting all the applicable criteria of this Section 6.04(h) being referred to herein as a “ Permitted Acquisition ”);

(i) Permitted Joint Ventures;

(j) investments in a Permitted Syndication Subsidiary in connection with a Permitted Syndication Transaction made pursuant to Section 6.05(b);

(k) investments in any Securitization Subsidiary or other person as required pursuant to the terms and conditions of any Permitted Receivables Transaction made pursuant to Section 6.05(b);

 

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(l) the Borrower or any of the Subsidiaries may acquire and hold Receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(m) investments to the extent that payment for such investments is made with issuances of or the cash proceeds from the issuance of Equity Interests of the Borrower;

(n) extensions of trade credit and purchases of equipment and inventory in the ordinary course of business;

(o) [reserved];

(p) investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices;

(q) investments by the Borrower and the Subsidiaries in any Captive Insurance Subsidiary in an aggregate amount not to exceed 150% of the minimum amount of capital required under the laws of the jurisdiction in which such Captive Insurance Subsidiary is formed (plus any excess capital generated as a result of any such prior investment that would result in an unfavorable tax or reimbursement impact if distributed), and other investments in any Captive Insurance Subsidiary to cover reasonable general corporate and overhead expenses of such Captive Insurance Subsidiary;

(r) investments by any Captive Insurance Subsidiary;

(s) investments in any Captive Insurance Subsidiary in connection with a push down by the Borrower of insurance reserves;

(t) investments held by a person (including by way of acquisition, merger or consolidation) after the Closing Date otherwise in accordance with this Section 6.04 to the extent that such investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

(u) investments in minority interests existing on the Closing Date;

(v) [reserved];

(w) investments representing the non-cash portion of the consideration received for an Asset Sale or other asset disposition permitted under Section 6.05;

(x) [reserved];

(y) (i) investments made using the Available Amount or (ii) investments made using the Available Declined Proceeds Amount; and

 

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(z) in addition to investments permitted by paragraphs (a) through (y) above, additional investments, loans and advances by the Borrower and the Subsidiaries so long as the aggregate outstanding amount of investments, loans and advances pursuant to this paragraph (z) (determined without regard to any write-downs or write-offs of such investments, loans and advances) does not exceed $50,000,000 plus the amount of dividends, distributions and other returns of capital actually received in cash by any Loan Party or any of its Subsidiaries in respect of investments made in reliance on this paragraph (z) in the aggregate at any time.

It is understood and agreed that, in the event that any investment is made by the Borrower or any Subsidiary in any person through substantially concurrent interim transfers of any amount through one or more other Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of this Section 6.04.

SECTION 6.05.  Mergers, Consolidations, Sales of Assets and Acquisitions . (a) Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all the assets (whether now owned or hereafter acquired) of the Borrower or less than all the Equity Interests of any Subsidiary (other than pursuant to any Permitted Interest Transfer, any Permitted Joint Venture or transfers of Equity Interests of any Subsidiary to a Loan Party or by a Subsidiary that is not a Subsidiary Guarantor to any Subsidiary or transfers of Equity Interests of a Subsidiary that remains a Subsidiary Guarantor after giving effect to such transfer), or purchase or otherwise acquire (in one transaction or a series of transactions) all or substantially all of the assets of any other person, except that (i) the Borrower and any Subsidiary may purchase and sell inventory in the ordinary course of business and (ii) if at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing, (w) the Borrower may merge with any other Person; provided that (1) the Borrower shall be the continuing and surviving Person or the continuing or surviving Person shall expressly assume the obligations of the Borrower including all of the obligations under this Agreement and the other Loan Documents, in a manner reasonably acceptable to the Administrative Agent, and (2) the Borrower or such continuing or surviving Person, as applicable, remains organized under the laws of the United States, any state thereof or the District of Columbia, (x) any wholly owned Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (y) any Subsidiary may merge into or consolidate with any other Subsidiary in a transaction in which the surviving entity is a Subsidiary ( provided that (A) if any party to any such transaction is a Loan Party, the surviving entity of such transaction shall be a Loan Party and (B) to the extent any person other than the Borrower or a wholly owned Subsidiary receives any consideration in connection therewith, then such transaction shall be considered as an investment under the applicable paragraph of Section 6.04) and (z) the Borrower and the Subsidiaries may make Permitted Acquisitions or any other investment, loan or advance permitted pursuant to Section 6.04 (including by merger), and may enter into Permitted Joint Ventures.

 

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(b) Make any Asset Sale otherwise permitted under paragraph (a) above unless such Asset Sale is:

(i) for consideration that is at least equal to the fair market value of the assets being sold, transferred, leased or disposed of; provided that for any disposition of assets with a fair market value of more than $10,000,000, at least 75% of such consideration is cash, cash equivalents or Permitted Investments;

(ii) a Receivables Transaction; provided that (x) the material terms and conditions and the structure of such Receivables Transaction have been approved by the Administrative Agent (such approval not to be unreasonably withheld or delayed), (y) any Liens granted in connection with such Receivables Transaction shall comply with the terms of Section 6.02(p), (z) the aggregate Receivables Transaction Amount outstanding at any time in respect of all Receivables Transactions does not exceed $150,000,000 (any Receivables Transaction meeting all the criteria of this Section 6.05(b)(ii) being referred to herein as a “ Permitted Receivables Transaction ”);

(iii) a Syndication Transaction, provided that the aggregate amount or value of the consideration received by any Permitted Syndication Subsidiary and/or the Borrower and the other Subsidiaries from third parties in connection with such Syndication Transaction (or series of Syndication Transactions), except for the Syndication Transactions listed on Schedule 6.05(b) (the “ Syndication Proceeds ”), when added to the aggregate Syndication Proceeds from all previous Permitted Syndications on or after the Closing Date does not exceed $40,000,000 (any Syndication Transaction meeting the criteria of this Section 6.05(b)(iii) being referred to herein as a “ Permitted Syndication Transaction ”);

(iv) any Permitted Interest Transfer;

(v) for the sale or other disposition consummated by the Borrower or any of the Subsidiaries after the Closing Date of assets constituting a subsidiary or business unit or units of the Borrower or the Subsidiaries (including a Facility) or the interest of the Borrower or the Subsidiaries therein, provided that (i) such sale or other disposition shall be made for fair value on an arm’s-length basis and (ii) the consideration received for such sale or other disposition constitutes or would constitute a Permitted Acquisition, Permitted Joint Venture or Permitted Syndication Subsidiary in accordance with the definition thereof;

(vi) the Borrower and the Subsidiaries may abandon, allow to lapse or otherwise dispose of intangible property that the Borrower or such Subsidiary shall determine in its reasonable business judgment is immaterial to the conduct of its business;

(vii) forgiveness of any loans or advances made pursuant to Section 6.04(e);

(viii) transfers of property subject to casualty or a condemnation proceeding;

(ix) Restricted Payments permitted pursuant to Section 6.06;

 

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(x) [reserved]; or

(xi) any investment, loan or advance permitted pursuant to Section 6.04.

For the purposes of Section 6.05(b)(i), the following will be deemed to be cash:

(i) the assumption by the transferee of Indebtedness or other liabilities contingent or otherwise of the Borrower or a Subsidiary (other than subordinated Indebtedness of the Borrower or a Subsidiary Guarantor) and the release of the Borrower or such Subsidiary from all liability on such Indebtedness or other liability in connection with such Asset Sale;

(ii) securities, notes or other obligations received by the Borrower or any Subsidiary of the Borrower from the transferee that are converted by the Borrower or such Subsidiary into cash or cash equivalents (including Permitted Investments) within 180 days following the closing of such Asset Sale;

(iii) Indebtedness of any Subsidiary that is no longer a Subsidiary as a result of such Asset Sale, to the extent that the Borrower and each other Subsidiary are released from any Guarantee of payment of such Indebtedness in connection with such Asset Sale;

(iv) consideration consisting of Indebtedness of the Borrower (other than subordinated Indebtedness) received after the Closing Date from Persons who are not the Borrower or any Subsidiary; and

(v) any Designated Non-Cash Consideration received by the Borrower or any Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this covenant that is at that time outstanding, not to exceed $50,000,000 (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

SECTION 6.06.  Restricted Payments; Restrictive Agreements . (a) Declare or make, directly or indirectly, any Restricted Payment (including pursuant to any Synthetic Purchase Agreement); provided , however , that

(i) any Subsidiary may declare and pay dividends or make other distributions ratably to its equity holders;

(ii) the Borrower may pay the CHS Dividend on the Closing Date;

(iii) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may repurchase its Equity Interests owned by current or former employees, directors or consultants of the

 

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Borrower or the Subsidiaries or make payments to employees, directors or consultants of the Borrower or the Subsidiaries in connection with the exercise of stock options, stock appreciation rights or similar equity incentives or equity based incentives pursuant to management incentive plans in an aggregate amount not to exceed $20,000,000 in any fiscal year;

(iv) [reserved];

(v) in addition to Restricted Payments permitted by clauses (i) through (iii) above, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may make other Restricted Payments in an aggregate amount from and after the Closing Date not to exceed $30,000,000 less the amount of payments made from and after the Closing Date pursuant to Section 6.09(b)(i);

(vi) the Borrower may net shares under employee benefits plans to settle option price payments owed by employees and directors with respect thereto and to settle employees’ and directors’ Federal, state and income tax liabilities (if any) related thereto;

(vii) so long as (A) no Event of Default or Default shall have occurred and be continuing or would result therefrom and (B) at the time of and after giving effect thereto, the Total Leverage Ratio shall not be greater than 4.90 to 1.00, the Borrower may make other Restricted Payments in an amount not to exceed the Available Amount at the time such Restricted Payment is made;

(viii) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may (A) repurchase any of its Equity Interests, or (B) make payments to employees, directors or consultants of the Borrower or the Subsidiaries in connection with the exercise of stock options, stock appreciation rights or similar equity incentives or equity based incentives pursuant to management incentive plans, in each case in an aggregate amount not to exceed the Received Exercise Proceeds Amount at the time such Restricted Payment is made;

(ix) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may make other Restricted Payments in an aggregate amount not to exceed $10,000,000 in any fiscal year, beginning with the fiscal year ending December 31, 2016;

(x) the Borrower or any Subsidiary may make a payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Agreement;

(xi) the Borrower or any Subsidiary may make a purchase, repurchase, redemption, defeasance or other acquisition or retirement of preferred Equity Interests made by exchange (including any such exchange pursuant to the exercise

 

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of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent sale of, preferred Equity Interests of the Borrower (other than Disqualified Stock and other than preferred Equity Interests sold to a Subsidiary) or a substantially concurrent contribution to the equity (other than through the issuance of Disqualified Stock or by preferred Equity Interests sold to any Subsidiary) of the Borrower;

(xii) the Borrower may make payments to holders of Equity Interests of the Borrower in lieu of the issuance of fractional shares of such Equity Interests, provided, however , that any such payment shall not be for the purpose of evading any limitation of this covenant or otherwise to facilitate any dividend or other return of capital to the holders of such Equity Interests (as determined in good faith by the board of directors of the Borrower);

(xiii) the Borrower or any Subsidiary may make purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of Equity Interests deemed to occur upon the exercise of stock options, warrants or other rights in respect thereof if such Equity Interests represent a portion of the exercise price thereof; and

(xiv) the Borrower or any Subsidiary may pay dividends or other distributions of Equity Interests of, or Indebtedness owed to the Borrower or a Subsidiary by, Unrestricted Subsidiaries (unless the Unrestricted Subsidiary’s principal asset is cash or cash equivalents (including Permitted Investments)).

(b) Enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (i) the ability of the Borrower or any Subsidiary (other than any Permitted Joint Venture Subsidiary) to create, incur or permit to exist any Lien upon any of its property or assets to secure the Obligations, or (ii) the ability of any Subsidiary (other than any Permitted Joint Venture Subsidiary) to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the Borrower or any Subsidiary Guarantor or to Guarantee Indebtedness of the Borrower or any Subsidiary Guarantor; provided (x) that the foregoing shall not apply to restrictions and conditions (A) imposed by law or by any Loan Document or any Senior Note Indenture, (B) contained in agreements relating to the sale of a Subsidiary or other assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary or assets that are to be sold and such sale is permitted hereunder, (C) imposed on any Foreign Subsidiary by the terms of any Indebtedness of such Foreign Subsidiary permitted to be incurred hereunder, (D) imposed pursuant to other Indebtedness incurred pursuant to Section 6.01 with such encumbrances and restrictions that, taken as a whole, are not more restrictive than the terms hereof, (E) contained in any agreement relating to a Permitted Receivables Transaction if such restrictions or encumbrances apply only to the relevant Permitted Receivables Transaction and are required pursuant to the terms and conditions of such Permitted Receivables Transaction, (F) on Permitted Joint Ventures or other joint ventures permitted under

 

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Section 6.04 and Permitted Syndication Subsidiaries imposed by the terms of the agreements governing the same, (G) applicable to an Acquired Entity at the time such Acquired Entity became a Subsidiary, so long as such restriction or encumbrance was not created in contemplation of or in connection with such Acquired Entity becoming a Subsidiary and apply only to such Acquired Entity, (H) imposed by any credit agreement, indenture or other agreement governing Pari Passu Debt or Alternative Incremental Facility Indebtedness, so long as such restrictions and conditions are not less favorable to the Lenders than to the holders of such Pari Passu Debt or such Alternative Incremental Facility Indebtedness, as the case may be, and (I) contained in the ABL Facility Credit Agreement or the other ABL Facility Loan Documents; provided that such restrictions and conditions are no more onerous than those set forth in the ABL Facility Loan Documents in effect on the Closing Date; and (y) clause (i) of the foregoing shall not apply to restrictions or conditions (A) that are customary provisions in leases and other contracts restricting the assignment thereof and any right of first refusal and (B) imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness.

SECTION 6.07.  Transactions with Affiliates . Except for transactions between or among the Borrower and its Subsidiaries or described on Schedule 6.07, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) the Borrower or any Subsidiary may engage in any of the foregoing transactions on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (ii) the Borrower and the Subsidiaries may make (x) investments, loans and advances and (y) Restricted Payments, permitted by Section 6.04 and Section 6.06, respectively, (iii) the Borrower may engage in Receivables Transactions, (iv) any issuance of Equity Interests otherwise permitted hereunder, (v) any issuance of Equity Interests, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans, or indemnities provided on behalf of employees or directors and approved by the board of directors or senior management of the Borrower, (vi) the payment of reasonable fees to directors of the Borrower and the Subsidiaries who are not employees of the Borrower or the Subsidiaries and (vii) transactions between CHS and its subsidiaries, on the one hand, and the Borrower and its Subsidiaries, on the other hand, pursuant to the Separation Documents (or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect) as in effect on the Closing Date.

SECTION 6.08.  Business of the Borrower and Subsidiaries . Engage at any time in any business or business activity other than the business currently conducted by it and business activities reasonably similar, incidental or complementary thereto and reasonable extensions thereof.

SECTION 6.09.  Other Indebtedness . (a) Permit any waiver, supplement, modification or amendment of any Senior Note Indenture or any waiver, supplement, modification or amendment of any indenture, instrument or agreement pursuant to which any subordinated Material Indebtedness of the Borrower or any of the Subsidiaries (other than the ABL Facility Credit Agreement and the other ABL Facility Loan Documents) is outstanding if the effect of

 

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such waiver, supplement, modification or amendment would materially increase the obligations of the obligor (except as permitted by this Agreement) or confer additional material rights on the holder of such Indebtedness in a manner adverse to the Lenders.

(b) Make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or commit to pay, or directly or indirectly (including pursuant to any Synthetic Purchase Agreement) redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any subordinated Indebtedness (other than intercompany Indebtedness); provided , however , that, so long as no Default or Event of Default shall have occurred and be continuing at the date of such redemption, repurchase, retirement or other acquisition for consideration, or would result therefrom, the Borrower or any Subsidiary may redeem, repurchase, retire or otherwise acquire for consideration (i) from and after the Closing Date, subordinated Indebtedness for an aggregate price not in excess of (A) $30,000,000 less (B) the amount of Restricted Payments made from and after the Closing Date pursuant to clause (v) of Section 6.06(a), (ii) subordinated Indebtedness with the proceeds of or in exchange for (A) subordinated Indebtedness that is permitted pursuant to Section 6.01 and is subordinated on terms not materially less advantageous to the Lenders than those of the Indebtedness being redeemed, repurchased, retired or otherwise acquired for consideration or (B) the issuance of Equity Interests, (iii) subordinated Indebtedness so long as (A) the amount paid in respect thereof does not exceed the Available Amount at the time paid and (B) at the time of and after giving effect thereto, the Total Leverage Ratio shall not be greater than 4.90 to 1.00, or (iv) subordinated Indebtedness so long as (A) the amount paid in respect thereof does not exceed the Available Declined Proceeds Amount at the time paid and (B) at the time of and after giving effect thereto, the Total Leverage Ratio shall not be greater than 4.90 to 1.00.

(c) Nothing in this Section 6.09 shall limit or otherwise prohibit the making (and any payment in connection therewith) of any “Change of Control Offer” in accordance with clause (f) of Article VII.

SECTION 6.10.  Practice Guarantees . Enter into Practice Guarantees with a term of 30 months or longer in an aggregate amount in excess of $50,000,000 in effect at any time with respect to all such Practice Guarantees.

SECTION 6.11.  Reserved.

SECTION 6.12.  Reserved .

SECTION 6.13.  Maximum Secured Net Leverage Ratio .  Permit the Secured Net Leverage Ratio to be greater than the ratio set forth opposite such period below:

 

Period

  

Ratio

Closing Date through June 30, 2017    4.50 to 1.00
July 1, 2017 through June 30, 2018    4.25 to 1.00
July 1, 2018 and thereafter    4.00 to 1.00

SECTION 6.14.  Fiscal Year . With respect to the Borrower, change its fiscal year-end to a date other than December 31.

 

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ARTICLE VII

Events of Default

In case of the happening of any of the following events (“ Events of Default ”):

(a) any representation, warranty or statement made or deemed made by any Loan Party herein or in any other Loan Document or any certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which it was made or deemed made;

(b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any L/C Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

(c) default shall be made in the payment of any interest on any Loan or any Fee or L/C Disbursement or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days;

(d) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.01(a) (with respect to the Borrower only), 5.05(a) or 5.08 or in Article VI;

(e) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant or agreement contained in any Loan Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent or any Lender to the Borrower;

(f) (i) the Borrower or any Subsidiary shall fail to pay any principal, interest or other amount due in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any grace period) or (ii) any other event or condition occurs that results in any Material Indebtedness (other than any Material Indebtedness of any Securitization Subsidiary) becoming due prior to its scheduled maturity or that enables or permits (after giving effect to any grace period) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to

 

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become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or that results in the termination or permits any counterparty to terminate any Hedging Agreement the obligations under which constitute Material Indebtedness; provided that (A) this clause (ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, and (B) for the avoidance of doubt, a requirement to make a mandatory offer to repurchase under the terms of any Indebtedness of any person acquired by the Borrower or any of its Subsidiaries pursuant to any Permitted Acquisition as a result of a “change of control” (or equivalent term) shall not constitute a Default or an Event of Default under this clause (ii) so long as (I) on or prior to the date the events constituting such “change of control” (or equivalent term) occur, either (1) the terms of such Indebtedness have been amended to eliminate the requirement to make such offer or (2) such Indebtedness has been defeased or discharged so that such requirement shall no longer apply (and, in the event such “change of control” is subject to a requirement that a specific credit ratings event or similar condition subsequent occur, no Event of Default shall exist pursuant to this paragraph (ii) until such time as the specific credit ratings event or similar condition subsequent has also occurred resulting in the obligor under such Indebtedness to become unconditionally obligated to make such offer) or (II) (x) the sum of (1) the aggregate amount of unrestricted cash, cash equivalents and Permitted Investments held by the Borrower and the Subsidiaries plus (2) any available debt financing commitments from any Revolving Lender or any Affiliate of a Revolving Lender or any other financial institution of nationally recognized standing available to the Borrower or its Subsidiaries for purposes of refinancing such Indebtedness is at least equal to the aggregate amount that would be required to repay such Indebtedness pursuant to any required “change of control offer” (or equivalent term) pursuant to the terms of such Indebtedness at all times prior to the expiration of the rights of the holders of such Indebtedness to require the repurchase or repayment of such Indebtedness as a result of such acquisition and (y) the Borrower or the applicable Subsidiary complies with the provisions of such Indebtedness that are applicable as a result of such acquisition (including by consummating any required “change of control offer” (or equivalent term) for such Indebtedness); provided further that this clause (f) shall not apply if such failure is remedied or waived by the holders of such Indebtedness prior to any termination of the Commitments or acceleration of the Loans pursuant to this Article VII;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof), or of a substantial part of the property or assets of the Borrower or a Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof), under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee,

 

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custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof) or for a substantial part of the property or assets of the Borrower or a Subsidiary or (iii) the winding-up or liquidation of the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof) shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof) or for a substantial part of the property or assets of the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof), (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any corporate action for the purpose of effecting any of the foregoing;

(i) one or more judgments shall be rendered against the Borrower, any Subsidiary or any combination thereof (not paid or fully covered by insurance) and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Borrower or any Subsidiary to enforce any such judgment and such judgment is for the payment of money in an aggregate amount in excess of $35,000,000;

(j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect;

(k) any Guarantee under the Guarantee and Collateral Agreement for any reason shall cease to be in full force and effect (other than in accordance with its terms), or any Subsidiary Guarantor shall deny in writing that it has any further liability under the Guarantee and Collateral Agreement (other than as a result of the discharge of such Subsidiary Guarantor in accordance with the terms of the Loan Documents);

 

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(l) any security interest purported to be created by any Security Document with respect to any Collateral with an aggregate fair market value in excess of $35,000,000 shall cease to be, or shall be asserted by the Borrower or any other Loan Party not to be, a valid, perfected (subject to the qualifications set forth in Section 3.19(a)), first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Guarantee and Collateral Agreement or any other act or omission by the Collateral Agent (unless such act or omission is a result of reliance on any information provided by a Loan Party or resulted from a breach by a Loan Party of its representations or obligations under the Loan Documents);

(m) the Indebtedness under any subordinated Indebtedness of the Borrower or any Subsidiary constituting Material Indebtedness shall cease (or any Loan Party or an Affiliate of any Loan Party shall so assert), for any reason, to be validly subordinated to the Obligations as provided in the agreements evidencing such subordinated Indebtedness;

(n) there shall have occurred a Change in Control;

(o) on any date, any Pari Passu Debt that at the time would constitute Material Indebtedness and that has a final stated maturity date within 91 days of such date, shall remain outstanding;

(p) so long as any Other Senior Secured Debt is outstanding, any Pari Passu Intercreditor Agreement shall cease to be effective or cease to be legally valid and binding, or otherwise not be effective to create the rights and obligations purported to be created thereunder, unless the same (i) results directly from the action or inaction of the Collateral Agent or (ii) is not materially adverse to the Lenders; or

(q) so long as any Other Junior Secured Debt is outstanding, any Junior Lien Intercreditor Agreement shall cease to be effective or cease to be legally valid and binding, or otherwise not be effective to create the rights and obligations purported to be created thereunder, unless the same (i) results directly from the action or inaction of the Collateral Agent or (ii) is not materially adverse to the Lenders; or

(r) so long as any commitments or loans under the ABL Facility Credit Agreement are outstanding, the ABL Intercreditor Agreement shall cease to be effective or cease to be legally valid and binding, or otherwise not be effective to create the rights and obligations purported to be created thereunder, unless the same (i) results directly from the action or inaction of the Collateral Agent or (ii) is not materially adverse to the Lenders;

 

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then, and in every such event (other than an event with respect to the Borrower described in paragraph (g) or (h) above or an event described in paragraph (d)(ii) above), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding; in any event with respect to the Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding.

Notwithstanding anything to the contrary contained in this Article VII, upon the request of the Borrower made in writing to the Administrative Agent, in the event of any Event of Default under any covenant set forth in Section 6.13 and until the expiration of the tenth Business Day after the date on which financial statements are required to be delivered with respect to the applicable fiscal quarter hereunder, the Borrower may issue Qualified Capital Stock and elect to treat all or any portion of the net cash proceeds thereof as having increased Consolidated EBITDA with respect to such applicable quarter solely for the purpose of determining actual and pro forma compliance with Section 6.13 at the end of such applicable quarter and applicable subsequent periods and for purposes of determining whether the Secured Net Leverage Ratio Condition has been satisfied and not for any other purpose of this Agreement; provided that (a) such proceeds (i) are actually received by the Borrower no later than ten days after the date on which financial statements are required to be delivered with respect to such fiscal quarter hereunder and (ii) do not exceed the aggregate amount necessary to cause the Borrower to be in compliance with the covenant under Section 6.13 for any applicable period, (b) in each period of four fiscal quarters, there shall be at least two fiscal quarters in which no such right to cure permitted by this paragraph is utilized and (c) such right to cure may not be exercised more than five times during the term of this Agreement.

ARTICLE VIII

The Administrative Agent and the Collateral Agent

Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent and the Collateral Agent (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the

 

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Agents ”) its agent and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute any and all documents (including releases) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents.

The bank serving as the Administrative Agent and/or the Collateral Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

Neither Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08), and (c) except as expressly set forth in the Loan Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct. Neither Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender, and neither Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper person. Each Agent may also rely upon any statement made to it orally or by telephone

 

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and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Credit Facilities as well as activities as Agent.

Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent (not to be unreasonably withheld or delayed) of the Borrower, to appoint a successor; provided that during the existence and continuation of an Event of Default pursuant to paragraph (b), (c), (g) or (h) of Article VII, no consent of the Borrower shall be required. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retirement of the retiring Agent shall become effective on such 30th day and the retiring Agent may (but shall not have any obligation to do so), on behalf of the Lenders and the Issuing Banks, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $1,000,000,000, or an Affiliate of any such bank and, so long as no Event of Default pursuant to paragraph (b), (c), (g) or (h) of Article VII shall have occurred and be continuing, reasonably acceptable to the Borrower. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an Agent’s resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

 

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ARTICLE IX

Miscellaneous

SECTION 9.01.  Notices . Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, as follows:

(a) if to the Borrower, to it at Quorum Health Corporation, 1573 Mallory Lane, Suite 100, Brentwood, Tennessee 37027, Attention of Michael Culotta, Email: mike_culotta@quorumhealth.com;

(b) if to the Administrative Agent, to Credit Suisse AG, Eleven Madison Avenue, New York, NY 10010, Attention of Agency Group (Fax No. (212) 322-2291), Email: agency.loanops@credit-suisse.com; and

(c) if to a Lender, to it at its address (or fax number) set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. As agreed to among the Borrower, the Administrative Agent and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.

The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on Intralinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “ Public Lender ”). The Borrower hereby agrees that (i) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for

 

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purposes of foreign, United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.17); (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor” and (iv) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor”. Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that any such document contains material non-public information: (A) the Loan Documents, (B) any notification of changes in the terms of the Credit Facilities and (C) all information delivered pursuant to Section 5.04(a), (b) and (c).

Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including foreign, United States Federal and state securities laws, to make reference to communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of foreign, United States Federal or state securities laws.

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. 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 THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of communications by the Administrative Agent at its e-mail address set forth above shall constitute effective

 

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delivery of the communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the communications have been posted to the Platform shall constitute effective delivery of the communications to such Lender for purposes of the Loan Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

SECTION 9.02.  Survival of Agreement . All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and the Issuing Banks and shall survive the making by the Lenders of the Loans and the issuance of Letters of Credit by the Issuing Banks, regardless of any investigation made by the Lenders and the Issuing Banks or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.16, 2.20, 9.05 and 9.18 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender or the Issuing Banks.

SECTION 9.03.  Binding Effect . This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.

SECTION 9.04.  Successors and Assigns . (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the Administrative Agent, the Collateral Agent, the Issuing Banks or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

(b) Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), with notice to the Borrower and the prior written consent of the Administrative Agent (not to be unreasonably withheld or delayed); provided , however , that (i) in the case of an

 

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assignment of a Revolving Credit Commitment, each of the Borrower and the Issuing Banks must also give its prior written consent to such assignment (which, in each case, such consent shall not be unreasonably withheld or delayed (it being understood and agreed that the Borrower shall be deemed to have consented to any such assignment unless it objects thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof)) ( provided , that the consent of the Borrower shall not be required to any such assignment made to another Lender, an Affiliate of a Lender or an Approved Fund, or after the occurrence and during the continuance of any Event of Default referred to in paragraph (b), (c), (g) or (h) of Article VII), (ii) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be not less than (x) $1,000,000 (with respect to an assignment of Term Loans) and (y) $5,000,000 (with respect to an assignment of Revolving Credit Commitments or Revolving Loans) (or, in any case, if less, the entire remaining amount of such Lender’s Commitment or Loans of the relevant Class) without the prior written consent of the Administrative Agent and the Borrower (provided, that the consent of the Borrower shall not be required after the occurrence and during the continuance of any Event of Default referred to in paragraph (b), (c), (g) or (h) of Article VII), (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent (or, if previously agreed with the Administrative Agent, manually), and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent and will not apply in the case of an assignment by a Lender to an Approved Fund that is managed by such Lender or an Affiliate of such Lender or by an entity or an Affiliate of an entity that administers or manages such Lender), and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and all applicable tax forms. Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Term Loan Commitment and Revolving Credit Commitment, are as set forth in such Assignment and Acceptance;

 

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(ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee and is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05 or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error and the Borrower, the Administrative Agent, the Issuing Banks, the Collateral Agent and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Banks, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(e) Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrower and the Issuing Banks to such assignment and any applicable tax forms, the Administrative Agent shall promptly (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e).

 

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(f) Each Lender may without the consent of the Borrower, the Issuing Banks or the Administrative Agent sell participations to one or more banks or other persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided , however , that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant), it being understood that the tax forms required under Section 2.20(e) shall be delivered to the participating Lender and (iv) the Borrower, the Administrative Agent, the Issuing Banks and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans or L/C Disbursements and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or person hereunder or the amount of principal of or the rate at which interest is payable on the Loans in which such participating bank or person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans in which such participating bank or person has an interest, increasing or extending the Commitments in which such participating bank or person has an interest or releasing any Subsidiary Guarantor (other than pursuant to the terms thereof or in connection with the sale of such Subsidiary Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral). Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

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(g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.17.

(h) Any Lender may at any time pledge or assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority; provided that no such pledge or assignment shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(i) Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle (an “ SPC ”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any investor, potential investor, rating agency, commercial paper dealer, collateral manager, servicer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.

 

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(j) The Borrower shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent, the Issuing Banks and each Lender, and any attempted assignment without such consent shall be null and void.

(k) In the event that any Revolving Credit Lender shall become a Defaulting Lender or S&P, Moody’s and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best’s Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Lender becomes a Revolving Credit Lender, downgrade the long-term certificate of deposit ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)) (or, with respect to any Revolving Credit Lender that is not rated by any such ratings service or provider, the Issuing Banks shall have reasonably determined that there has occurred a material adverse change in the financial condition of any such Lender, or a material impairment of the ability of any such Lender to perform its obligations hereunder, as compared to such condition or ability as of the date that any such Lender became a Revolving Credit Lender) then the Issuing Banks shall have the right, but not the obligation, at their own expense, upon notice to such Lender and the Administrative Agent, to replace such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Revolving Credit Commitment to such assignee; provided , however , that (i) no such assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and (ii) the Issuing Banks or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Lender hereunder and all other amounts accrued for such Lender’s account or owed to it hereunder.

SECTION 9.05.  Expenses; Indemnity . (a) The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, each Arranger and each Issuing Bank in connection with the syndication of the Credit Facilities and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Administrative Agent, the Collateral Agent, any Arranger, any Issuing Bank or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit issued hereunder, including the fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent and the Collateral Agent, and, in connection with any such enforcement or protection, the fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for the Administrative Agent, the Collateral Agent, the Arrangers, the Issuing Banks and the Lenders.

 

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(b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lender, each Arranger, each Issuing Bank and each Related Party of any of the foregoing persons (each such person being called an “ Indemnitee ”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, penalties and related reasonable out-of-pocket expenses, including reasonable fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for all Indemnitees, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions or any related transaction and the other transactions contemplated thereby (including the syndication of the Credit Facilities), (ii) the use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Borrower, any other Loan Party or any of their respective Affiliates), or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Liability related in any way to the Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, penalties or related expenses (x) are determined by a court of competent jurisdiction by final judgment to have resulted primarily from (1) the gross negligence, bad faith or willful misconduct of such Indemnitee or (2) a material breach of the obligations under this Agreement of such Indemnitee or any of such Indemnitee’s Affiliates or of any of its or their respective officers, directors, employees, agents, advisors or other representatives of the foregoing under this Agreement (as determined by a court of competent jurisdiction in a final and nonappealable decision) or (y) result from any proceeding (other than a proceeding against a party hereto acting pursuant to this Agreement or in its capacity as such or of any of its Affiliates or its or their respective officers, directors, employees, agents, advisors and other representatives and the successors of each of the foregoing) solely between or among Indemnitees not arising from any act or omission of a Loan Party.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Collateral Agent, any Arranger or any Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Collateral Agent, such Arranger or such Issuing Bank, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent, such Arranger or such Issuing Bank in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the Aggregate Revolving Credit Exposure, outstanding Term Loans and unused Commitments at the time.

 

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(d) To the extent permitted by applicable law, neither the Borrower nor any Indemnitee shall assert, and each hereby waives, any claim against any Indemnitee or the Borrower and each of their respective Affiliates, as applicable, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof; provided, that nothing contained in this sentence shall limit the Borrower’s indemnification obligations above to the extent such special, indirect, consequential and punitive damages are included in any third party claim in connection with which any Indemnitee is entitled to indemnification hereunder

(e) No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(f) The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender, any Arranger or any Issuing Bank. All amounts due under this Section 9.05 shall be payable, within 30 days of written demand therefor with a reasonably detailed summary of the amounts claimed.

SECTION 9.06.  Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender or an Affiliate of such Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or an Affiliate of such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement and other Loan Documents held by such Lender, provided that at such time such obligations are due or payable. The rights of each Lender and Affiliates of such Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender or an Affiliate of such Lender may have. Notwithstanding anything to the contrary contained herein or in any other Loan Document or Pari Passu Agreement, each Secured Party expressly waives its right of setoff (and any similar right including bankers’ liens) with respect to all lockboxes, deposit accounts and other cash management accounts maintained by any Grantor and into which any collections for Government Accounts are deposited. For purposes hereof, “Government Accounts” means all accounts on which any federal or state government unit or any intermediary for any federal or state government unit is the obligor.

SECTION 9.07.  Applicable Law . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY

 

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SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT, UNLESS OTHERWISE EXPRESSLY AGREED BY THE APPLICABLE ISSUING BANK AND THE BORROWER WHEN A LETTER OF CREDIT IS ISSUED, EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE RULES OF THE ISP, AND AS TO MATTERS NOT GOVERNED BY THE ISP, THE LAWS OF THE STATE OF NEW YORK. Notwithstanding the foregoing, an Issuing Bank shall not be responsible to the Borrower for, and an Issuing Bank’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of such Issuing Bank required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the applicable law or any order of a jurisdiction where such Issuing Bank or the beneficiary is located, the practice stated in the ISP or in the decisions, opinions, practice statements or official commentary of the International Chamber of Commerce Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

SECTION 9.08.  Waivers; Amendment . (a) No failure or delay of the Administrative Agent, the Collateral Agent, any Lender or Issuing Bank in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof, may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders (or, in the case of any amendment or modification to the definition of “Required Revolving Lenders”, the Required Revolving Lenders); provided , however , that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan or any date for reimbursement of an L/C Disbursement, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan or L/C Disbursement, without the prior written consent of each Lender directly adversely affected thereby, (ii) increase or extend the Commitment or decrease or extend the date for payment of any Fees or any other amount due and payable hereunder to any Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata requirements of Section 2.17, the

 

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sharing provisions of Section 2.18, the provisions of Section 9.04(j) or the provisions of this Section or release all or substantially all of the value of the Subsidiary Guarantors (other than pursuant to the terms hereof or thereof or in connection with the sale of such Subsidiary Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral (or subordinate the Liens in favor of the Administrative Agent on all or substantially all of the Collateral (other than in respect of the ABL Facility First Priority Collateral to the extent contemplated by the ABL Intercreditor Agreement)), without the prior written consent of each Lender, (iv) change the provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class, (v) modify the protections afforded to an SPC pursuant to the provisions of Section 9.04(i) without the written consent of such SPC, (vi) reduce the percentage contained in the definition of the term “Required Revolving Lenders”, without the prior written consent of each Revolving Lender, (vii) reduce the percentage contained in the definition of the term “Required Lenders”, or impose additional restrictions on the ability of the Lenders to assign their rights and obligations under the Loan Documents, without the prior written consent of each Lender (it being understood that with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Term Loan Commitments and Revolving Credit Commitments on the date hereof), or (viii) reduce the number or percentage of the Lenders required to consent, approve or otherwise take any action under the Loan Documents without the prior written consent of each Lender affected thereby; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, Collateral Agent or the Issuing Banks hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, the Collateral Agent or the Issuing Banks; (B) the Borrower and the Administrative Agent may amend or supplement this Agreement and any other Loan Documents, without the consent of any Lender, in order to (x) cure ambiguities, omissions, mistakes or defects, (y) cause this Agreement and the other Loan Documents to be consistent with the Guarantee and Collateral Agreement and other similar documents or (z) cause the Guarantee and Collateral Agreement or other document to comply with local Law on the advice of local counsel; and (C) no condition set forth in Section 4.01 to any Revolving Borrowing or the issuance of or increase to a Letter of Credit shall be amended, waived or otherwise modified without the approval of the Required Revolving Lenders.

SECTION 9.09.  Certain Releases of Guarantees and Security Interests . (a) Subject to the terms of any Pari Passu Intercreditor Agreement and the ABL Intercreditor Agreement, upon the closing of any Asset Sale consisting of the sale, transfer or other disposition of all of the Equity Interests of any Subsidiary Guarantor permitted pursuant to Section 6.05, (i) the obligations of such Subsidiary Guarantor pursuant to the Guarantee and Collateral Agreement shall automatically be discharged and released without any further action by the Administrative Agent or any Lender, and (ii) the Administrative Agent and the Lenders will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Administrative Agent which may reasonably be required to evidence such discharge and release, all without representation, recourse or warranty.

 

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(b) Subject to the terms of any Pari Passu Intercreditor Agreement and the ABL Intercreditor Agreement, upon the closing of any Asset Sale consisting of the sale, transfer or other disposition of Equity Interests of any Subsidiary Guarantor or any other Subsidiary of the Borrower permitted pursuant to Section 6.05, (i) the Collateral Agent shall release to the Borrower, without representation, warranty or recourse, express or implied, the pledged Equity Interests issued by such Subsidiary Guarantor and any pledged Equity Interests issued by any other Subsidiary, as applicable, held by such Subsidiary Guarantor, (ii) the Collateral Agent shall release its security interest in all Collateral of such Subsidiary, including any Mortgages, and (iii) the Collateral Agent will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Collateral Agent which may reasonably be required to evidence such release.

(c) Subject to the terms of any Pari Passu Intercreditor Agreement and the ABL Intercreditor Agreement, upon consummation by the Borrower or any Subsidiary of a Permitted Interest Transfer or designation of an Unrestricted Subsidiary in accordance with the terms hereof, (i) the Collateral Agent shall release to the Borrower, without representation, warranty or recourse, express or implied, those Equity Interests of the Subsidiary that are the subject of such Permitted Interest Transfer or designation in accordance with clauses (i) and (ii) of Section 9.09(b) and shall release any pledged note theretofore pledged to the extent such note is being discharged in connection with such Permitted Interest Transfer or designation, and (ii) if such Subsidiary whose shares are the subject of such Permitted Interest Transfer or designation is a Subsidiary Guarantor, the obligations of such Subsidiary under its Guarantee shall automatically be discharged and released in accordance with clauses (i) and (ii) of Section 9.09(a) and any Lien granted by such Subsidiary under the Loan Documents shall automatically be discharged and released.

(d) Subject to the terms of any Pari Passu Intercreditor Agreement and the ABL Intercreditor Agreement, the Collateral Agent will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Collateral Agent which may be reasonably be required to discharge and release, all without representation, recourse or warranty, any Lien on any Collateral granted to or held by the Collateral Agent under any Loan Document (i) upon termination of the Commitments and payment in full of the principal and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document and cancelation or expiration of all Letters of Credit and reimbursement of all amounts drawn thereunder in full (or other arrangements having been entered into with respect thereto acceptable to the applicable Issuing Bank and the Administrative Agent), (ii) that is sold, transferred or otherwise disposed of or to be sold, transferred or otherwise disposed of as part of or in connection with any sale, transfer or other disposition permitted hereunder to a Person other than the Borrower or any Subsidiary Guarantor, and upon consummation by the Borrower or any Subsidiary of any such sale, transfer or other disposition, any Lien granted by the Borrower or such Subsidiary

 

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under the Loan Documents on such Collateral shall automatically be discharged and released, and (iii) the Administrative Agent and the Lenders will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Administrative Agent which may reasonably be required to evidence such discharge and release, all without representation, recourse or warranty.

(e) Subject to the terms of any Pari Passu Intercreditor Agreement and the ABL Intercreditor Agreement, upon notification by the Borrower to the Collateral Agent that a Subsidiary Guarantor is a Non-Significant Subsidiary, and would not be required to become a Subsidiary Guarantor in accordance with the terms hereof, the Collateral Agent shall release the obligations of such Subsidiary under its Guarantee and shall release and discharge any Lien granted by such Subsidiary Guarantor under the Loan Documents in accordance with clauses (i) and (ii) of Section 9.09(a).

SECTION 9.10.  Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any L/C Disbursement, together with all fees, charges and other amounts which are treated as interest on such Loan or participation in such L/C Disbursement under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.10 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.11.  Entire Agreement . This Agreement, the Engagement Letter and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder including any Affiliate of an Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

SECTION 9.12.  WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO

 

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(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.

SECTION 9.13.  Severability . In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9.14.  Reserved .

SECTION 9.15.  Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 9.16.  Jurisdiction ; Consent to Service of Process . (a) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, the Issuing Banks or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower or its properties in the courts of any jurisdiction.

(b) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

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SECTION 9.17.  Confidentiality . Each of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel, numbering, administration and settlement service providers, and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.17, to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Loan Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any Subsidiary or any of their respective obligations, (f) with the consent of the Borrower or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.17. For the purposes of this Section, “ Information ” shall mean all information received from the Borrower and related to the Borrower or its business, other than any such information that was available to the Administrative Agent, the Collateral Agent, the Issuing Banks or any Lender on a nonconfidential basis prior to its disclosure by the Borrower; provided that any Lender, the Administrative Agent, the Collateral Agent or the Issuing Banks shall give the Borrower prior notice of any disclosure pursuant to clause (c) to the extent permissible. Any person required to maintain the confidentiality of Information as provided in this Section 9.17 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord its own confidential information.

SECTION 9.18.  USA PATRIOT Act Notice . Each Lender, each Issuing Bank and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower (and any Subsidiary in whose account a Letter of Credit is issued) that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower (and any Subsidiary in whose account a Letter of Credit is issued), which information includes the name and address of the Borrower or such Subsidiary and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower or such Subsidiary in accordance with the USA PATRIOT Act.

SECTION 9.19.  Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among the parties hereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan

 

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Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

The following terms shall for purposes of this Section have the meanings set forth below:

Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of such EEA Financial Institution.

Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country ” means any member state of the European Union, Iceland, Liechtenstein and Norway.

EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

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EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 9.20.  Pari Passu Obligations and Other Junior Secured Debt . (a) Each Lender and each Issuing Bank acknowledges that Pari Passu Debt Obligations and Other Junior Secured Debt may be secured by Liens on the Collateral having the same priority as, or junior priority to, the Liens securing the Obligations and hereby consents thereto.

(b) In connection with the incurrence by the Borrower or any Subsidiary of Pari Passu Debt, Alternative Incremental Facility Indebtedness and/or Other Junior Secured Debt, each Lender and each Issuing Bank (i) acknowledges that, at the request of the Borrower, each of the Administrative Agent and/or the Collateral Agent shall enter into one or more Pari Passu Intercreditor Agreements or Junior Lien Intercreditor Agreements, (ii) authorizes and directs each Agent to execute and deliver any Pari Passu Intercreditor Agreement or Junior Lien Intercreditor Agreement and any documents relating thereto, in each case on behalf of such Lender or Issuing Bank and without any further consent, authorization or other action by such Lender or Issuing Bank, (iii) authorizes and directs each Agent to act as its representative under, and in connection with, any Pari Passu Intercreditor Agreement or Junior Lien Intercreditor Agreement, (iv) acknowledges that any Pari Passu Intercreditor Agreement may contain provisions that permit or require the Liens securing the Obligations and the Pari Passu Debt Obligations to be granted in favor of a single collateral agent trustee, which may not be the Administrative Agent or the Collateral Agent (a “ Shared Collateral Agent ”), (v) acknowledges that any Pari Passu Intercreditor Agreement may provide that the holders of a majority in aggregate principal amount of Obligations and Pari Passu Debt Obligations, voting as a single class, may direct the Shared Collateral Agent with respect to enforcement or the actions concerning the Collateral, and (vi) agrees that, upon the execution and delivery thereof, it will be bound by the provisions of any Pari Passu Intercreditor Agreement or Junior Lien Intercreditor Agreement as if it were a signatory thereto and will take no actions contrary to the provisions thereof. Each Lender and each Issuing Bank further authorizes and directs each Agent to enter into such amendments, supplements or other modifications to any Pari Passu Intercreditor Agreement or Junior Lien Intercreditor Agreement as are reasonably acceptable to the Administrative Agent in order to (A) enable any extension, renewal, refinancing, replacement or additional incurrence of any Loans or any Pari Passu Debt, Alternative Incremental Facility Indebtedness or Other Junior Secured Debt permitted under this Agreement and (B) provide for the Pari Passu Debt Obligations or Other Junior Secured

 

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Debt thereunder to be secured by Liens on the Collateral having, as applicable, the same priority as, or junior priority to, the Liens on the Collateral securing the Obligations, in each case on behalf of such Lender or each Issuing Bank and without any further consent, authorization or other action by such Lender or such Issuing Bank.

(c) Each Lender and each Issuing Bank (i) acknowledges that, at the request of the Borrower, each of the Administrative Agent and the Collateral Agent shall, to the extent required by the terms of (or in order to implement the provisions of) any Pari Passu Intercreditor Agreement, delegate, assign and/or transfer any or all of its rights, duties, remedies, powers or obligations with respect to the Collateral to a Shared Collateral Agent and (ii) hereby consents to any such delegation, assignment or transfer. The exculpatory provisions of Article VIII shall apply to any Shared Collateral Agent and to the Related Parties thereof, and shall apply to their respective activities in connection with the Collateral and with any Pari Passu Intercreditor Agreement or any other Loan Documents.

(d) Each Lender and each Issuing Bank (i) acknowledges that, at the request of the Borrower, each of the Administrative Agent and/or the Collateral Agent shall (A) amend, substitute, supplement or otherwise modify the Guarantee and Collateral Agreement, (B) amend, substitute, replace, supplement or otherwise modify any other Security Document, (C) enter into additional Security Documents and (D) take such further actions as are reasonably incidental to the foregoing, in each case as are reasonably acceptable to the Administrative Agent and the Collateral Agent in order to (1) enable the Borrower or any Subsidiary to incur Pari Passu Debt, Alternative Incremental Facility Indebtedness and/or Other Junior Secured Debt otherwise permitted to be incurred hereunder, (2) provide for any Pari Passu Debt Obligations thereunder to be secured, in accordance with the terms of any Pari Passu Intercreditor Agreement, by Liens on the Collateral having the same priority as, or junior priority to, the Liens on the Collateral securing the Obligations and (3) provide for any Other Junior Secured Debt thereunder to be secured, in accordance with the terms of any Junior Lien Intercreditor Agreement, by Liens on the Collateral having junior priority to the Liens on the Collateral securing the Obligations, (ii) authorizes and directs each Agent to execute and deliver any such amendments, supplements, agreements and other documents, in each case on behalf of such Lender or Issuing Bank and without any further consent, authorization or other action by such Lender or Issuing Bank and (iii) agrees that, upon the execution and delivery thereof, it will be bound by the provisions of such amendments, supplements, agreements and other documents as if it were a signatory thereto and will take no actions contrary to the provisions thereof.

(e) Without limiting the foregoing, no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee of the Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Agents on behalf of the Secured Parties in accordance with the terms thereof (subject, in the case of the Collateral, to the provisions of any Pari Passu Intercreditor Agreement and any Junior Lien Intercreditor Agreement). In the event of a foreclosure by the Collateral Agent or any Shared Collateral Agent on any of the Collateral pursuant to a public or private sale or other

 

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disposition, any Lender may be the purchaser of any or all of such Collateral at any such sale or other disposition, and such Collateral Agent or Shared Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by such Collateral Agent or Shared Collateral Agent on behalf of the Secured Parties at such sale or other disposition. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Obligations provided under the Loan Documents, to have agreed to the foregoing provisions. The provisions of this paragraph are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party.

(f) Each Lender and Issuing Bank (a) acknowledges that it has received a copy of the ABL Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement and (c) acknowledges that the Collateral Agent will enter into the ABL Intercreditor Agreement, and hereby authorizes the Collateral Agent or the Administrative Agent, as applicable, to enter into (and be a party to) the ABL Intercreditor Agreement and any documents related thereto (including any amendments to the Security Documents) on behalf of itself, such Lender, the Issuing Banks and other holders of Secured Obligations, in each case as the Collateral Agent or the Administrative Agent, as applicable, shall determine to be appropriate to cause the applicable Indebtedness, and the obligations related thereto, to be secured as permitted hereunder without any further consent, authorization or other action by any Lender or Issuing Bank.

SECTION 9.21.  No Fiduciary Relationship.  The Borrower, on behalf of itself and its subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower, the other Subsidiaries and their Affiliates, on the one hand, and the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks and their Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks or their Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications. The Administrative Agent, the Collateral Agent, the Arrangers, the Lenders, the Issuing Banks and their Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of the Borrower and their Affiliates, and none of the Administrative Agent, the Collateral Agent, the Arrangers, the Lenders, the Issuing Banks and their Affiliates has any obligation to disclose any of such interests to the Borrower or any of their Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it or any of its Affiliates may have against the Administrative Agent, the Collateral Agent, the Arrangers, the Issuing Banks, the Lenders and their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

139


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

QUORUM HEALTH CORPORATION,
  by  

/s/ Michael J. Culotta

    Name:   Michael J. Culotta
    Title:   Executive Vice President and Chief Financial Officer

[Signature Page to Credit Agreement]


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, individually, as Issuing Bank and as Administrative Agent and Collateral Agent,
  by  

/s/ Robert Hetu

    Name: Robert Hetu
    Title: Authorized Signatory
  by  

/s/ Warren Van Heyst

    Name: Warren Van Heyst
    Title: Authorized Signatory

Signature Page to Credit Agreement


LENDER SIGNATURE PAGE TO

QUORUM HEALTH CORPORATION

CREDIT AGREEMENT

[Lender/Issuing Bank Signature Pages on

File with the Administrative Agent]

 

Name of Lender:  

 

By  

 

  Name:
  Title:
For any Lender requiring a second signature line:
Name of Lender:  

 

By  

 

  Name:
  Title:


INDEX OF SCHEDULES

 

Schedule 1.01(a)   -   Existing Letters of Credit
Schedule 1.01(b)   -   Subsidiary Guarantors
Schedule 1.01(c)   -   Hospitals
Schedule 1.01(d)   -   Mortgaged Properties
Schedule 1.01(e)   -   Certain Permitted Joint Ventures
Schedule 1.01(f)   -   Certain Subsidiaries
Schedule 1.01(g)   -   Non-Significant Subsidiaries
Schedule 2.01   -   Initial Lenders and Commitments
Schedule 3.08   -   Subsidiaries
Schedule 3.18   -   Insurance
Schedule 3.19(a)   -   UCC Filing Office
Schedule 3.19(c)   -   Mortgage Filing Offices
Schedule 3.21   -   Collective Bargaining Agreements
Schedule 4.02(b)   -   Local Counsel
Schedule 6.01(a)   -   Existing Indebtedness
Schedule 6.02(a)   -   Existing Liens
Schedule 6.04(h)   -   Certain Permitted Acquisitions
Schedule 6.05(b)   -   Certain Syndication Transactions
Schedule 6.07   -   Certain Affiliate Transactions


Schedule 1.01(a)

Existing Letters of Credit

None.

 

2


Schedule 1.01(b)

Subsidiary Guarantors

 

1. Anna Hospital Corporation

 

2. Big Bend Hospital Corporation

 

3. Big Spring Hospital Corporation

 

4. Blue Island Hospital Company, LLC

 

5. Blue Island Illinois Holdings, LLC

 

6. Blue Ridge Georgia Holdings, LLC

 

7. Centre Hospital Corporation

 

8. Clinton Hospital Corporation

 

9. CSRA Holdings, LLC

 

10. Deming Hospital Corporation

 

11. DHSC, LLC

 

12. Evanston Hospital Corporation

 

13. Forrest City Arkansas Hospital Company, LLC

 

14. Forrest City Hospital Corporation

 

15. Fort Payne Hospital Corporation

 

16. Galesburg Hospital Corporation

 

17. Granite City Hospital Corporation

 

18. Granite City Illinois Hospital Company, LLC

 

19. Greenville Hospital Corporation

 

20. Hamlet H.M.A., LLC

 

21. Hospital of Barstow, Inc.

 

22. Hospital of Louisa, Inc.

 

23. Jackson Hospital Corporation

 

24. Lexington Hospital Corporation

 

25. Marion Hospital Corporation

 

26. Massillon Community Health System LLC

 

27. Massillon Health System LLC

 

28. Massillon Holdings, LLC

 

29. McKenzie Tennessee Hospital Company, LLC

 

30. MMC of Nevada, LLC

 

31. Monroe HMA, LLC

 

32. MWMC Holdings, LLC

 

33. National Healthcare of Mt. Vernon, Inc.

 

34. Phillips Hospital Corporation

 

35. QHC California Holdings, LLC

 

36. QHG of Massillon, Inc.

 

37. Quorum Health Investment Company, LLC

 

38. Quorum Health Resources, LLC

 

39. Red Bud Hospital Corporation

 

40. Red Bud Illinois Hospital Company, LLC

 

41. San Miguel Hospital Corporation

 

42. Sunbury Hospital Company, LLC

 

43. Tooele Hospital Corporation

 

44. Triad of Oregon, LLC

 

45. Watsonville Hospital Corporation

 

3


46. Waukegan Hospital Corporation

 

47. Waukegan Illinois Hospital Company, LLC

 

48. Williamston Hospital Corporation

 

49. Winder HMA, LLC

 

4


Schedule 1.01(c)

Hospitals

 

(a) Owned Hospitals

Alabama

 

1. Cherokee Medical Center

400 Northwood Drive

Centre, AL 35960

(Cherokee)

Centre Hospital Corporation (AL)

 

2. DeKalb Regional Medical Center

200 Medical Center Drive SW

PO Box 680778

Fort Payne, AL 35968

(DeKalb)

Fort Payne Hospital Corporation (AL)

 

3. L.V. Stabler Memorial Hospital

29 L.V. Stabler Drive

Greenville, AL 36037

(Butler)

Greenville Hospital Corporation (AL)

California

 

4. Barstow Community Hospital

820 East Mountain View Street

Barstow, CA 92311

(San Bernardino)

Hospital of Barstow, Inc. (DE)

 

5. Watsonville Community Hospital

75 Nielson Street

Watsonville, CA 95076

(Santa Cruz)

Watsonville Hospital Corporation (DE)

Georgia

 

6. Fannin Regional Hospital

2855 Old Highway 5, North

Blue Ridge, GA 30513

(Fannin)

Blue Ridge Georgia Hospital Company, LLC (DE)

7. Clearview Regional Medical Center

2151 West Spring Street

PO Box 1346

Monroe, GA 30655

(Walton)

Monroe HMA, LLC

 

8. Barrow Regional Medical Center

316 North Broad Street

Winder, GA 30680

(Barrow)

Winder HMA, LLC

Illinois

 

9. MetroSouth Medical Center

12935 Gregory Street

Blue Island, IL 60406

(Cook)

Blue Island Hospital Company, LLC (DE)

 

10. Galesburg Cottage Hospital

695 N. Kellogg St.

Galesburg, IL 61401

(Knox)

Galesburg Hospital Corporation (IL)

 

11. Gateway Regional Medical Center

2100 Madison Avenue

Granite City, IL 62040

(Madison)

Granite City Illinois Hospital Company, LLC (IL)

 

12. Heartland Regional Medical Center

3333 West DeYoung

Marion, IL 62959

(Williamson)

Marion Hospital Corporation (IL)

 

13. Crossroads Community Hospital

#8 Doctors Park Road

Mt. Vernon, IL 62864

(Jefferson)

National Healthcare of Mt. Vernon, Inc. (DE)

 

 

5


14. Red Bud Regional Hospital

325 Spring Street

Red Bud, IL 62278

(Randolph)

Red Bud Illinois Hospital Company, LLC (IL)

 

15. Vista Medical Center East

1324 N. Sheridan Road

Waukegan, IL 60085

(Lake County)

Waukegan Illinois Hospital Company, LLC (IL)

 

16. Vista Medical Center West

2615 Washington Street

Waukegan, IL 60085

(Lake County)

Waukegan Illinois Hospital Company, LLC (IL)

Kentucky

 

17. Three Rivers Medical Center

2483 Highway 644

PO Box 769

Louisa, KY 41230

(Lawrence)

Hospital of Louisa, Inc. (KY)

 

18. Paul B. Hall Regional Medical Center

625 James S. Trimble Blvd.

Paintsville, KY 41240

(Johnson)

Paintsville Hospital Company, LLC

Nevada

 

19. Mesa View Regional Hospital

1299 Bertha Howe Avenue

PO Box 3540

Mesquite, NV 89027

(Clark)

MMC of Nevada, LLC (DE)

New Mexico

 

20. Mimbres Memorial Hospital

900 W. Ash Street

Deming, NM 88030

(Luna)

Deming Hospital Corporation (NM)

21. Alta Vista Regional Hospital

104 Legion Drive

Las Vegas, NM 87701

(San Miguel)

San Miguel Hospital Corporation (NM)

North Carolina

 

22. Sandhills Regional Medical Center

1000 West Hamlet Avenue

Hamlet, NC 28345

(Richmond)

Hamlet HMA, LLC

Ohio

 

23. Affinity Medical Center

875 Eighth Street, N.E.

PO Box 805

Massillon, OH 44646

(Stark)

DHSC, LLC (DE)

Oregon

 

24. McKenzie-Willamette Medical Center

1460 G Street

Springfield, OR 97477

(Lane)

McKenzie-Willamette Regional Medical

Center Associates, LLC (DE)

Pennsylvania

 

25. Lock Haven Hospital

24 Cree Drive

Lock Haven, PA 17745

(Clinton)

Clinton Hospital Corporation (PA)

 

26. Sunbury Community Hospital

350 N. Eleventh Street

PO Box 737

Sunbury, PA 17801

(Northumberland)

Sunbury Hospital Company, LLC (DE)

 

 

6


Tennessee

 

27. Henderson County Community Hospital

200 West Church Street

Lexington, TN 38351

(Henderson)

Lexington Hospital Corporation (TN)

 

28. McKenzie Regional Hospital

161 Hospital Dr.

McKenzie, TN 38201

(Carroll)

McKenzie Tennessee Hospital Company, LLC (DE)

Texas

 

29. Big Bend Regional Medical Center

2600 Highway 118 North

Alpine, TX 79830

(Brewster)

Big Bend Hospital Corporation (TX)

 

30. Scenic Mountain Medical Center

1601 West Eleventh Place

Big Spring, TX 79720

(Howard)

Big Spring Hospital Corporation (TX)

Utah

 

31. Mountain West Medical Center

2055 N. Main Street

Tooele, UT 84074

(Tooele)

Tooele Hospital Corporation (UT)

Wyoming

 

32. Evanston Regional Hospital

190 Arrowhead Drive

Evanston, WY 82930

(Uinta)

Evanston Hospital Corporation (WY)

(b) Leased Hospitals

Arkansas

 

1. Forrest City Medical Center

1601 Newcastle Road

Forrest City, AR 72336

(Saint Francis)

Forrest City Arkansas Hospital Company, LLC (AR)

 

2. Helena Regional Medical Center

1801 Martin Luther King Drive

PO Box 788

Helena, AR 72342

(Phillips)

Phillips Hospital Corporation (AR)

Georgia

 

3. Trinity Hospital of Augusta

2260 Wrightsboro Road

Augusta, GA 30904

(Richmond)

Augusta Hospital, LLC (DE)

Illinois

 

4. Union County Hospital

517 North Main

Anna, IL 62906

(Union)

Anna Hospital Corporation (IL)

Kentucky

 

5. Kentucky River Medical Center

540 Jetts Drive

Jackson, KY 41339

(Breathitt)

Jackson Hospital Corporation (KY)

North Carolina

 

6. Martin General Hospital

310 S. McCaskey Road

Williamston, NC 27892

(Martin)

Williamston Hospital Corporation (NC)

 

 

7


Schedule 1.01(d)

Mortgaged Properties

None as of the Closing Date.

Real property to be mortgaged pursuant to Section 5.12(b) of the Credit Agreement, within 60 days of the Closing Date (or such later date as the Administrative Agent in its sole discretion may permit):

 

   

Facility/Address

  

Owner

  

Filing Office

1.  

Cherokee Medical Center

400 Northwood Drive

Centre, AL 35960

   Centre Hospital Corporation    Alabama
2.  

Dekalb Regional Medical Center

200 Medical Center Drive SW

P. O. Box 680778

Fort Payne, AL 35968

   Fort Payne Hospital Corporation    Alabama
3.  

L.V. Stabler Memorial Hospital

29 L.V. Stabler Drive

Greenville, AL 36037

   Greenville Hospital Corporation    Alabama
4.  

Barstow Community Hospital

820 East Mountain View Street

Barstow, CA 92311

   Hospital of Barstow, Inc.    California
5.  

Watsonville Community Hospital

75 Nielson Street

Watsonville, CA 95076

   Watsonville Hospital Corporation    California
6.  

Clearview Regional Medical Center

2151 West Spring Street

PO Box 1346

Monroe, GA 30655

   Monroe HMA, LLC    Georgia
7.  

Barrow Regional Medical Center

316 North Broad Street

Winder, GA 30680

   Winder HMA, LLC    Georgia
8.  

Crossroads Community Hospital

#8 Doctors Park Road

Mt. Vernon, IL 62864

   National Healthcare of Mt. Vernon, Inc.    Illinois

 

8


   

Facility/Address

  

Owner

  

Filing Office

9.  

Galesburg Cottage Hospital

695 N. Kellogg St.

Galesburg, IL 61401

   Galesburg Hospital Corporation    Illinois
10.  

Gateway Regional Medical Center

2100 Madison Avenue

Granite City, IL 62040

   Granite City Illinois Hospital Company, LLC    Illinois
11.  

Heartland Regional Medical Center

3333 West DeYoung

Marion, IL 62959

   Marion Hospital Corporation    Illinois
12.  

MetroSouth Medical Center

12935 Gregory Street

Blue Island, IL 60406

   Blue Island Hospital Company, LLC    Illinois
13.  

Red Bud Regional Hospital

325 Spring Street

Red Bud, IL 62278

   Red Bud Illinois Hospital Company, LLC    Illinois
14.  

Vista Medical Center East

1324 N. Sheridan Road

Waukegan, IL 60085

   Waukegan Illinois Hospital Company, LLC    Illinois
15.  

Vista Medical Center West

2615 Washington Street

Waukegan, IL 60085

   Waukegan Illinois Hospital Company, LLC    Illinois
16.  

Three Rivers Medical Center

2483 Highway 644

PO Box 769

Louisa, KY 41230

   Hospital of Louisa, Inc.    Kentucky
17.  

Mesa View Regional Hospital

1299 Bertha Howe Avenue

PO Box 3540

Mesquite, NV 89027

   MMC of Nevada, LLC    Nevada
18.  

Alta Vista Regional Hospital

104 Legion Drive

Las Vegas, NM 87701

   San Miguel Hospital Corporation    New Mexico

 

9


   

Facility/Address

  

Owner

  

Filing Office

19.  

Mimbres Memorial Hospital

900 W. Ash Street

Deming, NM 88030

   Deming Hospital Corporation    New Mexico
20.  

Sandhills Regional Medical Center

1000 West Hamlet Avenue

Hamlet, NC 28345

   Hamlet HMA, LLC    North Carolina
21.  

Affinity Medical Center

875 Eighth Street, N.E.

PO Box 805

Massillon, OH 44646

   DHSC, LLC    Ohio
22.  

Lock Haven Hospital

24 Cree Drive

Lock Haven, PA 17745

   Clinton Hospital Corporation    Pennsylvania
23.  

Sunbury Community Hospital

350 N. Eleventh Street

PO Box 737

Sunbury, PA 17801

   Sunbury Hospital Company, LLC    Pennsylvania
24.  

Henderson County Community Hospital

200 West Church Street

Lexington, TN 38351

   Lexington Hospital Corporation    Tennessee
25.  

McKenzie Regional Hospital

161 Hospital Dr.

McKenzie, TN 38201

   McKenzie Tennessee Hospital Company, LLC    Tennessee
26.  

Big Bend Regional Medical Center

2600 Highway 118 North

Alpine, TX 79830

   Big Bend Hospital Corporation    Texas
27.  

Scenic Mountain Medical Center

1601 West Eleventh Place

Big Spring, TX 79720

   Big Spring Hospital Corporation    Texas
28.  

Mountain West Medical Center

2055 N. Main Street

Tooele, UT 84074-2794

   Tooele Hospital Corporation   

Utah

29.  

Evanston Regional Hospital

190 Arrowhead Drive

Evanston, WY 82930

   Evanston Hospital Corporation    Wyoming

 

10


Schedule 1.01(e)

Certain Permitted Joint Ventures

None.

 

11


Schedule 1.01(f)

Certain Subsidiaries

None.

 

12


Schedule 1.01(g)

Non-Significant Subsidiaries

 

1. Alfaro, Ltd.

 

2. Ambulance Services of Forrest City, LLC

 

3. Ambulance Services of Lexington, Inc.

 

4. Ambulance Services of McKenzie, Inc.

 

5. Ambulance Services of Tooele, LLC

 

6. Anna Clinic Corp.

 

7. Augusta Hospital, LLC

 

8. Augusta Physician Services, LLC

 

9. Barrow Health Ventures, Inc.

 

10. Barstow Healthcare Management, Inc.

 

11. Barstow Primary Care Clinic

 

12. Blue Island Clinic Company, LLC

 

13. Blue Island HBP Medical Group, LLC

 

14. Central Alabama Physician Services, Inc.

 

15. Centre Clinic Corp.

 

16. Centre HBP Services, LLC

 

17. Centre RHC Corp.

 

18. CHS Utah Holdings, LLC

 

19. Coastal Health Partners

 

20. Cottage Rehabilitation and Sports Medicine, L.L.C.

 

21. Crossroads Physician Corp.

 

22. Deming Clinic Corporation

 

23. Deming Nursing Home Company, LLC

 

24. Doctors Hospital Physician Services, LLC

 

25. Edwardsville Ambulatory Surgery Center, L.L.C.

 

26. Evanston Clinic Corp.

 

27. Fannin Regional Orthopaedic Center, Inc.

 

28. Forrest City Clinic Company, LLC

 

29. Fort Payne Clinic Corp.

 

30. Fort Payne RHC Corp.

 

31. Galesburg Professional Services, LLC

 

32. Gateway Malpractice Assistance Fund, Inc.

 

13


33. Georgia HMA Physician Management, LLC

 

34. Granite City ASC Investment Company, LLC

 

35. Granite City Clinic Corp

 

36. Granite City HBP Corp

 

37. Granite City Orthopedic Physicians Company, LLC

 

38. Granite City Physicians Corp.

 

39. Greenville Clinic Corp.

 

40. Hamlet HMA Physician Management, LLC

 

41. Hamlet HMA PPM, LLC

 

42. Haven Clinton Medical Associates, LLC

 

43. Heartland Rural Healthcare, LLC

 

44. Hidden Valley Medical Center, Inc.

 

45. In-Home Medical Equipment Supplies and Services, Inc.

 

46. Jackson Physician Corp.

 

47. Kentucky River HBP, LLC

 

48. Kentucky River Physician Corporation

 

49. King City Physician Company, LLC

 

50. Knox Clinic Corp.

 

51. Lexington Clinic Corp.

 

52. Lexington Family Physicians, LLC

 

53. Lindenhurst Illinois Hospital Company, LLC

 

54. Lindenhurst Surgery Center, LLC

 

55. Lock Haven Clinic Company, LLC

 

56. Massillon Physician Services, LLC

 

57. McKenzie Clinic Corp.

 

58. McKenzie Physician Services, LLC

 

59. Memorial Management, Inc.

 

60. Mesa View Physical Rehabilitation, LLC

 

61. Mesa View PT, LLC

 

62. Mesquite Clinic Management Company, LLC

 

63. Monroe County Surgical Center, LLC

 

64. Monroe Diagnostic Testing Centers, LLC

 

65. Monroe HMA Physician Management, LLC

 

66. National Imaging of Carterville, LLC

 

14


67. National Imaging of Mount Vernon, LLC

 

68. OHANI, LLC

 

69. Our Healthy Circle

 

70. Paintsville HMA Physician Management, LLC

 

71. Phillips Clinic Corp.

 

72. QHCCS, LLC

 

73. QHC HIM Shared Services, LLC

 

74. QHR Development, LLC

 

75. QHR Healthcare Affiliates, LLC

 

76. QHR Intensive Resources, LLC

 

77. QHR International, LLC

 

78. Quorum Health Foundation, Inc.

 

79. Quorum Purchasing Advantage, LLC

 

80. Quorum Solutions, LLC

 

81. Red Bud Clinic Corp.

 

82. Red Bud Physician Group, LLC

 

83. Red Bud Regional Clinic Company, LLC

 

84. River to River Heart Group, LLC

 

85. San Miguel Clinic Corp.

 

86. SMMC Medical Group

 

87. Southern Illinois Medical Care Associates, LLC

 

88. Springfield Oregon Holdings, LLC

 

89. Sunbury Clinic Company, LLC

 

90. Three Rivers Medical Clinics, Inc.

 

91. Tooele Clinic Corp.

 

92. Watsonville Healthcare Management, LLC

 

93. Waukegan Clinic Corp.

 

94. Western Illinois Kidney Center, LLC

 

95. Williamston Clinic Corp.

 

96. Williamston HBP Services, LLC

 

15


Schedule 2.01

Lenders and Commitments

On file with the Administrative Agent.

 

16


Schedule 3.08

Subsidiaries

 

   

Legal Entity

  

Percentage Owned

1.   Alfaro, Ltd.    0% (100% control) *
2.   Ambulance Services of Forrest City, LLC    100%
3.   Ambulance Services of Lexington, Inc.    100%
4.   Ambulance Services of McKenzie, Inc.    100%
5.   Ambulance Services of Tooele, LLC    100%
6.   Anna Clinic Corp.    100%
7.   Anna Hospital Corporation    100%
8.   Augusta Health System, LLC    89.71%
9.   Augusta Hospital, LLC    89.71%
10.   Augusta Physician Services, LLC    100%
11.   Barrow Health Ventures, Inc.    51%
12.   Barstow Healthcare Management, Inc.    100%
13.   Barstow Primary Care Clinic    0% (100% control)*
14.   Big Bend Hospital Corporation    100%
15.   Big Spring Hospital Corporation    100%
16.   Blue Island Clinic Company, LLC    100%
17.   Blue Island HBP Medical Group, LLC    100%
18.   Blue Island Hospital Company, LLC    100%
19.   Blue Island Illinois Holdings, LLC    100%
20.   Blue Ridge Georgia Hospital Company, LLC    98.21%
21.   Blue Ridge Georgia Holdings, LLC    100%
22.   Central Alabama Physician Services, Inc.    100%
23.   Centre Clinic Corp.    100%
24.   Centre HBP Services, LLC    100%
25.   Centre Hospital Corporation    100%
26.   Centre RHC Corp.    100%
27.   CHS Utah Holdings, LLC    100%
28.   Clinton Hospital Corporation    100%
29.   Coastal Health Partners    0% (100% control)*
30.   Cottage Rehabilitation and Sports Medicine, L.L.C.    50%
31.   Crossroads Physician Corp.    100%
32.   CSRA Holdings, LLC    100%
33.   Deming Clinic Corporation    100%
34.   Deming Hospital Corporation    100%
35.   Deming Nursing Home Company, LLC    100%
36.   DHSC, LLC    100%
37.   Doctors Hospital Physician Services, LLC    100%

 

* Indicates entity is a captive professional corporation. Such entity is controlled by a related management services entity owned by Borrower or a Subsidiary of Borrower, but owned by a physician in a contractual relationship with Borrower or a Subsidiary of Borrower.

 

17


   

Legal Entity

  

Percentage Owned

38.

  Edwardsville Ambulatory Surgery Center, L.L.C.    68.44%

39.

  Evanston Clinic Corp.    100%

40.

  Evanston Hospital Corporation    100%

41.

  Fannin Regional Orthopaedic Center, Inc.    100%

42.

  Forrest City Arkansas Hospital Company, LLC    100%

43.

  Forrest City Clinic Company, LLC    100%

44.

  Forrest City Hospital Corporation    100%

45.

  Fort Payne Clinic Corp.    100%

46.

  Fort Payne Hospital Corporation    100%

47.

  Fort Payne RHC Corp.    100%

48.

  Galesburg Hospital Corporation    100%

49.

  Galesburg Professional Services, LLC    100%

50.

  Gateway Malpractice Assistance Fund, Inc.    100%

51.

  Georgia HMA Physician Management, LLC    100%

52.

  Granite City ASC Investment Company, LLC    100%

53.

  Granite City Clinic Corp.    100%

54.

  Granite City HBP Corp.    100%

55.

  Granite City Hospital Corporation    100%

56.

  Granite City Illinois Hospital Company, LLC    100%

57.

  Granite City Orthopedic Physicians Company, LLC    100%

58.

  Granite City Physicians Corp.    100%

59.

  Greenville Clinic Corp.    100%

60.

  Greenville Hospital Corporation    100%

61.

  Hamlet H.M.A., LLC    100%

62.

  Hamlet HMA Physician Management, LLC    100%

63.

  Hamlet HMA PPM, LLC    100%

64.

  Haven Clinton Medical Associates, LLC    100%

65.

  Heartland Rural Healthcare, LLC    100%

66.

  Hidden Valley Medical Center, Inc.    100%

67.

  Hospital of Barstow, Inc.    100%

68.

  Hospital of Louisa, Inc.    100%

69.

  In-Home Medical Equipment Supplies and Services, Inc.    100%

70.

  Jackson Hospital Corporation    100%

71.

  Jackson Physician Corp.    100%

72.

  Kentucky River HBP, LLC    100%

73.

  Kentucky River Physician Corporation    100%

74.

  King City Physician Company, LLC    100%

75.

  Knox Clinic Corp.    100%

76.

  Lexington Clinic Corp.    100%

77.

  Lexington Family Physicians, LLC    100%

78.

  Lexington Hospital Corporation    100%

79.

  Lindenhurst Illinois Hospital Company, LLC    100%

80.

  Lindenhurst Surgery Center, LLC    51%

 

18


   

Legal Entity

  

Percentage Owned

81.

  Lock Haven Clinic Company, LLC    100%

82.

  Marion Hospital Corporation    100%

83.

  Massillon Community Health System LLC    100%

84.

  Massillon Health System, LLC    100%

85.

  Massillon Holdings, LLC    100%

86.

  Massillon Physician Services, LLC    100%

87.

  McKenzie Clinic Corp.    100%

88.

  McKenzie Physician Services, LLC    100%

89.

  McKenzie Tennessee Hospital Company, LLC    100%

90.

  McKenzie-Willamette Regional Medical Center Associates, LLC    92.24%

91.

  Memorial Management, Inc.    100%

92.

  Mesa View Physical Rehabilitation, LLC    50%

93.

  Mesa View PT, LLC    100%

94.

  Mesquite Clinic Management Company, LLC    100%

95.

  MMC of Nevada, LLC    100%

96.

  Monroe County Surgical Center, LLC    60%

97.

  Monroe Diagnostic Testing Centers, LLC    100%

98.

  Monroe HMA, LLC    100%

99.

  Monroe HMA Physician Management, LLC    100%

100.

  MWMC Holdings, LLC    100%

101.

  National Healthcare of Mt. Vernon, Inc.    100%

102.

  National Imaging of Carterville, LLC    100%

103.

  National Imaging of Mount Vernon, LLC    100%

104.

  OHANI, LLC    100%

105.

  Our Healthy Circle    100%

106.

  Paintsville HMA Physician Management, LLC    100%

107.

  Paintsville Hospital Company, LLC    97.0834%

108.

  Phillips Clinic Corp.    100%

109.

  Phillips Hospital Corporation    100%

110.

  QHC California Holdings, LLC    100%

111.

  QHC HIM Shared Services, LLC    100%

112.

  QHCCS, LLC    100%

113.

  QHG of Massillon, Inc.    100%

114.

  QHR Development, LLC    100%

115.

  QHR Healthcare Affiliates, LLC    100%

116.

  QHR Intensive Resources, LLC    100%

117.

  QHR International, LLC    100%

118.

  Quorum Health Foundation, Inc.    100%

119.

  Quorum Health Investment Company, LLC    100%

120.

  Quorum Health Resources, LLC    100%

121.

  Quorum Purchasing Advantage, LLC    100%

122.

  Quorum Solutions, LLC    100%

123.

  Red Bud Clinic Corp.    100%

 

19


   

Legal Entity

  

Percentage Owned

124.   Red Bud Hospital Corporation    100%
125.   Red Bud Illinois Hospital Company, LLC    100%
126.   Red Bud Physician Group, LLC    100%
127.   Red Bud Regional Clinic Company, LLC    100%
128.   River to River Heart Group, LLC    100%
129.   San Miguel Clinic Corp.    100%
130.   San Miguel Hospital Corporation    100%
131.   SMMC Medical Group    100%
132.   Southern Illinois Medical Care Associates, LLC    100%
133.   Springfield Oregon Holdings, LLC    100%
134.   Sunbury Clinic Company, LLC    100%
135.   Sunbury Hospital Company, LLC    100%
136.   Three Rivers Medical Clinics, Inc.    100%
137.   Tooele Clinic Corp.    100%
138.   Tooele Hospital Corporation    100%
139.   Triad of Oregon, LLC    100%
140.   Watsonville Healthcare Management, LLC    100%
141.   Watsonville Hospital Corporation    100%
142.   Waukegan Clinic Corp.    100%
143.   Waukegan Hospital Corporation    100%
144.   Waukegan Illinois Hospital Company, LLC    100%
145.   Western Illinois Kidney Center, LLC    50%
146.   Williamston Clinic Corp.    100%
147.   Williamston HBP Services, LLC    100%
148.   Williamston Hospital Corporation    100%
149.   Winder HMA, LLC    100%

 

20


Schedule 3.18

Insurance

(a) Quorum Health Corporation

 

Coverage

  

Carrier

  

Policy Limits

  

Deductible / SIR

1st Excess

   AWAC Bermuda    $25m xs $25m    N/A

Automobile

   Safety National    $2,000,000 CSL    Liability - $0 /Phys Dam-$3,500/$3,500

Crime Employment Practices Liability

  

Starr/Travelers

Markel (BDA)

  

$15m

$15m

  

$100,000

$1,000,000

Cyber

   Zurich    $10m    $1m

D&O Primary

   AIG/Zurich/ACE/Berkley/AWAC    $25m    $2,000,000

D&O Side A

   C N A    $5m    N/A

Environmental Liability (3 yr)

   Ironshore    $5m/ $10m agg    $50,000

Excess WC—Ohio TPA

   V&A Services    N/A    N/A

Excess Workers Compensation—Ohio

   Safety National   

WC: Statutory;

EL $1m/$1m

   $350,000

Fiduciary

   Axis/Starr    $20m    $50,000

Helipad/Non-Owned Aviation Liability

   AIG    $20m    $0

Lead Umbrella

   MedPro/National Fire and Marine    $25m/$25m    $5m

PL/GL TPA

   Western Litigation    N/A    N/A

Primary PL/GL- PA Only

   MedPro/National Fire and Marine    PL- $500k/$2.5m GL- $1m/$3m    $50k/$300k Agg

Property

   FM Global    $1B (includes CA EQ $25m Agg)    $50,000 (non CAT perils)

Punitive Wrap - Lead Umbrella

   Berkshire Hathaway Int’l Ins.    $25m    $5m

Workers Compensation

   Safety National    WC: Statutory; EL: $1m/$1m/$1m    $500,000

Workers Compensation TPA

   Gallagher Bassett    N/A    N/A

 

21


(b) Quorum Health Resources, LLC

 

Coverage

  

Carrier

  

Policy Limits

  

Deductible / SIR

Automobile—Hired and Non-owned only    Hartford    $1M    None

Integrated Insurance Policy—see A and B below

   Zurich    $25M each Loss/ $50M Each Annual Period; $50M Entire Policy Period subject to other policy limits including those shown below.    See below

A: Primary Insurance Coverage: Health Care Professional Liability and Miscellaneous Professional Liability

   See above    $25M per Loss/ $25M per Annual Period / $25M per Policy Period    $6M each Claim except $10M each Claim for Class Action or $10M each Medical incident involving more than one patient.

B: Umbrella (other) Liability

   See above    $25M per Loss/ $25M per Annual Period / $25M per Policy Period    Excess of General Liability $6M SIR; Auto Liability $1M; Employers Liability $1M/$1M/$1M

Property ( as additional insured under QHC policy noted above )

   FM Global    $1B (includes CA EQ $25m Agg)    $50,000 (non CAT perils)

Workers Compensation/Employers Liability

   Hartford    WC—Statutory; EL— $1M/$1M/$1M    None

 

22


Schedule 3.19(a)

UCC Filing Offices

 

   

Entity Name

  

Jurisdiction

of

Formation

  

Filing Office

1.   Quorum Health Corporation    Delaware    Secretary of State of the State of Delaware
2.   Centre Hospital Corporation    Alabama    Secretary of State of the State of Alabama
3.   Fort Payne Hospital Corporation    Alabama    Secretary of State of the State of Alabama
4.   Greenville Hospital Corporation    Alabama    Secretary of State of the State of Alabama
5.   Forrest City Arkansas Hospital Company, LLC    Arkansas    Secretary of State of the State of Arkansas
6.   Forrest City Hospital Corporation    Arkansas    Secretary of State of the State of Arkansas
7.   Phillips Hospital Corporation    Arkansas    Secretary of State of the State of Arkansas
8.   Blue Island Hospital Company, LLC    Delaware    Secretary of State of the State of Delaware
9.   Blue Island Illinois Holdings, LLC    Delaware    Secretary of State of the State of Delaware
10.   Blue Ridge Georgia Holdings, LLC    Delaware    Secretary of State of the State of Delaware
11.   CSRA Holdings, LLC    Delaware    Secretary of State of the State of Delaware
12.   DHSC, LLC    Delaware    Secretary of State of the State of Delaware
13.   Hospital of Barstow, Inc.    Delaware    Secretary of State of the State of Delaware
14.   Massillon Community Health System LLC    Delaware    Secretary of State of the State of Delaware
15.   Massillon Health System LLC    Delaware    Secretary of State of the State of Delaware
16.   Massillon Holdings, LLC    Delaware    Secretary of State of the State of Delaware
17.   McKenzie Tennessee Hospital Company, LLC    Delaware    Secretary of State of the State of Delaware
18.   MMC of Nevada, LLC    Delaware    Secretary of State of the State of Delaware
19.   MWMC Holdings, LLC    Delaware    Secretary of State of the State of Delaware
20.   National Healthcare of Mt. Vernon, Inc.    Delaware    Secretary of State of the State of Delaware
21.   QHC California Holdings, LLC    Delaware    Secretary of State of the State of Delaware
22.   Quorum Health Investment Company, LLC    Delaware    Secretary of State of the State of Delaware
23.   Quorum Health Resources, LLC    Delaware    Secretary of State of the State of Delaware
24.   Sunbury Hospital Company, LLC    Delaware    Secretary of State of the State of Delaware
25.   Triad of Oregon, LLC    Delaware    Secretary of State of the State of Delaware
26.   Watsonville Hospital Corporation    Delaware    Secretary of State of the State of Delaware
27.   Monroe HMA, LLC    Georgia    Office of the Clerk of any Superior Court in the State of Georgia
28.   Winder HMA, LLC    Georgia    Office of the Clerk of any Superior Court in the State of Georgia
29.   Anna Hospital Corporation    Illinois    Secretary of State of the State of Illinois
30.   Galesburg Hospital Corporation    Illinois    Secretary of State of the State of Illinois

 

23


31.   Granite City Hospital Corporation    Illinois    Secretary of State of the State of Illinois
32.   Granite City Illinois Hospital Company, LLC    Illinois    Secretary of State of the State of Illinois
33.   Marion Hospital Corporation    Illinois    Secretary of State of the State of Illinois
34.   Red Bud Hospital Corporation    Illinois    Secretary of State of the State of Illinois
35.   Red Bud Illinois Hospital Company, LLC    Illinois    Secretary of State of the State of Illinois
36.   Waukegan Hospital Corporation    Illinois    Secretary of State of the State of Illinois
37.   Waukegan Illinois Hospital Company, LLC    Illinois    Secretary of State of the State of Illinois
38.   Hospital of Louisa, Inc.    Kentucky    Secretary of State of the State of Kentucky
39.   Jackson Hospital Corporation    Kentucky    Secretary of State of the State of Kentucky
40.   Deming Hospital Corporation    New Mexico    Secretary of State of the State of New Mexico
41.   San Miguel Hospital Corporation    New Mexico    Secretary of State of the State of New Mexico
42.   Hamlet H.M.A., LLC    North Carolina    Secretary of State of the State of North Carolina
43.   Williamston Hospital Corporation    North Carolina    Secretary of State of the State of North Carolina
44.   QHG of Massillon, Inc.    Ohio    Secretary of State of the State of Ohio
45.   Clinton Hospital Corporation    Pennsylvania    Secretary of the Commonwealth of Pennsylvania
46.   Lexington Hospital Corporation    Tennessee    Secretary of State of the State of Tennessee
47.   Big Bend Hospital Corporation    Texas    Secretary of State of the State of Texas
48.   Big Spring Hospital Corporation    Texas    Secretary of State of the State of Texas
49.   Tooele Hospital Corporation    Utah    Division of Corporations and Commercial Code of the State of Utah
50.   Evanston Hospital Corporation    Wyoming    Secretary of State of the State of Wyoming

 

24


Schedule 3.19(c)

Mortgage Filing Offices

 

   

Facility

  

Filing Office

1.   Cherokee Medical Center    Alabama (Cherokee)
2.   DeKalb Regional Medical Center    Alabama (DeKalb)
3.   L.V. Stabler Memorial Hospital    Alabama (Butler)
4.   Barstow Community Hospital    California (San Bernardino)
5.   Watsonville Community Hospital    California (Santa Cruz)
6.   Clearview Regional Medical Center    Georgia (Walton)
7.   Barrow Regional Medical Center    Georgia (Barrow)
8.   MetroSouth Medical Center    Illinois (Cook)
9.   Galesburg Cottage Hospital    Illinois (Knox)
10.   Gateway Regional Medical Center    Illinois (Madison)
11.   Heartland Regional Medical Center    Illinois (Williamson)
12.   Crossroads Community Hospital    Illinois (Jefferson)
13.   Red Bud Regional Hospital    Illinois (Randolph)
14.   Vista Medical Center East    Illinois (Lake County)
15.   Vista Medical Center West    Illinois (Lake County)
16.   Three Rivers Medical Center    Kentucky (Lawrence)
17.   Mesa View Regional Hospital    Nevada (Clark)
18.   Alta Vista Regional Hospital    New Mexico (San Miguel)
19.   Mimbres Memorial Hospital    New Mexico (Luna)
20.   Sandhills Regional Medical Center    North Carolina (Richmond)
21.   Affinity Medical Center    Ohio (Stark)
22.   Lock Haven Hospital    Pennsylvania (Clinton)
23.   Sunbury Community Hospital    Pennsylvania (Northumberland)
24.   Henderson County Community Hospital    Tennessee (Henderson)
25.   McKenzie Regional Hospital    Tennessee (Carroll)
26.   Big Bend Regional Medical Center    Texas (Brewster)
27.   Scenic Mountain Medical Center    Texas (Howard)
28.   Mountain West Medical Center    Utah (Tooele)
29.   Evanston Regional Hospital    Wyoming (Uinta)

 

25


Schedule 3.21

Collective Bargaining Agreements

 

Facility

  

Union

  

CBA’s Term

  

Bargaining Unit

Paul B. Hall Regional Medical Center

 

Paintsville, KY

   United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC Local 9120    October 18, 2015, to 11:59 p.m. October 17, 2017.   

“The Hospital hereby recognizes the Union as the sole exclusive bargaining agency for all the Hospital’s employees at its Paintsville, Kentucky facility, including service and maintenance employees, ward clerks, registered nurses, licensed practical nurses, respiratory therapists, radiology technologists, housekeeping employees, dietary employees, nurses’ assistants, orderlies, central supply employees, central store

employees, pharmacy technicians (certified and non-certified) and office clerical employees, but excluding pharmacists, physical therapy employees, confidential employees, guards, and supervisors as defined in the ACT.”

Kentucky River Medical Center

 

Jackson, KY

   United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC   

February 28, 2016 to February 28, 2019

 

April 1, 2016, to 11:58 p.m. on February 28, 2019

   Virtually all employees, except for Business Office Clerical

Metro South Medical Center

 

Blue Island, IL

   SEIU Healthcare IL, IN, MO and KS    September 30, 2014 to October 1, 2016    Service and Maintenance

McKenzie-Willamette Medical Center

 

Springfield, OR

   Oregon Nurses Association    January 1, 2015 to December 31, 2016    RNs and LPNs

McKenzie-Willamette Medical Center

 

Springfield, OR

   SEIU, Local 49    November 1, 2014 to July 31, 2016    Virtually all employees, except for RNs and LPNs

 

26


Facility

  

Union

  

CBA’s Term

  

Bargaining Unit

Watsonville Community Hospital

 

Watsonville, CA

   California Technical Employees’ Coalition    February 1, 2015 to January 31, 2017    Technical

Watsonville Community Hospital

 

Watsonville, CA

   SEIU – United Healthcare Workers West    November 1, 2014 to October 31, 2016    Service & Maintenance

Watsonville Community Hospital

 

Watsonville, CA

   Teamsters, Local 912    March 1, 2015 to February 28, 2017    Business Office Clerical, HIM and IT

Alta Vista Regional Hospital

 

Las Vegas, NM

   District 1199NM, National Union of Hospital and Healthcare Employees    October 1, 2015 to August 31, 2016   

Barstow Community Hospital

 

Barstow, CA

   SEIU – United Healthcare Workers West    December 10, 2014 to December 10, 2016    Technical, Service & Maintenance and Skilled Maintenance

Lock Haven Hospital

 

Lock Haven, PA

   SEIU Healthcare Pennsylvania    November 30, 2015 to November 30, 2016    RNs

Lock Haven Hospital

 

Lock Haven, PA

   SEIU Healthcare Pennsylvania    November 30, 2015 to November 30, 2016    Technical, Service & Maintenance

 

27


Schedule 4.02(b)

Local Counsel

 

1. Ballard Spahr LLP (Pennsylvania; Utah)

 

2. Bass, Berry & Sims PLC (Delaware; Tennessee)

 

3. Bingham Greenebaum Doll LLP (Kentucky; Ohio)

 

4. Bradley Arant Boult Cummins LLP (Alabama; North Carolina)

 

5. Crowley Fleck PLLP (Wyoming)

 

6. Hodgson Russ, LLP (New York)

 

7. King & Spalding LLP (Georgia)

 

8. Kutak Rock LLP (Arkansas)

 

9. Liechty & McGinnis, LLP (Texas)

 

10. McGuire Woods LLP (Illinois)

 

11. Montgomery & Andrews, P.A.(New Mexico)

 

28


Schedule 6.01(a)

Existing Indebtedness

Indebtedness incurred pursuant to that certain Indenture, dated as of April 22, 2016, as supplemented through the date hereof, providing for the issuance of the 11.625% Senior Notes due 2023.

Miscellaneous Debt:

 

          $ amounts in
thousands
 

Monroe County Surgical Center, LLC (Waterloo, IL)

   Term Loan      531   

Monroe County Surgical Center, LLC (Waterloo, IL)

   Pump Station      44   

Blue Ridge Georgia Hospital Company, LLC (Fannin RH – Blue Ridge, GA)

   Term Loan      44   

Blue Ridge Georgia Hospital Company, LLC (Fannin RH – Blue Ridge, GA)

   Pump Station      16   
     

 

 

 
   TOTAL      635   
Capital Leases:      
          $ amounts in
thousands
 

Quorum Health Corporation (Corporate Building Lease)

   Building lease      14,391   

Jackson Hospital Corporation (Kentucky River – Jackson, KY)

   Building lease      6,996   

Tooele Hospital Corporation (Mountain West – Tooele, UT)

   Equipment lease      214   

Quorum Health Resources, LLC

   Equipment lease      18   

Monroe County Surgical Center, LLC (Waterloo, IL)

   Equipment lease      31   

Monroe HMA, LLC (Walton Regional Medical Center – Monroe, GA)

   Equipment lease      467   

Paintsville Hospital Company, LLC (Paul B Hall RMC – Paintsville, KY)

   Equipment lease      206   
     

 

 

 
   TOTAL CAP LEASES      22,323   
Physician Loans:      
          $ amounts
in thousands
 

DHSC, LLC (Affinity Medical Center – Massillon, OH)

   Physician Loan      101   

Fort Payne Hospital Corporation (DeKalb RMC – Fort Payne, AL)

   Physician Loan      70   

Phillips Hospital Corporation (Helena RMC – Helena, AR)

   Physician Loan      45   

Marion Hospital Corporation (Heartland RMC – Marion, IL)

   Physician Loan      37   

McKenzie Tennessee Hospital Company, LLC (McKenzie RH – McKenzie, TN)

   Physician Loan      52   

McKenzie-Willamette Regional Medical Center Association (McKenzie Willamette MC – Springfield, OR)

   Physician Loan      150   

Blue Ridge Georgia Hospital Company, LLC (Fannin RH – Blue Ridge, GA)

   Physician Loan      1   
     

 

 

 
   TOTAL PHYSICIAN LOANS      456   

 

* Debt aggregated by major type per facility.

 

29


Schedule 6.02(a)

Existing Liens

( see attached )

 

30


(attachment to Schedule 6.02(a))

 

DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

ANNA HOSPITAL CORPORATION    IL    Secretary of State    8/4/2011    16494879    U.S. Bank, N.A.

ANNA HOSPITAL CORPORATION

(ADD’L DEBTOR:

UNION COUNTY HOSPITAL)

   IL    Secretary of State    7/10/2012    17433644    Toshiba America Medical Credit
ANNA HOSPITAL CORPORATION    IL    Secretary of State    11/14/2012    17756990    MB Financial Bank, N.A.
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    4/13/2011    11-0011104493    De Lage Landen Financial Services, Inc.
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    7/15/2013    13-0022386722    First Midwest Bank
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    8/18/2014    14-0026385211    First Midwest Bank
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    9/16/2014    14-0029599756    De Lage Landen Financial Services, Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/14/2007    07-0031612565    Dade Behring Finance Co. LLC
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    8/14/2009    09-0022209529    KBH SPV 3, LLC
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    4/21/2011    11-0012046883    Olympus America Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    6/25/2012    12-0020210018    Konica Minolta Business Solutions USA, Inc
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    11/28/2012    12-0037064841    Siemens Financial Services, Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    3/26/2013    13-0009420150    Philips Medical Capital, LLC
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/3/2013    13-0028025667    Olympus America Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/23/2013    13-00304463737    Philips Medical Capital, LLC

BIG SPRING HOSPITAL CORPORATION

(ADD’L DEBTOR:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)

   TX    Secretary of State    3/13/2014    14-0007989078    MB Financial Bank, N.A.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    7/14/2015    15-0022174709    General Electric Capital Corporation
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    8/27/2015    15-0028457365    Stryker Sales Finance
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/18/2015    15-0030407292    General Electric Capital Corporation
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    12/9/2015    15-0038939543    KMBS
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    5/5/2013    2013 1731794    Banc of America Leasing & Capital, LLC
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    11/11/2013    2013 4426095    First Midwest Bank
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    4/8/2014    2014 1378868    CHG-Meridian USA Corp.
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    12/17/2014    2014 5130372    Novadaq Capital Solutions


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    3/2/2016    2016 1245479    De Lage Landen Financial Services, Inc.
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    3/29/2016    2016 1848009    Leasing Associates of Barrington, Inc.
CENTRE HOSPITAL CORPORATION    AL    Secretary of State    1/18/2013    13-0045674    Urban Partnership Bank
CLINTON HOSPITAL CORPORATION    PA    Department of State    4/1/2011    2011040400176    Leasing Associates of Barrington, Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    6/6/2011    2011060805584    De Lage Landen Financial Services, Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    4/20/2012    2012042008712    Konica Minolta Business Solutions USA Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    5/3/2012    2012050307336    Konica Minolta Business Solutions USA Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    6/11/2012    2012061203771    Leasing Associates of Barrington, Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    12/7/2012    2012121004378    U.S. Bank, N.A.
CLINTON HOSPITAL CORPORATION    PA    Department of State    6/16/2014    2014061711520    U.S. Bank, N.A.
CLINTON HOSPITAL CORPORATION    PA    Department of State    5/27/2015    2015052708308    Konica Minolta Premier Finance
DEMING HOSPITAL CORPORATION    NM    Secretary of State    8/5/2009    20090012304B    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATON    NM    Secretary of State    10/22/2009    20090016362M    Toshiba America Medical Credit, a Program of Toshiba America Medical Systems, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    7/20/2011    20110011939J    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    7/20/2011    20110011973G    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    7/21/2011    20110011999E    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    11/29/2011    20110019736A    KMBS Business Solutions U.S.A., Inc.

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION

(ADD’L DEBTOR:

DEMING HOSPITAL CORPORATION)

   NM    Secretary of State    11/30/2011    20110019815K    CHG-Meridian U.S. Finance, Ltd.

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION

(ADD’L DEBTOR:

DEMING HOSPITAL CORPORATION)

   NM    Secretary of State    4/3/2012    20120006266G    CHG-Meridian U.S. Finance, Ltd.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    9/5/2012    20120016391G    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/29/2013    20130007317F    Philips Medical Capital, LLC
DEMING HOSPITAL CORPORATION    NM    Secretary of State    12/16/2013    20130020724B    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    5/20/2014    20140008176M    First Midwest Bank


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE

NUMBER

  

SECURED PARTY

DEMING HOSPITAL CORPORATION    NM    Secretary of State    10/6/2014    20140022377C    Leasing Associates of Barrington, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    3/18/2015    20150027320C    Toshiba America Medical Credit, a Program of Toshiba America Medical Systems, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/3/2015    20150027854C    General Electric Capital Corporation
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/20/2015    20150028382J    CHG-Meridian USA Corp.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/30/2015    20150028745C    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    7/11/2008    2008 2394359    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    8/21/2008    2008 2858544    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    9/2/2008    2008 3045315    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    9/3/2008    2008 3061833    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    10/6/2010    2010 3486408    Toshiba America Medical Credit, a Program of Toshiba America Medical Systems, Inc.
DHSC, LLC    DE    Department of State: Division Of Corporations    5/16/2011    2011 1839615    KMBS Business Solutions U.S.A., Inc.

CHSPSC, LLC

(ADD’L DEBTOR:

DHSC, LLC)

   DE    Department of State: Division Of Corporations    11/3/2011    2011 4255660    SG Equipment Finance USA Corp.
DHSC, LLC    DE    Department of State: Division Of Corporations    7/18/2012    2012 2758110    CreekRidge Capital LLC
DHSC, LLC    DE    Department of State: Division Of Corporations    7/23/2012    2012 2817304    Philips Medical Capital, LLC
DHSC, LLC    DE    Department of State: Division Of Corporations    7/23/2012    2012 2820134    MB Financial Bank, N.A.
DHSC, LLC    DE    Department of State: Division Of Corporations    9/21/2012    2012 3645696    Konica Minolta Business Solutions USA Inc
DHSC, LLC    DE    Department of State: Division Of Corporations    4/29/2013    2013 1627836    Urban Partnership Bank
DHSC, LLC    DE    Department of State: Division Of Corporations    3/31/2016    2016 1917382    Konica Minolta Premier Finance
DHSC, LLC    OH    Stark County    11/6/2012    2012CV3479   

Plaintiff:

Ann Wayt

DHSC, LLC    OH    Stark County    6/30/2014    2014CV01545   

Plaintiff:

James E. Brahm


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    3/31/2009    2009-40086436    Siemens Financial Services, Inc.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    4/11/2011    2011-46867039    U.S. Bank, N.A.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    4/10/2012    2012-50237324    TCF Equipment Finance, Inc.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    7/3/2012    2012-50992435    Siemens Financial Services, Inc.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    9/10/2012    2012-51543627    Philips Medical Capital LLC
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    11/20/2012    2012-52123122    Philips Medical Capital LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    10/5/2010    40000020154258    Leasing Associates of Barrington, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    12/28/2010    40000023740212    Leasing Associates of Barrington, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/12/2011    40000031369399    De Lage Landen Financial Services, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/20/2011    40000031768322    De Lage Landen Financial Services, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    7/6/2011    40000034179351    De Lage Landen Financial Services, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    8/10/2011    40000035965274    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    1/3/2012    40000042512997    Konica Minolta Business Solutions USA Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    2/7/2012    40000044373328    U.S. Bank National Association
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/30/2012    40000051217646    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    6/12/2012    40000051912163    First Midwest Bank

FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC

(ADD’L DEBTOR:

FORREST CITY HOSPITAL)

   AR    Secretary of State    3/26/2013    40000066290380    Toshiba America Medical Credit
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    6/14/2013    40000071030611    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    8/26/2013    40000074861626    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    11/13/2014    40000098864271    Philips Medical Capital, LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/8/2015    40000108465159    GE HFS, LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    10/6/2015    40000116691664    GE HFS, LLC


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    1/29/2016    4000012195912    GE HFS, LLC
FORREST CITY HOSPITAL CORPORATION    AR    Secretary of State    3/26/2013    40000066290380    Toshiba America Medical Credit
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    10/25/2005    05-0799125    Siemens Financial Services, Inc.
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    2/8/2013    13-0072401    First Midwest Bank
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    2/28/2013    13-0091839    De Lage Landen Financial Services, Inc.
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    5/11/2015    15-7351597    TCF Equipment Finance, a division of TCF National Bank
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    8/13/2015    15-7655382    SCG Capital Corporation
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    10/6/2015    15-7818015   

Med One Capital Funding, LLC

(Add’l Secured Party: IPA ONE)

GALESBURG HOSPITAL CORPORATION    IL    Secretary of State    8/13/2012    17513001    MB Financial Bank, N.A.
GALESBURG HOSPITAL CORPORATION    IL    Secretary of State    12/31/2013    18896834    CHG-Meridian USA Corp.
GALESBURG HOSPITAL CORPORATION    IL    Secretary of State    3/17/2016    21189499    GE HFS, LLC
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    4/12/2011    16175838    U. S. Bank, N.A.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/30/2011    16398705    General Electric Capital Corporation
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/28/2011    16640638    Siemens Financial Services, Inc.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/17/2011    16778516    General Electric Capital Corporation
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LCC    IL    Secretary of State    12/2/2011    16819123    Associated Bank, N.A.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/2/2012    17644661    Konica Minolta Business Solutions USA Inc
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/13/2013    18761491    CHG-Meridian USA Corp.

GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC

(ADD’L DEBTOR:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)

   IL    Secretary of State    11/13/2013    18762048    CHG-Meridian USA Corp.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/16/2013    18848899    CHG-Meridian USA Corp.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/29/2014    19673561    Urban Partnership Bank
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    2/4/2016    21083259    Konica Minolta Premier Finance


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Madison County Recorder    9/24/2015    2015R33507    PHH Mortgage Corp
GREENVILLE HOSPITAL CORPORATION    AL    Secretary of State    4/12/2013    13-0173884    First Midwest Bank
HAMLET H.M.A., LLC    NC    Secretary of State    2/19/2010    20100013297G    Siemens Financial Services, Inc.
HAMLET H.M.A., LLC    NC    Secretary of State    6/28/2011    20110055952A    General Electric Capital Corporation
HAMLET H.M.A., LLC    NC    Secretary of State    10/11/2011    20110086434M    General Electric Capital Corporation
HAMLET H.M.A., LLC    NC    Secretary of State    10/27/2011    20110091501A    Philips Medical Capital LLC
HAMLET H.M.A., LLC    NC    Secretary of State    11/11/2011    20110095789C    MB Financial Bank, N.A.
HAMLET H.M.A., LLC    NC    Secretary of State    9/14/2012    20120086315K    Siemens Financial Services, Inc.
HAMLET H.M.A., LLC    NC    Secretary of State    9/14/2012    20120086317A    Siemens Financial Services, Inc.
HAMLET H.M.A., LLC    NC    Secretary of State    1/29/2016    20160009344M    Konica Minolta Premier Finance
HOSPITAL OF BARSTOW, INC.    DE    Department of State: Division Of Corporations    11/18/2010    2010 4050864    General Electric Capital Corporation
HOSPITAL OF BARSTOW, INC.    DE    Department of State: Division Of Corporations    8/13/2012    2012 3118967    MB Financial Bank, N.A.

CHSPSC, LLC

(ADD’L DEBTOR:

HOSPITAL OF BARSTOW, INC.)

   DE    Department of State: Division Of Corporations    1/4/2013    2013 0058108    MB Financial Bank, N.A.
HOSPITAL OF BARSTOW, INC.    DE    Department of State: Division Of Corporations    7/14/2014    2014 2777274    General Electric Capital Corporation
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    6/10/2010    2010-2459934-59.01    De Lage Landen Financial Services, Inc.
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    7/1/2013    2013-2651975-81.01    OPTUM Bank, Inc.
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    2/19/2015    2015-2750465-57.01    Leasing Associates of Barrington, Inc.

HOSPITAL OF LOUISA, INC.

(ADD’L DEBTOR:

CHSPSC, LLC)

   KY    Secretary of State    3/25/2015    2015-2755356-31.01    TCF Equipment Finance, a division of TCF National Bank
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    9/22/2015    2015-27900103-20.01    Philips Medical Capital, LLC
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    10/1/2015    2015-2791693-75.01    General Electric Capital Corporation
JACKSON HOSPITAL CORPORATION    KY    Breathitt County    12/29/2015    LP41 PG560    Citizens Bank & Trust Co. of Jackson
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    9/25/2007    2007-2272142-49    National Health Investors, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    5/3/2010    2010-2451776-75.01    De Lage Landen Financial Services, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    6/2/2010    2010-2457962-58.01    Siemens Financial Services, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    7/22/2011    2011-2529832-35.01    Leasing Associates of Barrington, Inc.


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

JACKSON HOSPITAL CORPORATION    KY    Secretary of State    12/12/2011    2011-2552778-50.01    Leasing Associates of Barrington, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    3/25/2015    2015-2755355-20.01    CHG-Meridian USA Corp.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    9/15/2015    2015-2788799-78.01    Leasing Associates of Barrington, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    4/5/2016    2016-2823002-36.01    Modular Space Corporation
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    5/18/2011    211-063636    Robert Orr-Sysco Food Services, LLC
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    8/15/2011    311-048431    U.S. Bank N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    12/9/2011    311-075117    Beverly Bank & Trust Company N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    3/26/2012    312-315071    U.S. Bank N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    4/9/2012    312-317347    Beverly Bank & Trust Company N.A.

LEXINGTON HOSPITAL CORPORATION

(ADD’L DEBTOR:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)

   TN    Department of State    4/9/2012    312-317348    Beverly Bank & Trust Company N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    5/21/2012    112-216248    First Midwest Bank
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    6/26/2012    312-330563    Konica Minolta Business Solutions USA, Inc
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    3/25/2015    422-964328    TCF Equipment Finance, a division of TCF National Bank
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    5/27/2015    423293246    KMBS Business Solutions U.S.A., Inc.
MARION HOSPITAL CORPORATION    IL    Secretary of State    8/15/2005    10092701    Dade Behring Finance Co. LLC
MARION HOSPITAL CORPORATION    IL    Secretary of State    1/4/2006    10522250    General Electric Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    12/2/2011    16821101    First Midwest Bank
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/4/2012    17260685    Toshiba America Medical Systems, Inc.

MARION HOSPITAL CORPORATION

(ADD’L DEBTOR:

HEARTLAND REGIONAL MEDICAL CENTER)

   IL    Secretary of State    5/4/2012    17261266    Toshiba America Medical Credit
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/23/2012    17307215    Olympus America Inc.
MARION HOSPITAL CORPORATION    IL    Secretary of State    8/24/2912    17543075    General Electric Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    9/19/2012    17607936    Konica Minolta Business Solutions USA Inc.


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE

NUMBER

  

SECURED PARTY

MARION HOSPITAL CORPORATION

(ADD’L DEBTOR:

HEARTLAND REGIONAL MEDICAL CENTER)

   IL    Secretary of State    10/10/2012    17667637    Toshiba America Medical Credit

MARION HOSPITAL CORPORATION

(ADD’L DEBTOR:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATIONPITAL CORPORATION)

   IL    Secretary of State    2/7/2013    17987968    CHG-Meridian U.S. Finance, LTD.
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/14/2014    19276309    Olympus America Inc.
MARION HOSPITAL CORPORATION    IL    Secretary of State    9/29/2014    19674339    Urban Partnership Bank
MARION HOSPITAL CORPORATION    IL    Secretary of State    4/22/2015    20247614    General Electric Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/4/2015    20286695    SCG Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    9/19/2012    17607936    KMBS Business Solutions U.S.A., Inc
MCKENZIE TENNESSEE HOSPITAL COMPANY    DE    Department of State: Division Of Corporations    9/6/2011    2011 3421347    TCF Equipment Finance, Inc.
MCKENZIE TENNESSEE HOSPITAL COMPANY    DE    Department of State: Division Of Corporations    9/21/2011    2011 3628388    TCF Equipment Finance, Inc.

MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC

(ADD’L DEBTORS:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION; CHSPSC, LLC)

   DE    Department of State: Division Of Corporations    3/25/2013    2013 1139733    TCF Equipment Finance, Inc.
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    4/17/2013    2013 1469437    Leasing Associates of Barrington, Inc.
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    10/7/2013    2013 3922565    First Midwest Bank
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    6/10/2014    2014 2243897    First Midwest Bank

MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC

(ADD’L DEBTOR:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)

   DE    Department of State: Division Of Corporations    2/10/2015    2015 0577105    Beverly Bank & Trust Company, N.A.
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    3/22/2011    2011 1058570    Konica Minolta Business USA Inc
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    7/11/2012    2012 2669861    Philips Medical Capital, LLC
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    12/3/2012    2012 4632255    Philips Medical Capital, LLC


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE

NUMBER

  

SECURED PARTY

MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    5/12/2014    2014 1871979    BankFinancial FSB
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    6/5/2014    2014 2191724    Konica Minolta Business Solutions USA Inc
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    8/5/2014    2014 3133535    Stryker Sales Corporation
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    12/3/2014    2014 4862579    General Electric Capital Corporation
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    4/9/2015    2015 1517316    General Electric Capital Corporation
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    8/10/2015    2015 3460747    Beverly Bank & Trust Company N.A.
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    10/13/2015    2015 4657952    Leasing Associates of Barrington, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/9/2008   

033-2008-00289

(Cobb County)

   De Lage Landen Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    11/8/2010   

038-2010-006324

(Coweta County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/28/2011    038-2011-000617    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    6/23/2011   

007-2011-013143

(Barrow County)

   AGFA Finance Corporation
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/17/2011   

038-2011-006850

(Coweta County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    8/8/2011   

060-2011-06961

(Fulton County)

   The Huntington National Bank
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/20/2011   

038-2011-006972

(Coweta County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    12/27/2011   

038-2011-008562

(Coweta County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/4/2014   

147-2012-000004

(Walton County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    3/5/2012   

038-2012-001506

(Coweta County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    3/5/2012   

038-2012-001507

(Coweta County)

   Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    4/20/2012   

038-2012-002744

(Coweta County)

   De Lage Landen Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    4/27/2012   

038-2012-002928

(Coweta County)

   Karl Storz Capital, a Program of Medical Technology Finance Corporation


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/16/2012   

038-2012-007279

(Coweta County)

   Siemens Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/8/2013   

038-2013-000233

(Coweta County

   Siemens Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    4/1/2013   

007-2013-007262

(Barrow County)

   KMBS Business Solutions U.S.A., Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/7/2013   

147-2013-0457

(Walton County)

   BMO Harris Bank National Association
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    9/2/2015   

007-2015-029028

(Barrow County)

   AGFA Finance Corporation
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    12/4/2015   

147-2015-000663

(Walton County)

   Loganville MOB, LP
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    12/29/2015   

121-2015-001909

(Richmond County)

   Leasing Associates of Barrington, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    3/28/2016   

038-2016-004207

(Coweta County)

   Konica Minolta Premier Finance
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    3/28/2008    2008 3005251    General Electric Capital Corporation
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    8/7/2009    2009 2542725    KBH SPV 3, LLC
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    8/13/2010    2010 2834574    Siemens Financial Services, Inc.
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    12/21/2012    2012 4997047    AMS Sales Corporation
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    7/1/2013    2013 2536259    De Lage Landen Financial Services, Inc.
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    6/4/2014    2014 2167781    GE HFS, LLC
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    6/30/2014    2014 2575355    Philips Medical Capital, LLC

NATIONAL HEALTHCARE OF MT. VERNON, INC.

(ADD’L DEBTOR:

CHSPSC, LLC)

   DE    Department of State: Division Of Corporations    10/23/2014    2014 4281978    TCF Equipment Finance, a division of TCF National Bank
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    3/24/2015    2015 1219699    Beverly Bank & Trust Company N.A.
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    9/21/2015    2015 4194618    MB Financial Bank, N.A.
PHILLIPS HOSPITAL CORPORATION    AR    Phillips County    1/20/2015    54CV-2014-81   

Plaintiff:

Lacretta Wilborn


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    9/10/2010    40000019054952    Konica Minolta Business Solutions U.S.A., Inc.
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    4/13/2011    40000029699695    Philips Medical Capital LLC
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    5/12/2011    40000031370321    De Lage Landen Financial Services, Inc.
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    11/22/2011    40000040773762    Philips Medical Capital, LLC.
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    7/23/2013    40000073073660    First Midwest Bank
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    9/19/2013    40000076199379    Konica Minolta Business Solutions USA Inc
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    5/52015    40000108177169    Beverly Bank & Trust Company N.A.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/11/2009    14367799    Leasing Associates of Barrington, Inc.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/16/2011    16093408    De Lage Landen Financial Services, Inc.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/28/2011    16124931    Siemens Financial Services, Inc.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/29/2013    18116227    Konica Minolta Business Solutions USA, Inc
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/24/2014    19397734    First Midwest Bank
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/10/2015    20843098    SCG Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    5/10/2010    20100006917H    Siemens Financial Services, Inc.
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    9/2/2010    20100013019J    Philips Medical Capital LLC
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    8/26/2011    20110014239E    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    10/15/2012    20120018729C    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    11/30/2012    20120021559J    Konica Minolta Business Solutions USA, Inc
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    1/2/2013    20130000049M    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    1/2/2013    20130000051C    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    4/23/2014    20140006613E    First Midwest Bank
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    8/15/2014    20140020687E    Urban Partnership Bank
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    3/13/2015    20150027210G    Beverly Bank & Trust Company N.A.
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    4/23/2015    20150028514E    Stryker Finance
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    2/24/2016    20160038465F    KMBS Business Solutions U.S.A., Inc.
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    8/4/2010    2010 2713778    De Lage Landen Financial Services, Inc.


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE

NUMBER

  

SECURED PARTY

SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    9/20/2011    2011 3599399    Siemens Financial Services, Inc.
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    11/5/2015    2015 5170450    SCG Capital Corporation
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    3/4/2016    2016 1312782    Leasing Associates of Barrington, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    11/5/2001    172767200135    Siemens Financial Services, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    4/9/2009    361309200901    Leasing Associates of Barrington, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    4/16/2009    361634200900    Kingsbridge Holdings, LLC
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    2/20/2013    426264201331    Siemens Financial Services, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    10/24/2013    439159201340    Konica Minolta Business Solutions USA, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    10/24/2013    439161201334    Konica Minolta Business Solutions USA, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    5/19/2014    450208201433    Konica Minolta Business Solutions USA Inc
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    3/2/2015    465391201539    First Midwest Bank
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    3/5/2015    465609201541    General Electric Capital Corporation
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    3/26/2015    466817201545    Siemens Financial Services, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    5/5/2015    468987201555    Corporation Service Company, as Representative
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    10/24/2011    2011 4091214    Ricoh Americas Corporation
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    11/8/2011    2011 4308477    U. S. Bank, N.A.
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    7/6/2012    2012 2613257    General Electric Capital Corporation
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    10/29/2012    2012 4166056    Urban Partnership Bank
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    10/1/2013    2013 3835866    Megadyne Financial Services
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    7/7/2014    2014 2659795    First Midwest Bank


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    4/5/2016    2016 2010559    GE HFS, LLC
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/3/2005    10333865    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/3/2005    10333903    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/3/2005    10333962    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    1/12/2006    10555655    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    1/12/2006    10555698    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    5/11/2009    14282335    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/24/2009    14402705    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/13/2009    14688994    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/18/2009    14858776    De Lage Landen Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    5/19/2010    15285362    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/6/2010    15408952    De Lage Landen Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/2/2011    16055204    Wells Fargo Financial Leasing, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/14/2011    16353256    De Lage Landen Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/2/2011    16574163    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/28/2011    16637831    Beverly Bank & Trust Company N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/30/2011    16645788    Wells Fargo Financial Leasing, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/20/2011    16701882    Siemens Financial Services, Inc.

WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC

(ADD’L DEBTOR:

COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)

   IL    Secretary of State    12/1/2011    16815519    CHG-Meridian USA Corp.


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/13/2011    16848263    Xerox Financial Services
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/4/2012    17335235    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/25/2012    17707329    Americorp Financial, LLC
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/27/2012    17868853    Olympus America Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/29/2014    19495566    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/29/2014    19495663    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/29/2014    19495698    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/8/2014    19864901    First Midwest Bank
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    4/28/2015    20268719    Xerox Financial Services
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/2/2015    20473347    Stryker Sales Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    2/24/2016    21130273    CSI Leasing, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Martin County    8/25/2009    09CVS000449   

Plaintiff:

Yneka T. Rhodes/

Jalani Rhodes/

Richard S. James

WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    4/16/2010    20100030008F    De Lage Landen Financial Services, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    10/29/2010    20100084794G    De Lage Landen Financial Services, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    12/11/2012    20120113403J    U.S. Bank, N.A.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    6/26/2015    20150061625K    Leasing Associates of Barrington, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    10/29/2015    20150103012G    De Lage Landen Financial Services, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    11/2/2015    20150103670G    De Lage Landen Financial Services, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    11/29/2007   

007200724354

(Barrow County)

   Philips Medical Capital
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    12/17/2007   

033200712143

(Cobb County)

   Philips Medical Capital LLC


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL FILE
DATE

  

ORIGINAL FILE
NUMBER

  

SECURED PARTY

WINDER HMA LLC    GA    Cooperative Authority/Central Index    3/5/2009   

0072009003815

(Barrow County)

   AGFA Finance Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    8/9/2010   

0382010004462

(Coweta County)

   Siemens Financial Services, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    4/4/2011   

0072011006327

(Barrow County)

   Marquette Equipment Finance, LLC
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    11/11/2011   

0382011007505

(Coweta County)

   MB Financial Bank, N.A.
WINDER HMA    GA    Cooperative Authority/Central Index    12/1/2011   

0072011026161

(Barrow County)

   Baxter Healthcare Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    12/12/2011   

0072011027046

(Barrow County)

   Konica Minolta Business Solutions USA Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    9/11/2012   

0382012006325

(Coweta County)

   Siemens Financial Services, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    11/2/2012   

0382012007650

(Coweta County)

   Stryker Finance, a Division of Stryker Sales Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    6/26/2013   

0382013004978

(Coweta County)

   Stryker Finance, a Division of Stryker Sales Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    7/8/2014   

1212014001355

(Richmond County)

   Leasing Associates of Barrington, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    12/30/2014   

0382014012441

(Coweta County)

   Konica Minolta Premier Finance
WINDER HMA LLC    GA    Cooperative Authority/Central Index    9/2/2015   

0072015029033

(Barrow County)

   AGFA Finance Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    2/24/2016   

0072016005508

(Barrow County)

   Olympus America Inc.


Schedule 6.04(h)

Certain Permitted Acquisitions

None.


Schedule 6.05(b)

Certain Syndication Transactions

 

1. Augusta Health System, LLC

 

2. Blue Ridge Georgia Hospital Company, LLC

 

3. McKenzie-Williamette Regional Medical Center Associates, LLC

 

4. Paintsville Hospital Company, LLC


Schedule 6.07

Certain Affiliate Transactions

None.


EXHIBIT A

 

 

 

ABL INTERCREDITOR AGREEMENT

dated as of

April 29, 2016,

among

QUORUM HEALTH CORPORATION,

as Borrower,

the Subsidiaries of the Borrower.

from time to time party hereto,

UBS AG, STAMFORD BRANCH,

as ABL Agent

and

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Term Loan/Cash Flow Revolver Agent

THIS IS THE ABL INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE GUARANTEE AND COLLATERAL AGREEMENT OF EVEN DATE HEREWITH AMONG QUORUM HEALTH CORPORATION, CERTAIN SUBSIDIARIES OF QUORUM HEALTH CORPORATION AND UBS AG, STAMFORD BRANCH, AS COLLATERAL AGENT, (B) THE GUARANTEE AND COLLATERAL AGREEMENT OF EVEN DATE HEREWITH AMONG QUORUM HEALTH CORPORATION, CERTAIN SUBSIDIARIES OF QUORUM HEALTH CORPORATION AND CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, AS COLLATERAL AGENT, AND (C) THE OTHER SECURITY DOCUMENTS REFERRED TO IN THE CREDIT AGREEMENTS REFERRED TO HEREIN.

 

 

 


ABL INTERCREDITOR AGREEMENT dated as of April 29, 2016, among UBS AG, STAMFORD BRANCH (“ UBS ”), as ABL Agent, CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (“ Credit Suisse ”), as Term Loan/Cash Flow Revolver Agent, QUORUM HEALTH CORPORATION, a Delaware corporation, as the borrower under the ABL Credit Agreement and the borrower under the Term Loan/Cash Flow Revolver Agreement (the “ Borrower ”), and each Subsidiary of the Borrower listed on Schedule I hereto or that becomes a party hereto pursuant to Section 8.19 below.

A. The Borrower is party to the ABL Credit Agreement dated as of April 29, 2016 (as amended, supplemented, restated, extended, refinanced, renewed, replaced, increased, defeased, refunded or otherwise modified from time to time, the “ ABL Credit Agreement ”) among the Borrower, the lenders party thereto from time to time, and UBS, as administrative agent and collateral agent.

B. The Borrower is party to the Credit Agreement dated as of April 29, 2016 (as amended, supplemented, restated, extended, refinanced, renewed, replaced, increased, defeased, refunded or otherwise modified from time to time, the “ Term Loan/Cash Flow Revolver Agreement ”) among the Borrower, the lenders party thereto from time to time and Credit Suisse, as administrative agent and collateral agent.

Accordingly, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

Section 1. Definitions.

1.1. Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

ABL Agent ” shall mean UBS, in its capacity as administrative agent and collateral agent for the ABL Lenders under the ABL Credit Agreement and the other ABL Loan Documents entered into pursuant to the ABL Credit Agreement, together with its successors and permitted assigns under the ABL Credit Agreement exercising substantially the same rights and powers.

ABL Claims ” shall mean the ABL Priority Claims and the ABL Other Claims.

ABL Collateral ” shall mean all of the assets of any Grantor, whether real, personal or mixed, upon which a Lien is granted or purported to be granted to the ABL Agent under any of the ABL Collateral Documents.

ABL Collateral Agreement ” shall mean the Guarantee and Collateral Agreement dated as of April 29, 2016, among the Borrower, the other Grantors and UBS, as collateral agent for the secured parties referred to therein, as amended, restated, modified or replaced from time to time.

 

1


ABL Collateral Documents ” shall mean the ABL Collateral Agreement and any security agreement or other agreement, document or instrument pursuant to which a Lien is now or hereafter granted securing any ABL Claims or under which rights or remedies with respect to such Liens are at any time governed.

ABL Credit Agreement ” shall have the meaning set forth in the recitals.

ABL Designated Cash Management Obligations ” shall mean “Secured Cash Management Obligations” as defined in the ABL Credit Agreement.

ABL Designated Hedging Obligations ” shall mean “Secured Hedging Obligations” as defined in the ABL Credit Agreement.

ABL Facility First Priority Collateral ” shall mean all Common Collateral consisting of the following:

(1) all Accounts;

(2) (v) all Money and cash, (w) Deposit Accounts (and Money and cash, checks, other negotiable instruments, funds and other evidences of payments held therein), (x) all Payment Intangibles, (y) all proceeds from business interruption insurance and (z) all Securities, Security Entitlements and Securities Accounts, in each case, to the extent constituting cash or cash equivalents or representing a claim to cash equivalents; provided that any of the foregoing that consists of identifiable Term Loan/Cash Flow Revolver Priority Proceeds shall not be included in ABL Facility First Priority Collateral;

(3) to the extent involving or governing any of the items referred to in the preceding clauses (1) and (2), all Documents, General Intangibles (excluding intellectual property), Instruments (including promissory notes but excluding intercompany notes) and Commercial Tort Claims (it being understood that a Commercial Tort Claim does not “involve” or “govern” clauses (1) and (2) solely because a claim for money damages is made), provided that to the extent any of the foregoing also relates to Term Priority Collateral, only that portion related to the items referred to in the preceding clauses (1) and (2) (other than Term Loan/Cash Flow Revolver Priority Proceeds, except for Term Loan/Cash Flow Revolver Priority Proceeds which are not identifiable) shall be included in the ABL Facility First Priority Collateral;

(4) to the extent evidencing or governing any of the items referred to in the preceding clauses (1) through (3), all Supporting Obligations; provided that to the extent any of the foregoing also relates to Term Priority Collateral, only that portion related to the items referred to in the preceding clauses (1) through (3) (other than Term Loan/Cash Flow Revolver Priority Proceeds, except for Term Loan/Cash Flow Revolver Priority Proceeds which are not identifiable) shall be included in the ABL Facility First Priority Collateral;

 

2


(5) all books and Records relating to the foregoing (including all books, databases, customer lists and Records, whether tangible or electronic, to the extent they contain any information relating to any of the foregoing);

(6) all proceeds of any of the foregoing, including all collateral security and guarantees with respect to any of the foregoing and all cash, Money, Instruments, Securities, Financial Assets and Deposit Accounts received as proceeds of any ABL Facility First Priority Collateral (“ ABL Priority Proceeds ”); provided , however , that no proceeds of ABL Priority Proceeds will constitute ABL Facility First Priority Collateral unless such proceeds of ABL Priority Proceeds are of the type that would otherwise constitute ABL Facility First Priority Collateral.

For the avoidance of doubt, under no circumstances shall any assets excluded from the ABL Collateral pursuant to any ABL Collateral Document constitute ABL Facility First Priority Collateral.

ABL Lenders ” shall mean the Persons holding ABL Claims, including the ABL Agent.

ABL Loan Documents ” shall mean the ABL Credit Agreement, the ABL Collateral Documents and each of the other agreements, documents and instruments providing for, evidencing or securing any Obligation under the ABL Credit Agreement (including each agreement, document or instrument providing for or evidencing an ABL Designated Hedging Obligation or ABL Designated Cash Management Obligation) and any other related document or instrument executed or delivered pursuant to any ABL Collateral Document at any time or otherwise evidencing or securing any Obligation arising under any ABL Loan Document.

ABL Other Claims ” shall mean any Obligations arising under an ABL Loan Document that do not constitute ABL Priority Claims.

ABL Priority Claims ” shall mean the aggregate of (a) (i) the Obligations arising under the ABL Loan Documents to the extent the principal amount thereof is permitted to be incurred pursuant to Section 6.01(y) of the Term Loan/Cash Flow Revolver Agreement, as such Term Loan/Cash Flow Revolver Agreement in effect on the date hereof (other than ABL Designated Cash Management Obligations and ABL Designated Hedging Obligations), plus any interest, fees, attorneys fees, costs, expenses and indemnities payable on account of such Obligations or otherwise in respect of, or arising under, the ABL Credit Agreement or the ABL Loan Documents related thereto or any of them, including all fees and expenses of the ABL Agent thereunder (the amounts under this clause (i), the “ ABL Credit Agreement Claims ”) and (ii) $150,000,000 constituting DIP Financing, to the extent incurred in accordance with the terms hereof, (b) the principal amount of all indebtedness incurred under the ABL Designated Hedging Obligations (calculated, at any given date, as the maximum aggregate amount, giving effect to any netting agreements, that would be required to be paid if all Secured Hedging Agreements (as such term is defined in the ABL Credit Agreement) underlying such ABL Designated Hedging Obligations were terminated as of such date) and (c) up to $30,000,000 of ABL Designated Cash Management Obligations, including, in the case of each of clauses (a), (b) and (c) above, all interest and expenses accrued or accruing (or that would, absent the commencement of an

 

3


Insolvency or Liquidation Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the relevant ABL Loan Document whether or not the claim for such interest or expense is allowed or allowable as a claim in such Insolvency or Liquidation Proceeding.

ABL Recovery ” shall have the meaning set forth in Section 6.4.

Accounts ” shall mean all Accounts (as defined in the UCC), all Health-Care-Insurance Receivables (as defined in the UCC) and all Medicare and Medicaid rights to payments, payments and reimbursement obligations of third party payors.

Agreement ” shall mean this Agreement, as amended, renewed, extended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

Bankruptcy Law ” shall mean Title 11 of the United States Code and any similar Federal, state or foreign law for the relief of debtors.

Borrower ” shall have the meaning set forth in the preamble.

Cash Collateral ” shall mean any Common Collateral consisting of Money or cash equivalents, any Security Entitlement and any Financial Assets.

Cash Dominion Event ” shall have the meaning assigned to such term in the ABL Credit Agreement.

Closing Date ” shall mean April 29, 2016.

Common Collateral ” shall mean collectively, the ABL Collateral and the Term Loan/Cash Flow Revolver Collateral.

Credit Agreements ” shall mean the collective reference to the ABL Credit Agreement and the Term Loan/Cash Flow Revolver Agreement.

Credit Suisse ” shall have the meaning set forth in the preamble.

Deposit Account Collateral ” shall mean that part of the Common Collateral comprised of or contained in Deposit Accounts.

DIP Financing ” shall have the meaning set forth in Section 6.1.

Discharge of ABL Priority Claims ” shall mean, except to the extent otherwise provided in Section 5.7 below, (i) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all outstanding ABL Credit Agreement Claims, (ii) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all other ABL Priority Claims that are due and payable or otherwise accrued and owing at or prior to the time the Obligations referred to in clause (i) are paid and (iii) with respect to letters of credit outstanding under the ABL Credit Agreement, delivery of cash

 

4


collateral in compliance with the ABL Credit Agreement or the making of other arrangements reasonably satisfactory to issuing banks thereunder, in each case after or concurrently with the termination of all commitments to extend credit under the ABL Credit Agreement; provided that the Discharge of ABL Priority Claims shall not be deemed to have occurred if such payments are made with the proceeds of other ABL Priority Claims that constitute an exchange or replacement for or a refinancing of such Obligations or ABL Priority Claims. In the event the ABL Priority Claims are modified and the Obligations are paid over time or otherwise modified pursuant to Section 1129 of the United States Bankruptcy Code (or any successor provision), the ABL Priority Claims shall be deemed to be discharged only when the final payment is made, in cash, in respect of such Obligations and any obligations pursuant to such new indebtedness shall have been satisfied.

Discharge of Term Priority Claims ” shall mean, except to the extent otherwise provided in Section 5.7 below, (i) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all outstanding Term Loan/Cash Flow Revolver Agreement Claims, (ii) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all other Term Loan/Cash Flow Revolver Priority Claims that are due and payable or otherwise accrued and owing at or prior to the time the Obligations referred to in clause (i) are paid, in each case after or concurrently with the termination of all commitments to extend credit that would constitute Term Loan/Cash Flow Revolver Priority Claims; provided that the Discharge of Term Priority Claims shall not be deemed to have occurred if such payments are made with the proceeds of other Term Loan/Cash Flow Revolver Priority Claims that constitute an exchange or replacement for or a refinancing of such Obligations or Term Loan/Cash Flow Revolver Priority Claims. In the event the Term Loan/Cash Flow Revolver Priority Claims are modified and the Obligations are paid over time or otherwise modified pursuant to Section 1129 of the United States Bankruptcy Code (or any successor provision), the Term Loan/Cash Flow Revolver Priority Claims shall be deemed to be discharged only when the final payment is made, in cash, in respect of such Obligations and any obligations pursuant to such new indebtedness shall have been satisfied.

Exercise Any Secured Creditor Remedies ” or “ Exercise of Any Secured Creditor Remedies ” shall mean, except as otherwise provided in the final sentence of this definition:

(a) the taking by any Lender of any action to enforce or realize upon any Lien, including the institution of any foreclosure proceedings or the noticing of any public or private sale pursuant to Article 9 of the Uniform Commercial Code or other applicable law;

(b) the exercise by any Lender of any right or remedy provided to a secured creditor on account of a Lien under any of the ABL Loan Documents or Term Loan/Cash Flow Revolver Loan Documents, as applicable, under applicable law, in an Insolvency or Liquidation Proceeding or otherwise, including the election to retain any of the Common Collateral in satisfaction of any Obligation secured by a Lien;

 

5


(c) the taking of any action by any Lender or the exercise of any right or remedy by any Lender in respect of the collection on, setoff against, marshaling of, injunction respecting or foreclosure on the Common Collateral or the proceeds thereof;

(d) the appointment, on the application of a Lender, of a receiver, receiver and manager or interim receiver of all or part of the Common Collateral;

(e) the sale, lease, license or other disposition of all or any portion of the Common Collateral by private or public sale conducted by a Lender or by any other means at the direction of a Lender permissible under applicable law;

(f) the exercise of any other right of a secured creditor under Part 6 of Article 9 of the Uniform Commercial Code or under provisions of similar effect other applicable law; and

(g) the exercise by a Lender of any voting rights relating to any Equity Interests included in the Common Collateral.

For the avoidance of doubt, none of the following shall be deemed to constitute an Exercise of Any Secured Creditor Remedies: (i) the filing of a proof of claim in any Insolvency or Liquidation Proceeding or seeking adequate protection, (ii) the exercise of rights pursuant to the ABL Loan Documents by the ABL Agent during the continuance of a Cash Dominion Event, (iii) the exercise of rights pursuant to the ABL Loan Documents by the ABL Agent in respect of clauses (c) and (e) above, to the extent such actions solely relate to a de minimis amount of Common Collateral (not to exceed an amount equal to $2,000,000 in the aggregate based on the fair market value of such Common Collateral), (iv) the reduction of advance rates by the ABL Agent or the ABL Lenders, (v) the modification of eligibility criteria with respect to the Borrowing Base (as defined in the ABL Credit Agreement) by the ABL Agent or the ABL Lenders or (vi) the imposition of Availability Reserves (as defined in the ABL Credit Agreement) by the ABL Agent or the ABL Lenders.

First Priority Agent ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Agent, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent, as applicable.

First Priority Claims ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Priority Claims, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Priority Claims, as applicable.

First Priority Collateral ” shall mean, with respect to (a) the ABL Agent and the ABL Lenders, the ABL Facility First Priority Collateral, and (b) the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders, the Term/Cash Flow Revolver Facility First Priority Collateral, as applicable.

First Priority Documents ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Loan Documents, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Loan Documents, as applicable.

 

6


First Priority Lenders ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Lenders, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Lenders, as applicable.

Grantors ” shall mean the Borrower, and each of the Borrower’s Subsidiaries that has granted or purported to grant a Lien in any or all of its assets under an ABL Collateral Document or a Term Loan/Cash Flow Revolver Collateral Document.

Hedging Agreement ” shall have the meaning set forth in the ABL Credit Agreement.

Indebtedness ” shall mean and include all obligations that constitute “Indebtedness” within the meaning of the ABL Credit Agreement or the Term Loan/Cash Flow Revolver Agreement.

Insolvency or Liquidation Proceeding ” shall mean (a) any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to any of its assets, (c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

Lenders ” shall mean the collective reference to the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders.

Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

New York Courts ” shall have the meaning set forth in Section 8.7.

Obligations ” shall mean, with respect to any Person, any payment, performance or other obligations of such Person of any kind, including any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any Insolvency or Liquidation Proceeding. Without limiting the generality of the foregoing, the Obligations of any Grantor under any ABL Loan Document or Term Loan/Cash Flow Revolver Loan Document include the obligations to pay principal, interest (including interest accruing during the pendency of any Insolvency or Liquidation Proceeding, regardless of whether allowed or allowable in such proceeding) or premium on any Indebtedness, letter of credit commissions (if applicable), charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by such Grantor to reimburse any amount in respect of any of the foregoing that any ABL Lender or Term Loan/Cash Flow Revolver Lender, in its sole discretion, may elect to pay or advance on behalf of such Grantor.

 

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Payment Collateral ” shall mean all Accounts, Instruments, Chattel Paper, Letter-Of-Credit Rights, Deposit Accounts, Securities Accounts and Payment Intangibles, together with all Supporting Obligations in relation to the foregoing, in each case comprising a portion of the Common Collateral.

Payment Intangibles ” shall mean all Payment Intangibles (as defined in the UCC) in connection with purchases from and other goods and services provided by any Grantor.

Person ” shall mean any natural person, partnership, corporation, business trust, limited liability company, company, association, joint venture, governmental agency or other entity.

Pledged Collateral ” shall mean the Common Collateral in the possession of the ABL Agent (or its agents or bailees) or the Term Loan/Cash Flow Revolver Agent (or its agents or bailees), to the extent that possession thereof perfects a Lien thereon under the Uniform Commercial Code.

Real Estate Collateral ” shall mean the Term Loan/Cash Flow Revolver Collateral that consists of, at any time of determination, any fee interest of any Grantor in owned real property. For the avoidance of doubt, Real Estate Collateral shall not constitute ABL Collateral and the ABL Agent shall have no rights with respect to any Real Estate Collateral.

Required Lenders ” shall mean, with respect to any Credit Agreement, those Lenders the approval of which is required to approve an amendment or modification of, termination or waiver of any provision of or consent to any departure from such Credit Agreement (or would be required to effect such consent under this Agreement if such consent were treated as an amendment of the Credit Agreement), other than any such amendment, modification, termination, waiver or consent that would require approval of all, or a “super-majority” of, Lenders or each Lender affected thereby.

Second Priority Agent ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Agent, as applicable.

Second Priority Documents ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Loan Documents, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Loan Documents, as applicable.

Second Priority Lenders ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Lenders, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Lenders, as applicable.

 

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Second Priority Claims ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Priority Claims, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Priority Claims, as applicable.

Subsidiary ” shall mean any “subsidiary” of the Borrower.

Term Loan/Cash Flow Revolver Agent ” shall mean Credit Suisse, in its capacity as administrative agent and collateral agent for the Term Loan/Cash Flow Revolver Lenders under the Term Loan/Cash Flow Revolver Agreement and the other Term Loan/Cash Flow Revolver Loan Documents entered into pursuant to the Term Loan/Cash Flow Revolver Agreement, together with its successors and permitted assigns under the Term Loan/Cash Flow Revolver Agreement exercising substantially the same rights and powers.

Term Loan/Cash Flow Revolver Agreement ” shall have the meaning set forth in the recitals.

Term Loan/Cash Flow Revolver Claims ” shall mean the Term Loan/Cash Flow Revolver Priority Claims and the Term Loan/Cash Flow Revolver Other Claims.

Term Loan/Cash Flow Revolver Collateral ” shall mean all of the assets of any Grantor, whether real, personal or mixed, upon which a Lien is granted or purported to be granted to the Term Loan/Cash Flow Revolver Agent under any of the Term Loan/Cash Flow Revolver Collateral Documents.

Term Loan/Cash Flow Revolver Collateral Agreement ” shall mean the Guarantee and Collateral Agreement dated as of April 29, 2016, among the Borrower, the Subsidiaries of the Borrower from time to time party thereto and Credit Suisse, as administrative agent for the secured parties referred to therein, as amended, restated, modified or replaced from time to time.

Term Loan/Cash Flow Revolver Collateral Documents ” shall mean the Term Loan/Cash Flow Revolver Collateral Agreement and any security agreement, mortgage or other agreement, document or instrument pursuant to which a Lien is now or hereafter granted securing any Term Loan/Cash Flow Revolver Claims or under which rights or remedies with respect to such Liens are at any time governed.

Term Loan/Cash Flow Revolver Designated Cash Management Obligations ” shall mean “Secured Cash Management Obligations” as defined in the Term Loan/Cash Flow Revolver Collateral Agreement.

Term Loan/Cash Flow Revolver Designated Hedging Obligations ” shall mean “Secured Hedging Obligations” as defined in the Term Loan/Cash Flow Revolver Collateral Agreement.

Term/Cash Flow Revolver Facility First Priority Collateral ” shall mean all Term Loan/Cash Flow Revolver Collateral (other than Accounts and all other ABL Facility First Priority Collateral) and all collateral security and guarantees with respect to any Term/Cash Flow Revolver Facility First Priority Collateral and all proceeds of any of the foregoing, including all

 

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cash, Money, Instruments, Securities, Financial Assets and Deposit Accounts received as proceeds of any Term/Cash Flow Revolver Facility First Priority Collateral (“ Term Loan/Cash Flow Revolver Priority Proceeds ”); provided , however , no proceeds of Term Loan/Cash Flow Revolver Priority Proceeds will constitute Term/Cash Flow Revolver Facility First Priority Collateral unless such proceeds of Term Loan/Cash Flow Revolver Priority Proceeds would otherwise constitute Term/Cash Flow Revolver Facility First Priority Collateral; provided that any of the foregoing that consists of identifiable ABL Priority Proceeds shall not be included in Term/Cash Flow Revolver Facility First Priority Collateral. For the avoidance of doubt, under no circumstances shall any assets excluded from the Term Loan/Cash Flow Revolver Collateral pursuant to any Term Loan/Cash Flow Revolver Collateral Document constitute Term/Cash Flow Revolver Facility First Priority Collateral.

Term Loan/Cash Flow Revolver Lenders ” shall mean the Persons holding Term Loan/Cash Flow Revolver Claims, including the Term Loan/Cash Flow Revolver Agent.

Term Loan/Cash Flow Revolver Loan Documents ” shall mean the Term Loan/Cash Flow Revolver Agreement, the Term Loan/Cash Flow Revolver Collateral Documents and each of the other agreements, documents and instruments providing for, evidencing or securing any Obligation under the Term Loan/Cash Flow Revolver Agreement (including each agreement, document or instrument providing for or evidencing a Term Loan/Cash Flow Revolver Designated Hedging Obligation or Term Loan/Cash Flow Revolver Designated Cash Management Obligation) and any other related document or instrument executed or delivered pursuant to any Term Loan/Cash Flow Revolver Collateral Document at any time or otherwise evidencing or securing any Obligation arising under any such Term Loan/Cash Flow Revolver Collateral Document.

Term Loan/Cash Flow Revolver Other Claims ” shall mean any Obligations arising under a Term Loan/Cash Flow Revolver Loan Document that do not constitute Term Loan/Cash Flow Revolver Priority Claims.

Term Loan/Cash Flow Revolver Priority Claims ” shall mean the aggregate of (a) (i) the Obligations arising under the Term Loan/Cash Flow Revolver Loan Documents to the extent the principal amount thereof is permitted to be incurred pursuant to Section 6.01(y) of the ABL Credit Agreement, as such ABL Credit Agreement in effect on the date hereof (other than Term Loan/Cash Flow Revolver Designated Cash Management Obligations and Term Loan/Cash Flow Revolver Designated Hedging Obligations), plus any interest, fees, attorneys fees, costs, expenses and indemnities payable on account of such Obligations or otherwise in respect of, or arising under, the Term Loan/Cash Flow Revolver Agreement or the Term Loan/Cash Flow Revolver Loan Documents related thereto or any of them, including al fees and expenses of the Term Loan/Cash Flow Revolver Agent thereunder (the amounts under this clause (i), the “ Term Loan/Cash Flow Revolver Agreement Claims ”), and (ii) $150,000,000 constituting DIP Financing, to the extent incurred in accordance with the terms hereof, (b) the principal amount of all indebtedness incurred under the Term Loan/Cash Flow Revolver Designated Hedging Obligations (calculated, at any given date, as the maximum aggregate amount, giving effect to any netting agreements, that would be required to be paid if all Hedging Agreements (as such term is defined in the Term Loan/Cash Flow Revolver Agreement) underlying such Term Loan/Cash Flow Revolver Designated Hedging Obligations were

 

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terminated as of such date) and (c) up to $30,000,000 of Term Loan/Cash Flow Revolver Designated Cash Management Obligations, including, in the case of each of clauses (a), (b) and (c) above, all interest and expenses accrued or accruing (or that would, absent the commencement of an Insolvency or Liquidation Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the relevant Term Loan/Cash Flow Revolver Loan Document whether or not the claim for such interest or expense is allowed or allowable as a claim in such Insolvency or Liquidation Proceeding.

Term Loan/Cash Flow Revolver Recovery ” shall have the meaning set forth in Section 6.4.

UBS ” shall have the meaning set forth in the preamble.

Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

1.2. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified in accordance with this Agreement, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections shall be construed to refer to Sections of this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f) the term “or” is not exclusive. All capitalized terms not defined herein or by reference to another agreement shall have the meaning assigned to such term in the UCC. The term “Instrument” shall have the meaning specified in Article 9 of the UCC.

Section 2. Lien Priorities.

2.1. Subordination of Liens . Notwithstanding (i) the date, time, method, manner or order of filing or recordation of any document or instrument or grant, attachment or perfection (including any defect or deficiency or alleged defect or deficiency in any of the foregoing) of any Liens granted to the ABL Agent or the ABL Lenders on the Common Collateral or of any Liens granted to the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders on the Common Collateral, (ii) any provision of the UCC, any Bankruptcy Law, or other applicable law or the ABL Loan Documents or the Term Loan/Cash Flow Revolver Loan Documents, (iii) whether the ABL Agent or the Term Loan/Cash Flow Revolver Agent, either directly or through agents, holds possession of, or has

 

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control over, all or any part of the Common Collateral, (iv) the fact that any such Liens may be subordinated, voided, avoided, invalidated or lapsed or (v) any other circumstance of any kind or nature whatsoever, the ABL Agent, on behalf of itself and each applicable ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each applicable Term Loan/Cash Flow Revolver Lender, hereby agrees that:

(a) any Lien on the ABL Facility First Priority Collateral securing any ABL Priority Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Claims,

(b) any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the ABL Facility First Priority Collateral securing any ABL Priority Claims,

(c) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Priority Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Claims,

(d) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Priority Claims,

(e) any Lien on the ABL Facility First Priority Collateral securing any ABL Other Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims,

(f) any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the ABL Facility First Priority Collateral securing any ABL Other Claims,

 

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(g) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Other Claims, and

(h) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Other Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims.

All Liens on the ABL Facility First Priority Collateral securing any ABL Priority Claims shall be and remain senior in all respects and prior to all Liens on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Claims for all purposes, whether or not such Liens securing any ABL Priority Claims are subordinated to any Lien securing any other obligation of the Borrower, any other Grantor or any other Person, and all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Priority Claims shall be and remain senior in all respects and prior to all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Claims for all purposes, whether or not such Liens securing any Term Loan/Cash Flow Revolver Claims are subordinated to any Lien securing any other obligation of the Borrower, any other Grantor or any other Person.

2.2. Prohibition on Contesting Liens . The ABL Agent, for itself and on behalf of each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each applicable Term Loan/Cash Flow Revolver Lender, agrees that it shall not (and hereby waives any right to) take any action to challenge, contest or support any other Person in contesting or challenging, directly or indirectly, in any proceeding (including any Insolvency or Liquidation Proceeding), the validity, perfection, priority or enforceability of (a) a Lien securing any ABL Claims held (or purported to be held) by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor in any Common Collateral or (b) a Lien securing any Term Loan/Cash Flow Revolver Claims held (or purported to be held) by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in any Common Collateral, as the case may be; provided , however , that nothing in this Agreement shall be construed (x) to prevent or impair the rights of the ABL Agent or any ABL Lender to enforce this Agreement (including the priority of the Liens securing the ABL Claims as provided in Section 2.1 with respect to any ABL Facility First Priority Collateral) or any of the ABL Loan Documents or (y) to prevent or impair the rights of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender to enforce this Agreement (including the priority of the Liens securing the Term Loan/Cash Flow Revolver Claims as provided in Section 2.1 with respect to any Term/Cash Flow Revolver Facility First Priority Collateral) or any of the Term Loan/Cash Flow Revolver Loan Documents.

 

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2.3. No New Liens .

(a) So long as the Discharge of ABL Priority Claims has not occurred, the Term Loan/Cash Flow Revolver Agent agrees, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, that it shall not acquire or hold any Lien on any assets of the Borrower or any other Grantor securing any Term Loan/Cash Flow Revolver Claims that are not also subject to the Lien in respect of the ABL Claims under the ABL Loan Documents (other than Liens on Real Estate Collateral). If the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender shall (nonetheless and in breach hereof) acquire or hold any Lien on any collateral of a Grantor that is not also subject to the Lien in respect of the ABL Claims under the ABL Loan Documents (other than Liens on Real Estate Collateral), then the Term Loan/Cash Flow Revolver Agent shall, without the need for any further consent of any party and notwithstanding anything to the contrary in any other document, be deemed to also hold and have held such Lien for the benefit of the ABL Agent as security for the ABL Claims (subject to the Lien priority and other terms hereof) and shall promptly notify the ABL Agent in writing of the existence of such Lien and in any event take such actions as may be requested by the ABL Agent to assign or release such Liens to the ABL Agent (and/or its designee) as security for the applicable ABL Claims.

(b) So long as the Discharge of Term Priority Claims has not occurred, the ABL Agent agrees, for itself and on behalf of each ABL Lender, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, that it shall not acquire or hold any Lien on any assets of the Borrower or any other Grantor securing any ABL Claims that are not also subject to the Lien in respect of the Term Loan/Cash Flow Revolver Claims under the Term Loan/Cash Flow Revolver Loan Documents. If the ABL Agent or any ABL Lender shall (nonetheless and in breach hereof) acquire or hold any Lien on any collateral of a Grantor that is not also subject to the Liens in respect of the Term Loan/Cash Flow Revolver Claims under the Term Loan/Cash Flow Revolver Loan Documents, then the ABL Agent shall, without the need for any further consent of any party and notwithstanding anything to the contrary in any other document, be deemed to also hold and have held such Lien for the benefit of the Term Loan/Cash Flow Revolver Agent as security for the Term Loan/Cash Flow Revolver Claims (subject to the Lien priority and other terms hereof) and shall promptly notify the Term Loan/Cash Flow Revolver Agent in writing of the existence of such Lien and in any event take such actions as may be requested by the Term Loan/Cash Flow Revolver Agent to assign or release such Liens to the Term Loan/Cash Flow Revolver Agent (and/or its designee) as security for the applicable Term Loan/Cash Flow Revolver Claims.

2.4. Perfection of Liens . With respect to any portion of the Common Collateral, neither the First Priority Agent nor the First Priority Lenders shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Common Collateral for the benefit of the Second Priority Agent and the Second Priority Lenders. The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders and shall not impose on the ABL

 

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Agent, the Term Loan/Cash Flow Revolver Agent, the ABL Lenders or the Term Loan/Cash Flow Revolver Lenders or any agent or trustee therefor any obligations in respect of the disposition of proceeds of any Common Collateral which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or governmental authority or any applicable law.

2.5. Waiver of Marshalling .

(a) Until the Discharge of ABL Priority Claims, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and the Term Loan/Cash Flow Revolver Lenders, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the ABL Facility First Priority Collateral or any other similar rights a junior secured creditor may have under applicable law with respect to the ABL Facility First Priority Collateral.

(b) Until the Discharge of Term Priority Claims, the ABL Agent, on behalf of itself and the ABL Lenders, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Term/Cash Flow Revolver Facility First Priority Collateral or any other similar rights a junior secured creditor may have under applicable law with respect to the Term/Cash Flow Revolver Facility First Priority Collateral.

Section 3. Enforcement.

3.1. Exercise of Remedies .

(a) So long as the Discharge of ABL Priority Claims has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, (i) neither the Term Loan/Cash Flow Revolver Agent nor any Term Loan/Cash Flow Revolver Lender will (x) Exercise Any Secured Creditor Remedies or seek to Exercise Any Secured Creditor Remedies with respect to any ABL Facility First Priority Collateral, (y) contest, protest or object to any Exercise of Any Secured Creditor Remedies with respect to the ABL Facility First Priority Collateral by the ABL Agent or any ABL Lender in respect of the ABL Priority Claims, the exercise of any right by the ABL Agent or any ABL Lender (or any agent or sub-agent on their behalf) in respect of the ABL Priority Claims under any lockbox agreement, control agreement or similar agreement or arrangement to which the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender either is a party or may have rights as a third party beneficiary, or any other exercise by any such party of any rights and remedies relating to the ABL Facility First Priority Collateral under the ABL Loan Documents or otherwise in respect of ABL Priority Claims, or (z) object to the forbearance by the ABL Lenders from bringing or pursuing any Exercise of Any Secured Creditor Remedies relating to the ABL Facility First Priority Collateral in respect of ABL Priority Claims and (ii) except as otherwise provided herein, the ABL Agent and the ABL Lenders shall have the exclusive right to Exercise Any Secured Creditor Remedies (including setoff and the right to credit bid their debt) and in connection therewith make determinations regarding the release,

 

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disposition or restrictions with respect to the ABL Facility First Priority Collateral without any consultation with or the consent of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender; provided , however , that (A) in any Insolvency or Liquidation Proceeding commenced by or against the Borrower or any other Grantor, the Term Loan/Cash Flow Revolver Agent may file a proof of claim or statement of interest with respect to the applicable Term Loan/Cash Flow Revolver Claims and (B) the Term Loan/Cash Flow Revolver Agent may take any action (not adverse to the prior Liens on the ABL Facility First Priority Collateral securing the ABL Priority Claims, or the rights of the ABL Agent or the ABL Lenders to exercise remedies in respect thereof) in order to create, prove, perfect, preserve or protect (but not enforce) its rights in, and perfection and priority of its Lien on, the ABL Facility First Priority Collateral. In exercising rights and remedies with respect to the ABL Facility First Priority Collateral, the ABL Agent and the ABL Lenders may enforce the provisions of the ABL Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of ABL Facility First Priority Collateral or other collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured lender under the uniform commercial code of any applicable jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

(b) So long as the Discharge of Term Priority Claims has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, (i) neither the ABL Agent nor any ABL Lender will (x) Exercise Any Secured Creditor Remedies or seek to Exercise Any Secured Creditor Remedies with respect to any Term/Cash Flow Revolver Facility First Priority Collateral, (y) contest, protest or object to any Exercise of Any Secured Creditor Remedies with respect to the Term/Cash Flow Revolver Facility First Priority Collateral by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in respect of the Term Loan/Cash Flow Revolver Priority Claims, the exercise of any right by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender (or any agent or sub-agent on their behalf) in respect of the Term Loan/Cash Flow Revolver Priority Claims under any control agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the ABL Agent or any ABL Lender either is a party or may have rights as a third party beneficiary, or any other exercise by any such party, of any rights and remedies relating to the Term/Cash Flow Revolver Facility First Priority Collateral under the Term Loan/Cash Flow Revolver Loan Documents or otherwise in respect of Term Loan/Cash Flow Revolver Priority Claims, or (z) object to the forbearance by the Term Loan/Cash Flow Revolver Lenders from bringing or pursuing any Exercise of Any Secured Creditor Remedies relating to the Term/Cash Flow Revolver Facility First Priority Collateral in respect of Term Loan/Cash Flow Revolver Priority Claims and (ii) except as otherwise provided herein, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have the exclusive right to Exercise Any Secured Creditor Remedies (including setoff and the right to credit bid their debt) and in connection therewith make determinations regarding the release, disposition or restrictions with respect to the Term/Cash Flow Revolver Facility First Priority Collateral without any consultation with or the consent of the ABL Agent or any ABL Lender; provided , however , that (A) in any Insolvency or Liquidation Proceeding commenced by or against the Borrower or any other Grantor, the ABL Agent may file a proof of claim or statement of interest with respect to the applicable ABL Claims and (B) the ABL Agent

 

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may take any action (not adverse to the prior Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing the Term Loan/Cash Flow Revolver Priority Claims, or the rights of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders to exercise remedies in respect thereof) in order to create, prove, perfect, preserve or protect (but not enforce) its rights in, and perfection and priority of its Lien on, the Term/Cash Flow Revolver Facility First Priority Collateral. In exercising rights and remedies with respect to the Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders may enforce the provisions of the Term Loan/Cash Flow Revolver Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Term/Cash Flow Revolver Facility First Priority Collateral or other collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured lender under the uniform commercial code of any applicable jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

(c) So long as the Discharge of ABL Priority Claims has not occurred, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that it will not take or receive any ABL Facility First Priority Collateral or any proceeds of ABL Facility First Priority Collateral in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) with respect to any ABL Facility First Priority Collateral. Without limiting the generality of the foregoing, unless and until the Discharge of ABL Priority Claims has occurred, except as expressly provided in the proviso in clause (ii) of Section 3.1(a), the sole right of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders with respect to the ABL Facility First Priority Collateral is to hold a Lien on the ABL Facility First Priority Collateral pursuant to the Term Loan/Cash Flow Revolver Loan Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of ABL Priority Claims has occurred. So long as the Discharge of Term Priority Claims has not occurred, the ABL Agent, on behalf of itself and each ABL Lender, agrees that it will not take or receive any Term/Cash Flow Revolver Facility First Priority Collateral or any proceeds of Term/Cash Flow Revolver Facility First Priority Collateral in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) with respect to any Term/Cash Flow Revolver Facility First Priority Collateral. Without limiting the generality of the foregoing, unless and until the Discharge of Term Priority Claims has occurred, except as expressly provided in the proviso in clause (ii) of Section 3.1(b), the sole right of the ABL Agent and the ABL Lenders with respect to the Term/Cash Flow Revolver Facility First Priority Collateral is to hold a Lien on the Term/Cash Flow Revolver Facility First Priority Collateral pursuant to the ABL Loan Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of Term Priority Claims has occurred.

(d) Subject to the proviso in clause (ii) of Section 3.1(a) above, (i) the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, agrees that the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders will not take any action that would hinder any Exercise of Any Secured Creditor Remedies undertaken by the ABL Agent or the ABL Lenders with respect to the ABL Facility

 

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First Priority Collateral under the ABL Loan Documents, including any sale, lease, exchange, transfer or other disposition of the ABL Facility First Priority Collateral, whether by foreclosure or otherwise, and (ii) the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, hereby waives any and all rights it or any Term Loan/Cash Flow Revolver Lender may have as a junior lien creditor or otherwise to object to the manner in which the ABL Agent or the ABL Lenders seek to enforce or collect the ABL Priority Claims with respect to the ABL Facility First Priority Collateral or the Liens granted in any of the ABL Facility First Priority Collateral, regardless of whether any action or failure to act by or on behalf of the ABL Agent or the ABL Lenders is adverse to the interests of the Term Loan/Cash Flow Revolver Lenders. Subject to the proviso in clause (ii) of Section 3.1(b) above, (i) the ABL Agent, for itself and on behalf of each ABL Lender, agrees that the ABL Agent and the ABL Lenders will not take any action that would hinder any Exercise of Any Secured Creditor Remedies undertaken by the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders with respect to the Term/Cash Flow Revolver Facility First Priority Collateral under the Term Loan/Cash Flow Revolver Loan Documents, including any sale, lease, exchange, transfer or other disposition of the Term/Cash Flow Revolver Facility First Priority Collateral, whether by foreclosure or otherwise, and (ii) the ABL Agent, for itself and on behalf of each ABL Lender, hereby waives any and all rights it or any ABL Lender may have as a junior lien creditor or otherwise to object to the manner in which the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders seek to enforce or collect the Term Loan/Cash Flow Revolver Priority Claims with respect to the Term/Cash Flow Revolver Facility First Priority Collateral or the Liens granted in any of the Term/Cash Flow Revolver Facility First Priority Collateral, regardless of whether any action or failure to act by or on behalf of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders is adverse to the interests of the Term Loan/Cash Flow Revolver Lenders.

(e) The Term Loan/Cash Flow Revolver Agent hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Term Loan/Cash Flow Revolver Loan Document shall be deemed to restrict in any way the rights and remedies of the ABL Agent or the ABL Lenders with respect to the ABL Facility First Priority Collateral as set forth in this Agreement and the ABL Loan Documents. The ABL Agent hereby acknowledges and agrees that no covenant, agreement or restriction contained in any ABL Loan Document shall be deemed to restrict in any way the rights and remedies of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders with respect to the Term/Cash Flow Revolver Facility First Priority Collateral as set forth in this Agreement and the Term Loan/Cash Flow Revolver Loan Documents.

 

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3.2. Cooperation .

(a) Subject to the proviso in clause (ii) of Section 3.1(a), the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that, unless and until the Discharge of ABL Priority Claims has occurred, it will not commence, or join with any Person (other than the ABL Lenders and the ABL Agent upon the request thereof) in commencing, any enforcement, collection, execution, levy or foreclosure action or proceeding with respect to any Lien held by it in the ABL Facility First Priority Collateral under any of the Term Loan/Cash Flow Revolver Loan Documents or otherwise in respect of the Term Loan/Cash Flow Revolver Claims relating to the ABL Facility First Priority Collateral.

(b) Subject to the proviso in clause (ii) of Section 3.1(b), the ABL Agent, on behalf of itself and each ABL Lender, agrees that, unless and until the Discharge of Term Priority Claims has occurred, it will not commence, or join with any Person (other than the Term Loan/Cash Flow Revolver Lenders and the Term Loan/Cash Flow Revolver Agent upon the request thereof) in commencing, any enforcement, collection, execution, levy or foreclosure action or proceeding with respect to any Lien held by it in the Term/Cash Flow Revolver Facility First Priority Collateral under any of the ABL Loan Documents or otherwise in respect of the ABL Claims relating to the Term/Cash Flow Revolver Facility First Priority Collateral.

3.3. Actions Upon Breach .

(a) If any Term Loan/Cash Flow Revolver Lender, in contravention of the terms of this Agreement, in any way takes or attempts or threatens to take any action with respect to the ABL Facility First Priority Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), this Agreement shall create an irrebuttable presumption and admission by such Term Loan/Cash Flow Revolver Lender that relief against such Term Loan/Cash Flow Revolver Lender by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the ABL Lenders, it being understood and agreed by the Term Loan/Cash Flow Revolver Agent on behalf of each Term Loan/Cash Flow Revolver Lender that (i) the ABL Lenders’ damages from its actions may at that time be difficult to ascertain and may be irreparable and (ii) each Term Loan/Cash Flow Revolver Lender waives any defense that the Grantors and/or the ABL Lenders cannot demonstrate damage and/or be made whole by the awarding of damages.

(b) If any ABL Lender, in contravention of the terms of this Agreement, in any way takes or attempts or threatens to take any action with respect to the Term/Cash Flow Revolver Facility First Priority Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), this Agreement shall create an irrebuttable presumption and admission by such ABL Lender that relief against such ABL Lender by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the Term Loan/Cash Flow Revolver Lenders, it being understood and agreed by the ABL Agent on behalf of each ABL Lender that (i) the Term Loan/Cash Flow Revolver Lenders’ damages from its actions may at that time be difficult to ascertain and may be irreparable and (ii) each ABL Lender waives any defense that the Grantors and/or the Term Loan/Cash Flow Revolver Lenders cannot demonstrate damage and/or be made whole by the awarding of damages.

 

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Section 4. Payments.

4.1. Revolving Nature of ABL and Term Priority Claims .

(a) The Term Loan/Cash Flow Revolver Agent, for and on behalf of itself and each Term Loan/Cash Flow Revolver Lender, expressly acknowledges and agrees that (i) the ABL Credit Agreement includes a revolving commitment, that in the ordinary course of business the ABL Agent and the ABL Lenders will apply payments and make advances thereunder, and that no application of any Payment Collateral or Cash Collateral or the release of any Lien by the ABL Agent upon any portion of the Common Collateral in connection with a permitted disposition under the ABL Credit Agreement shall constitute the exercise of remedies prohibited under this Agreement; (ii) subject to the limitations set forth herein, the amount of the ABL Priority Claims that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed; and (iii) all Payment Collateral or Cash Collateral received by the ABL Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, to the ABL Priority Claims at any time; provided , however , that from and after the date on which the ABL Agent (or any ABL Lender) commences the Exercise of Any Secured Creditor Remedies with respect to any of the Common Collateral (other than, prior to the acceleration of any of the Term Loan/Cash Flow Revolver Priority Claims, the exercise of its rights during a Cash Dominion Event), all amounts received by the ABL Agent or any ABL Lender in respect of any ABL Claims shall be applied as specified in this Section 4. The Lien priority set forth in this Agreement shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of the ABL Priority Claims, the ABL Other Claims, the Term Loan/Cash Flow Revolver Priority Claims or the Term Loan/Cash Flow Revolver Other Claims, or any portion thereof.

(b) The ABL Agent, for and on behalf of itself and each ABL Lender, expressly acknowledges and agrees that (i) the Term Loan/Cash Flow Revolver Agreement includes revolving commitments, that in the ordinary course of business the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders will apply payments and make advances thereunder, and that no application of any Payment Collateral or Cash Collateral or the release of any Lien by the Term Loan/Cash Flow Revolver Agent upon any portion of the Common Collateral in connection with a permitted disposition under the Term Loan/Cash Flow Revolver Agreement shall constitute the exercise of remedies prohibited under this Agreement; (ii) subject to the limitations set forth herein, the amount of the Term Loan/Cash Flow Revolver Priority Claims that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed; and (iii) all Payment Collateral or Cash Collateral received by the Term Loan/Cash Flow Revolver Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, to the Term Loan/Cash Flow Revolver Priority Claims at any time; provided , however , that from and after the date on which the Term Loan/Cash Flow Revolver Agent (or any Term Loan/Cash Flow Revolver Lender) commences the Exercise of Any Secured Creditor Remedies with respect to any of the Common Collateral, all amounts received by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in respect of any Term Loan/Cash Flow Revolver Claims shall be applied as specified in this Section 4. The Lien priority set forth in this Agreement shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment,

 

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reborrowing, increase, replacement, renewal, restatement or refinancing of the ABL Priority Claims, the ABL Other Claims, the Term Loan/Cash Flow Revolver Priority Claims or the Term Loan/Cash Flow Revolver Other Claims, or any portion thereof.

4.2. Application of Proceeds of ABL Facility First Priority Collateral . The ABL Agent, on behalf of itself and each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, hereby agree that the ABL Facility First Priority Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such ABL Facility First Priority Collateral upon the Exercise of Any Secured Creditor Remedies, shall be applied:

first , to the payment of the ABL Priority Claims in accordance with the ABL Loan Documents,

second , to the payment of the Term Loan/Cash Flow Revolver Priority Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents,

third , to the payment of ABL Other Claims in accordance with the ABL Loan Documents,

fourth , to the payment of Term Loan/Cash Flow Revolver Other Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents, and

fifth , the balance, if any, to the Grantors or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

4.3. Application of Proceeds of Term/Cash Flow Revolver Facility First Priority Collateral . The ABL Agent, on behalf of itself and each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, hereby agree that the Term/Cash Flow Revolver Facility First Priority Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Term/Cash Flow Revolver Facility First Priority Collateral upon the Exercise of Any Secured Creditor Remedies, shall be applied:

first , to the payment of the Term Loan/Cash Flow Revolver Priority Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents,

second , to the payment of the ABL Priority Claims in accordance with the ABL Loan Documents,

third , to the payment of Term Loan/Cash Flow Revolver Other Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents,

fourth , to the payment of ABL Other Claims in accordance with the ABL Loan Documents, and

fifth , the balance, if any, to the Grantors or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

 

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4.4. Payments Over .

(a) Any ABL Facility First Priority Collateral or proceeds thereof received by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) relating to the ABL Facility First Priority Collateral prior to the Discharge of ABL Priority Claims shall be segregated and held in trust for the benefit of and forthwith paid over to the ABL Agent (and/or its designees) for the benefit of the ABL Lenders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The ABL Agent is hereby authorized to make any such endorsements as agent for the Term Loan/Cash Flow Revolver Agent or any such Term Loan/Cash Flow Revolver Lender. This authorization is coupled with an interest and is irrevocable.

(b) Any Term/Cash Flow Revolver Facility First Priority Collateral or proceeds thereof received by the ABL Agent or any ABL Lender in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) relating to the Term/Cash Flow Revolver Facility First Priority Collateral prior to the Discharge of Term Priority Claims shall be segregated and held in trust for the benefit of and forthwith paid over to the Term Loan/Cash Flow Revolver Agent (and/or its designees) for the benefit of the Term Loan/Cash Flow Revolver Lenders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The Term Loan/Cash Flow Revolver Agent is hereby authorized to make any such endorsements as agent for the ABL Agent or any such ABL Lender. This authorization is coupled with an interest and is irrevocable.

(c) Promptly upon the Discharge of ABL Priority Claims, the ABL Agent shall deliver written notice confirming the same to the Term Loan/Cash Flow Revolver Agent; provided that the failure to give any such notice shall not result in any liability of the ABL Agent or the ABL Lenders or in the modification, alteration, impairment or waiver of the rights of any party hereunder. Promptly upon the Discharge of Term Priority Claims, the Term Loan/Cash Flow Revolver Agent shall deliver written notice confirming the same to the ABL Agent; provided that the failure to give any such notice shall not result in any liability of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders or in the modification, alteration, impairment or waiver of the rights of any party hereunder.

4.5. Common Collateral .

Notwithstanding anything contained in this Agreement to the contrary, in the event of any disposition or series of related dispositions in connection with the Exercise of Any Secured Creditor Remedies that includes (i) Equity Interests issued by a Grantor that has an interest in any ABL Facility First Priority Collateral or (ii) a combination of both ABL Facility First Priority Collateral and Term/Cash Flow Revolver Facility First Priority Collateral, then solely for purposes of this Agreement, unless otherwise agreed by the ABL Agent and the Term Loan/Cash Flow Revolver Agent, the proceeds of any such disposition shall be allocated to the ABL Facility First Priority Collateral in an amount equal to the sum of (A) the book value determined in accordance with GAAP of any ABL Facility First Priority Collateral consisting of Accounts that are the subject of such disposition (or, in the case of a disposition of Equity Interests issued by a Grantor, any ABL Facility First Priority Collateral consisting of Accounts in

 

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which such Grantor has an interest), determined as of the date of such disposition, and (B) the fair market value of all other ABL Facility First Priority Collateral that is the subject of such disposition (or, in the case of a disposition of Equity Interests issued by a Grantor, any other ABL Facility First Priority Collateral in which such Grantor has an interest), determined as of the date of such disposition.

Section 5. Other Agreements.

5.1. Releases .

(a) If, at any time any Grantor or the holder of any ABL Priority Claim delivers notice to the Term Loan/Cash Flow Revolver Agent that any specified ABL Facility First Priority Collateral is sold, transferred or otherwise disposed of (including for such purpose, in the case of the sale of equity interests in any Subsidiary, any ABL Facility First Priority Collateral held by such Subsidiary or any direct or indirect Subsidiary thereof):

(i) by the owner of such ABL Facility First Priority Collateral in a transaction permitted under the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement and each other ABL Loan Document and Term Loan/Cash Flow Revolver Loan Document; or

(ii) during the existence of any Event of Default under (and as defined in) the ABL Credit Agreement to the extent the ABL Agent has consented to such sale, transfer or disposition;

then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the Term Loan/Cash Flow Revolver Lenders upon such ABL Facility First Priority Collateral will automatically be released and discharged as and when, but only to the extent, such Liens on such ABL Facility First Priority Collateral securing ABL Priority Claims are released and discharged. Upon delivery to the Term Loan/Cash Flow Revolver Agent of a notice from the ABL Agent stating that any release of Liens securing or supporting the ABL Priority Claims on any ABL Facility First Priority Collateral has become effective (or shall become effective upon the Term Loan/Cash Flow Revolver Agent’s release), the Term Loan/Cash Flow Revolver Agent will promptly execute and deliver such instruments, releases, termination statements or other documents confirming such release on customary terms at the expense of the Borrower.

The Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, hereby irrevocably constitutes and appoints the ABL Agent and any officer or agent of the ABL Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Term Loan/Cash Flow Revolver Agent or such Term Loan/Cash Flow Revolver Lender or in the ABL Agent’s own name, from time to time in the ABL Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1(a), to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Section 5.1(a), including any termination statements, endorsements or other instruments of transfer or release.

(b) If, at any time any Grantor or the holder of any Term Loan/Cash Flow Revolver Priority Claim delivers notice to the ABL Agent that any specified Term/Cash Flow Revolver

 

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Facility First Priority Collateral (including all or substantially all of the equity interests of a Grantor or any of its Subsidiaries) (including for such purpose, in the case of the sale of equity interests in any Subsidiary, any Term/Cash Flow Revolver Facility First Priority Collateral held by such Subsidiary or any direct or indirect Subsidiary thereof) is sold, transferred or otherwise disposed of:

(i) by the owner of such Term/Cash Flow Revolver Facility First Priority Collateral in a transaction permitted under the Term Loan/Cash Flow Revolver Agreement, the ABL Credit Agreement and each other Term Loan/Cash Flow Revolver Loan Document and ABL Loan Document; or

(ii) during the existence of any Event of Default under (and as defined in) the Term Loan/Cash Flow Revolver Agreement to the extent the Term Loan/Cash Flow Revolver Agent has consented to such sale, transfer or disposition;

then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the ABL Lenders upon such Term/Cash Flow Revolver Facility First Priority Collateral will automatically be released and discharged as and when, but only to the extent, such Liens on such Term/Cash Flow Revolver Facility First Priority Collateral securing Term Loan/Cash Flow Revolver Priority Claims are released and discharged. Upon delivery to the ABL Agent of a notice from the Term Loan/Cash Flow Revolver Agent stating that any release of Liens securing or supporting the Term Loan/Cash Flow Revolver Priority Claims on any Term/Cash Flow Revolver Facility First Priority Collateral has become effective (or shall become effective upon the ABL Agent’s release), the ABL Agent will promptly execute and deliver such instruments, releases, termination statements or other documents confirming such release on customary terms at the expense of the Borrower. In the case of the sale of all or substantially all of the capital stock of a Grantor or any of its Subsidiaries, the guarantee in favor of the ABL Lenders, if any, made by such Grantor or Subsidiary will automatically be released and discharged (i) as and when, but only to the extent, the guarantee by such Grantor or Subsidiary of Term Loan/Cash Flow Revolver Claims is released and discharged and (ii) subject to payment of proceeds from the sale of such capital stock to the ABL Agent to the extent provided in Section 4.5.

The ABL Agent, for itself and on behalf of each applicable ABL Lender, hereby irrevocably constitutes and appoints the Term Loan/Cash Flow Revolver Agent and any officer or agent of the Term Loan/Cash Flow Revolver Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the ABL Agent or such ABL Lender or in the Term Loan/Cash Flow Revolver Agent’s own name, from time to time in the Term Loan/Cash Flow Revolver Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1(b), to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Section 5.1(b), including any termination statements, endorsements or other instruments of transfer or release.

(c) Unless and until the Discharge of ABL Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, hereby consents to the application, whether prior to or after a default, of

 

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proceeds of ABL Facility First Priority Collateral to the repayment of ABL Priority Claims pursuant to the ABL Loan Documents; provided that nothing in this Section 5.1(c) shall be construed to prevent or impair the rights of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders to receive proceeds in connection with the Term Loan/Cash Flow Revolver Claims not otherwise in contravention of this Agreement.

(d) Unless and until the Discharge of Term Priority Claims has occurred, the ABL Agent, for itself and on behalf of each ABL Lender, hereby consents to the application, whether prior to or after a default, of proceeds of Term/Cash Flow Revolver Facility First Priority Collateral to the repayment of Term Loan/Cash Flow Revolver Priority Claims pursuant to the Term Loan/Cash Flow Revolver Loan Documents; provided that nothing in this Section 5.1(d) shall be construed to prevent or impair the rights of the ABL Agent or the ABL Lenders to receive proceeds in connection with the ABL Claims not otherwise in contravention of this Agreement.

5.2. Insurance .

(a) Proceeds of Common Collateral include insurance proceeds and, therefore, the Lien priority set forth in this Agreement shall govern the ultimate disposition of insurance proceeds.

(b) Unless and until the Discharge of ABL Priority Claims has occurred, the ABL Agent and the ABL Lenders shall have the sole and exclusive right, subject to the rights of the Grantors under the ABL Loan Documents, to adjust settlement for any insurance policy covering the ABL Facility First Priority Collateral (including, for the avoidance of doubt, any business interruption insurance) in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the ABL Facility First Priority Collateral. Unless and until the Discharge of ABL Priority Claims has occurred, subject to the rights of the Grantors under the ABL Loan Documents, all proceeds of any such policy and any such award if in respect of the ABL Facility First Priority Collateral shall be paid in accordance with the terms of Section 4.2. If the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender shall, at any time, receive any proceeds of any such insurance policy or any such award in contravention of this Agreement, it shall pay such proceeds over to the ABL Agent in accordance with the terms of Section 4.4.

(c) Unless and until the Discharge of Term Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have the sole and exclusive right, subject to the rights of the Grantors under the Term Loan/Cash Flow Revolver Loan Documents, to adjust settlement for any insurance policy covering the Term/Cash Flow Revolver Facility First Priority Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Term/Cash Flow Revolver Facility First Priority Collateral. Unless and until the Discharge of Term Priority Claims has occurred, subject to the rights of the Grantors under the Term Loan/Cash Flow Revolver Loan Documents, all proceeds of any such policy and any such award if in respect of the Term/Cash Flow Revolver Facility First Priority Collateral shall be paid in accordance with the terms of Section 4.3. If the ABL Agent or any ABL Lender shall, at any time, receive any proceeds of any such insurance policy or any such award in contravention of this Agreement, it shall pay such proceeds over to the Term Loan/Cash Flow Revolver Agent in accordance with the terms of Section 4.4.

 

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5.3. Amendments to ABL Loan Documents and Term Loan/Cash Flow Revolver Loan Documents .

(a) The Term Loan/Cash Flow Revolver Agent, on behalf of itself and the Term Loan/Cash Flow Revolver Lenders, hereby agrees that, without affecting the obligations of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders hereunder, the ABL Agent and the ABL Lenders may, at any time and from time to time, in their sole discretion without the consent of or notice to the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify any of the ABL Loan Documents in any manner whatsoever, including, to:

(i) change the manner, place, time, or terms of payment or renew, alter or increase, all or any of the Obligations under the ABL Loan Documents or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the Obligations under the ABL Loan Documents or any of the ABL Loan Documents;

(ii) retain or, subject to Section 2.3, obtain a Lien on any property of any Person to secure any of the ABL Claims, and in connection therewith to enter into any additional ABL Loan Documents;

(iii) amend, or grant any waiver, compromise, or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the ABL Claims;

(iv) subject to Section 5.1, release its Lien on any Common Collateral or other property;

(v) exercise or refrain from exercising any rights against the Borrower, any Grantor, or any other Person;

(vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the ABL Claims; and

(vii) otherwise manage and supervise the ABL Claims as the ABL Agent shall deem appropriate.

(b) The ABL Agent, on behalf of itself and the ABL Lenders, hereby agrees that, without affecting the obligations of the ABL Agent and the ABL Lenders hereunder, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders may, at any time and from time to time, in their sole discretion without the consent of or notice to the ABL Agent or any ABL Lender (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the ABL Agent or

 

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any ABL Lender or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify any of the Term Loan/Cash Flow Revolver Loan Documents in any manner whatsoever, including, to:

(i) change the manner, place, time, or terms of payment or renew, alter or increase, all or any of the Obligations under the Term Loan/Cash Flow Revolver Loan Documents or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the Obligations under the Term Loan/Cash Flow Revolver Loan Documents or any of the Term Loan/Cash Flow Revolver Loan Documents;

(ii) retain or, subject to Section 2.3, obtain a Lien on any property of any Person to secure any of the Term Loan/Cash Flow Revolver Claims, and in connection therewith to enter into any additional Term Loan/Cash Flow Revolver Loan Documents;

(iii) amend, or grant any waiver, compromise, or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the Term Loan/Cash Flow Revolver Claims;

(iv) subject to Section 5.1, release its Lien on any Common Collateral or other property;

(v) exercise or refrain from exercising any rights against the Borrower, any Grantor, or any other Person;

(vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the Term Loan/Cash Flow Revolver Claims; and

(vii) otherwise manage and supervise the Term Loan/Cash Flow Revolver Claims as the Term Loan/Cash Flow Revolver Agent shall deem appropriate.

(c) The ABL Claims and the Term Loan/Cash Flow Revolver Claims may be refinanced or replaced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is required to permit the refinancing or replacement transaction under the ABL Credit Agreement or the Term Loan/Cash Flow Revolver Agreement) of the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders, as the case may be, all without affecting the Lien priorities provided for herein or the other provisions hereof, provided , however , that the holders of such refinancing or replacement indebtedness (or an authorized agent or trustee on their behalf) bind themselves in writing to the terms of this Agreement pursuant to such documents or agreements (including amendments, replacements or supplements to this Agreement) as the ABL Agent (in the case of a refinancing or replacement transaction relating to the Term Loan/Cash Flow Revolver Claims) or the Term Loan/Cash Flow Revolver Agent (in the case of a refinancing or replacement transaction relating to the ABL Claims), shall reasonably request and in form and substance reasonably acceptable to the ABL Agent (in the case of a refinancing or replacement transaction relating to the Term Loan/Cash Flow Revolver Claims) or the Term Loan/Cash Flow Revolver Agent (in the case of a refinancing or replacement transaction relating to the ABL Claims), and any such refinancing or replacement transaction shall be in accordance with any applicable provisions of both the ABL Loan Documents (unless waived thereunder) and the Term Loan/Cash Flow Revolver Loan Documents (unless waived thereunder). Following any refinancing or replacement transaction

 

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relating to the Term Loan/Cash Flow Revolver Claims (i) the Term Loan/Cash Flow Revolver Agreement shall be any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of such refinancing or replacement indebtedness and identified as such in such agreement and (ii) the Term Loan/Cash Flow Revolver Agent shall be the Person identified as such in such agreement. Following any refinancing or replacement transaction relating to the ABL Claims (i) the ABL Credit Agreement shall be any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of such refinancing or replacement indebtedness and identified as such in such agreement and (ii) the ABL Agent shall be the Person identified as such in such agreement.

(d) In the event that the ABL Agent or the ABL Lenders enter into any amendment, waiver or consent in respect of or replace any of the ABL Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any ABL Collateral Document or changing in any manner the rights of the ABL Agent, the ABL Lenders, the Borrower or any other Grantor thereunder in respect of the ABL Facility First Priority Collateral, then such amendment, waiver or consent (other than those effecting any release of any Liens in ABL Facility First Priority Collateral except as provided in Section 5.1) shall apply automatically to any comparable provision of each comparable Term Loan/Cash Flow Revolver Collateral Document (but solely as to ABL Facility First Priority Collateral) without the consent of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender and without any action by the Term Loan/Cash Flow Revolver Lenders, the Borrower or any other Grantor; provided that such amendment, waiver or consent does not materially adversely affect the rights of the Term Loan/Cash Flow Revolver Lenders or the interests of the Term Loan/Cash Flow Revolver Lenders in the ABL Facility First Priority Collateral unless the rights and interests of all other creditors of the Borrower or such Grantor, as the case may be, that have a security interest in the affected collateral are affected in a like and similar manner (without regard to the fact that the Lien of such ABL Collateral Document is senior to the Lien of the comparable Term Loan/Cash Flow Revolver Collateral Document). The ABL Agent shall give written notice of such amendment, waiver or consent to the Term Loan/Cash Flow Revolver Agent; provided that the failure to give such notice shall not affect the effectiveness of such amendment, waiver or consent with respect to the provisions of any Term Loan/Cash Flow Revolver Collateral Documents as set forth in this Section 5.3(d).

(e) In the event that the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders enter into any amendment, waiver or consent in respect of or replace any of the Term Loan/Cash Flow Revolver Collateral Documents (other than any Term Loan/Cash Flow Revolver Collateral Documents granting or governing Liens on any Real Estate Collateral) for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any Term Loan/Cash Flow Revolver Collateral Document (other than any Term Loan/Cash Flow Revolver Collateral Documents granting or governing Liens on any Real Estate Collateral) or changing in any manner the rights of the Term Loan/Cash Flow Revolver Agent, the Term Loan/Cash Flow Revolver Lenders, the Borrower or any other Grantor thereunder in respect of the Term/Cash Flow Revolver Facility First Priority Collateral (other than in respect of any Real Estate Collateral), then such amendment, waiver or consent (other than those effecting any release of any Liens in Term/Cash Flow Revolver Facility First Priority Collateral except as provided in Section 5.1) shall apply automatically to any comparable

 

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provision of each comparable ABL Collateral Document (but solely as to Term/Cash Flow Revolver Facility First Priority Collateral) without the consent of the ABL Agent or any ABL Lender and without any action by the ABL Lenders, the Borrower or any other Grantor; provided that such amendment, waiver or consent does not materially adversely affect the rights of the ABL Lenders or the interests of the ABL Lenders in the Term/Cash Flow Revolver Facility First Priority Collateral unless the rights and interests of all other creditors of the Borrower or such Grantor, as the case may be, that have a security interest in the affected collateral are affected in a like and similar manner (without regard to the fact that the Lien of such Term Loan/Cash Flow Revolver Collateral Document is senior to the Lien of the comparable ABL Collateral Document). The Term Loan/Cash Flow Revolver Agent shall give written notice of such amendment, waiver or consent to the ABL Agent; provided that the failure to give such notice shall not affect the effectiveness of such amendment, waiver or consent with respect to the provisions of any ABL Collateral Document as set forth in this Section 5.3(e).

5.4. Rights As Unsecured Creditors . Notwithstanding anything to the contrary in this Agreement, the Second Priority Agents and the Second Priority Lenders may exercise rights and remedies as an unsecured creditor against the Borrower or any Subsidiary that has guaranteed the Second Priority Claims in accordance with the terms of the applicable Second Priority Documents and applicable law, in each case to the extent not inconsistent with the provisions of this Agreement. Nothing in this Agreement shall prohibit the receipt by any Second Priority Agent or any Second Priority Lender of the required payments of interest and principal so long as such receipt is not the direct or indirect result of (a) the exercise by any Second Priority Agent or any Second Priority Lender of rights or remedies as a secured creditor in respect of the applicable portion of the Common Collateral or (b) enforcement in contravention of this Agreement of any Lien in respect of Second Priority Claims held by any of them. In the event any Second Priority Agent or any Second Priority Lender becomes a judgment lien creditor or other secured creditor in respect of Common Collateral as a result of its enforcement of its rights as an unsecured creditor in respect of Second Priority Claims or otherwise, such judgment or other lien shall be subordinated to the Liens securing First Priority Claims on the same basis as the other Liens securing the Second Priority Claims are so subordinated to such Liens securing First Priority Claims under this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies the ABL Agent or the ABL Lenders may have with respect to the ABL Facility First Priority Collateral, or any rights or remedies the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders may have with respect to the Term/Cash Flow Revolver Facility First Priority Collateral.

5.5. First Priority Agent as Gratuitous Bailee for Perfection .

(a) The ABL Agent agrees to hold the Pledged Collateral that is part of the ABL Facility First Priority Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the Term Loan/Cash Flow Revolver Agent and any assignee solely for the purpose of perfecting the security interest granted in such Pledged Collateral pursuant to the Term Loan/Cash Flow Revolver Collateral Documents, subject to the terms and conditions of this Section 5.5 (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC). The Term Loan/Cash Flow Revolver Agent agrees to hold the Pledged Collateral that is part of the

 

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Term/Cash Flow Revolver Facility First Priority Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the ABL Agent and any assignee solely for the purpose of perfecting the security interest granted in such Pledged Collateral pursuant to the ABL Collateral Documents, subject to the terms and conditions of this Section 5.5 (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC).

(b) The ABL Agent agrees to hold the Deposit Account Collateral that is part of the Common Collateral and controlled by the ABL Agent as gratuitous bailee for the Term Loan/Cash Flow Revolver Agent and any assignee solely for the purpose of perfecting the security interest granted in such Deposit Account Collateral pursuant to the Term Loan/Cash Flow Revolver Collateral Documents, subject to the terms and conditions of this Section 5.5. The Term Loan/Cash Flow Revolver Agent agrees to hold the collateral controlled by the Term Loan/Cash Flow Revolver Agent as gratuitous bailee for the ABL Agent and any assignee solely for the purpose of perfecting the security interest granted in such collateral pursuant to the ABL Collateral Documents, subject to the terms and conditions of this Section 5.5.

(c) In the event that the ABL Agent (or its agent or bailees) has Lien filings against Intellectual Property that is part of the ABL Facility First Priority Collateral that are necessary for the perfection of Liens in such ABL Facility First Priority Collateral, the ABL Agent agrees to hold such Liens as gratuitous bailee for the Term Loan/Cash Flow Revolver Agent and any assignee solely for the purpose of perfecting the security interest granted in such Liens pursuant to the Term Loan/Cash Flow Revolver Collateral Documents, subject to the terms and conditions of this Section 5.5. In the event that the Term Loan/Cash Flow Revolver Agent (or its agent or bailees) has Lien filings against Intellectual Property that is part of the Term/Cash Flow Revolver Facility First Priority Collateral that are necessary for the perfection of Liens in such Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent agrees to hold such Liens as gratuitous bailee for the ABL Agent and any assignee solely for the purpose of perfecting the security interest granted in such Liens pursuant to the ABL Collateral Documents, subject to the terms and conditions of this Section 5.5.

(d) Except as otherwise specifically provided herein (including Sections 3.1 and 4), until the Discharge of ABL Priority Claims has occurred, the ABL Agent shall be entitled to deal with the Pledged Collateral constituting ABL Facility First Priority Collateral in accordance with the terms of the ABL Loan Documents as if the Liens under the Term Loan/Cash Flow Revolver Collateral Documents did not exist. The rights of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders with respect to such Pledged Collateral shall at all times be subject to the terms of this Agreement. Except as otherwise specifically provided herein (including Sections 3.1 and 4), until the Discharge of Term Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent shall be entitled to deal with the Pledged Collateral constituting Term/Cash Flow Revolver Facility First Priority Collateral in accordance with the terms of the Term Loan/Cash Flow Revolver Loan Documents as if the Liens under the ABL Collateral Documents did not exist. The rights of the ABL Agent and the ABL Lenders with respect to such Pledged Collateral shall at all times be subject to the terms of this Agreement.

(e) The First Priority Agent shall have no obligation whatsoever to any Second Priority Agent or any Second Priority Lender to assure that the Pledged Collateral is genuine or owned

 

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by the Grantors or to protect or preserve rights or benefits of any Person or any rights pertaining to the applicable portion of the Common Collateral except as expressly set forth in this Section 5.5. The duties or responsibilities of the First Priority Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as gratuitous bailee for each Second Priority Agent for purposes of perfecting the Lien held by the Second Priority Lenders.

(f) The First Priority Agent shall not have by reason of the Second Priority Documents or this Agreement or any other document a fiduciary relationship in respect of any Second Priority Agent or any Second Priority Lender and the Second Priority Agent on its own behalf, and on behalf of the Second Priority Lenders hereby waives and releases the First Priority Agent from all claims and liabilities arising pursuant to the First Priority Agent’s role under this Section 5.5, as agent and gratuitous bailee with respect to the applicable portion of the Common Collateral.

(g) Upon the Discharge of ABL Priority Claims, the ABL Agent shall deliver to the Term Loan/Cash Flow Revolver Agent, to the extent that it is legally permitted to do so, the remaining Pledged Collateral (if any) and Deposit Account Collateral (if any) constituting ABL Facility First Priority Collateral in its possession or under its control, together with any necessary endorsements (or otherwise allow the Term Loan/Cash Flow Revolver Agent to obtain control of such Pledged Collateral and Deposit Account Collateral) or as a court of competent jurisdiction may otherwise direct. The Borrower shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify the ABL Agent for loss or damage suffered by the ABL Agent as a result of such transfer except for loss or damage suffered by the ABL Agent primarily as a result of its own willful misconduct, gross negligence or bad faith. The ABL Agent has no obligation to follow instructions from the Term Loan/Cash Flow Revolver Agent in contravention of this Agreement.

(h) Upon the Discharge of Term Priority Claims, the Term Loan/Cash Flow Revolver Agent shall deliver to the ABL Agent, to the extent that it is legally permitted to do so, the remaining Pledged Collateral (if any) constituting Term/Cash Flow Revolver Facility First Priority Collateral in its possession or under its control, together with any necessary endorsements (or otherwise allow the ABL Agent to obtain control of such Pledged Collateral) or as a court of competent jurisdiction may otherwise direct. The Borrower shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify the Term Loan/Cash Flow Revolver Agent for loss or damage suffered by the Term Loan/Cash Flow Revolver Agent as a result of such transfer except for loss or damage suffered by the Term Loan/Cash Flow Revolver Agent primarily as a result of its own willful misconduct, gross negligence or bad faith. The Term Loan/Cash Flow Revolver Agent has no obligation to follow instructions from the ABL Agent in contravention of this Agreement.

5.6. Access to Premises and Cooperation .

(a) If the ABL Agent takes any enforcement action with respect to the ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders (i) shall cooperate with the ABL Agent (at the sole cost and expense of the ABL Agent and the ABL Lenders and subject to the condition that the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have no obligation or duty to take any action or refrain from taking any action that could reasonably be expected to

 

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result in the incurrence of any liability or damage to the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders) in its efforts to enforce its security interest in the ABL Facility First Priority Collateral and to assemble the ABL Facility First Priority Collateral, (ii) shall not take any action designed or intended to hinder or restrict in any respect the ABL Agent from enforcing its security interest in the ABL Facility First Priority Collateral or assembling the ABL Facility First Priority Collateral, and (iii) shall permit the ABL Agent, its employees, agents, advisers and representatives, at the sole cost and expense of the ABL Lenders and upon reasonable advance notice, to use the Term/Cash Flow Revolver Facility First Priority Collateral (including (x) equipment, processors, computers and other machinery related to the storage or processing of records, documents or files, (y) intellectual property and (z) Real Estate Collateral), for a period not to exceed 180 days after the taking of such enforcement action, for purposes of (A) assembling the ABL Facility First Priority Collateral, (B) selling any or all of the ABL Facility First Priority Collateral in the ordinary course of business or otherwise, (C) removing any or all of the ABL Facility First Priority Collateral located in or on such Term/Cash Flow Revolver Facility First Priority Collateral, if any, or (D) taking reasonable actions to protect, secure, and otherwise enforce the rights of the ABL Agent and the ABL Lenders in and to the ABL Facility First Priority Collateral; provided , however , that nothing contained in this Agreement shall restrict the rights of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders from selling, assigning or otherwise transferring any Term/Cash Flow Revolver Facility First Priority Collateral prior to the expiration of such 180 day period if the purchaser, assignee or transferee thereof agrees to be bound by the provisions of this Section 5.6. If any stay or other order prohibiting the exercise of remedies with respect to the ABL Facility First Priority Collateral has been entered by a court of competent jurisdiction, such 180 day period shall be tolled during the pendency of any such stay or other order.

(b) During the period of actual use or control by the ABL Agent or its agents or representatives of any Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral), the ABL Agent and the ABL Lenders shall (i) be responsible for the ordinary course third party expenses related thereto, and (ii) be obligated to repair at their expense any physical damage to such Term/Cash Flow Revolver Facility First Priority Collateral resulting from such use or control, and to leave such Term/Cash Flow Revolver Facility First Priority Collateral in substantially the same condition as it was at the commencement of such use or control, ordinary wear and tear excepted. The ABL Agent and the ABL Lenders jointly and severally agree to pay, indemnify and hold the Term Loan/Cash Flow Revolver Agent and its officers, directors, employees and agents harmless from and against any liability, cost, expense, loss or damages, including legal fees and expenses, resulting from the gross negligence or willful misconduct of the ABL Agent or any of its agents, representatives or invitees in its or their operation of such Term/Cash Flow Revolver Facility First Priority Collateral. Notwithstanding the foregoing, in no event shall the ABL Agent or the ABL Lenders have any liability to the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders pursuant to this Section 5.6 as a result of the condition of any Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) existing prior to the date of the exercise by the ABL Agent and the ABL Lenders of their rights under this Section 5.6, and the ABL Agent and the ABL Lenders shall have no duty or liability to maintain the Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) in a condition or manner better than that in which it was maintained prior to the use thereof by the ABL Agent, or

 

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for any diminution in the value of the Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) that results solely from ordinary wear and tear resulting from the use of the Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) by the ABL Agent in the manner and for the time periods specified under this Section 5.6. Without limiting the rights granted in this paragraph, the ABL Agent and the ABL Lenders shall cooperate with the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders in connection with any efforts made by the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders to sell the Term/Cash Flow Revolver Facility First Priority Collateral.

(c) If the Term Loan/Cash Flow Revolver Agent takes any enforcement action with respect to the Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Agent and the ABL Lenders (i) shall cooperate with the Term Loan/Cash Flow Revolver Agent (at the sole cost and expense of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders and subject to the condition that the ABL Agent and the ABL Lenders shall have no obligation or duty to take any action or refrain from taking any action that could reasonably be expected to result in the incurrence of any liability or damage to the ABL Agent or the ABL Lenders) in its efforts to enforce its security interest in the Term/Cash Flow Revolver Facility First Priority Collateral and assemble the Term/Cash Flow Revolver Facility First Priority Collateral and (ii) shall not take any action designed or intended to hinder or restrict in any respect the Term Loan/Cash Flow Revolver Agent from enforcing its security interest in the Term/Cash Flow Revolver Facility First Priority Collateral or from assembling the Term/Cash Flow Revolver Facility First Priority Collateral.

(d) The Term Loan/Cash Flow Revolver Agent agrees that if the ABL Agent shall require rights available under any permit or license controlled by the Term Loan/Cash Flow Revolver Agent in order to realize on any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent shall take all such actions as shall be available to it (at the sole expense of the Grantors), consistent with applicable law and reasonably requested by the ABL Agent to make such rights available to the ABL Agent, subject to the Lien of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders. The ABL Agent agrees that if the Term Loan/Cash Flow Revolver Agent shall require rights available under any permit or license controlled by the ABL Agent in order to realize on any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Agent shall take all such actions as shall be available to it (at the sole expense of the Grantors), consistent with applicable law and reasonably requested by the Term Loan/Cash Flow Revolver Agent to make such rights available to the Term Loan/Cash Flow Revolver Agent, subject to the Liens of the ABL Agent and the ABL Lenders.

5.7. No Release If Event of Default; Reinstatement .

(a) If, at any time after the Discharge of ABL Priority Claims has occurred, the Borrower incurs any ABL Priority Claims, then such Discharge of ABL Priority Claims shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken prior to the date of such designation as a result of the occurrence of such first Discharge of ABL Priority Claims), and the applicable agreement governing such ABL Priority Claims shall automatically be treated as the ABL Credit Agreement for all purposes of this

 

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Agreement, including for purposes of the Lien priorities and rights in respect of Common Collateral set forth herein and the granting by the ABL Agent of amendments, waivers and consents hereunder. Upon receipt of notice of such incurrence (including the identity of the new ABL Agent), the Term Loan/Cash Flow Revolver Agent shall promptly (i) enter into such documents and agreements (at the expense of the Borrower), including amendments or supplements to this Agreement, as the Borrower or such new ABL Agent shall reasonably request in writing in order to provide the new ABL Agent the rights of the ABL Agent contemplated hereby and (ii) to the extent then held by the Term Loan/Cash Flow Revolver Agent, deliver to the ABL Agent the Pledged Collateral or Deposit Collateral that is ABL Facility First Priority Collateral together with any necessary endorsements (or otherwise allow such ABL Agent to obtain possession or control of such Pledged Collateral).

(b) If, at any time after the Discharge of Term Priority Claims has occurred, the Borrower incurs any Term Loan/Cash Flow Revolver Priority Claims, then such Discharge of Term Priority Claims shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken prior to the date of such designation as a result of the occurrence of such first Discharge of Term Priority Claims), and the applicable agreement governing such Term Loan/Cash Flow Revolver Priority Claims shall automatically be treated as the Term Loan/Cash Flow Revolver Agreement for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Common Collateral set forth herein and the granting by the Term Loan/Cash Flow Revolver Agent of amendments, waivers and consents hereunder. Upon receipt of notice of such incurrence (including the identity of the new Term Loan/Cash Flow Revolver Agent), the ABL Agent shall promptly (i) enter into such documents and agreements (at the expense of the Borrower), including amendments or supplements to this Agreement, as the Borrower or such new Term Loan/Cash Flow Revolver Agent shall reasonably request in writing in order to provide the new Term Loan/Cash Flow Revolver Agent the rights of the Term Loan/Cash Flow Revolver Agent contemplated hereby and (ii) to the extent then held by the ABL Agent, deliver to the Term Loan/Cash Flow Revolver Agent the Pledged Collateral or Deposit Collateral that is Term/Cash Flow Revolver Facility First Priority Collateral together with any necessary endorsements (or otherwise allow such Term Loan/Cash Flow Revolver Agent to obtain possession or control of such Pledged Collateral).

5.8. Legends . Upon the request of either the ABL Agent or the Term Loan/Cash Flow Revolver Agent, each party hereto agrees that each Credit Agreement and each other agreement that constitutes an ABL Collateral Document or a Term Loan/Cash Flow Revolver Collateral Agreement shall contain the applicable provisions set forth on Schedule II hereto, or similar provisions approved by the ABL Agent and the Term Loan/Cash Flow Revolver Agent, which approval shall not be unreasonably withheld or delayed.

Section 6. Insolvency or Liquidation Proceedings.

6.1. Financing Issues . If the Borrower or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding and shall move for the approval of the use of cash collateral or of financing (“ DIP Financing ”) under Section 363 or Section 364 of Title 11 of the United States Code or under any similar provision in any Bankruptcy Law, then each Second Priority Agent, on behalf of itself and each Second Priority Lender, agrees that it will raise no objection to, and will not support any objection to, and will not otherwise contest (a)

 

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such DIP Financing, the Liens on First Priority Collateral securing such DIP Financing (the “ DIP Financing Liens ”) or the use of cash collateral that constitutes First Priority Collateral, in each case unless the First Priority Agent or the First Priority Lenders shall then object or support an objection to such DIP Financing, DIP Financing Liens or use of cash collateral, and will not request adequate protection or any other relief in connection therewith (except to the extent permitted by Section 6.3) and, to the extent the Liens securing the First Priority Claims under the applicable Credit Agreement or, if no such Credit Agreement exists, under the other First Priority Documents are subordinated or pari passu with such DIP Financing Liens, will subordinate its Liens in the First Priority Collateral to such DIP Financing Liens on the same basis as the other Liens on First Priority Collateral securing the Second Priority Claims are so subordinated to Liens securing First Priority Claims under this Agreement, (b) any motion for relief from the automatic stay or from any injunction against foreclosure or enforcement in respect of First Priority Claims made by the First Priority Agent or any holder of First Priority Claims, (c) any lawful exercise by any holder of First Priority Claims of the right to credit bid First Priority Claims at any sale in foreclosure solely of First Priority Collateral, (d) any other request for judicial relief made in any court by any holder of First Priority Claims relating to the lawful enforcement of any Lien on First Priority Collateral or (e) any order relating to a sale of assets comprised of First Priority Collateral of any Grantor for which the First Priority Agent has consented that provides, to the extent the sale of First Priority Collateral is to be free and clear of Liens, that the Liens securing the First Priority Claims and the Second Priority Claims will attach to the proceeds of the sale on the same basis of priority as set forth in this Agreement; provided that all Liens granted to the ABL Agent or the Term Loan/Cash Flow Revolver Agent in any Insolvency or Liquidation Proceeding are intended by the parties hereto to be and shall be deemed to be subject to the Lien priority and the other terms and conditions of this Agreement.

6.2. Relief from the Automatic Stay . Until the Discharge of ABL Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that none of them shall seek relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the ABL Facility First Priority Collateral, without the prior written consent of the ABL Agent and the Required Lenders under the ABL Credit Agreement. Until the Discharge of Term Priority Claims has occurred, the ABL Agent, on behalf of itself and each ABL Lender, agrees that none of them shall seek relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Term/Cash Flow Revolver Facility First Priority Collateral, without the prior written consent of the Term Loan/Cash Flow Revolver Agent and the Required Lenders under the Term Loan/Cash Flow Revolver Agreement.

6.3. Adequate Protection . Except to the extent provided in Section 6.1, nothing in this Agreement shall limit the rights of the ABL Agent and the ABL Lenders, on the one hand, and the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders, on the other hand, from seeking or requesting adequate protection with respect to their interests in the applicable Common Collateral in any Insolvency or Liquidation Proceeding, including adequate protection in the form of a cash payment, periodic cash payments, cash payments of interest, additional collateral or otherwise; provided that (a) in the event that the ABL Agent, on behalf of itself or any of the ABL Lenders, seeks or requests adequate protection in respect of the ABL Claims and such adequate protection is granted in the form of

 

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additional collateral comprising assets of the type of assets that constitute Term/Cash Flow Revolver Facility First Priority Collateral, then the ABL Agent, on behalf of itself and each of the ABL Lenders, agrees, subject to Section 2.3, that the Term Loan/Cash Flow Revolver Agent shall also be granted a senior Lien on such collateral as security for the Term Loan/Cash Flow Revolver Priority Claims and that any Lien on such collateral securing the ABL Claims shall be subordinate to the Lien on such collateral securing the Term Loan/Cash Flow Revolver Priority Claims and (b) in the event that the Term Loan/Cash Flow Revolver Agent, on behalf of itself or any of the Term Loan/Cash Flow Revolver Lenders, seeks or requests adequate protection in respect of the Term Loan/Cash Flow Revolver Claims and such adequate protection is granted in the form of additional collateral comprising assets of the type of assets that constitute ABL Facility First Priority Collateral, then the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each of the Term Loan/Cash Flow Revolver Lenders, agrees, subject to Section 2.3, that the ABL Agent shall also be granted a senior Lien on such collateral as security for the ABL Priority Claims and that any Lien on such collateral securing the Term Loan/Cash Flow Revolver Claims shall be subordinate to the Lien on such collateral securing the ABL Priority Claims.

6.4. Avoidance Issues .

(a) If any ABL Lender is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Borrower or any other Grantor (or any trustee, receiver or similar person therefor), because the payment of such amount was declared to be fraudulent or preferential in any respect or for any other reason, any amount (an “ ABL Recovery ”), whether received as proceeds of security, enforcement of any right of setoff or otherwise, then as among the parties hereto the ABL Claims shall be deemed to be reinstated to the extent of such ABL Recovery and to be outstanding as if such payment had not occurred and the ABL Lenders shall be entitled, to the extent they are entitled hereunder, to a Discharge of ABL Priority Claims with respect to all such recovered amounts and shall have all rights hereunder until such time. If this Agreement shall have been terminated prior to such ABL Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto.

(b) If any Term Loan/Cash Flow Revolver Lender is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Borrower or any other Grantor (or any trustee, receiver or similar person therefor), because the payment of such amount was declared to be fraudulent or preferential in any respect or for any other reason, any amount (a “ Term Loan/Cash Flow Revolver Recovery ”), whether received as proceeds of security, enforcement of any right of setoff or otherwise, then as among the parties hereto the Term Loan/Cash Flow Revolver Claims shall be deemed to be reinstated to the extent of such Term Loan/Cash Flow Revolver Recovery and to be outstanding as if such payment had not occurred and the Term Loan/Cash Flow Revolver Lenders shall be entitled, to the extent they are entitled hereunder, to a Discharge of Term Priority Claims with respect to all such recovered amounts and shall have all rights hereunder until such time. If this Agreement shall have been terminated prior to such Term Loan/Cash Flow Revolver Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto.

 

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6.5. Application . This Agreement, which the parties hereto expressly acknowledge as a “subordination agreement” within the meaning of, and enforceable under, Section 510(a) of the United States Bankruptcy Code (or any successor provision), shall be applicable prior to and after the commencement of any Insolvency or Liquidation Proceeding. All references herein to any Grantor shall apply to any trustee for such Person and such Person as debtor in possession. The relative rights as to the Common Collateral and proceeds thereof shall continue after the filing thereof on the same basis as prior to the date of the petition, subject to any court order approving the financing of, or use of cash collateral by, any Grantor.

6.6. Waivers . Until the Discharge of ABL Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, (a) will not assert or enforce any claim under, Section 506(c) of the United States Bankruptcy Code (or any successor provision) senior to or on a parity with the Liens on ABL Facility First Priority Collateral securing the ABL Priority Claims for costs or expenses of preserving or disposing of any ABL Collateral and (b) waives any claim it may now or hereafter have arising out of the election by any ABL Lender of the application of Section 1111(b)(2) of the United States Bankruptcy Code (or any successor provision) with respect to any ABL Facility First Priority Collateral. Until the Discharge of Term Priority Claims has occurred, the ABL Agent, on behalf of itself and each ABL Lender, (a) will not assert or enforce any claim under Section 506(c) of the United States Bankruptcy Code (or any successor provision) senior to or on a parity with the Liens on Term/Cash Flow Revolver Facility First Priority Collateral securing the Term Loan/Cash Flow Revolver Priority Claims for costs or expenses of preserving or disposing of any Term Loan/Cash Flow Revolver Collateral and (b) waives any claim it may now or hereafter have arising out of the election by any Term Loan/Cash Flow Revolver Lender of the application of Section 1111(b)(2) of the United States Bankruptcy Code (or any successor provision) with respect to any Term/Cash Flow Revolver Facility First Priority Collateral.

6.7. Separate Grants of Liens . Each Term Loan/Cash Flow Revolver Lender and each ABL Lender acknowledges and agrees that (a) the grants of Liens pursuant to the ABL Collateral Documents and the Term Loan/Cash Flow Revolver Collateral Documents constitute two separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Common Collateral, the Term Loan/Cash Flow Revolver Claims are fundamentally different from the ABL Claims and must be separately classified in any plan of reorganization (or other plans of similar effect under any Bankruptcy Law) proposed or adopted in an Insolvency or Liquidation Proceeding. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders in respect of the Common Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders hereby acknowledge and agree that all distributions shall be made as if there were separate classes of ABL Claims and Term Loan/Cash Flow Revolver Claims against the Grantors, with the effect being that, to the extent that the aggregate value of the ABL Facility First Priority Collateral or Term/Cash Flow Revolver Facility First Priority Collateral is sufficient, the ABL Lenders or the Term Loan/Cash Flow Revolver Lenders, respectively, shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest that is available from each pool of Priority

 

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Collateral for each of the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders, respectively, before any distribution is made in respect of the claims held by the other Lenders from such Priority Collateral, with the other Lenders hereby agreeing to turn over to the respective other Lenders amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the aggregate recoveries.

6.8. Purchase Right .

(a) If (i) an Event of Default (as defined in the Term Loan/Cash Flow Revolver Agreement) under paragraph (g) or (h) of Article VII of the Term Loan/Cash Flow Revolver Agreement has occurred and is continuing or (ii) the ABL Agent or any ABL Lender has taken any action to Exercise Any Secured Creditor Remedies (each such event described in clauses (i) and (ii) herein above, a “ Purchase Option Event ”), the Term Loan/Cash Flow Revolver Lenders shall have the opportunity to purchase (at par and without premium) all (but not less than all) of the ABL Priority Claims pursuant to this Section 6.8; provided, that such option shall expire if the Term Loan/Cash Flow Revolver Lenders fail to deliver a written notice (a “ Purchase Notice ”) to the ABL Agent within fifteen (15) Business Days following the first date the Term Loan/Cash Flow Revolver Agent obtains actual knowledge of the occurrence of a Purchase Option Event, which Purchase Notice shall (A) be signed by the applicable Term Loan/Cash Flow Revolver Lenders committing to such purchase (the “ Purchasing Creditors ”) and indicate the percentage of the ABL Priority Claims to be purchased by each Purchasing Creditor (which aggregate commitments must add up to 100% of the ABL Priority Claims) and (B) state that (1) it is a Purchase Notice delivered pursuant to Section 6.8 of this Agreement and (2) the offer contained therein is irrevocable. Upon receipt of such Purchase Notice by the ABL Agent, the Purchasing Creditors shall have from the date of delivery thereof to and including the date that is five (5) Business Days after the Purchase Notice was received by the ABL Agent to purchase all (but not less than all) of the ABL Priority Claims pursuant to this Section 6.8 (the date of such purchase, the “ Purchase Date ”).

(b) On the Purchase Date, the ABL Lenders shall, subject to any required approval of any governmental authority and any limitation in the ABL Credit Agreement, in each case then in effect, if any, sell to the Purchasing Creditors all (but not less than all) of the ABL Priority Claims. On such Purchase Date, the Purchasing Creditors shall (i) pay to the ABL Agent, for the benefit of the ABL Lenders, as directed by the ABL Agent, in immediately available funds the full amount (at par and without premium) of all ABL Priority Claims then outstanding together with all accrued and unpaid interest and fees thereon, all in the amounts specified by the ABL Agent and determined in accordance with the applicable ABL Loan Documents and (ii) furnish such amount of cash collateral in immediately available funds as the ABL Agent determines in accordance with the ABL Loan Documents is required to secure the ABL Lenders in connection with any issued and outstanding letters of credit issued under the ABL Credit Agreement but not in any event in an amount greater than 105% of the aggregate undrawn amount of all such outstanding letters of credit (provided that any excess of such cash collateral for such letters of credit remaining at such time when there are no longer any such letters of credit outstanding shall be promptly paid over to the Term Loan/Cash Flow Revolver Agent). Interest and fees shall be calculated to but excluding the Purchase Date if the amounts so paid by the Purchasing Creditors to the bank account designated by the ABL Agent are received in such bank account prior to

 

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1:00 p.m., New York time, and interest shall be calculated to and including such Purchase Date if the amounts so paid by the Purchasing Creditors to the bank account designated by the ABL Agent are received in such bank account after 1:00 p.m., New York time.

(c) Any purchase pursuant to the purchase option set forth in this Section 6.8 shall, except as provided below, be expressly made without representation or warranty of any kind by the ABL Agent or the other ABL Lenders as to the ABL Obligations, the collateral or otherwise, and without recourse to the ABL Agent and the other ABL Lenders as to the ABL Obligations, the collateral or otherwise, except that the ABL Agent and each of the ABL Lenders, severally as to itself only, shall represent and warrant only as to the matters set forth in the assignment agreement to be entered into as provided herein in connection with such purchase, which shall be limited to: (i) the principal amount of the ABL Obligations being sold by it, (ii) that such Person has not created any Lien on any ABL Obligations being sold by it, and (iii) that such Person has the right to assign the ABL Obligations being assigned by it and its assignment agreement has been duly authorized.

(d) Upon notice to the Loan Parties by the Term Loan/Cash Flow Revolver Agent that the purchase of ABL Priority Claims pursuant to this Section 6.8 has been consummated by delivery of the purchase price to the ABL Agent (and ABL Agent’s confirmation of receipt of the purchase price), the Grantors shall treat the Purchasing Creditors as holders of the ABL Priority Claims and the Term Loan/Cash Flow Revolver Agent shall be deemed appointed to act in such capacity as the “agent”, “administrative agent” or “collateral agent” (or analogous capacity) (the “ Replacement Agent ”), as swingline lender (or analogous capacity)(the “ Replacement Swingline Lender ”) and as issuing lender (or analogous capacity) (the “ Replacement Issuing Lender ”) under the ABL Loan Documents, for all purposes hereunder and under each ABL Loan Document (it being agreed that the ABL Agent shall have no obligation to act as such replacement “agent”, “administrative agent” or “collateral agent” (or analogous capacity), the ABL swingline lender shall have no obligation to act as such replacement “swingline lender” (or analogous capacity) and no ABL issuing lender shall have an obligation to act as such replacement “issuing lender” (or analogous capacity) with respect to the issuance of any new letters of credit). In connection with any purchase of ABL Priority Claims pursuant to this Section 6.8, each ABL Lender and ABL Agent agrees to enter into and deliver to the applicable Term Loan/Cash Flow Revolver Lenders on the Purchase Date, as a condition to closing, an assignment agreement customarily used by the ABL Agent in connection with the ABL Credit Agreement and, at the expense of the Grantors, the ABL Agent and each other ABL Lender shall deliver all possessory collateral (if any), together with any necessary endorsements and other documents (including any applicable stock powers or bond powers), then in its possession or in the possession of its agent or bailee, or turn over control as to any pledged collateral, deposit accounts or securities accounts of which it or its agent or bailee then has control, as the case may be, to the Replacement Agent, and deliver the loan register and all other records pertaining to the ABL Priority Claims to the Replacement Agent and otherwise take such actions as may be reasonably appropriate to effect an orderly transition to the Replacement Agent. Upon the consummation of the purchase of the ABL Priority Claims pursuant to this Section 6.8, the ABL Agent (and all other agents under the ABL Credit Agreement) shall be deemed to have resigned as an “agent” or “administrative agent” and “collateral agent” (or analogous capacity) for the ABL Lenders under the ABL Loan Documents, the ABL swingline lender shall be deemed to have resigned as ABL swingline lender (or analogous capacity) and

 

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each of the ABL issuing lenders shall be deemed to have resigned as an ABL issuing lender (or analogous capacity) with respect to the issuance of any new letters of credit; provided that the ABL Agent (and all other agents under the ABL Credit Agreement) shall be entitled to all of the rights and benefits of a former “agent”, “administrative agent” or “collateral agent” (or analogous capacity), the ABL swingline lender shall be entitled to all of the rights and benefits of a swingline lender (or analogous capacity) for any periods during which it served as the swingline lender and each of the ABL issuing lenders shall be entitled to all of the rights and benefits of an issuing lender with respect to any outstanding letters of credit issued by it and for all periods during which it serves as an issuing lender, in each instance under the ABL Credit Agreement.

(e) Notwithstanding the foregoing purchase of the ABL Priority Claims by the Purchasing Creditors, the ABL Lenders shall retain those contingent indemnification obligations and other obligations under the ABL Loan Documents which by their express terms would survive any repayment of the ABL Priority Claims pursuant to this Section 6.8.

Section 7. Reliance; Waivers; etc.

7.1. Reliance . The consent by the First Priority Lenders to the execution and delivery of the Second Priority Documents to which the First Priority Lenders have consented and all loans and other extensions of credit made or deemed made on and after the date hereof by the First Priority Lenders to the Borrower or any Subsidiary shall be deemed to have been given and made in reliance upon this Agreement. The Second Priority Agent, on behalf of itself and each applicable Second Priority Lender, acknowledges that it and the applicable Second Priority Lenders are not entitled to rely on any credit decision or other decisions made by the First Lien Agent or any First Priority Lender in taking or not taking any action under the applicable Second Priority Document or this Agreement.

7.2. No Warranties or Liability . Except as set forth in Section 8.15, neither the First Priority Agent nor any First Priority Lender shall have been deemed to have made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the First Priority Documents, the ownership of any Common Collateral or the perfection or priority of any Liens thereon. The First Priority Lenders will be entitled to manage and supervise their respective loans and extensions of credit under the First Priority Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the First Priority Lenders may manage their loans and extensions of credit without regard to any rights or interests that any Second Priority Agent or any of the Second Priority Lenders have in the Common Collateral or otherwise, except as otherwise provided in this Agreement. Neither the First Priority Agent nor any First Priority Lender shall have any duty to any Second Priority Agent or any Second Priority Lender to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Borrower or any Subsidiary thereof (including the Second Priority Documents), regardless of any knowledge thereof that they may have or be charged with. Except as expressly set forth in this Agreement, the First Priority Agent, the First Priority Lenders, the Second Priority Agent and the Second Priority Lenders have not otherwise made to each other, nor do they hereby make to each other, any warranties, express or implied, nor do they assume any liability to each

 

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other with respect to (a) the enforceability, validity, value or collectibility of any of the First Priority Claims, the Second Priority Claims or any guarantee or security which may have been granted to any of them in connection therewith, (b) the Borrower’s title to or right to transfer any of the Common Collateral or (c) any other matter except as expressly set forth in this Agreement.

7.3. Obligations Unconditional . All rights, interests, agreements and obligations of the First Lien Agent and the First Priority Lenders, and the Second Priority Agent and the Second Priority Lenders, respectively, hereunder shall remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any First Priority Documents or any Second Priority Documents;

(b) any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Priority Claims or Second Priority Claims, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of the ABL Credit Agreement or any other ABL Loan Document or of the terms of the Term Loan/Cash Flow Revolver Agreement or any other Term Loan/Cash Flow Revolver Loan Document;

(c) any exchange of any security interest in any Common Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Priority Claims or Second Priority Claims or any guarantee thereof;

(d) the commencement of any Insolvency or Liquidation Proceeding in respect of the Borrower or any other Grantor; or

(e) any other circumstances that otherwise might constitute a defense available to, or a discharge of, the Borrower or any other Grantor in respect of the First Priority Claims, or of any Second Priority Agent or any Second Priority Lenders in respect of this Agreement.

Section 8. Miscellaneous.

8.1. Conflicts . Subject to Section 8.19, in the event of any conflict between the provisions of this Agreement and the provisions of any ABL Loan Document or any Term Loan/Cash Flow Revolver Loan Document, the provisions of this Agreement shall govern.

8.2. Term of this Agreement; Severability . Subject to Section 5.7 and Section 6.4, (i) if no Event of Default has occurred and is continuing under either Credit Agreement (as such term is defined in the applicable Credit Agreement), this Agreement shall terminate upon the first to occur of the Discharge of ABL Priority Claims or the Discharge of Term Priority Claims and (ii) if an Event of Default has occurred and is continuing under either Credit Agreement (as such term is defined in the applicable Credit Agreement), this Agreement shall terminate upon the Discharge of ABL Priority Claims, the Discharge of Term Priority Claims and the payment in full in cash of all ABL Other Claims and Term Loan/Cash Flow Revolver Other Claims (other than, in each case, indemnification and contingent obligations for

 

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which no claim has been made). This is a continuing agreement of lien subordination and the First Priority Lenders may continue, at any time and without notice to the Second Priority Agent or any Second Priority Lender, to extend credit and other financial accommodations and lend monies to or for the benefit of the Borrower or any other Grantor constituting First Priority Claims in reliance hereon. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

8.3. Amendments; Waivers . No amendment, modification or waiver of any of the provisions of this Agreement by the ABL Agent or the Term Loan/Cash Flow Revolver Agent shall be deemed to be made unless the same shall be in writing signed on behalf of the party making the same or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. The Borrower and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights or obligations are affected.

8.4. Information Concerning Financial Condition of the Borrower and the Subsidiaries . Neither the First Priority Agent nor any First Priority Lender shall have any obligation to the Second Priority Agent or any Second Priority Lender to keep the Second Priority Agent or any Second Priority Lender informed of, and the Second Priority Agent and the Second Priority Lenders shall not be entitled to rely on the First Priority Agent or the First Priority Lenders with respect to, (a) the financial condition of the Borrower and the Subsidiaries and all endorsers and/or guarantors of the First Priority Claims or the Second Priority Claims and (b) all other circumstances bearing upon the risk of nonpayment of the First Priority Claims or the Second Priority Claims. The ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have no duty to advise any other party hereunder of information known to it or them regarding such condition or any such circumstances or otherwise. In the event that the ABL Agent, any ABL Lender, the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to any other party, it or they shall be under no obligation (w) to make, and the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided, (x) to provide any additional information or to provide any such information on any subsequent occasion, (y) to undertake any investigation or (z) to disclose any information that, pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential. Nothing in this section shall amend, modify or otherwise affect the confidentiality obligations of the ABL Agent and the ABL Lenders under the ABL Credit Agreement and of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders under the Term Loan/Cash Flow Revolver Agreement.

 

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8.5. Subrogation . The Term Loan/Cash Flow Revolver Agent, for and on behalf of itself and the Term Loan/Cash Flow Revolver Lenders, agrees that no payment to the ABL Agent or any ABL Lender pursuant to the provisions of this Agreement shall entitle the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender to exercise any rights of subrogation in respect thereof until the Discharge of ABL Priority Claims shall have occurred. Following the Discharge of ABL Priority Claims, the ABL Agent agrees to execute such documents, agreements, and instruments as the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the ABL Priority Claims resulting from payments to the ABL Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the ABL Agent are paid by such Person upon request for payment thereof. The ABL Agent, for and on behalf of itself and the ABL Lenders, agrees that no payment to the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender pursuant to the provisions of this Agreement shall entitle the ABL Agent or any ABL Lender to exercise any rights of subrogation in respect thereof until the Discharge of Term Priority Claims shall have occurred. Following the Discharge of Term Priority Claims, the Term Loan/Cash Flow Revolver Agent agrees to execute such documents, agreements, and instruments as the ABL Agent or any ABL Lender may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the Term Loan/Cash Flow Revolver Claims resulting from payments to the Term Loan/Cash Flow Revolver Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the Term Loan/Cash Flow Revolver Agent are paid by such Person upon request for payment thereof.

8.6. Application of Payments .

(a) Except as otherwise provided herein, all payments received by the ABL Lenders may be applied, reversed and reapplied, in whole or in part, to such part of the ABL Priority Claims as the ABL Lenders, in their sole discretion, deem appropriate, consistent with the terms of the ABL Loan Documents. Except as otherwise provided herein, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, assents to any such extension or postponement of the time of payment of the ABL Priority Claims or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security that may at any time secure any part of the ABL Priority Claims and to the addition or release of any other Person primarily or secondarily liable therefor.

(b) Except as otherwise provided herein, all payments received by the Term Loan/Cash Flow Revolver Lenders may be applied, reversed and reapplied, in whole or in part, to such part of the Term Loan/Cash Flow Revolver Priority Claims as the Term Loan/Cash Flow Revolver Lenders, in their sole discretion, deem appropriate, consistent with the terms of the Term Loan/Cash Flow Revolver Loan Documents. Except as otherwise provided herein, the ABL Agent, on behalf of itself and each ABL Lender, assents to any such extension or postponement of the time of payment of the Term Loan/Cash Flow Revolver Priority Claims or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security that may at any time secure any part of the Term Loan/Cash Flow Revolver Priority Claims and to the addition or release of any other Person primarily or secondarily liable therefor.

 

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8.7. Consent to Jurisdiction; Waivers . Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any state or federal court located in New York, New York (the “ New York Courts ”), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Term Loan/Cash Flow Revolver Loan Document or ABL Loan Document, or for recognition or enforcement of any judgment. Each of the parties hereto irrevocably consents that all service of process may be made by registered mail directed to such party as provided in Section 8.8 for such party. Service so made shall be deemed to be completed three days after the same shall be posted as aforesaid. Each of the parties hereto irrevocably and unconditionally waives, to the extent it may legally and effectively do so, any objection to any action instituted hereunder in any such court based on forum non conveniens, and any objection to the venue of any action instituted hereunder in any such court. Each of the parties hereto irrevocably and unconditionally waives, to the extent it may legally and effectively do so, any right it may have to trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Agreement, or any course of conduct, course of dealing, verbal or written statement or action of any party hereto in connection with the subject matter hereof.

8.8. Notices . All notices to the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders permitted or required under this Agreement may be sent to the ABL Agent or the Term Loan/Cash Flow Revolver Agent as provided in the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement, the other relevant ABL Loan Documents or the other relevant Term Loan/Cash Flow Revolver Loan Documents, as applicable. Unless otherwise specifically provided herein or therein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, electronically mailed or sent by courier service or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or electronic mail or upon receipt via U.S. mail (registered or certified, with postage prepaid and properly addressed). For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties. Each First Priority Agent hereby agrees to promptly notify each Second Priority Agent upon payment in full in cash of all Indebtedness under the applicable First Priority Documents (other than indemnification and contingent obligations for which no claim has been made).

8.9. Further Assurances . The ABL Agent, on behalf of itself and each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that each of them shall take such further action and shall execute and deliver to the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders such additional documents and instruments (in recordable form, if requested) as the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders may reasonably request, at the expense of the Borrower, to effectuate the terms of and the Lien priorities contemplated by this Agreement.

8.10. Governing Law . This Agreement shall be construed in accordance with and governed by the laws of the State of New York.

 

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8.11. No Third Party Beneficiaries; Binding on Successors and Assigns . This Agreement shall be binding upon the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent, the Term Loan/Cash Flow Revolver Lenders, the Borrower, the Borrower’s Subsidiaries party hereto and their respective permitted successors and assigns. No other Person shall have or be entitled to assert rights or benefits hereunder. Without limiting the generality of the foregoing (a) any person to whom a Lender assigns or otherwise transfers all or any portion of the ABL Claims or the Term Loan/Cash Flow Revolver Claims, as applicable, in accordance with the applicable ABL Loan Documents or Term Loan/Cash Flow Revolver Loan Documents, as the case may be, shall become vested with all the rights and obligations in respect thereof granted to such Lenders, without any further consent or action of the other Lenders and (b) any counterparty to a Hedging Agreement or an agreement relating to Cash Management Obligations (as such terms are defined in the ABL Credit Agreement or the Term Loan/Cash Flow Revolver Agreement, as applicable) that accepts the benefit of any Common Collateral in accordance with the ABL Collateral Documents or the Term Loan/Cash Flow Revolver Collateral Documents, as applicable, shall be deemed to have agreed to be bound by the terms of this Agreement.

8.12. Specific Performance . Each First Priority Agent may demand specific performance of this Agreement. Each Second Priority Agent, on behalf of itself and each Second Priority Lender, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action that may be brought by the First Priority Agent.

8.13. Section Titles . The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Agreement.

8.14. Counterparts . This Agreement may be executed in one or more counterparts, including by means of facsimile, each of which shall be an original and all of which shall together constitute one and the same document. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other customary means of electronic transmission (e.g., “PDF”) shall be as effective as delivery of a manually executed counterpart hereof.

8.15. Authorization . By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement. The ABL Agent represents and warrants that this Agreement is binding upon the ABL Lenders. The Term Loan/Cash Flow Revolver Agent represents and warrants that this Agreement is binding upon the Term Loan/Cash Flow Revolver Lenders.

8.16. Effectiveness . This Agreement shall become effective when executed and delivered by the parties hereto. This Agreement shall be effective both before and after the commencement of any Insolvency or Liquidation Proceeding. All references to the Borrower or any other Grantor shall include the Borrower or any other Grantor as debtor and debtor-in-possession and any receiver or trustee for the Borrower or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding.

 

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8.17. ABL Agent and Term Loan/Cash Flow Revolver Agent . It is understood and agreed that (a) UBS is entering into this Agreement in its capacity as collateral agent under the ABL Credit Agreement and the provisions of Article VIII of the ABL Credit Agreement applicable to UBS as collateral agent thereunder shall also apply to UBS as ABL Agent hereunder and (b) Credit Suisse is entering in this Agreement in its capacity as collateral agent under the Term Loan/Cash Flow Revolver Agreement and the provisions of Article VIII of the Term Loan/Cash Flow Revolver Agreement applicable to Credit Suisse as collateral agent thereunder shall also apply to Credit Suisse as Term Loan/Cash Flow Revolver Agent hereunder.

8.18. Relative Rights . Notwithstanding anything in this Agreement to the contrary (except to the extent contemplated by Section 5.3(d) or (e)), nothing in this Agreement is intended to or will (a) amend, waive or otherwise modify the provisions of the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other ABL Loan Document or Term Loan/Cash Flow Revolver Loan Documents entered into in connection with the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other ABL Loan Document or Term Loan/Cash Flow Revolver Loan Document or permit the Borrower or any Subsidiary to take any action, or fail to take any action, to the extent such action or failure would otherwise constitute a breach of, or default under, the ABL Credit Agreement or any other ABL Loan Documents entered into in connection with the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other Term Loan/Cash Flow Revolver Loan Documents entered into in connection with the Term Loan/Cash Flow Revolver Loan Documents, (b) change the relative priorities of the ABL Priority Claims, the ABL Other Claims or the Liens granted under the ABL Loan Documents on the Common Collateral (or any other assets) as among the ABL Lenders, or change the relative priorities of the Term Loan/Cash Flow Revolver Priority Claims, the Term Loan/Cash Flow Revolver Other Claims or the Liens granted under the Term Loan/Cash Flow Revolver Loan Documents on the Common Collateral (or any other assets) as among the Term Loan/Cash Flow Revolver Lenders, (c) otherwise change the relative rights of the ABL Lenders in respect of the Common Collateral as among such ABL Lenders, or the relative rights of the Term Loan/Cash Flow Revolver Lenders in respect of the Common Collateral as among such Term Loan/Cash Flow Revolver Lenders or (d) obligate the Borrower or any Subsidiary to take any action, or fail to take any action, that would otherwise constitute a breach of, or default under, the ABL Credit Agreement or any other ABL Loan Document entered into in connection with the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other Term Loan/Cash Flow Revolver Loan Documents entered into in connection with the Term Loan/Cash Flow Revolver Agreement. None of the Borrower or any Subsidiary shall have any rights hereunder except as expressly set forth herein (including as set forth in Section 8.3).

8.19. Supplements . Upon the execution by any Subsidiary of the Borrower of a supplement hereto in form and substance satisfactory to the ABL Agent and the Term Loan/Cash Flow Revolver Agent, such Subsidiary shall be a party to this Agreement and shall be bound by the provisions hereof to the same extent as the Borrower and each other Grantor are so bound.

 

46


QUORUM HEALTH CORPORATION,
By:  

 

  Name:
  Title:
Address:

Signature Page to Intercreditor Agreement


Anna Hospital Corporation   Marion Hospital Corporation
Big Bend Hospital Corporation   Massillon Community Health System LLC
Big Spring Hospital Corporation   Massillon Health System LLC
Blue Island Hospital Company, LLC   Massillon Holdings, LLC
Blue Island Illinois Holdings, LLC   McKenzie Tennessee Hospital Company, LLC
Blue Ridge Georgia Holdings, LLC   MMC of Nevada, LLC
Centre Hospital Corporation   Monroe HMA, LLC
Clinton Hospital Corporation   MWMC Holdings, LLC
CSRA Holdings, LLC   National Healthcare of Mt. Vernon, Inc.
Deming Hospital Corporation   Phillips Hospital Corporation
DHSC, LLC   QHC California Holdings, LLC
Evanston Hospital Corporation   QHG of Massillon, Inc.
Forrest City Arkansas Hospital Company, LLC   Quorum Health Investment Company, LLC
Forrest City Hospital Corporation   Quorum Health Resources, LLC
Fort Payne Hospital Corporation   Red Bud Hospital Corporation
Galesburg Hospital Corporation   Red Bud Illinois Hospital Company, LLC
Granite City Hospital Corporation   San Miguel Hospital Corporation
Granite City Illinois Hospital Company, LLC   Sunbury Hospital Company, LLC
Greenville Hospital Corporation   Tooele Hospital Corporation
Hamlet H.M.A., LLC   Triad of Oregon, LLC
Hospital of Barstow, Inc.   Watsonville Hospital Corporation
Hospital of Louisa, Inc.   Waukegan Hospital Corporation
Jackson Hospital Corporation   Waukegan Illinois Hospital Company, LLC
Lexington Hospital Corporation   Williamston Hospital Corporation
  Winder HMA, LLC
    On behalf of each of the above entities:
    by  

 

      Name:   Michael J. Culotta
      Title:   President

Signature Page to Intercreditor Agreement


CREDIT SUISSE AG, CAYMAN

ISLANDS BRANCH, as Term Loan/Cash

Flow Revolver Agent

By:  

 

  Name:
  Title:
By:  

 

  Name:
  Title:
Address:

Signature Page to Intercreditor Agreement


UBS AG, STAMFORD BRANCH,
as ABL Agent
By:  

 

  Name:
  Title:
By:  

 

  Name:
  Title:
Address:
600 Washington Boulevard
Stamford, Connecticut 06901
Attention: DL – UBS Agency
Telecopier: (203) 719-3888
Email: DL-UBSAgency@ubs.com
with copies to:
1285 Avenue of the Americas
New York, New York 10019
Attention: Alfred Scoyni
Email: Alfred.scoyni@ubs.com
and
1285 Avenue of the Americas
New York, New York 10019
Attention: Kristine Shryock
Email: Kristine.Shryock@ubs.com

Signature Page to Intercreditor Agreement


SCHEDULE I

Subsidiary Guarantors

 

Anna Hospital Corporation   Marion Hospital Corporation
Big Bend Hospital Corporation   Massillon Community Health System LLC
Big Spring Hospital Corporation   Massillon Health System LLC
Blue Island Hospital Company, LLC   Massillon Holdings, LLC
Blue Island Illinois Holdings, LLC   McKenzie Tennessee Hospital Company, LLC
Blue Ridge Georgia Holdings, LLC   MMC of Nevada, LLC
Centre Hospital Corporation   Monroe HMA, LLC
Clinton Hospital Corporation   MWMC Holdings, LLC
CSRA Holdings, LLC   National Healthcare of Mt. Vernon, Inc.
Deming Hospital Corporation   Phillips Hospital Corporation
DHSC, LLC   QHC California Holdings, LLC
Evanston Hospital Corporation   QHG of Massillon, Inc.
Forrest City Arkansas Hospital Company, LLC   Quorum Health Investment Company, LLC
Forrest City Hospital Corporation   Quorum Health Resources, LLC
Fort Payne Hospital Corporation   Red Bud Hospital Corporation
Galesburg Hospital Corporation   Red Bud Illinois Hospital Company, LLC
Granite City Hospital Corporation   San Miguel Hospital Corporation
Granite City Illinois Hospital Company, LLC   Sunbury Hospital Company, LLC
Greenville Hospital Corporation   Tooele Hospital Corporation
Hamlet H.M.A., LLC   Triad of Oregon, LLC
Hospital of Barstow, Inc.   Watsonville Hospital Corporation
Hospital of Louisa, Inc.   Waukegan Hospital Corporation
Jackson Hospital Corporation   Waukegan Illinois Hospital Company, LLC
Lexington Hospital Corporation   Williamston Hospital Corporation
  Winder HMA, LLC


SCHEDULE II

Provision for Credit Agreements

“Reference is made to the ABL Intercreditor Agreement dated as of April [29], 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto, UBS AG, STAMFORD BRANCH, as ABL Agent (as defined therein), and Credit Suisse AG, Cayman Islands Branch, as Term Loan/Cash Flow Revolver Agent (as defined therein). Each Lender hereunder (a) consents to the subordination of Liens provided for in the ABL Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement and (c) authorizes and instructs the [ABL Agent] [Term Loan/Cash Flow Revolver Agent] to enter into the ABL Intercreditor Agreement as [ABL Agent] [Term Loan/Cash Flow Revolver Agent] and on behalf of such Lender. The foregoing provisions are intended as an inducement to the Lenders under the Credit Agreement to extend credit and such Lenders are intended third party beneficiaries of such provisions and the provisions of the ABL Intercreditor Agreement.”

Provision for Security Documents

“Reference is made to the ABL Intercreditor Agreement dated as of April [29], 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto, UBS AG, STAMFORD BRANCH, as ABL Agent (as defined therein), and Credit Suisse AG, Cayman Islands Branch, as Term Loan/Cash Flow Revolver Agent (as defined therein). Notwithstanding anything herein to the contrary, the lien and security interest granted to the [Collateral Agent], for the benefit of the secured parties hereunder, pursuant to this Agreement and the exercise of any right or remedy by the [Collateral Agent] and the other secured parties hereunder are subject to the provisions of the ABL Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of the ABL Intercreditor Agreement and this Agreement, the provisions of the ABL Intercreditor Agreement shall control.”


EXHIBIT B

FORM OF

QUORUM HEALTH CORPORATION

ADMINISTRATIVE QUESTIONNAIRE

Please accurately complete the following information and return via Fax to the attention of Agency Administration at Credit Suisse AG as soon as possible, at Fax No. (212) 322-2291.

 

LENDER LEGAL NAME TO APPEAR IN DOCUMENTATION:

GENERAL INFORMATION - DOMESTIC LENDING OFFICE:

 

Institution Name:  

 

Street Address:  

 

City, State, Zip Code:  

 

GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:

 

Institution Name:  

 

Street Address:  

 

City, State, Zip Code:  

 

POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:

CREDIT CONTACTS:

 

Primary Contact:  

 

Street Address:  

 

City, State, Zip Code:  

 

Phone Number:  

 

Fax Number:  

 

Backup Contact:  

 

Street Address:  

 

City, State, Zip Code:  

 

Phone Number:  

 

Fax Number:  

 


TAX WITHHOLDING:

 

United States Person   Y   N  
(as defined in Section 7701(a)(30) of the Code)      
Enclose Form W-8 or W-9, as applicable      
Tax ID Number                                                    

POST-CLOSING, ONGOING ADMIN. CONTACTS / NOTIFICATION METHODS:

ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.

 

Contact:  

 

Street Address:  

 

City, State, Zip Code:  

 

Phone Number:  

 

Fax Number:  

 

PAYMENT INSTRUCTIONS:

 

Name of Bank to which funds are to be transferred:  

 

 

Routing Transit/ABA number of Bank to which funds are to be transferred:  

 

Name of Account, if applicable:  

 

Account Number:  

 

Additional information:  

 

 

MAILINGS:

Please specify the person to whom the Borrower should send financial and compliance information received subsequent to the closing (if different from primary credit contact):

 

Name:  

 

Street Address:  

 

City, State, Zip Code:  

 

 

2


It is very important that all the above information be accurately completed and that this questionnaire be returned to the person specified in the introductory paragraph of this questionnaire as soon as possible. If there is someone other than yourself who should receive this questionnaire, please notify us of that person’s name and Fax number and we will Fax a copy of the questionnaire. If you have any questions about this form, please call Agency Administration at Credit Suisse AG.

 

3


EXHIBIT C

FORM OF

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Credit Agreement dated as of April [●], 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Quorum Health Corporation, a Delaware corporation (the “ Borrower ”), the Lenders (as defined in Article I of the Credit Agreement), and Credit Suisse AG, Cayman Islands Branch, as administrative agent (in such capacity, the “ Administrative Agent ”) and as collateral agent for the Lenders. Terms defined in the Credit Agreement are used herein with the same meanings.

1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below (but not prior to the registration of the information contained herein in the Register pursuant to Section 9.04(d) of the Credit Agreement), the interests set forth below (the “ Assigned Interest ”) in the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the amounts and percentages set forth below of (i) the Commitments of the Assignor on the Effective Date and (ii) the Loans owing to the Assignor which are outstanding on the Effective Date. Each of the Assignor and the Assignee hereby makes and agrees to be bound by all the representations, warranties and agreements set forth in Section 9.04(c) of the Credit Agreement, a copy of which has been received by each such party. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

2. This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if the Assignee is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, any forms referred to in Section 2.20(e) of the Credit Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is not already a Lender under the Credit Agreement, a completed Administrative Questionnaire and (iii) unless waived or reduced in the sole discretion of the Administrative Agent, a processing and recordation fee of $3,500. 1

3. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York.

 

1   Such fee may be waived or reduced in the sole discretion of the Administrative Agent and will not apply in the case of an assignment by a Lender to an Approved Fund that is managed by such Lender or an Affiliate of such Lender or by an entity or an Affiliate of an entity that administers or manages such Lender.


Date of Assignment:

Legal Name of Assignor (“ Assignor ”):

Legal Name of Assignee (“ Assignee ”):

Assignee’s Address for Notices:

Effective Date of Assignment (“ Effective Date ”):

 

Class of Loans/Commitments Assigned

   Principal
Amount Assigned
   Percentage of Loans/Commitments
of the applicable Class Assigned
(set forth, to at least 8 decimals, as
a percentage of the aggregate
Loans and Commitments, of the
applicable Class, of all Lenders)
 
   $                      
   $                      

[Remainder of Page Intentionally Left Blank]

 

2


Accepted

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Administrative Agent,
  by:  

 

    Name:
    Title:
   

 

    Name:
    Title:
[                    ], as Issuing Bank 2
  by:  

 

    Name:
    Title:
[QUORUM HEALTH CORPORATION],
  by:  

 

    Name:
    Title: ] 3

 

2   Consent of Issuing Bank only required in the case of an assignment of a Revolving Credit Commitment.
3   Consent of the Borrower is only required in the case of an assignment of a Revolving Credit Commitment; provided , that the consent of the Borrower shall not be required for any assignment (a) made to another Lender, an Affiliate of a Lender or an Approved Fund of a Lender or (b) after the occurrence and during the continuance of an Event of Default referred to in paragraph (b), (c), (g) or (h) of Article VII of the Credit Agreement.

 

3


The terms set forth above are hereby agreed to:
                    , as Assignor,
by:  

 

  Name:
  Title:
                    , as Assignee,
by:  

 

  Name:
  Title:

 

4


EXHIBIT D

FORM OF

BORROWING REQUEST

Credit Suisse AG, Cayman Islands Branch,

as Administrative Agent for

    the Lenders referred to below,

Eleven Madison Avenue

New York, New York 10010

Attention: Agency Group

[DATE] 1

Ladies and Gentlemen:

The undersigned, Quorum Healthcare Corporation, a Delaware corporation, (the “ Borrower ”), refers to the Credit Agreement dated as of April [●], 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the lenders from time to time party thereto (the “ Lenders ”) and Credit Suisse AG, Cayman Islands Branch, as administrative agent (in such capacity, the “ Administrative Agent ”) and collateral agent for the Lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives the Administrative Agent notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in connection therewith sets forth below the terms on which such Borrowing is requested to be made:

 

(A)    Type of Borrowing 2  

 

  
(B)    Date of Borrowing 3  

 

  
(C)    Account Number and Location  

 

  
(D)    Principal Amount of Borrowing  

 

  
(E)    Interest Period 4  

 

  

 

1   The Administrative Agent must be notified irrevocably by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon) (New York City time), three Business Days before a proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of a proposed Borrowing, in each case to be confirmed promptly by hand delivery or fax of a Borrowing Request to the Administrative Agent.
2   Specify whether such Borrowing is to be a Term Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing.
3   Date of Borrowing must be a Business Day.
4   If such Borrowing is to be a Eurodollar Borrowing, specify the Interest Period with respect thereto.


The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation of such Loan) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this paragraph being called a “ Breakage Event ”) or (b) any default in the making of any payment or prepayment of any Eurodollar Loan required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this paragraph shall be delivered to the Borrower and shall be conclusive absent manifest error.

The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, on the date of this Borrowing Request and on the date of the related Borrowing, the conditions to lending specified in paragraphs (b) and (c) of Section 4.01 of the Credit Agreement have been satisfied.

 

QUORUM HEALTH CORPORATION,
  by  

 

    Name:
    Title:

 

2


EXHIBIT E

GUARANTEE AND COLLATERAL AGREEMENT

dated as of

April 29, 2016

among

QUORUM HEALTH CORPORATION,

as Borrower,

the Subsidiaries of the Borrower

from time to time party hereto

and

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

as Collateral Agent

Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are expressly subject in all respects to the terms of the ABL Intercreditor Agreement and any Pari Passu Intercreditor Agreement (each as defined in, and entered into in accordance with the provisions of, the Term Loan Credit Agreement referred to herein). In the event of any conflict or inconsistency between the provisions of this Agreement and the terms of the ABL Intercreditor Agreement or any Pari Passu Intercreditor Agreement, the terms of the ABL Intercreditor Agreement or such Pari Passu Intercreditor Agreement shall control.

 

 

[CS&M Ref. No. 7865-194]


TABLE OF CONTENTS

 

         Page  
ARTICLE I   
Definitions   

SECTION 1.01.

  Term Loan Credit Agreement      2   

SECTION 1.02.

  Other Defined Terms      2   
ARTICLE II   
Guarantee   

SECTION 2.01.

  Guarantee      8   

SECTION 2.02.

  Guarantee of Payment      9   

SECTION 2.03.

  No Limitations, Etc.      9   

SECTION 2.04.

  Reinstatement      10   

SECTION 2.05.

  Agreement To Pay; Subrogation      10   

SECTION 2.06.

  Information      10   
ARTICLE III   
Pledge of Securities   

SECTION 3.01.

  Pledge      10   

SECTION 3.02.

  Delivery of the Pledged Collateral      12   

SECTION 3.03.

  Representations, Warranties and Covenants      12   

SECTION 3.04.

  Certification of Limited Liability Company Interests and Limited Partnership Interests      14   

SECTION 3.05.

  Registration in Nominee Name; Denominations      14   

SECTION 3.06.

  Voting Rights; Dividends and Interest, Etc.      14   
ARTICLE IV   
Security Interests in Personal Property   

SECTION 4.01.

  Security Interest      17   

SECTION 4.02.

  Representations and Warranties      19   

SECTION 4.03.

  Covenants      21   

SECTION 4.04.

  Other Actions      25   

SECTION 4.05.

  Covenants Regarding Patent, Trademark and Copyright Collateral      27   


ARTICLE V
Remedies
SECTION 5.01.   Remedies Upon Default    29
SECTION 5.02.   Application of Proceeds    30
SECTION 5.03.   Grant of License to Use Intellectual Property    31
SECTION 5.04.   Securities Act, Etc.    32
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01.   Indemnity and Subrogation    33
SECTION 6.02.   Contribution and Subrogation    33
SECTION 6.03.   Subordination    33
ARTICLE VII
Miscellaneous
SECTION 7.01.   Notices    34
SECTION 7.02.   Security Interest Absolute    34
SECTION 7.03.   Survival of Agreement    34
SECTION 7.04.   Binding Effect; Several Agreement    35
SECTION 7.05.   Successors and Assigns    35
SECTION 7.06.   Collateral Agent’s Fees and Expenses; Indemnification    35
SECTION 7.07.   Collateral Agent Appointed Attorney-in-Fact    36
SECTION 7.08.   Applicable Law    37
SECTION 7.09.   Waivers; Amendment    37
SECTION 7.10.   WAIVER OF JURY TRIAL    38
SECTION 7.11.   Severability    39
SECTION 7.12.   Counterparts    39
SECTION 7.13.   Headings    39
SECTION 7.14.   Jurisdiction; Consent to Service of Process    39
SECTION 7.15.   Termination or Release    40
SECTION 7.16.   Additional Subsidiaries    41
SECTION 7.17.   Right of Setoff    41
SECTION 7.18.   ABL INTERCREDITOR AGREEMENT GOVERNS    42

 

ii


Schedules

 

Schedule I    Exact Legal Names and Other Information
Schedule II    Guarantors
Schedule III    Equity Interests; Pledged Debt Securities
Schedule IV    Debt Instruments; Advances
Schedule V    Intellectual Property
Schedule VI    Mortgage Filings
Schedule VII    Commercial Tort Claims

Exhibits

 

Exhibit A    Form of Supplement

 

iii


GUARANTEE AND COLLATERAL AGREEMENT dated as of April 29, 2016 (this “ Agreement ”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “ Borrower ”), the Subsidiaries from time to time party hereto and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (“ Credit Suisse ”), as collateral agent (in such capacity, the “ Collateral Agent ”).

PRELIMINARY STATEMENT

Reference is made to (a) the Credit Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Credit Agreement” ), among the Borrower, the lenders from time to time party thereto (each, a “ Lender ” and collectively, the “ Lenders ”) and Credit Suisse AG, Cayman Islands Branch, as administrative agent (in such capacity, the “ Administrative Agent ”) and Collateral Agent, (b) the ABL Facility Credit Agreement (such term and each other capitalized term used but not defined in this preliminary statement having the meaning given or ascribed to it in Section 1.02 or the Term Loan Credit Agreement, as the case may be), (c) the ABL Collateral Agreement (as defined in the ABL Intercreditor Agreement), (d) the ABL Intercreditor Agreement, (e) any Pari Passu Agreements and (f) any Pari Passu Intercreditor Agreements.

The Lenders and the Issuing Bank have agreed to extend credit to the Borrower pursuant to, and upon the terms and conditions specified in, the Term Loan Credit Agreement. The obligations of the Lenders and the Issuing Bank to extend credit to the Borrower are conditioned upon, among other things, the execution and delivery of this Agreement by the Borrower and each Guarantor.

Concurrent with the execution and delivery of this Agreement, the Borrower and/or one or more of the Guarantors will enter into the ABL Facility Credit Agreement, the ABL Collateral Agreement and the ABL Intercreditor Agreement. Following the execution and delivery of the ABL Facility Credit Agreement, the ABL Collateral Agreement and the ABL Intercreditor Agreement, this Agreement shall be subject to the ABL Intercreditor Agreement.

Additionally, to the extent permitted by the Term Loan Credit Agreement, the Grantors may from time to time enter into Pari Passu Agreements, and the Pari Passu Debt Obligations may be secured hereunder on a pari passu basis with the Bank Loan Obligations. Following the incurrence by any Grantor of any Pari Passu Debt, this Agreement shall be subject to any Pari Passu Intercreditor Agreement then in effect.

Each Guarantor is an Affiliate of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Term Loan Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders and the Issuing Bank to extend such credit. Accordingly, the parties hereto agree as follows:


ARTICLE I

Definitions

SECTION 1.01. Term Loan Credit Agreement. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings set forth in the Term Loan Credit Agreement. All capitalized terms defined in the New York UCC (as such term is defined herein) and not defined in this Agreement have the meanings specified therein. All references to the Uniform Commercial Code shall mean the New York UCC; provided that if, by reason of mandatory provisions of law, the perfection, the effect of perfection or non-perfection or priority of a security interest is governed by the personal property security laws of any jurisdiction other than New York, “UCC” shall mean those personal property security laws as in effect in such other jurisdiction for the purposes of the provisions hereof relating to such perfection or priority and for the definitions related to such provisions.

(b) The rules of construction specified in Section 1.02 of the Term Loan Credit Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

ABL Collateral Agent ” shall have the meaning assigned to the term “ABL Agent” in the ABL Intercreditor Agreement.

Accounts Receivable ” shall mean all Accounts, all Payment Intangibles and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.

Administrative Agent ” shall have the meaning assigned to such term in the preliminary statement.

Article 9 Collateral ” shall have the meaning assigned to such term in Section 4.01.

Bank Loan Obligations ” shall mean (a) the Loan Document Obligations, (b) the due and punctual payment and performance of all obligations of each Loan Party (or, in the case of a Cash Management Arrangement, a Subsidiary of a Loan Party) under each Cash Management Arrangement that (i) is in effect on the Closing Date with a counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (ii) is entered into after the Closing Date with any counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Cash Management Arrangement is entered into; provided , however , that the aggregate amount of obligations

 

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under Cash Management Arrangements that shall constitute “Bank Loan Obligations” hereunder shall not exceed $30,000,000 at any time (collectively, “ Secured Cash Management Obligations ”); provided further that in the event that the sum of the aggregate amount of Secured Cash Management Obligations exceeds $30,000,000, the portion of the Secured Cash Management Obligations included in “Bank Loan Obligations” shall be determined based on the chronological order of the entry into the Cash Management Arrangements giving rise to such Secured Cash Management Obligations) and (c) the due and punctual payment and performance of all obligations of each Loan Party under each Hedging Agreement that (i) is in effect on the Closing Date with a counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (ii) is entered into after the Closing Date with any counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement is entered into (collectively, “ Secured Hedging Obligations ”); provided, however, none of the terms “Bank Loan Obligations” or “Secured Hedging Obligations” shall create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support) any Excluded Swap Obligations of such Guarantor.

Bank Loan Secured Parties ” shall mean (a) the Administrative Agent, (b) the Collateral Agent, (c) any Issuing Bank, (d) the Lenders, (e) each counterparty to any Hedging Agreement or Cash Management Arrangement with a Loan Party or, in the case of a Cash Management Arrangement, a Subsidiary of a Loan Party, that either (i) is in effect on the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (ii) is entered into after the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement or Cash Management Arrangement is entered into, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and permitted assigns of each of the foregoing.

Borrower ” shall have the meaning assigned to such term in the preamble.

Cash Management Arrangements ” shall mean overdraft protections, netting services and similar arrangements arising from treasury, depository and cash management services, any automated clearing house transfers of funds or any credit card or similar services, in each case in the ordinary course of business.

Collateral ” shall mean the Article 9 Collateral and the Pledged Collateral.

Collateral Agent ” shall have the meaning assigned to such term in the preamble.

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

 

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Copyright License ” shall mean any written agreement, now or hereafter in effect, granting any right to any third person under any registered copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any registered copyright now or hereafter owned by any third person, and all rights of such Grantor under any such agreement.

Copyrights ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all registered copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any successor office or any similar office in any other country), including those registered and pending copyrights listed on Schedule V.

Discharge of ABL Priority Claims ” shall have the meaning assigned to such term in the ABL Intercreditor Agreement.

Event of Default ” shall mean any Event of Default under and as defined in (a) the Term Loan Credit Agreement or (b) any Pari Passu Agreement, as the context requires, provided that with respect to (b) any notice, lapse of time or other condition precedent to the occurrence of such Event of Default in the relevant instrument shall have been satisfied.

Excluded Swap Obligation ” means, with respect to each Guarantor, any Swap Obligation if, and to the extent that, the Guarantee by such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Guarantor becomes effective with respect to such related Swap Obligation.

Federal Securities Laws ” shall have the meaning assigned to such term in Section 5.04.

General Intangibles ” shall mean all (a) General Intangibles (as defined in the New York UCC) and (b) choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts or Payment Intangibles.

 

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Grantors ” shall mean the Borrower and the Guarantors.

Guarantors ” shall mean (a) the Subsidiaries identified on Schedule II hereto as Guarantors and (b) each other Subsidiary that becomes a party to this Agreement as a Guarantor after the Closing Date.

Indemnified Amount ” has the meaning assigned to such term in Section 6.02.

Intellectual Property ” shall mean all intellectual property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation and registrations, and all additions and improvements to any of the foregoing.

License ” shall mean any Patent License, Trademark License, Copyright License or other license or sublicense agreement relating to Intellectual Property to which any Grantor is a party, including those listed on Schedule V.

“Loan Document Obligations” shall mean (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower under the Term Loan Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations of the Borrower to any of the Bank Loan Secured Parties under the Term Loan Credit Agreement and each of the other Loan Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrower under or pursuant to the Term Loan Credit Agreement and each of the other Loan Documents and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents.

New York UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

 

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Obligations ” shall mean (a) the Bank Loan Obligations and (b) the Pari Passu Debt Obligations; provided, however, the term “Obligations” shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support) any Excluded Swap Obligations of such Guarantor.

Pari Passu Agreement ” shall mean any indenture, credit agreement or other agreement, document or instrument, if any, pursuant to which any Grantor has or will incur, assume or otherwise become liable for, Pari Passu Debt Obligations; provided that, in each case, the Indebtedness and other obligations thereunder have been designated as Pari Passu Debt Obligations pursuant to and in accordance with Section 7.09(c).

Pari Passu Debt Obligations ” shall mean all advances to, and debts, liabilities, obligations, covenants and duties of, any Grantor arising under any Pari Passu Agreement, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), in each case, that have been designated as Pari Passu Debt Obligations pursuant to and in accordance with Section 7.09(c); provided, however, the term “Pari Passu Debt Obligations” shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support) any Excluded Swap Obligations of such Guarantor.

Pari Passu Representative ” shall mean, for any Series of Pari Passu Debt Obligations, the Representative named for such Series in accordance with Section 7.09(c).

Pari Passu Secured Parties ” shall mean (a) the holders of any Pari Passu Debt Obligations and (b) any Pari Passu Representative with respect thereto.

Patent License ” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third person, is in existence, and all rights of any Grantor under any such agreement.

Patents ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office (or any successor or any similar offices in any other country), including those listed on Schedule V, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to exclude others from making, using and/or selling the inventions disclosed or claimed therein.

 

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Pledged Collateral ” shall have the meaning assigned to such term in Section 3.01.

Pledged Debt Securities ” shall have the meaning assigned to such term in Section 3.01.

Pledged Securities ” shall mean any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

Pledged Stock ” shall have the meaning assigned to such term in Section 3.01.

Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 or that otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder at the time such Swap Obligation is incurred (including as a result of any this Agreement or any other Guarantee or other support agreement in respect of the obligations of such Guarantor by the Borrower or another Person that constitutes an “eligible contract participant”).

Representative ” shall mean (a) in the case of the Bank Loan Obligations, the Administrative Agent, and (b) in the case of any Series of Pari Passu Debt Obligations, the Pari Passu Representative for such Series.

Secured Parties ” shall mean the Bank Loan Secured Parties and any Pari Passu Secured Parties.

Security Interest ” shall have the meaning assigned to such term in Section 4.01.

Series ” shall mean (a) the Bank Loan Obligations and (b) any Pari Passu Debt Obligations which are represented by a common Representative named with respect to such Pari Passu Debt Obligation in accordance with Section 7.09(c).

Series Excluded Stock ” shall have the meaning assigned to such term in Section 3.01(b).

Swap Obligation ” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

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Trademark License ” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third person, and all rights of any Grantor under any such agreement.

Trademarks ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all registered trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and applications for registration (other than intent-to-use applications) in the United States Patent and Trademark Office (or any successor office) or any similar offices in any State of the United States, and all extensions or renewals thereof, including those listed on Schedule V, and (b) all goodwill associated therewith or symbolized thereby.

Unfunded Advances/Participations ” shall mean (a) with respect to the Administrative Agent, the aggregate amount, if any (i) made available to the Borrower on the assumption that each Lender has made its portion of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.02(d) of the Term Loan Credit Agreement and (ii) with respect to which a corresponding amount shall not in fact have been returned to the Administrative Agent by the Borrower or made available to the Administrative Agent by any such Lender and (b) with respect to any Issuing Bank, the aggregate amount, if any, of participations in respect of any outstanding L/C Disbursement that shall not have been funded by the Revolving Credit Lenders in accordance with Sections 2.23(d) and 2.02(f) of the Term Loan Credit Agreement.

ARTICLE II

Guarantee

SECTION 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation, and hereby waives any provision of applicable law to the contrary that may be waived by such Guarantor. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any Obligation, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. Each Guarantor agrees that its guarantee hereunder is continuing in nature as to the Obligations and applies to all Obligations, whether currently existing or hereafter incurred.

 

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SECTION 2.02. Guarantee of Payment. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy, insolvency, receivership or similar proceeding shall have stayed the accrual or collection of any of the Obligations or operated as a discharge thereof) and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrower or any other person.

SECTION 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Pari Passu Agreement, any Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Pari Passu Agreement, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement, (iii) the release of, or any impairment of or failure to perfect any Lien on or security interest in, any security held by the Collateral Agent or any other Secured Party for the Obligations or any of them, (iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations (other than unasserted contingent indemnity obligations)). To the fullest extent permitted by applicable law and in accordance with the Loan Documents and the Pari Passu Agreements, each Guarantor expressly authorizes the Collateral Agent to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in its sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the payment in full in cash of all the Obligations (other than unasserted contingent indemnity obligations). To the fullest extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, the Collateral

 

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Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without adversely affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.

SECTION 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of the Borrower, any other Loan Party or otherwise.

SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Obligation owed by such party when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will, promptly upon written notice thereof from the Collateral Agent, forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against the Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.

SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Collateral Agent nor any other Secured Party will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

ARTICLE III

Pledge of Securities

SECTION 3.01. Pledge. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to

 

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the Collateral Agent, its successors and permitted assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and permitted assigns, for the benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under (a)(i) the Equity Interests owned by such Grantor on the date hereof (including all such Equity Interests listed on Schedule III), (ii) any other Equity Interests obtained in the future by such Grantor and (iii) the certificates representing all such Equity Interests (all the foregoing collectively referred to herein as the “ Pledged Stock ”); ( provided , however , that the Pledged Stock shall not include any Excluded Equity Interests), (b)(i) the debt securities held by such Grantor on the date hereof (including all such debt securities listed opposite the name of such Grantor on Schedule III), (ii) any debt securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments evidencing such debt securities (excluding any promissory notes issued by employees of any Grantor) (all the foregoing collectively referred to herein as the “ Pledged Debt Securities ”), (c) all other property that may be delivered to and held by the Collateral Agent (or, prior to the Discharge of ABL Priority Claims and with respect to the ABL Facility First Priority Collateral, to the ABL Collateral Agent, as gratuitous bailee) pursuant to the terms of this Section 3.01, (d) subject to Section 3.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a) and (b) above, (e) subject to Section 3.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the “ Pledged Collateral ”).

(b) Notwithstanding anything herein to the contrary, in the event that any Series of Pari Passu Debt Obligations is issued pursuant to a registration statement that has been filed with the SEC (including pursuant to any exchange offer subsequent to the initial private issuance of such Series), the “ Pledged Stock ” securing any such Series shall automatically be deemed not to include any Equity Interests or other securities of a subsidiary of Borrower which, if pledged to secure such Series, would require the Borrower to file separate financial statements for any Subsidiary with the SEC or any other U.S. federal government agency (in each case solely to the extent necessary to not be subject to such filing requirements) (such Equity Interests or securities the “ Series Excluded Stock ” with respect to such Series of Pari Passu Debt Obligations). The limitation provided for in this paragraph (b) shall not be applied to the Bank Loan Obligations or to any Series of Pari Passu Debt Obligations that is not issued pursuant to such a registration statement.

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and permitted assigns, for the benefit of the Secured Parties, forever; subject , however , to the terms, covenants and conditions hereinafter set forth.

 

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SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent any and all certificates, promissory notes, instruments or other documents representing or evidencing Pledged Securities (other than Pledged Debt Securities with a face amount less than $1,000,000, Equity Interests in Non-Significant Subsidiaries and minority Equity Interests).

(b) [Reserved].

(c) Upon delivery to the Collateral Agent, (i) any certificate, instrument or document representing or evidencing Pledged Securities shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer satisfactory to the Collateral Agent and duly executed in blank and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the applicable securities, which schedule shall be attached hereto as Schedule III and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of the pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

(d) In accordance with the terms of the ABL Intercreditor Agreement, all Pledged Collateral delivered to the Collateral Agent shall also be held by the Collateral Agent as gratuitous bailee for the secured parties under the ABL Facility Credit Agreement solely for the purpose of perfecting the security interest therein granted under the ABL Collateral Agreement.

(e) Prior to the Discharge of ABL Priority Claims, to the extent any Grantor is required hereunder to deliver Collateral to the Collateral Agent for purposes of possession or control and is unable to do so as a result of having previously delivered such Collateral to the ABL Collateral Agent in accordance with the terms of the ABL Collateral Agreement and the ABL Intercreditor Agreement, such Grantor’s obligations hereunder with respect to such delivery shall be deemed satisfied by the delivery to the ABL Collateral Agent, acting as a gratuitous bailee for the Secured Parties.

SECTION 3.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that:

(a) As of the Closing Date, Schedule III correctly sets forth the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by such Pledged Stock and includes all Equity Interests (other than Equity Interests issued by Non-Significant Subsidiaries and minority Equity Interests), debt securities and promissory notes required to be pledged hereunder (to the extent not waived or extended in accordance with the terms of the Term Loan Credit Agreement);

 

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(b) as of the Closing Date, Schedule IV correctly sets forth all promissory notes and other evidence of indebtedness required to be pledged hereunder including all intercompany notes between the Borrower and any subsidiary of the Borrower and any subsidiary of the Borrower and any other such subsidiary required to be pledged hereunder;

(c) the Pledged Stock and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof;

(d) except for the security interests granted hereunder (or otherwise permitted under the Term Loan Credit Agreement or the other Loan Documents), each Grantor (i) is and, subject to any transfers made in compliance with the Term Loan Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule III as owned by such Grantor, (ii) holds the same free and clear of all Liens other than Liens permitted by Section 6.02 of the Term Loan Credit Agreement, and (iii) will not create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than any security interests and Liens that are made in compliance with the Term Loan Credit Agreement or the other Loan Documents;

(e) except for restrictions and limitations imposed by any Pari Passu Agreement, the Loan Documents or securities or other laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder other than Liens permitted by Section 6.02 of the Term Loan Credit Agreement;

(f) each Grantor (i) has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or therein against any and all Liens (other than any Lien created or permitted by the Loan Documents or any Pari Passu Agreement), however arising, of all persons whomsoever;

(g) no material consent or approval of any Governmental Authority or any securities exchange was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(h) by virtue of the execution and delivery by each Grantor of this Agreement and subject to the Lien priorities set forth in the ABL Intercreditor Agreement and any Pari Passu Intercreditor Agreement, when any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement (or, prior to the Discharge of ABL Priority Claims and with respect to the ABL Facility First Priority Collateral, to the ABL

 

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Collateral Agent, as gratuitous bailee), the Collateral Agent will obtain, for the benefit of the Secured Parties, a legal, valid and perfected first priority lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations; and

(i) the pledge effected hereby is effective to vest in the Collateral Agent, for the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein and in the ABL Intercreditor Agreement.

SECTION 3.04. Certification of Limited Liability Company Interests and Limited Partnership Interests. If any Pledged Collateral is not a security pursuant to Section 8-103 of the UCC, no Grantor shall take any action that, under such Section, converts such Pledged Collateral into such a security without causing the issuer thereof to issue to it certificates or instruments evidencing such Pledged Collateral, which it shall promptly deliver to the Collateral Agent as provided in Section 3.02, or complying with Section 4.04(b) hereof.

SECTION 3.05. Registration in Nominee Name; Denominations. The Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion), upon the occurrence and during the continuance of an Event of Default, to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent. Each Grantor will promptly give to the Collateral Agent copies of any material written notices or other material written communications received by it with respect to Pledged Securities in its capacity as the registered owner thereof. After the occurrence and during the continuance of an Event of Default, the Collateral Agent shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

SECTION 3.06. Voting Rights; Dividends and Interest, Etc. (a) Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the Grantors notice of its intent to exercise its rights under this Agreement (which notice shall be deemed to have been given immediately upon the occurrence of an Event of Default under paragraph (g) or (h) of Article VII of the Term Loan Credit Agreement):

(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Term Loan Credit Agreement and the other Loan Documents; provided , however , that such rights and powers shall not be exercised in any manner that could reasonably be expected to materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the Collateral Agent or the other Secured Parties under this Agreement, any Pari Passu Agreement, the Term Loan Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.

 

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(ii) The Collateral Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to each Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (i) above.

(iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Term Loan Credit Agreement, the other Loan Documents, and any Pari Passu Agreement, and applicable law; provided , however , that any noncash dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Secured Parties and shall be forthwith delivered to the Collateral Agent (or, prior to the Discharge of ABL Priority Claims and with respect to the ABL Facility First Priority Collateral, to the ABL Collateral Agent, as gratuitous bailee) in the same form as so received (with any necessary endorsement or instrument of assignment). This paragraph (iii) shall not apply to dividends between or among the Borrower, the Guarantors and any Subsidiaries only of property subject to a perfected security interest under this Agreement.

(b) To the fullest extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 3.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06 shall cease, and, subject to the ABL Intercreditor Agreement, all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All

 

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dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and, subject to, in the case of ABL Facility First Priority Collateral, the rights of the ABL Collateral Agent and the obligations of the Grantors under the ABL Facility Loan Documents and the ABL Intercreditor Agreement, shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement or instrument of assignment). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. Promptly after all Events of Default have been cured or waived and each applicable Grantor has delivered to the Administrative Agent certificates to that effect, the Collateral Agent shall repay to each applicable Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 3.06, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and, subject to compliance with any applicable healthcare laws, all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers, subject to, in the case of ABL Facility First Priority Collateral, the rights of the ABL Collateral Agent and the obligations of the Grantors under the ABL Facility Loan Documents and the ABL Intercreditor Agreement; provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived and each applicable Grantor has delivered to the Administrative Agent a certificate to that effect, such voting and consensual rights shall automatically vest in the applicable Grantor, and the Collateral Agent shall (1) take such steps reasonably requested by the applicable Grantor, at such Grantor’s expense, to allow all Pledged Securities registered under its name to be registered under the name of the applicable Grantor and (2) promptly repay to each applicable Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise have been permitted to retain pursuant to the terms of paragraph (a) of this Section 3.06 that were not applied to repay the Obligations.

(d) Any notice given by the Collateral Agent to the Grantors exercising its rights under paragraph (a) of this Section 3.06 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or

 

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different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

ARTICLE IV

Security Interests in Personal Property

SECTION 4.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and permitted assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and permitted assigns, for the benefit of the Secured Parties, a security interest (the “ Security Interest ”), in all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Article 9 Collateral ”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all cash and Deposit Accounts

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

(viii) all Inventory;

(ix) all Investment Property;

(x) all Letter-of-Credit Rights;

(xi) all Commercial Tort Claims;

(xii) all books and records pertaining to the Article 9 Collateral; and

(xiii) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing.

 

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Notwithstanding anything herein to the contrary, (I) in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, any Excluded Asset or any Excluded Equity Interests and (II) in the event that any Series of Pari Passu Debt Obligations is issued pursuant to a registration statement that has been filed with the SEC (including pursuant to any exchange offer subsequent to the initial private issuance of such Series), the Collateral securing such Series shall automatically be deemed not to include any Series Excluded Stock with respect to such Series of Pari Passu Debt Obligations (but, for the avoidance of doubt, such Series Excluded Stock shall at all times continue to secure the Bank Loan Obligations and all other Series of Pari Passu Debt Obligations to the extent provided for in this Agreement).

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) indicate the Article 9 Collateral as “all assets” of such Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates. Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.

The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.

Notwithstanding anything to the contrary provided herein, no Grantor shall be required to (a) deliver any certificates evidencing Equity Interests issued by Non-Significant Subsidiaries or minority Equity Interests, (b) enter into or deliver any control agreements or control or similar arrangements with respect to deposit accounts or securities accounts (except to the extent required under the ABL Facility Loan Documents), (c) take steps to perfect any security interest with respect to letter of credit rights and commercial tort claims (except to the extent perfected through the filing of Uniform Commercial Code financing statements) or (d) enter into or deliver security documents governed by laws of a jurisdiction other than the United States or any State thereof or the District of Columbia.

(c) The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.

 

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SECTION 4.02. Representations and Warranties. The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:

(a) Each Grantor has good and valid rights in and marketable title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent, for the benefit of the Secured Parties, the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval that has been obtained or any other consent where the failure to obtain such consent could not reasonably be expected to have a Material Adverse Effect.

(b) The Schedules attached hereto have been duly prepared and completed and the information set forth therein is true and correct in all material respects as of the Closing Date and (x) the exact legal name of each Grantor in Schedule I and (y) the jurisdiction of formation or organization of each Grantor in Schedule I, is true and correct as of the Closing Date). Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Article 9 Collateral have been prepared by the Collateral Agent based upon the information provided to the Administrative Agent and the Secured Parties in the applicable Schedules attached hereto for filing in each governmental, municipal or other office specified in Schedule I (or specified by notice from the Borrower to the Administrative Agent after the Closing Date in the case of filings, recordings or registrations required by Sections 5.06 or 5.12 of the Term Loan Credit Agreement), which are all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in the Article 9 Collateral consisting of United States Patents, Trademarks, Copyrights and exclusive Copyright Licenses (to the extent that perfection can be achieved by such filings)) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements. Each Grantor represents and warrants that a fully executed short form agreement in form and substance reasonably satisfactory to the Collateral Agent, and containing a description of all Article 9 Collateral consisting of pending and issued United States Patents and United States Trademarks and United States Copyrights will be delivered to the Collateral Agent as of or prior to the Closing Date for timely recording with the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. §261, 15 U.S.C. §1060 or 17 U.S.C. §205 and the regulations thereunder.

(c) As of the Closing Date, Schedule I correctly sets forth (i) the exact legal name of each Grantor, as such name appears in its respective certificate of formation or

 

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organization; (ii) the jurisdiction of formation or organization of each Grantor that is a registered organization; (iii) the Organizational Identification Number, if any, issued by the jurisdiction of formation or organization of each Grantor that is a registered organization; (iv) the chief executive office of each Grantor; and (v) all locations where Grantor maintains any material books or records relating to any Accounts Receivables.

(d) As of the Closing Date, Schedule V correctly sets forth, in proper form for filing with (a) the United States Patent and Trademark Office a list of each issued and pending Patents and Trademarks, including, as applicable, the name of the registered owner and the registration number of each Patent and Trademark owned by any Grantor and (b) the United States Copyright Office a list of each Copyright, including the name of the registered owner and the registration number of each Copyright owned by any Grantor.

(e) As of the Closing Date, Schedule VI correctly sets forth, with respect to each Mortgaged Property, (i) the exact name of the person that owns such property as such name appears in its certificate of formation or other organizational document; (ii) if different from the name identified pursuant to clause (i), the exact name of the current record owner of such property reflected in the records of the filing office for such property identified pursuant to the following clause (iii); and (iii) the filing office in which a mortgage with respect to such property must be filed or recorded in order for the Collateral Agent to obtain a perfected security interest therein.

(f) The Security Interest constitutes (i) a legal and valid security interest in all Article 9 Collateral securing the payment and performance of the Obligations, (ii) subject to the qualifications and filings described in Section 4.02(b) (including payment of applicable fees in connection therewith), a perfected security interest in all Article 9 Collateral in which and to the extent a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) a security interest that shall be perfected in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens expressly permitted pursuant to Section 6.02 of the Term Loan Credit Agreement or the other Loan Documents that have priority as a matter of law and Liens in respect of the ABL Facility First Priority Collateral under the ABL Facility Loan Documents.

(g) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of the Term Loan Credit Agreement or the other Loan Documents. No Grantor has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or

 

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similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office, (iii) any notice under the Assignment of Claims Act, or (iv) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.02 of the Term Loan Credit Agreement or the other Loan Documents. As of the Closing Date, no Grantor holds any Commercial Tort Claims in an amount in excess of $1,000,000 except as indicated on Schedule VII.

SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change in (i) its legal name and/or address, (ii) its identity or type of organization or corporate structure, (iii) its Federal Taxpayer Identification Number or organizational identification number or (iv) its jurisdiction of organization. Each Grantor agrees promptly to provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the first sentence of this paragraph. Each Grantor agrees not to effect or permit any change referred to in the first sentence of this paragraph unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Article 9 Collateral (except, with respect to priority, as otherwise set forth in the ABL Intercreditor Agreement and any Pari Passu Intercreditor Agreement). Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Article 9 Collateral owned or held by such Grantor is damaged or destroyed.

(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records (in all material respects) with respect to the Article 9 Collateral owned by it as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include complete accounting records (in all material respects) indicating all material payments and proceeds received with respect to any part of the Article 9 Collateral.

(c) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a) of the Term Loan Credit Agreement, the Borrower shall deliver to the Collateral Agent a certificate executed by a Responsible Officer of the Borrower setting forth in the format of Schedule V all Intellectual Property of any Grantor in existence on the date thereof that, if it had existed on the Closing Date, would have been required to be listed in such Schedule, and not then listed on such Schedules or previously so identified to the Collateral Agent.

(d) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral against all persons and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien not permitted pursuant to Section 6.02 of the Term Loan Credit Agreement.

 

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(e) Each Grantor agrees, at its own expense, promptly to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to obtain, preserve, protect and perfect (to the extent that perfection can be achieved under any applicable law by such filings and actions) the Security Interest and the rights and remedies created hereby, including the payment of any fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing or continuation statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable to any Grantor under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note or other instrument with a face amount in excess of $1,000,000, such note or instrument shall be promptly pledged and delivered to the Collateral Agent, duly endorsed in a manner reasonably satisfactory to the Collateral Agent.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule V or adding additional schedules hereto to identify specifically any asset or item of a Grantor that may, in the Collateral Agent’s reasonable judgment, constitute Copyrights, Licenses, Patents or Trademarks; provided that any Grantor shall have the right, exercisable within 30 days after it has been notified by the Collateral Agent of the specific identification of such Collateral, to advise the Collateral Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral. Each Grantor agrees that it will use its commercially reasonable efforts to take such action as shall be necessary, and which the Collateral Agent may from time to time reasonably request, in order that all representations and warranties hereunder shall be true and correct in all material respects with respect to such Collateral within 45 days after the date it has been notified by the Collateral Agent of the specific identification of such Collateral and any such request.

(f) The Collateral Agent and such persons as the Collateral Agent may designate shall have the right to inspect, subject to a reasonable prior notice to each Grantor, the Article 9 Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Article 9 Collateral is located, to discuss the applicable Grantor’s affairs with the officers of such Grantor and its independent accountants and to verify the existence, validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Article 9 Collateral, including, in the case of Accounts or other Article 9 Collateral in the possession of any third person, after the occurrence and during the continuance of an Event of Default, by contacting Account Debtors or the third person possessing such Article 9 Collateral for the purpose of making such a verification, subject in each case to the requirements of applicable law, including healthcare laws, data privacy and third

 

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party confidentiality obligations all at the expense of the Borrower; provided that, (i) other than with respect to the verification of any such Accounts as provided in the immediately succeeding clause (ii) below, excluding any such visits and inspections during the continuation of an Event of Default, only one such visit during any fiscal year shall be at the Borrower’s expense and (ii) any such verification of Accounts shall be conducted in accordance with the provisions set forth in Section 5.07 of the ABL Facility Credit Agreement (which, solely for purposes hereof, shall be deemed to apply to the Collateral Agent and the Borrower, and with references therein to a Default or an Event of Default being deemed to mean a Default or an Event of Default, respectively, in each case as defined in the Term Loan Credit Agreement). The Collateral Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Party, subject in each case to the requirements of applicable law, including healthcare laws, data privacy and third party confidentiality obligations.

(g) At its option, upon the occurrence and during the continuation of a Default or an Event of Default, the Collateral Agent may with five Business Days’ prior written notice to the relevant Grantor discharge past due Taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not expressly permitted pursuant to Section 5.03 or Section 6.02 of the Term Loan Credit Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Term Loan Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent within five Business Days after written demand for any reasonable payment made or any reasonable expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided , however , that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to Taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

(h) If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other person valued in excess of $1,000,000 to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent, subject to the terms of the ABL Intercreditor Agreement, for the benefit of the Secured Parties. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other person granting the security interest.

(i) Except to the extent otherwise expressly agreed by the Collateral Agent, each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance in accordance with Section 7.06 of this Agreement.

 

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(j) No Grantor shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral or permit any notice to be filed under the Assignment of Claims Act, except, in each case, as expressly permitted by Section 6.02 of the Term Loan Credit Agreement. No Grantor shall make or permit to be made any transfer of the Article 9 Collateral, except as permitted by the Term Loan Credit Agreement.

(k) No Grantor will, without the Collateral Agent’s prior written consent, grant any extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof (unless the aggregate amount of such compromised or settled Accounts in any fiscal year is not in excess of $2,500,000), release, wholly or partly, any person liable for the payment thereof (unless the aggregate amount of such compromised or settled Accounts in any fiscal year is not in excess of $2,500,000) or allow any credit or discount whatsoever thereon (unless the aggregate amount of such compromised or settled Accounts in any fiscal year is not in excess of $2,500,000), other than extensions, credits, discounts, compromises, compoundings or settlements in each case granted or made in the ordinary course of business.

(l) Each Grantor, at its own expense, shall maintain or cause to be maintained insurance policies covering physical loss or damage to the Inventory and Equipment in accordance with the requirements set forth in Section 5.02 of the Term Loan Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, upon the occurrence and during the continuance of an Event of Default and subject to the ABL Intercreditor Agreement, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto ( provided that the Collateral Agent shall give five Business Days’ prior written notice to such Grantor prior to exercising its rights in such capacity). In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or under the Term Loan Credit Agreement or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of any Grantor hereunder or any Default or Event of Default, in its sole reasonable discretion, upon notice to the Grantors, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent reasonably deems advisable. All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, out-of-pocket expenses and other charges relating thereto, shall be payable, within five Business Days of written demand (accompanied by supporting documentation therefor in reasonable detail) by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby.

 

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SECTION 4.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest in the Article 9 Collateral, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a) Instruments. If any Grantor shall at any time hold or acquire any Instruments (other than any Instruments in an amount no greater than $1,000,000), that have not been pledged hereunder, such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent or, prior to the Discharge of ABL Priority Claims and with respect to ABL Facility First Priority Collateral, deliver the same to the ABL Collateral Agent, as gratuitous bailee, accompanied by such undated instruments of endorsement, transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.

(b) Investment Property . Without limiting each Grantor’s obligations under Article III, if any securities now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Collateral Agent thereof and, at the Collateral Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Collateral Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor are held by such Grantor or its nominee through a securities intermediary or commodity intermediary in a securities account or commodity account for which perfection by “control” or control agreements are required under the ABL Facility Loan Documents, such Grantor shall promptly notify the Collateral Agent thereof and, at the Collateral Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, cause such securities intermediary or commodity intermediary, as the case may be, to agree to comply with entitlement orders or other instructions from the Collateral Agent (or the ABL Collateral Agent, pursuant to the ABL Intercreditor Agreement) to such securities intermediary as to such security entitlements or to apply any value distributed on account of any commodity contract as directed by the Collateral Agent (or the ABL Collateral Agent, pursuant to the ABL Intercreditor Agreement) to such commodity intermediary, as the case may be, in each case without further consent of any Grantor, such nominee, or any other Person (other than, subject to the ABL Intercreditor Agreement, the ABL Collateral Agent). The Collateral Agent agrees with each of the Grantors that the Collateral Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing or, after giving effect to any

 

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such investment and withdrawal rights, would occur. The provisions of this paragraph shall not apply to any financial assets or other investment property credited to a securities account for which the Collateral Agent is the securities intermediary, unless otherwise requested by the Collateral Agent.

(c) Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any material Electronic Chattel Paper or any material “ transferable record ”, as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof and, at the reasonable request of the Collateral Agent, shall take such action as the Collateral Agent may reasonably request to vest in the Collateral Agent or, prior to the Discharge of ABL Priority Claims and with respect to the ABL Facility First Priority Collateral, in the ABL Collateral Agent, as gratuitous bailee, control under New York UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record. Notwithstanding the foregoing, no Grantor shall be obligated to deliver to the Collateral Agent any Electronic Chattel Paper held by such Grantor with a face amount less than $1,000,000, provided that the aggregate face amount of the Electronic Chattel Paper so excluded pursuant to this sentence shall not exceed $5,000,000 at any time.

(d) Commercial Tort Claims. If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated to exceed $1,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor including a summary description of such claim and grant to the Collateral Agent, for the benefit of the Secured Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.

(e) Deposit Accounts . For each Deposit Account that any Grantor at any time opens or maintains over which perfection by “control” or control agreements are required under the ABL Facility Loan Documents, such Grantor shall, promptly following the Collateral Agent’s request, use its commercially reasonable efforts to cause the depositary bank to agree to comply at any time with instructions from the Collateral

 

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Agent or, prior to the Discharge of ABL Priority Claims and with respect to ABL Facility First Priority Collateral, from the ABL Collateral Agent, as gratuitous bailee or agent, to such depositary bank directing the disposition of funds from time to time credited to such Deposit Account, without further consent of such Grantor or any other person, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent. The Collateral Agent agrees with each Grantor that the Collateral Agent shall not give any such instructions or withhold any withdrawal rights from any Grantor, in each case pursuant to, and in accordance with, the ABL Intercreditor Agreement, unless an Event of Default has occurred and is continuing, or, after giving effect to any withdrawal, would occur.

SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral. In each case unless otherwise decided by such Grantor in its reasonable business judgment or except as to such Collateral that is not material to the business of such Grantor: (a) Each Grantor agrees that it will not, and will not permit any of its licensees to, do any act, or omit to do any act, whereby any Patent that is material to the conduct of such Grantor’s business may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent with the relevant patent number to the extent necessary and sufficient to establish and preserve its maximum rights under applicable patent laws, to the extent required by applicable law.

(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law, to the extent required by applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through its licensees or sublicensees) will, for each work covered by a material Copyright or exclusive Copyright License, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice to the extent necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws, to the extent required by applicable law.

(d) Each Grantor shall notify the Collateral Agent promptly if it knows that any Patent, Trademark or Copyright material to the conduct of its business has or is likely to become abandoned, lost or dedicated to the public, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor’s ownership of any such Patent, Trademark, Copyright or exclusive Copyright License its right to register the same, or its right to keep and maintain the same.

 

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(e) If any Grantor, either itself or through any agent, employee, licensee or designee, files an application for any Patent, Trademark, Copyright or Copyright License (or for the registration of any Trademark, Copyright or exclusive Copyright License) with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, or otherwise acquires any such Patent, Trademark, Copyright or exclusive Copyright License (or any application with respect thereto), the Grantor shall so notify the Collateral Agent, and, upon request of the Collateral Agent, shall execute and deliver any and all agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Security Interest in such Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed.

(f) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks, Copyrights and exclusive Copyright Licenses that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties.

(g) In the event that any Grantor knows or has reason to believe that any Article 9 Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor’s business has been or is about to be infringed, misappropriated or diluted by a third person, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions, if consistent with good business judgment, as are reasonably appropriate under the circumstances to protect such Article 9 Collateral.

(h) Upon the occurrence and during the continuance of an Event of Default, upon the reasonable request of the Collateral Agent, each Grantor shall use its best efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License, and each other material License, to effect the assignment of all such Grantor’s right, title and interest thereunder to the Collateral Agent, for the benefit of the Secured Parties, or its designee.

 

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ARTICLE V

Remedies

SECTION 5.01. Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Article 9 Collateral consisting of Intellectual Property or Licenses, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantor to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the requirements of applicable law, including any applicable healthcare laws, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Collateral Agent shall give each applicable Grantor 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral

 

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Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by applicable law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by applicable law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. To the fullest extent permitted under applicable law, any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. Any remedies provided in this Section 5.01 shall be subject to the ABL Intercreditor Agreement.

SECTION 5.02. Application of Proceeds. Subject to the terms of any Pari Passu Intercreditor Agreement and the ABL Intercreditor Agreement, if an Event of Default shall have occurred and is continuing, the Collateral Agent shall apply the proceeds of any collection, sale, foreclosure or other realization upon any Collateral, including any Collateral consisting of cash, as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, the Collateral Agent or any other Representative

 

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(in their respective capacities as such hereunder or under any other Loan Document or any Pari Passu Agreement, as applicable) in connection with such collection, sale, foreclosure or realization or otherwise in connection with this Agreement, any other Loan Document, any Pari Passu Agreement or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent and/or the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other reasonable out-of-pocket costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document or any Pari Passu Agreement, as applicable;

SECOND, to the payment in full of Unfunded Advances/Participations (the amounts so applied to be distributed between or among the Administrative Agent and any Issuing Bank pro rata in accordance with the amounts of Unfunded Advances/Participations owed to them on the date of any such distribution);

THIRD, to the payment in full of all other Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution);

FOURTH, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion (subject to the ABL Intercreditor Agreement) as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. Notwithstanding the foregoing, the proceeds of any collection, sale, foreclosure or realization upon (a) any Series Excluded Stock with respect to any Series of Pari Passu Debt Obligations, shall not be applied to such Series of Pari Passu Debt Obligations and shall instead be applied to other secured obligations and (b) any Collateral of any Grantor, including any collateral consisting of cash, shall not be applied to any Excluded Swap Obligation of such Grantor and shall instead be applied to other secured obligations.

SECTION 5.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors), to use, license or sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the

 

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same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent may be exercised at the option of the Collateral Agent and shall be effective only upon the occurrence and during the continuation of an Event of Default; provided , however , that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon each Grantor notwithstanding any subsequent cure of an Event of Default.

SECTION 5.04. Securities Act, Etc. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the U.S. Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “ Federal Securities Laws ”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable “blue sky” or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion (a) to the fullest extent permitted by applicable Federal Securities Laws, may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.

 

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ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), the Borrower agrees that (a) in the event a payment shall be made by any Guarantor under this Agreement, the Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part a claim of any Secured Party, the Borrower shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 6.02. Contribution and Subrogation. Each Guarantor (a “ Contributing Guarantor ”) agrees (subject to Section 6.03) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Obligation, or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Obligation owed to any Secured Party, and such other Guarantor (the “ Claiming Guarantor ”) shall not have been fully indemnified by the Borrower as provided in Section 6.01, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to (i) the amount of such payment or (ii) the greater of the book value or the fair market value of such assets (the “ Indemnified Amount ”), as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the Closing Date and the denominator shall be the aggregate net worth of all the Guarantors on the Closing Date (or, in the case of any Guarantor becoming a party hereto after the Closing Date, the date on which such party became a Guarantor hereunder). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the rights of such Claiming Guarantor under Section 6.01 to the extent of such payment. Notwithstanding the foregoing, to the extent that any Claiming Guarantor’s right to indemnification hereunder arises from a payment or sale of Collateral made to satisfy Obligations constituting Swap Obligations, only those Contributing Guarantors for whom such Swap Obligations do not constitute Excluded Swap Obligations shall indemnify such Claiming Guarantor, with the fraction set forth in the second preceding sentence being modified as appropriate to provide for indemnification of the entire Indemnified Amount.

SECTION 6.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Obligations (other than contingent indemnification obligations for which no claim has been made). No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of its obligations hereunder.

 

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(b) The Borrower and each Guarantor hereby agree that all Indebtedness and other monetary obligations owed by it to the Borrower or any Subsidiary shall be fully subordinated to the payment in full in cash of the Obligations; provided that nothing in this Section 6.03(b) shall prohibit any payments or distributions permitted by the Term Loan Credit Agreement and Pari Passu Agreements.

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Term Loan Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it in care of the Borrower as provided in Section 9.01 of the Term Loan Credit Agreement.

SECTION 7.02. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Term Loan Credit Agreement, any other Loan Document, any Pari Passu Agreement, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Term Loan Credit Agreement, any other Loan Document or any other agreement or instrument relating to the foregoing, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement.

SECTION 7.03. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders, the Issuing Bank and the other Secured Parties and shall survive the execution and delivery of the Loan Documents and of any Pari Passu Agreement in connection with any Series of Pari Passu Debt and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any Lender, any Issuing Bank or any other Secured Party or on their behalf and notwithstanding that the Collateral Agent, any Issuing Bank, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is

 

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extended under the Term Loan Credit Agreement or any Pari Passu Agreement, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Pari Passu Debt, or any fee or any other amount payable under any Loan Document or any Pari Passu Agreement is outstanding and unpaid or the aggregate L/C Exposure does not equal zero (except for outstanding Letters of Credit subject to arrangements satisfactory to the Administrative Agent and the Issuing Bank) and so long as the Commitments have not expired or terminated.

SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall become effective as to any Loan Party when a counterpart hereof executed on behalf of such Loan Party shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Loan Party and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Loan Party, the Collateral Agent and the other Secured Parties and their respective successors and permitted assigns, except that no Loan Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated or permitted by this Agreement or the Term Loan Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Loan Party and may be amended, modified, supplemented, waived or released with respect to any Loan Party without the approval of any other Loan Party and without affecting the obligations of any other Loan Party hereunder.

SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and permitted assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and permitted assigns.

SECTION 7.06. Collateral Agent’s Fees and Expenses; Indemnification. (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of all reasonable out-of-pocket expenses incurred by the Collateral Agent in connection with the preparation and administration of this Agreement, any other Loan Documents and any Pari Passu Agreements and in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Collateral Agent in connection with the enforcement or protection of its rights in connection with this Agreement, any other Loan Documents and any Pari Passu Agreements, including the fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the Collateral Agent, and, in connection with any such enforcement or protection, the fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for the Collateral Agent and the Secured Parties.

 

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(b) Without limitation or duplication of its indemnification obligations under the other Loan Documents or any Pari Passu Agreement, each Grantor jointly and severally agrees to indemnify the Collateral Agent and the other Indemnitees against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities, penalties and related reasonable out of pocket expenses, including the reasonable fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for all Indemnitees, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of, the execution, delivery or performance of this Agreement or any agreement or instrument contemplated hereby or any claim, litigation, investigation or proceeding relating to any of the foregoing or to the Collateral, regardless of whether any Indemnitee is a party thereto or whether initiated by a third party or by a Loan Party or any Affiliate thereof; provided , however , that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, penalties or related expenses are determined by a court of competent jurisdiction by final judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee. To the extent permitted by applicable law, neither any Grantor nor the Collateral Agent nor any Indemnitee shall assert, and each hereby waives any claim against any Indemnitee, any Grantor and the Collateral Agent, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of proceeds thereof.

(c) Any such amounts payable as provided hereunder or under any Pari Passu Agreement shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement, any other Loan Document or any Pari Passu Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement, any other Loan Document or any Pari Passu Agreement, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 7.06 shall be payable within 30 days after written demand therefor and shall bear interest, on and from the date of demand, at the rate specified in Section 2.06(a) of the Term Loan Credit Agreement.

(d) BY ACCEPTING THE BENEFITS OF THIS AGREEMENT AND THE GUARANTEES AND SECURITY INTERESTS CREATED HEREBY, EACH SECURED PARTY ACKNOWLEDGES THE PROVISIONS OF ARTICLE VIII OF THE CREDIT AGREEMENT AND AGREES TO BE BOUND BY SUCH PROVISIONS AS FULLY AS IF THEY WERE SET FORTH HEREIN.

SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Collateral Agent as the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and

 

36


executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor ( provided , that to the extent written notice is not required hereunder, the Collateral Agent shall use commercially reasonable efforts to provide notice to such Grantor, though its rights hereunder are not conditioned thereon) (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, (b) upon three Business Days’ prior written notice to such Grantor, to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral, (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral, (d) upon three Business Days’ prior written notice to such Grantor, to send verifications of Accounts Receivable to any Account Debtor, (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral, (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral, (g) upon three Business Days’ prior written notice to such Grantor, to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent, and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement in accordance with its terms, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided , however , that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, wilful misconduct or bad faith.

SECTION 7.08. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.09. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, the Administrative Agent, any Issuing Bank, any Lender or any other Secured Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the

 

37


exercise of any other right or power. The rights and remedies of the Collateral Agent, the Administrative Agent, the Issuing Banks, the Lenders and the other Secured Parties hereunder and under the other Loan Documents and any Pari Passu Agreements are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or any Pari Passu Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.09, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Collateral Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

(b) Subject to the terms of any Pari Passu Intercreditor Agreement and Section 9.08(b)(B) of the Term Loan Credit Agreement, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent (acting at the direction, or with the consent, of the Required Lenders) and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Term Loan Credit Agreement.

(c) So long as permitted by the Loan Documents and the Pari Passu Agreements then in effect, the Borrower may from time to time designate Indebtedness and other obligations at the time of the assumption or incurrence thereof to be secured on a pari passu basis with the then outstanding Obligations as Pari Passu Debt Obligations hereunder by delivering to the Collateral Agent and each Representative a certificate signed by a Financial Officer of the Borrower (i) identifying the Indebtedness and other obligations so designated and the aggregate principal amount or face amount thereof, (ii) stating that such Indebtedness and other obligations are designated as Pari Passu Debt Obligations for purposes hereof, (iii) representing that such designation of such Indebtedness and other obligations as Pari Passu Debt Obligations complies with the terms of the Loan Documents and the Pari Passu Agreements then outstanding and (iv) specifying the name and address of the Representative for the holders of such Indebtedness and other obligations. Upon such delivery and the execution by such Representative of a joinder to the Pari Passu Intercreditor Agreement, the Collateral Agent shall act hereunder for the benefit of all Secured Parties, including any Secured Parties that hold any Pari Passu Debt Obligations so designated.

SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO HEREBY (A) CERTIFIES

 

38


THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

SECTION 7.11. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7.12. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 7.04. Delivery of an executed signature page to this Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 7.13. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 7.14. Jurisdiction; Consent to Service of Process. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America, sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Collateral Agent, the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Grantor or its properties in the courts of any jurisdiction.

 

39


(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section 7.14. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each of the parties hereto hereby irrevocably consents to service of process in the manner provided for notices in Section 7.01. Nothing in this Agreement or any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by law.

SECTION 7.15. Termination or Release. (a) Subject to Section 2.04, this Agreement, the Pari Passu Intercreditor Agreement, the guarantees made herein, the Security Interest, the pledge of the Pledged Collateral and all other security interests granted hereby shall automatically terminate and be released when all the Obligations (other than contingent indemnification obligations for which no claim has been made) have been paid in full in cash and the Lenders and Pari Passu Secured Parties have no further commitment to lend under the Term Loan Credit Agreement or the Pari Passu Agreements, respectively, the aggregate L/C Exposure has been reduced to zero (or the only outstanding Letters of Credit have become subject to arrangements reasonably satisfactory to the Administrative Agent and the Issuing Bank) and the Issuing Banks have no further obligations to issue Letters of Credit under the Term Loan Credit Agreement.

(b) A Guarantor shall automatically be released from its obligations hereunder and the Security Interests created hereunder in the Collateral of such Guarantor shall be automatically released upon the consummation of any transaction permitted by the Term Loan Credit Agreement and the other Pari Passu Agreements (or consented to in writing pursuant to Section 9.08 of the Term Loan Credit Agreement and the analogous provision of any Pari Passu Agreement) as a result of which such Guarantor ceases to be a Subsidiary, or in accordance with Section 9.09(c) of the Term Loan Credit Agreement and the analogous provision of any Pari Passu Agreement.

(c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the Term Loan Credit Agreement and the other Pari Passu Agreements to any person that is not the Borrower or a Guarantor (including any Permitted Receivables Transaction or Permitted Securitization Transaction), or, upon the effectiveness of any written consent to the release of the Security Interest granted hereby in any Collateral pursuant to Section 9.08 of the Term Loan Credit Agreement and the analogous provision of the Pari Passu Agreements, the Security Interest in such Collateral shall be automatically released.

 

40


(d) Upon notification by the Borrower to the Collateral Agent that a Guarantor is a Non-Significant Subsidiary, and would not be required to become a Guarantor in accordance with the Term Loan Credit Agreement or any Pari Passu Agreement, the Collateral Agent shall release the obligations of such Subsidiary hereunder and the Security Interests created hereunder in the Collateral of such Guarantor.

(e) In connection with any termination or release pursuant to paragraph (a), (b), (c) or (d) above, the Collateral Agent shall promptly execute and deliver to any Grantor, at such Grantor’s expense, all Uniform Commercial Code termination statements and similar documents that such Grantor shall reasonably request to evidence such termination or release, and all assignments or other instruments of transfer as may be necessary to reassign to such Grantor all rights, titles and interests in any relevant Intellectual Property as may have been assigned to the Collateral Agent and/or its designees, subject to any disposition thereof that may have been made by the Collateral Agent and/or its designees in accordance with the terms of this Agreement, and all rights and license granted to the Collateral Agent and/or its designees in or to any such Intellectual Property pursuant to this Agreement shall automatically and immediately terminate and all rights shall automatically and immediately revert to such Grantor. Any execution and delivery of documents pursuant to this Section 7.15 shall be without recourse to or representation or warranty by the Collateral Agent or any Secured Party. Without limiting the provisions of Section 7.06, the Borrower shall reimburse the Collateral Agent upon demand for all costs and out of pocket expenses, including the reasonable fees, charges and expenses of counsel, incurred by it in connection with any action contemplated by this Section 7.15.

SECTION 7.16. Additional Subsidiaries. Any Subsidiary that is required to become a party hereto pursuant to Section 5.12 of the Term Loan Credit Agreement or the analogous provision of any Pari Passu Agreement shall enter into this Agreement as a Guarantor and a Grantor. Upon execution and delivery by the Collateral Agent and such Subsidiary of a supplement in the form of Exhibit A hereto, such Subsidiary shall become a Guarantor and a Grantor hereunder with the same force and effect as if originally named as a Guarantor and a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Loan Party hereunder. The rights and obligations of each Loan Party hereunder shall remain in full force and effect notwithstanding the addition of any new Loan Party as a party to this Agreement.

SECTION 7.17. Right of Setoff. If an Event of Default shall have occurred and is continuing, each Secured Party and its Affiliates hereby are authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all Collateral (including any deposits (general or special, time or demand, provisional or final (other than tax accounts, trust accounts or payroll accounts))) at any time held and other obligations at any time owing by such Secured Party or any of its Affiliates to or for the credit or the account of any Grantor against any and all of the obligations of such Grantor now or hereafter existing under this Agreement, the other Loan Documents and any Pari Passu Agreements held by such Secured Party, provided

 

41


that at such time such obligations are due or payable. The rights of each Secured Party and its Affiliates under this Section 7.17 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party or its Affiliates may have. The applicable Secured Party shall notify such Grantor and the Collateral Agent of any such setoff and application made by such Secured Party, provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section.

Notwithstanding anything to the contrary contained herein or in any other Loan Document or Pari Passu Agreement, each Secured Party expressly waives its right of setoff (and any similar right including bankers’ liens) with respect to all lockboxes, deposit accounts and other cash management accounts maintained by any Grantor and into which any collections for Government Accounts are deposited. For purposes hereof, “Government Accounts” means all accounts on which any federal or state government unit or any intermediary for any federal or state government unit is the obligor.

SECTION 7.18. ABL INTERCREDITOR AGREEMENT GOVERNS . NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT FOR THE BENEFIT OF THE SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT AND THE OTHER SECURED PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE ABL INTERCREDITOR AGREEMENT AND THE PARI PASSU INTERCREDITOR AGREEMENT (IF ANY). IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THE ABL INTERCREDITOR AGREEMENT, THE PARI PASSU INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE FOLLOWING ORDER OF PRIORITY SHALL APPLY: (1) THE ABL INTERCREDITOR AGREEMENT, (2) THIS AGREEMENT AND (3) THE PARI PASSU INTERCREDITOR AGREEMENT.

 

42


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

QUORUM HEALTH CORPORATION, 1

  by  

 

    Name:
    Title:

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Collateral Agent,

  by  

 

    Name:
    Title:
  by  

 

    Name:
    Title:

 

1   QHC/BB to provide signature pages for Subsidiaries party hereto.


Schedule I to the Guarantee and

Collateral Agreement

EXACT LEGAL NAMES AND OTHER INFORMATION

 

Exact Legal Name of Grantor

   Jurisdiction
of
Formation
   Organizational
ID
   Address of
Chief Executive
Office
   Address Where
Guarantor Maintains
Equipment or Other
Collateral
   Accounts
Receivable
              
              
              


Schedule II to the Guarantee and

Collateral Agreement

GUARANTORS


Schedule III to the Guarantee and

Collateral Agreement

EQUITY INTERESTS

 

Issuer

   Number of
Certificate
   Registered
Owner
   Number and
Class of
Equity Interest
   Percentage
of Equity
Interests
           
           
           

PLEDGED DEBT SECURITIES

 

Issuer

   Principal
Amount
   Date of Note    Maturity Date
        
        
        


Schedule IV to the Guarantee and

Collateral Agreement

DEBT INSTRUMENTS; ADVANCES


Schedule V to the Guarantee and

Collateral Agreement

U.S. COPYRIGHTS OWNED BY [NAME OR GRANTOR]

[Make a separate page of Schedule V for each Grantor and state if no copyrights are owned. List in numerical order by Registration No.]

U.S. Copyright Registrations

 

Title

  

Reg. No.

  

Author

     
     
     

Pending U.S. Copyright Applications for Registration

 

Title

  

Author

  

Class

  

Date Filed

        
        
        

Non-U.S. Copyright Registrations

[List in alphabetical order by country/numerical order by Registration No. within each country.]

 

Country

  

Title

  

Reg. No.

  

Author

        
        
        

Non-U.S. Pending Copyright Applications for Registration

[List in alphabetical order by country.]

 

Country

  

Title

  

Author

  

Class

  

Date Filed

           
           
           


LICENSES

[Make a separate page of Schedule V for each Grantor, and state if any Grantor is not a party to a license/sublicense.]

I. Licenses/Sublicenses of [Name of Grantor] as Licensor/Sublicensor on Date Hereof

A. Copyrights

[List U.S. copyrights in numerical order by Registration No. List non-U.S. copyrights by country in alphabetical order with Registration Nos. within each country in numerical order.]

U.S. Copyrights

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

Title of

U.S.

Copyright

  

Author

  

Reg. No.

           
           
           

Non-U.S. Copyrights

 

Country

  

Licensee Name

and Address

  

Date of

License/

Sublicense

  

Title of

Non-U.S.

Copyrights

  

Author

  

Reg. No.

              
              
              

 

V-2


B. Patents

[List U.S. patent Nos. and U.S. patent application Nos. in numerical order. List non-U.S. patent Nos. and non-U.S. application in alphabetical order by country, with numbers within each country in numerical order.]

U.S. Patents

 

Licensee Name and Address

  

Date of License/ Sublicense

  

Issue Date

  

Patent No.

        
        
        

U.S. Patent Applications

 

Licensee Name and Address

  

Date of License/ Sublicense

  

Date Filed

  

Application No.

        
        
        

Non-U.S. Patents

 

Country

  

Licensee Name and
Address

  

Date of License/
Sublicense

  

Issue Date

  

Non-U.S. Patent No.

           
           
           

Non-U.S. Patent Applications

 

Country

  

Licensee Name and
Address

  

Date of License/

Sublicense

  

Date Filed

  

Application No.

           
           
           

 

V-3


C. Trademarks

[List U.S. trademark Nos. and U.S. trademark application Nos. in numerical order. List non-U.S. trademark Nos. and non-U.S. application Nos. with trademark Nos. within each country in numerical order.]

U.S. Trademarks

 

Licensee Name and Address

  

Date of License/
Sublicense

  

U.S. Mark

  

Reg. Date

  

Reg. No.

           
           
           

U.S. Trademark Applications

 

Licensee Name and Address

  

Date of License/

Sublicense

  

U.S. Mark

  

Date Filed

  

Application No.

           
           
           

Non-U.S. Trademarks

 

Country

  

Licensee Name and
Address

  

Date of License/
Sublicense

  

Non-U.S. Mark

  

Reg. Date

  

Reg. No.

              
              
              

Non-U.S. Trademark Applications

 

Country

  

Licensee Name and
Address

  

Date of License/
Sublicense

  

Non-U.S. Mark

  

Date Filed

  

Application No.

              
              
              

 

V-4


D. Others

 

Licensee Name and Address

  

Date of License/ Sublicense

  

Subject Matter

     
     
     

 

V-5


II. Licenses/Sublicenses of [Name of Grantor] as Licensee/Sublicensee on Date Hereof

A. Copyrights

[List U.S. copyrights in numerical order by Registration No. List non-U.S. copyrights by country in alphabetical order, with Registration Nos. within each country in numerical order.]

U.S. Copyrights

 

Licensor Name and Address

  

Date of License/
Sublicense

  

Title of U.S. Copyright

  

Author

  

Reg. No.

           
           
           

Non-U.S. Copyrights

 

Country

  

Licensor Name and
Address

  

Date of License/
Sublicense

  

Title of Non-U.S.
Copyrights

  

Author

  

Reg. No.

              
              
              

 

V-6


B. Patents

[List U.S. patent Nos. and U.S. patent application Nos. in numerical order. List non-U.S. patent Nos. and non-U.S. application Nos. in alphabetical order by country with patent Nos. within each country in numerical order.]

U.S. Patents

 

Licensor Name and Address

  

Date of License/ Sublicense

  

Issue Date

  

Patent No.

        
        
        

U.S. Patent Applications

 

Licensor Name and Address

  

Date of License/ Sublicense

  

Date Filed

  

Application No.

        
        
        

Non-U.S. Patents

 

Country

  

Licensor Name and
Address

  

Date of License/
Sublicense

  

Issue Date

  

Non-U.S. Patent No.

           
           
           

Non-U.S. Patent Applications

 

Country

  

Licensor Name and
Address

  

Date of License/
Sublicense

  

Date Filed

  

Application No.

           
           
           

 

V-7


C. Trademarks

[List U.S. trademark Nos. and U.S. trademark application Nos. in numerical order. List non-U.S. trademark Nos. and non-U.S. application Nos. with trademark Nos. within each country in numerical order.]

U.S. Trademarks

 

Licensor Name and Address

  

Date of License/

Sublicense

  

U.S. Mark

  

Reg. Date

  

Reg. No.

           
           
           

U.S. Trademark Applications

 

Licensor Name and Address

  

Date of License/
Sublicense

  

U.S. Mark

  

Date Filed

  

Application No.

           
           
           

Non-U.S. Trademarks

 

Country

  

Licensor Name and
Address

  

Date of License/
Sublicense

  

Non-U.S. Mark

  

Reg. Date

  

Reg. No.

              
              
              

Non-U.S. Trademark Applications

 

Country

  

Licensor Name and
Address

  

Date of License/
Sublicense

  

Non-U.S. Mark

  

Date Filed

  

Application No.

              
              
              

 

V-8


D. Others

 

Licensor Name and Address

  

Date of License/ Sublicense

  

Subject Matter

     
     
     

 

V-9


PATENTS OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule V for each Grantor and state if no patents are owned. List in numerical order by Patent No./Patent Application No.]

U.S. Patents

 

Patent No.

  

Issue Date

  
  
  

U.S. Patent Applications

 

Patent Application No.

  

Filing Date

  
  
  

Non-U.S. Patents

[List non-U.S. patents and non-U.S. patent applications by country in alphabetical order, with patent Nos. and patent application Nos. within each country in numerical order.]

 

Country

  

Issue Date

  

Patent No.

     
     
     

Non-U.S. Patent Applications

 

Country

  

Filing Date

  

Patent Application No.

     
     
     

 

V-10


TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule V for each Grantor and state if no trademarks/trade names are owned. List in numerical order by trademark Registration/Application No.]

U.S. Trademark Registrations

 

Mark

  

Reg. Date

  

Reg. No.

     
     
     

U.S. Trademark Applications

 

Mark

  

Filing Date

  

Application No.

     
     
     

State Trademark Registrations

[List in alphabetical order by state/numerical order by trademark No. within each state.]

 

State

  

Mark

  

Reg. Date

  

Reg. No.

        
        
        

Non-U.S. Trademark Registrations

[List non-U.S. trademarks and non-U.S. trademark applications by country in alphabetical order, with Registration Nos. and application Nos. within each country in numerical order.]

 

Country

  

Mark

  

Reg. Date

  

Reg. No.

        
        
        

Non-U.S. Trademark Applications

 

Country

  

Mark

  

Application Date

  

Application No.

        
        
        

 

V-11


Trade Names

 

Country(s) Where Used

  

Trade Names

  
  
  

 

V-12


Schedule VI to the Guarantee and

Collateral Agreement

MORTGAGE FILINGS


Schedule VII to the Guarantee and

Collateral Agreement

COMMERCIAL TORT CLAIMS


Exhibit A to the Guarantee and

Collateral Agreement

SUPPLEMENT NO. [●] (this “ Supplement ”) dated as of [●], 20[●] to the Guarantee and Collateral Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Guarantee and Collateral Agreement ”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “ Borrower ”), each Subsidiary from time to time party thereto (each such Subsidiary individually a “ Guarantor ” and collectively, the “ Guarantors ”; the Guarantors and the Borrower are referred to collectively herein as the “ Grantors ”) and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (together with its affiliates “ Credit Suisse ”), as administrative agent and as collateral agent (in such capacity, the “ Collateral Agent ”) for the Secured Parties (as defined therein).

A. Reference is made to the Credit Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Term Loan Credit Agreement ”), among the Borrower, the lenders from time to time party thereto (the “ Lenders ”) and Credit Suisse AG, Cayman Islands Branch, as administrative agent for the Lenders and as Collateral Agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Term Loan Credit Agreement or the Guarantee and Collateral Agreement referred to therein, as applicable.

C. The Grantors have entered into the Guarantee and Collateral Agreement in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit. Section 7.16 of the Guarantee and Collateral Agreement provides that additional Subsidiaries may become Guarantors and Grantors under the Guarantee and Collateral Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “ New Subsidiary ”) is executing this Supplement in accordance with the requirements of the Term Loan Credit Agreement and any Pari Passu Agreements to become a Guarantor and a Grantor under the Guarantee and Collateral Agreement in order to induce the Lenders to make additional Loans and the Issuing Banks to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

SECTION 1. In accordance with Section 7.16 of the Guarantee and Collateral Agreement, the New Subsidiary by its signature below becomes a Grantor and Guarantor under the Guarantee and Collateral Agreement with the same force and effect as if originally named therein as a Grantor and Guarantor and the New Subsidiary hereby (a) agrees to all the terms and provisions of the Guarantee and Collateral Agreement


applicable to it as a Grantor and Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor and Guarantor thereunder are true and correct in all material respects on and as of the date hereof. In furtherance of the foregoing, the New Subsidiary, as security for the payment and performance in full of the Obligations (as defined in the Guarantee and Collateral Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Guarantee and Collateral Agreement) of the New Subsidiary. Each reference to a “Grantor” or a “Guarantor” in the Guarantee and Collateral Agreement shall be deemed to include the New Subsidiary. The Guarantee and Collateral Agreement is hereby incorporated herein by reference.

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Subsidiary and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Subsidiary hereby represents and warrants that as of the date hereof (a) set forth on Schedule III attached hereto is a true and correct schedule of any and all Equity Interests and Pledged Debt Securities now owned by the New Subsidiary and required to be pledged under the Guarantee and Collateral Agreement, other than Equity Interests issued by Non-Significant Subsidiaries and minority Equity Interests, (b) set forth on Schedule V attached hereto is a true and correct schedule of any and all Intellectual Property now owned by the New Subsidiary and that would have been required to be listed on Schedule V to the Guarantee and Collateral Agreement on the Closing Date, and (c) set forth on Schedule VII attached hereto is a true and correct schedule of any Commercial Tort Claims now held by the New Subsidiary and that would have been required to be listed on Schedule VII to the Guarantee and Collateral Agreement on the Closing Date and (d) set forth under its signature hereto, is the true and correct legal name of the New Subsidiary and its jurisdiction of organization.

SECTION 5. Except as expressly supplemented hereby, the Guarantee and Collateral Agreement shall remain in full force and effect.

 

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SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guarantee and Collateral Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall (except as otherwise expressly permitted by the Guarantee and Collateral Agreement) be in writing and given as provided in Section 9.01 of the Term Loan Credit Agreement. All communications and notices hereunder to the New Subsidiary shall be given to it in care of the Borrower as provided in Section 9.01 of the Term Loan Credit Agreement.

SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of one counsel for the Collateral Agent in each relevant jurisdiction.

 

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IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly executed this Supplement to the Guarantee and Collateral Agreement as of the day and year first above written.

 

[NAME OF NEW SUBSIDIARY],
by  

 

  Name:
  Title:
  Address:
  Legal Name:
  Jurisdiction of Formation:

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Collateral Agent,
by  

 

  Name:
  Title:
by  

 

  Name:
  Title:

 

A-4


Schedule III

Collateral of the New Subsidiary

EQUITY INTERESTS

 

Issuer

  

Number of
Certificate

  

Registered
Owner

  

Number and
Class of
Equity Interest

  

Percentage
of Equity

Interests

           
           
           

PLEDGED DEBT SECURITIES

 

Issuer

  

Principal
Amount

  

Date of Note

  

Maturity Date

        
        
        


Schedule V

INTELLECTUAL PROPERTY

[Follow format of Schedule V to the

Guarantee and Collateral Agreement.]


Schedule VII

COMMERCIAL TORT CLAIMS

[Follow format of Schedule VII to the

Guarantee and Collateral Agreement.]


EXHIBIT F

 

 

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY

AGREEMENT, AND FINANCING STATEMENT AND FIXTURE FILING

From

[NAME OF MORTGAGOR]

To

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

 

Dated:             , 2016

Premises: [City], [STATE]

                    County

 

 

 

 

 


EXHIBIT F

THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING dated as of             , 2016 (this “Mortgage”), by [    ], a [        ], having an office at [1573 Mallory Lane, Suite 100, Brentwood, Tennessee 37027] (the “Mortgagor”), to CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, a bank organized under the laws of Switzerland, having an office at Eleven Madison Avenue, New York, New York 10010 (the “Mortgagee”) as Collateral Agent for the Secured Parties (as such terms are defined below).

WITNESSETH THAT:

Reference is made to (i) the Credit Agreement dated as of April 29, 2016 (as same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Quorum Health Corporation, a Delaware corporation (the “Borrower”), the lenders from time to time party thereto (the “Lenders”) and Credit Suisse AG, Cayman Islands Branch as administrative agent (the “Administrative Agent”) for the Lenders, and collateral agent (the “Collateral Agent”) for the Secured Parties, and (ii) the Guarantee and Collateral Agreement dated as of April 29, 2016 (as same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Guarantee and Collateral Agreement”) among the Borrower, the Subsidiaries of the Borrower from time to time party thereto and Collateral Agent. Capitalized terms used but not defined herein have the meanings given to them in the Credit Agreement and the Guarantee and Collateral Agreement, as applicable.

In the Credit Agreement, (i) the Lenders have agreed to make term loans (the “Term Loans”), including Incremental Term Loans, and revolving loans (the “Revolving Loans”, together with the Term Loans, the “Loans”) to the Borrower and (ii) the Issuing Banks have issued or agreed to issue from time to time Letters of Credit for the account of the Borrower, in each case pursuant to, upon the terms, and subject to the conditions specified in, the Credit Agreement. Amounts paid in respect of Term Loans may not be reborrowed. Subject to the terms of the Credit Agreement, Borrower may borrow, prepay and reborrow Revolving Loans.

Mortgagor is a wholly-owned direct or indirect Subsidiary of the Borrower and will derive substantial benefit from the making of the Loans by the Lenders and the issuance of the Letters of Credit by the Issuing Banks. In order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit, the Mortgagor has agreed to guarantee, among other things, the due and punctual payment and performance of all of the obligations of the Borrower under the Credit Agreement pursuant to the terms of the Guarantee and Collateral Agreement.

The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit are conditioned upon, among other things, the execution and delivery by the Mortgagor of this Mortgage in the form hereof to secure the Obligations as such term is defined in the Guarantee and Collateral Agreement.


As used in this Mortgage, the term “Secured Parties” shall mean (a)(i) the Administrative Agent, (ii) the Collateral Agent, (iii) any Issuing Bank, (iv) the Lenders, (v) each counterparty to any Hedging Agreement or Cash Management Arrangement with a Loan Party that either (A) is in effect on the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (B) is entered into after the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement or Cash Management Arrangement is entered into, (vi) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (vii) the successors and assigns of each of the foregoing and (b)(i) the holders of any Pari Passu Debt Obligations and (ii) any Pari Passu Representative with respect thereto.

Pursuant to the requirements of the Credit Agreement, the Mortgagor is granting this Mortgage to create a lien on and a security interest in the Mortgaged Property (as hereinafter defined) to secure the performance and payment by the Mortgagor of the Obligations. The Credit Agreement also requires the granting by other Loan Parties of mortgages, deeds of trust and/or deeds to secure debt (the “Other Mortgages”) that create liens on and security interests in certain real and personal property other than the Mortgaged Property to secure the performance of the Obligations.

Granting Clauses

NOW, THEREFORE, IN CONSIDERATION OF the foregoing and in order to secure the due and punctual payment and performance of the Obligations for the benefit of the Secured Parties, Mortgagor hereby grants, conveys, mortgages, assigns and pledges to the Mortgagee, a mortgage lien on and a security interest in, all the following described property (the “Mortgaged Property”) whether now owned or held or hereafter acquired:

(1) the land more particularly described on Exhibit A hereto (the “Land”), together with all rights appurtenant thereto, including the easements over certain other adjoining land granted by any easement agreements, covenant or restrictive agreements and all air rights, mineral rights, water rights, oil and gas rights and development rights, if any, relating thereto, and also together with all of the other easements, rights, privileges, interests, hereditaments and appurtenances thereunto belonging or in any way appertaining and all of the estate, right, title, interest, claim or demand whatsoever of Mortgagor therein and in the streets and ways adjacent thereto, either in law or in equity, in possession or expectancy, now or hereafter acquired (the “Premises”);

(2) all buildings, improvements, structures, paving, parking areas, walkways and landscaping now or hereafter erected or located upon the Land, and

 

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all fixtures of every kind and type affixed to the Premises or attached to or forming part of any structures, buildings or improvements and replacements thereof now or hereafter erected or located upon the Land (the “Improvements”);

(3) all apparatus, movable appliances, building materials, equipment, fittings, furnishings, furniture, machinery and other articles of tangible personal property of every kind and nature, and replacements thereof, now or at any time hereafter placed upon or used in any way in connection with the use, enjoyment, occupancy or operation of the Improvements or the Premises, including all of Mortgagor’s books and records relating thereto and including all pumps, tanks, goods, machinery, tools, equipment, lifts (including fire sprinklers and alarm systems, fire prevention or control systems, cleaning rigs, air conditioning, heating, boilers, refrigerating, electronic monitoring, water, loading, unloading, lighting, power, sanitation, waste removal, entertainment, communications, computers, recreational, window or structural, maintenance, truck or car repair and all other equipment of every kind), restaurant, bar and all other indoor or outdoor furniture (including tables, chairs, booths, serving stands, planters, desks, sofas, racks, shelves, lockers and cabinets), bar equipment, glasses, cutlery, uniforms, linens, memorabilia and other decorative items, furnishings, appliances, supplies, inventory, rugs, carpets and other floor coverings, draperies, drapery rods and brackets, awnings, venetian blinds, partitions, chandeliers and other lighting fixtures, freezers, refrigerators, walk-in coolers, signs (indoor and outdoor), computer systems, cash registers and inventory control systems, and all other apparatus, equipment, furniture, furnishings, and articles used in connection with the use or operation of the Improvements or the Premises, it being understood that the enumeration of any specific articles of property shall in no way result in or be held to exclude any items of property not specifically mentioned (the property referred to in this subparagraph (3), the “Personal Property”);

(4) all general intangibles owned by Mortgagor and relating to design, development, operation, management and use of the Premises or the Improvements, all certificates of occupancy, zoning variances, building, use or other permits, approvals, authorizations and consents obtained from and all materials prepared for filing or filed with any governmental agency in connection with the development, use, operation or management of the Premises and Improvements, all construction, service, engineering, consulting, leasing, architectural and other similar contracts concerning the design, construction, management, operation, occupancy and/or use of the Premises and Improvements, all architectural drawings, plans, specifications, soil tests, feasibility studies, appraisals, environmental studies, engineering reports and similar materials relating to any portion of or all of the Premises and Improvements, and all payment and performance bonds or warranties or guarantees relating to the Premises or the Improvements, all to the extent assignable (the “Permits, Plans and Warranties”);

 

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(5) all now or hereafter existing leases or licenses (under which Mortgagor is landlord or licensor) and subleases (under which Mortgagor is sublandlord), concession, management, mineral or other agreements of a similar kind that permit the use or occupancy of the Premises or the Improvements for any purpose in return for any payment, or the extraction or taking of any gas, oil, water or other minerals from the Premises in return for payment of any fee, rent or royalty (collectively, “Leases”), and all agreements or contracts for the sale or other disposition of all or any part of the Premises or the Improvements, now or hereafter entered into by Mortgagor, together with all charges, fees, income, issues, profits, receipts, rents, revenues or royalties payable thereunder (“Rents”);

(6) all real estate tax refunds and all proceeds of the conversion, voluntary or involuntary, of any of the Mortgaged Property into cash or liquidated claims (“Proceeds”), including Proceeds of insurance maintained by the Mortgagor and condemnation awards, any awards that may become due by reason of the taking by eminent domain or any transfer in lieu thereof of the whole or any part of the Premises or Improvements or any rights appurtenant thereto, and any awards for change of grade of streets, together with any and all moneys now or hereafter on deposit for the payment of real estate taxes, assessments or common area charges levied against the Mortgaged Property, unearned premiums on policies of fire and other insurance maintained by the Mortgagor covering any interest in the Mortgaged Property or required by the Credit Agreement; and

(7) all extensions, improvements, betterments, renewals, substitutes and replacements of and all additions and appurtenances to, the Land, the Premises, the Improvements, the Personal Property, the Permits, Plans and Warranties and the Leases, hereinafter acquired by or released to the Mortgagor or constructed, assembled or placed by the Mortgagor on the Land, the Premises or the Improvements, and all conversions of the security constituted thereby, immediately upon such acquisition, release, construction, assembling, placement or conversion, as the case may be, and in each such case, without any further mortgage, deed of trust, conveyance, assignment or other act by the Mortgagor, all of which shall become subject to the lien of this Mortgage as fully and completely, and with the same effect, as though now owned by the Mortgagor and specifically described herein.

TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its successors and assigns, for the ratable benefit of the Secured Parties, forever, subject only to the Liens set forth in Section 6.02 of the Credit Agreement, including, for the avoidance of uncertainty, those Liens set forth in Sections 6.02(h), (i) and (l) of the Credit Agreement and to satisfaction and release as provided in Section 3.04.

 

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ARTICLE I

Representations, Warranties and Covenants of Mortgagor

Mortgagor agrees, covenants, represents and/or warrants as follows:

Section 1.01. Title, Mortgage Lien. (a) Mortgagor has good and marketable fee simple title to the Mortgaged Property, subject only to the Liens set forth in Section 6.02 of the Credit Agreement, including, for the avoidance of uncertainty, those Liens set forth in Sections 6.02(h), (i) and (l) of the Credit Agreement.

(b) The execution and delivery of this Mortgage is within Mortgagor’s [limited liability company powers] and has been duly authorized by all necessary [limited liability company] and, if required, [member] action. This Mortgage has been duly executed and delivered by Mortgagor and constitutes a legal, valid and binding obligation of Mortgagor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(c) The execution, delivery and recordation of this Mortgage (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect the lien of this Mortgage, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of Mortgagor or any order of any Governmental Authority, (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon Mortgagor or its assets, or give rise to a right thereunder to require any payment to be made by Mortgagor, and (iv) will not result in the creation or imposition of any Lien on any asset of Mortgagor, except the lien of this Mortgage.

(d) This Mortgage and the Uniform Commercial Code Financing Statements described in Section 1.09 of this Mortgage, when duly recorded in the public records identified in the Perfection Certificate will create a valid, perfected and enforceable lien upon and security interest in all of the Mortgaged Property.

(e) Mortgagor will forever warrant and defend its title to the Mortgaged Property, the rights of Mortgagee therein under this Mortgage and the validity and priority of the lien of this Mortgage thereon against the claims of all persons and parties except those having rights under the Liens set forth in Section 6.02 of the Credit Agreement to the extent of those rights.

Section 1.02. Credit Agreement. This Mortgage is given pursuant to the Credit Agreement. Mortgagor expressly covenants and agrees to pay when due, and to timely perform, and to cause the other Loan Parties to pay when due, and to timely perform, the Obligations in accordance with their terms.

 

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Section 1.03. Payment of Taxes, and Other Obligations. (a) Mortgagor will pay and discharge from time to time prior to the time when the same shall become delinquent, and before any interest or penalty accrues thereon or attaches thereto, all Taxes and other obligations with respect to the Mortgaged Property or any part thereof or upon the Rents from the Mortgaged Property or arising in respect of the occupancy, use or possession thereof in accordance with, and to the extent required by, the Credit Agreement.

(b) In the event of the passage of any state, Federal, municipal or other governmental law, order, rule or regulation subsequent to the date hereof (i) deducting from the value of real property for the purpose of taxation any lien or encumbrance thereon or in any manner changing or modifying the laws now in force governing the taxation of this Mortgage or debts secured by mortgages or deeds of trust (other than laws governing income, franchise and similar taxes generally) or the manner of collecting taxes thereon and (ii) imposing a tax to be paid by Mortgagee, either directly or indirectly, on this Mortgage or any of the Loan Documents, or requiring an amount of taxes to be withheld or deducted therefrom, Mortgagor will promptly (i) notify Mortgagee of such event, (ii) enter into such further instruments as Mortgagee may determine are reasonably necessary or desirable to obligate Mortgagor to make any additional payments necessary to put the Lenders and Secured Parties in the same financial position they would have been if such law, order, rule or regulation had not been passed and (iii) make such additional payments to Mortgagee for the benefit of the Lenders and Secured Parties.

Section 1.04. Maintenance of Mortgaged Property. Mortgagor will maintain the Improvements and the Personal Property in the manner required by the Credit Agreement.

Section 1.05. Insurance . Mortgagor will keep or cause to be kept the Improvements and Personal Property insured against such risks, and in the manner, described in Section 4.03(l) of the Guarantee and Collateral Agreement and shall purchase such additional insurance as may be required from time to time pursuant to Section 5.02 of the Credit Agreement. Federal Emergency Management Agency Standard Flood Hazard Determination Forms will be purchased by Mortgagor for each Mortgaged Property on which Improvements are located. If any portion of Improvements constituting part of the Mortgaged Property is located in an area identified as a special flood hazard area by Federal Emergency Management Agency or other applicable agency, Mortgagor will purchase flood insurance and provide evidence to Collateral Agent in an amount reasonably satisfactory to Mortgagee and in compliance with applicable law, but in no event less than the maximum limit of coverage available under the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, each, as amended.

Section 1.06. Casualty Condemnation/Eminent Domain. Mortgagor shall give Mortgagee prompt written notice of any casualty or other damage to the Mortgaged

 

6


Property or any proceeding for the taking of the Mortgaged Property or any portion thereof or interest therein under power of eminent domain or by condemnation or any similar proceeding in accordance with, and to the extent required by, the Credit Agreement. Any Net Cash Proceeds received by or on behalf of the Mortgagor in respect of any such casualty, damage or taking shall constitute trust funds held by the Mortgagor for the benefit of the Secured Parties to be applied to repair, restore or replace the Mortgaged Property or, if a prepayment event shall occur with respect to any such Net Cash Proceeds, to be applied in accordance with the Credit Agreement.

Section 1.07. Assignment of Leases and Rents. (a) Mortgagor hereby irrevocably and absolutely grants, transfers and assigns all of its right title and interest in all Leases, together with any and all extensions and renewals thereof for purposes of securing and discharging the performance by Mortgagor of the Obligations. Mortgagor has not assigned or executed any assignment of, and will not assign or execute any assignment of, any Leases or the Rents payable thereunder to anyone other than Mortgagee.

(b) Except for those Leases set forth in Section 6.02(l) of the Credit Agreement, all Leases shall be subordinate to the lien of this Mortgage. Except for those Leases set forth in Section 6.02(l) of the Credit Agreement, Mortgagor will not enter into, modify or amend any Lease if such Lease, as entered into, modified or amended, will not be subordinate to the lien of this Mortgage.

(c) Subject to Section 1.07(d), Mortgagor has assigned and transferred to Mortgagee all of Mortgagor’s right, title and interest in and to the Rents now or hereafter arising from each Lease heretofore or hereafter made or agreed to by Mortgagor, it being intended that this assignment establish, subject to Section 1.07(d), an absolute transfer and assignment of all Rents and all Leases to Mortgagee and not merely to grant a security interest therein. Subject to Section 1.07(d), Mortgagee may in Mortgagor’s name and stead (with or without first taking possession of any of the Mortgaged Property personally or by receiver as provided herein) operate the Mortgaged Property and rent, lease or let all or any portion of any of the Mortgaged Property to any party or parties at such rental and upon such terms as Mortgagee shall, in its sole discretion, determine, and may collect and have the benefit of all of said Rents arising from or accruing at any time thereafter or that may thereafter become due under any Lease.

(d) So long as an Event of Default shall not have occurred and be continuing, Mortgagee will not exercise any of its rights under Section 1.07(c), and Mortgagor shall receive and collect the Rents accruing under any Lease; but after the happening and during the continuance of any Event of Default, Mortgagee may, at its option, receive and collect all Rents and enter upon the Premises and Improvements through its officers, agents, employees or attorneys for such purpose and for the operation and maintenance thereof. Mortgagor hereby irrevocably authorizes and directs each tenant, if any, and each successor, if any, to the interest of any tenant under any Lease, respectively, to rely upon any notice of an Event of Default sent by Mortgagee to any

 

7


such tenant or any of such tenant’s successors in interest, and thereafter to pay Rents to Mortgagee without any obligation or right to inquire as to whether an Event of Default actually exists and even if some notice to the contrary is received from the Mortgagor, who shall have no right or claim against any such tenant or successor in interest for any such Rents so paid to Mortgagee. Each tenant or any of such tenant’s successors in interest from whom Mortgagee or any officer, agent, attorney or employee of Mortgagee shall have collected any Rents, shall be authorized to pay Rents to Mortgagor only after such tenant or any of their successors in interest shall have received written notice from Mortgagee (such notice to promptly be sent by Mortgagee once an Event of Default is no longer occurring) that the Event of Default is no longer continuing, unless and until a further notice of an Event of Default is given by Mortgagee to such tenant or any of its successors in interest.

(e) Mortgagee will not become a mortgagee in possession so long as it does not enter or take actual possession of the Mortgaged Property. In addition, Mortgagee shall not be responsible or liable for performing any of the obligations of the landlord under any Lease, for any waste by any tenant, or others, for any dangerous or defective conditions of any of the Mortgaged Property, for negligence in the management, upkeep, repair or control of any of the Mortgaged Property or any other act or omission by any other person.

(f) Mortgagor shall furnish to Mortgagee, within 30 days after a request by Mortgagee to do so, a written statement containing the names of all tenants, subtenants and concessionaires of the Premises or Improvements, the terms of any Lease, the space occupied and the rentals and/or other amounts payable thereunder.

Section 1.08. Restrictions on Transfers and Encumbrances. Mortgagor shall not directly or indirectly sell, convey, divest, alienate, assign, lease, sublease, license, mortgage, pledge, encumber or otherwise transfer, create, consent to or suffer the creation of any lien, charge or other form of encumbrance upon any interest in or any part of the Mortgaged Property (other than resulting from a condemnation), or engage in any common, cooperative, joint, time-sharing or other congregate ownership of all or part thereof, except in each case in accordance with and to the extent permitted by the Credit Agreement; provided , that Mortgagor may, in the ordinary course of business and in accordance with reasonable commercial standards, enter into easement or covenant agreements that relate to and/or benefit the operation of the Mortgaged Property and that do not materially and adversely affect the value, use or operation of the Mortgaged Property. If any of the foregoing transfers or encumbrances results in an event requiring prepayment of the Loans in accordance with the terms of the Credit Agreement, any Net Cash Proceeds received by or on behalf of the Mortgagor in respect thereof shall constitute trust funds to be held by the Mortgagor for the benefit of the Secured Parties and applied in accordance with the Credit Agreement.

Section 1.09. Security Agreement. This Mortgage is both a mortgage of real property and a grant of a security interest in personal property, and shall constitute

 

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and serve as a “Security Agreement” within the meaning of the uniform commercial code as adopted in the state wherein the Premises are located (“UCC”). Mortgagor has hereby granted unto Mortgagee a security interest in and to all the Mortgaged Property described in this Mortgage that is not real property, and simultaneously with the recording of this Mortgage, Mortgagor has filed or will file UCC financing statements, and will file continuation statements prior to the lapse thereof, at the appropriate offices in the jurisdiction of formation of the Mortgagor to perfect the security interest granted by this Mortgage in all the Mortgaged Property that is not real property. Mortgagor hereby appoints Mortgagee as its true and lawful attorney-in-fact and agent, for Mortgagor and in its name, place and stead, in any and all capacities, to execute any document and to file the same in the appropriate offices (to the extent it may lawfully do so), and to perform each and every act and thing reasonably requisite and necessary to be done to perfect the security interest contemplated by the preceding sentence. Mortgagee shall have all rights with respect to the part of the Mortgaged Property that is the subject of a security interest afforded by the UCC in addition to, but not in limitation of, the other rights afforded Mortgagee hereunder and under the Guarantee and Collateral Agreement.

Section 1.10. Filing and Recording. Mortgagor will cause this Mortgage, the UCC financing statements referred to in Section 1.09, any other security instrument creating a security interest in or evidencing the lien hereof upon the Mortgaged Property and each UCC continuation statement and instrument of further assurance to be filed, registered or recorded and, if necessary, refiled, rerecorded and reregistered, in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to perfect the lien hereof upon, and the security interest of Mortgagee in, the Mortgaged Property until this Mortgage is terminated and released in full in accordance with Section 3.04 hereof. Mortgagor will pay all filing, registration and recording fees, all Federal, state, county and municipal recording, documentary or intangible taxes and other taxes, duties, imposts, assessments and charges, and all reasonable expenses incidental to or arising out of or in connection with the execution, delivery and recording of this Mortgage, UCC continuation statements any mortgage supplemental hereto, any security instrument with respect to the Personal Property, Permits, Plans and Warranties and Proceeds or any instrument of further assurance.

Section 1.11. Further Assurances. Upon reasonable demand by Mortgagee, Mortgagor will, at the cost of Mortgagor and without expense to Mortgagee, do, execute, acknowledge and deliver all such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall from time to time reasonably require for the better assuring, conveying, assigning, transferring and confirming unto Mortgagee the property and rights hereby conveyed or assigned or intended now or hereafter so to be, or which Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Mortgage, or for filing, registering or recording this Mortgage, and on demand, Mortgagor will also execute and deliver and hereby appoints Mortgagee as its true and lawful attorney-in-fact and agent, for Mortgagor and in its name, place and stead, in any and all capacities, to execute and

 

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file to the extent it may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments reasonably requested by Mortgagee to evidence more effectively the lien hereof upon the Personal Property and to perform each and every act and thing requisite and necessary to be done to accomplish the same.

Section 1.12. Additions to Mortgaged Property. All right, title and interest of Mortgagor in and to all extensions, improvements, betterments, renewals, substitutions and replacements of, and all additions and appurtenances to, the Mortgaged Property hereafter acquired by or released to Mortgagor or constructed, assembled or placed by Mortgagor upon the Premises or the Improvements, and all conversions of the security constituted thereby, immediately upon such acquisition, release, construction, assembling, placement or conversion, as the case may be, and in each such case without any further mortgage, conveyance, assignment or other act by Mortgagor, shall become subject to the lien and security interest of this Mortgage as fully and completely and with the same effect as though now owned by Mortgagor and specifically described in the grant of the Mortgaged Property above, but at any and all times Mortgagor will execute and deliver to Mortgagee any and all such further assurances, mortgages, conveyances or assignments thereof as Mortgagee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien and security interest of this Mortgage.

Section 1.13. No Claims Against Mortgagee. Nothing contained in this Mortgage shall constitute any consent or request by Mortgagee, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Mortgaged Property or any part thereof, nor as giving Mortgagor any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Mortgagee in respect thereof.

Section 1.14. Fixture Filing. (a) Certain portions of the Mortgaged Property are or will become “fixtures” (as that term is defined in the UCC) on the Land, and this Mortgage, upon being filed for record in the real estate records of the county wherein such fixtures are situated, shall operate also as a financing statement filed as a fixture filing in accordance with the applicable provisions of said UCC upon such portions of the Mortgaged Property that are or become fixtures.

(b) The real property to which the fixtures relate is described in Exhibit A attached hereto. The record owner of the real property described in Exhibit A attached hereto is Mortgagor. The name, type of organization and jurisdiction of organization of the debtor for purposes of this financing statement are the name, type of organization and jurisdiction of organization of the Mortgagor set forth in the first paragraph of this Mortgage, and the name of the secured party for purposes of this financing statement is the name of the Mortgagee set forth in the first paragraph of this Mortgage. The mailing address of the Mortgagor/debtor is the address of the Mortgagor set forth in the first paragraph of this Mortgage. The mailing address of the Mortgagee/secured party from which information concerning the security interest hereunder may be obtained is the address of the Mortgagee set forth in the first paragraph of this Mortgage.

 

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ARTICLE II

Defaults and Remedies

[Subject to Local Laws]

Section 2.01. Events of Default. Any Event of Default under the Credit Agreement (as such term is defined therein) shall constitute an Event of Default under this Mortgage.

Section 2.02. Demand for Payment. If an Event of Default shall occur and be continuing, then, upon written demand of Mortgagee, Mortgagor will pay to Mortgagee all amounts due hereunder and under the Credit Agreement and the Guarantee and Collateral Agreement and such further amount as shall be sufficient to cover the out-of-pocket costs and expenses of collection, including attorneys’ fees, disbursements and expenses incurred by Mortgagee, and Mortgagee shall be entitled and empowered to institute an action or proceedings at law or in equity for the collection of the sums so due and unpaid, to prosecute any such action or proceedings to judgment or final decree, to enforce any such judgment or final decree against Mortgagor and to collect, in any manner provided by law, all moneys adjudged or decreed to be payable.

Section 2.03. Rights To Take Possession, Operate and Apply Revenues. (a) If an Event of Default shall occur and be continuing, Mortgagor shall, upon demand of Mortgagee, forthwith surrender to Mortgagee actual possession of the Mortgaged Property and, if and to the extent not prohibited by applicable law, Mortgagee itself, or by such officers or agents as it may appoint, may then enter and take possession of all the Mortgaged Property without the appointment of a receiver or an application therefor, exclude Mortgagor and its agents and employees wholly therefrom, and have access to the books, papers and accounts of Mortgagor.

(b) If Mortgagor shall for any reason fail to surrender or deliver the Mortgaged Property or any part thereof after such demand by Mortgagee, Mortgagee may to the extent not prohibited by applicable law, obtain a judgment or decree conferring upon Mortgagee the right to immediate possession or requiring Mortgagor to deliver immediate possession of the Mortgaged Property to Mortgagee, to the entry of which judgment or decree Mortgagor hereby specifically consents. Mortgagor will pay to Mortgagee, upon demand, all reasonable expenses of obtaining such judgment or decree, including reasonable compensation to Mortgagee’s attorneys and agents with interest thereon at the rate per annum applicable to overdue amounts under the Credit Agreement as provided in Section 2.07 of the Credit Agreement (the “Interest Rate”); and all such expenses and compensation shall, until paid, be secured by this Mortgage.

 

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(c) Upon every such entry or taking of possession, Mortgagee may, to the extent not prohibited by applicable law, hold, store, use, operate, manage and control the Mortgaged Property, conduct the business thereof and, from time to time, (i) make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements thereto and thereon, (ii) purchase or otherwise acquire additional fixtures, personalty and other property that are reasonably necessary for the operation of the business, (iii) insure or keep the Mortgaged Property insured, (iv) manage and operate the Mortgaged Property and exercise all the rights and powers of Mortgagor to the same extent as Mortgagor could in its own name or otherwise with respect to the same, or (v) enter into any and all agreements with respect to the exercise by others of any of the powers herein granted Mortgagee, all as may from time to time be directed or determined by Mortgagee to reasonably be in its best interest and Mortgagor hereby appoints Mortgagee as its true and lawful attorney-in-fact and agent, for Mortgagor and in its name, place and stead, in any and all capacities, to perform any of the foregoing acts. Mortgagee may collect and receive all the Rents, issues, profits and revenues from the Mortgaged Property, including those past due as well as those accruing thereafter, and, after deducting (A) all out-of-pocket expenses of taking, holding, managing and operating the Mortgaged Property (including compensation for the services of all persons employed for such purposes), (B) the out-of-pocket costs of all such maintenance, repairs, renewals, replacements, additions, betterments, improvements, purchases and acquisitions, (C) the costs of insurance, (D) such taxes, assessments and other similar charges as Mortgagee may at its option pay, (E) other proper charges upon the Mortgaged Property or any part thereof and (F) the compensation, expenses and disbursements of the attorneys and agents of Mortgagee, Mortgagee shall apply the remainder of the moneys and proceeds so received first to the payment of the Mortgagee for the satisfaction of the Obligations in accordance with the Credit Agreement, and second, if there is any surplus, to Mortgagor, subject to the entitlement of others thereto under applicable law.

(d) Whenever, before any sale of the Mortgaged Property under Section 2.06, all Obligations that are then due shall have been paid and all Events of Default fully cured, Mortgagee will surrender possession of the Mortgaged Property back to Mortgagor, its successors or assigns. The same right of taking possession shall, however, arise again if any subsequent Event of Default shall occur and be continuing.

Section 2.04. Right To Cure Mortgagor’s Failure to Perform. Should Mortgagor fail in the payment, performance or observance of any term, covenant or condition required by this Mortgage or the Credit Agreement (with respect to the Mortgaged Property), Mortgagee may pay, perform or observe the same, and all payments made or costs or expenses incurred by Mortgagee in connection therewith shall be secured hereby and shall be, without demand, immediately repaid by Mortgagor to Mortgagee with interest thereon at the Interest Rate. Mortgagee shall be the judge using reasonable discretion of the necessity for any such actions and of the amounts to be paid. Mortgagee is hereby empowered to enter and to authorize others to enter upon the Premises or the Improvements or any part thereof for the purpose of performing or

 

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observing any such defaulted term, covenant or condition without having any obligation to so perform or observe and without thereby becoming liable to Mortgagor, to any person in possession holding under Mortgagor or to any other person; provided, however, that except in the case of an emergency, Mortgagee will provide reasonable advance notice of such entry, such entry shall be conducted in a reasonable manner and Mortgagee shall use reasonable efforts to endeavor to minimize the amount of disturbance to the Mortgagor’s possession of the Mortgaged Property.

Section 2.05. Right to a Receiver. If an Event of Default shall occur and be continuing, Mortgagee, upon application to a court of competent jurisdiction, shall be entitled as a matter of right to the appointment of a receiver to take possession of and to operate the Mortgaged Property and to collect and apply the Rents. The receiver shall have all of the rights and powers permitted under the laws of the state wherein the Mortgaged Property is located. Mortgagor shall pay to Mortgagee upon demand all reasonable out-of-pocket expenses, including receiver’s fees, reasonable attorney’s fees and disbursements, costs and agent’s compensation incurred pursuant to the provisions of this Section 2.05; and all such expenses shall be secured by this Mortgage and shall be, without demand, immediately repaid by Mortgagor to Mortgagee with interest thereon at the Interest Rate.

Section 2.06. Foreclosure and Sale. (a) If an Event of Default shall occur and be continuing, Mortgagee may elect to sell the Mortgaged Property or any part of the Mortgaged Property by exercise of the power of foreclosure or of sale granted to Mortgagee by applicable law or this Mortgage. In such case, Mortgagee may commence a civil action to foreclose this Mortgage, or it may proceed and sell the Mortgaged Property to satisfy any Obligation. Mortgagee or an officer appointed by a judgment of foreclosure to sell the Mortgaged Property, may sell all or such parts of the Mortgaged Property as may be chosen by Mortgagee at the time and place of sale fixed by it in a notice of sale, either as a whole or in separate lots, parcels or items as Mortgagee shall deem expedient, and in such order as it may determine, at public auction to the highest bidder. Mortgagee or an officer appointed by a judgment of foreclosure to sell the Mortgaged Property may postpone any foreclosure or other sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement or subsequently noticed sale. Without further notice, Mortgagee or an officer appointed to sell the Mortgaged Property may make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. Any person, including Mortgagor or Mortgagee or any designee or affiliate thereof, may purchase at such sale.

(b) The Mortgaged Property may be sold subject to unpaid taxes and the Liens set forth in Section 6.02 of the Credit Agreement, and, after deducting all costs, fees and out-of-pocket expenses of Mortgagee (including costs of evidence of title in connection with the sale), Mortgagee or an officer that makes any sale shall apply the proceeds of sale in the manner set forth in Section 2.08.

 

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(c) Any foreclosure or other sale of less than the whole of the Mortgaged Property or any defective or irregular sale made hereunder shall not exhaust the power of foreclosure or of sale provided for herein; and subsequent sales may be made hereunder until the Obligations have been satisfied, or the entirety of the Mortgaged Property has been sold.

(d) If an Event of Default shall occur and be continuing, Mortgagee may instead of, or in addition to, exercising the rights described in Section 2.06(a) above and either with or without entry or taking possession as herein permitted, proceed by a suit or suits in law or in equity or by any other appropriate proceeding or remedy (i) to specifically enforce payment of some or all of the Obligations, or the performance of any term, covenant, condition or agreement of this Mortgage or any other Loan Document or any other right, or (ii) to pursue any other remedy available to Mortgagee, all as Mortgagee shall determine most effectual for such purposes.

Section 2.07. Other Remedies. (a) In case an Event of Default shall occur and be continuing, Mortgagee may also exercise, to the extent not prohibited by law, any or all of the remedies available to a secured party under the UCC.

(b) In connection with a sale of the Mortgaged Property or any Personal Property and the application of the proceeds of sale as provided in Section 2.08, Mortgagee shall be entitled to enforce payment of and to receive up to the principal amount of the Obligations, plus all other charges, payments and costs due under this Mortgage, and to recover a deficiency judgment for any portion of the aggregate principal amount of the Obligations remaining unpaid, with interest.

Section 2.08. Application of Sale Proceeds and Rents. After any foreclosure sale of all or any of the Mortgaged Property, Mortgagee shall receive and apply the proceeds of the sale together with any Rents that may have been collected and any other sums that then may be held by Mortgagee under this Mortgage as follows:

FIRST, to the payment of all out-of-pocket costs and expenses incurred by the Administrative Agent or the Mortgagee (in their respective capacities as such hereunder or under any other Loan Document) in connection with such collection, sale, foreclosure or realization or otherwise in connection with this Mortgage, any other Loan Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent and/or the Mortgagee hereunder or under any other Loan Document on behalf of any Mortgagor and any other out-of-pocket costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

SECOND, to the payment in full of Unfunded Advances/Participations (the amounts so applied to be distributed between or among the Administrative Agent and any Issuing Bank pro rata in accordance with the amounts of Unfunded Advances/Participations owed to them on the date of any such distribution);

 

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THIRD, to the payment in full of all other Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution);

FOURTH, to the Mortgagor, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Mortgagee shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Mortgage. Upon any sale of the Mortgaged Property by the Mortgagee (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Mortgagee or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Mortgaged Property so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Mortgagee or such officer or be answerable in any way for the misapplication thereof.

Section 2.09. Mortgagor as Tenant Holding Over. If Mortgagor remains in possession of any of the Mortgaged Property after any foreclosure sale by Mortgagee, at Mortgagee’s election Mortgagor shall be deemed a tenant holding over and shall forthwith surrender possession to the purchaser or purchasers at such sale or be summarily dispossessed or evicted according to provisions of law applicable to tenants holding over.

Section 2.10. Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws. Mortgagor waives, to the extent not prohibited by law, (i) the benefit of all laws now existing or that hereafter may be enacted (x) providing for any appraisement or valuation of any portion of the Mortgaged Property and/or (y) in any way extending the time for the enforcement or the collection of amounts due under any of the Obligations or creating or extending a period of redemption from any sale made in collecting said debt or any other amounts due Mortgagee, (ii) any right to at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any homestead exemption, stay, statute of limitations, extension or redemption, or sale of the Mortgaged Property as separate tracts, units or estates or as a single parcel in the event of foreclosure or notice of deficiency, and (iii) all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of or each of the Obligations and marshaling in the event of foreclosure of this Mortgage.

Section 2.11. Discontinuance of Proceedings. In case Mortgagee shall proceed to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall be discontinued or abandoned for any reason, or shall be determined adversely to Mortgagee, then and in every such case Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Mortgagee shall continue as if no such proceeding had been taken.

 

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Section 2.12. Suits To Protect the Mortgaged Property. Mortgagee shall have power (a) to institute and maintain suits and proceedings to prevent any impairment of the Mortgaged Property by any acts that may be unlawful or in violation of this Mortgage, (b) to preserve or protect its interest in the Mortgaged Property and in the Rents arising therefrom and (c) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of or compliance with such enactment, rule or order would impair the security or be prejudicial to the interest of Mortgagee hereunder.

Section 2.13. Filing Proofs of Claim. In case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting Mortgagor, Mortgagee shall, to the extent permitted by law, be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of Mortgagee allowed in such proceedings for the Obligations secured by this Mortgage at the date of the institution of such proceedings and for any interest accrued, late charges and additional interest or other amounts due or that may become due and payable hereunder after such date.

Section 2.14. Possession by Mortgagee. Notwithstanding the appointment of any receiver, liquidator or trustee of Mortgagor, any of its property or the Mortgaged Property, Mortgagee shall be entitled, to the extent not prohibited by law, to remain in possession and control of all parts of the Mortgaged Property now or hereafter granted under this Mortgage to Mortgagee in accordance with the terms hereof and applicable law.

Section 2.15. Waiver. (a) No delay or failure by Mortgagee to exercise any right, power or remedy accruing upon any breach or Event of Default shall exhaust or impair any such right, power or remedy or be construed to be a waiver of any such breach or Event of Default or acquiescence therein; and every right, power and remedy given by this Mortgage to Mortgagee may be exercised from time to time and as often as may be deemed expedient by Mortgagee. No consent or waiver by Mortgagee to or of any breach or Event of Default by Mortgagor in the performance of the Obligations shall be deemed or construed to be a consent or waiver to or of any other breach or Event of Default in the performance of the same or of any other Obligations by Mortgagor hereunder. No failure on the part of Mortgagee to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall constitute a waiver by Mortgagee of its rights hereunder or impair any rights, powers or remedies consequent on any future Event of Default by Mortgagor.

(b) Even if Mortgagee (i) grants some forbearance or an extension of time for the payment of any sums secured hereby, (ii) takes other or additional security for the payment of any sums secured hereby, (iii) waives or does not exercise some right granted herein or under the Loan Documents, (iv) releases a part of the Mortgaged Property from this Mortgage, (v) agrees to change some of the terms, covenants, conditions or agreements of any of the Loan Documents, (vi) consents to the filing of a map, plat or

 

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replat affecting the Premises, (vii) consents to the granting of an easement or other right affecting the Premises or (viii) makes or consents to an agreement subordinating Mortgagee’s lien on the Mortgaged Property hereunder; no such act or omission shall preclude Mortgagee from exercising any other right, power or privilege herein granted or intended to be granted in the event of any breach or Event of Default then made or of any subsequent default; nor, except as otherwise expressly provided in an instrument executed by Mortgagee, shall this Mortgage be altered thereby. In the event of the sale or transfer by operation of law or otherwise of all or part of the Mortgaged Property, Mortgagee is hereby authorized and empowered to deal with any vendee or transferee with reference to the Mortgaged Property secured hereby, or with reference to any of the terms, covenants, conditions or agreements hereof, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any liabilities, obligations or undertakings.

Section 2.16. Waiver of Trial by Jury. To the fullest extent permitted by applicable law, Mortgagor and Mortgagee each hereby irrevocably and unconditionally waive trial by jury in any action, claim, suit or proceeding relating to this Mortgage and for any counterclaim brought therein. Mortgagor hereby waives all rights to interpose any counterclaim in any suit brought by Mortgagee hereunder and all rights to have any such suit consolidated with any separate suit, action or proceeding.

Section 2.17. Remedies Cumulative. No right, power or remedy conferred upon or reserved to Mortgagee by this Mortgage is intended to be exclusive of any other right, power or remedy, and each and every such right, power and remedy shall be cumulative and concurrent and in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity or by statute.

ARTICLE III

Miscellaneous

Section 3.01. Partial Invalidity. In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be invalid, illegal or unenforceable in any respect, such validity, illegality or unenforceability shall, at the option of Mortgagee, not affect any other provision of this Mortgage, and this Mortgage shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein or therein.

Section 3.02. Notices. All notices and communications hereunder shall be in writing and given to Mortgagor in accordance with the terms of the Credit Agreement at the address set forth on the first page of this Mortgage and to the Mortgagee as provided in the Credit Agreement.

Section 3.03. Successors and Assigns. All of the grants, covenants, terms, provisions and conditions herein shall run with the Premises and the Improvements and shall apply to, bind and inure to, the benefit of the permitted successors and assigns of Mortgagor and the successors and assigns of Mortgagee.

 

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Section 3.04. Satisfaction and Cancelation. (a) The conveyance to Mortgagee of the Mortgaged Property as security created and consummated by this Mortgage shall automatically terminate and be null and void and Mortgagor shall automatically be released from its obligations hereunder when all the Obligations (other than contingent obligations for which no claim has been made) have been paid in full in cash and the Lenders and Pari Passu Secured Parties have no further commitment to lend under the Credit Agreement or the Pari Passu Agreements, respectively, the aggregate L/C Exposure has been reduced to zero (or the outstanding Letters of Credit have become subject to arrangements reasonably satisfactory to the Administrative Agent and the applicable Issuing Banks) and the Issuing Banks have no further obligation to issue Letters of Credit under the Credit Agreement.

(b) The conveyance to Mortgagee of the Mortgaged Property as security created and consummated by this Mortgage shall automatically terminate and be null and void and Mortgagor shall automatically be released from its obligations hereunder upon the consummation of any transaction permitted by the Credit Agreement and the other Pari Passu Agreements (or consented to in writing pursuant to Section 9.08 of the Credit Agreement and the analogous provision of any Pari Passu Agreement) as a result of which Mortgagor ceases to be a Subsidiary.

(c) Upon any sale or other transfer by Mortgagor of any Mortgaged Property or any Collateral that is permitted under the Credit Agreement and the other Pari Passu Agreements to any person that is not the Borrower or a Guarantor (including any Permitted Receivables Transaction or Permitted Securitization Transaction), or, upon the effectiveness of any written consent to the termination of the conveyance of the Mortgaged Property hereunder or the release of the Security Interest granted hereby in any Collateral pursuant to Section 9.08 of the Credit Agreement and the analogous provision of the Pari Passu Agreements, the conveyance of the Mortgaged Property as security created and consummated by this Mortgage shall automatically terminate and be null and void and the Security Interest in such Collateral shall be automatically released.

(d) Upon notification by the Borrower to Mortgagee that Mortgagor is a Non-Significant Subsidiary, and would not be required to become a Guarantor in accordance with the Credit Agreement or any Pari Passu Agreement, Mortgagee shall release the obligations of Mortgagor hereunder, terminate the conveyance of the Mortgaged Property as security created hereunder and release the Security Interests created hereunder and release the Security Interests created hereunder in the Collateral of Mortgagor.

(e) In connection with any termination or release pursuant to paragraph (a), (b), (c) or (d) above, the Mortgagee shall promptly execute and deliver to Mortgagor, at Mortgagor’s expense, a release of this Mortgage and all Uniform Commercial Code termination statements and similar documents that Mortgagor shall

 

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reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 3.04 shall be without recourse to or representation or warranty by the Mortgagee or any Secured Party. Without limiting the provisions of Section 7.06 of the Guarantee and Collateral Agreement, the Mortgagor shall reimburse the Mortgagee upon demand for all reasonable out of pocket expenses, including the fees, charges and expenses of counsel, incurred by it in connection with any action contemplated by this Section 3.04.

Section 3.05. Definitions. As used in this Mortgage, the singular shall include the plural as the context requires and the following words and phrases shall have the following meanings: (a) “including” shall mean “including but not limited to”; (b) “provisions” shall mean “provisions, terms, covenants and/or conditions”; (c) “lien” shall mean “lien, charge, encumbrance, security interest, mortgage or deed of trust”; (d) “obligation” shall mean “obligation, duty, covenant and/or condition”; and (e) “any of the Mortgaged Property” shall mean “the Mortgaged Property or any part thereof or interest therein”. Any act that Mortgagee is permitted to perform hereunder may be performed at any time and from time to time by Mortgagee or any person or entity designated by Mortgagee. Any act that is prohibited to Mortgagor hereunder is also prohibited to all lessees of any of the Mortgaged Property. Each appointment of Mortgagee as attorney-in-fact for Mortgagor under the Mortgage is irrevocable, with power of substitution and coupled with an interest. Subject to the applicable provisions hereof, Mortgagee has the right to refuse to grant its consent, approval or acceptance or to indicate its satisfaction, in its sole discretion, whenever such consent, approval, acceptance or satisfaction is required hereunder.

Section 3.06. Multisite Real Estate Transaction. Mortgagor acknowledges that this Mortgage is one of a number of Other Mortgages and Security Documents that secure the Obligations. Mortgagor agrees that the lien of this Mortgage shall be absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of Mortgagee, and without limiting the generality of the foregoing, the lien hereof shall not be impaired by any acceptance by the Mortgagee of any security for or guarantees of any of the Obligations hereby secured, or by any failure, neglect or omission on the part of Mortgagee to realize upon or protect any Obligation or indebtedness hereby secured or any collateral security therefor including the Other Mortgages and other Security Documents. The lien hereof shall not in any manner be impaired or affected by any release (except as to the property released), sale, pledge, surrender, compromise, settlement, renewal, extension, indulgence, alteration, changing, modification or disposition of any of the Obligations secured or of any of the collateral security therefor, including the Other Mortgages and other Security Documents or of any guarantee thereof, and Mortgagee may at its discretion foreclose, exercise any power of sale, or exercise any other remedy available to it under any or all of the Other Mortgages and other Security Documents without first exercising or enforcing any of its rights and remedies hereunder. Such exercise of Mortgagee’s rights and remedies under any or all of the Other Mortgages and other Security Documents shall not in any manner impair the indebtedness hereby secured or the lien of this Mortgage and any exercise of

 

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the rights or remedies of Mortgagee hereunder shall not impair the lien of any of the Other Mortgages and other Security Documents or any of Mortgagee’s rights and remedies thereunder. Mortgagor specifically consents and agrees that Mortgagee may exercise its rights and remedies hereunder and under the Other Mortgages and other Security Documents separately or concurrently and in any order that it may deem appropriate and waives any rights of subrogation.

Section 3.07. No Oral Modification. This Mortgage may not be changed or terminated orally. Any agreement made by Mortgagor and Mortgagee after the date of this Mortgage relating to this Mortgage shall be superior to the rights of the holder of any intervening or subordinate Mortgage, lien or encumbrance.

Section 3.08. INTERCREDITOR AGREEMENT. Notwithstanding any other provision contained herein, this Mortgage, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are expressly subject in all respects to the terms of the ABL Intercreditor Agreement and any Pari Passu Intercreditor Agreement (each as defined in, and entered into in accordance with the provisions of, the Credit Agreement). In the event of any conflict or inconsistency between the provisions of this Mortgage and the terms of the ABL Intercreditor Agreement or any Pari Passu Intercreditor Agreement, the terms of the ABL Intercreditor Agreement or such Pari Passu Intercreditor Agreement shall control.

ARTICLE IV

Particular Provisions

This Mortgage is subject to the following provisions relating to the particular laws of the state wherein the Premises are located:

Section 4.01. Applicable Law; Certain Particular Provisions. This Mortgage shall be governed by and construed in accordance with the internal law of the state where the Mortgaged Property is located, except that Mortgagor expressly acknowledges that by their terms, the Credit Agreement and other Loan Documents (aside from those Other Mortgages to be recorded outside New York) shall be governed by the internal law of the State of New York, without regard to principles of conflict of law. Mortgagor and Mortgagee agree to submit to jurisdiction and the laying of venue for any suit on this Mortgage in the state where the Mortgaged Property is located. The terms and provisions set forth in Appendix A attached hereto are hereby incorporated by reference as though fully set forth herein. In the event of any conflict between the terms and provisions contained in the body of this Mortgage and the terms and provisions set forth in Appendix A, the terms and provisions set forth in Appendix A shall govern and control.

 

20


IN WITNESS WHEREOF, this Mortgage has been duly executed and delivered to Mortgagee by Mortgagor on the date of the acknowledgment attached hereto.

 

NAME OF MORTGAGOR], a [    ] CORPORATION,
by  

 

 

Name:

Title:


ARTICLE V

[ADD LOCAL FORM OF ACKNOWLEDGMENT]

STATE OF                     ,

COUNTY OF                     , SS:

The foregoing instrument was acknowledged before me this      day of             , 2016, by                     , a                     , by                     , its duly authorized                     , on behalf of the [limited liability company].

 

   

 

    Notary Public
Commission       
Expiration:  

 

  

This instrument prepared by:

Janet L. Lewis, Esq.

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, NY 10019


Exhibit A

to Mortgage

Description of the Land


Exhibit A

to Mortgage

Local Law Provisions

[To be provided]


EXHIBIT G-1

 

  LOGO  
 

 

150 Third Avenue South, Suite 2800

Nashville, TN 37201

(615) 742-6200

 

April 29, 2016

Credit Suisse AG, Cayman Islands Branch,

as Administrative Agent and Collateral Agent

Each of the Lenders party to the Credit Agreement

described below on the date hereof

Ladies and Gentlemen:

We have acted as special counsel to (i) Quorum Health Corporation, a Delaware corporation (“ Borrower ”), (ii) Lexington Hospital Corporation, a Tennessee corporation (the “ Tennessee Opinion Entity ”) and (iii) each of the other Delaware Opinion Entities (as defined on Exhibit A ) listed on Exhibit A attached hereto, in connection with that certain Credit Agreement, dated as of even date herewith (the “ Credit Agreement ”), among Borrower, the Lenders listed on the signature pages thereto and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent (the “ Agent ”). We have been requested by Borrower to render this opinion pursuant to Section 4.02(b)(i) of the Credit Agreement. The Tennessee Opinion Entity and the Delaware Opinion Entities are referred to herein, collectively, as the “ Opinion Entities ” and each, individually, as an “ Opinion Entity ”. Capitalized terms used but not otherwise defined herein have the same meanings as in the Credit Agreement.

In connection with this opinion, we have examined:

(1) the Credit Agreement;

(2) that certain Guarantee and Collateral Agreement (the “ Security Agreement ”), dated as of the date hereof, among the Opinion Entities, certain other Subsidiaries of the Borrower, and the Collateral Agent;

(3) those certain financing statements naming each Delaware Opinion Entity as a debtor and the Collateral Agent as secured party, relating to the security interests granted to the Collateral Agent pursuant to the Security Agreement, to be filed in the Office of the Secretary of State of Delaware (collectively, the “ Delaware Financing Statements ”); and


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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(4) that certain financing statement naming the Tennessee Opinion Entity as debtor and the Collateral Agent as secured party, relating to the security interests granted to the Collateral Agent pursuant to the Security Agreement, to be filed in the Office of the Secretary of State of Tennessee (the “ Tennessee Financing Statement ” and, together with the Delaware Financing Statements, collectively, the “ Financing Statements ”).

The Credit Agreement and the Security Agreement are sometimes herein referred to collectively as the “ Transaction Documents ”.

We have also reviewed the certificate of incorporation, charter or articles of organization, as applicable, and the bylaws or operating agreement, as applicable, of each Opinion Entity (collectively, the “ Organizational Documents ”), and such corporate or limited liability company, as applicable, records of the Opinion Entities, such certificates of public officials and such other matters regarding the Opinion Entities as we have deemed necessary or appropriate for purposes of this opinion letter. As to factual matters, we have assumed the correctness of and relied upon statements and other representations of the Opinion Entities and the officers thereof set forth in the Transaction Documents and in certificates provided pursuant to or in connection with the Transaction Documents or otherwise provided to us, and upon certificates of public officials, and we have made no independent inquiries or investigations. We have assumed that all of the documents we have reviewed are the valid and binding obligations of the parties thereto. For purposes of the opinions on the existence and good standing of each Opinion Entity, we have relied solely upon certificates of good standing of recent date issued by the Secretary of State of Delaware or the Secretary of State of Tennessee, as applicable.

In making such examination and in expressing our opinions, we have further assumed, without investigation or inquiry:

(a) the due organization and existence of all parties to the Transaction Documents, except to the extent that we express an opinion in Paragraphs 1 – 3 below regarding the existence of the Opinion Entities,

(b) the legal capacity of all natural persons,

(c) the due authorization of the Transaction Documents by all parties thereto, except to the extent that we express an opinion in Paragraphs 1 – 3 below regarding the authorization of the Transaction Documents by the Opinion Entities,

(d) the due execution and delivery of the Transaction Documents by all parties thereto, except to the extent that we express an opinion in Paragraph 4 below regarding the execution and delivery of the Transaction Documents by the Opinion Entities,


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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(e) that all parties to the Transaction Documents have the legal right, power and authority to enter into the Transaction Documents and to consummate the transactions contemplated thereby, except to the extent that we express an opinion in Paragraphs 1 – 3 below regarding the corporate or limited liability company, as applicable, power and corporate or limited liability company, as applicable, authority of the Opinion Entities,

(f) that all signatures on any executed documents furnished to us are genuine, all original documents submitted to us are authentic originals and all certified or other reproductions of documents submitted to us conform to the original documents,

(g) that each Opinion Entity owns, beneficially and of record, the property and/or interests in property that it purports to transfer, or in which it purports to grant a lien or security interest, pursuant to the Transaction Documents,

(h) that all property descriptions used in the Transaction Documents accurately and sufficiently describe the subject property,

(i) that the security interests of the Transaction Documents have attached and are in full force and effect under the law applicable thereto,

(j) that, notwithstanding any broader descriptions of the Collateral (as defined in the Security Agreement) that may have been used in the Transaction Documents, none of the Collateral (as defined in the Security Agreement) consists of as-extracted collateral or timber to be cut,

(k) that the Financing Statements will be appropriately recorded and filed in the offices referred to herein, and

(l) that the indebtedness incurred and obligations undertaken pursuant to the Transaction Documents have been incurred and undertaken for adequate consideration.

Based upon the foregoing and subject to the assumptions, limitations and qualifications herein set forth, we are of the opinion that:

1. Each Delaware Corporation is an existing Delaware corporation, in good standing under the laws of Delaware. Each Delaware Corporation has all necessary corporate power and corporate authority to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents and the performance of the provisions of the Transaction Documents have been duly authorized by all necessary corporate actions on the part of the Delaware Corporations.

2. Each Delaware Limited Liability Company is an existing Delaware limited liability company, in good standing under the laws of Delaware. Each Delaware Limited


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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Liability Company has all necessary limited liability company power and limited liability company authority to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents and the performance of the provisions of the Transaction Documents have been duly authorized by all necessary limited liability company actions on the part of the Delaware Limited Liability Company.

3. The Tennessee Corporation is an existing Tennessee corporation, in good standing under the laws of Tennessee. The Tennessee Corporation has all necessary corporate power and corporate authority to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents and the performance of the provisions of the Transaction Documents have been duly authorized by all necessary corporate actions on the part of the Tennessee Corporation.

4. The Transaction Documents have been duly executed and delivered by the Opinion Entities.

5. The execution and delivery of the Transaction Documents and the consummation of the financing transaction that is the subject thereof do not (a) violate any statute or regulation of the United States of America or the State of Tennessee or the Delaware General Corporation Law or the Delaware Limited Liability Company Act that are applicable to the Opinion Entities or their assets and that, in our experience, are normally applicable to transactions of the types contemplated by the Transaction Documents, (b) contravene any Opinion Entity’s Organizational Documents, or (c) constitute a default under or breach of the terms of, or an event that, with the lapse of time or the giving of notice, or both, would constitute a default under or breach of, or result in the creation or imposition of any Lien (other than Liens evidenced by the Transaction Documents in favor of the Agent and the Lenders) on the assets of any Opinion Entity pursuant to the terms of, the agreement identified on Exhibit B hereto to which an Opinion Entity is a party or by which it or its properties is bound.

6. Except for the Financing Statements, no authorization, consent or approval by any United States federal governmental authority or any governmental authority in Tennessee or in Delaware under the Delaware General Corporation Law or the Delaware Limited Liability Company Act is required for the execution and delivery of the Transaction Documents by the Opinion Entities.

7. Each of the Financing Statements is in proper form for filing with the Office of the Secretary of State of Tennessee or the Office of the Secretary of State of Delaware, as applicable.

8. Upon the filing of the Delaware Financing Statements in the Office of the Secretary of State of Delaware, the security interests created pursuant to the Security Agreement in the personal property of each Delaware Opinion Entity that is described both in the Security


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

Page 5

 

Agreement and in the corresponding Delaware Financing Statement will be perfected to the extent that a security interest therein may be perfected by the filing of a financing statement in Delaware under Article 9 of the Uniform Commercial Code as in effect on the date hereof in Delaware (the “ Delaware UCC ”); provided, however, that:

(a) continuation statements must be filed timely to prevent a lapse in the effectiveness of a filed financing statement,

(b) additional filings may be necessary if a Delaware Opinion Entity changes its name or location or if a new debtor becomes bound by the Security Agreement,

(c) the perfection of a security interest in proceeds is limited to the extent provided in Section 9-315 of the Delaware UCC,

(d) Section 552 of the federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor prior to the commencement of the case,

(e) under applicable provisions of the Delaware UCC, the law of a jurisdiction other than Delaware may govern (i) perfection of a security interest in collateral in which the security interest is perfected by possession, (ii) perfection of a security interest in collateral consisting of fixtures in which the security interest is perfected by a fixture filing, (iii) perfection of a security interest in collateral consisting of timber to be cut, (iv) perfection of a security interest in as-extracted collateral, (v) perfection of an agricultural lien on farm products, and (vi) perfection of a security interest in collateral consisting of goods covered by a certificate of title, deposit accounts, investment property or letter of credit rights, and

(f) catch-all references in the Security Agreement to “personal property” are probably overbroad and accordingly ineffective to result in the inclusion of any types or items of collateral not otherwise described with greater precision.

9. Upon the filing of the Tennessee Financing Statement in the Office of the Secretary of State of Tennessee, the security interests created pursuant to the Security Agreement in the personal property of the Tennessee Opinion Entity that is described both in the Security Agreement and in the Tennessee Financing Statement will be perfected to the extent that a security interest therein may be perfected by the filing of a financing statement in Tennessee under Article 9 of the Uniform Commercial Code as in effect on the date hereof in Tennessee (the “ Tennessee UCC ”); provided, however , that:

(a) continuation statements must be filed timely to prevent a lapse in the effectiveness of a filed financing statement,


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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(b) additional filings may be necessary if the Tennessee Opinion Entity changes its name or location or if a new debtor becomes bound by the Security Agreement,

(c) the perfection of a security interest in proceeds is limited to the extent provided in Section 9-315 of the Tennessee UCC,

(d) Section 552 of the federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor prior to the commencement of the case,

(e) under applicable provisions of the Tennessee UCC, the law of a jurisdiction other than Tennessee may govern (i) perfection of a security interest in collateral in which the security interest is perfected by possession, (ii) perfection of a security interest in collateral consisting of fixtures in which the security interest is perfected by a fixture filing, (iii) perfection of a security interest in collateral consisting of timber to be cut, (iv) perfection of a security interest in as-extracted collateral, (v) perfection of an agricultural lien on farm products, and (vi) perfection of a security interest in collateral consisting of goods covered by a certificate of title, deposit accounts, investment property or letter of credit rights, and

(f) catch-all references in the Security Agreement to “personal property” are probably overbroad and accordingly ineffective to result in the inclusion of any types or items of collateral not otherwise described with greater precision.

The opinions expressed herein are limited to the federal laws of the United States of America, the laws of Tennessee including Article 9 of the Tennessee UCC, the Delaware General Corporation Law, the Delaware Limited Liability Company Act and Article 9 of the Delaware UCC. Our opinions as to the Delaware Opinion Entities regarding corporate power, corporate authority, limited liability company power, limited liability company authority, existence, authorization, execution and delivery of documents and other matters of corporate or limited liability company law, and the Delaware UCC, are based solely upon our review of the latest unofficial compilations of the Delaware General Corporation Law, the Delaware Limited Liability Company Act and Article 9 of the Delaware UCC that were available to us, and we have not examined any other Delaware statutes or any court decisions from Delaware.

The opinions expressed herein are qualified as follows:

(a) We express no opinion as to the title to any property or the priority of any lien on or any security or other interest in any property.


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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(b) We express no opinion with respect to any matters that would require us to perform a mathematical calculation or make a determination as to financial or accounting matters (including but not limited to compliance or noncompliance with financial covenants or ratios).

(c) The authorization, validity, binding nature and enforceability of the Security Agreement may be subject to Tennessee or Delaware corporation law restrictions relating to capital or other financial adequacy that would be applicable in the event that any indebtedness, obligation, liability or undertaking of the Opinion Entities as Guarantors under the Security Agreement is deemed to be a dividend or distribution.

Our opinion is rendered as of the date hereof, and we assume no obligation to advise you of changes in law or fact (or the effect thereof on the opinions expressed herein) that hereafter may come to our attention.

The opinions rendered herein are solely for the benefit of the Agent, the Lenders and their respective successors and assigns in connection with the transactions that are the subject of the Transaction Documents, and this opinion letter may not be delivered to or relied upon by any other person nor quoted or reproduced in any report or other document without our prior written consent in each case; provided, however, that a copy of this opinion letter may be furnished to your regulators, accountants, attorneys and other professional advisors for the purpose of confirming its existence, and this opinion letter may be disclosed in connection with any legal or regulatory proceeding relating to the subject matter hereof; and provided further that (i) reliance by any assignee must be actual and reasonable under the circumstances existing at the time of assignment, and (ii) each such assignee shall be deemed to have the knowledge of the addressees as of the date hereof with respect to matters related to the opinions rendered herein.

 

Very truly yours,


Exhibit A

Delaware Opinion Parties

As used herein, “ Delaware Corporation ” and “ Delaware Corporations ” means and refers to Borrower and each of the following:

1. Hospital of Barstow, Inc.

2. National Healthcare of Mt. Vernon, Inc.

3. Watsonville Hospital Corporation

As used herein, “ Delaware LLC ” and “ Delaware LLCs ” means and refers to each of the following:

1. Blue Island Hospital Company, LLC

2. Blue Island Illinois Holdings, LLC

3. Blue Ridge Georgia Holdings, LLC

4. CSRA Holdings, LLC

5. DHSC, LLC

6. Massillon Community Health System LLC

7. Massillon Health System LLC

8. Massillon Holdings, LLC

9. McKenzie Tennessee Hospital Company, LLC

10. MMC of Nevada, LLC

11. MWMC Holdings, LLC

12. QHC California Holdings, LLC

13. Quorum Health Investment Company, LLC

14. Quorum Health Resources, LLC

15. Sunbury Hospital Company, LLC

16. Triad of Oregon, LLC

As used herein, “ Delaware Opinion Entity ” and “ Delaware Opinion Entities ” means and refers to each of the Delaware Corporations and the Delaware LLCs.


Exhibit B

Specified Agreement

Indenture dated as of April 22, 2016, among Borrower, the Guarantors and Regions Bank, an Alabama banking corporation, as Trustee, relating to the issuance by Borrower of its 11.625% Senior Notes due 2023


EXHIBIT G-2

PRIVILEGED AND CONFIDENTIAL

April 29, 2016

The Lenders and the Agent Referred to Below

c/o Credit Suisse AG

as Administrative Agent and Collateral Agent

Eleven Madison Avenue

New York, New York 10010

RE: Credit Agreement, dated as of April 29, 2016

Ladies and Gentlemen:

I am Senior Vice President and and General Counsel of Quorum Health Corporation, a Delaware corporation (the “ Borrower ’), and have acted as Counsel for the Borrower and each of the Subsidiaries listed on the Schedule of Guarantors attached hereto as Schedule I (each a “ Guarantor “and, collectively, the “ Guarantors ”, and together with the Borrower, the “ Credit Parties ”) in connection with the Credit Agreement, dated as of even date herewith (the “ Credit Agreement ”), among the Borrower, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent (the “ Agent ”), and the Lenders listed on the signature pages thereto.

This opinion is delivered to you pursuant to subsection Section 4.02(b)(ii) of the Credit Agreement. All capitalized terms used herein that are defined in, or by reference in, the Credit Agreement have the meanings assigned to such terms therein, or by reference therein, unless otherwise defined herein. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on my part except to the extent otherwise expressly stated, and I express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon.

In connection with this opinion, I have (i) investigated such questions of law, (ii) examined originals or certified, conformed or reproduction copies of such agreements, instruments, documents, and records of the Credit Parties, such certificates of public officials and such other documents, and (iii) received such information from officers and representatives of the Credit Parties, as I have deemed necessary or appropriate for the purposes of this opinion. For purposes of the opinions on the existence and good standing of each Credit Party, I have relied solely upon certificates of existence of recent date issued by the Secretary of State of the applicable state of incorporation or formation. I have examined, among other documents, the following:

(a) an executed copy of the Credit Agreement; and


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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(b) an executed copy of the Guarantee and Collateral Agreement, dated as of the date hereof, among the Credit Parties and the Collateral Agent.

The documents referred to in items (a) and (b) above, inclusive, are referred to herein as the “ Transaction Documents ”.

In all such examinations, I have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures on original or certified, conformed or reproduction copies of documents of all parties (other than with respect to the Credit Parties to the extent signed in my presence), the authenticity of original and certified documents and the conformity to original or certified documents of all copies submitted to me as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, I have relied upon, and assume the accuracy of, certificates and oral or written statements and other information of or from public officials and others, and assume compliance on the part of all parties to the Transaction Documents with their covenants and agreements contained therein.

With respect to the opinions expressed in clauses (ii) and (iv) of paragraph (b) below, my opinions are limited (x) to my actual knowledge of the respective business activities and properties of the Credit Parties in respect of such matters and without any independent investigation or verification on my part and (y) to my review of only those laws and regulations that, in my experience, are normally applicable to transactions of the type contemplated by the Transaction Documents.

To the extent it may be relevant to the opinions expressed herein, I have assumed that the parties to the Transaction Documents, other than the Credit Parties, have the corporate power to enter into and perform such documents and that (except as set forth in paragraph (b) below) such documents have been duly authorized, executed and delivered by, and constitute legal, valid and binding obligations of, such parties.

Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth therein, I am of the opinion that:

(a) Each Guarantor is a corporation, limited liability company, or limited partnership validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all power and authority necessary to execute, deliver and perform its obligations under the Transaction Documents.

(b) The execution and delivery by each Credit Party of the Transaction Documents and the performance by each Credit Party of its respective obligations under each of the


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April 29, 2016

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Transaction Documents and the borrowings by the Borrower and the grant by each Credit Party of the security interests pursuant to the Transaction Documents to which it is a party (i) have been authorized, in the case of each Guarantor, by all necessary action by such Guarantor, (ii) do not require under present law any filing or registration by any Credit Party with, or approval or consent to any Credit Party of, any governmental agency or authority of the State of Tennessee that has not been made or obtained, except those required in the ordinary course of business in connection with the future performance, if any, by each Credit Party of its respective obligations under certain covenants contained in the Transaction Documents to which it is a party or pursuant to securities or other laws that may be applicable to the disposition of any collateral subject thereto, (iii) do not contravene any provision of the certificate of incorporation or bylaws or similar organizational document of any Guarantor, (iv) do not violate any present law, or present regulation of any governmental agency or authority, of the State of Tennessee known by me to be applicable to any Credit Party or its properties, (v) do not breach or cause a default under any agreement or violate any court decree or order binding upon such Credit Party or its property (this opinion being limited (x) to those agreements, decrees or orders that are identified on Exhibit A attached hereto and (y) in that I express no opinion with respect to any breach, default or violation not readily ascertainable from the face of any such agreement, decree or order, or arising under or based upon any cross default provision insofar as it relates to a default under an agreement not so identified to me, or arising under or based upon any covenant of a financial or numerical nature or requiring computation), and (vi) will not result in or require the creation or imposition of any Lien (other than Liens evidenced by the Transaction Documents in favor of the Agent and the Lenders) upon any properties of a Credit Party pursuant to the provisions of any agreement (this opinion being limited to those agreements that are identified on Exhibit A attached hereto).

(c) The Transaction Documents have been duly executed and delivered on behalf of each Guarantor that is a party thereto.

To my actual knowledge, I am not aware of any pending legal proceeding before, or pending investigation by, any court or administrative agency or authority, or any arbitration tribunal, against or directly affecting the Credit Parties, or any of their respective properties, which seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief in connection with or which would adversely affect the legality, validity or enforceability of, any of the Transaction Documents or the transactions contemplated thereby.

I have issued certain limited opinions above as to the corporate, limited liability company, or limited partnership existence, good standing and authority of the Guarantors under the law of their respective states of organization. I do not purport to be an expert in matters of law of jurisdictions other than the State of Tennessee and the federal law of the United States of America, and have issued my opinions based solely upon my review of the corporate record of each Guarantor.


Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent

April [29], 2016

Page 4

 

The opinions set forth above are subject to the following qualifications and limitations:

 

  (a) I express no opinion regarding the application of federal or state securities laws to the transactions contemplated in the Transaction Documents;

 

  (b) I express no opinion regarding (i) the effect of fraudulent conveyance, fraudulent transfer and other similar laws relating to or affecting the rights of creditors and (ii) restrictions relating to capital adequacy that may be applicable to any Guarantor to the extent any Transaction Document may be deemed a dividend or distribution; and

 

  (c) To the extent that section 8.31 of the Revised Model Business Corporation Act (as adopted in any state in which a Credit Party is incorporated) or other corporation law analogous thereto may apply, I have assumed the transactions described in the Transaction Documents are fair to the Credit Parties.

I am qualified to practice law in the State of Tennessee, and I am no expert in and express no opinions as to the laws of other jurisdictions other than to the federal laws of the United States of America and the laws of the State of Tennessee, as currently in effect. I assume no obligation to supplement this opinion if any applicable laws change after the date hereof or if I become aware of any facts that might change the opinions expressed herein after the date hereof.

The opinions expressed herein are solely for the benefit of the Lenders and the Agent and may not be relied on in any manner or for any purpose by any other person or entity.

 

Very truly yours,
R. Harold McCard, Jr.
Senior Vice President and General Counsel


Schedule I

Schedule of Guarantors

 

1. Anna Hospital Corporation

 

2. Big Bend Hospital Corporation

 

3. Big Spring Hospital Corporation

 

4. Blue Island Hospital Company, LLC

 

5. Blue Island Illinois Holdings, LLC

 

6. Blue Ridge Georgia Holdings, LLC

 

7. Centre Hospital Corporation

 

8. Clinton Hospital Corporation

 

9. CSRA Holdings, LLC

 

10. Deming Hospital Corporation

 

11. DHSC, LLC

 

12. Evanston Hospital Corporation

 

13. Forrest City Arkansas Hospital Company, LLC

 

14. Forrest City Hospital Corporation

 

15. Fort Payne Hospital Corporation

 

16. Galesburg Hospital Corporation

 

17. Granite City Hospital Corporation

 

18. Granite City Illinois Hospital Company, LLC

 

19. Greenville Hospital Corporation

 

20. Hamlet H.M.A., LLC

 

21. Hospital of Barstow, Inc.

 

22. Hospital of Louisa, Inc.

 

23. Jackson Hospital Corporation (KY)

 

24. Lexington Hospital Corporation

 

25. Marion Hospital Corporation

 

26. Massillon Community Health System LLC

 

27. Massillon Health System LLC

 

28. Massillon Holdings, LLC

 

29. McKenzie Tennessee Hospital Company, LLC

 

30. MMC of Nevada, LLC

 

31. Monroe HMA, LLC

 

32. MWMC Holdings, LLC

 

33. National Healthcare of Mt. Vernon, Inc.

 

34. Phillips Hospital Corporation

 

35. QHC California Holdings, LLC

 

36. QHG of Massillon, Inc.

 

37. Quorum Health Investment Company, LLC

 

38. Quorum Health Resources, LLC

 

39. Red Bud Hospital Corporation

 

40. Red Bud Illinois Hospital Company, LLC

 

41. San Miguel Hospital Corporation

 

42. Sunbury Hospital Company, LLC

 

43. Tooele Hospital Corporation


44. Triad of Oregon, LLC

 

45. Watsonville Hospital Corporation

 

46. Waukegan Hospital Corporation

 

47. Waukegan Illinois Hospital Company, LLC

 

48. Williamston Hospital Corporation

 

49. Winder HMA, LLC


Exhibit A

Specified Agreement

Indenture dated as of April     , 2016, among Borrower, the Guarantors and Regions Bank, an Alabama banking corporation, as Trustee, relating to the issuance by Borrower of its     % Senior Notes due 2023


EXHIBIT G-3

[CS&M Draft—04/28/2016]

FORM OF LOCAL COUNSEL OPINION

[Letterhead of Local Counsel]

April [●], 2016

Credit Suisse AG, Cayman Islands Branch,

as Administrative Agent and Collateral Agent

Eleven Madison Avenue

New York, NY 10010

The Lenders party to the Credit

Agreement referenced below

Ladies and Gentlemen:

We have acted as special counsel in the State of [    ] (the “ State ”) to each of the entities listed on the attached Schedule I (each an “ Opinion Party ” and collectively, the “ Opinion Parties ”), in connection with the execution and delivery today of, and the consummation of the transactions contemplated by, the Credit Agreement dated as of the date hereof between Quorum Health Corporation, a Delaware corporation (the “ Borrower ”), the lenders party thereto (the “ Lenders ”) and Credit Suisse AG, Cayman Islands Branch, individually, as administrative agent (in that capacity, the “ Administrative Agent ”) and collateral agent (in such capacity, the “ Collateral Agent ”). This opinion is delivered pursuant to Section 4.02(b) of the Credit Agreement. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the “ Documents ”):

 

  (a) an executed copy of the Credit Agreement;

 

  (b) an executed copy of that certain Guarantee and Collateral Agreement (the “ Security Agreement ” and, together with the Credit Agreement, the “ Transaction Documents ”), dated as of the date hereof, by and between the Borrower, the Opinion Parties, certain other subsidiaries of the Borrower, and the Collateral Agent;

 

  (c) UCC financing statements relating to personalty, copies of which are attached hereto as Exhibit A (the “ Financing Statements ”);


  (d) Organizational documents of the Opinion Parties; and

 

  (e) Authorizing resolutions of the Opinion Parties dated as of the date hereof.

In addition, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, instruments and other documents, and have made such other investigations, as we have deemed necessary for the purpose of this opinion.

References in this opinion to the “ UCC ” shall mean the Uniform Commercial Code as in effect on the date hereof in the State.

In rendering this opinion to you, we have assumed that:

(a) there has occurred due execution and delivery of the Documents; and

(b) except as otherwise set forth in the applicable Transaction Documents, the applicable Loan Party owns the Collateral (as defined in the Security Agreement).

Subject to the foregoing assumptions, we are of the opinion that:

1. Each Opinion Party is a [corporation/limited liability company/limited partnership] [validly existing] and in good standing under the laws of the State. Each Opinion Party has all necessary power and authority to execute and deliver the Transaction Documents and to perform its obligations thereunder.

2. The execution and delivery by the Opinion Parties of the Transaction Documents, the performance by each Opinion Party of its obligations thereunder and the grant by each of the Opinion Parties of security interests pursuant to the Security Agreement (i) have been duly authorized by all requisite action on the part of the applicable Opinion Party and (ii) do not violate the [Certificate of Incorporation or By-laws/Certificate of Formation or operating agreement] of the applicable Opinion Party.

3. The execution and delivery by the Opinion Parties of the Transaction Documents and the performance by each Opinion Party of its obligations thereunder do not (i) violate any law, rule or regulation of the State and (ii) will not result in the creation or imposition of any lien, charge or encumbrance under any State law upon any property or assets of the applicable Opinion Party.

4. Each of the Transaction Documents has been duly executed and delivered by each Opinion Party party thereto.

 

2


5. No authorization, approval or other action by, and no notice to, consent of, order of or filing with, any State governmental authority is required to be made or obtained by the Opinion Parties in connection with the execution, delivery and performance by the Opinion Parties of the Transaction Documents.

6. The security interest in that portion of the Collateral in which a security interest may be perfected by the filing in the State of [    ] of financing statements under the [State] UCC (such portion, the “ UCC Filing Collateral ”) will be perfected upon the filing of the [State] Financing Statements, describing the UCC Filing Collateral, in the [State] Filing Office.

This opinion may be relied upon by each of you, by any successors and assigns of the Administrative Agent, the Collateral Agent, and any participant, assignee or successor to the interests of the Lenders under the Loan Documents.

 

Very truly yours,

 

3


Schedule I

OPINION PARTIES


Exhibit A

UCC 1 FINANCING STATEMENTS

Exhibit 10.2

 

 

 

ABL CREDIT AGREEMENT

dated as of

April 29, 2016

among

QUORUM HEALTH CORPORATION,

as Borrower

THE LENDERS PARTY HERETO

and

UBS AG, STAMFORD BRANCH,

as Administrative Agent, Collateral Agent and Swingline Lender

 

 

UBS SECURITIES LLC, CITIBANK, N.A., BANK OF AMERICA, N.A., SUNTRUST ROBINSON HUMPHREY, INC. and WELLS FARGO BANK, N.A.,

as Joint Lead Arrangers and Joint Bookrunners

Reference is made to the ABL Intercreditor Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto, UBS AG, STAMFORD BRANCH, as ABL Agent (as defined therein), and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Term Loan/Cash Flow Revolver Agent (as defined therein). Each Lender hereunder (a) consents to the subordination of Liens provided for in the ABL Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement and (c) authorizes and instructs the Administrative Agent to enter into the ABL Intercreditor Agreement as ABL Agent and on behalf of such Lender. The foregoing provisions are intended as an inducement to the Lenders under this Agreement to extend credit and such Lenders are intended third party beneficiaries of such provisions and the provisions of the ABL Intercreditor Agreement.

 

 

 


Table of Contents

 

     Page  

ARTICLE I DEFINITIONS

     1   

SECTION 1.01. Defined Terms

     1   

SECTION 1.02. Terms Generally

     37   

SECTION 1.03. Pro Forma Calculations

     38   

SECTION 1.04. Classification of Loans and Borrowings

     39   

SECTION 1.05. Effectuation of Transactions

     39   

SECTION 1.06. Excluded Swap Obligations

     39   

ARTICLE II THE CREDITS

     40   

SECTION 2.01. Commitments

     40   

SECTION 2.02. Loans

     41   

SECTION 2.03. Borrowing Procedure

     42   

SECTION 2.04. Evidence of Debt; Repayment of Loans

     43   

SECTION 2.05. Fees

     44   

SECTION 2.06. Interest on Loans

     45   

SECTION 2.07. Default Interest

     45   

SECTION 2.08. Alternate Rate of Interest

     45   

SECTION 2.09. Termination and Reduction of Commitments

     46   

SECTION 2.10. Conversion and Continuation of Borrowings

     46   

SECTION 2.11. Reserved

     48   

SECTION 2.12. Optional Prepayment

     48   

SECTION 2.13. Mandatory Prepayments

     48   

SECTION 2.14. Reserve Requirements; Change in Circumstances

     49   

SECTION 2.15. Change in Legality

     50   

SECTION 2.16. Indemnity

     51   

SECTION 2.17. Pro Rata Treatment

     51   

SECTION 2.18. Sharing of Setoffs

     51   

SECTION 2.19. Payments

     52   

SECTION 2.20. Taxes

     53   

SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate

     54   

SECTION 2.22. Swingline Loans

     56   

SECTION 2.23. Letters of Credit

     58   

SECTION 2.24. Defaulting Lenders

     65   

SECTION 2.25. Loan Modification Offers; Replacement Revolving Credit Facility

     67   

ARTICLE III REPRESENTATIONS AND WARRANTIES

     69   

SECTION 3.01. Organization; Powers

     69   

SECTION 3.02. Authorization

     69   

SECTION 3.03. Enforceability

     69   

 

i


Table of Contents

(continued)

 

     Page  

SECTION 3.04. Governmental Approvals

     70   

SECTION 3.05. Financial Statements

     70   

SECTION 3.06. No Material Adverse Change

     70   

SECTION 3.07. Title to Properties; Possession Under Leases

     70   

SECTION 3.08. Subsidiaries

     70   

SECTION 3.09. Litigation; Compliance with Laws

     71   

SECTION 3.10. Agreements

     71   

SECTION 3.11. Federal Reserve Regulations

     71   

SECTION 3.12. Investment Company Act

     71   

SECTION 3.13. Use of Proceeds

     71   

SECTION 3.14. Tax Returns

     72   

SECTION 3.15. No Material Misstatements

     72   

SECTION 3.16. Employee Benefit Plans

     72   

SECTION 3.17. Environmental Matters

     72   

SECTION 3.18. Insurance

     73   

SECTION 3.19. Security Documents

     73   

SECTION 3.20. Location of Real Property and Leased Premises

     74   

SECTION 3.21. Labor Matters

     74   

SECTION 3.22. Solvency

     74   

SECTION 3.23. Sanctions; FCPA

     75   

ARTICLE IV CONDITIONS OF LENDING

     76   

SECTION 4.01. All Credit Events

     76   

SECTION 4.02. First Credit Event

     77   

ARTICLE V AFFIRMATIVE COVENANTS

     79   

SECTION 5.01. Existence; Compliance with Laws; Businesses and Properties

     80   

SECTION 5.02. Insurance

     80   

SECTION 5.03. Obligations and Taxes

     81   

SECTION 5.04. Financial Statements, Reports, etc.

     81   

SECTION 5.05. Litigation and Other Notices

     83   

SECTION 5.06. Information Regarding Collateral

     83   

SECTION 5.07. Maintaining Records; Access to Properties and Inspections; Maintenance of Ratings

     84   

SECTION 5.08. Use of Proceeds

     84   

SECTION 5.09. Employee Benefits

     85   

SECTION 5.10. Compliance with Environmental Laws

     85   

SECTION 5.11. Reserved

     85   

SECTION 5.12. Further Assurances

     85   

SECTION 5.13. Proceeds of Certain Dispositions

     86   

SECTION 5.14. Operation of Facilities

     86   

SECTION 5.15. Anti-Corruption Laws

     87   

 

ii


Table of Contents

(continued)

 

     Page  

SECTION 5.16. Cash Management Systems; Application of Proceeds of Accounts

     87   

SECTION 5.17. Landlord Waivers

     88   

ARTICLE VI NEGATIVE COVENANTS

     88   

SECTION 6.01. Indebtedness

     88   

SECTION 6.02. Liens

     91   

SECTION 6.03. Sale and Lease-Back Transactions

     94   

SECTION 6.04. Investments, Loans and Advances

     94   

SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions

     98   

SECTION 6.06. Restricted Payments; Restrictive Agreements

     100   

SECTION 6.07. Transactions with Affiliates

     103   

SECTION 6.08. Business of the Borrower and Subsidiaries

     103   

SECTION 6.09. Other Indebtedness

     103   

SECTION 6.10. Practice Guarantees

     104   

SECTION 6.11. Reserved

     104   

SECTION 6.12. Reserved

     104   

SECTION 6.13. Consolidated Fixed Charge Coverage Ratio

     104   

SECTION 6.14. Fiscal Year

     104   

ARTICLE VII EVENTS OF DEFAULT

     104   

ARTICLE VIII THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

     109   

ARTICLE IX MISCELLANEOUS

     111   

SECTION 9.01. Notices

     111   

SECTION 9.02. Survival of Agreement

     113   

SECTION 9.03. Binding Effect

     114   

SECTION 9.04. Successors and Assigns

     114   

SECTION 9.05. Expenses; Indemnity

     118   

SECTION 9.06. Right of Setoff

     120   

SECTION 9.07. Applicable Law

     121   

SECTION 9.08. Waivers; Amendment

     121   

SECTION 9.09. Certain Releases of Guarantees and Security Interests

     123   

SECTION 9.10. Interest Rate Limitation

     124   

SECTION 9.11. Entire Agreement

     124   

SECTION 9.12. WAIVER OF JURY TRIAL

     125   

SECTION 9.13. Severability

     125   

SECTION 9.14. Reserved

     125   

SECTION 9.15. Headings

     125   

SECTION 9.16. Jurisdiction; Consent to Service of Process

     125   

SECTION 9.17. Confidentiality

     126   

 

iii


Table of Contents

(continued)

 

     Page  

SECTION 9.18. USA PATRIOT Act Notice

     127   

SECTION 9.19. Acknowledgement and Consent to Bail-In of EEA Financial Institutions

     127   

SECTION 9.20. Additional Secured Debt

     128   

SECTION 9.21. No Fiduciary Relationship

     130   

 

iv


Table of Contents

(continued)

 

SCHEDULES

 

     

Schedule 1.01(b)

   -    Subsidiary Guarantors

Schedule 1.01(c)

   -    Hospitals

Schedule 1.01(d)

   -    Certain Permitted Joint Ventures

Schedule 1.01(e)

   -    Certain Subsidiaries

Schedule 1.01(f)

   -    Non-Significant Subsidiaries

Schedule 1.01(g)

   -    Issuing Banks

Schedule 2.01

   -    Initial Lenders and Commitments

Schedule 3.08

   -    Subsidiaries

Schedule 3.18

   -    Insurance

Schedule 3.19(a)

   -    UCC Filing Offices

Schedule 3.21

   -    Collective Bargaining Agreements

Schedule 4.02(b)

   -    Local Counsel

Schedule 6.01(a)

   -    Existing Indebtedness

Schedule 6.02(a)

   -    Existing Liens

Schedule 6.04(h)

   -    Certain Permitted Acquisitions

Schedule 6.05(b)

   -    Certain Syndication Transactions

Schedule 6.07

   -    Certain Affiliate Transactions

EXHIBITS

 

Exhibit A

  -    Form of ABL Intercreditor Agreement

Exhibit B

  -    Form of Administrative Questionnaire

Exhibit C

  -    Form of Assignment and Acceptance

Exhibit D

  -    Form of Borrowing Request

Exhibit E

  -    Form of Guarantee and Collateral Agreement

Exhibit F-1

  -    Form of Opinion of Bass, Berry & Sims PLC

Exhibit F-2

  -    Form of Opinion of General Counsel of the Borrower

Exhibit F-3

  -    Form of Local Counsel Opinion

Exhibit G

  -    Form of Borrowing Base Certificate

 

v


ABL CREDIT AGREEMENT dated as of April 29, 2016 (this “ Agreement ”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “ Borrower ”), the Lenders (as defined in Article I), and UBS AG, STAMFORD BRANCH, as administrative agent (in such capacity, the “ Administrative Agent ”), and as collateral agent (in such capacity, the “ Collateral Agent ”) for the Lenders.

PRELIMINARY STATEMENT

Community Health Systems, Inc. (“ CHS ”) shall undertake a series of transactions on or prior to the Closing Date pursuant to which the Equity Interests of certain direct and indirect subsidiaries of CHS shall be contributed or otherwise transferred to the Borrower or its subsidiaries (the “ Contribution ”), and the Equity Interests of the Borrower shall be distributed to the shareholders of CHS (the “ Distribution ”), immediately after which, the Borrower shall constitute a separate public company (collectively, the “ Spin-Off ”).

The Borrower has requested that the Lenders extend credit in the form of Revolving Loans and the Issuing Banks extend credit in the form of Letters of Credit to the Borrower after the Closing Date, in an aggregate principal amount of up to $125,000,000 as provided herein and ending on the Revolving Credit Maturity Date. The proceeds of the Revolving Loans made after the Closing Date are to be used by the Borrower solely for working capital and general corporate purposes. Letters of Credit will be used for general corporate purposes of the Borrower and its Subsidiaries.

The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms . As used in this Agreement, the following terms shall have the meanings specified below:

ABL Facility First Priority Collateral ” shall have the meaning specified in the ABL Intercreditor Agreement.

ABL Intercreditor Agreement ” shall mean an Intercreditor Agreement among the Borrower, the other Loan Parties, the Collateral Agent and the collateral agent under the Term Loan Documents, substantially in the form of Exhibit A.

ABL Payment Conditions ” shall mean, with respect to any applicable transaction, (a) no Default or Event of Default shall exist immediately after giving effect to such transaction, (b) the quotient obtained by dividing (i) the sum of each day’s Excess Availability (calculated on a pro forma basis to include (x) any Borrowing or the issuance of any Letter of Credit in connection with such transaction and (y) the Eligible Receivables and Eligible Self-Pay Receivables of (or attributable to) the person (or assets) acquired in any such transaction that is an acquisition) for each day in the 30-day


period prior to such transaction by (ii) 30 shall be greater than or equal to the greater of (i) $25,000,000 and (ii) 20% of the lesser of (x) the aggregate Commitments and (y) the Borrowing Base, (c) Excess Availability (calculated as set forth above) on the date of such proposed transaction shall be greater than or equal to the greater of (i) $25,000,000 and (ii) 20% of the lesser of (x) the aggregate Commitments and (y) the Borrowing Base, (d) the Consolidated Fixed Charge Coverage Ratio (calculated on a pro forma basis after giving effect to such transaction) shall be at least 1.1:1.0; provided, that the foregoing condition in this clause (d) shall not apply if the quotient calculated pursuant to clause (b) above and the Excess Availability amount calculated pursuant to clause (c) above are greater than or equal to 25% of the aggregate Commitments, and (e) the Borrower shall have delivered a certificate of a Responsible Officer to the Administrative Agent certifying compliance with the requirements of clauses (a) through (d) above.

ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, is bearing interest at a rate determined by reference to the Alternate Base Rate.

Accepting Lenders ” shall have the meaning assigned to such term in Section 2.25(a).

Account Debtor ” shall mean a person who is obligated under a Receivable.

Acquired Entity ” shall have the meaning assigned to such term in Section 6.04(h).

Additional Secured Debt ” shall mean Indebtedness secured by Liens having a priority junior to that of the Liens securing the Obligations on the ABL Facility First Priority Collateral and Liens having a priority that may be senior to that of the Liens securing the Obligations on the Term Facility First Priority Collateral.

Additional Secured Debt Intercreditor Agreement ” shall mean any intercreditor agreement governing the relative priorities of the holders of the Obligations, on the one hand, and the holders of Additional Secured Debt, on the other hand, provided that such agreement (a) provides for such Indebtedness to be secured by (i) Liens having junior priority to the Liens securing the Obligations on the ABL Facility First Priority Collateral and (ii) Liens that may have senior priority to the Liens securing the Obligations on the Term Facility First Priority Collateral (which Liens may be either pari passu with, or junior to, the Liens securing Indebtedness arising under the Term Loan Agreement and (b) is on terms substantially the same as the terms of the ABL Intercreditor Agreement or otherwise on terms reasonably acceptable to the Administrative Agent and the Borrower.

Adjusted LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to the product of (a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.

Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.05(b).

 

2


Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit B, or such other form as may be supplied from time to time by the Administrative Agent.

Affected Class ” shall have the meaning assigned to such term in Section 2.25(a).

Affiliate ” shall mean, when used with respect to a specified 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; provided, however , that, for purposes of Section 6.07, the term “Affiliate” shall also include any person that directly or indirectly owns 10% or more of any class of Equity Interests of the person specified.

Aggregate Revolving Credit Exposure ” shall mean the aggregate amount of the Lenders’ Revolving Credit Exposures.

Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted LIBO Rate on such day for a one month Interest Period commencing on the second Business Day after such day plus 1%; provided that in no event shall the Alternate Base Rate be less than 0.00%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or the Adjusted LIBO Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of Federal Funds Effective Rate, the Alternate Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, as the case may be.

Anti-Corruption Laws ” shall have the meaning assigned to such term in Section 5.08.

Applicable Fee ” shall mean the applicable percentage per annum set forth below determined by reference to the Average Utilization for the immediately preceding fiscal quarter in accordance with the following grid (and shall remain in effect until the next change to be effected pursuant to this paragraph):

 

Average Utilization

  

Applicable Fee

Greater than or equal to 50%

   0.25% per annum

Less than 50%

   0.375% per annum

 

3


Applicable Margin ” shall mean the applicable percentage per annum set forth below determined by reference to Average Excess Availability for the immediately preceding fiscal quarter:

 

          Loans  

Level

  

Average Excess Availability

   Base Rate
Loans
    LIBOR Loans  

I

   Greater than $90,000,000      0.75     1.75

II

   Less than or equal to $90,000,000 and greater than $45,000,000      1.00     2.00

III

   Less than or equal to $45,000,000      1.25     2.25

Notwithstanding the foregoing, during the fiscal quarter in which the Closing Date occurs and until the fiscal quarter ending on or around June 30, 2016, Level II shall be deemed to apply. Any increase or decrease in the Applicable Margin resulting from a change in the Average Excess Availability shall become effective as of the first calendar day of each fiscal quarter. Average Excess Availability shall be calculated by the Administrative Agent based on the Administrative Agent’s records. If the Borrowing Base Certificate (including any required financial information in support thereof) is not received by the Administrative Agent by the date required pursuant to Section 5.04(d) of this Agreement, then, upon the request of the Required Lenders, the Applicable Margin shall be determined as if the Average Excess Availability for the immediately preceding fiscal quarter is at Level III until such time as such Borrowing Base Certificate and supporting information are received.

Approved Fund ” shall mean any person (other than a natural person) that is engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and 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.

Arranger ” shall mean UBS Securities LLC.

Asset Sale ” shall mean the sale, transfer or other disposition (by way of merger, casualty, condemnation or otherwise) by the Borrower or any of the Subsidiaries to any person other than the Borrower or any Subsidiary Guarantor of (a) any Equity Interests of any of the Subsidiaries (other than directors’ qualifying shares) or (b) any other assets of the Borrower or any of the Subsidiaries, other than:

(i) inventory, damaged, obsolete or worn out assets, scrap, surplus and Permitted Investments, in each case disposed of in the ordinary course of business;

(ii) donations of assets by the Borrower or any Subsidiary (whether of real or personal property (including cash and Equity Interests)) to state or local municipalities

 

4


(or other Governmental Authorities), nonprofit organizations, foundations, charities or similar entities of the Borrower’s or such Subsidiary’s choice, with an aggregate fair market value not to exceed $10,000,000 in any fiscal year of the Borrower;

(iii) dispositions by any Subsidiary that is not a Subsidiary Guarantor to the Borrower or any other Subsidiary;

(iv) sales or other dispositions of (x) Receivables of the Borrower or any of the Subsidiaries that are more than 180 days past due or are written-off at the time of such sale or disposition or (y) any Receivables of the Borrower or any of the Subsidiaries that are self-pay accounts receivable and that are reasonably determined by the Borrower to be unable to be paid in full within 150 days of the related service date, provided that the face value of all such Receivables sold or disposed of on or after the Closing Date does not exceed $25,000,000;

(v) sales or other dispositions of property (including like-kind exchanges) to the extent that (x) such property is exchanged for credit against the purchase price of similar or replacement property or (y) the proceeds of such sale or disposition are applied to the purchase price of such property, provided that, if the property so sold or exchanged constituted Collateral, then the property so received shall also constitute Collateral;

(vi) leases or sub-leases of any real property or personal property in the ordinary course of business;

(vii) dispositions of investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in the joint venture arrangements and similar binding arrangements;

(viii) licensings and sublicensings of intellectual property of the Borrower or any Subsidiary in the ordinary course of business;

(ix) sales, transfers, leases or other dispositions of property in the ordinary course of business consisting of the abandonment of intellectual property rights which, in the reasonable good faith determination of the Borrower, are not material to the conduct of the business of the Borrower and the Subsidiaries;

(x) dispositions of Equity Interests of any Subsidiary as contemplated by clause (b) of the definition of Permitted Joint Venture;

(xi) dispositions consisting of the granting of Liens permitted by Section 6.02; and

(xii) any sale, transfer or other disposition or series of related sales, transfers or other dispositions (in each case other than of a Hospital or Hospitals) having a value not in excess of $15,000,000;

provided , that, in the case of any transaction described in clause (v) or (xii) above which would result in a reduction in the Borrowing Base of $10,000,000 or more, Borrower

 

5


shall have delivered to the Administrative Agent, prior to the consummation of such transaction, an updated Borrowing Base Certificate with an updated calculation of the Borrowing Base after taking into account such transaction.

Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent.

Availability Reserve ” shall mean, on any date of determination and with respect to the Borrowing Base, the sum (without duplication) of (a) the Bank Product Reserve; (b) the aggregate amount of liabilities secured by Liens upon Eligible Receivables or Eligible Self-Pay Receivables that are senior to the Collateral Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); (c) reserves for excess dilution; and (d) such additional reserves, in such amounts and with respect to such matters, as the Administrative Agent in its Reasonable Credit Judgment may elect to impose from time to time. The amount of any Availability Reserve established by the Administrative Agent shall have a reasonable relationship as determined by the Administrative Agent in its Reasonable Credit Judgment to the event, condition or other matter that is the basis for the Availability Reserve.

Average Excess Availability ” shall mean, on any date of determination, the amount of Excess Availability during a stipulated consecutive Business Day period, calendar day period or fiscal quarter period divided by the number of Business Days or calendar days, as the case may be, in such period.

Average Utilization ” shall mean, for any period, an amount, expressed as a percentage, equal to (a) the daily average Aggregate Revolving Credit Exposure for such period divided by (b) the daily average Revolving Credit Commitments for such period.

Bank Product Obligations ” shall mean all (a) Secured Cash Management Obligations and (b) Secured Hedging Obligations.

Bank Product Reserve ” shall mean the aggregate amount of reserves established by the Administrative Agent from time to time in its Reasonable Credit Judgment in respect of Bank Product Obligations of the Loan Parties.

Bank Product Secured Parties ” shall mean each counterparty to any Hedging Agreement or Cash Management Agreement with a Loan Party or, in the case of a Cash Management Agreement, a Subsidiary of a Loan Party, that either (a) is in effect on the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (b) is entered into after the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement or Cash Management Agreement is entered into.

Board ” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

 

6


Board of Directors ” shall mean, with respect to any person, (i) in the case of any corporation, the board of directors of such person, (ii) in the case of any limited liability company, the board of managers of such person, (iii) in the case of any partnership, the board of directors of the general partner of such person and (iv) in any other case, the functional equivalent of the foregoing.

Borrower Materials ” shall have the meaning assigned to such term in Section 9.01.

Borrowing ” shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) Swingline Loans of the same Class and Type.

Borrowing Base ” shall mean, on any date of determination, an amount (calculated based on the most recent Borrowing Base Certificate delivered to the Administrative Agent in accordance with this Agreement) equal to

(a) the sum of

(i) 85% of the value of the Eligible Receivables of the Loan Parties, and

(ii) up to 85% of the value of Eligible Self-Pay Receivables of the Loan Parties,

minus

(b) the Availability Reserve.

Borrowing Base Certificate ” shall mean a certificate by a Responsible Officer of the Borrower, substantially in the form of Exhibit G (or another form reasonably acceptable to the Administrative Agent and the Borrower) setting forth the calculation of the Borrowing Base, including a calculation of each component thereof.

Borrowing Request ” shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit D, or such other form as shall be approved by the Administrative Agent.

Breakage Event ” shall have the meaning assigned to such term in Section 2.16.

Business Day ” shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close; provided , however , that when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

Capital Expenditures ” shall mean, for any period, the additions to property, plant and equipment and other capital expenditures of the Borrower and its consolidated

 

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subsidiaries (including all amounts expended or capitalized under Capital Lease Obligations, but excluding any amount representing capitalized interest) that are (or should be) set forth in a consolidated statement of cash flows of the Borrower for such period prepared in accordance with GAAP, but excluding in each case any such expenditure (i) made with insurance proceeds, condemnation awards or damage recovery proceeds, (ii) made with the proceeds of the issuance of Equity Interests, (iii) to the extent such expenditure is made with proceeds of Asset Sales, (iv) to the extent of the credit against the gross purchase price of newly acquired equipment granted by the seller of such newly acquired equipment for other equipment that is simultaneously traded-in at the time of purchase of such newly acquired equipment, (v) is accounted for as a capital expenditure pursuant to GAAP but that actually is paid for by a third party (excluding the Borrower or any Subsidiary) and for which neither the Borrower nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period) or (vi) constituting the purchase price of any Permitted Acquisition or any investment permitted under Sections 6.04(a), 6.04(i), 6.04(j), 6.04(k), 6.04(y) or 6.04(z).

Capital Lease Obligations ” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP (excluding any lease that would be required to be so classified as a result of a change in GAAP after the Closing Date), and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

Captive Insurance Subsidiary ” shall mean a Subsidiary established for the purpose of insuring the healthcare businesses or Facilities owned or operated by the Borrower or any of the Subsidiaries, any joint venture of the Borrower or any of the Subsidiaries or any physician or other personnel employed by or on the medical staff of any such business or Facility.

Cash Dominion Event ” shall mean either (a) the occurrence and continuance of an Event of Default or (b) the failure of the Borrower to maintain Excess Availability of at least the greater of (i) 12.5% of the aggregate Commitments and (ii) $15,000,000. For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing (a) if such Cash Dominion Event arises under clause (a) above, so long as such Event of Default is continuing and has not been cured or waived, or (b) if such Cash Dominion Event arises under clause (b) above, until Excess Availability is equal to or greater than the greater of (i) 12.5% of the aggregate Commitments and (ii) $15,000,000 for thirty (30) consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement.

Cash Management Agreement ” shall mean any agreement to provide overdraft protections, netting services and similar arrangements arising from treasury, depository and cash management services, any automated clearing house transfers of funds, any e-payable or similar products or any credit card or similar services, in each case in the ordinary course of business.

 

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Cash Management Obligations ” shall mean the obligations owed by Borrower or any Subsidiary to the Administrative Agent, any Arranger, any Lender or an Affiliate of any of the foregoing in respect of any Cash Management Agreement.

A “ Change in Control ” shall be deemed to have occurred if (a) any “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the Closing Date), shall own, directly or indirectly, beneficially or of record, shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower (other than a transaction following which holders of securities that represented 100% of such aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower immediately prior to such transaction (or other securities into which such securities are converted as part of such transaction) own, directly or indirectly, shares representing at least a majority of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the surviving Person in such transaction immediately after such transaction), (b) a majority of the seats (other than vacant seats) on the board of directors of the Borrower shall at any time be occupied by persons who were neither (i) nominated by the board of directors of the Borrower, (ii) appointed by directors so nominated or (iii) approved by the board of directors of the Borrower as director candidates prior to their election to such board of directors, or (c) any change in control (or similar event, however denominated) with respect to the Borrower or any Subsidiary shall occur under and as defined in any indenture or agreement in respect of Material Indebtedness to which the Borrower or any Subsidiary is a party (other than under any indenture or agreement in respect of Material Indebtedness assumed in connection with a Permitted Acquisition, any change in control triggered by the Permitted Acquisition pursuant to which such Indebtedness was assumed). For the avoidance of doubt, the consummation of the Distribution and the Spin-Off on the Closing Date shall not constitute a Change in Control.

Change in Law ” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.14, by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any policy, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

CHS ” shall have the meaning assigned to such term in the Preliminary Statement.

 

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CHS Dividend ” shall mean a dividend to CHS in an aggregate amount not to exceed $1,225,000,000 to be made on the Closing Date.

Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit Commitment or a Swingline Commitment.

Closing Date ” shall mean the first date on which the conditions precedent set forth in Section 4.02 are satisfied or waived in accordance with Section 9.08(b).

Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

Collateral ” shall mean all the “Collateral” as defined in any Security Document.

Collateral Agent ” shall have the meaning assigned to such term in the Preliminary Statement.

Commitment ” shall mean, with respect to any Lender, such Lender’s Revolving Credit Commitment.

Commitment Fees ” shall have the meaning assigned to such term in Section 2.05(a).

Confidential Information Memorandum ” shall mean the Confidential Information Memorandum of the Borrower dated January 2016.

Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period plus (a) without duplication and (except in the case of clause (a)(x) below) to the extent deducted (and not added back) in determining such Consolidated Net Income, the sum of:

(i) interest expense (net of interest income), including amortization and write offs of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with (x) letters of credit, (y) obtaining or unwinding Hedging Agreements or (z) surety bonds for financing activities, in each case for such period,

(ii) provision for taxes based on income, profits or capital and franchise taxes, including Federal, foreign, state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period, including any penalties and interest relating to any tax examinations for such period,

(iii) depreciation and amortization expenses including acceleration thereof and including the amortization of the increase in inventory resulting from the application of Statement of Financial Accounting Standards No. 141 (“FASB 141”) for transactions contemplated hereby, including Permitted Acquisitions, for such period,

 

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(iv) non-cash compensation expenses arising from the sale of Equity Interests, the granting of options to purchase Equity Interests, the granting of appreciation rights in respect of Equity Interests and similar arrangements for such period,

(v) the excess of the expense in respect of post-retirement benefits and post-employment benefits accrued under Statement of Financial Accounting Standards No. 106 (“FASB 106”) and Statement of Financial Accounting Standards No. 112 (“FASB 112”) over the cash expense in respect of such post-retirement benefits and post-employment benefits for such period,

(vi) minority interest (to the extent distributions are not required to be made and are not made in respect thereof),

(vii) [reserved],

(viii) fees and expenses for such period incurred or paid in connection with the Transactions,

(ix) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that such amount is reasonably likely to be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of the relevant event (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events,

(x) proceeds of received business interruption insurance,

(xi) any fees and expenses incurred during such period in connection with any acquisition, investment, recapitalization, asset disposition, issuance or repayment of debt, issuance of Equity Interests, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction undertaken but not completed),

(xii) any (w) severance costs, relocation costs, integration and facilities opening costs, signing costs, retention or completion bonuses and transition costs incurred during such period, (x) cash restructuring related or nonrecurring cash merger costs and expenses incurred during such period as a result of any acquisition, investment, recapitalization, or asset disposition permitted hereunder; provided , that the aggregate amount added to or included in Consolidated EBITDA pursuant to this subclause (x) for any period of four consecutive fiscal quarters shall not exceed an amount equal to 20% of Consolidated EBITDA, calculated prior to giving effect to any amounts added to or included in Consolidated EBITDA pursuant to this subclause (x) and prior to giving effect to any additions to Consolidated EBITDA in respect of such period pursuant to Section 1.03, (y) other nonrecurring cash losses and charges for such period and (z) fees, expenses and charges incurred during such period in respect of litigation (including legal fees) against the Borrower or any of its Subsidiaries, and

 

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(xiii) other non-cash charges for such period (other than the write down of current assets, unless such assets are acquired pursuant to a Permitted Acquisition, in which case any such write down shall (A) occur on or before the first anniversary of the date on which the applicable Permitted Acquisition was consummated and (B) result from (1) a change in accounting policies or (2) a revision in the estimated value of such assets), and minus

(b) without duplication, (i) non-recurring gains (including any non-cash gains as a result of the consummation of any Offer (as such term is defined in the Term Loan Agreement)) and (ii) all cash payments made during such period on account of reserves, restructuring charges and other non-cash charges added to Consolidated Net Income pursuant to clause (a)(xiii) (other than any such non-cash charges that if originally paid in cash and so not taken as non-cash charges would have been added to Consolidated Net Income above pursuant to clause (a)(xii)) in a previous period.

For purposes of determining Consolidated EBITDA under this Agreement, Consolidated EBITDA for the fiscal quarters ended March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015 shall be deemed to be $59,913,000, $69,988,000, $59,484,000 and $76,907,000, respectively (which amounts, for the avoidance of doubt shall be subject, without duplication, to add-backs and adjustments pursuant to this definition and shall give effect to calculations made on a pro forma basis in accordance with Section 1.03 that in each case may become applicable due to actions taken on or after the Closing Date after giving effect to the consummation of the Transactions).

Consolidated Fixed Charge Coverage Ratio ” shall mean, for any Test Period, the ratio of (a) (i) Consolidated EBITDA of the Borrower and its Subsidiaries for such period, less (ii) the aggregate amount of all Capital Expenditures of or by the Borrower and its Subsidiaries paid in cash during such period, other than Capital Expenditures financed or paid for with the proceeds of a permitted issuance of Equity Interests, a permitted issuance of Indebtedness, a permitted Asset Sale or an insurance claim, less (iii) income taxes paid in cash by the Borrower and its Subsidiaries with respect to such period (net of cash refunds received) to (b) the sum of (i) the Consolidated Interest Expense of the Borrower and its Subsidiaries for such period paid in cash, plus (ii) scheduled principal payments required to be made during such period in respect of Indebtedness for borrowed money by the Borrower and its Subsidiaries. For purposes of calculating the Consolidated Fixed Charge Coverage Ratio with respect to Test Periods that include periods prior to the Closing Date, (1) non-financed Capital Expenditures for the fiscal quarters ended March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015 shall be deemed to be $10,900,000, $12,100,000, $16,200,000 and $29,100,000, respectively, (2) income taxes paid in cash for the fiscal quarters ended March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015 shall be deemed to be $2,700,000, $1,500,000, $0 and $0, respectively, and (3) Consolidated Interest Expense paid in cash and scheduled principal payments paid in cash shall, in each case, be the actual amounts thereof from the Closing Date until the end of such Test Period, multiplied by 4 in the case of the Test Period ending March 31, 2016, multiplied by 2 in the case of the Test Period ending June 30, 2016 and multiplied by 4/3 in the case of the Test Period ending September 30, 2016.

 

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Consolidated Interest Expense ” shall mean, for any period, the sum of (a) the interest expense paid in cash (including imputed interest expense in respect of Capital Lease Obligations and Synthetic Lease Obligations) of the Borrower and the Subsidiaries for such period, net of interest income, determined on a consolidated basis in accordance with GAAP and (b) the dividends paid in cash during such period by the Borrower and the Subsidiaries on a consolidated basis in respect of Disqualified Stock, but excluding, however, to the extent otherwise included therein, (i) fees and expenses associated with the consummation of the Transactions, (ii) annual agency fees paid to the Administrative Agent, (iii) costs associated with obtaining or unwinding any Hedging Agreements, (iv) fees and expenses associated with any investment permitted pursuant to Section 6.04, issuances of Equity Interests or Indebtedness, or amendments of any Indebtedness (whether or not consummated), (v) penalties and interest relating to Taxes and (vi) all non-recurring cash interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations and financing fees. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by the Borrower or any Subsidiary with respect to interest rate Hedging Agreements.

Consolidated Net Income ” shall mean, for any period, the net income or loss ((i) excluding extraordinary gains and losses, and gains and losses arising from the proposed or actual disposition of material assets and (ii) excluding the cumulative effect of changes in accounting principles) of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded the income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by the Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to such Subsidiary. Notwithstanding the foregoing, the amount of any cash dividends paid by any Unrestricted Subsidiary and received by the Borrower or the Subsidiaries during any such period shall be included, without duplication, in the calculation of Consolidated Net Income for such period. There shall be excluded from Consolidated Net Income for any period (i) gains and losses, including unrealized gains and losses, for such period attributable to (v) the early extinguishment of Indebtedness, (w) discontinued operations, (x) facilities to be closed within one year of the date of recognition of such gain or loss, (y) obtaining or unwinding Hedging Agreements and (z) except as provided above, interests in Unrestricted Subsidiaries, (ii) all deferred financing costs written off or amortized and premiums paid or other expenses incurred directly in connection with any extinguishment of Indebtedness and any net gain (loss) from any write-off or forgiveness of Indebtedness and (iii) the effects of purchase accounting adjustments to inventory, property, equipment and intangible assets and deferred revenue in component amounts required or permitted by GAAP, as a result of the Transactions or the amortization or write-off of any amounts thereof.

 

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Contractual Obligation ” shall mean, as to any person, any provision of any security issued by such person or of any agreement, instrument or undertaking to which such person is a party or by which it or any of the property owned by it is bound.

Contribution ” shall have the meaning assigned to such term in the Preliminary Statement.

Control ” shall mean 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 ownership of voting securities, by contract or otherwise, and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

Covenant Trigger Event ” shall mean, at any time, the failure of the Borrower to maintain Excess Availability equal to or greater than the greater of (i) $12,500,000 and (ii) 10.0% of the aggregate Commitments. For purposes of this Agreement, the occurrence of a Covenant Trigger Event shall be deemed continuing, until Excess Availability is equal to or greater than the greater of (i) $12,500,000 and (ii) 10.0% of the aggregate Commitments for thirty (30) consecutive days, in which case a Covenant Trigger Event shall no longer be deemed to be continuing for purposes of this Agreement.

Credit Event ” shall have the meaning assigned to such term in Section 4.01.

Credit Extension ” shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the amendment, extension or renewal of any existing Letter of Credit, by an Issuing Bank.

Credit Facilities ” shall mean the revolving credit and letter of credit facilities provided for by this Agreement.

Default ” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

Defaulted Receivable ” means a Receivable:

(a) which remains unpaid as of the date that is 180 days after the Last Service Date, or

(b) as to which the Account Debtor thereof is currently the subject of an Insolvency Proceeding.

Defaulting Lender ” shall mean any Lender that (a) defaults in its obligation to make any Loan or fulfill any obligation required to be made or fulfilled by it hereunder in the case of any funding requirement within two Business Days of the date such Loans were required to be funded hereunder, unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in

 

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such writing) has not been satisfied, (b) has notified the Administrative Agent or any Loan Party in writing that it does not intend to satisfy any such obligations, (c) has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that if a Lender would be a “Defaulting Lender” solely by reason of events relating to a parent company of such Lender or solely because a Governmental Authority has been appointed as receiver, conservator, trustee or custodian for such Lender, such Lender shall not be a “Defaulting Lender” if and for so long as such Lender confirms in writing, upon request by the Administrative Agent, that it will continue to comply with its obligations to make Loans and fulfill all other obligations required to be made and fulfilled by it hereunder, or (d) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action (as defined in Section 9.19).

Deposit Account Control Agreements ” shall mean any account control agreement, in form and substance satisfactory to the Collateral Agent, among a Loan Party, the Collateral Agent and any bank or other financial institution with which such Loan Party maintains (i) a primary concentration account or (ii) such other accounts that do not qualify as Excluded Accounts as may be reasonably requested by the Administrative Agent, in respect of each such account.

Designated Non-Cash Consideration ” shall mean the fair market value (as determined in good faith by the Borrower) of non-cash consideration received by the Borrower or one of its Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to an officer’s certificate, setting forth the basis of such valuation, less the amount of cash or cash equivalents (including Permitted Investments) received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with Section 6.05(b).

Disqualified Stock ” shall mean any 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 (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (except (i) as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments

 

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or (ii) pursuant to any put option with respect to any Equity Interests of a Permitted Syndication Subsidiary granted in favor of any Permitted Syndication Transaction Partner), or is redeemable at the option of the holder thereof, in whole or in part, in each case at any time on or prior to the first anniversary of the Revolving Credit Maturity Date in effect at the time such Equity Interest is issued, or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) Indebtedness or (ii) any Equity Interest referred to in clause (a) above, in each case at any time prior to the first anniversary of the Revolving Credit Maturity Date in effect at the time such Equity Interest is issued.

Distribution ” shall have the meaning assigned to such term in the Preliminary Statement.

dollars ” or “ $ ” shall mean lawful money of the United States of America.

Domestic Subsidiaries ” shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.

Eligible Account Debtor ” shall mean, at any time, an Account Debtor which is:

(a) not an Affiliate of the Borrower or any Loan Party;

(b) a resident of the United States;

(c) not the Account Debtor on Defaulted Receivables having a value in an aggregate amount of 25% or more of the aggregate value of all Receivables of such Account Debtor;

(d) not the subject of any Insolvency Proceeding; and

(e) an Insurer or a Governmental Authority.

Eligible Assignee ” shall mean any commercial bank, insurance company, investment or mutual fund or other entity (but not any natural person) that is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933, as amended) that extends credit or invests in bank loans as one of its businesses; provided that in any event, “Eligible Assignee” shall not include (x) the Borrower or any Affiliate (which for this purpose shall not include the Administrative Agent or any of its branches or Affiliates engaged in the business of making commercial loans) thereof or (y) any Defaulting Lender.

Eligible Receivable ” shall mean, at any time, a Receivable:

(a) the Account Debtor of which is an Eligible Account Debtor;

(b) which is not a Defaulted Receivable;

 

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(c) which (i) is an “account”, including a health-care-insurance receivable, or a general intangible within the meaning of the UCC and is not evidenced by any instrument or chattel paper, (ii) as to which all performance and other action required to be taken in connection therewith by the applicable Loan Party for the Account Debtor has been so performed or taken, (iii) is denominated and payable only in U.S. Dollars, (iv) is net of any deductible limitations, commissions, fees, or other discounts, (v) is based on an actual and bona fide rendition of services or sale of goods to the patient by the applicable Loan Party in the ordinary course of business, and (vi) to the extent required under applicable law, is subject to a patient consent form executed by the applicable patient;

(d) to the extent not the subject of any action, suit, proceeding or dispute (pending or threatened), setoff, counterclaim, defense, abatement, suspension, deferment, deductible, reduction or termination by the Account Debtor thereof (except for statutory rights of Governmental Authorities that are not pending or threatened);

(e) which is not based on any cost report settlement or expected settlement due from any Governmental Authority;

(f) the invoice for the goods and services constituting the basis for which, has been prepared and delivered;

(g) which does not contravene or conflict in any material respect with any applicable law or any contractual or other restriction or limitation;

(h) the Account Debtor with respect to which has been directed to make payments on such Receivable to a Deposit Account which is either subject to a Deposit Account Control Agreement or which is swept into a concentration account which is subject to a Deposit Account Control Agreement as required by Section 5.16;

(i) which is owned by the applicable Loan Party, and with respect to which, the Collateral Agent has a properly perfected first priority Lien therein, free and clear of any Lien (other than Permitted Liens);

(j) all information set forth in the bill and supporting claim documents with respect to which is true, complete and correct in all material respects, and if additional information is requested by the Account Debtor, the applicable Loan Party has or will promptly provide (or cause to be provided) the same, and if any error has been made with respect to such information, the applicable Loan Party will promptly correct the same and, if necessary, rebill such Receivable;

(k) with respect to which the applicable Loan Party’s Medicare or Medicaid cost reports have been examined and audited or “final settled” or for which a Notice of Program Reimbursement (“NPR”) has been issued by (i) as to Medicaid, the applicable state agency or other CMS designated agent or agents of such state agency, charged with such responsibility, or (ii) as to Medicare, the

 

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Medicare intermediary or other CMS designated agents charged with such responsibility, and there is no basis for any Governmental Authority to assert an offset with respect to such Receivable, including as the result of any unpaid amounts, with respect to any audit, financial settlement or NPR; and

(l) which was not generated by a Loan Party from a facility with respect to which any applicable Governmental Authority: (i) has revoked or suspended the applicable Medicaid, Medicare or similar governmental program qualification pertaining to such facility, or (ii) has revoked or suspended any material healthcare permit pertaining to such facility, and, in each case, to the extent that such Receivable arose after the date of such Governmental Authority action and such Governmental Authority action has not been reversed or rescinded.

Eligible Self-Pay Receivables ” shall mean, at any time, 80% of the average monthly cash collections of the Loan Parties from self-pay Receivables during the immediately preceding period of three (3) months; provided, that, the aggregate amount of Eligible Self-Pay Receivables at any time shall not exceed ten percent (10%) of the aggregate amount of Eligible Receivables at such time.

Engagement Letter ” shall mean the Engagement Letter dated December 22, 2015, among the Borrower, Community Health Systems, Inc., CHS/Community Health Systems, Inc. and UBS Securities, LLC, as extended by that certain Amendment to Engagement Letter, dated March 23, 2016, among the Borrower, Community Health Systems, Inc., CHS/Community Health Systems, Inc. and UBS Securities, LLC.

Environmental Laws ” shall mean all former, current and future Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), and legally binding agreements in each case, relating to protection of the environment, natural resources, occupational health and safety or Hazardous Materials.

Environmental Liability ” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment, recycling, arrangement for disposal, or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the presence or Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Equity Interest s ” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any person, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

 

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ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event ” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) a failure by any Plan to meet the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived, (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan, (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code), (e) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (f) the receipt by the Borrower or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (g) the receipt by the Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Borrower or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA, (h) the occurrence of a “prohibited transaction” with respect to which the Borrower or any of the Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with respect to which the Borrower or any such Subsidiary could otherwise be liable or (i) any other event or condition with respect to a Plan or Multiemployer Plan that could result in liability of the Borrower or any Subsidiary.

Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

Event of Default ” shall have the meaning assigned to such term in Article VII.

Excess Availability ” shall mean, at any time, the difference between (a) the lesser of (i) the Revolving Credit Commitments and (ii) the Borrowing Base at such time, as determined from the most recent Borrowing Base Certificate delivered by the Borrower to the Administrative Agent minus (b) the Aggregate Revolving Credit Exposure.

 

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Excluded Accounts ” shall mean (a) any disbursement or payroll accounts used solely for such purposes, (b) accounts solely holding withheld income taxes, employment taxes or other employment-related taxes or amounts to be paid over to employee health or benefits plans and, in each case, funded in the ordinary course of business and (c) other accounts of the Loan Parties having deposits of not more than $1,000,000 in the aggregate for all such accounts.

“Excluded Assets” shall mean, (a) all fee-owned real property and all leasehold interests; (b) motor vehicles and other assets subject to certificates of title (other than to the extent a security interest in such assets can be perfected by filing a Uniform Commercial Code financing statement); (c) Excluded Equity Interests; (d) Commercial Tort Claims with a value of less than $1,000,000; (e) any lease, license or other agreement or any property subject to a purchase money security interest or similar arrangement not prohibited by this Agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money security interest or similar arrangement or create a right of termination in favor of any other party thereto (other than the Borrower or any Subsidiary Guarantor) (after giving effect to Section 9-406, 9-407, 9-408 and any other anti-assignment provisions of the Uniform Commercial Code or other applicable law and rules of equity), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code notwithstanding such prohibition; (f) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Lenders of the security to be afforded thereby; (g) promissory notes issued by employees of any Loan Party; and (h) “intent-to-use” trademark applications.

Excluded Equity Interests” shall mean (a) voting Equity Interests issued by any Foreign Subsidiary in excess of 66% of the outstanding voting Equity Interests of such Foreign Subsidiary, (b) Equity Interests issued by any Person other than wholly-owned Subsidiaries of the Borrower or any Subsidiary Guarantor to the extent a pledge over such Equity Interests is not permitted by such Person’s organizational or joint-venture documents, (c) Equity Interests issued by any Permitted Syndication Subsidiary to the extent a pledge over such Equity Interests is not permitted by a Contractual Obligation that is not prohibited by this Agreement or is not permitted under any requirement of law (after giving effect to Section 9-406, 9-407, 9-408 and any other anti-assignment provisions of the Uniform Commercial Code or other applicable law and rules of equity) and (d) Equity Interests issued by any Securitization Subsidiary to the extent the pledge of such Equity Interests is prohibited by a Contractual Obligation that is not prohibited by this Agreement or is not permitted under any requirement of law (after giving effect to Section 9-406, 9-407, 9-408 and any other anti-assignment provisions of the Uniform Commercial Code or other applicable law and rules of equity).

Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal

 

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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 of America or any similar tax imposed by any other jurisdiction described in clause (a) above and (c) in the case of the Administrative Agent or a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts payable to such Administrative Agent or Foreign Lender as a result of any law in effect (including FATCA) at the time such Administrative Agent or Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Administrative Agent or Foreign Lender’s failure to comply with Section 2.20(e), except to the extent that such Administrative Agent or 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 the Borrower with respect to such withholding tax pursuant to Section 2.20(a).

Facility ” shall mean any Hospital, outpatient clinic, long-term care facility, ambulatory center, nursing home or rehabilitation center and related medical office building or other facility owned or used by the Borrower or any Subsidiary in connection with their respective business.

FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any regulations or official interpretations thereof issued after the date of this Agreement.

FCPA ” shall mean the United States Foreign Corrupt Practices Act of 1977.

Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. If the Federal Funds Effective Rate is less than zero, it shall be deemed to be zero hereunder.

Fees ” shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees, the Fronting Fees and the Issuing Bank Fees.

Financial Officer ” of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person.

Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

Foreign Subsidiary ” shall mean any Subsidiary that is not a Domestic Subsidiary.

 

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Fronting Exposure ” shall mean, at any time there is a Defaulting Lender, (a) with respect to any Issuing Bank, such Defaulting Lender’s Pro Rata Percentage of the LC Exposure with respect to Letters of Credit issued by such Issuing Bank other than such LC Exposure 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 the Swingline Lender, such Defaulting Lender’s Pro Rata Percentage of the Swingline Exposure other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders.

Fronting Fee ” shall have the meaning assigned to such term in Section 2.05(c).

GAAP ” shall mean United States generally accepted accounting principles.

Governmental Authority ” shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

Granting Lender ” shall have the meaning assigned to such term in Section 9.04(i).

Guarantee ” of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided , however , that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) Practice Guarantees. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount (based on the maximum reasonably anticipated net liability in respect thereof as determined by the Borrower in good faith) of the primary obligation or portion thereof in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated net liability in respect thereof (assuming such person is required to perform thereunder) as determined by the Borrower in good faith.

Guarantee and Collateral Agreement ” shall mean the Guarantee and Collateral Agreement, substantially in the form of Exhibit E, dated as of the Closing Date among the Borrower, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties.

Hazardous Materials ” shall mean (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and

 

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all other ozone-depleting substances, medical, biological and animal wastes and (b) without limitation of the foregoing, any other chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

Health Care Associates ” shall have the meaning assigned to such term in Section 6.04(e).

Hedging Agreement ” shall mean any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

Hospital ” shall mean each hospital now or hereafter owned, leased or operated by the Borrower or any of the Subsidiaries or in which the Borrower or any of the Subsidiaries owns an equity interest. Set forth on Schedule 1.01(b) is a list of all Hospitals in existence on the Closing Date owned or used by the Borrower and the Subsidiaries.

Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or with respect to deposits or advances of any kind (other than customer deposits and interest payable thereon in the ordinary course of business), (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 or assets purchased by such person, (d) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business and deferred payment for services to employees or former employees incurred in the ordinary course of business and payable in accordance with customary practices and other deferred compensation arrangements), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness 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 obligations secured thereby have been assumed, (f) all Guarantees by such person of Indebtedness of others, (g) all Capital Lease Obligations and Synthetic Lease Obligations of such person, (h) all obligations of such person as an account party in respect of letters of credit, (i) all obligations of such person in respect of bankers’ acceptances, (j) [reserved] and (k) the aggregate liquidation preference of all outstanding Disqualified Stock issued by such person; provided that in all cases (w) Practice Guarantees, (x) earnouts, unless not paid after becoming due and payable, and working capital adjustments under acquisition or disposition agreements, (y) deferred or prepaid revenue and (z) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, shall be excluded from the definition of “Indebtedness”. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner.

Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

Indemnitee ” shall have the meaning assigned to such term in Section 9.05(b).

 

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Insurer ” means any Person (other than a Governmental Authority) which in the ordinary course of its business or activities agrees to pay for healthcare goods and services received by individuals, including commercial insurance companies, nonprofit insurance companies (such as the Blue Cross, Blue Shield entities), employers or unions which self-insure for employee or member health insurance, prepaid health care organizations, preferred provider organizations, health maintenance organizations or any other similar Person. “Insurer” includes insurance companies issuing health, personal injury, workers’ compensation or other types of insurance but does not include any individual guarantor.

Interest Payment Date ” shall mean (a) with respect to any ABR Revolving Loan, the last Business Day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing.

Interest Period ” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter or, with the consent of each applicable Lender, 12 months thereafter, as the Borrower may elect; provided , however , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

ISP ” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

Issuing Bank ” shall mean, as the context may require, (a) each Lender listed on Schedule 1.01(g) with respect to Letters of Credit issued by it in an aggregate amount outstanding at any time not to exceed the amount set forth for such Lender on Schedule 1.01(g); or (b) any other Lender that may become an Issuing Bank pursuant to Sections 2.23(j) and (k)  with respect to Letters of Credit issued by such Lender.

Issuing Bank Fees ” shall have the meaning assigned to such term in Section 2.05(c).

Last Service Date ” shall mean, with respect to any Receivable, the date on which the related patient was discharged from the care of the applicable Loan Party.

 

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LC Disbursement ” shall mean a payment or disbursement made by any Issuing Bank pursuant to a Letter of Credit.

LC Exposure ” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit issued for the account of Borrower under the Revolving Facility at such time and (b) the aggregate principal amount of Reimbursement Obligations in respect of Letters of Credit issued for the account of Borrower under the Revolving Facility outstanding at such time, provided that the amount in clause (a) will be reduced by the amount of cash deposited by Borrower in the LC Restricted Account in respect of Letters of Credit issued for the account of Borrower under the Revolving Facility that remains in such LC Restricted Account at such time. The LC Exposure of any Revolving Credit Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.

LC Participation Fee ” shall have the meaning assigned to such term in Section 2.05(c) .

LC Request ” shall mean a request by the Borrower in accordance with the terms of Section 2.23(b) in such form as shall be approved by the Administrative Agent and the applicable Issuing Bank.

LC Restricted Account ” shall mean a restricted deposit account held at the Collateral Agent the amounts in which serve to cash collateralize outstanding Letters of Credit issued for the account of Borrower. By its execution of this Agreement, Borrower consents to and authorizes the establishment and maintenance of such account by the Collateral Agent to cash collateralize Letters of Credit issued for Borrower’s account (or the account of its Subsidiaries) as required hereunder and pledges and grants to the Collateral Agent for the benefit of the Secured Parties, a lien on and security interest in, such account and all funds therein. It is understood and agreed that the funds in such account shall be invested only in overnight investments.

Lenders ” shall mean (a) the persons listed on Schedule 2.01 (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any person that has become a party hereto pursuant to an Assignment and Acceptance.

Letter of Credit ” shall mean any letter of credit issued pursuant to Section 2.23.

Letter of Credit Expiration Date ” shall mean, with respect to any Letter of Credit, the date that is five Business Days prior to the Revolving Credit Maturity Date.

LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate of interest appearing on the applicable Bloomberg screen (or on any successor or substitute screen or page of such service, or any successor to such service as determined by the Administrative Agent) as the London interbank offered rate administered by ICE Benchmark Administration Limited for deposits in dollars for a term comparable to such Interest Period, at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the commencement of such Interest Period;

 

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provided that in no event shall the LIBO Rate be less than 0.00%; provided further that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period.

License ” shall mean any license or agreement under which a Loan 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.

Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset. For the avoidance of doubt, the term “Lien” shall not be deemed to include any license of intellectual property.

Loan Documents ” shall mean this Agreement, the Letters of Credit, the Security Documents, the ABL Intercreditor Agreement, any Loan Modification Agreement, and the promissory notes, if any, executed and delivered pursuant to Section 2.04(e).

Loan Modification Agreement ” shall mean a Loan Modification Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, among the Borrower, the other Loan Parties, one or more Accepting Lenders and the Administrative Agent.

Loan Modification Offer ” shall have the meaning specified in Section 2.25(a).

Loan Parties ” shall mean the Borrower and the Subsidiary Guarantors.

Loans ” shall mean the Revolving Loans and the Swingline Loans.

Margin Stock ” shall have the meaning assigned to such term in Regulation U.

Material Adverse Effect ” shall mean (a) a materially adverse effect on the business, assets, operations, financial condition or operating results of the Borrower and the Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Document to which they are or will be a party or (c) a material impairment of the rights and remedies of or benefits available to the Lenders under the Loan Documents.

Material Indebtedness ” shall mean Indebtedness (other than the Loans and intercompany loans), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower or any Subsidiary in an aggregate principal amount

 

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exceeding $35,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

Material Subsidiary ” shall mean any Subsidiary other than any (a) Permitted Joint Venture Subsidiary, (b) Permitted Syndication Subsidiary, (c) [Reserved], (d) Foreign Subsidiary, (e) Captive Insurance Subsidiary or (f) Non-Significant Subsidiary.

Moody’s ” shall mean Moody’s Investors Service, Inc., or any successor thereto.

Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

Non-Significant Subsidiary ” shall mean at any time, any Subsidiary (a) which at such time has total assets book value (including the total assets book value of any subsidiaries of such Subsidiary), or for which the Borrower or any of the Subsidiaries shall have paid (including the assumption of Indebtedness) in connection with the acquisition of Equity Interests or the total assets of such Subsidiary, less than $10,000,000 or (b) which does not and will not itself or through its subsidiaries own a Hospital or an interest in a Hospital or manage or operate a Hospital; provided that the total assets of all Non-Significant Subsidiaries at any time does not exceed 5.0% of the total assets of the Borrower and the Subsidiaries on a consolidated basis. Schedule 1.01(f) contains, as of the Closing Date, a true, correct and complete list of all Non-Significant Subsidiaries.

Obligations ” shall mean all obligations defined as “Bank Loan Obligations” in the Guarantee and Collateral Agreement and the other Security Documents.

OFAC ” shall have the meaning assigned to such term in Section 3.23.

Other Taxes ” shall mean any and 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.

Overadvance ” has the meaning specified in Section 2.01(b) .

Participant Register ” shall have the meaning assigned to such term in Section 9.04(f).

PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

Permitted Acquisition ” shall have the meaning assigned to such term in Section 6.04(h).

 

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Permitted Amendments ” shall have the meaning assigned to such term in Section 2.25(c).

Permitted Interest Transfer ” shall mean a sale, issuance or other transfer of securities of a Subsidiary or of assets of any Subsidiary to a new Subsidiary, or sale, issuance or transfer of securities of a Subsidiary to another person if after such sale, issuance or other transfer, such Subsidiary shall meet the applicable requirements of the definition of “Permitted Joint Venture Subsidiary”, “Non-Significant Subsidiary” or “Permitted Syndication Subsidiary”; provided that (a) the aggregate fair market value (determined at the time of and after giving effect to any Permitted Interest Transfer) of all Permitted Interest Transfers made to, or in connection with the establishment of, a Permitted Joint Venture shall not exceed $100,000,000 and (b) at the time of and after giving effect to any Permitted Interest Transfer the total book value of the assets, calculated as of the date of the applicable Permitted Interest Transfer, of all Subsidiaries (other than Loan Parties) that become Permitted Joint Venture Subsidiaries or Permitted Syndication Subsidiaries after the Closing Date as a result of a Permitted Interest Transfer made after the Closing Date shall not exceed (i) 10% of the total book value of the assets of the Borrower and the Subsidiaries on a consolidated basis, calculated as of the date of the applicable Permitted Interest Transfer, in the case of Permitted Joint Venture Subsidiaries, and (ii) 10% of the total book value of the assets of the Borrower and the Subsidiaries on a consolidated basis, calculated as of the date of the applicable Permitted Interest Transfer, in the case of Permitted Syndication Subsidiaries.

Permitted Investments ” shall mean:

(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

 

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(e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (d) above; and

(f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments of a type analogous to the foregoing.

Permitted Joint Venture Subsidiary ” shall mean a partially owned Subsidiary pursuant to which the Borrower or such Subsidiary conducts a Permitted Joint Venture.

Permitted Joint Ventures ” shall mean (a) acquisitions (by merger, purchase, lease (including any lease that contains upfront payments or buy out options) or otherwise), not constituting Permitted Acquisitions, by the Borrower or any of the Subsidiaries of interests in any of the assets of, or shares of the capital stock of or other Equity Interests in, a person or division or line of business of any person engaged in the same business as the Borrower and the Subsidiaries or in a related business, (b) sales, issuances or other transfers of securities of a Subsidiary to a Person other than a Loan Party if after such sale, issuance or other transfer, such Subsidiary shall meet the applicable requirements of the definition of “Permitted Joint Venture Subsidiary” or (c) other investments in and loans and advances to Permitted Joint Venture Subsidiaries; provided that (x) no Default or Event of Default shall have occurred and be continuing and (y) except for the Permitted Joint Ventures listed on Schedule 1.01(d), to the extent the aggregate value of the investments, loans and advances made by the Borrower and the Subsidiaries in (including assets transferred to) any Permitted Joint Venture, in each case, measured as of the date of each such investment, loan or advance (net of any repayments or return of capital in respect thereof actually received in cash by the Borrower or the Subsidiaries (net of applicable Taxes) after the Closing Date) (the “ Net Investment Amount ”), when added to the aggregate Net Investment Amounts of all Permitted Joint Ventures consummated after the Closing Date, would exceed $2,000,000, the ABL Payment Conditions would be satisfied.

Permitted Real Estate Indebtedness ” shall have the meaning assigned to such term in Section 6.01(f).

Permitted Syndication Subsidiary ” shall mean a partially owned Subsidiary of the Borrower which, after giving effect to a Permitted Syndication Transaction, owns, leases or operates the Hospital which is the subject of such Permitted Syndication Transaction.

Permitted Syndication Transaction ” shall have the meaning assigned to such term in Section 6.05(b)(iii).

Permitted Syndication Transaction Partner ” shall mean one or more persons (other than the Borrower or any Subsidiary) that owns a minority interest in a Permitted Syndication Subsidiary.

 

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person ” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership, Governmental Authority or other entity.

Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, sponsored, maintained or contributed to by the Borrower or any ERISA Affiliate.

Platform ” shall have the meaning assigned to such term in Section 9.01.

Practice Guarantees ” shall mean admitting physician practice guarantees pursuant to which the Borrower or any of the Subsidiaries guarantees to pay an admitting physician on the medical staff of a Hospital the difference between such admitting physician’s monthly net revenue from professional fees and a minimum monthly guaranteed amount.

Prime Rate ” shall mean the rate of interest per annum published from time to time by The Wall Street Journal as the prime rate.

Pro Rata Percentage ” shall mean, with respect to any Revolving Credit Lender, the percentage of the Total Revolving Credit Commitments represented by such Revolving Credit Lender’s Revolving Credit Commitment.

Public Lender ” shall have the meaning assigned to such term in Section 9.01.

Qualified Capital Stock ” of any person shall mean any Equity Interest of such person that is not Disqualified Stock.

Reasonable Credit Judgment ” shall mean the commercially reasonable judgment of an asset based lender exercised by the Administrative Agent in good faith.

Receivables ” shall mean a right to receive payment arising from a sale or lease of goods or the performance of services by a person pursuant to an arrangement with another person by which such other person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit, and all proceeds thereof and rights (contractual or other) and collateral related thereto, and shall include, in any event, any items of property that would be classified as accounts receivable on the balance sheet of the Borrower or any of the Subsidiaries prepared in accordance with GAAP or an “account”, “chattel paper”, an “instrument”, a “general intangible” or a “payment intangible” under the Uniform Commercial Code as in effect in the State of New York and any “supporting obligations” or “proceeds” (as so defined) of any such items.

Received Exercise Proceeds Amount ” shall mean, as at any date of determination, an amount equal to (a) the aggregate net cash proceeds received by the Borrower in respect of any issuance of Equity Interests to employees or directors after the Closing Date, including payments in connection with the exercise of stock options, minus (b) the aggregate amount of all Restricted Payments made in reliance on Section 6.06(a)(viii) prior to such date.

 

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Register ” shall have the meaning assigned to such term in Section 9.04(d).

Regulation T ” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Reimbursement Obligations ” shall mean Borrower’s obligations under Section 2.23(e) to reimburse LC Disbursements.

Related Parties ” shall mean, with respect to any specified person, such person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such person and such person’s Affiliates.

Release ” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

Required Lenders ” shall mean, at any time, Lenders having Loans (other than Swingline Loans) outstanding, LC Exposure, Swingline Exposure and unused Revolving Credit Commitments representing more than 50% of the sum of all Loans (other than Swingline Loans) outstanding, LC Exposure, Swingline Exposure and unused Revolving Credit Commitments at such time; provided that, in the event that there are two (2) or more Lenders at such time, Required Lenders shall include at least two (2) Lenders which are not Affiliates; provided, further that the Loans outstanding, LC Exposure, Swingline Exposure and unused Commitments held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of the Required Lenders at any time.

Responsible Officer ” of any person shall mean any executive officer, executive vice president or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.

Restricted Indebtedness ” shall mean Indebtedness of the Borrower or any Subsidiary, the payment, prepayment, repurchase or defeasance of which is restricted under Section 6.09(b).

Restricted Payment ” shall mean any dividend or other distribution (whether in cash, securities or other property (other than Qualified Capital Stock of the person making such dividend or distribution)) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other

 

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property (other than Qualified Capital Stock of the person making such dividend or distribution)), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary (other than, in each case, capital contributions to, or the purchase of Equity Interests in, any Subsidiary).

Revolving Availability Period ” shall mean the period from and including the Closing Date to but excluding the earlier of (i) the Business Day preceding the Revolving Credit Maturity Date and (ii) the date of the termination of the Revolving Credit Commitments.

Revolving Credit Borrowing ” shall mean a Borrowing comprised of Revolving Loans.

Revolving Credit Commitment ” shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans, to acquire participations in Swingline Loans, and to acquire participations in Letters of Credit issued hereunder up to the amount (representing the maximum aggregate principal amount in Dollars of such Revolving Credit Lender’s Revolving Credit Exposure hereunder) set forth on Schedule 2.01 or by an amendment to this Agreement pursuant to Section 11.02(e) , or in the Assignment and Assumption pursuant to which such Revolving Credit Lender assumed its Revolving Credit Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Revolving Credit Lender pursuant to Section 9.04 . The aggregate amount of the Lenders’ Revolving Credit Commitments as of the Closing Date is $125,000,000.

Revolving Credit Exposure ” shall mean, with respect to any Revolving Credit Lender at any time, the sum of (a) the aggregate principal amount of Revolving Loans of such Revolving Credit Lender outstanding at such time, (b) such Revolving Credit Lender’s LC Exposure at such time and (c) such Revolving Credit Lender’s Swingline Exposure at such time.

Revolving Credit Lender ” shall mean a Lender with a Revolving Credit Commitment or an outstanding Revolving Loan.

Revolving Credit Maturity Date ” shall mean April 29, 2021; provided that if such day is not a Business Day the Revolving Credit Maturity Date shall be the Business Day immediately preceding such day.

Revolving Facility ” shall mean the Revolving Credit Commitments and the extensions of credit made thereunder by the Revolving Credit Lenders.

Revolving Loans ” shall mean the revolving loans made by the Lenders to the Borrower pursuant to Section 2.01(b).

S&P ” shall mean Standard & Poor’s Ratings Service, or any successor thereto.

 

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Sanctions ” shall have the meaning assigned to such term in Section 3.23.

SEC ” shall mean the U.S. Securities and Exchange Commission or any Governmental Authority succeeding to any or all of its functions.

Secured Cash Management Agreement ” shall mean any Cash Management Agreement between a Loan Party or Subsidiary of a Loan Party and a Bank Product Secured Party.

Secured Cash Management Obligations ” shall mean the due and punctual payment and performance of all obligations of each Loan Party or Subsidiary of a Loan Party under each Secured Cash Management Agreement.

Secured Hedging Agreement ” shall mean any Hedging Agreement between a Loan Party and a Bank Product Secured Party.

Secured Hedging Obligations ” shall mean the due and punctual payment and performance of all obligations of each Loan Party under each Secured Hedging Agreement.

Secured Parties ” shall have the meaning assigned to such term in the Guarantee and Collateral Agreement.

Security Documents ” shall mean the Guarantee and Collateral Agreement and each of the security agreements and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.12 or 9.20.

Senior Note Indenture ” shall mean each indenture under which Senior Notes are issued, as the same may be amended, restated, substituted, replaced, refinanced, supplemented or otherwise modified from time to time in accordance with Section 6.01(a).

Senior Notes ” shall mean the Borrower’s 11.625% Senior Notes due 2023 issued on or prior to the Closing Date, as the same may be amended, restated, substituted, replaced, refinanced, supplemented or otherwise modified from time to time in accordance with Section 6.01(a) of the Term Loan Agreement.

Separation Documents ” shall mean the Separation and Distribution Agreement, the Computer and Data Processing Transition Services Agreement, the Receivables Collection Agreement, the Billing and Collection Agreement, the Eligibility Screening Services Agreement, the Employee Service Center/HRIS Transition Services Agreement, the Shared Services Center Transition Services Agreement, the Supplemental Medicaid Program Services Agreement, certain other short-term transition services agreements that may be entered into on or following the Distribution Date, the Tax Matters Agreement and the Employee Matters Agreement, among CHS and its subsidiaries (not including the Borrower and its Subsidiaries), on the one hand, and the Borrower and its Subsidiaries, on the other hand, with respect to services and transactions relating to the separation of the Borrower and its Subsidiaries from CHS.

 

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Significant Asset Sale ” shall mean the sale, transfer, lease or other disposition by the Borrower or any Subsidiary to any person other than the Borrower or a Subsidiary Guarantor of all or substantially all of the assets of, or a majority of the Equity Interests in, a person, or a division or line of business or other business unit of a person.

SPC ” shall have the meaning assigned to such term in Section 9.04(i).

Spin-Off ” shall have the meaning assigned to such term in the Preliminary Statement.

Statutory Reserves ” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D of the Board). Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D of the Board) and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

subsidiary ” shall mean, as to any person, a corporation, partnership or other entity of which Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such corporation, partnership or other entity are at the time owned, directly or indirectly, or the management of which is otherwise Controlled, directly or indirectly, or both, by such person.

Subsidiary ” shall mean any subsidiary of the Borrower; provided , however , that Unrestricted Subsidiaries shall be deemed not to be Subsidiaries for any purpose of this Agreement or the other Loan Documents.

Subsidiary Guarantor ” shall mean each Subsidiary listed on Schedule 1.01(b), and each other Subsidiary that is or becomes a party to the Guarantee and Collateral Agreement pursuant to Section 5.12 (it being understood and agreed that no (i) Foreign Subsidiary, (ii) Non-Significant Subsidiary, (iii) Permitted Syndication Subsidiary, (iv) [Reserved], (v) Captive Insurance Subsidiary, (vi) Permitted Joint Venture Subsidiary or (vii) Subsidiary listed on Schedule 1.01(e), shall, in any case, be required to enter into the Guarantee and Collateral Agreement pursuant to Section 5.12, unless the Borrower elects to make any such Permitted Joint Venture Subsidiary a Subsidiary Guarantor).

 

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Supermajority Lenders ” shall mean, at any time, Lenders having Loans (other than Swingline Loans) outstanding, LC Exposure, Swingline Exposure and unused Revolving Credit Commitments representing more than 66 2/3% of the sum of all Loans (other than Swingline Loans) outstanding, LC Exposure, Swingline Exposure and unused Revolving Credit Commitments at such time; provided that, in the event that there are two (2) or more Lenders at such time, Supermajority Lenders shall include at least two (2) Lenders which are not Affiliates; provided, further that the Loans outstanding, LC Exposure, Swingline Exposure and unused Commitments held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Supermajority Lenders.

Swingline Commitment ” shall mean the (a) commitment of Swingline Lender to make Swingline Loans to Borrower, in each case pursuant to Section 2.22 . The amount of the Swingline Commitment as of the Closing Date is $15,000,000.

Swingline Exposure ” shall mean at any time the sum of the total Swingline Loans outstanding.

Swingline Lender ” shall mean UBS AG, Stamford Branch and any additional Lender added as a Swingline Lender hereunder.

Swingline Loan ” shall mean any loan made by Swingline Lender to Borrower pursuant to Section 2.22 .

Syndication Proceeds ” shall have the meaning assigned to such term in Section 6.05(b)(iii).

Syndication Transaction ” shall mean a transaction (or series of transactions) whereby the Borrower or a Subsidiary sells, transfers or otherwise disposes of part, but not all, of its interest in a Subsidiary that owns, leases or operates a Hospital to one or more third parties or of its interest in a Hospital to a partially owned Subsidiary.

Synthetic Lease ” shall mean, as to any person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such person is the lessor.

Synthetic Lease Obligations ” shall mean, as to any person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.

Synthetic Purchase Agreement ” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which the Borrower or any Subsidiary is or may become obligated to make (a) any payment in connection with a purchase by any third party from a person other than the Borrower or any Subsidiary of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account

 

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of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness; provided that no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of the Borrower or the Subsidiaries (or to their heirs and estates) shall be deemed to be a Synthetic Purchase Agreement.

Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term Facility First Priority Collateral ” shall have the meaning assigned to the term “Term/Cash Flow Revolver Facility First Priority Collateral” in the ABL Intercreditor Agreement.

Term Loan Agreement ” shall mean (a) the Credit Agreement dated as of the date hereof among Borrower, Credit Suisse Securities (USA) LLC, the guarantors party thereto, Credit Suisse AG, as administrative agent and collateral agent, and the lenders from time to time party thereto, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with this Agreement and the ABL Intercreditor Agreement and (b) one or more loan agreements among the Borrower and other parties from time to time party thereto pursuant to which the Indebtedness under the credit agreement referenced in clause (a) above has been refinanced, repaid, prepaid, repurchased, redeemed, replaced, renewed, refunded on increased in whole or in part in accordance with, and subject to, the provisions of this Agreement (including Section 6.01(y)) and the ABL Intercreditor Agreement.

Term Loan Documents ” shall mean the Term Loan Agreement, each guarantee, mortgage and other security document thereunder and the notes issued thereunder.

Term Loans ” shall mean the loans (whether term or revolving) made from time to time pursuant to the Term Loan Agreement.

Test Period ” shall mean, at any time, the four consecutive fiscal quarters of Borrower then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to Section 5.04(a) or (b) .

Total Revolving Credit Commitment ” shall mean, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time. As of the Closing Date, the Total Revolving Credit Commitment is $125,000,000.

Transactions ” shall mean, collectively, (a) the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder on the Closing Date, (b) the execution, delivery and performance by each Loan Party of each Term Loan Document to which it is to be party, (c) the Spin-Off, (d) the CHS Dividend, (e) the Contribution, (f) the Distribution, (g) all related transactions to occur on, prior to or after the Closing Date and (h) the payment of fees and expenses related to the foregoing.

 

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Type ”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “ Rate ” shall mean the Adjusted LIBO Rate and the Alternate Base Rate.

UCP ” shall mean, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

Unrestricted Subsidiary ” shall mean any Subsidiary organized or acquired directly or indirectly by the Borrower after the Closing Date that the Borrower designates as an “Unrestricted Subsidiary” by written notice to the Administrative Agent. No Unrestricted Subsidiary may own any Equity Interests of a Subsidiary; provided that, so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower may redesignate any Unrestricted Subsidiary as a “Subsidiary” by written notice to the Administrative Agent and by complying with the applicable provisions of Section 5.12.

USA PATRIOT Act ” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

wholly owned Subsidiary ” of any person shall mean a subsidiary of such person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the Equity Interests are, at the time any determination is being made, owned, Controlled or held by such person or one or more wholly owned Subsidiaries of such person or by such person and one or more wholly owned Subsidiaries of such person.

Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Withholding Agent ” shall mean any Loan Party or the Administrative Agent.

SECTION 1.02. Terms Generally . The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement

 

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unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided , however , that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article VI or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article VI or any related definition for such purpose), then the Borrower’s compliance with such covenant shall at all times be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.

SECTION 1.03. Pro Forma Calculations . With respect to any period of four consecutive fiscal quarters during which any Permitted Acquisition, other acquisition permitted pursuant to Section 6.04 or Significant Asset Sale occurs, Consolidated EBITDA shall, for all purposes set forth herein, be calculated with respect to such period on a pro forma basis after giving effect to such Permitted Acquisition, acquisition or Significant Asset Sale (and any related repayment of Indebtedness) (including, without duplication, (a) all pro forma adjustments permitted or required by Article 11 of Regulation S-X under the Securities Act of 1933, as amended, (b) pro forma adjustments for designation of any Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Subsidiary in accordance with the definition of “Unrestricted Subsidiary” (a “ Subsidiary Designation ”), and (c) pro forma adjustments for cost savings and synergies (net of continuing associated expenses) to the extent such cost savings and synergies are reasonably identifiable, reasonably supportable, are expected to have a continuing impact and have been realized or are reasonably expected to be realized within 12 months following any such Permitted Acquisition or acquisition (which cost savings and synergies shall be calculated on a pro forma basis as though they had been realized on the first day of such period); provided that at the election of the Borrower, such pro forma adjustment shall not be required to be determined for any Permitted Acquisition or other acquisition if the aggregate consideration paid in connection with such acquisition is less than $75,000,000; provided further that all such adjustments shall be set forth in a reasonably detailed certificate of a Financial Officer of the Borrower), assuming, for purposes of making such calculations, such Permitted Acquisition, Subsidiary Designation, acquisition permitted pursuant to Section 6.04 or Significant Asset Sale (and related repayment of Indebtedness), and any other Permitted Acquisitions and Significant Asset Sales (and related repayment of Indebtedness) that have been consummated during the period, had been consummated on the first day of such period; provided , further , that the aggregate amount added to or included in Consolidated EBITDA above in respect of synergies for any period of four consecutive fiscal quarters shall not exceed an amount equal to 20% of Consolidated EBITDA, calculated prior to giving effect to such additions and any other prior additions in respect of such period pursuant to this Section 1.03.

 

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SECTION 1.04. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “Revolving Loan”) or by Type ( e.g. , a “Eurodollar Loan”) or by Class and Type ( e.g ., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class ( e.g ., a “Revolving Borrowing”) or by Type ( e.g., a “Eurodollar Borrowing”) or by Class and Type ( e.g. , a “Eurodollar Revolving Borrowing”).

SECTION 1.05. Effectuation of Transactions . All references herein to the Borrower and the Subsidiaries shall be deemed to be references to such persons, and all the representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Spin-Off and the other Transactions to occur on the Closing Date, unless the context otherwise requires.

SECTION 1.06. Excluded Swap Obligations . (a) Notwithstanding any provision of this Agreement or any other Loan Document, no Guarantee by any Loan Party under any Loan Document shall include a Guarantee of any Obligation that, as to such Loan Party, is an Excluded Swap Obligation and no Collateral provided by any Loan Party shall secure any Obligation that, as to such Loan Party, is an Excluded Swap Obligation. In the event that any payment is made by, or any collection is realized from, any Loan Party as to which any Obligations are Excluded Swap Obligations, or from any Collateral provided by such Loan Party, the proceeds thereof shall be applied to pay the Obligations of such Loan Party as otherwise provided herein without giving effect to such Excluded Swap Obligations and each reference in this Agreement or any other Loan Document to the ratable application of such amounts as among the Obligations or any specified portion of the Obligations that would otherwise include such Excluded Swap Obligations shall be deemed so to provide.

(b) The following terms shall for purposes of this Section 1.06 have the meanings set forth below:

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

Excluded Swap Obligation ” means, with respect to each Subsidiary Guarantor, any Swap Obligation if, and to the extent that, the Guarantee by such Subsidiary Guarantor of, or the grant by such Subsidiary Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Subsidiary Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Subsidiary Guarantor becomes effective with respect to such related Swap Obligation.

Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Subsidiary Guarantor that has total assets exceeding $10,000,000 or that otherwise

 

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constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder at the time such Swap Obligation is incurred (including as a result of any agreement in the Guarantee and Collateral Agreement or any other Guarantee or other support agreement in respect of the obligations of such Subsidiary Guarantor by the Borrower or another Person that constitutes an “eligible contract participant”).

Swap Obligation ” means, with respect to any Subsidiary Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

ARTICLE II

The Credits

SECTION 2.01. Commitments . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each applicable Lender agrees, severally and not jointly:

(a) to make Revolving Loans to Borrower, at any time and from time to time after the Closing Date until the earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Credit Commitment or (ii) the Aggregate Revolving Credit Exposures exceeding the lesser of (x) the Total Revolving Credit Commitments and (y) the Borrowing Base.

(b) If the Aggregate Revolving Credit Exposures exceed the Borrowing Base (“ Overadvance ”) at any time, the excess amount shall be payable by the Borrower within one Business Day after demand by the Administrative Agent, but all such excess Revolving Loans shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents. Unless its authority has been revoked in writing by the Required Lenders, the Administrative Agent may require the Lenders to honor requests for Overadvances and to forbear from requiring the Borrower to cure an Overadvance, when no other Event of Default is known to the Administrative Agent, as long as (i) the Overadvance does not continue for more than 45 consecutive days (and no Overadvance may exist for at least five consecutive days thereafter before further Overadvances are required), and (ii) the Overadvance is not known by the Administrative Agent to exceed, when taken together with all Protective Advances, an amount equal to 10% of the greater of (x) the Total Revolving Credit Commitments and (y) the Borrowing Base. Notwithstanding the foregoing, in no event shall Overadvances be required or permitted that would cause the (A) the Revolving Credit Exposure of any Lender to exceed such Lender’s Revolving Credit Commitment or (B) the sum of the Aggregate Revolving Credit Exposures to exceed the Total Revolving Credit Commitments. Any funding of an Overadvance or sufferance of an

 

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Overadvance shall not constitute a waiver by the Administrative Agent or the Lenders of the Event of Default caused thereby. In no event shall the Borrower or any other Loan Party be deemed a beneficiary of this Section nor authorized to enforce any of its terms. At the Administrative Agent’s discretion, Overadvances made under this Section 2.01(b) may be made in the form of Swingline Loans or in accordance with Section 2.22 .

(c) The Administrative Agent shall be authorized, in its discretion, at any time that any conditions in Section 4.02 are not satisfied, to make Revolving Loans (any such Revolving Loans made pursuant to this Section 2.01(c) the “ Protective Advances ”) (a) up to an aggregate amount outstanding at any time, together with all Overadvances, of 10% of the greater of (x) the Total Revolving Credit Commitments and (y) the Borrowing Base, if the Administrative Agent reasonably 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 Loan Parties under any Loan Documents, including costs, fees and expenses. Protective Advances shall constitute Obligations secured by the Collateral and shall be entitled to all of the benefits of the Loan Documents. Immediately upon the making of a Protective Advance, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Administrative Agent a risk participation in such Protective Advance in an amount equal to the product of such applicable Lender’s Pro Rata Percentage times the amount of such Protective Advance. The Administrative Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive. In no event shall Protective Advances cause such Lender’s Revolving Credit Exposure, to exceed such Lender’s Commitment.

Within the limits set forth in this Section 2.01 and subject to the terms, conditions and limitations set forth herein, Borrower may borrow, pay or prepay and reborrow Revolving Loans.

SECTION 2.02. Loans . (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided , however , that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). The Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1,000,000 and not less than $3,000,000 or (ii) equal to the remaining available balance of the applicable Commitments.

(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided , however, that the Borrower shall not be entitled to request any Borrowing that, if made, would result in

 

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more than ten Eurodollar Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

(c) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 1:00 p.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account designated by the Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower to but excluding the date such amount is repaid to the Administrative Agent at a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error). If such Lender shall not repay to the Administrative Agent such corresponding amount within three Business Days after demand by the Administrative Agent, then the Administrative Agent shall be entitled to recover such amount with interest thereon at the rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing, on demand, from the Borrower. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

(e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Revolving Credit Borrowing if the Interest Period requested with respect thereto would end after the Revolving Credit Maturity Date.

SECTION 2.03. Borrowing Procedure . In order to request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon), New York City time, three Business Days before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of a proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable, and shall be confirmed promptly by hand delivery or fax to the Administrative Agent of a written Borrowing

 

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Request and shall specify the following information: (i) whether the Borrowing then being requested is to be Revolving Credit Borrowing or Swingline Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto; provided , however , that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Lender’s portion of the requested Borrowing.

SECTION 2.04. Evidence of Debt; Repayment of Loans . (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Credit Maturity Date.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Class and Type thereof and, if applicable, the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Subsidiary Guarantor and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided , however , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms.

(e) Any Lender may request that Loans made by it hereunder be evidenced by a promissory note. In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form and substance reasonably acceptable to the Administrative Agent and the Borrower. Notwithstanding any other provision of this Agreement, in the event any Lender shall

 

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request and receive such a promissory note, the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns.

SECTION 2.05. Fees . (a) The Borrower agrees to pay to each Revolving Credit Lender, through the Administrative Agent, on the last Business Day of March, June, September and December in each year and on each date on which any Revolving Credit Commitment of such Lender shall expire or be terminated as provided herein, a commitment fee (a “ Commitment Fee ”) equal to the Applicable Fee per annum on the daily unused amount of the Revolving Credit Commitment of such Lender during the preceding quarter (or other period ending with the Revolving Credit Maturity Date or the date on which the Revolving Credit Commitments of such Lender shall expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. For purposes of computing Commitment Fees with respect to Revolving Credit Commitments, a Revolving Credit Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).

(b) The Borrower agrees to pay to the Administrative Agent, for its own account, the administration fees set forth in the Engagement Letter at the times and in the amounts specified therein (the “ Administrative Agent Fees ”).

(c) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Credit Lender a participation fee (“ LC Participation Fee ”) with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Loans pursuant to Section 2.06(b) on the daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations), during the preceding quarter, and (ii) to each applicable Issuing Bank a fronting fee (“ Fronting Fee ”), which shall accrue at the rate of 0.125% per annum on the average daily amount of the Letters of Credit (excluding any portion thereof attributable to Reimbursement Obligations) issued by such Issuing Bank and outstanding during the preceding quarter, as well as each applicable Issuing Bank’s customary fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder (“ Issuing Bank Fees ”). Accrued LC Participation Fees and Fronting Fees shall be payable in arrears (i) on the third Business Day after the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (ii) on the date on which the Revolving Credit Commitments terminate. Any such fees accruing after the date on which the Revolving Credit Commitments terminate shall be payable on demand. Any other fees payable to any Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand therefor. All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

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(d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that Borrower shall pay the Fronting Fees and Issuing Bank Fees directly to the applicable Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06. Interest on Loans . (a) Subject to the provisions of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when the Alternate Base Rate is determined by reference to the Prime Rate and over a year of 360 days at all other times and calculated from and including the date of such Borrowing to but excluding the date of repayment thereof) at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time.

(b) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time.

(c) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.07. Default Interest . If the Borrower shall default in the payment of any principal of or interest on any Loan or any other amount due hereunder, by acceleration or otherwise, or under any other Loan Document, then, until such defaulted amount shall have been paid in full, to the extent permitted by law, such defaulted amount shall bear interest (after as well as before judgment), payable on demand, (a) in the case of principal, at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) equal to the rate that would be applicable to an ABR Revolving Loan plus 2.00% per annum.

SECTION 2.08. Alternate Rate of Interest . In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined that dollar deposits in the principal amounts of the Loans comprising such Borrowing are not generally available in the London interbank market, or that the rates at which such dollar deposits are being offered will not adequately and fairly reflect the cost to any Lender of making or maintaining its Eurodollar Loan during such Interest Period, or that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to

 

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the Borrower and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each determination by the Administrative Agent under this Section 2.08 shall be conclusive absent manifest error.

SECTION 2.09. Termination and Reduction of Commitments . (a) The Revolving Credit Commitments shall automatically terminate on the Revolving Credit Maturity Date.

(b) Upon at least three Business Days’ prior written or fax notice to the Administrative Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided , however , that (i) each partial reduction of the Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $3,000,000, and (ii) the Commitments shall not be reduced to an amount that is less than the Aggregate Revolving Credit Exposure at the time. Each notice delivered by the Borrower pursuant to this Section 2.09 shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or any other event, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(c) Each reduction in the Revolving Credit Commitments hereunder shall be made ratably among the Lenders in accordance with their respective applicable Commitments. The Borrower shall pay to the Administrative Agent for the account of the applicable Lenders, on the date of each termination or reduction, the Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction.

SECTION 2.10. Conversion and Continuation of Borrowings . The Borrower shall have the right at any time upon prior irrevocable notice to the Administrative Agent (a) not later than 11:00 a.m., New York City time, on the date of conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 12:00 (noon), New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest Period, and (c) not later than 12:00 (noon), New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing to another permissible Interest Period, subject in each case to the following:

(i) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing;

 

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(ii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type;

(iii) each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the Borrower at the time of conversion;

(iv) if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;

(v) any portion of a Borrowing of any Loans maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing;

(vi) any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing; and

(vii) upon notice to the Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan.

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, then, the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender’s portion of any converted or continued Borrowing. If the Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be continued into an ABR Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

 

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SECTION 2.11. Reserved .

SECTION 2.12. Optional Prepayment . The Borrower shall have the right at any time and from time to time to prepay any Borrowing made by Borrower, in whole or in part, subject to the requirements of this Section 2.12 ; provided that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000.

SECTION 2.13. Mandatory Prepayments .

(a) In the event of the termination of all the Revolving Credit Commitments, the Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and replace all outstanding Letters of Credit or cash collateralize all outstanding Letters of Credit in accordance with the procedures set forth in Section 2.23(i) , in each case outstanding under the Revolving Credit Commitments.

(b) In the event of any partial reduction of the Revolving Credit Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify Borrower and Revolving Credit Lenders of the sum of the Revolving Credit Exposures after giving effect thereto and (y) if the Revolving Credit Exposures would exceed the aggregate Revolving Credit Commitments, after giving effect to such reduction, then the Borrower shall, on the date of such reduction, first, repay or prepay Swingline Loans, second , repay or prepay Revolving Loans and third , replace outstanding Letters of Credit under the Revolving Facility or cash collateralize outstanding Letters of Credit under the Revolving Facility in accordance with the procedures set forth in Section 2.23(i) , in an aggregate amount sufficient to eliminate such excess.

(c) In the event that the sum of all Revolving Credit Lenders’ Revolving Credit Exposures exceeds the lesser of (i) the Borrowing Base and (ii) the aggregate amount of the Revolving Credit Commitments then in effect, the Borrower shall, subject to Sections 2.01(b) and 2.01(c) , without notice or demand, within one Business Day first , repay or prepay Swingline Loans, second , repay or prepay Revolving Loans and third , replace outstanding Letters of Credit under the Revolving Facility or cash collateralize outstanding Letters of Credit under the Revolving Facility in accordance with the procedures set forth in Section 2.23(i) , in an aggregate amount sufficient to eliminate such excess; provided that if such excess arises solely as a result of currency rate fluctuations, such repayment, prepayment, replacement or cash collateralization, as the case may be, shall not be required to be made until the third Business Day after the Administrative Agent shall have delivered to Borrower written notice of such required repayment, prepayment, replacement or cash collateralization.

 

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SECTION 2.14. Reserve Requirements; Change in Circumstances .

(a) Notwithstanding any other provision of this Agreement, if any Change in Law shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender or Issuing Bank (except any such reserve requirement which is reflected in the Adjusted LIBO Rate), shall subject any Lender, any Issuing Bank or the Administrative Agent to any Taxes (other than (i) Indemnified Taxes imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (ii) Excluded Taxes) on its Loans, Commitments or other obligations or its deposits, reserves, other liabilities or capital attributable thereto or shall impose on such Lender or Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender or Issuing Bank of making or maintaining any Eurodollar Loan or increase the cost to any Lender or Issuing Bank of issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or Issuing Bank to be material, then the Borrower will pay to such Lender or Issuing Bank, as the case may be, from time to time such additional amount or amounts as will compensate such Lender or Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or Issuing Bank shall have determined that any Change in Law regarding capital adequacy or liquidity has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender or participations in Letters of Credit purchased pursuant hereto to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy or liquidity) by an amount deemed by such Lender or Issuing Bank to be material, then from time to time the Borrower shall pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or Issuing Bank the amount shown as due on any such certificate delivered by it within 30 days after its receipt of the same.

(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender’s or Issuing

 

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Bank’s right to demand such compensation; provided that the Borrower shall not be under any obligation to compensate any Lender or Issuing Bank under paragraph (a) or (b) above with respect to increased costs or reductions with respect to any period prior to the date that is 180 days prior to such request if such Lender or Issuing Bank knew or could reasonably have been expected to know of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions; provided further that the foregoing limitation shall not apply to any increased costs or reductions arising out of the retroactive application of any Change in Law within such 180-day period. The protection of this Section shall be available to each Lender and Issuing Bank regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.

SECTION 2.15. Change in Legality . (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower and to the Administrative Agent:

(i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods) and ABR Loans will not thereafter (for such duration) be converted into Eurodollar Loans, whereupon any request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and

(ii) such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans.

(b) For purposes of this Section 2.15, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower.

 

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SECTION 2.16. Indemnity . The Borrower shall indemnify each Lender against any loss or expense (but not against any lost profits) that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Revolving Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this clause (a) being called a “ Breakage Event ”) or (b) any default in the making of any payment or prepayment of any Eurodollar Loan required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrower and shall be conclusive absent manifest error.

SECTION 2.17. Pro Rata Treatment . Except as required under Section 2.15, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each reduction of the Revolving Credit Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole dollar amount.

SECTION 2.18. Sharing of Setoffs . Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Borrower or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means (excluding means expressly contemplated elsewhere in this Agreement), obtain payment (voluntary or involuntary) in respect of any Loan or Loans or LC Disbursement as a result of which the unpaid principal portion of its Loans and participations in LC Disbursements shall be proportionately less than the unpaid principal portion of the Loans and participations in LC Disbursements of any other Lender, it shall be deemed simultaneously to have

 

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purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans and LC Exposure of such other Lender, so that the aggregate unpaid principal amount of the Loans and LC Exposure and participations in Loans and LC Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans and LC Exposure then outstanding as the principal amount of its Loans prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans and LC Exposure outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided , however , that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Borrower expressly consents to the foregoing arrangements and agree that any Lender holding a participation in a Loan or LC Disbursement deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such participation.

SECTION 2.19. Payments . (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any LC Disbursement or any Fees or other amounts) hereunder and under any other Loan Document not later than 1:00 p.m., New York City time, on the date when due in immediately available dollars, without setoff, defense or counterclaim. Each such payment (other than Fronting Fees and Issuing Bank Fees, which shall be paid directly to the applicable Issuing Bank) shall be made to the Administrative Agent at its designated offices. The Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender.

(b) Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

(c) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Banks hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Banks, as the case may be, the amount due. In such event, if the Borrower does not in fact make such payment, then each of the Lenders or the Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, and to pay interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error).

 

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SECTION 2.20. Taxes . (a) Any and all payments by or on account of any obligation of the Borrower or any other Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that, if the Borrower or any other Loan Party shall be required by applicable law to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such Loan Party shall make such deductions and (iii) the Borrower or such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes that are payable or paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower or any other Loan Party hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto; provided that the Borrower shall not be obligated to so indemnify any Lender, the Administrative Agent or any Issuing Bank in respect of interest or penalties attributable to any Indemnified Taxes or Other Taxes to the extent that such interest or penalties resulted solely from the gross negligence or willful misconduct of the Administrative Agent, such Lender or such Issuing Bank. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or an Issuing Bank or by the Administrative Agent on behalf of itself or a Lender or an Issuing Bank, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes, Excluded Taxes or Other Taxes by the Borrower or any other Loan Party to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) (i) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent),

 

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at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate.

(ii) If a payment made to a Lender or Issuing Bank under this Agreement or any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender or Issuing Bank 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 or Issuing Bank shall deliver to the Withholding Agent, at the time or times prescribed by law and at such other time or times reasonably requested by the Withholding 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 Withholding Agent as may be necessary for the Withholding Agent to comply with its obligations under FATCA, to determine that such Lender or Issuing Bank has complied with such Lender’s or Issuing Bank’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (ii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender and Issuing Bank agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(f) Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so) and (ii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided , that this paragraph (f) shall not create any additional obligation of the Borrower hereunder. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (f).

(g) Each party’s obligations under this Section 2.20 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments, the cancellation or expiration of any Letter of Credit and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate . (a) In the event (i) any Lender or Issuing Bank delivers a certificate

 

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requesting compensation pursuant to Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in Section 2.15, (iii) the Borrower is required to pay any additional amount to any Lender or Issuing Bank or any Governmental Authority on account of any Lender or Issuing Bank pursuant to Section 2.20, (iv) any Lender refuses to consent to any amendment, waiver or other modification of any Loan Document requested by the Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, (v) any Lender refuses to consent to any Loan Modification Offer, and such Loan Modification Offer is consented to by Lenders holding a majority in interest of the Affected Class or (vi) any Lender becomes a Defaulting Lender, then, in each case, the Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender or Issuing Bank, as the case may be, and the Administrative Agent, require such Lender or Issuing Bank to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement (or, in the case of clause (iv), (v) or (vi) above, all of its interests, rights and obligations with respect to the Class of Loans or Commitments that is the subject of the related consent, amendment, waiver or other modification or in respect of which such Lender is a Defaulting Lender, as the case may be) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iv) or (v) above, shall consent to such requested amendment, waiver or other modification of any Loan Document (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, and (z) the Borrower or such Eligible Assignee shall have paid to the affected Lender or Issuing Bank in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans or LC Disbursements of such Lender or Issuing Bank, respectively, plus all Fees (except, in the case of a Defaulting Lender, any Fees not required to be paid to such Defaulting Lender pursuant to the express provisions of this Agreement) and other amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Sections 2.14 and 2.16); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s or Issuing Bank’s claim for compensation under Section 2.14, notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender or Issuing Bank pursuant to paragraph (b) below), or if such Lender or Issuing Bank shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification or shall cease to be a

 

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Defaulting Lender, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder. Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.21(a).

(b) If (i) any Lender or Issuing Bank shall request compensation under Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower is required to pay any additional amount to any Lender or Issuing Bank or any Governmental Authority on account of any Lender or Issuing Bank, pursuant to Section 2.20, then such Lender or Issuing Bank shall use reasonable efforts (which shall not require such Lender or Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or Issuing Bank in connection with any such filing or assignment, delegation and transfer.

SECTION 2.22. Swingline Loans .

(a) Swingline Commitments . Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to Borrower in Dollars from time to time after the Closing Date during the Revolving Availability Period in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of Swingline Loans exceeding $15,000,000, or (ii) the Aggregate Revolving Credit Exposures exceeding the lesser of (x) the Total Revolving Credit Commitments and (y) the Borrowing Base; provided that no Swingline Lender shall be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow Swingline Loans.

(b) Swingline Loans . To request a Swingline Loan, the Borrower shall deliver, by hand delivery, telecopy or e-mail, a duly completed and executed Borrowing Request to the Administrative Agent and the applicable Swingline Lender, not later than 12:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and the amount of the requested Swingline Loan. Each Swingline Loan shall be an ABR Loan. The Swingline Lender shall make the applicable Swingline Loan available to the Borrower by 3:00 p.m., New York City time, on the requested date of such Swingline Loan. Borrower shall not request a Swingline Loan if at the time of or immediately after giving effect to the Credit Extension contemplated by such request a Default has occurred

 

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and is continuing or would result therefrom. Swingline Loans denominated in Dollars shall be made in minimum amounts of $500,000 and integral multiples of $250,000 above such amount.

(c) Prepayment . The Borrower shall have the right at any time and from time to time to repay any Swingline Loan, in whole or in part, upon giving written notice to the Swingline Lender and the Administrative Agent before 12:00 (noon), New York City time, on the proposed date of repayment.

(d) Participations . The Swingline Lender may at any time in its discretion, and in any event, at least weekly, by written notice given to the Administrative Agent ( provided such notice requirement shall not apply if such Swingline Lender and the Administrative Agent are the same entity) not later than 11:00 A.M., New York City time, on the next succeeding Business Day following such notice require the Revolving Credit Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans then outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Credit Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Credit Lender specifying in such notice such Lender’s Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Credit Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to promptly pay to the Administrative Agent, for the account of the applicable Swingline Lender, such Lender’s Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Credit Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02 shall apply, mutatis mutandis , to the payment obligations of the Revolving Credit Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from such Revolving Credit Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired by the Revolving Credit Lenders pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender (unless the Administrative Agent is the same entity as the Swingline Lender). Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of Borrower) in respect of a Swingline Loan after receipt by such Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent. Any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made their payments pursuant to this paragraph, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

 

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SECTION 2.23. Letters of Credit .

(a) General . Subject to the terms and conditions set forth herein, Borrower may request an Issuing Bank to issue Letters of Credit in Dollars for the account of Borrower or the account of a Subsidiary under the Revolving Facility ( provided that Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary). If at any time there is more than one Issuing Bank hereunder, Borrower may, in its discretion, select which Issuing Bank is to issue any particular Letter of Credit. The Issuing Banks shall have no obligation to issue, and no Borrower shall request the issuance of, any Letter of Credit at any time if after giving effect to such issuance, (i) the LC Exposure would exceed $35,000,000 or (ii) the Aggregate Revolving Credit Exposures would exceed the lesser of (x) the Total Revolving Credit Commitments and (y) the Borrowing Base. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by Borrower to, or entered into by Borrower with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. No Issuing Bank shall be required to issue any Letter of Credit that is not a standby Letter of Credit.

(b) Request for Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) an LC Request to the applicable Issuing Bank and the Administrative Agent not later than 11:00 a.m., New York City time, on the third Business Day preceding the requested date of issuance, amendment, renewal or extension (or such later date and time as is acceptable to the applicable Issuing Bank).

A request for an initial issuance of a Letter of Credit shall specify in form and detail satisfactory to the applicable Issuing Bank:

(i) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day);

(ii) the amount thereof;

(iii) the expiry date thereof (which shall not be later than the close of business on the Letter of Credit Expiration Date);

(iv) the name and address of the beneficiary thereof;

(v) whether the Letter of Credit is to be issued for the account of Borrower or for the account of one of its Subsidiaries; provided that Borrower shall be a co-applicant, and therefore jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary;

 

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(vi) the documents to be presented by such beneficiary in connection with any drawing thereunder;

(vii) the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and

(viii) such other matters as the applicable Issuing Bank may require.

A request for an amendment, renewal or extension of any outstanding Letter of Credit shall specify in form and detail satisfactory to the applicable Issuing Bank:

(ix) the Letter of Credit to be amended, renewed or extended;

(x) the proposed date of amendment, renewal or extension thereof (which shall be a Business Day);

(xi) the nature of the proposed amendment, renewal or extension; and

(xii) such other matters as the applicable Issuing Bank may require.

If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on the applicable Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon issuance, amendment, renewal or extension of each Letter of Credit, the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, the conditions set forth in Article IV in respect of such issuance, amendment, renewal or extension shall have been satisfied, and the applicable Issuing Bank with respect to such Letter of Credit shall be entitled to assume that all such conditions have been satisfied unless it has received written notice from the Administrative Agent or the Required Lenders that they have not been satisfied. Unless the applicable Issuing Bank shall agree otherwise, no Letter of Credit shall be in an initial amount less than $100,000.

(c) Expiration Date .

(i) Each Letter of Credit shall expire at or prior to the close of business on the earlier of (x) the date that is no later than one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, no later than one year after such renewal or extension) and (y) the Letter of Credit Expiration Date.

(ii) If the Borrower so requests in any LC Request, the applicable Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an “ Auto-Renewal Letter of Credit ”); provided that any such Auto-Renewal Letter of Credit must permit such Issuing Bank to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving

 

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prior notice to the beneficiary thereof not later than a day in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by such Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Revolving Credit Lenders shall be deemed to have authorized (but may not require) such Issuing Bank to permit the renewal of such Letter of Credit at any time to an expiry date not later than the earlier of (A) one year from the date of such renewal and (B) the Letter of Credit Expiration Date; provided that such Issuing Bank shall not permit any such renewal if (x) such Issuing Bank has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.23(l) or otherwise), or (y) it has received notice on or before the day that is two Business Days before the date which has been agreed upon pursuant to the proviso of the first sentence of this paragraph, from the Administrative Agent, any Lender or Borrower that one or more of the applicable conditions specified in Section 4.02 are not then satisfied.

(d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of any Issuing Bank or Revolving Credit Lenders, each applicable Issuing Bank hereby irrevocably grants to each Revolving Credit Lender, and each such Revolving Credit Lender hereby acquires from each applicable Issuing Bank, a participation in such Letter of Credit equal to such Revolving Credit Lender’s Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of each applicable Issuing Bank, such Revolving Credit Lender’s Pro Rata Percentage of each LC Disbursement made by each applicable Issuing Bank in respect of a Letter of Credit issued under the Revolving Credit Commitments and not reimbursed by the Borrower on the date due as provided in Section 2.23(e) , or of any reimbursement payment required to be refunded to Borrower for any reason. Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit, the occurrence and continuance of a Default, reduction or termination of the Commitments, or expiration, termination or cash collateralization of any Letter of Credit and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. The Administrative Agent shall notify the Revolving Credit Lenders promptly after the issuance, amendment or expiration of any Letter of Credit.

(e) Reimbursement .

(i) If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement, in Dollars, by paying to the applicable Issuing Bank an amount equal to such LC

 

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Disbursement not later than 3:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives such notice; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request (x) in accordance with Section 2.03 that such payment be financed with ABR Loans, in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by such resulting Revolving Loans or (y) that such payment be satisfied with the proceeds held in the applicable LC Restricted Account.

(ii) If the Borrower fails to make such payment when due, in the case of each LC Disbursement, the applicable Issuing Bank shall notify the Administrative Agent and the Administrative Agent shall notify each Revolving Credit Lender of the applicable LC Disbursement, the payment then due from Borrower in respect thereof and such Revolving Credit Lender’s Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit Lender shall have received such notice later than 12:00 noon, New York City time, on any day, not later than 11:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Revolving Credit Lender’s Pro Rata Percentage of the unreimbursed LC Disbursement in the same manner as provided in Section 2.02(c) with respect to Revolving Loans made by such Revolving Credit Lender, and the Administrative Agent will promptly pay to such Issuing Bank the amounts so received by it from such Revolving Credit Lenders. The Administrative Agent will promptly pay to such Issuing Bank any amounts received by it from the Borrower pursuant to the above paragraph prior to the time that any Revolving Credit Lender makes any payment pursuant to the preceding sentence and any such amounts received by the Administrative Agent from the Borrower thereafter will be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made such payments and to such Issuing Bank, as appropriate. Any payment made by a Revolving Credit Lender pursuant to this paragraph to reimburse any Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(iii) If any Revolving Credit Lender shall not have made its Pro Rata Percentage of such LC Disbursement available to the Administrative Agent as provided above, each of such Revolving Credit Lender and the Borrower severally agrees to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with the foregoing to but excluding the date such amount is paid, to the Administrative Agent for the account of the applicable Issuing Bank at (i) in the case of the Borrower, the rate per annum set forth in Section 2.23(h) and (ii) in the case of such Lender, at a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation.

 

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(f) Obligations Absolute . The Reimbursement Obligation of Borrower as provided in Section 2.23(e) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein; (ii) any draft or other document presented under a Letter of Credit being proved to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by any Issuing Bank under a Letter of Credit against presentation of a draft or other document that fails to comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.23 , constitute a legal or equitable discharge of, or provide a right of setoff or compensation against, the obligations of the Borrower hereunder; (v) the fact that a Default shall have occurred and be continuing; or (vi) any material adverse change in the business, property, results of operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries. None of the Administrative Agent, the Lenders, the Issuing Banks or any of their Affiliates shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the applicable Issuing Bank; provided that the foregoing shall not be construed to excuse the applicable Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the applicable Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures . Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The applicable Issuing Bank shall promptly give written notice to the Administrative Agent and the Borrower of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the

 

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Borrower of its Reimbursement Obligation to such Issuing Bank and the Revolving Credit Lenders with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in Section 2.23(e) ).

(h) Interim Interest . If any Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans, provided that, if such LC Disbursement is not reimbursed by the Borrower when due pursuant to paragraph (e)(i) of this Section 2.23 , then Section 2.06(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Credit Lender pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for the account of such Revolving Credit Lender to the extent of such payment.

(i) Cash Collateralization . If any Event of Default shall occur and be continuing, on the Business Day that Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Credit Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in the LC Restricted Account, in the name of the Collateral Agent and for the benefit of the Revolving Credit Lenders, an amount in cash in Dollars equal to 105.0% of the portion of the LC Exposure arising under the Revolving Credit Commitments as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default described in paragraph (g) or (h) of Article VII . Funds in the LC Restricted Account of Borrower in respect of Letters of Credit issued hereunder shall be applied by the Administrative Agent to reimburse the Issuing Banks for LC Disbursements in respect of Letters of Credit issued under such Revolving Credit Commitments for the account of Borrower (or its Subsidiaries) for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of outstanding Reimbursement Obligations in respect of Letters of Credit issued under such Revolving Credit Commitments for the account of Borrower (or its Subsidiaries) or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Credit Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Obligations of Borrower under this Agreement. If Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount plus any accrued interest or realized profits with respect to such amounts (to the extent not applied as aforesaid) shall be returned to Borrower within three Business Days after all Events of Default have been cured or waived.

(j) Additional Issuing Banks . The Borrower may, at any time and from time to time, designate one or more additional Revolving Credit Lenders to act as an

 

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issuing bank under the terms of this Agreement, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Revolving Credit Lender(s). Any Lender designated as an issuing bank pursuant to this paragraph (j) shall be deemed (in addition to being a Revolving Credit Lender) to be the Issuing Bank with respect to Letters of Credit issued or to be issued by such Revolving Credit Lender in an aggregate amount outstanding at any time not to exceed the amount to be agreed by the Borrower, the Administrative Agent and such Revolving Credit Lender upon its designation as an Issuing Bank hereunder, and all references herein and in the other Loan Documents to the term “Issuing Bank” shall, with respect to such Letters of Credit, be deemed to refer to such Revolving Credit Lender in its capacity as Issuing Bank, as the context shall require. Upon the addition of any Issuing Bank pursuant to this Section 2.23(j) , Schedule 1.01(g) shall be deemed modified to the extent necessary to reflect the addition of such additional Issuing Bank.

(k) Resignation or Removal of the Issuing Bank . Any Issuing Bank may resign as an Issuing Bank hereunder at any time upon at least 30 days’ prior notice to the Lenders, the Administrative Agent and Borrower. Any Issuing Bank may be replaced at any time by written agreement among Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of any Issuing Bank or any such additional Issuing Bank. At the time any such resignation or replacement shall become effective, Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank. From and after the effective date of any such resignation or replacement or addition, as applicable, (i) the successor or additional Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (ii) references herein to the term “ Issuing Bank ” shall be deemed to refer to such successor or such addition or to any previous Issuing Bank, or to such successor or such addition and all previous Issuing Banks, as the context shall require. After the resignation or replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. Upon the resignation, removal or replacement of any Issuing Bank pursuant to this Section 2.23(k) , Schedule 1.01(g) shall be deemed modified to the extent necessary to reflect the resignation, removal or replacement of such Issuing Bank.

(l) Other . Each Issuing Bank shall be under no obligation to issue any Letter of Credit if

(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or any law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital

 

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requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense that was not applicable on the Closing Date and that such Issuing Bank in good faith deems material to it;

(ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank; or

(iii) the issuance of such Letter of Credit would cause the aggregate face amount of all Letters of Credit issued by such Issuing Bank to exceed the amount set forth for such Issuing Bank on Schedule 1.01(g).

Each Issuing Bank shall be under no obligation to amend any Letter of Credit if (A) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

SECTION 2.24. Defaulting Lenders .

(a) Defaulting Lender Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i) Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders or Super Majority Lenders, as applicable.

(ii) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, following an Event of Default or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank or the Swingline Lender hereunder, third , to cash collateralize the Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.23(i), fourth , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, fifth , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement, and (y) cash collateralize the Issuing Banks’ future Fronting Exposure with

 

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respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.23(i), sixth , to the payment of any amounts owing to the Lenders, the Issuing Banks or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the Issuing Banks or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 2.24 shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender.

(iv) Each Defaulting Lender shall be entitled to receive LC Participation Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its pro rata share of the stated amount of Letters of Credit for which it has provided cash collateral.

(v) With respect to any Commitment Fee or LC Participation Fee not required to be paid to any Defaulting Lender pursuant to clause (iii) or (iv) above, the Borrower shall (x) pay to each non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit or Swingline Loans that has been reallocated to such non-Defaulting Lender pursuant to clause (vi) below, (y) pay to each Issuing Bank and the Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s or the Swingline Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(vi) All or any part of such Defaulting Lender’s participation in Letters of Credit and Swingline Loans shall be reallocated among the non-Defaulting Lenders in accordance with their respective pro rata Commitments (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 4.01 are satisfied at the time of such reallocation (and, unless the Borrower shall have had reasonable notice of such reallocation and have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time) and (y) such reallocation does not cause the Revolving Credit Exposure of any non-Defaulting Lender to exceed such

 

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non-Defaulting Lender’s Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.

(vii) If the reallocation described in clause (vi) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, within one (1) Business Day following the written request (or within two (2) Business Days, if such request is received after noon, New York City time) of the (i) Administrative Agent or (ii) the Swingline Lender or any Issuing Bank, as applicable (with a copy to the Administrative Agent), (x)  first , prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y)  second , cash collateralize the Issuing Banks’ Fronting Exposure in accordance with the procedures set forth in Section 2.23(i).

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent, the Swingline Lender and each Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Revolving Loans of the other Lenders or take such actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with their Revolving Credit Commitments (without giving effect to Section 2.24(a)(vi)), whereupon such Lender shall be deemed to no longer 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 the Borrower while that Lender was a Defaulting Lender; provided , further , that except to the extent otherwise expressly agreed 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.

(c) New Swingline Loans / Letters of Credit . So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) each Issuing Bank shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

SECTION 2.25. Loan Modification Offers; Replacement Revolving Credit Facility.

(a) The Borrower may, by written notice to the Administrative Agent from time to time after the Closing Date, make one or more offers (each, a “ Loan Modification Offer ”) to all the Lenders of one or more Classes of Loans and/or

 

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Commitments (each Class subject to such a Loan Modification Offer, an “ Affected Class ”) to make one or more Permitted Amendments pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Borrower. Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and/or Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and/or Commitments of such Affected Class as to which such Lender’s acceptance has been made.

(b) The Borrower and each Accepting Lender shall execute and deliver to the Administrative Agent a Loan Modification Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the acceptance of the Permitted Amendments and the terms and conditions thereof. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each of the parties hereto hereby agrees that, upon the effectiveness of any Loan Modification Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Permitted Amendment evidenced thereby and only with respect to the applicable Loans and/or Commitments of the Accepting Lenders of the Affected Class, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders of the Affected Class as a new “Class” of loans and/or commitments hereunder. Notwithstanding the foregoing, no Permitted Amendment shall become effective unless the Administrative Agent, to the extent reasonably requested by the Administrative Agent, shall have received legal opinions, board resolutions, officer’s and secretary’s certificates and other customary documentation consistent with those delivered on the Closing Date.

(c) “ Permitted Amendments ” means any or all of the following: (i) an extension of the final maturity date applicable to the applicable Loans and/or Commitments of the Accepting Lenders, (ii) a change in the Applicable Margin with respect to the applicable Loans and/or Commitments of the Accepting Lenders, (iii) a change in the Fees payable to (or the inclusion of additional fees to be payable to) the Accepting Lenders, (iv) changes to any prepayment premiums with respect to the applicable Loans and Commitments, (v) such amendments to this Agreement and the other Loan Documents as shall be appropriate, in the reasonable judgment of the Administrative Agent, to provide the rights and benefits of this Agreement and other Loan Documents to each new “Class” of loans and/or commitments resulting therefrom and (vi) additional amendments to the terms of this Agreement applicable to the applicable Loans and/or Commitments of the Accepting Lenders that are less favorable to such Accepting Lenders than the terms of this Agreement prior to giving effect to such Permitted Amendments and that are reasonably acceptable to the Administrative Agent.

 

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ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Banks and each of the Lenders that:

SECTION 3.01. Organization; Powers . Each of the Loan Parties (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, except, with respect to Loan Parties other than the Borrower, to the extent that the failure of such Loan Parties to be in good standing could not reasonably be expected to have a Material Adverse Effect, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, except to the extent that the failure to possess such power and authority could not reasonably be expected to result in a Material Adverse Effect, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and, in the case of the Borrower, to borrow hereunder.

SECTION 3.02. Authorization . The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of the Borrower or any Subsidiary, (B) any order of any Governmental Authority or (C) any provision of any indenture, agreement or other instrument to which the Borrower or any Subsidiary is a party or by which any of them or any of their property is or may be bound, except as could not reasonably be expected to result in a Material Adverse Effect, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument, except as could not reasonably be expected to result in a Material Adverse Effect or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary (other than any Lien created hereunder or under the Security Documents or permitted pursuant to Section 6.02 or under any Term Loan Document).

SECTION 3.03. Enforceability . This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document constitutes, a legal, valid and binding obligation of the Borrower enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

 

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SECTION 3.04. Governmental Approvals . No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder, except for (a) the filing of Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) other filings and recordings in respect of Liens created pursuant to the Security Documents, (c) such as have been made or obtained and are in full force and effect and (d) such actions, consents, approvals, registrations or filings which the failure to obtain or make could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.05. Financial Statements . The Borrower has heretofore furnished to the Lenders its consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Borrower as of and for the fiscal year ended December 31, 2015, audited by and accompanied by the opinion of Deloitte & Touche LLP, independent public accountant, and (ii) as of and for each 2016 fiscal quarter of the Borrower thereafter ended at least 45 days prior to the Closing Date. Such financial statements present fairly in all material respects the financial condition and results of operations and cash flows of the Borrower and its consolidated subsidiaries as of such dates and for such periods. Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of the Borrower and its consolidated subsidiaries as of the dates thereof in accordance with GAAP in all material respects. Such financial statements were prepared in accordance with GAAP applied on a consistent basis in all material respects, subject, in the case of unaudited financial statements, to year-end audit adjustments and the absence of footnotes.

SECTION 3.06. No Material Adverse Change . No event, change or condition has occurred that has had, or could reasonably be expected to have, a material adverse effect on the business, assets, operations, financial condition or operating results of the Borrower and the Subsidiaries, taken as a whole, since December 31, 2015.

SECTION 3.07. Title to Properties; Possession Under Leases . Each of the Borrower and the Subsidiaries has good and marketable title to, or valid leasehold interests in, or a right to use, all its properties and assets, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title or other interest could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02.

SECTION 3.08. Subsidiaries . Schedule 3.08 sets forth as of the Closing Date a list of all Subsidiaries and the percentage ownership interest of the Borrower therein. The shares of capital stock or other ownership interests so indicated on Schedule 3.08 are, in the case of corporations, fully paid and non-assessable and are owned by the Borrower,

 

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directly or indirectly, free and clear of all Liens (other than Liens created under the Security Documents and any Term Loan Document or permitted pursuant to Section 6.02).

SECTION 3.09. Litigation; Compliance with Laws . (a) Except as disclosed in the periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC prior to the Closing Date, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of the Borrower through receipt of written notice or proceeding, threatened against or affecting the Borrower or any Subsidiary or any business, property or rights of any such person as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

(b) Neither the Borrower nor any of the Subsidiaries nor any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any occupational safety and health, health care, pension, certificate of need, Medicare, Medicaid, insurance fraud or similar law, zoning, building, Environmental Law, ordinance, code or approval or any building permits) or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. Agreements . Neither the Borrower nor any of the Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11. Federal Reserve Regulations . (a) Neither the Borrower nor any of the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, U or X.

SECTION 3.12. Investment Company Act. Neither the Borrower nor any Subsidiary is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.13. Use of Proceeds . The Borrower will use the proceeds of the Loans and will request the issuance of Letters of Credit only for the purposes specified in the Preliminary Statement to this Agreement.

 

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SECTION 3.14. Tax Returns . The Borrower and each of the Subsidiaries has filed or caused to be filed, or has timely requested an extension to file or has received an approved extension to file, all Federal, state, local and foreign Tax returns or materials that to the Borrower’s best knowledge are required to have been filed by it and has paid or caused to be paid all Taxes due and payable by it and all assessments received by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, shall have set aside on its books reserves in accordance with GAAP and except any such filings or Taxes, fees or charges, the failure of which to make or pay, could not reasonably be expected to have a Material Adverse Effect.

SECTION 3.15. No Material Misstatements . None of (a) the Confidential Information Memorandum or (b) any other written information, report, financial statement, Borrowing Request, LC Request, exhibit or schedule (other than estimates and information of a general economic or general industry nature) heretofore or contemporaneously furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto, when furnished and taken as a whole, contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading in light of the circumstances under which such statements were made; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, the Borrower represents only that it acted in good faith and utilized assumptions that the Borrower believed to be reasonable at the time made.

SECTION 3.16. Employee Benefit Plans . Each of the Borrower and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect. The present value of all benefit liabilities under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 715) did not, as of the last annual valuation date applicable thereto, exceed the fair market value of the assets of such Plan in such amount that could reasonably be expected to result in a Material Adverse Effect, and the present value of all benefit liabilities of all underfunded Plans (based on the assumptions used for purposes of Financial Accounting Standards Board Accounting Standards Codification Topic 715) did not, as of the last annual valuation dates applicable thereto, exceed the fair market value of the assets of all such underfunded Plans in such amount that could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.17. Environmental Matters . Except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit,

 

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license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

SECTION 3.18. Insurance . Schedule 3.18 sets forth a true, complete and correct description, in all material respects, of all insurance maintained by the Borrower for itself or the Subsidiaries as of the Closing Date. As of the Closing Date, such insurance is in full force and effect and all premiums have been duly paid. The Borrower and the Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice.

SECTION 3.19. Security Documents . (a) The Guarantee and Collateral Agreement creates in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Guarantee and Collateral Agreement) and the proceeds thereof, subject to the effects of bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general equitable principles, and (i) with respect to all Pledged Collateral (as defined in the Guarantee and Collateral Agreement) to be delivered to the Collateral Agent or, in the case of Pledged Collateral (as defined in the Guarantee and Collateral Agreement) that is Term Facility First Priority Collateral, the collateral agent under the Term Loan Credit Agreement, the Lien created under the Guarantee and Collateral Agreement will constitute, a fully perfected first priority Lien (or, with respect to the Term Facility First Priority Collateral, a fully perfected second priority Lien) on, and security interest in, all right, title and interest of the Loan Parties in such Pledged Collateral as to which perfection may be obtained by such actions, in each case prior and superior in right to any other person (other than the rights of persons pursuant to (x) Liens permitted by Section 6.02(z) and (y) Liens permitted by Section 6.02 having priority by operation of law), and (ii) with the filing of financing statements in appropriate form to be filed in the offices specified on Schedule 3.19(a) (as such schedule may be updated from time to time; provided , that such schedules shall be deemed to be updated when the Borrower provides the relevant information in accordance with the Guarantee and Collateral Agreement), the Lien created under the Guarantee and Collateral Agreement will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral (other than Intellectual Property, as defined in the Guarantee and Collateral Agreement) as to which perfection may be obtained by such filings, in each case prior and superior in right to any other person, other than with respect to Liens expressly permitted by Section 6.02 and, with respect to the Term Facility First Priority Collateral, the collateral agent under the Term Loan Agreement.

(b) The Guarantee and Collateral Agreement (or a short form security agreement in form and substance reasonably satisfactory to the Borrower and the Collateral Agent), together with the filings to be made pursuant to the Guarantee and Collateral Agreement with the United States Patent and Trademark Office and the United States Copyright Office and the financing statements to be filed in the offices specified on Schedule 3.19(a) (as such schedule may be updated from time to time; provided that such schedules shall be deemed to be updated when the Borrower provides the relevant information in accordance with the Guarantee and Collateral Agreement), will constitute

 

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a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the Guarantee and Collateral Agreement) in which a security interest may be perfected by filing security agreements in the United States and its territories and possessions, in each case prior and superior in right to any other person other than with respect to Liens permitted pursuant to Section 6.02 (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the Loan Parties after the Closing Date).

SECTION 3.20. Location of Real Property and Leased Premises . (a) Schedule 1.01(c) lists completely and correctly as of the Closing Date all Hospitals owned by the Borrower and the Subsidiaries and the addresses thereof. The Borrower and the Subsidiaries own in fee all the real property set forth on Schedule 1.01(c).

(b) Schedule 1.01(c) lists completely and correctly as of the Closing Date all Hospitals leased by the Borrower and the Subsidiaries and the addresses thereof. The Borrower and the Subsidiaries have valid leases in all the material real property set forth on Schedule 1.01(c).

SECTION 3.21. Labor Matters . Except as set forth on Schedule 3.21, as of the Closing Date, there are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower by delivery of written notice or proceeding, threatened. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound. Except as set forth on Schedule 3.21, as of the Closing Date, neither the Borrower nor any Subsidiary is a party to any collective bargaining agreement or other labor contract applicable to persons employed by it at any Facility.

SECTION 3.22. Solvency . After giving effect to the consummation of the Subject Transactions, (i) each of the Fair Value and the Present Fair Salable Value of the assets of the Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities; (ii) the Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital; and (iii) the Borrower and its Subsidiaries taken as a whole can pay their Stated Liabilities and Identified Contingent Liabilities as they mature. For purposes of this Section 3.22, the following terms shall have the meanings specified:

Subject Transactions ” shall mean the consummation of the Transactions and the other transactions to occur on the Closing Date (including the effectiveness of this Agreement, the making of the Loans to be made on the Closing Date, the use of proceeds of such Loans on the Closing Date and the payment of the CHS Dividend).

Fair Value ” shall mean the amount at which the assets (both tangible and intangible), in their entirety, of the Borrower and its Subsidiaries taken as a whole

 

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would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

Present Fair Salable Value ” shall mean the amount that could be obtained by an independent willing seller from an independent willing buyer if the assets (both tangible and intangible) of the Borrower and its Subsidiaries taken as a whole are sold on a going concern basis with reasonable promptness in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.

Stated Liabilities ” shall mean the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Borrower and its Subsidiaries taken as a whole, as of the date hereof after giving effect to the consummation of Subject Transactions, determined in accordance with GAAP consistently applied.

Identified Contingent Liabilities ” shall mean the maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of the Borrower and its Subsidiaries taken as a whole after giving effect to the Subject Transactions (including all fees and expenses related thereto but exclusive of such contingent liabilities to the extent reflected in Stated Liabilities), as identified and explained in terms of their nature and estimated magnitude by responsible officers of the Borrower.

Do not have Unreasonably Small Capital ” shall mean the Borrower and its Subsidiaries taken as a whole after giving effect to the Subject Transactions have sufficient capital to ensure that it is a going concern.

Can pay their Stated Liabilities and Identified Contingent Liabilities as they mature ” shall mean the Borrower and its Subsidiaries taken as a whole after giving effect to the Subject Transactions have sufficient assets and cash flow to pay their respective Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or (in the case of contingent liabilities) otherwise become payable.

SECTION 3.23. Sanctions; FCPA .

(a) None of the Borrower, any other Loan Party or any or their subsidiaries nor, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate of the Borrower, any Loan Party or any of their subsidiaries is (i) a person on the list of “Specially Designated Nationals and Blocked Persons” or (ii) subject to the limitations and prohibitions or any sanctions under or administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”), the U.S. State Department or any other relevant sanctions authority to whose jurisdiction the Borrower, any Loan Party or any of their subsidiaries is subject (collectively, “ Sanctions ”) and each

 

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is currently in compliance with all rules and regulations promulgated by OFAC, the U.S. State Department and each other relevant Sanctions authority to whose jurisdiction the Borrower, any Loan Party or any of their subsidiaries is subject. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower and its Subsidiaries and their respective directors, officer, employees and agents with Anti-Corruption Laws and Sanctions.

(b) None of the Borrower, any other Loan Party or any or their subsidiaries nor, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate of the Borrower, any Loan Party or any of their subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any applicable provision of the FCPA, OFAC or any Sanctions, or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

ARTICLE IV

Conditions of Lending

The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions:

SECTION 4.01. All Credit Events . On the date of each Borrowing (other than a conversion or a continuation of a Borrowing), including on the date of each issuance of or increase to a Letter of Credit (each such event being called a “ Credit Event ”):

(a) The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.02) or, in the case of the issuance of or increase to a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of or increase to such Letter of Credit as required by Section 2.23(b).

(b) The representations and warranties set forth in Article III and in each other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(c) At the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing.

(d) Except as provided in Section 2.01(b) and (c), after giving effect to such Credit Event, the Borrowing Base exceeds the Revolving Credit Exposure at such time.

 

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Each Credit Event shall be deemed to constitute a representation and warranty by the Borrower on the date of such Credit Event as to the applicable matters specified in paragraphs (b) and (c) of this Section 4.01.

SECTION 4.02. First Credit Event . On or prior to the Closing Date:

(a) The Administrative Agent shall have received from each party to this Agreement (i) a counterpart of this Agreement signed on behalf of each such party or (ii) evidence satisfactory to the Administrative Agent (which may include a facsimile or other electronic imaging transmission) that such party has signed such a counterpart.

(b) The Administrative Agent shall have received, on behalf of itself and the Lenders, a favorable written opinion of (i) Bass, Berry & Sims PLC, counsel for the Borrower, substantially to the effect set forth in Exhibit F-1, (ii) the general counsel of the Borrower, substantially to the effect set forth in Exhibit F-2, and (iii) each local counsel listed on Schedule 4.02(b), substantially to the effect set forth in Exhibit F-3, in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent and the Lenders, and (C) covering such matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and the Borrower hereby requests such counsel to deliver such opinions.

(c) The Administrative Agent shall have received a copy of an opinion addressed to CHS from its outside tax advisor, subject to customary assumptions and limitations, as to the satisfaction of certain requirements necessary for the Distribution, together with certain related transactions, to qualify as generally tax-free for U.S. Federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code.

(d) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or its equivalent) of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the

 

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incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above; and (iv) such other documents as the Lenders or the Administrative Agent may reasonably request.

(e) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer of the Borrower, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01 and paragraph (j) of this Section 4.02.

(f) The Administrative Agent shall have received all Administrative Agent Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.

(g) The Security Documents shall have been duly executed by each Loan Party that is to be a party thereto and shall be in full force and effect on the Closing Date. The Collateral Agent on behalf of the Secured Parties shall have a security interest in the Collateral of the type and priority described in each Security Document.

(h) The Collateral Agent shall have received the results of a search of the Uniform Commercial Code filings (or equivalent filings) made with respect to the Loan Parties in the states (or other jurisdictions) of formation of such persons as indicated on the applicable schedules to the Guarantee and Collateral Agreement, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Collateral Agent that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 6.02 or have been or will be contemporaneously released or terminated.

(i) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Collateral Agent as additional insured.

(j) The Spin-Off (including the Contribution and the Distribution) shall have been, or substantially simultaneously with the initial funding of Loans on the Closing Date shall be, consummated in accordance with applicable law and as described in the Form 10 filed by the Borrower with the SEC and declared effective on April 4, 2016. The CHS Dividend shall be paid substantially simultaneously with the initial funding of Loans on the Closing Date.

 

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(k) The Lenders shall have received the financial statements and opinion referred to in Section 3.05.

(l) The Administrative Agent shall have received (i) a solvency certificate from the chief financial officer of the Borrower on behalf of the Borrower in form and substance satisfactory to the Administrative Agent certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the Transactions to occur on the Closing Date, are solvent and (ii) a solvency certificate from the chief financial officer of CHS on behalf of CHS in form and substance satisfactory to the Administrative Agent certifying that CHS and its subsidiaries, on a consolidated basis after giving effect to the Transactions to occur on the Closing Date, are solvent.

(m) The Administrative Agent shall have received correct and complete copies of the Separation Documents.

(n) The Borrower and each Subsidiary shall cease to have any obligations under the Third Amended and Restated Credit Agreement dated as of July 25, 2007, as amended and restated as of November 5, 2010, February 2, 2012, and January 27, 2014, among CHS, CHS/Community Health Systems, Inc., the lenders party thereto and Credit Suisse AG, as administrative agent, or any other “Loan Document” or other agreement referred to therein or entered into in connection therewith.

(o) The Lenders shall have received, at least five Business Days prior to the Closing Date, to the extent requested, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

(p) The Term Loan Credit Agreement and the documents to be executed pursuant to the terms thereof shall have become effective in accordance with their terms.

(q) The Administrative Agent shall have received a Borrowing Base Certificate, dated as of the Closing Date, in form and substance satisfactory to the Administrative Agent and evidencing that Excess Availability on the Closing Date after giving effect to the Transactions is at least $100,000,000.

ARTICLE V

Affirmative Covenants

The Borrower covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan and all Fees, all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been cancelled, have expired or have been cash collateralized to the full extent required by this Agreement and all amounts drawn thereunder have been reimbursed in

 

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full, unless the Required Lenders shall otherwise consent in writing, the Borrower will, and will cause (i) in the case of Sections 5.01 and 5.02, each of the Material Subsidiaries, and (ii) in the case of Sections 5.03 through 5.15, each of the Subsidiaries to:

SECTION 5.01. Existence; Compliance with Laws; Businesses and Properties . (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05.

(b) (i) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises and authorizations material to the conduct of its business, except as could not reasonably be expected to have a Material Adverse Effect; (ii) comply in all material respects with all applicable laws, rules, regulations and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except as could not reasonably be expected to have a Material Adverse Effect; and (iii) at all times maintain and preserve all tangible property material to the conduct of such business and keep such property in good repair, working order and condition (subject to ordinary wear and tear, casualty and condemnation) and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times, except as could not reasonably be expected to have a Material Adverse Effect.

(c) Comply with each Separation Document to which it is party, except if the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

SECTION 5.02. Insurance . (a) Maintain with financially sound and reputable insurers insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations, including hospital liability (which shall include general liability, medical professional liability, contractual liability and druggists’ liability), workers’ compensation, employers’ liability, automobile liability and physical damage coverage, environmental impairment liability, all risk property, business interruption, fidelity and crime insurance and public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; provided that the Borrower may implement programs of self insurance in the ordinary course of business and in accordance with industry standards for a company of similar size so long as reserves are maintained in accordance with GAAP for the liabilities associated therewith.

(b) Cause all casualty and property policies covering any Collateral to name the Collateral Agent as loss payee and/or additional insured, and each provider of any such insurance shall agree, by endorsement upon such policies issued by it, that it will give the Administrative Agent 30 days prior written notice before any such policy or policies shall be altered or canceled.

 

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SECTION 5.03. Obligations and Taxes . Pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, could reasonably be expected to give rise to a Lien upon such properties or any part thereof; provided , however , that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (i) the validity or amount thereof shall be contested in good faith by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP or (ii) the failure to pay and discharge such Tax, assessment, charge, levy or claim could not reasonably be expected to have a Material Adverse Effect.

SECTION 5.04. Financial Statements, Reports, etc . In the case of the Borrower, furnish to the Administrative Agent, which shall furnish to each Lender:

(a) within 90 days after the end of each fiscal year, its consolidated balance sheet and related statements of income, stockholders’ equity and cash flows showing the financial condition of the Borrower and its consolidated subsidiaries as of the close of such fiscal year and the results of its operations and the operations of such subsidiaries during such year, together with comparative figures for the immediately preceding fiscal year, all audited by Deloitte & Touche LLP or other independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which opinion shall be without a “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements fairly present in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP;

(b) within 50 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated balance sheet and related statements of income, stockholders’ equity and cash flows showing the financial condition of the Borrower and its consolidated subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, and comparative figures for the same periods in the immediately preceding fiscal year all certified by one of its Financial Officers as fairly presenting in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments;

(c) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, and (ii) setting forth

 

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computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenant contained in Section 6.13 and, with respect to any Permitted Acquisition consummated during the preceding quarter for total consideration in excess of $50,000,000, 6.04(h);

(d) (i) on or before the 25th day of each month (which monthly Borrowing Base Certificate shall be furnished regardless of whether weekly Borrowing Base Certificates are required to be furnished pursuant to clause (ii) below), the Borrower shall deliver to the Administrative Agent a Borrowing Base Certificate, prepared as of the close of business of the previous month (it being understood that all calculations of Excess Availability in any Borrowing Base Certificate shall originally be made by the Borrower and certified by a Responsible Officer of each of the Borrower, provided that the Administrative Agent may from time to time review and adjust any such calculation in its Reasonable Credit Judgment to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the Availability Reserve), (ii) upon the occurrence and during the continuation of a Cash Dominion Event and upon the request of the Administrative Agent, the Borrower shall deliver to Administrative Agent a weekly Borrowing Base Certificate within five (5) Business Days after the end of each calendar week (each calendar week deemed, for purposes hereof, to end on a Friday), updated as of the close of business on the last Business Day of the immediately preceding calendar week unless the Administrative Agent otherwise agrees, and (iii) together with each delivery of a Borrowing Base Certificate pursuant to this clause (d), such supporting documentation, agings and additional reports with respect to the Borrowing Base as the Administrative Agent shall reasonably request;

(e) within 120 days after the beginning of each fiscal year of the Borrower, a detailed consolidated budget for such fiscal year (including a projected consolidated balance sheet and related statements of projected operations and cash flows as of the end of and for such fiscal year and setting forth the assumptions used for purposes of preparing such budget) and, promptly when available, any significant revisions of such budget;

(f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national securities exchange, or distributed to its shareholders, as the case may be;

(g) promptly after the request by any Lender (made through the Administrative Agent), all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act;

(h) promptly after the request by the Administrative Agent or any Lender, copies of (i) any documents described in Section 101(k)(1) of ERISA that the

 

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Borrower or any of its ERISA Affiliates may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l)(1) of ERISA that the Borrower or any of its ERISA Affiliates may request with respect to any Multiemployer Plan; provided that if the Borrower or any of its ERISA Affiliates has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower or the applicable ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof;

(i) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent may reasonably request (on behalf of itself or any Lender); and

(j) substantially contemporaneously with each designation of a Subsidiary as an “Unrestricted Subsidiary” and each redesignation of an Unrestricted Subsidiary as a “Subsidiary”, provide written notice of such designation or redesignation, as applicable, to the Administrative Agent (who shall promptly notify the Lenders).

SECTION 5.05. Litigation and Other Notices . Furnish to the Administrative Agent, promptly after obtaining knowledge thereof, written notice of the following:

(a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

(b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrower or any Subsidiary that could reasonably be expected to result in a Material Adverse Effect; and

(c) any event or occurrence that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

SECTION 5.06. Information Regarding Collateral . Furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s corporate name, (ii) in any Loan Party’s jurisdiction of organization or formation, (iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan Party’s Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. The Borrower also agrees promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.

 

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SECTION 5.07. Maintaining Records; Access to Properties and Inspections; Maintenance of Ratings . (a) Keep books of record and account in which full, true and correct entries in all material respects are made of all dealings and transactions in relation to its business and activities which permit financial statements to be prepared in conformity with GAAP and all requirements of law. Each Loan Party will, and will cause each of its subsidiaries to, permit any representatives designated by the Administrative Agent or the Required Lenders to visit and inspect the financial records and the properties of such person at reasonable times and as often as reasonably requested upon reasonable notice and to make extracts from and copies of such financial records (in each case excluding patient medical records and any other material which is confidential pursuant to any laws, rules, regulations and decrees and orders of any Governmental Authority) and permit any representatives designated by the Administrative Agent or the Required Lenders to discuss the affairs, finances and condition of such person with the officers thereof and independent accountants therefor (with a senior officer of the Borrower present); provided that, excluding any such visits and inspections during the continuation of an Event of Default, only one such visit during any fiscal year shall be at the Borrower’s expense.

(b) Reimburse the Administrative Agent for all reasonable and documented charges, costs and expenses of the Administrative Agent in connection with field examinations, verifications and evaluations of any Loan Party’s books and records or any other financial or Collateral matters as the Administrative Agent reasonably deems appropriate, up to three times during the first year following the Closing Date and thereafter, twice per year; provided , however, that if a field examination is initiated while a Default or Event of Default has occurred and is continuing, all charges, costs and expenses therefor shall be reimbursed by Borrower without regard to such limits. Subject to and without limiting the foregoing, Borrower specifically agrees to pay the Administrative Agent’s then standard charges for each day that an employee of such Agent or its branches or Affiliates is engaged in any examination activities, and shall pay the standard charges of such Agent’s internal appraisal group. This Section shall not be construed to limit the Administrative Agent’s right to conduct examinations or to obtain appraisals at any time in its discretion, nor to use third parties for such purposes. Neither the Administrative Agent nor any Lender shall have any duty to any Borrower to make any inspection, nor to share any results of any inspection, appraisal or report with any Borrower. Borrower acknowledges that all inspections, appraisals and reports are prepared by the Administrative Agent and Lenders for their purposes, and Borrower shall not be entitled to rely upon them

(c) In the case of the Borrower, use commercially reasonable efforts to maintain a corporate rating from S&P and a corporate family rating from Moody’s, in each case in respect of the Borrower.

SECTION 5.08. Use of Proceeds . Use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes specified in the Preliminary Statement

 

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to this Agreement. The Borrower will not directly or indirectly use the proceeds of the Loans or request the issuance of Letters of Credit or otherwise make available such proceeds to any person for the purpose of financing the activities of any person currently subject to any Sanctions. The Borrower will not directly or indirectly use the proceeds of the Loans or request the issuance of Letters of Credit or otherwise make available such proceeds to any person in any country, territory or region, that is subject to, or the target of, any Sanctions. No part of the proceeds of the Loans and no Letter of Credit shall be used directly or indirectly by the Borrower in violation of the FCPA or any similar laws, rules or regulations issued, administered or enforced by any Governmental Authority to whose jurisdiction the Borrower or any Subsidiary is subject (including, if so applicable, the United Kingdom Bribery Act of 2010, as amended) (collectively, the “ Anti-Corruption Laws ”) or in any manner that would result in a violation of any Sanctions by any party to this Agreement.

SECTION 5.09. Employee Benefits . (a) Comply in all material respects with the applicable provisions of ERISA and the Code, except as would not reasonably be expected to have a Material Adverse Effect, and (b) furnish to the Administrative Agent as soon as possible after, and in any event within ten days after any Responsible Officer of the Borrower or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrower or any ERISA Affiliate in an aggregate amount exceeding $10,000,000, a statement of a Financial Officer of the Borrower setting forth details as to such ERISA Event and the action, if any, that the Borrower proposes to take with respect thereto.

SECTION 5.10. Compliance with Environmental Laws . Comply, and cause all lessees and other persons occupying its properties to comply, in all material respects with all Environmental Laws applicable to its operations and properties; obtain and renew all material environmental permits necessary for its operations and properties; and promptly conduct any remedial action in accordance with Environmental Laws; provided , however , that neither the Borrower nor any Subsidiary shall be required to undertake any remedial action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

SECTION 5.11. Reserved .

SECTION 5.12. Further Assurances . Execute any and all further documents, financing statements, agreements and instruments, and take all further action (including filing Uniform Commercial Code and other financing statements) that may be required under applicable law, or that the Required Lenders, the Administrative Agent or the Collateral Agent may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and priority of the security interests created or intended to be created by the Security Documents. The Borrower will cause any subsequently acquired or organized Material Subsidiary (or any Subsidiary that becomes a Material Subsidiary) to become a Loan Party by executing the Guarantee and Collateral Agreement and each applicable

 

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Security Document in favor of the Collateral Agent. The Borrower may, in its discretion, elect to cause a Permitted Joint Venture Subsidiary to become a Loan Party by complying with the foregoing sentence. In addition, except with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by written notice to the Borrower), the cost or other consequences (including any Tax consequence) of doing so shall be excessive in view of the benefits to be obtained by the Lenders therefrom and subject to applicable limitations set forth in the Security Documents, from time to time, the Borrower will, at its cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties as the Administrative Agent or the Required Lenders shall designate (it being understood that it is the intent of the parties that the Obligations shall be secured by substantially all the assets of the Borrower and the Subsidiary Guarantors (including assets acquired subsequent to the Closing Date), except this Section 5.12 shall not require the Borrower or any Subsidiary Guarantor to (i) pledge any Excluded Equity Interests, (ii) grant security interests in any Excluded Assets, (iii) deliver any certificates evidencing Equity Interests issued by Non-Significant Subsidiaries, (iv) take steps to perfect any security interest with respect to letter of credit rights and commercial tort claims (except to the extent perfected through the filing of Uniform Commercial Code financing statements) or (v) enter into or deliver security documents governed by laws of a jurisdiction other than the United States or any State thereof or the District of Columbia. Such security interests and Liens will be created under the Security Documents and other security agreements and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent, and the Borrower shall deliver or cause to be delivered to the Lenders all such instruments and documents (including legal opinions, title insurance policies and lien searches) as the Collateral Agent shall reasonably request to evidence compliance with this Section. The Borrower agrees to provide such evidence as the Collateral Agent shall reasonably request as to the perfection and priority status of each such security interest and Lien.

SECTION 5.13. Proceeds of Certain Dispositions . If, as a result of the receipt of any cash proceeds by the Borrower or any Subsidiary in connection with any sale, transfer, lease or other disposition of any asset the Borrower would be required by the terms of any Senior Note Indenture or the documentation governing any other Material Indebtedness that is unsecured or secured by Liens junior to the Liens securing the Obligations to make an offer to purchase any of the Indebtedness thereunder, then, prior to the first day on which the Borrower would be required to commence such an offer to purchase, (i) prepay Term Loans in accordance with the Term Loan Agreement, provided that the Borrower may use a portion of such cash proceeds to prepay or repurchase other permitted secured Indebtedness to the extent any applicable credit agreement, indenture or other agreement governing such Indebtedness requires the Borrower to prepay or make an offer to purchase such Indebtedness with such cash proceeds, or (ii) acquire assets or make investments in a manner that is permitted hereby, in each case in a manner that will eliminate any such requirement to make such an offer to purchase.

SECTION 5.14. Operation of Facilities . Use commercially reasonable efforts to operate, and cause the Subsidiaries to operate, the Facilities owned, leased or operated by the Borrower or any of the Subsidiaries now or in the future in a manner believed by the

 

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Borrower to be consistent with prevailing health care industry standards in the locations where the Facilities exist from time to time, except to the extent failure to do so would not have a Material Adverse Effect.

SECTION 5.15. Anti-Corruption Laws . Each Loan Party shall (i) conduct its businesses in compliance with applicable Anti-Corruption Laws and (ii) maintain policies and procedures reasonably designed to promote and achieve compliance with such Anti-Corruption Laws.

SECTION 5.16. Cash Management Systems; Application of Proceeds of Accounts .

(a) Within sixty (60) days after the Closing Date (or such later day as the Administrative Agent may reasonably agree), each Loan Party shall enter into a Deposit Account Control Agreement, in respect of each primary concentration account. In addition, each applicable Loan Party shall enter into an Account Control Agreement with respect to any new account that qualifies as a primary concentration account, in each case within 30 days (or such longer period as the Administrative Agent may reasonably agree) after such account is established.

(b) Promptly, and in any event within five (5) Business Days following receipt thereof, the Loan Parties shall cause all proceeds of Receivables from Governmental Authorities to be swept to a concentration account which is subject to a Deposit Account Control Agreement; promptly, and in any event within five (5) Business Days following receipt thereof, the Loan Parties shall cause all proceeds of all other Receivables to be swept to a concentration account which is subject to a Deposit Account Control Agreement. At any time after the occurrence and during the continuance of a Cash Dominion Event, the Administrative Agent shall have the right to deliver a notice with respect to each account subject to a Deposit Account Control Agreement directing the bank at which such account is maintained to transfer or cause to be transferred, no less frequently than once per Business Day, all available cash balances and cash receipts to an account of the Administrative Agent (the “ Administrative Agent’s Account ”). All amounts so received by the Administrative Agent’s Account shall be distributed and applied on a daily basis by the Administrative Agent to repay outstanding Loans and, if an Event of Default has occurred and is continuing, to cash collateralize any LC Exposure in respect of outstanding Letters of Credit as provided herein; provided , that, for the avoidance of doubt, any repayment or prepayment of the Revolving Loans pursuant to this sentence shall not reduce the Revolving Credit Commitments then in effect.

(c) So long as no Cash Dominion Event has occurred and is continuing, the Loan Parties shall have full and complete access to, and may direct, and shall have sole control over, the manner of disposition of funds in all Deposit Accounts subject to a Deposit Account Control Agreement.

 

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SECTION 5.17. Landlord Waivers . Each Loan Party shall use commercially reasonable efforts to obtain, within sixty (60) days after the Closing Date, a landlord lien waiver, in form and substance reasonably acceptable to the Administrative Agent, from the landlord of each leased property of the Loan Parties at which a substantial portion of the books and records relating to the ABL Facility First Priority Collateral are located.

ARTICLE VI

Negative Covenants

The Borrower covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan and all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been cancelled, have expired or have been cash collateralized to the full extent required by this Agreement and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, the Borrower will not, nor will it cause or permit any of the Subsidiaries to:

SECTION 6.01. Indebtedness . Incur, create, assume or permit to exist any Indebtedness, except:

(a) Indebtedness existing on the Closing Date and set forth in Schedule 6.01(a) and any extensions, renewals, refinancings or replacements of such Indebtedness to the extent the principal amount of such Indebtedness is not increased (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement), neither the final maturity nor the weighted average life to maturity of such Indebtedness is decreased, such Indebtedness, if subordinated to the Obligations, remains so subordinated on terms no less favorable to the Lenders, and the obligors thereof, if not the original obligors in respect of such Indebtedness, are Loan Parties;

(b) Indebtedness created hereunder and under the other Loan Documents;

(c) intercompany Indebtedness of the Borrower and the Subsidiaries to the extent permitted by Section 6.04(c);

(d) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement); provided that (i) such Indebtedness is incurred prior to or within 270 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal

 

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amount of Indebtedness permitted by this Section 6.01(d), when combined with the aggregate principal amount of all Capital Lease Obligations and Synthetic Lease Obligations incurred pursuant to Section 6.01(e), shall not exceed $50,000,000 at any time outstanding;

(e) Capital Lease Obligations and Synthetic Lease Obligations in an aggregate principal amount, when combined with the aggregate principal amount of all Indebtedness incurred pursuant to Section 6.01(d), not in excess of $50,000,000 at any time outstanding;

(f) Indebtedness (including Capital Lease Obligations) of any Subsidiary secured by one or more Facilities owned or leased by such Subsidiary, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement); provided that (i) when incurred, such Indebtedness shall not exceed the fair market value of the Facilities securing the same and (ii) the aggregate principal amount of all such Indebtedness incurred pursuant to this Section 6.01(f) shall not exceed $50,000,000 at any time outstanding (such Indebtedness meeting the criteria of this Section 6.01(f) being referred to herein as “ Permitted Real Estate Indebtedness ”);

(g) Indebtedness under performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations, or with respect to workers’ compensation claims, in each case incurred in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;

(h) [reserved];

(i) Indebtedness in respect of Hedging Agreements permitted by Section 6.04(g);

(j) Cash Management Obligations;

(k) Indebtedness incurred by Foreign Subsidiaries in an aggregate principal amount not exceeding $25,000,000 at any time outstanding;

(l) [reserved];

(m) Indebtedness incurred to finance, or assumed in connection with, one or more Permitted Acquisitions, and any extensions, renewals, refinancings or replacements of such Indebtedness to the extent the principal amount of such Indebtedness is not increased (except by an amount equal to the unpaid accrued interest and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection with such extension, renewal, refinancing or replacement plus unused committed amounts), neither the final maturity nor the

 

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weighted average life to maturity of such Indebtedness is decreased, such Indebtedness, if subordinated to the Obligations, remains so subordinated on terms no less favorable to the Lenders, and the obligors thereof, if not the original obligors in respect of such Indebtedness, are Loan Parties;

(n) Indebtedness owed to a seller in a Permitted Acquisition or any other acquisition permitted under Section 6.04, or a Permitted Joint Venture or to a buyer in a disposition permitted under Section 6.05 that (i) relates to post-closing adjustments with respect to accounts receivable, accounts payable, net worth and/or similar items or earnouts or (ii) relates to indemnities granted to the seller or buyer in such transactions;

(o) [reserved];

(p) Indebtedness in the nature of letters of credit (other than Letters of Credit and letters of credit issued under the Term Loan Agreement) issued for the account of the Borrower or any Subsidiary (and related reimbursement obligations) not to exceed an aggregate face amount of $20,000,000;

(q) without duplication of any other Indebtedness, non-cash accruals of interest, accretion or amortization of original issue discount and/or pay-in-kind interest on Indebtedness otherwise permitted hereunder;

(r) [reserved];

(s) Indebtedness consisting of obligations to pay insurance premiums;

(t) except as otherwise expressly provided herein, Guarantees by the Borrower or the Subsidiaries of Indebtedness of the Borrower and the Subsidiaries permitted to be incurred hereunder;

(u) other Indebtedness incurred after the Closing Date of the Borrower or the Subsidiaries in an aggregate principal amount not exceeding $75,000,000 at any time outstanding;

(v) other Indebtedness incurred after the Closing Date so long as immediately after giving effect to the incurrence thereof and the use of proceeds therefrom, the ABL Payment Conditions are satisfied;

(w) [reserved];

(x) [reserved]; and

(y) Indebtedness of Borrower under the Term Loan Agreement in an aggregate principal amount not to exceed the sum of (i) $980,000,000 and (ii) the Incremental Amount (as defined in the Term Loan Agreement).

 

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SECTION 6.02. Liens . Create, incur, assume or permit to exist any Lien on any property or assets (including Equity Interests or other securities of any person, including the Borrower or any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

(a) Liens on property or assets of the Borrower and the Subsidiaries existing on the Closing Date and set forth in Schedule 6.02(a); provided that such Liens shall secure only those obligations which they secured on the Closing Date and extensions, renewals and replacements thereof permitted hereunder;

(b) any Lien created under the Loan Documents;

(c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or assets of any person that becomes a Subsidiary after the Closing Date prior to the time such person becomes a Subsidiary, as the case may be; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such person becoming a Subsidiary, (ii) such Lien does not apply to any other property or assets of the Borrower or any Subsidiary (other than affixed or incorporated into the property covered by such Lien) and (iii) such Lien secures only those obligations which it secures on the date of such acquisition or the date such person becomes a Subsidiary, as the case may be, and any extensions, renewals, refinancings or replacements of such obligations;

(d) Liens, assessments or governmental charges or claims for taxes not yet delinquent or which are not required to be paid pursuant to Section 5.03;

(e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business and securing obligations that are not delinquent or which are not required to be paid under Section 5.03;

(f) Liens incurred and pledges and deposits made in the ordinary course of business in connection with any self-retention or self-insurance, or with respect to workmen’s compensation, unemployment insurance, general liability, medical malpractice, professional liability or property insurance and other social security laws or regulations;

(g) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, government contracts, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(h) zoning restrictions, easements, rights-of-way, rights of first refusal, restrictions on use of real property, minor defects or irregularities in title and other similar charges or encumbrances which, in the aggregate, do not interfere in any material respect with the business of the Borrower and the Subsidiaries, taken as a whole;

 

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(i) zoning, building codes and other land use laws, regulations and ordinances regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such real property which are not violated by the current use or occupancy of such real property or the operation of the business of the Borrower or any of the Subsidiaries or any violation of which would not have a Material Adverse Effect;

(j) ground leases in respect of real property on which Facilities owned or leased by the Borrower or any of the Subsidiaries are located;

(k) any interest or title of a lessor or secured by a lessor’s interest under any lease permitted hereunder;

(l) leases or subleases granted to others not interfering in any material respect with the business of the Borrower and the Subsidiaries, taken as a whole;

(m) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(n) Liens securing Indebtedness to finance the acquisition, construction or improvement of fixed or capital assets; provided that (i) such security interests secure Indebtedness permitted by Section 6.01, (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 270 days after such acquisition, construction or improvement, and (iii) such security interests do not apply to any other property or assets of the Borrower or any Subsidiary, except for accessions to the property financed with the proceeds of such Indebtedness and the proceeds and the products thereof; provided that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment provided by such lender secured by a Lien permissibly incurred pursuant to this Section 6.02(n);

(o) Liens arising out of judgments or awards that do not constitute an Event of Default under paragraph (i) of Article VII;

(p) [Reserved];

(q) Liens on assets of Foreign Subsidiaries; provided that (i) such Liens do not extend to, or encumber, assets that constitute Collateral or the Equity Interests of the Borrower or any of the Domestic Subsidiaries, and (ii) such Liens extending to the assets of any Foreign Subsidiary secure only Indebtedness incurred by such Foreign Subsidiary pursuant to Section 6.01(k);

(r) Liens (i) of a collecting bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business; and (iii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set off);

 

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(s) Liens on one or more Facilities owned or leased by any Subsidiary to secure Permitted Real Estate Indebtedness incurred by such Subsidiary pursuant to Section 6.01(f);

(t) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;

(u) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale or purchase of goods entered into by the Borrower or any of the Subsidiaries in the ordinary course of business permitted hereunder;

(v) Liens solely on any cash earnest money deposits made by the Borrower or any of the Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(w) Liens securing insurance premiums financing arrangements, provided that such Liens are limited to the applicable unearned insurance premiums;

(x) other Liens that do not, individually or in the aggregate, secure obligations in excess of $50,000,000 at any one time and which Liens in respect of the ABL Facility First Priority Collateral have junior priority to the Liens securing the Obligations and are subject to the ABL Intercreditor Agreement or an Additional Secured Debt Intercreditor Agreement;

(y) Liens on the Collateral (i) which secure Indebtedness incurred pursuant to Section 6.01(v) and (ii) which Liens in respect of the ABL Facility First Priority Collateral have junior priority to the Liens securing the Obligations and are subject to the ABL Intercreditor Agreement or an Additional Secured Debt Intercreditor Agreement;

(z) [reserved];

(aa) [reserved];

(bb) [reserved]; and

(cc) Liens on the Collateral which secure Indebtedness incurred pursuant to Section 6.01(y) and Indebtedness in respect of Hedging Agreements and Cash

 

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Management Agreements which is secured pursuant to the Term Loan/Cash Flow Revolver Collateral Agreement (as defined in the ABL Intercreditor Agreement); provided, that (x) all such Liens on the ABL Facility First Priority Collateral shall be junior to the Liens of the Administrative Agent thereon and (y) all such Liens on any Collateral shall be subject to the ABL Intercreditor Agreement.

SECTION 6.03. Sale and Lease-Back Transactions . Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred unless (a) the sale or transfer of such property is permitted by Section 6.05 and (b) any Capital Lease Obligations, Synthetic Lease Obligations, Permitted Real Estate Indebtedness or Liens arising in connection therewith are permitted by Sections 6.01 and 6.02, as the case may be.

SECTION 6.04. Investments, Loans and Advances . Purchase, hold or acquire any Equity Interests, evidences of indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment or any other interest in, any other person, except:

(a) (i) investments by the Borrower and the Subsidiaries existing on the Closing Date in the Borrower and the Subsidiaries, (ii) additional investments by the Borrower and the Subsidiaries in the Borrower and the Subsidiaries and any Unrestricted Subsidiaries and (iii) additional investments by the Borrower and the Subsidiaries in Permitted Joint Ventures (subject to the limitations on such investments referred to in the definition of the term “Permitted Joint Ventures”); provided that (x) any Equity Interests held by a Loan Party shall be pledged to the extent required by Section 5.12 and the Guarantee and Collateral Agreement and (y) any such investments made pursuant to clause (ii) above made by a Loan Party to a Subsidiary that is not a Loan Party, or made by the Borrower or any Subsidiary to an Unrestricted Subsidiary, may only be made if (A) no Default or Event of Default shall have occurred and be continuing and (B) the aggregate amount of all such investments made by Loan Parties in Subsidiaries that are not Loan Parties, or by the Borrower or any Subsidiary in an Unrestricted Subsidiary and outstanding at any time (without regard to any write-downs or write-offs thereof, and valued net in the case of intercompany loans and transferred liabilities) shall not exceed $50,000,000 after the Closing Date plus the amount of dividends, distributions and other returns of capital actually received in cash by any Loan Party with respect to any such investments; for purposes of the foregoing, if the Borrower designates a Subsidiary as an Unrestricted Subsidiary in accordance with the definition of the term “Unrestricted Subsidiary”, the Borrower will be deemed to have made an investment at that time in the resulting Unrestricted Subsidiary in an aggregate amount equal to the fair market value of the net assets of such Unrestricted Subsidiary;

(b) Permitted Investments;

 

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(c) (i) loans or advances in respect of intercompany accounts attributable to the operation of the Borrower’s cash management system (including with respect to intercompany self-insurance arrangements), (ii) loans or advances made by the Borrower or any of the Subsidiaries to a Permitted Syndication Subsidiary for working capital needs evidenced by a promissory note that is pledged to the Collateral Agent so long as such loans or advances constitute Indebtedness of the primary obligor that is not subordinate to any other Indebtedness of such obligor, and (iii) loans or advances made by the Borrower to any Subsidiary and by any Subsidiary to the Borrower or any other Subsidiary; provided , however , that (x) any such loans and advances made by a Loan Party that are evidenced by a promissory note shall be pledged to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to the Guarantee and Collateral Agreement (and any such loans and advances made by a Loan Party to a Subsidiary that is not a Loan Party shall be so evidenced and pledged) and (y) any such loan or advance made by a Loan Party to a Subsidiary that is not a Loan Party or by the Borrower or any Subsidiary to an Unrestricted Subsidiary shall be subject to the requirements and limitations described in clause (y) of the first proviso to Section 6.04(a), except to the extent that (1) such loan or advance shall be secured by a fully perfected, first-priority Lien on substantially all of the assets of the recipient of such loan or advance and its subsidiaries (in each case of a type that would have constituted Collateral if such recipient were party to the applicable Security Documents) and (2) such Lien is collaterally assigned to the Collateral Agent for the benefit of the Secured Parties, all on terms reasonably satisfactory to the Collateral Agent;

(d) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

(e) the Borrower and the Subsidiaries may make loans and advances in the ordinary course of business to their respective employees, officers, consultants and agents (including payroll advances, travel and entertainment advances and relocation loans in the ordinary course of business to employees, officers and agents of the Borrower or any such Subsidiary (or to any physician or other health care professional associated with or agreeing to become associated with the Borrower or any Subsidiary or any Hospital owned or leased or operated by the Borrower or any Subsidiary (“ Health Care Associates ”)));

(f) Guarantees to third parties made in the ordinary course of business in connection with the relocation of employees or agents of Health Care Associates of the Borrower or any of the Subsidiaries;

(g) the Borrower and the Subsidiaries may enter into Hedging Agreements that are not speculative in nature;

(h) the Borrower or any Subsidiary may acquire (including by any lease that contains upfront payments and/or buyout options) all or substantially all the assets of a person or line of business of such person, or directly acquire and

 

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beneficially own (and retain the right to vote) more than 50% of the aggregate ordinary voting power and aggregate equity value represented by the outstanding capital stock or other Equity Interests of any acquired or newly formed corporation or other entity that acquires or leases such person, division or line of business (referred to herein as the “ Acquired Entity ”); provided that (i) as of the consummation thereof, such acquisition shall have been approved by the Board of Directors of the Acquired Entity; (ii) the Acquired Entity shall be in a similar, related, incidental or complementary line of business as that of the Borrower and the Subsidiaries as conducted during the current and most recent calendar year; and (iii) at the time of such transaction (A) [Reserved], (B) if the total consideration paid in connection with such acquisition and any other acquisitions pursuant to this Section 6.04(h) after the Closing Date (including any Indebtedness of the Acquired Entity that is assumed by the Borrower or any Subsidiary following such acquisition and any payments following such acquisition pursuant to earn-out provisions or similar obligations) shall exceed $50,000,000 in the aggregate (excluding the total consideration paid in respect of Permitted Acquisitions listed on Schedule 6.04(h) and consideration consisting of, or funded with the proceeds of, Qualified Capital Stock, then the Borrower would be in compliance with the covenant set forth in Section 6.13 on the last day of the most recently ended fiscal quarter for which financial statements have been or were required to be delivered, after giving pro forma effect to such transaction and to any other event occurring after such period as to which pro forma recalculation is appropriate (including any other transaction described in this Section 6.04(h) occurring after such period) as if such transaction had occurred as of the first day of such period, (C) immediately after giving effect to any such acquisition and any related transaction, the ABL Payment Conditions shall be satisfied, (D) the Borrower shall comply, and shall cause the Acquired Entity to comply, with the applicable provisions of Section 5.12 and the Security Documents within a period after consummation of such transaction agreed to by the Administrative Agent (other than, in each case, any Captive Insurance Subsidiary), and (E) the aggregate consideration paid in connection with all such acquisitions of Acquired Entities that become Foreign Subsidiaries (or, in the case of an acquisition of assets, such assets are not directly acquired by Loan Parties), shall not exceed $10,000,000 (any acquisition of an Acquired Entity meeting all the applicable criteria of this Section 6.04(h) being referred to herein as a “ Permitted Acquisition ”); it being understood and agreed that, in connection with any Permitted Acquisition in which the Borrower or any Loan Party acquires Receivables (including self-pay Receivables) in excess of $20,000,000 in the aggregate, such acquired Receivables shall not constitute Eligible Receivables or Eligible Self-Pay Receivables until such time as a field examination, in form and substance satisfactory to the Administrative Agent in its Reasonable Credit Judgment, shall have been completed with respect to such acquired Receivables;

(i) Permitted Joint Ventures;

(j) investments in a Permitted Syndication Subsidiary in connection with a Permitted Syndication Transaction made pursuant to Section 6.05(b);

 

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(k) [reserved];

(l) the Borrower or any of the Subsidiaries may acquire and hold Receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(m) investments to the extent that payment for such investments is made with issuances of or the cash proceeds from the issuance of Equity Interests of the Borrower;

(n) extensions of trade credit and purchases of equipment and inventory in the ordinary course of business;

(o) [reserved];

(p) investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices;

(q) investments by the Borrower and the Subsidiaries in any Captive Insurance Subsidiary in an aggregate amount not to exceed 150% of the minimum amount of capital required under the laws of the jurisdiction in which such Captive Insurance Subsidiary is formed (plus any excess capital generated as a result of any such prior investment that would result in an unfavorable tax or reimbursement impact if distributed), and other investments in any Captive Insurance Subsidiary to cover reasonable general corporate and overhead expenses of such Captive Insurance Subsidiary;

(r) investments by any Captive Insurance Subsidiary;

(s) investments in any Captive Insurance Subsidiary in connection with a push down by the Borrower of insurance reserves;

(t) investments held by a person (including by way of acquisition, merger or consolidation) after the Closing Date otherwise in accordance with this Section 6.04 to the extent that such investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

(u) investments in minority interests existing on the Closing Date;

(v) [reserved];

(w) investments representing the non-cash portion of the consideration received for an Asset Sale or other asset disposition permitted under Section 6.05;

(x) [reserved];

 

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(y) other Investments so long as at the time such Investment is made, the ABL Payment Conditions are satisfied; and

(z) in addition to investments permitted by paragraphs (a) through (y) above, additional investments, loans and advances by the Borrower and the Subsidiaries so long as the aggregate outstanding amount of investments, loans and advances pursuant to this paragraph (z) (determined without regard to any write-downs or write-offs of such investments, loans and advances) does not exceed $50,000,000 plus the amount of dividends, distributions and other returns of capital actually received in cash by any Loan Party or any of its Subsidiaries in respect of investments made in reliance on this paragraph (z) in the aggregate at any time.

It is understood and agreed that, in the event that any investment is made by the Borrower or any Subsidiary in any person through substantially concurrent interim transfers of any amount through one or more other Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of this Section 6.04.

SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions . (a) Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all the assets (whether now owned or hereafter acquired) of the Borrower or less than all the Equity Interests of any Subsidiary (other than pursuant to any Permitted Interest Transfer, any Permitted Joint Venture or transfers of Equity Interests of any Subsidiary to a Loan Party or by a Subsidiary that is not a Subsidiary Guarantor to any Subsidiary or transfers of Equity Interests of a Subsidiary that remains a Subsidiary Guarantor after giving effect to such transfer), or purchase or otherwise acquire (in one transaction or a series of transactions) all or substantially all of the assets of any other person, except that (i) the Borrower and any Subsidiary may purchase and sell inventory in the ordinary course of business and (ii) if at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing, (w) the Borrower may merge with any other Person; provided that (1) the Borrower shall be the continuing and surviving Person or the continuing or surviving Person shall expressly assume the obligations of the Borrower including all of the obligations under this Agreement and the other Loan Documents, in a manner reasonably acceptable to the Administrative Agent, and (2) the Borrower or such continuing or surviving Person, as applicable, remains organized under the laws of the United States, any state thereof or the District of Columbia, (x) any wholly owned Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (y) any Subsidiary may merge into or consolidate with any other Subsidiary in a transaction in which the surviving entity is a Subsidiary ( provided that (A) if any party to any such transaction is a Loan Party, the surviving entity of such transaction shall be a Loan Party and (B) to the extent any person other than the Borrower or a wholly owned Subsidiary receives any consideration in connection therewith, then such transaction shall be considered as an investment under the applicable paragraph of Section 6.04) and (z) the Borrower and the Subsidiaries may

 

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make Permitted Acquisitions or any other investment, loan or advance permitted pursuant to Section 6.04 (including by merger), and may enter into Permitted Joint Ventures.

(b) Make any Asset Sale otherwise permitted under paragraph (a) above unless such Asset Sale is:

(i) for consideration that is at least equal to the fair market value of the assets being sold, transferred, leased or disposed of; provided that for any disposition of assets with a fair market value of more than $10,000,000, at least 75% of such consideration is cash, cash equivalents or Permitted Investments;

(ii) [reserved]

(iii) a Syndication Transaction, provided that the aggregate amount or value of the consideration received by any Permitted Syndication Subsidiary and/or the Borrower and the other Subsidiaries from third parties in connection with such Syndication Transaction (or series of Syndication Transactions), except for the Syndication Transactions listed on Schedule 6.05(b) (the “ Syndication Proceeds ”), when added to the aggregate Syndication Proceeds from all previous Permitted Syndications on or after the Closing Date does not exceed $40,000,000 (any Syndication Transaction meeting the criteria of this Section 6.05(b)(iii) being referred to herein as a “ Permitted Syndication Transaction ”);

(iv) any Permitted Interest Transfer;

(v) for the sale or other disposition consummated by the Borrower or any of the Subsidiaries after the Closing Date of assets constituting a subsidiary or business unit or units of the Borrower or the Subsidiaries (including a Facility) or the interest of the Borrower or the Subsidiaries therein, provided that (i) such sale or other disposition shall be made for fair value on an arm’s-length basis and (ii) the consideration received for such sale or other disposition constitutes or would constitute a Permitted Acquisition, Permitted Joint Venture or Permitted Syndication Subsidiary in accordance with the definition thereof;

(vi) the Borrower and the Subsidiaries may abandon, allow to lapse or otherwise dispose of intangible property that the Borrower or such Subsidiary shall determine in its reasonable business judgment is immaterial to the conduct of its business;

(vii) forgiveness of any loans or advances made pursuant to Section 6.04(e);

(viii) transfers of property subject to casualty or a condemnation proceeding;

(ix) Restricted Payments permitted pursuant to Section 6.06;

 

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(x) [reserved]; or

(xi) any investment, loan or advance permitted pursuant to Section 6.04.

For the purposes of Section 6.05(b)(i), the following will be deemed to be cash:

(i) the assumption by the transferee of Indebtedness or other liabilities contingent or otherwise of the Borrower or a Subsidiary (other than subordinated Indebtedness of the Borrower or a Subsidiary Guarantor) and the release of the Borrower or such Subsidiary from all liability on such Indebtedness or other liability in connection with such Asset Sale;

(ii) securities, notes or other obligations received by the Borrower or any Subsidiary of the Borrower from the transferee that are converted by the Borrower or such Subsidiary into cash or cash equivalents (including Permitted Investments) within 180 days following the closing of such Asset Sale;

(iii) Indebtedness of any Subsidiary that is no longer a Subsidiary as a result of such Asset Sale, to the extent that the Borrower and each other Subsidiary are released from any Guarantee of payment of such Indebtedness in connection with such Asset Sale;

(iv) consideration consisting of Indebtedness of the Borrower (other than subordinated Indebtedness) received after the Closing Date from Persons who are not the Borrower or any Subsidiary; and

(v) any Designated Non-Cash Consideration received by the Borrower or any Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this covenant that is at that time outstanding, not to exceed $50,000,000 (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

SECTION 6.06. Restricted Payments; Restrictive Agreements . (a) Declare or make, directly or indirectly, any Restricted Payment (including pursuant to any Synthetic Purchase Agreement); provided , however , that

(i) any Subsidiary may declare and pay dividends or make other distributions ratably to its equity holders;

(ii) the Borrower may pay the CHS Dividend on the Closing Date;

(iii) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may repurchase its Equity Interests owned by current or former employees, directors or consultants of the

 

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Borrower or the Subsidiaries or make payments to employees, directors or consultants of the Borrower or the Subsidiaries in connection with the exercise of stock options, stock appreciation rights or similar equity incentives or equity based incentives pursuant to management incentive plans in an aggregate amount not to exceed $20,000,000 in any fiscal year;

(iv) [reserved];

(v) in addition to Restricted Payments permitted by clauses (i) through (iii) above, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may make other Restricted Payments in an aggregate amount from and after the Closing Date not to exceed $30,000,000 less the amount of payments made from and after the Closing Date pursuant to Section 6.09(b)(i);

(vi) the Borrower may net shares under employee benefits plans to settle option price payments owed by employees and directors with respect thereto and to settle employees’ and directors’ Federal, state and income tax liabilities (if any) related thereto;

(vii) the Borrower may make other Restricted Payments; provided that at the time any such Restricted Payment is made and after giving effect thereto, the ABL Payment Conditions shall have been satisfied;

(viii) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may (A) repurchase any of its Equity Interests, or (B) make payments to employees, directors or consultants of the Borrower or the Subsidiaries in connection with the exercise of stock options, stock appreciation rights or similar equity incentives or equity based incentives pursuant to management incentive plans, in each case in an aggregate amount not to exceed the Received Exercise Proceeds Amount at the time such Restricted Payment is made;

(ix) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may make other Restricted Payments in an aggregate amount not to exceed $10,000,000 in any fiscal year, beginning with the fiscal year ending December 31, 2016;

(x) other than Restricted Payments described in clause (vii) above, the Borrower or any Subsidiary may make a payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Agreement;

(xi) the Borrower or any Subsidiary may make a purchase, repurchase, redemption, defeasance or other acquisition or retirement of preferred Equity Interests made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially

 

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concurrent sale of, preferred Equity Interests of the Borrower (other than Disqualified Stock and other than preferred Equity Interests sold to a Subsidiary) or a substantially concurrent contribution to the equity (other than through the issuance of Disqualified Stock or by preferred Equity Interests sold to any Subsidiary) of the Borrower;

(xii) the Borrower may make payments to holders of Equity Interests of the Borrower in lieu of the issuance of fractional shares of such Equity Interests, provided, however , that any such payment shall not be for the purpose of evading any limitation of this covenant or otherwise to facilitate any dividend or other return of capital to the holders of such Equity Interests (as determined in good faith by the Board of Directors of the Borrower);

(xiii) the Borrower or any Subsidiary may make purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of Equity Interests deemed to occur upon the exercise of stock options, warrants or other rights in respect thereof if such Equity Interests represent a portion of the exercise price thereof; and

(xiv) the Borrower or any Subsidiary may pay dividends or other distributions of Equity Interests of, or Indebtedness owed to the Borrower or a Subsidiary by, Unrestricted Subsidiaries (unless the Unrestricted Subsidiary’s principal asset is cash or cash equivalents (including Permitted Investments)).

(b) Enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (i) the ability of the Borrower or any Subsidiary (other than any Permitted Joint Venture Subsidiary) to create, incur or permit to exist any Lien upon any of its property or assets to secure the Obligations, or (ii) the ability of any Subsidiary (other than any Permitted Joint Venture Subsidiary) to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the Borrower or any Subsidiary Guarantor or to Guarantee Indebtedness of the Borrower or any Subsidiary Guarantor; provided (x) that the foregoing shall not apply to restrictions and conditions (A) imposed by law or by any Loan Document or any Senior Note Indenture, (B) contained in agreements relating to the sale of a Subsidiary or other assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary or assets that are to be sold and such sale is permitted hereunder, (C) imposed on any Foreign Subsidiary by the terms of any Indebtedness of such Foreign Subsidiary permitted to be incurred hereunder, (D) imposed pursuant to other Indebtedness incurred pursuant to Section 6.01 with such encumbrances and restrictions that, taken as a whole, are not more restrictive than the terms hereof, (E) [reserved], (F) on Permitted Joint Ventures or other joint ventures permitted under Section 6.04 and Permitted Syndication Subsidiaries imposed by the terms of the agreements governing the same, (G) applicable to an Acquired Entity at the time such Acquired Entity became a Subsidiary, so long as such restriction or encumbrance was not created in contemplation of or in connection with such Acquired Entity becoming a Subsidiary and apply only to such Acquired Entity, (H) under any agreements evidencing any Indebtedness permitted to be incurred under Section 6.01, and

 

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(I) contained in the Term Loan Credit Agreement or the other Term Loan Documents; provided that such restrictions and conditions are no more onerous than those set forth in the Term Loan Documents in effect on the Closing Date; and (y) clause (i) of the foregoing shall not apply to restrictions or conditions (A) that are customary provisions in leases and other contracts restricting the assignment thereof and any right of first refusal and (B) imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness.

SECTION 6.07. Transactions with Affiliates . Except for transactions between or among the Borrower and its Subsidiaries or described on Schedule 6.07, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) the Borrower or any Subsidiary may engage in any of the foregoing transactions on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (ii) the Borrower and the Subsidiaries may make (x) investments, loans and advances and (y) Restricted Payments, permitted by Section 6.04 and Section 6.06, respectively, (iii) [reserved], (iv) any issuance of Equity Interests otherwise permitted hereunder, (v) any issuance of Equity Interests, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans, or indemnities provided on behalf of employees or directors and approved by the Board of Directors or senior management of the Borrower, (vi) the payment of reasonable fees to directors of the Borrower and the Subsidiaries who are not employees of the Borrower or the Subsidiaries and (vii) transactions between CHS and its subsidiaries, on the one hand, and the Borrower and its Subsidiaries, on the other hand, pursuant to the Separation Documents (or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect) as in effect on the Closing Date.

SECTION 6.08. Business of the Borrower and Subsidiaries . Engage at any time in any business or business activity other than the business currently conducted by it and business activities reasonably similar, incidental or complementary thereto and reasonable extensions thereof.

SECTION 6.09. Other Indebtedness . (a) Permit any waiver, supplement, modification or amendment of any Senior Note Indenture or any waiver, supplement, modification or amendment of any indenture, instrument or agreement pursuant to which any subordinated Material Indebtedness of the Borrower or any of the Subsidiaries (other than the Term Loan Credit Agreement and the other Term Loan Documents) is outstanding if the effect of such waiver, supplement, modification or amendment would materially increase the obligations of the obligor (except as permitted by this Agreement) or confer additional material rights on the holder of such Indebtedness in a manner adverse to the Lenders.

(b) Make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in

 

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respect of, or pay, or commit to pay, or directly or indirectly (including pursuant to any Synthetic Purchase Agreement) redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any subordinated Indebtedness (other than intercompany Indebtedness); provided , however , that, so long as no Default or Event of Default shall have occurred and be continuing at the date of such redemption, repurchase, retirement or other acquisition for consideration, or would result therefrom, the Borrower or any Subsidiary may redeem, repurchase, retire or otherwise acquire for consideration (i) from and after the Closing Date, subordinated Indebtedness for an aggregate price not in excess of (A) $30,000,000 less (B) the amount of Restricted Payments made from and after the Closing Date pursuant to clause (v) of Section 6.06(a), (ii) subordinated Indebtedness with the proceeds of or in exchange for (A) subordinated Indebtedness that is permitted pursuant to Section 6.01 and is subordinated on terms not materially less advantageous to the Lenders than those of the Indebtedness being redeemed, repurchased, retired or otherwise acquired for consideration or (B) the issuance of Equity Interests, or (iii) other subordinated Indebtedness; provided that at the time any such Restricted Payment is made and after giving effect thereto, the ABL Payment Conditions shall have been satisfied.

(c) Nothing in this Section 6.09 shall limit or otherwise prohibit the making (and any payment in connection therewith) of any “Change of Control Offer” in accordance with clause (f) of Article VII.

SECTION 6.10. Practice Guarantees . Enter into Practice Guarantees with a term of 30 months or longer in an aggregate amount in excess of $50,000,000 in effect at any time with respect to all such Practice Guarantees.

SECTION 6.11. Reserved.

SECTION 6.12. Reserved .

SECTION 6.13. Consolidated Fixed Charge Coverage Ratio . If, at the close of business on any Business Day, a Covenant Trigger Event shall exist, the Borrower must maintain a Consolidated Fixed Charge Coverage Ratio (as of and commencing for the Test Period then most recently ended) of not less than 1.10 to 1.00 until such time as no Covenant Trigger Event shall exist.

SECTION 6.14. Fiscal Year . With respect to the Borrower, change its fiscal year-end to a date other than December 31.

ARTICLE VII

Events of Default

In case of the happening of any of the following events (“ Events of Default ”):

(a) any representation, warranty or statement made or deemed made by any Loan Party herein or in any other Loan Document, or any certificate, including any Borrowing Base Certificate, Letters of Credit or Letter of Credit

 

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application delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which it was made or deemed made;

(b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

(c) default shall be made in the payment of any interest on any Loan or LC Disbursement or any Fee or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days;

(d) (i) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.01(a) (with respect to the Borrower only), 5.05(a) or 5.08 or in Article VI or (ii) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.04(d) or 5.16 and such default shall continue unremedied for a period of 3 Business Days;

(e) default shall be made in the due observance or performance by the Borrower or any Subsidiary of any covenant or agreement contained in any Loan Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent or any Lender to the Borrower;

(f) (i) the Borrower or any Subsidiary shall fail to pay any principal, interest or other amount due in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any grace period) or (ii) any other event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after giving effect to any grace period) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or that results in the termination or permits any counterparty to terminate any Hedging Agreement the obligations under which constitute Material Indebtedness; provided that (A) this clause (ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, and (B) for the avoidance of doubt, a requirement to make a mandatory offer to repurchase under the terms of any Indebtedness of any person acquired by the Borrower or any of its Subsidiaries pursuant to any Permitted Acquisition as a result of a “change of control” (or equivalent term) shall not constitute a Default or an Event of Default under this clause (ii) so long as (I) on

 

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or prior to the date the events constituting such “change of control” (or equivalent term) occur, either (1) the terms of such Indebtedness have been amended to eliminate the requirement to make such offer or (2) such Indebtedness has been defeased or discharged so that such requirement shall no longer apply (and, in the event such “change of control” is subject to a requirement that a specific credit ratings event or similar condition subsequent occur, no Event of Default shall exist pursuant to this paragraph (ii) until such time as the specific credit ratings event or similar condition subsequent has also occurred resulting in the obligor under such Indebtedness to become unconditionally obligated to make such offer) or (II) (x) the sum of (1) the aggregate amount of unrestricted cash, cash equivalents and Permitted Investments held by the Borrower and the Subsidiaries plus (2) any available debt financing commitments from any financial institution of nationally recognized standing available to the Borrower or its Subsidiaries for purposes of refinancing such Indebtedness is at least equal to the aggregate amount that would be required to repay such Indebtedness pursuant to any required “change of control offer” (or equivalent term) pursuant to the terms of such Indebtedness at all times prior to the expiration of the rights of the holders of such Indebtedness to require the repurchase or repayment of such Indebtedness as a result of such acquisition and (y) the Borrower or the applicable Subsidiary complies with the provisions of such Indebtedness that are applicable as a result of such acquisition (including by consummating any required “change of control offer” (or equivalent term) for such Indebtedness); provided further that this clause (f) shall not apply if such failure is remedied or waived by the holders of such Indebtedness prior to any termination of the Commitments or acceleration of the Loans pursuant to this Article VII;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof), or of a substantial part of the property or assets of the Borrower or a Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof), under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof) or for a substantial part of the property or assets of the Borrower or a Subsidiary or (iii) the winding-up or liquidation of the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof) shall (i) voluntarily commence any proceeding or file any petition seeking relief under

 

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Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof) or for a substantial part of the property or assets of the Borrower or any Subsidiary (other than a Non-Significant Subsidiary within the meaning of clause (a) of the definition thereof), (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any corporate action for the purpose of effecting any of the foregoing;

(i) one or more judgments shall be rendered against the Borrower, any Subsidiary or any combination thereof (not paid or fully covered by insurance) and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Borrower or any Subsidiary to enforce any such judgment and such judgment is for the payment of money in an aggregate amount in excess of $35,000,000;

(j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect;

(k) any Guarantee under the Guarantee and Collateral Agreement for any reason shall cease to be in full force and effect (other than in accordance with its terms), or any Subsidiary Guarantor shall deny in writing that it has any further liability under the Guarantee and Collateral Agreement (other than as a result of the discharge of such Subsidiary Guarantor in accordance with the terms of the Loan Documents);

(l) any security interest purported to be created by any Security Document with respect to any Collateral with an aggregate fair market value in excess of $35,000,000 shall cease to be, or shall be asserted by the Borrower or any other Loan Party not to be, a valid, perfected (subject to the qualifications set forth in Section 3.19(a)), first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Guarantee and Collateral Agreement or any other act or omission by the Collateral Agent (unless such act or omission is a result of reliance on any information provided by a Loan Party or resulted from a breach by a Loan Party of its representations or obligations under the Loan Documents);

 

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(m) the Indebtedness under any subordinated Indebtedness of the Borrower or any Subsidiary constituting Material Indebtedness shall cease (or any Loan Party or an Affiliate of any Loan Party shall so assert), for any reason, to be validly subordinated to the Obligations as provided in the agreements evidencing such subordinated Indebtedness;

(n) there shall have occurred a Change in Control;

(o) [Reserved];

(p) [Reserved]; or

(q) [Reserved]; or

(r) so long as any commitments or loans under the Term Loan Agreement are outstanding, the ABL Intercreditor Agreement shall cease to be effective or cease to be legally valid and binding, or otherwise not be effective to create the rights and obligations purported to be created thereunder, unless the same (i) results directly from the action or inaction of the Collateral Agent or (ii) is not materially adverse to the Lenders;

then, and in every such event (other than an event with respect to the Borrower described in paragraph (g) or (h) above or an event described in paragraph (d)(ii) above), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans and Reimbursement Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans, the face amount (or principal amount, as the case may be) of Reimbursement Obligations so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding; in any event with respect to the Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, the face amount (or principal amount, as the case may be) of Reimbursement Obligations, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding.

 

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ARTICLE VIII

The Administrative Agent and the Collateral Agent

Each of the Lenders and Issuing Banks hereby irrevocably appoints the Administrative Agent and the Collateral Agent (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the “ Agents ”) its agent and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute any and all documents (including releases) with respect to the Collateral, including the ABL Intercreditor Agreement, and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents.

The bank serving as the Administrative Agent and/or the Collateral Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

Neither Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08), and (c) except as expressly set forth in the Loan Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct. Neither Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender, and neither Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document,

 

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or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper person. Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Credit Facilities as well as activities as Agent.

Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent (not to be unreasonably withheld or delayed) of the Borrower, to appoint a successor; provided that during the existence and continuation of an Event of Default pursuant to paragraph (b), (c), (g) or (h) of Article VII, no consent of the Borrower shall be required. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retirement of the retiring Agent shall become effective on such 30th day and the retiring Agent may (but shall not have any obligation to do so), on behalf of the Lenders and Issuing Banks, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $1,000,000,000, or an Affiliate of any such bank and, so long as no Event of Default pursuant to paragraph (b), (c), (g) or (h) of Article VII shall have occurred and be continuing, reasonably acceptable to the Borrower. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an Agent’s resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Agent.

 

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Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

Administrative Agent and each Lender appoints each Bank Product Secured Party (as defined in the Guarantee and Collateral Agreement) as agent for the purpose of perfecting Liens in Collateral held or controlled by it, to the extent such Liens are perfected by possession or control. If a Lender or other Bank Product Secured Party obtains possession or control of any Collateral, it shall notify Administrative Agent thereof and, promptly upon Administrative Agent’s request, deliver such Collateral to Administrative Agent or otherwise deal with it in accordance with Administrative Agent’s instructions.

Each Bank Product Secured Party that is party to a Secured Cash Management Agreement agrees that it shall report to the Administrative Agent, on a monthly basis, the amount of Secured Cash Management Obligations owing to such Bank Product Secured Party at the time of such reporting.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices . Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, as follows:

(a) if to the Borrower, to it at Quorum Health Corporation, 1573 Mallory Lane, Suite 100, Brentwood, TN 37027, Attention: Michael Culotta-Executive Vice President and Chief Financial Officer, Email: mike_culotta@quorumhealth.com ;

(b) if to the Administrative Agent, to UBS AG, Stamford Branch, 600 Washington Boulevard, Stamford, Connecticut 06901, Attention: Banking Products Services Agency (Fax No. 203-719-3888), Email: DL-UBSAgency@ubs.com; and

(c) if to a Lender, to it at its address (or fax number) set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.

Any party hereto may change its address, fax or email instructions at which it is to receive notices hereunder by notice in writing given to the other parties in accordance

 

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with this Section 9.01. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. As agreed to among the Borrower, the Administrative Agent and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.

The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on Intralinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to Borrower or its securities) (each, a “ Public Lender ”). The Borrower hereby agrees that (i) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of foreign, United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.17); (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor” and (iv) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor”. Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that any such document contains material non-public information: (A) the Loan Documents, (B) any notification of changes in the terms of the Credit Facilities and (C) all information delivered pursuant to Section 5.04(a), (b) and (c).

Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including foreign, United States Federal and state securities laws, to make reference to communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of foreign, United States Federal or state securities laws.

 

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THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. 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 THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the communications have been posted to the Platform shall constitute effective delivery of the communications to such Lender for purposes of the Loan Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

SECTION 9.02. Survival of Agreement . All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and Issuing Banks and shall survive the making by the Lenders of the Loans and issuance of Letters of Credit by the Issuing Banks, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any

 

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Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.16, 2.20, 9.05 and 9.18 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the payment of the Reimbursement Obligations, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank.

SECTION 9.03. Binding Effect . This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.

SECTION 9.04. Successors and Assigns . (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the Administrative Agent, the Collateral Agent, the Issuing Banks or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

(b) Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), with notice to the Borrower and the prior written consent of the Administrative Agent (not to be unreasonably withheld or delayed) and each Issuing Bank (not to be unreasonably withheld or delayed); provided , however , that (i) in the case of an assignment of a Revolving Credit Commitment, the Borrower must also give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) ( provided , that the consent of the Borrower shall not be required to any such assignment made to another Lender or an Affiliate of a Lender or after the occurrence and during the continuance of any Event of Default referred to in paragraph (b), (c), (g) or (h) of Article VII), (ii) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be not less than $5,000,000 (or, in any case, if less, the entire remaining amount of such Lender’s Commitment or Loans), (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent (or, if previously agreed with the Administrative Agent, manually), and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent and will not apply in the case of an assignment by a Lender to an Approved Fund that is managed by such Lender or an Affiliate of such Lender or by an entity or an Affiliate of an entity that administers or manages such Lender), and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and all applicable tax forms. Upon acceptance and

 

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recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Revolving Credit Commitment is as set forth in such Assignment and Acceptance; (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee and is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05 or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”).

 

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The entries in the Register shall be conclusive absent manifest error and the Borrower, the Administrative Agent, the Issuing Banks, the Collateral Agent and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Banks, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(e) Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrower to such assignment and any applicable tax forms, the Administrative Agent shall promptly (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e).

(f) Each Lender may without the consent of the Borrower, the Issuing Banks or the Administrative Agent sell participations to one or more banks or other persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided , however , that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant) and (iv) the Borrower, the Administrative Agent, the Issuing Banks and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans or LC Disbursements and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or person hereunder or the amount of principal of or the rate at which interest is payable on the Loans in which such participating bank or person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans in which such participating bank or person has an interest, increasing or extending the Commitments in which such participating bank or person has an interest or releasing any Subsidiary Guarantor (other than pursuant to the terms thereof or in connection with the sale of such Subsidiary Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral). Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant

 

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Register (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.17.

(h) Any Lender may at any time pledge or assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority; provided that no such pledge or assignment shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(i) Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle (an “ SPC ”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or

 

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liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any investor, potential investor, rating agency, commercial paper dealer, collateral manager, servicer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.

(j) The Borrower shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void.

(k) In the event that any Lender shall become a Defaulting Lender or S&P, Moody’s and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best’s Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Lender becomes a Lender, downgrade the long-term certificate of deposit ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)) (or, with respect to any Lender that is not rated by any such ratings service or provider, the Issuing Banks shall have reasonably determined that there has occurred a material adverse change in the financial condition of any such Lender, or a material impairment of the ability of any such Lender to perform its obligations hereunder, as compared to such condition or ability as of the date that any such Lender became a Lender) then the Issuing Banks shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the Administrative Agent, to replace such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Revolving Credit Commitment to such assignee; provided , however , that (i) no such assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and (ii) the Issuing Banks or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Lender hereunder and all other amounts accrued for such Lender’s account or owed to it hereunder.

SECTION 9.05. Expenses; Indemnity . (a) The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, each Arranger and each Issuing Bank in connection with the syndication of the Credit Facilities and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby

 

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contemplated shall be consummated) or incurred by the Administrative Agent, the Collateral Agent, any Arranger, any Issuing Bank or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit issued hereunder, including the fees, charges and disbursements of Winston & Strawn LLP, counsel for the Administrative Agent and the Collateral Agent, and, in connection with any such enforcement or protection, the fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for the Administrative Agent, the Collateral Agent, the Arranger, the Issuing Banks and the Lenders.

(b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lender, each Arranger, each Issuing Bank and each Related Party of any of the foregoing persons (each such person being called an “ Indemnitee ”) against, and to hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities, penalties and related reasonable out-of-pocket expenses, including reasonable fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for all Indemnitees, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions or any related transaction and the other transactions contemplated thereby (including the syndication of the Credit Facilities), (ii) the use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Borrower, any other Loan Party or any of their respective Affiliates), or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Liability related in any way to the Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, penalties or related expenses (x) are determined by a court of competent jurisdiction by final judgment to have resulted primarily from (1) the gross negligence, bad faith or willful misconduct of such Indemnitee or (2) a material breach of the obligations under this Agreement of such Indemnitee or any of such Indemnitee’s Affiliates or of any of its or their respective officers, directors, employees, agents, advisors or other representatives of the foregoing under this Agreement (as determined by a court of competent jurisdiction in a final and nonappealable decision) or (y) result from any proceeding (other than a proceeding against a party hereto acting pursuant to this Agreement or in its capacity as such or of any of its Affiliates or its or their respective officers, directors, employees, agents, advisors and other representatives and the successors of each of the foregoing) solely between or among Indemnitees not arising from any act or omission of a Loan Party.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Collateral Agent, any Arranger or any

 

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Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Collateral Agent, such Arranger or such Issuing Bank, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent, such Arranger or such Issuing Bank in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the Aggregate Revolving Credit Exposure and unused Commitments at the time.

(d) To the extent permitted by applicable law, neither the Borrower nor any Indemnitee shall assert, and each hereby waives, any claim against any Indemnitee or the Borrower and each of their respective Affiliates, as applicable, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof ; provided, that nothing contained in this sentence shall limit the Borrower’s indemnification obligations above to the extent such special, indirect, consequential and punitive damages are included in any third party claim in connection with which any Indemnitee is entitled to indemnification hereunder.

(e) No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(f) The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender, any Arranger or any Issuing Bank. All amounts due under this Section 9.05 shall be payable, within 30 days of written demand therefor with a reasonably detailed summary of the amounts claimed.

SECTION 9.06. Right of Setoff . If an Event of Default shall have occurred and be continuing, each Secured Party and its Affiliates hereby are authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all Collateral (including any deposits (general or special, time or demand, provisional or final (other than tax accounts, trust accounts or payroll accounts))) at any time held and other obligations at any time owing by such Secured Party or any of its Affiliates to or for the credit or the account of any Loan Party against any and all of the obligations of such Loan Party now or hereafter existing under this Agreement and the other Loan

 

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Documents held by such Secured Party, provided that at such time such obligations are due or payable. The rights of each Secured Party and its Affiliates under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party or its Affiliates may have. The applicable Secured Party shall notify such Loan Party and the Collateral Agent of any such setoff and application made by such Secured Party, provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, each Secured Party expressly waives its right of setoff (and any similar right including bankers’ liens) with respect to all lockboxes, deposit accounts and other cash management accounts maintained by any Loan Party and into which any collections for Government Accounts are deposited. For purposes hereof, “Government Accounts” means all accounts on which any federal or state government unit or any intermediary for any federal or state government unit is the obligor.

SECTION 9.07. Applicable Law . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT, UNLESS OTHERWISE EXPRESSLY AGREED BY THE APPLICABLE ISSUING BANK AND THE BORROWER WHEN A LETTER OF CREDIT IS ISSUED, EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE RULES OF THE ISP, AND AS TO MATTERS NOT GOVERNED BY THE ISP, THE LAWS OF THE STATE OF NEW YORK. Notwithstanding the foregoing, none of the Issuing Banks shall be responsible to the Borrower for, and each Issuing Bank’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of such Issuing Bank required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the applicable law or any order of a jurisdiction where such Issuing Bank or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the International Chamber of Commerce Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

SECTION 9.08. Waivers; Amendment . (a) No failure or delay of the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent, the Lenders and the Issuing Banks hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by

 

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the Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof, may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders; provided , however , that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any date for the payment of any interest on, any Loan or LC Disbursement or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan or LC Disbursement without the prior written consent of each Lender directly adversely affected thereby, (ii) increase or extend the Commitment or decrease or extend the date for payment of any Fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata requirements of Section 2.17, the provisions of Section 9.04(j) or the provisions of this Section or release all or substantially all of the value of the Subsidiary Guarantors (other than pursuant to the terms hereof or thereof or in connection with the sale of such Subsidiary Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral, without the prior written consent of each Lender, (iv) change the provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class, (v) modify the protections afforded to an SPC pursuant to the provisions of Section 9.04(i) without the written consent of such SPC, (vi) reduce the percentage contained in the definition of the term “Required Lenders” or “Supermajority Lenders” without the prior written consent of each Lender, (vii) postpone the scheduled date of expiration of any Letter of Credit beyond the Revolving Credit Maturity Date without the prior written consent of each Lender or (viii) change or otherwise modify the eligibility criteria, eligible asset classes, reserves or sublimits in respect of the Borrowing Base, or add new asset categories to the Borrowing Base, which would, in each case increase the amount of credit available to the Borrower hereunder, without the written consent of the Supermajority Lenders; provided that this clause (viii)  shall not limit the discretion of the Administrative Agent to change, establish or eliminate any reserves, to add assets acquired in a Permitted Acquisition to the Borrowing Base or to otherwise exercise its discretion or Reasonable Credit Judgment in respect of any determination expressly provided hereunder to be made by the Administrative Agent in its discretion or Reasonable Credit Judgment, all to the extent otherwise set forth herein; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, any Issuing Bank or any Swingline Lender hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, the Collateral Agent, such Issuing Bank or such Swingline Lender; provided however that the aggregate maximum amount of LC Exposure permitted under Section 2.23(a) may be modified with the prior written consent of the Borrower, the Administrative Agent and the Required Lenders; (B) the amount set forth for any Issuing Bank on Schedule 1.01(g) may be

 

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modified with the written consent of such Issuing Bank, the Borrower and the Administrative Agent; and (C) the Borrower and the Administrative Agent may amend or supplement this Agreement and any other Loan Documents, without the consent of any Lender, in order to (x) cure ambiguities, omissions, mistakes or defects, (y) cause this Agreement and the other Loan Documents to be consistent with the Guarantee and Collateral Agreement and other similar documents or (z) cause the Guarantee and Collateral Agreement or other document to comply with local Law on the advice of local counsel.

SECTION 9.09. Certain Releases of Guarantees and Security Interests .

(a) Subject to the terms of the ABL Intercreditor Agreement, upon the closing of any Asset Sale consisting of the sale, transfer or other disposition of all of the Equity Interests of any Subsidiary Guarantor permitted pursuant to Section 6.05, (i) the obligations of such Subsidiary Guarantor pursuant to the Guarantee and Collateral Agreement shall automatically be discharged and released without any further action by the Administrative Agent or any Lender, and (ii) the Administrative Agent and the Lenders will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Administrative Agent which may reasonably be required to evidence such discharge and release, all without representation, recourse or warranty.

(b) Subject to the terms of the ABL Intercreditor Agreement, upon the closing of any Asset Sale consisting of the sale, transfer or other disposition of Equity Interests of any Subsidiary Guarantor or any other Subsidiary of the Borrower permitted pursuant to Section 6.05, (i) the Collateral Agent shall release to the Borrower, without representation, warranty or recourse, express or implied, the pledged Equity Interests of such Subsidiary Guarantor or other Subsidiary, as applicable, held by it, (ii) the Collateral Agent shall release its security interest in all Collateral of such Subsidiary, and (iii) the Collateral Agent will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Collateral Agent which may reasonably be required to evidence such release.

(c) Subject to the terms of the ABL Intercreditor Agreement, upon consummation by the Borrower or any Subsidiary of a Permitted Interest Transfer or designation of an Unrestricted Subsidiary in accordance with the terms hereof, (i) the Collateral Agent shall release to the Borrower, without representation, warranty or recourse, express or implied, those Equity Interests of the Subsidiary that are the subject of such Permitted Interest Transfer or designation in accordance with clauses (i) and (ii) of Section 9.09(b) and shall release any pledged note theretofore pledged to the extent such note is being discharged in connection with such Permitted Interest Transfer or designation, and (ii) if such Subsidiary whose shares are the subject of such Permitted Interest Transfer or designation is a Subsidiary Guarantor, the obligations of such Subsidiary under its Guarantee shall automatically be discharged and released in accordance with clauses (i) and (ii) of Section 9.09(a) and any Lien granted by such Subsidiary under the Loan Documents shall automatically be discharged and released.

 

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(d) Subject to the terms of the ABL Intercreditor Agreement, the Collateral Agent will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Collateral Agent which may be reasonably be required to discharge and release, all without representation, recourse or warranty, any Lien on any Collateral granted to or held by the Collateral Agent under any Loan Document (i) upon termination of the Commitments and payment in full of the principal and interest on each Loan and all Fees and all other expenses or amounts payable under any Loan Document and the cancellation or expiration of all Letters of Credit or the cash collateralization thereof to the full extent required by this Agreement and reimbursement in full of all amounts drawn thereunder, (ii) that is sold, transferred or otherwise disposed of or to be sold, transferred or otherwise disposed of as part of or in connection with any sale, transfer or other disposition permitted hereunder to a Person other than the Borrower or any Subsidiary Guarantor, and upon consummation by the Borrower or any Subsidiary of any such sale, transfer or other disposition, any Lien granted by the Borrower or such Subsidiary under the Loan Documents on such Collateral shall automatically be discharged and released, and (iii) the Administrative Agent and the Lenders will, upon the request and at the sole expense of the Borrower, execute and deliver any instrument or other document in a form acceptable to the Administrative Agent which may reasonably be required to evidence such discharge and release, all without representation, recourse or warranty.

(e) Subject to the terms of the ABL Intercreditor Agreement, upon notification by the Borrower to the Collateral Agent that a Subsidiary Guarantor is a Non-Significant Subsidiary, and would not be required to become a Subsidiary Guarantor in accordance with the terms hereof, the Collateral Agent shall release the obligations of such Subsidiary under its Guarantee and shall release and discharge any Lien granted by such Subsidiary Guarantor under the Loan Documents in accordance with clauses (i) and (ii) of Section 9.09(a).

SECTION 9.10. Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any LC Disbursement, together with all fees, charges and other amounts which are treated as interest on such Loan or participation in such LC Disbursement under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.10 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.11. Entire Agreement . This Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter

 

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hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

SECTION 9.12. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.

SECTION 9.13. Severability . In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9.14. Reserved .

SECTION 9.15. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 9.16. Jurisdiction; Consent to Service of Process . (a) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan

 

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Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower or its properties in the courts of any jurisdiction.

(b) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.17. Confidentiality . Each of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel, numbering, administration and settlement service providers, and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.17, to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Loan Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any Subsidiary or any of their respective obligations, (f) with the consent of the Borrower or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.17. For the purposes of this Section, “ Information ” shall mean all information received from the Borrower or any Subsidiary and related to the Borrower or its business, other than any such information that was available to the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender on a nonconfidential basis

 

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prior to its disclosure by the Borrower; provided that any Lender, the Administrative Agent, the Collateral Agent or any Issuing Bank shall give the Borrower prior notice of any disclosure pursuant to clause (c) to the extent permissible. Any person required to maintain the confidentiality of Information as provided in this Section 9.17 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord its own confidential information.

SECTION 9.18. USA PATRIOT Act Notice . Each Lender, each Swingline Lender, each Issuing Bank and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower (and any Subsidiary in whose account a Letter of Credit is issued) that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower (and any Subsidiary in whose account a Letter of Credit is issued), which information includes the name and address of the Borrower or such Subsidiary and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower or such Subsidiary in accordance with the USA PATRIOT Act.

SECTION 9.19. Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among the parties hereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

 

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The following terms shall for purposes of this Section have the meanings set forth below:

Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of such EEA Financial Institution.

Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country ” means any member state of the European Union, Iceland, Liechtenstein and Norway.

EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 9.20. Additional Secured Debt . (a) Each Lender and each Issuing Bank acknowledges that Additional Secured Debt may be secured by Liens on the Collateral having (i) junior priority to the Liens securing the Obligations on the ABL Facility First Priority Collateral and (ii) senior priority to the Liens securing the Obligations on the Term Facility First Priority Collateral and hereby consents thereto.

(b) In connection with the incurrence by the Borrower or any Subsidiary of Additional Secured Debt, each Lender and each Issuing Bank (i) acknowledges that, at the request of the Borrower, each of the Administrative Agent and/or the Collateral Agent shall enter into one or more Additional Secured Debt Intercreditor Agreements, (ii)

 

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authorizes and directs each Agent to execute and deliver any Additional Secured Debt Intercreditor Agreement and any documents relating thereto, in each case on behalf of such Lender or Issuing Bank and without any further consent, authorization or other action by such Lender or Issuing Bank, (iii) authorizes and directs each Agent to act as its representative under, and in connection with, any Additional Secured Debt Intercreditor Agreement, and (iv) agrees that, upon the execution and delivery thereof, it will be bound by the provisions of any Additional Secured Debt Intercreditor Agreement as if it were a signatory thereto and will take no actions contrary to the provisions thereof. Each Lender and each Issuing Bank further authorizes and directs each Agent to enter into such amendments, supplements or other modifications to any Additional Secured Debt Intercreditor Agreement as are reasonably acceptable to the Administrative Agent in order to (A) enable any extension, renewal, refinancing, replacement or additional incurrence of any Additional Secured Debt permitted under this Agreement and (B) provide for the Additional Secured Debt thereunder to be secured by Liens on the Collateral having junior priority to the Liens securing the Obligations on the ABL Facility First Priority Collateral and senior priority to the Liens securing the Obligations on the Term Facility First Priortiy Collateral, in each case on behalf of such Lender or each Issuing Bank and without any further consent, authorization or other action by such Lender or such Issuing Bank.

(c) Each Lender and each Issuing Bank (i) acknowledges that, at the request of the Borrower, each of the Administrative Agent and/or the Collateral Agent shall (A) amend, substitute, supplement or otherwise modify the Guarantee and Collateral Agreement, (B) amend, substitute, replace, supplement or otherwise modify any other Security Document, (C) enter into additional Security Documents and (D) take such further actions as are reasonably incidental to the foregoing, in each case as are reasonably acceptable to the Administrative Agent and the Collateral Agent in order to (1) enable the Borrower or any Subsidiary to incur Additional Secured Debt otherwise permitted to be incurred hereunder, and (2) provide for any Additional Secured Debt thereunder to be secured, in accordance with the terms of any Additional Secured Debt Intercreditor Agreement, by Liens having junior priority to the Liens securing the Obligations on the ABL Facility First Priority Collateral and senior priority to the Liens securing the Obligations on the Term Facility First Priority Collateral, (ii) authorizes and directs each Agent to execute and deliver any such amendments, supplements, agreements and other documents, in each case on behalf of such Lender or Issuing Bank and without any further consent, authorization or other action by such Lender or Issuing Bank and (iii) agrees that, upon the execution and delivery thereof, it will be bound by the provisions of such amendments, supplements, agreements and other documents as if it were a signatory thereto and will take no actions contrary to the provisions thereof.

(d) Without limiting the foregoing, no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee of the Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Agents on behalf of the Secured Parties in accordance with the terms thereof (subject, in the case of the Collateral, to the provisions of the ABL Intercreditor Agreement and any Additional Secured Debt Intercreditor Agreement). In the event of a foreclosure by the Collateral Agent on any of

 

129


the Collateral pursuant to a public or private sale or other disposition, any Lender may be the purchaser of any or all of such Collateral at any such sale or other disposition, and such Collateral Agent as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by such Collateral Agent on behalf of the Secured Parties at such sale or other disposition. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Obligations provided under the Loan Documents, to have agreed to the foregoing provisions. The provisions of this paragraph are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party.

(e) Each Lender and Issuing Bank (i) acknowledges that it has received a copy of the ABL Intercreditor Agreement, (ii) agrees that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement and (iii) acknowledges that the Collateral Agent will enter into the ABL Intercreditor Agreement, and hereby authorizes the Collateral Agent or the Administrative Agent, as applicable, to enter into (and be a party to) the ABL Intercreditor Agreement and any documents related thereto (including any amendments to the Security Documents) on behalf of itself, such Lender, the Issuing Banks and other holders of Secured Obligations, in each case as the Collateral Agent or the Administrative Agent, as applicable, shall determine to be appropriate to cause the applicable Indebtedness, and the obligations related thereto, to be secured as permitted hereunder without any further consent, authorization or other action by any Lender or Issuing Bank.

SECTION 9.21. No Fiduciary Relationship. The Borrower, on behalf of itself and its subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower, the other Subsidiaries and their Affiliates, on the one hand, and the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks and their Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks or their Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications. The Administrative Agent, the Collateral Agent, the Arranger, the Lenders, the Issuing Banks and their Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of the Borrower and their Affiliates, and none of the Administrative Agent, the Collateral Agent, the Arranger, the Lenders, the Issuing Banks and their Affiliates has any obligation to disclose any of such interests to the Borrower or any of their Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it or any of its Affiliates may have against the Administrative Agent, the Collateral Agent, the Arranger, the Lenders, the Issuing Banks and their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

130


[Signature Pages Follow]

 

131


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

QUORUM HEALTH CORPORATION,
     
  by  

/s/ Michael J. Culotta

    Name:   Michael J. Culotta
    Title:   Executive Vice President and Chief Financial Officer

 

Signature Page to ABL Credit Agreement


UBS AG, STAMFORD BRANCH, as Administrative Agent, Collateral Agent, an Issuing Bank and a Lender
   
  by  

/s/ Darlene Arias

    Name:   Darlene Arias
    Title:   Director
   
  by  

/s/ Craig Pearson

    Name:   Craig Pearson
    Title:   Associate Director

 

Signature Page to ABL Credit Agreement


[Lender/Issuing Bank Signature Pages on File with the Administrative Agent]
   
  by  

 

    Name:  
    Title:  
  by  

 

    Name:
    Title:  

 

Signature Page to ABL Credit Agreement


INDEX OF SCHEDULES

 

Schedule 1.01(b)    -      Subsidiary Guarantors
Schedule 1.01(c)    -      Hospitals
Schedule 1.01(d)    -      Certain Permitted Joint Ventures
Schedule 1.01(e)    -      Certain Subsidiaries
Schedule 1.01(f)    -      Non-Significant Subsidiaries
Schedule 1.01(g)    -      Issuing Banks
Schedule 2.01    -      Initial Lenders and Commitments
Schedule 3.08    -      Subsidiaries
Schedule 3.18    -      Insurance
Schedule 3.19(a)    -      UCC Filing Offices
Schedule 3.21    -      Collective Bargaining Agreements
Schedule 4.02(b)    -      Local Counsel
Schedule 6.01(a)    -      Existing Indebtedness
Schedule 6.02(a)    -      Existing Liens
Schedule 6.04(h)    -      Certain Permitted Acquisitions
Schedule 6.05(b)    -      Certain Syndication Transactions
Schedule 6.07    -      Certain Affiliate Transactions


Schedule 1.01(b)

Subsidiary Guarantors

 

1. Anna Hospital Corporation

 

2. Big Bend Hospital Corporation

 

3. Big Spring Hospital Corporation

 

4. Blue Island Hospital Company, LLC

 

5. Blue Island Illinois Holdings, LLC

 

6. Blue Ridge Georgia Holdings, LLC

 

7. Centre Hospital Corporation

 

8. Clinton Hospital Corporation

 

9. CSRA Holdings, LLC

 

10. Deming Hospital Corporation

 

11. DHSC, LLC

 

12. Evanston Hospital Corporation

 

13. Forrest City Arkansas Hospital Company, LLC

 

14. Forrest City Hospital Corporation

 

15. Fort Payne Hospital Corporation

 

16. Galesburg Hospital Corporation

 

17. Granite City Hospital Corporation

 

18. Granite City Illinois Hospital Company, LLC

 

19. Greenville Hospital Corporation

 

20. Hamlet H.M.A., LLC

 

21. Hospital of Barstow, Inc.

 

22. Hospital of Louisa, Inc.

 

23. Jackson Hospital Corporation

 

24. Lexington Hospital Corporation

 

25. Marion Hospital Corporation

 

26. Massillon Community Health System LLC

 

27. Massillon Health System LLC

 

28. Massillon Holdings, LLC

 

29. McKenzie Tennessee Hospital Company, LLC

 

30. MMC of Nevada, LLC

 

31. Monroe HMA, LLC

 

32. MWMC Holdings, LLC

 

33. National Healthcare of Mt. Vernon, Inc.

 

34. Phillips Hospital Corporation

 

35. QHC California Holdings, LLC

 

36. QHG of Massillon, Inc.

 

37. Quorum Health Investment Company, LLC

 

38. Quorum Health Resources, LLC

 

39. Red Bud Hospital Corporation

 

40. Red Bud Illinois Hospital Company, LLC

 

41. San Miguel Hospital Corporation

 

42. Sunbury Hospital Company, LLC

 

43. Tooele Hospital Corporation

 

44. Triad of Oregon, LLC

 

2


45. Watsonville Hospital Corporation

 

46. Waukegan Hospital Corporation

 

47. Waukegan Illinois Hospital Company, LLC

 

48. Williamston Hospital Corporation

 

49. Winder HMA, LLC

 

3


Schedule 1.01(c)

Hospitals

 

(a) Owned Hospitals

Alabama

 

1. Cherokee Medical Center

400 Northwood Drive

Centre, AL 35960

(Cherokee)

Centre Hospital Corporation (AL)

 

2. DeKalb Regional Medical Center

200 Medical Center Drive

PO Box 680778

Fort Payne, AL 35968

(DeKalb)

Fort Payne Hospital Corporation (AL)

 

3. L.V. Stabler Memorial Hospital

29 L.V. Stabler Drive

Greenville, AL 36037

(Butler)

Greenville Hospital Corporation (AL)

California

 

4. Barstow Community Hospital

820 East Mountain View Street

Barstow, CA 92311

(San Bernardino)

Hospital of Barstow, Inc. (DE)

 

5. Watsonville Community Hospital

75 Nielson Street

Watsonville, CA 95076

(Santa Cruz)

Watsonville Hospital Corporation (DE)

Georgia

 

6. Fannin Regional Hospital

2855 Old Highway 5, North

Blue Ridge, GA 30513

(Fannin)

Blue Ridge Georgia Hospital Company, LLC (DE)

7. Clearview Regional Medical Center

2151 West Spring Street

PO Box 1346

Monroe, GA 30655

(Walton)

Monroe HMA, LLC

 

8. Barrow Regional Medical Center

316 North Broad Street

Winder, GA 30680

(Barrow)

Winder HMA, LLC

Illinois

 

9. MetroSouth Medical Center

12935 Gregory Street

Blue Island, IL 60406

(Cook)

Blue Island Hospital Company, LLC (DE)

 

10. Galesburg Cottage Hospital

695 N. Kellogg St.

Galesburg, IL 61401

(Knox)

Galesburg Hospital Corporation (IL)

 

11. Gateway Regional Medical Center

2100 Madison Avenue

Granite City, IL 62040

(Madison)

Granite City Illinois Hospital Company, LLC (IL)

 

12. Heartland Regional Medical Center

3333 West DeYoung

Marion, IL 62959

(Williamson)

Marion Hospital Corporation (IL)

 

13. Crossroads Community Hospital

#8 Doctor’s Park Road

Mt. Vernon, IL 62864

(Jefferson)

National Healthcare of Mt. Vernon, Inc. (DE)

 

 

4


14. Red Bud Regional Hospital

325 Spring Street

Red Bud, IL 62278

(Randolph)

Red Bud Illinois Hospital Company, LLC (IL)

 

15. Vista Medical Center East

1324 N. Sheridan Road

Waukegan, IL 60085

(Lake County)

Waukegan Illinois Hospital Company, LLC (IL)

 

16. Vista Medical Center West

2615 Washington Street

Waukegan, IL 60085

(Lake County)

Waukegan Illinois Hospital Company, LLC (IL)

Kentucky

 

17. Three Rivers Medical Center

2483 Highway 644

PO Box 769

Louisa, KY 41230

(Lawrence)

Hospital of Louisa, Inc. (KY)

 

18. Paul B. Hall Regional Medical Center

625 James S. Trimble Blvd.

Paintsville, KY 41240

(Johnson)

Paintsville Hospital Company, LLC

Nevada

 

19. Mesa View Regional Hospital

1299 Bertha Howe Avenue

PO Box 3540

Mesquite, NV 89027

(Clark)

MMC of Nevada, LLC (DE)

New Mexico

 

20. Mimbres Memorial Hospital

900 W. Ash Street

Deming, NM 88030

(Luna)

Deming Hospital Corporation (NM)

 

21. Alta Vista Regional Hospital

104 Legion Drive

Las Vegas, NM 87701

(San Miguel)

San Miguel Hospital Corporation (NM)

North Carolina

 

22. Sandhills Regional Medical Center

1000 West Hamlet Avenue

Hamlet, NC 28345

(Richmond)

Hamlet HMA, LLC

Ohio

 

23. Affinity Medical Center

875 Eighth Street, N.E.

PO Box 805

Massillon, OH 44646

(Stark)

DHSC, LLC (DE)

Oregon

 

24. McKenzie-Willamette Medical Center

1460 G Street

Springfield, OR 97477

(Lane)

McKenzie-Willamette Regional Medical

Center Associates, LLC (DE)

Pennsylvania

 

25. Lock Haven Hospital

24 Cree Drive

Lock Haven, PA 17745

(Clinton)

Clinton Hospital Corporation (PA)

 

26. Sunbury Community Hospital

350 N. Eleventh Street

PO Box 737

Sunbury, PA 17801

(Northumberland)

Sunbury Hospital Company, LLC (DE)

 

 

5


Tennessee

 

27. Henderson County Community Hospital

200 West Church Street

Lexington, TN 38351

(Henderson)

Lexington Hospital Corporation (TN)

 

28. McKenzie Regional Hospital

161 Hospital Dr.

McKenzie, TN 38201

(Carroll)

McKenzie Tennessee Hospital Company, LLC (DE)

Texas

 

29. Big Bend Regional Medical Center

2600 Highway 118 North

Alpine, TX 79830

(Brewster)

Big Bend Hospital Corporation (TX)

 

30. Scenic Mountain Medical Center

1601 West Eleventh Place

Big Spring, TX 79720

(Howard)

Big Spring Hospital Corporation (TX)

Utah

 

31. Mountain West Medical Center

2055 N. Main

Tooele, UT 84074

(Tooele)

Tooele Hospital Corporation (UT)

Wyoming

 

32. Evanston Regional Hospital

190 Arrowhead Drive

Evanston, WY 82930

(Uinta)

Evanston Hospital Corporation (WY)

 

(b) Leased Hospitals

Arkansas

 

1. Forrest City Medical Center

1601 Newcastle Road

Forrest City, AR 72336

(Saint Francis)

Forrest City Arkansas Hospital Company, LLC (AR)

 

2. Helena Regional Medical Center

1801 Martin Luther King Drive

PO Box 788

Helena, AR 72342

(Phillips)

Phillips Hospital Corporation (AR)

Georgia

 

3. Trinity Hospital of Augusta

2260 Wrightsboro Road

Augusta, GA 30904

(Richmond)

Augusta Hospital, LLC (DE)

Illinois

 

4. Union County Hospital

517 North Main

Anna, IL 62906

(Union)

Anna Hospital Corporation (IL)

Kentucky

 

5. Kentucky River Medical Center

540 Jetts Drive

Jackson, KY 41339

(Breathitt)

Jackson Hospital Corporation (KY)

North Carolina

 

6. Martin General Hospital

310 S. McCaskey Road

Williamston, NC 27892

(Martin)

Williamston Hospital Corporation (NC)

 

 

6


Schedule 1.01(d)

Certain Permitted Joint Ventures

None.

 

7


Schedule 1.01(e)

Certain Subsidiaries

None.

 

8


Schedule 1.01(f)

Non-Significant Subsidiaries

 

1. Alfaro, Ltd.

 

2. Ambulance Services of Forrest City, LLC

 

3. Ambulance Services of Lexington, Inc.

 

4. Ambulance Services of McKenzie, Inc.

 

5. Ambulance Services of Tooele, LLC

 

6. Anna Clinic Corp.

 

7. Augusta Hospital, LLC

 

8. Augusta Physician Services, LLC

 

9. Barrow Health Ventures, Inc.

 

10. Barstow Healthcare Management, Inc.

 

11. Barstow Primary Care Clinic

 

12. Blue Island Clinic Company, LLC

 

13. Blue Island HBP Medical Group, LLC

 

14. Central Alabama Physician Services, Inc.

 

15. Centre Clinic Corp.

 

16. Centre HBP Services, LLC

 

17. Centre RHC Corp.

 

18. CHS Utah Holdings, LLC

 

19. Coastal Health Partners

 

20. Cottage Rehabilitation and Sports Medicine, L.L.C.

 

21. Crossroads Physician Corp.

 

22. Deming Clinic Corporation

 

23. Deming Nursing Home Company, LLC

 

24. Doctors Hospital Physician Services, LLC

 

25. Edwardsville Ambulatory Surgery Center, L.L.C.

 

26. Evanston Clinic Corp.

 

27. Fannin Regional Orthopaedic Center, Inc.

 

28. Forrest City Clinic Company, LLC

 

29. Fort Payne Clinic Corp.

 

30. Fort Payne RHC Corp.

 

31. Galesburg Professional Services, LLC

 

32. Gateway Malpractice Assistance Fund, Inc.

 

33. Georgia HMA Physician Management, LLC

 

34. Granite City ASC Investment Company, LLC

 

35. Granite City Clinic Corp

 

36. Granite City HBP Corp

 

9


37. Granite City Orthopedic Physicians Company, LLC

 

38. Granite City Physicians Corp.

 

39. Greenville Clinic Corp.

 

40. Hamlet HMA Physician Management, LLC

 

41. Hamlet HMA PPM, LLC

 

42. Haven Clinton Medical Associates, LLC

 

43. Heartland Rural Healthcare, LLC

 

44. Hidden Valley Medical Center, Inc.

 

45. In-Home Medical Equipment Supplies and Services, Inc.

 

46. Jackson Physician Corp.

 

47. Kentucky River HBP, LLC

 

48. Kentucky River Physician Corporation

 

49. King City Physician Company, LLC

 

50. Knox Clinic Corp.

 

51. Lexington Clinic Corp.

 

52. Lexington Family Physicians, LLC

 

53. Lindenhurst Illinois Hospital Company, LLC

 

54. Lindenhurst Surgery Center, LLC

 

55. Lock Haven Clinic Company, LLC

 

56. Massillon Physician Services, LLC

 

57. McKenzie Clinic Corp.

 

58. McKenzie Physician Services, LLC

 

59. Memorial Management, Inc.

 

60. Mesa View Physical Rehabilitation, LLC

 

61. Mesa View PT, LLC

 

62. Mesquite Clinic Management Company, LLC

 

63. Monroe County Surgical Center, LLC

 

64. Monroe Diagnostic Testing Centers, LLC

 

65. Monroe HMA Physician Management, LLC

 

66. National Imaging of Carterville, LLC

 

67. National Imaging of Mount Vernon, LLC

 

68. OHANI, LLC

 

69. Our Healthy Circle

 

70. Paintsville HMA Physician Management, LLC

 

71. Phillips Clinic Corp.

 

72. QHCCS, LLC

 

73. QHC HIM Shared Services, LLC

 

74. QHR Development, LLC

 

75. QHR Healthcare Affiliates, LLC

 

10


76. QHR Intensive Resources, LLC

 

77. QHR International, LLC

 

78. Quorum Health Foundation, Inc.

 

79. Quorum Purchasing Advantage, LLC

 

80. Quorum Solutions, LLC

 

81. Red Bud Clinic Corp.

 

82. Red Bud Physician Group, LLC

 

83. Red Bud Regional Clinic Company, LLC

 

84. River to River Heart Group, LLC

 

85. San Miguel Clinic Corp.

 

86. SMMC Medical Group

 

87. Southern Illinois Medical Care Associates, LLC

 

88. Springfield Oregon Holdings, LLC

 

89. Sunbury Clinic Company, LLC

 

90. Three Rivers Medical Clinics, Inc.

 

91. Tooele Clinic Corp.

 

92. Watsonville Healthcare Management, LLC

 

93. Waukegan Clinic Corp.

 

94. Western Illinois Kidney Center, LLC

 

95. Williamston Clinic Corp.

 

96. Williamston HBP Services, LLC

 

11


Schedule 1.01(g)

Issuing Banks

 

Issuing Bank

   Maximum L/C Amount  

UBS AG, Stamford Branch

   $ 20,000,000   

Bank of America, N.A.

   $ 10,000,000   

SunTrust Bank

   $ 10,000,000   

Wells Fargo Bank, National Association

   $ 10,000,000   

 

12


Schedule 2.01

Lenders and Commitments

 

Lender

   Revolving Credit Commitment  

UBS AG, Stamford Branch

   $ 25,000,000   

Bank of America, N.A.

   $ 25,000,000   

Citibank, N.A.

   $ 25,000,000   

SunTrust Bank

   $ 25,000,000   

Wells Fargo Bank, National Association

   $ 25,000,000   

 

13


Schedule 3.08

Subsidiaries

 

    

Legal Entity

  

Percentage Owned

1.

   Alfaro, Ltd.    0% (100% control)*

2.

   Ambulance Services of Forrest City, LLC    100%

3.

   Ambulance Services of Lexington, Inc.    100%

4.

   Ambulance Services of McKenzie, Inc.    100%

5.

   Ambulance Services of Tooele, LLC    100%

6.

   Anna Clinic Corp.    100%

7.

   Anna Hospital Corporation    100%

8.

   Augusta Health System, LLC    89.71%

9.

   Augusta Hospital, LLC    89.71%

10.

   Augusta Physician Services, LLC    100%

11.

   Barrow Health Ventures, Inc.    51%

12.

   Barstow Healthcare Management, Inc.    100%

13.

   Barstow Primary Care Clinic    0% (100% control)*

14.

   Big Bend Hospital Corporation    100%

15.

   Big Spring Hospital Corporation    100%

16.

   Blue Island Clinic Company, LLC    100%

17.

   Blue Island HBP Medical Group, LLC    100%

18.

   Blue Island Hospital Company, LLC    100%

19.

   Blue Island Illinois Holdings, LLC    100%

20.

   Blue Ridge Georgia Hospital Company, LLC    98.21%

21.

   Blue Ridge Georgia Holdings, LLC    100%

22.

   Central Alabama Physician Services, Inc.    100%

23.

   Centre Clinic Corp.    100%

24.

   Centre HBP Services, LLC    100%

25.

   Centre Hospital Corporation    100%

26.

   Centre RHC Corp.    100%

27.

   CHS Utah Holdings, LLC    100%

28.

   Clinton Hospital Corporation    100%

29.

   Coastal Health Partners    0% (100% control)*

30.

   Cottage Rehabilitation and Sports Medicine, L.L.C.    50%

31.

   Crossroads Physician Corp.    100%

32.

   CSRA Holdings, LLC    100%

33.

   Deming Clinic Corporation    100%

34.

   Deming Hospital Corporation    100%

35.

   Deming Nursing Home Company, LLC    100%

36.

   DHSC, LLC    100%

37.

   Doctors Hospital Physician Services, LLC    100%

 

* Indicates entity is a captive professional corporation. Such entity is controlled by a related management services entity owned by Borrower or a Subsidiary of Borrower, but owned by a physician in a contractual relationship with Borrower or a Subsidiary of Borrower.

 

14


    

Legal Entity

  

Percentage Owned

38.

   Edwardsville Ambulatory Surgery Center, L.L.C.    68.44%

39.

   Evanston Clinic Corp.    100%

40.

   Evanston Hospital Corporation    100%

41.

   Fannin Regional Orthopaedic Center, Inc.    100%

42.

   Forrest City Arkansas Hospital Company, LLC    100%

43.

   Forrest City Clinic Company, LLC    100%

44.

   Forrest City Hospital Corporation    100%

45.

   Fort Payne Clinic Corp.    100%

46.

   Fort Payne Hospital Corporation    100%

47.

   Fort Payne RHC Corp.    100%

48.

   Galesburg Hospital Corporation    100%

49.

   Galesburg Professional Services, LLC    100%

50.

   Gateway Malpractice Assistance Fund, Inc.    100%

51.

   Georgia HMA Physician Management, LLC    100%

52.

   Granite City ASC Investment Company, LLC    100%

53.

   Granite City Clinic Corp.    100%

54.

   Granite City HBP Corp.    100%

55.

   Granite City Hospital Corporation    100%

56.

   Granite City Illinois Hospital Company, LLC    100%

57.

   Granite City Orthopedic Physicians Company, LLC    100%

58.

   Granite City Physicians Corp.    100%

59.

   Greenville Clinic Corp.    100%

60.

   Greenville Hospital Corporation    100%

61.

   Hamlet H.M.A., LLC    100%

62.

   Hamlet HMA Physician Management, LLC    100%

63.

   Hamlet HMA PPM, LLC    100%

64.

   Haven Clinton Medical Associates, LLC    100%

65.

   Heartland Rural Healthcare, LLC    100%

66.

   Hidden Valley Medical Center, Inc.    100%

67.

   Hospital of Barstow, Inc.    100%

68.

   Hospital of Louisa, Inc.    100%

69.

   In-Home Medical Equipment Supplies and Services, Inc.    100%

70.

   Jackson Hospital Corporation    100%

71.

   Jackson Physician Corp.    100%

72.

   Kentucky River HBP, LLC    100%

73.

   Kentucky River Physician Corporation    100%

74.

   King City Physician Company, LLC    100%

75.

   Knox Clinic Corp.    100%

76.

   Lexington Clinic Corp.    100%

77.

   Lexington Family Physicians, LLC    100%

78.

   Lexington Hospital Corporation    100%

79.

   Lindenhurst Illinois Hospital Company, LLC    100%

80.

   Lindenhurst Surgery Center, LLC    51%

 

15


    

Legal Entity

  

Percentage Owned

81.

   Lock Haven Clinic Company, LLC    100%

82.

   Marion Hospital Corporation    100%

83.

   Massillon Community Health System LLC    100%

84.

   Massillon Health System, LLC    100%

85.

   Massillon Holdings, LLC    100%

86.

   Massillon Physician Services, LLC    100%

87.

   McKenzie Clinic Corp.    100%

88.

   McKenzie Physician Services, LLC    100%

89.

   McKenzie Tennessee Hospital Company, LLC    100%

90.

   McKenzie-Willamette Regional Medical Center Associates, LLC    92.24%

91.

   Memorial Management, Inc.    100%

92.

   Mesa View Physical Rehabilitation, LLC    50%

93.

   Mesa View PT, LLC    100%

94.

   Mesquite Clinic Management Company, LLC    100%

95.

   MMC of Nevada, LLC    100%

96.

   Monroe County Surgical Center, LLC    60%

97.

   Monroe Diagnostic Testing Centers, LLC    100%

98.

   Monroe HMA, LLC    100%

99.

   Monroe HMA Physician Management, LLC    100%

100.

   MWMC Holdings, LLC    100%

101.

   National Healthcare of Mt. Vernon, Inc.    100%

102.

   National Imaging of Carterville, LLC    100%

103.

   National Imaging of Mount Vernon, LLC    100%

104.

   OHANI, LLC    100%

105.

   Our Healthy Circle    100%

106.

   Paintsville HMA Physician Management, LLC    100%

107.

   Paintsville Hospital Company, LLC    97.0834%

108.

   Phillips Clinic Corp.    100%

109.

   Phillips Hospital Corporation    100%

110.

   QHC California Holdings, LLC    100%

111.

   QHC HIM Shared Services, LLC    100%

112.

   QHCCS, LLC    100%

113.

   QHG of Massillon, Inc.    100%

114.

   QHR Development, LLC    100%

115.

   QHR Healthcare Affiliates, LLC    100%

116.

   QHR Intensive Resources, LLC    100%

117.

   QHR International, LLC    100%

118.

   Quorum Health Foundation, Inc.    100%

119.

   Quorum Health Investment Company, LLC    100%

120.

   Quorum Health Resources, LLC    100%

121.

   Quorum Purchasing Advantage, LLC    100%

122.

   Quorum Solutions, LLC    100%

123.

   Red Bud Clinic Corp.    100%

 

16


    

Legal Entity

  

Percentage Owned

124.

   Red Bud Hospital Corporation    100%

125.

   Red Bud Illinois Hospital Company, LLC    100%

126.

   Red Bud Physician Group, LLC    100%

127.

   Red Bud Regional Clinic Company, LLC    100%

128.

   River to River Heart Group, LLC    100%

129.

   San Miguel Clinic Corp.    100%

130.

   San Miguel Hospital Corporation    100%

131.

   SMMC Medical Group    100%

132.

   Southern Illinois Medical Care Associates, LLC    100%

133.

   Springfield Oregon Holdings, LLC    100%

134.

   Sunbury Clinic Company, LLC    100%

135.

   Sunbury Hospital Company, LLC    100%

136.

   Three Rivers Medical Clinics, Inc.    100%

137.

   Tooele Clinic Corp.    100%

138.

   Tooele Hospital Corporation    100%

139.

   Triad of Oregon, LLC    100%

140.

   Watsonville Healthcare Management, LLC    100%

141.

   Watsonville Hospital Corporation    100%

142.

   Waukegan Clinic Corp.    100%

143.

   Waukegan Hospital Corporation    100%

144.

   Waukegan Illinois Hospital Company, LLC    100%

145.

   Western Illinois Kidney Center, LLC    50%

146.

   Williamston Clinic Corp.    100%

147.

   Williamston HBP Services, LLC    100%

148.

   Williamston Hospital Corporation    100%

149.

   Winder HMA, LLC    100%

 

17


Schedule 3.18

Insurance

(a) Quorum Health Corporation

 

Coverage

  

Carrier

   Policy Limits    Deductible / SIR

1st Excess

   AWAC Bermuda    $25m xs $25m    N/A

Automobile

   Safety National    $2,000,000 CSL    Liability -$0 /Phys

Dam-$3,500/$3,500

Crime

Employment Practices Liability

  

Starr/Travelers

Markel (BDA)

   $15m

$15m

   $100,000

$1,000,000

Cyber

   Zurich    $10m    $1m

D&O Primary

   AIG/Zurich/ACE/Berkley/AWAC    $25m    $2,000,000

D&O Side A

   C N A    $5m    N/A

Environmental Liability (3 yr)

   Ironshore    $5m/ $10m agg    $50,000

Excess WC—Ohio TPA

   V&A Services    N/A    N/A

Excess Workers Compensation—Ohio

   Safety National    WC: Statutory;

EL $1m/$1m

   $350,000

Fiduciary

   Axis/Starr    $20m    $50,000

Helipad/Non-Owned Aviation Liability

   AIG    $20m    $0

Lead Umbrella

   MedPro/National Fire and Marine    $25m/$25m    $5m

PL/GL TPA

   Western Litigation    N/A    N/A

Primary PL/GL- PA Only

   MedPro/National Fire and Marine    PL- $500k/$2.5m

GL- $1m/$3m

   $50k/$300k Agg

Property

   FM Global    $1B (includes CA EQ
$25m Agg)
   $50,000 (non CAT
perils)

Punitive Wrap - Lead Umbrella

   Berkshire Hathaway Int’l Ins.    $25m    $5m

Workers Compensation

   Safety National    WC: Statutory; EL: $1m/

$1m/$1m

   $500,000

Workers Compensation TPA

   Gallagher Bassett    N/A    N/A

 

18


(b) Quorum Health Resources, LLC

 

Coverage

  

Carrier

   Policy Limits    Deductible / SIR
Automobile—Hired and Non-owned only    Hartford    $1M    None

Integrated Insurance Policy—see A and B below

   Zurich    $25M each Loss/
$50M Each
Annual Period;
$50M Entire
Policy Period
subject to other
policy limits
including those
shown below.
   See below

A: Primary Insurance Coverage: Health Care Professional Liability and Miscellaneous Professional Liability

   See above    $25M per Loss/
$25M per
Annual Period /
$25M per
Policy Period
   $6M each Claim
except $10M
each Claim for
Class Action or
$10M each
Medical incident
involving more
than one patient.

B: Umbrella (other) Liability

   See above    $25M per Loss/
$25M per
Annual Period /
$25M per
Policy Period
   Excess of
General
Liability $6M
SIR; Auto
Liability $1M;
Employers
Liability $1M/
$1M/$1M

Property ( as additional insured under QHC policy noted above )

   FM Global    $1B (includes
CA EQ $25m
Agg)
   $50,000 (non
CAT perils)

Workers Compensation/Employers Liability

   Hartford    WC—Statutory;
EL—$1M/$1M/
$1M
   None

 

19


Schedules 3.19(a)

UCC Filing Offices

 

    

Entity Name

  

Jurisdiction
of
Formation

  

Filing Office

1.    Quorum Health Corporation    Delaware    Secretary of State of the State of Delaware
2.    Centre Hospital Corporation    Alabama    Secretary of State of the State of Alabama
3.    Fort Payne Hospital Corporation    Alabama    Secretary of State of the State of Alabama
4.    Greenville Hospital Corporation    Alabama    Secretary of State of the State of Alabama
5.    Forrest City Arkansas Hospital Company, LLC    Arkansas    Secretary of State of the State of Arkansas
6.    Forrest City Hospital Corporation    Arkansas    Secretary of State of the State of Arkansas
7.    Phillips Hospital Corporation    Arkansas    Secretary of State of the State of Arkansas
8.    Blue Island Hospital Company, LLC    Delaware    Secretary of State of the State of Delaware
9.    Blue Island Illinois Holdings, LLC    Delaware    Secretary of State of the State of Delaware
10.    Blue Ridge Georgia Holdings, LLC    Delaware    Secretary of State of the State of Delaware
11.    CSRA Holdings, LLC    Delaware    Secretary of State of the State of Delaware
12.    DHSC, LLC    Delaware    Secretary of State of the State of Delaware
13.    Hospital of Barstow, Inc.    Delaware    Secretary of State of the State of Delaware
14.    Massillon Community Health System LLC    Delaware    Secretary of State of the State of Delaware
15.    Massillon Health System LLC    Delaware    Secretary of State of the State of Delaware
16.    Massillon Holdings, LLC    Delaware    Secretary of State of the State of Delaware
17.    McKenzie Tennessee Hospital Company, LLC    Delaware    Secretary of State of the State of Delaware
18.    MMC of Nevada, LLC    Delaware    Secretary of State of the State of Delaware
19.    MWMC Holdings, LLC    Delaware    Secretary of State of the State of Delaware
20.    National Healthcare of Mt. Vernon, Inc.    Delaware    Secretary of State of the State of Delaware
21.    QHC California Holdings, LLC    Delaware    Secretary of State of the State of Delaware
22.    Quorum Health Investment Company, LLC    Delaware    Secretary of State of the State of Delaware
23.    Quorum Health Resources, LLC    Delaware    Secretary of State of the State of Delaware
24.    Sunbury Hospital Company, LLC    Delaware    Secretary of State of the State of Delaware
25.    Triad of Oregon, LLC    Delaware    Secretary of State of the State of Delaware
26.    Watsonville Hospital Corporation    Delaware    Secretary of State of the State of Delaware
27.    Monroe HMA, LLC    Georgia    Office of the Clerk of any Superior Court in the State of Georgia
28.    Winder HMA, LLC    Georgia    Office of the Clerk of any Superior Court in the State of Georgia
29.    Anna Hospital Corporation    Illinois    Secretary of State of the State of Illinois
30.    Galesburg Hospital Corporation    Illinois    Secretary of State of the State of Illinois

 

20


     Entity Name    Jurisdiction of
Formation
   Filing Office
31.    Granite City Hospital Corporation    Illinois    Secretary of State of the State of Illinois
32.    Granite City Illinois Hospital Company, LLC    Illinois    Secretary of State of the State of Illinois
33.    Marion Hospital Corporation    Illinois    Secretary of State of the State of Illinois
34.    Red Bud Hospital Corporation    Illinois    Secretary of State of the State of Illinois
35.    Red Bud Illinois Hospital Company, LLC    Illinois    Secretary of State of the State of Illinois
36.    Waukegan Hospital Corporation    Illinois    Secretary of State of the State of Illinois
37.    Waukegan Illinois Hospital Company, LLC    Illinois    Secretary of State of the State of Illinois
38.    Hospital of Louisa, Inc.    Kentucky    Secretary of State of the State of Kentucky
39.    Jackson Hospital Corporation    Kentucky    Secretary of State of the State of Kentucky
40.    Deming Hospital Corporation    New Mexico    Secretary of State of the State of New Mexico
41.    San Miguel Hospital Corporation    New Mexico    Secretary of State of the State of New Mexico
42.    Hamlet H.M.A., LLC    North Carolina    Secretary of State of the State of North Carolina
43.    Williamston Hospital Corporation    North Carolina    Secretary of State of the State of North Carolina
44.    QHG of Massillon, Inc.    Ohio    Secretary of State of the State of Ohio
45.    Clinton Hospital Corporation    Pennsylvania    Secretary of the Commonwealth of Pennsylvania
46.    Lexington Hospital Corporation    Tennessee    Secretary of State of the State of Tennessee
47.    Big Bend Hospital Corporation    Texas    Secretary of State of the State of Texas
48.    Big Spring Hospital Corporation    Texas    Secretary of State of the State of Texas
49.    Tooele Hospital Corporation    Utah    Division of Corporations and Commercial Code of the State of Utah
50.    Evanston Hospital Corporation    Wyoming    Secretary of State of the State of Wyoming

 

21


Schedule 3.21

Collective Bargaining Agreements

 

Facility

  

Union

  

CBA’s Term

  

Bargaining Unit

Paul B. Hall Regional Medical Center

Paintsville, KY

   United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC Local 9120   

October 18, 2015, to

11:59 p.m. October 17, 2017.

  

“The Hospital hereby recognizes the Union as the sole exclusive bargaining agency for all the Hospital’s employees at its Paintsville, Kentucky facility, including service and maintenance employees, ward clerks, registered nurses, licensed practical nurses, respiratory therapists, radiology technologists, housekeeping employees, dietary employees, nurses’ assistants, orderlies, central supply employees, central store

employees, pharmacy technicians (certified and non-certified) and office clerical employees, but excluding pharmacists, physical therapy employees, confidential employees, guards, and supervisors as defined in the ACT.”

Kentucky River Medical Center

Jackson, KY

   United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC   

February 28, 2016 to February 28, 2019

April 1, 2016, to 11:58 p.m. on February 28, 2019

   Virtually all employees, except for Business Office Clerical

Metro South Medical Center

Blue Island, IL

   SEIU Healthcare IL, IN, MO and KS    September 30, 2014 to October 1, 2016    Service and Maintenance

McKenzie-Willamette

Medical Center

Springfield, OR

   Oregon Nurses Association    January 1, 2015 to December 31, 2016    RNs and LPNs

McKenzie-Willamette Medical Center

Springfield, OR

   SEIU, Local 49    November 1, 2014 to July 31, 2016    Virtually all employees, except for RNs and LPNs

 

22


Facility

  

Union

  

CBA’s Term

  

Bargaining Unit

Watsonville Community Hospital

Watsonville, CA

   California Technical Employees’ Coalition    February 1, 2015 to January 31, 2017    Technical

Watsonville Community Hospital

Watsonville, CA

   SEIU – United Healthcare Workers West    November 1, 2014 to October 31, 2016    Service & Maintenance

Watsonville Community Hospital

Watsonville, CA

   Teamsters, Local 912    March 1, 2015 to February 28, 2017    Business Office Clerical, HIM and IT

Alta Vista Regional Hospital

Las Vegas, NM

   District 1199NM, National Union of Hospital and Healthcare Employees    October 1, 2015 to August 31, 2016   

Barstow Community Hospital

Barstow, CA

   SEIU – United Healthcare Workers West    December 10, 2014 to December 10, 2016    Technical, Service & Maintenance and Skilled Maintenance

Lock Haven Hospital

Lock Haven, PA

   SEIU Healthcare Pennsylvania    November 30, 2015 to November 30, 2016    RNs

Lock Haven Hospital

Lock Haven, PA

   SEIU Healthcare Pennsylvania    November 30, 2015 to November 30, 2016    Technical, Service & Maintenance

 

23


Schedule 4.02(b)

Local Counsel

 

1. Ballard Spahr LLP (Pennsylvania; Utah)

 

2. Bass, Berry & Sims PLC (Delaware; Tennessee)

 

3. Bingham Greenebaum Doll LLP (Kentucky; Ohio)

 

4. Bradley Arant Boult Cummins LLP (Alabama; North Carolina)

 

5. Crowley Fleck PLLP (Wyoming)

 

6. Hodgson Russ, LLP (New York)

 

7. King & Spalding LLP (Georgia)

 

8. Kutak Rock LLP(Arkansas)

 

9. Liechty & McGinnis, LLP (Texas)

 

10. McGuire Woods LLP (Illinois)

 

11. Montgomery & Andrews, P.A.(New Mexico)

 

24


Schedule 6.01(a)

Existing Indebtedness

Indebtedness incurred pursuant to that certain Indenture, dated as of April 22, 2016, as supplemented through the date hereof, providing for the issuance of the 11.625% Senior Notes due 2023.

Miscellaneous Debt:

 

          $ amounts in
thousands
 

Monroe County Surgical Center, LLC (Waterloo, IL)

   Term Loan      531   

Monroe County Surgical Center, LLC (Waterloo, IL)

   Pump Station      44   

Blue Ridge Georgia Hospital Company, LLC (Fannin RH – Blue Ridge, GA)

   Term Loan      44   

Blue Ridge Georgia Hospital Company, LLC (Fannin RH – Blue Ridge, GA)

   Pump Station      16   
     

 

 

 
   TOTAL      635   

Capital Leases:

 

          $ amounts in
thousands
 

Quorum Health Corporation (Corporate Building Lease)

   Building lease      14,391   

Jackson Hospital Corporation (Kentucky River – Jackson, KY)

   Building lease      6,996   

Tooele Hospital Corporation (Mountain West – Tooele, UT)

   Equipment lease      214   

Quorum Health Resources, LLC

   Equipment lease      18   

Monroe County Surgical Center, LLC (Waterloo, IL)

   Equipment lease      31   

Monroe HMA, LLC (Walton Regional Medical Center – Monroe, GA)

   Equipment lease      467   

Paintsville Hospital Company, LLC (Paul B Hall RMC – Paintsville, KY)

   Equipment lease      206   
     

 

 

 
   TOTAL CAP LEASES      22,323   

Physician Loans:

 

          $ amounts in
thousands
 

DHSC, LLC (Affinity Medical Center – Massillon, OH)

   Physician Loan      101   

Fort Payne Hospital Corporation (DeKalb RMC – Fort Payne, AL)

   Physician Loan      70   

Phillips Hospital Corporation (Helena RMC – Helena, AR)

   Physician Loan      45   

Marion Hospital Corporation (Heartland RMC – Marion, IL)

   Physician Loan      37   

McKenzie Tennessee Hospital Company, LLC (McKenzie RH – McKenzie, TN)

   Physician Loan      52   

McKenzie-Willamette Regional Medical Center Association (McKenzie Willamette MC – Springfield, OR)

   Physician Loan      150   

Blue Ridge Georgia Hospital Company, LLC (Fannin RH – Blue Ridge, GA)

   Physician Loan      1   
     

 

 

 
   TOTAL PHYSICIAN LOANS      456   

 

* Debt aggregated by major type per facility.

 

25


Schedule 6.02(a)

Existing Liens

( see attached )

 

26


(attachment to Schedule 6.02(a))

 

DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL
FILE DATE

  

ORIGINAL

FILE NUMBER

  

SECURED PARTY

ANNA HOSPITAL CORPORATION    IL    Secretary of State    8/4/2011    16494879    U.S. Bank, N.A.
ANNA HOSPITAL CORPORATION (ADD’L DEBTOR: UNION COUNTY HOSPITAL)    IL    Secretary of State    7/10/2012    17433644    Toshiba America Medical Credit
ANNA HOSPITAL CORPORATION    IL    Secretary of State    11/14/2012    17756990    MB Financial Bank, N.A.
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    4/13/2011    11-0011104493    De Lage Landen Financial Services, Inc.
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    7/15/2013    13-0022386722    First Midwest Bank
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    8/18/2014    14-0026385211    First Midwest Bank
BIG BEND HOSPITAL CORPORATION    TX    Secretary of State    9/16/2014    14-0029599756    De Lage Landen Financial Services, Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/14/2007    07-0031612565    Dade Behring Finance Co. LLC
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    8/14/2009    09-0022209529    KBH SPV 3, LLC
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    4/21/2011    11-0012046883    Olympus America Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    6/25/2012    12-0020210018    Konica Minolta Business Solutions USA, Inc
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    11/28/2012    12-0037064841    Siemens Financial Services, Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    3/26/2013    13-0009420150    Philips Medical Capital, LLC
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/3/2013    13-0028025667    Olympus America Inc.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/23/2013    13-00304463737    Philips Medical Capital, LLC
BIG SPRING HOSPITAL CORPORATION (ADD’L DEBTOR: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)    TX    Secretary of State    3/13/2014    14-0007989078    MB Financial Bank, N.A.
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    7/14/2015    15-0022174709    General Electric Capital Corporation
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    8/27/2015    15-0028457365    Stryker Sales Finance
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    9/18/2015    15-0030407292    General Electric Capital Corporation
BIG SPRING HOSPITAL CORPORATION    TX    Secretary of State    12/9/2015    15-0038939543    KMBS
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    5/5/2013    2013 1731794    Banc of America Leasing & Capital, LLC
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    11/11/2013    2013 4426095    First Midwest Bank
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    4/8/2014    2014 1378868    CHG-Meridian USA Corp.
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    12/17/2014    2014 5130372    Novadaq Capital Solutions

 

27


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL
FILE DATE

  

ORIGINAL

FILE NUMBER

  

SECURED PARTY

BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    3/2/2016    2016 1245479    De Lage Landen Financial Services, Inc.
BLUE ISLAND HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    3/29/2016    2016 1848009    Leasing Associates of Barrington, Inc.
CENTRE HOSPITAL CORPORATION    AL    Secretary of State    1/18/2013    13-0045674    Urban Partnership Bank
CLINTON HOSPITAL CORPORATION    PA    Department of State    4/1/2011    2011040400176    Leasing Associates of Barrington, Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    6/6/2011    2011060805584    De Lage Landen Financial Services, Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    4/20/2012    2012042008712    Konica Minolta Business Solutions USA Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    5/3/2012    2012050307336    Konica Minolta Business Solutions USA Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    6/11/2012    2012061203771    Leasing Associates of Barrington, Inc.
CLINTON HOSPITAL CORPORATION    PA    Department of State    12/7/2012    2012121004378    U.S. Bank, N.A.
CLINTON HOSPITAL CORPORATION    PA    Department of State    6/16/2014    2014061711520    U.S. Bank, N.A.
CLINTON HOSPITAL CORPORATION    PA    Department of State    5/27/2015    2015052708308    Konica Minolta Premier Finance
DEMING HOSPITAL CORPORATION    NM    Secretary of State    8/5/2009    20090012304B    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATON    NM    Secretary of State    10/22/2009    20090016362M    Toshiba America Medical Credit, a Program of Toshiba America Medical Systems, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    7/20/2011    20110011939J    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    7/20/2011    20110011973G    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    7/21/2011    20110011999E    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    11/29/2011    20110019736A    KMBS Business Solutions U.S.A., Inc.
COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION (ADD’L DEBTOR: DEMING HOSPITAL CORPORATION)    NM    Secretary of State    11/30/2011    20110019815K    CHG-Meridian U.S. Finance, Ltd.
COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION (ADD’L DEBTOR: DEMING HOSPITAL CORPORATION)    NM    Secretary of State    4/3/2012    20120006266G    CHG-Meridian U.S. Finance, Ltd.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    9/5/2012    20120016391G    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/29/2013    20130007317F    Philips Medical Capital, LLC
DEMING HOSPITAL CORPORATION    NM    Secretary of State    12/16/2013    20130020724B    Siemens Financial Services, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    5/20/2014    20140008176M    First Midwest Bank

 

28


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL
FILE DATE

  

ORIGINAL
FILE NUMBER

  

SECURED PARTY

DEMING HOSPITAL CORPORATION    NM    Secretary of State    10/6/2014    20140022377C    Leasing Associates of Barrington, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    3/18/2015    20150027320C    Toshiba America Medical Credit, a Program of Toshiba America Medical Systems, Inc.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/3/2015    20150027854C    General Electric Capital Corporation
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/20/2015    20150028382J    CHG-Meridian USA Corp.
DEMING HOSPITAL CORPORATION    NM    Secretary of State    4/30/2015    20150028745C    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    7/11/2008    2008 2394359    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    8/21/2008    2008 2858544    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    9/2/2008    2008 3045315    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    9/3/2008    2008 3061833    General Electric Capital Corporation
DHSC, LLC    DE    Department of State: Division Of Corporations    10/6/2010    2010 3486408    Toshiba America Medical Credit, a Program of Toshiba America Medical Systems, Inc.
DHSC, LLC    DE    Department of State: Division Of Corporations    5/16/2011    2011 1839615    KMBS Business Solutions U.S.A., Inc.
CHSPSC, LLC (ADD’L DEBTOR: DHSC, LLC)    DE    Department of State: Division Of Corporations    11/3/2011    2011 4255660    SG Equipment Finance USA Corp.
DHSC, LLC    DE    Department of State: Division Of Corporations    7/18/2012    2012 2758110    CreekRidge Capital LLC
DHSC, LLC    DE    Department of State: Division Of Corporations    7/23/2012    2012 2817304    Philips Medical Capital, LLC
DHSC, LLC    DE    Department of State: Division Of Corporations    7/23/2012    2012 2820134    MB Financial Bank, N.A.
DHSC, LLC    DE    Department of State: Division Of Corporations    9/21/2012    2012 3645696    Konica Minolta Business Solutions USA Inc
DHSC, LLC    DE    Department of State: Division Of Corporations    4/29/2013    2013 1627836    Urban Partnership Bank
DHSC, LLC    DE    Department of State: Division Of Corporations    3/31/2016    2016 1917382    Konica Minolta Premier Finance
DHSC, LLC    OH    Stark County    11/6/2012    2012CV3479    Plaintiff: Ann Wayt
DHSC, LLC    OH    Stark County    6/30/2014    2014CV01545    Plaintiff: James E. Brahm
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    3/31/2009    2009-40086436    Siemens Financial Services, Inc.

 

29


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL
FILE DATE

  

ORIGINAL

FILE NUMBER

  

SECURED PARTY

EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    4/11/2011    2011-46867039    U.S. Bank, N.A.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    4/10/2012    2012-50237324    TCF Equipment Finance, Inc.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    7/3/2012    2012-50992435    Siemens Financial Services, Inc.
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    9/10/2012    2012-51543627    Philips Medical Capital LLC
EVANSTON HOSPITAL CORPORATION    WY    Secretary of State    11/20/2012    2012-52123122    Philips Medical Capital LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    10/5/2010    40000020154258    Leasing Associates of Barrington, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    12/28/2010    40000023740212    Leasing Associates of Barrington, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/12/2011    40000031369399    De Lage Landen Financial Services, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/20/2011    40000031768322    De Lage Landen Financial Services, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    7/6/2011    40000034179351    De Lage Landen Financial Services, Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    8/10/2011    40000035965274    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    1/3/2012    40000042512997    Konica Minolta Business Solutions USA Inc.
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    2/7/2012    40000044373328    U.S. Bank National Association
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/30/2012    40000051217646    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    6/12/2012    40000051912163    First Midwest Bank
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC (ADD’L DEBTOR: FORREST CITY HOSPITAL)    AR    Secretary of State    3/26/2013    40000066290380    Toshiba America Medical Credit
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    6/14/2013    40000071030611    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    8/26/2013    40000074861626    General Electric Capital Corporation
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    11/13/2014    40000098864271    Philips Medical Capital, LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    5/8/2015    40000108465159    GE HFS, LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    10/6/2015    40000116691664    GE HFS, LLC
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC    AR    Secretary of State    1/29/2016    4000012195912    GE HFS, LLC
FORREST CITY HOSPITAL CORPORATION    AR    Secretary of State    3/26/2013    40000066290380    Toshiba America Medical Credit
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    10/25/2005    05-0799125    Siemens Financial Services, Inc.
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    2/8/2013    13-0072401    First Midwest Bank
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    2/28/2013    13-0091839    De Lage Landen Financial Services, Inc.
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    5/11/2015    15-7351597    TCF Equipment Finance, a division of TCF National Bank

 

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FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    8/13/2015    15-7655382    SCG Capital Corporation
FORT PAYNE HOSPITAL CORPORATION    AL    Secretary of State    10/6/2015    15-7818015    Med One Capital Funding, LLC (Add’l Secured Party: IPA ONE)
GALESBURG HOSPITAL CORPORATION    IL    Secretary of State    8/13/2012    17513001    MB Financial Bank, N.A.
GALESBURG HOSPITAL CORPORATION    IL    Secretary of State    12/31/2013    18896834    CHG-Meridian USA Corp.
GALESBURG HOSPITAL CORPORATION    IL    Secretary of State    3/17/2016    21189499    GE HFS, LLC
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    4/12/2011    16175838    U. S. Bank, N.A.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/30/2011    16398705    General Electric Capital Corporation
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/28/2011    16640638    Siemens Financial Services, Inc.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/17/2011    16778516    General Electric Capital Corporation
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LCC    IL    Secretary of State    12/2/2011    16819123    Associated Bank, N.A.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/2/2012    17644661    Konica Minolta Business Solutions USA Inc
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/13/2013    18761491    CHG-Meridian USA Corp.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC (ADD’L DEBTOR: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)    IL    Secretary of State    11/13/2013    18762048    CHG-Meridian USA Corp.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/16/2013    18848899    CHG-Meridian USA Corp.
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/29/2014    19673561    Urban Partnership Bank
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    2/4/2016    21083259    Konica Minolta Premier Finance
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC    IL    Madison County Recorder    9/24/2015    2015R33507    PHH Mortgage Corp
GREENVILLE HOSPITAL CORPORATION    AL    Secretary of State    4/12/2013    13-0173884    First Midwest Bank
HAMLET H.M.A., LLC    NC    Secretary of State    2/19/2010    20100013297G    Siemens Financial Services, Inc.
HAMLET H.M.A., LLC    NC    Secretary of State    6/28/2011    20110055952A    General Electric Capital Corporation
HAMLET H.M.A., LLC    NC    Secretary of State    10/11/2011    20110086434M    General Electric Capital Corporation
HAMLET H.M.A., LLC    NC    Secretary of State    10/27/2011    20110091501A    Philips Medical Capital LLC
HAMLET H.M.A., LLC    NC    Secretary of State    11/11/2011    20110095789C    MB Financial Bank, N.A.
HAMLET H.M.A., LLC    NC    Secretary of State    9/14/2012    20120086315K    Siemens Financial Services, Inc.
HAMLET H.M.A., LLC    NC    Secretary of State    9/14/2012    20120086317A    Siemens Financial Services, Inc.
HAMLET H.M.A., LLC    NC    Secretary of State    1/29/2016    20160009344M    Konica Minolta Premier Finance

 

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SECURED PARTY

HOSPITAL OF BARSTOW, INC.    DE    Department of State: Division Of Corporations    11/18/2010    2010 4050864    General Electric Capital Corporation
HOSPITAL OF BARSTOW, INC.    DE    Department of State: Division Of Corporations    8/13/2012    2012 3118967    MB Financial Bank, N.A.
CHSPSC, LLC (ADD’L DEBTOR: HOSPITAL OF BARSTOW, INC.)    DE    Department of State: Division Of Corporations    1/4/2013    2013 0058108    MB Financial Bank, N.A.
HOSPITAL OF BARSTOW, INC.    DE    Department of State: Division Of Corporations    7/14/2014    2014 2777274    General Electric Capital Corporation
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    6/10/2010    2010-2459934-59.01    De Lage Landen Financial Services, Inc.
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    7/1/2013    2013-2651975-81.01    OPTUM Bank, Inc.
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    2/19/2015    2015-2750465-57.01    Leasing Associates of Barrington, Inc.
HOSPITAL OF LOUISA, INC. (ADD’L DEBTOR: CHSPSC, LLC)    KY    Secretary of State    3/25/2015    2015-2755356-31.01    TCF Equipment Finance, a division of TCF National Bank
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    9/22/2015    2015-27900103-20.01    Philips Medical Capital, LLC
HOSPITAL OF LOUISA, INC.    KY    Secretary of State    10/1/2015    2015-2791693-75.01    General Electric Capital Corporation
JACKSON HOSPITAL CORPORATION    KY    Breathitt County    12/29/2015    LP41 PG560    Citizens Bank & Trust Co. of Jackson
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    9/25/2007    2007-2272142-49    National Health Investors, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    5/3/2010    2010-2451776-75.01    De Lage Landen Financial Services, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    6/2/2010    2010-2457962-58.01    Siemens Financial Services, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    7/22/2011    2011-2529832-35.01    Leasing Associates of Barrington, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    12/12/2011    2011-2552778-50.01    Leasing Associates of Barrington, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    3/25/2015    2015-2755355-20.01    CHG-Meridian USA Corp.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    9/15/2015    2015-2788799-78.01    Leasing Associates of Barrington, Inc.
JACKSON HOSPITAL CORPORATION    KY    Secretary of State    4/5/2016    2016-2823002-36.01    Modular Space Corporation
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    5/18/2011    211-063636    Robert Orr-Sysco Food Services, LLC
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    8/15/2011    311-048431    U.S. Bank N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    12/9/2011    311-075117    Beverly Bank & Trust Company N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    3/26/2012    312-315071    U.S. Bank N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    4/9/2012    312-317347    Beverly Bank & Trust Company N.A.

 

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SECURED PARTY

LEXINGTON HOSPITAL CORPORATION (ADD’L DEBTOR: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)    TN    Department of State    4/9/2012    312-317348    Beverly Bank & Trust Company N.A.
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    5/21/2012    112-216248    First Midwest Bank
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    6/26/2012    312-330563    Konica Minolta Business Solutions USA, Inc
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    3/25/2015    422-964328    TCF Equipment Finance, a division of TCF National Bank
LEXINGTON HOSPITAL CORPORATION    TN    Department of State    5/27/2015    423293246    KMBS Business Solutions U.S.A., Inc.
MARION HOSPITAL CORPORATION    IL    Secretary of State    8/15/2005    10092701    Dade Behring Finance Co. LLC
MARION HOSPITAL CORPORATION    IL    Secretary of State    1/4/2006    10522250    General Electric Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    12/2/2011    16821101    First Midwest Bank
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/4/2012    17260685    Toshiba America Medical Systems, Inc.
MARION HOSPITAL CORPORATION (ADD’L DEBTOR: HEARTLAND REGIONAL MEDICAL CENTER)    IL    Secretary of State    5/4/2012    17261266    Toshiba America Medical Credit
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/23/2012    17307215    Olympus America Inc.
MARION HOSPITAL CORPORATION    IL    Secretary of State    8/24/2912    17543075    General Electric Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    9/19/2012    17607936    Konica Minolta Business Solutions USA Inc.
MARION HOSPITAL CORPORATION (ADD’L DEBTOR: HEARTLAND REGIONAL MEDICAL CENTER)    IL    Secretary of State    10/10/2012    17667637    Toshiba America Medical Credit
MARION HOSPITAL CORPORATION (ADD’L DEBTOR: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATIONPITAL CORPORATION)    IL    Secretary of State    2/7/2013    17987968    CHG-Meridian U.S. Finance, LTD.
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/14/2014    19276309    Olympus America Inc.
MARION HOSPITAL CORPORATION    IL    Secretary of State    9/29/2014    19674339    Urban Partnership Bank
MARION HOSPITAL CORPORATION    IL    Secretary of State    4/22/2015    20247614    General Electric Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    5/4/2015    20286695    SCG Capital Corporation
MARION HOSPITAL CORPORATION    IL    Secretary of State    9/19/2012    17607936    KMBS Business Solutions U.S.A., Inc
MCKENZIE TENNESSEE HOSPITAL COMPANY    DE    Department of State: Division Of Corporations    9/6/2011    2011 3421347    TCF Equipment Finance, Inc.

 

33


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ORIGINAL

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SECURED PARTY

MCKENZIE TENNESSEE HOSPITAL COMPANY    DE    Department of State: Division Of Corporations    9/21/2011    2011 3628388    TCF Equipment Finance, Inc.
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC (ADD’L DEBTORS: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION; CHSPSC, LLC)    DE    Department of State: Division Of Corporations    3/25/2013    2013 1139733    TCF Equipment Finance, Inc.
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    4/17/2013    2013 1469437    Leasing Associates of Barrington, Inc.
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    10/7/2013    2013 3922565    First Midwest Bank
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    6/10/2014    2014 2243897    First Midwest Bank
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC (ADD’L DEBTOR: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)    DE    Department of State: Division Of Corporations    2/10/2015    2015 0577105    Beverly Bank & Trust Company, N.A.
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    3/22/2011    2011 1058570    Konica Minolta Business USA Inc
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    7/11/2012    2012 2669861    Philips Medical Capital, LLC
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    12/3/2012    2012 4632255    Philips Medical Capital, LLC
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    5/12/2014    2014 1871979    BankFinancial FSB
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    6/5/2014    2014 2191724    Konica Minolta Business Solutions USA Inc
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    8/5/2014    2014 3133535    Stryker Sales Corporation
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    12/3/2014    2014 4862579    General Electric Capital Corporation
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    4/9/2015    2015 1517316    General Electric Capital Corporation
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    8/10/2015    2015 3460747    Beverly Bank & Trust Company N.A.
MMC OF NEVADA, LLC    DE    Department of State: Division Of Corporations    10/13/2015    2015 4657952    Leasing Associates of Barrington, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/9/2008    033-2008-00289 (Cobb County)    De Lage Landen Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    11/8/2010    038-2010-006324 (Coweta County)    Phillips Medical Capital LLC

 

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ORIGINAL

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SECURED PARTY

MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/28/2011    038-2011-000617    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    6/23/2011    007-2011-013143 (Barrow County)    AGFA Finance Corporation
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/17/2011    038-2011-006850 (Coweta County)    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    8/8/2011    060-2011-06961 (Fulton County)    The Huntington National Bank
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/20/2011    038-2011-006972 (Coweta County)    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    12/27/2011    038-2011-008562 (Coweta County)    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/4/2014    147-2012-000004 (Walton County)    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    3/5/2012    038-2012-001506 (Coweta County)    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    3/5/2012    038-2012-001507 (Coweta County)    Phillips Medical Capital LLC
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    4/20/2012    038-2012-002744 (Coweta County)    De Lage Landen Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    4/27/2012    038-2012-002928 (Coweta County)    Karl Storz Capital, a Program of Medical Technology Finance Corporation
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/16/2012    038-2012-007279 (Coweta County)    Siemens Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    1/8/2013    038-2013-000233 (Coweta County    Siemens Financial Services, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    4/1/2013    007-2013-007262 (Barrow County)    KMBS Business Solutions U.S.A., Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    10/7/2013    147-2013-0457 (Walton County)    BMO Harris Bank National Association
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    9/2/2015    007-2015-029028 (Barrow County)    AGFA Finance Corporation
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    12/4/2015    147-2015-000663 (Walton County)    Loganville MOB, LP
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    12/29/2015    121-2015-001909 (Richmond County)    Leasing Associates of Barrington, Inc.
MONROE HMA, LLC    GA    Cooperative Authority/Central Index    3/28/2016    038-2016-004207 (Coweta County)    Konica Minolta Premier Finance

 

35


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ORIGINAL

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NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    3/28/2008    2008 3005251    General Electric Capital Corporation
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    8/7/2009    2009 2542725    KBH SPV 3, LLC
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    8/13/2010    2010 2834574    Siemens Financial Services, Inc.
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    12/21/2012    2012 4997047    AMS Sales Corporation
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    7/1/2013    2013 2536259    De Lage Landen Financial Services, Inc.
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    6/4/2014    2014 2167781    GE HFS, LLC
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    6/30/2014    2014 2575355    Philips Medical Capital, LLC
NATIONAL HEALTHCARE OF MT. VERNON, INC. (ADD’L DEBTOR: CHSPSC, LLC)    DE    Department of State: Division Of Corporations    10/23/2014    2014 4281978    TCF Equipment Finance, a division of TCF National Bank
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    3/24/2015    2015 1219699    Beverly Bank & Trust Company N.A.
NATIONAL HEALTHCARE OF MT. VERNON, INC.    DE    Department of State: Division Of Corporations    9/21/2015    2015 4194618    MB Financial Bank, N.A.
PHILLIPS HOSPITAL CORPORATION    AR    Phillips County    1/20/2015    54CV-2014-81    Plaintiff: Lacretta Wilborn
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    9/10/2010    40000019054952    Konica Minolta Business Solutions U.S.A., Inc.
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    4/13/2011    40000029699695    Philips Medical Capital LLC
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    5/12/2011    40000031370321    De Lage Landen Financial Services, Inc.
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    11/22/2011    40000040773762    Philips Medical Capital, LLC.
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    7/23/2013    40000073073660    First Midwest Bank
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    9/19/2013    40000076199379    Konica Minolta Business Solutions USA Inc
PHILLIPS HOSPITAL CORPORATION    AR    Secretary of State    5/52015    40000108177169    Beverly Bank & Trust Company N.A.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/11/2009    14367799    Leasing Associates of Barrington, Inc.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/16/2011    16093408    De Lage Landen Financial Services, Inc.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/28/2011    16124931    Siemens Financial Services, Inc.
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/29/2013    18116227    Konica Minolta Business Solutions USA, Inc
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/24/2014    19397734    First Midwest Bank
RED BUD ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/10/2015    20843098    SCG Capital Corporation

 

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SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    5/10/2010    20100006917H    Siemens Financial Services, Inc.
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    9/2/2010    20100013019J    Philips Medical Capital LLC
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    8/26/2011    20110014239E    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    10/15/2012    20120018729C    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    11/30/2012    20120021559J    Konica Minolta Business Solutions USA, Inc
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    1/2/2013    20130000049M    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    1/2/2013    20130000051C    General Electric Capital Corporation
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    4/23/2014    20140006613E    First Midwest Bank
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    8/15/2014    20140020687E    Urban Partnership Bank
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    3/13/2015    20150027210G    Beverly Bank & Trust Company N.A.
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    4/23/2015    20150028514E    Stryker Finance
SAN MIGUEL HOSPITAL CORPORATION    NM    Secretary of State    2/24/2016    20160038465F    KMBS Business Solutions U.S.A., Inc.
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    8/4/2010    2010 2713778    De Lage Landen Financial Services, Inc.
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    9/20/2011    2011 3599399    Siemens Financial Services, Inc.
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    11/5/2015    2015 5170450    SCG Capital Corporation
SUNBURY HOSPITAL COMPANY, LLC    DE    Department of State: Division Of Corporations    3/4/2016    2016 1312782    Leasing Associates of Barrington, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    11/5/2001    172767200135    Siemens Financial Services, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    4/9/2009    361309200901    Leasing Associates of Barrington, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    4/16/2009    361634200900    Kingsbridge Holdings, LLC
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    2/20/2013    426264201331    Siemens Financial Services, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    10/24/2013    439159201340    Konica Minolta Business Solutions USA, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    10/24/2013    439161201334    Konica Minolta Business Solutions USA, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    5/19/2014    450208201433    Konica Minolta Business Solutions USA Inc

 

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TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    3/2/2015    465391201539    First Midwest Bank
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    3/5/2015    465609201541    General Electric Capital Corporation
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    3/26/2015    466817201545    Siemens Financial Services, Inc.
TOOELE HOSPITAL CORPORATION    UT    Division of Corporations And Commercial Code    5/5/2015    468987201555    Corporation Service Company, as Representative
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    10/24/2011    2011 4091214    Ricoh Americas Corporation
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    11/8/2011    2011 4308477    U. S. Bank, N.A.
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    7/6/2012    2012 2613257    General Electric Capital Corporation
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    10/29/2012    2012 4166056    Urban Partnership Bank
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    10/1/2013    2013 3835866    Megadyne Financial Services
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    7/7/2014    2014 2659795    First Midwest Bank
WATSONVILLE HOSPITAL CORPORATION    DE    Department of State: Division Of Corporations    4/5/2016    2016 2010559    GE HFS, LLC
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/3/2005    10333865    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/3/2005    10333903    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    11/3/2005    10333962    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    1/12/2006    10555655    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    1/12/2006    10555698    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    5/11/2009    14282335    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/24/2009    14402705    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/13/2009    14688994    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/18/2009    14858776    De Lage Landen Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    5/19/2010    15285362    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/6/2010    15408952    De Lage Landen Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    3/2/2011    16055204    Wells Fargo Financial Leasing, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/14/2011    16353256    De Lage Landen Financial Services, Inc.

 

38


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL
FILE DATE

  

ORIGINAL

FILE NUMBER

  

SECURED PARTY

WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/2/2011    16574163    General Electric Capital Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/28/2011    16637831    Beverly Bank & Trust Company N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    9/30/2011    16645788    Wells Fargo Financial Leasing, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/20/2011    16701882    Siemens Financial Services, Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC (ADD’L DEBTOR: COMMUNITY HEALTH SYSTEMS PROFESSIONAL SERVICES CORPORATION)    IL    Secretary of State    12/1/2011    16815519    CHG-Meridian USA Corp.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/13/2011    16848263    Xerox Financial Services
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    6/4/2012    17335235    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    10/25/2012    17707329    Americorp Financial, LLC
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/27/2012    17868853    Olympus America Inc.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/29/2014    19495566    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/29/2014    19495663    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/29/2014    19495698    MB Financial Bank, N.A.
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    12/8/2014    19864901    First Midwest Bank
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    4/28/2015    20268719    Xerox Financial Services
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    7/2/2015    20473347    Stryker Sales Corporation
WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC    IL    Secretary of State    2/24/2016    21130273    CSI Leasing, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Martin County    8/25/2009    09CVS000449    Plaintiff: Yneka T. Rhodes/ Jalani Rhodes/ Richard S. James
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    4/16/2010    20100030008F    De Lage Landen Financial Services, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    10/29/2010    20100084794G    De Lage Landen Financial Services, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    12/11/2012    20120113403J    U.S. Bank, N.A.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    6/26/2015    20150061625K    Leasing Associates of Barrington, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    10/29/2015    20150103012G    De Lage Landen Financial Services, Inc.
WILLIAMSTON HOSPITAL CORPORATION    NC    Secretary of State    11/2/2015    20150103670G    De Lage Landen Financial Services, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    11/29/2007    007200724354 (Barrow County)    Philips Medical Capital
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    12/17/2007    033200712143 (Cobb County)    Philips Medical Capital LLC

 

39


DEBTOR

  

STATE

  

JURISDICTION

  

ORIGINAL
FILE DATE

  

ORIGINAL

FILE NUMBER

  

SECURED PARTY

WINDER HMA LLC    GA    Cooperative Authority/Central Index    3/5/2009    0072009003815 (Barrow County)    AGFA Finance Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    8/9/2010    0382010004462 (Coweta County)    Siemens Financial Services, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    4/4/2011    0072011006327 (Barrow County)    Marquette Equipment Finance, LLC
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    11/11/2011    0382011007505 (Coweta County)    MB Financial Bank, N.A.
WINDER HMA    GA    Cooperative Authority/Central Index    12/1/2011    0072011026161 (Barrow County)    Baxter Healthcare Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    12/12/2011    0072011027046 (Barrow County)    Konica Minolta Business Solutions USA Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    9/11/2012    0382012006325 (Coweta County)    Siemens Financial Services, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    11/2/2012    0382012007650 (Coweta County)    Stryker Finance, a Division of Stryker Sales Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    6/26/2013    0382013004978 (Coweta County)    Stryker Finance, a Division of Stryker Sales Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    7/8/2014    1212014001355 (Richmond County)    Leasing Associates of Barrington, Inc.
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    12/30/2014    0382014012441 (Coweta County)    Konica Minolta Premier Finance
WINDER HMA LLC    GA    Cooperative Authority/Central Index    9/2/2015    0072015029033 (Barrow County)    AGFA Finance Corporation
WINDER HMA, LLC    GA    Cooperative Authority/Central Index    2/24/2016    0072016005508 (Barrow County)    Olympus America Inc.

 

40


Schedule 6.04(h)

Certain Permitted Acquisitions

None.

 

41


Schedule 6.05(b)

Certain Syndication Transactions

1. Augusta Health System, LLC

2. Blue Ridge Georgia Hospital Company, LLC

3. McKenzie-Williamette Regional Medical Center Associates, LLC

4. Paintsville Hospital Company, LLC

 

42


Schedule 6.07

Certain Affiliate Transactions

None.

 

43


EXHIBIT A

FORM OF

INTERCREDITOR AGREEMENT

(See attached)

 

44


EXECUTION VERSION

 

 

 

ABL INTERCREDITOR AGREEMENT

dated as of

April 29, 2016,

among

QUORUM HEALTH CORPORATION,

as Borrower,

the Subsidiaries of the Borrower.

from time to time party hereto,

UBS AG, STAMFORD BRANCH,

as ABL Agent

and

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Term Loan/Cash Flow Revolver Agent

THIS IS THE ABL INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE GUARANTEE AND COLLATERAL AGREEMENT OF EVEN DATE HEREWITH AMONG QUORUM HEALTH CORPORATION, CERTAIN SUBSIDIARIES OF QUORUM HEALTH CORPORATION AND UBS AG, STAMFORD BRANCH, AS COLLATERAL AGENT, (B) THE GUARANTEE AND COLLATERAL AGREEMENT OF EVEN DATE HEREWITH AMONG QUORUM HEALTH CORPORATION, CERTAIN SUBSIDIARIES OF QUORUM HEALTH CORPORATION AND CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, AS COLLATERAL AGENT, AND (C) THE OTHER SECURITY DOCUMENTS REFERRED TO IN THE CREDIT AGREEMENTS REFERRED TO HEREIN.

 

 

 


ABL INTERCREDITOR AGREEMENT dated as of April 29, 2016, among UBS AG, STAMFORD BRANCH (“ UBS ”), as ABL Agent, CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (“ Credit Suisse ”), as Term Loan/Cash Flow Revolver Agent, QUORUM HEALTH CORPORATION, a Delaware corporation, as the borrower under the ABL Credit Agreement and the borrower under the Term Loan/Cash Flow Revolver Agreement (the “ Borrower ”), and each Subsidiary of the Borrower listed on Schedule I hereto or that becomes a party hereto pursuant to Section 8.19 below.

A. The Borrower is party to the ABL Credit Agreement dated as of April 29, 2016 (as amended, supplemented, restated, extended, refinanced, renewed, replaced, increased, defeased, refunded or otherwise modified from time to time, the “ ABL Credit Agreement ”) among the Borrower, the lenders party thereto from time to time, and UBS, as administrative agent and collateral agent.

B. The Borrower is party to the Credit Agreement dated as of April 29, 2016 (as amended, supplemented, restated, extended, refinanced, renewed, replaced, increased, defeased, refunded or otherwise modified from time to time, the “ Term Loan/Cash Flow Revolver Agreement ”) among the Borrower, the lenders party thereto from time to time and Credit Suisse, as administrative agent and collateral agent.

Accordingly, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

Section 1. Definitions.

1.1. Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

ABL Agent ” shall mean UBS, in its capacity as administrative agent and collateral agent for the ABL Lenders under the ABL Credit Agreement and the other ABL Loan Documents entered into pursuant to the ABL Credit Agreement, together with its successors and permitted assigns under the ABL Credit Agreement exercising substantially the same rights and powers.

ABL Claims ” shall mean the ABL Priority Claims and the ABL Other Claims.

ABL Collateral ” shall mean all of the assets of any Grantor, whether real, personal or mixed, upon which a Lien is granted or purported to be granted to the ABL Agent under any of the ABL Collateral Documents.

ABL Collateral Agreement ” shall mean the Guarantee and Collateral Agreement dated as of April 29, 2016, among the Borrower, the other Grantors and UBS, as collateral agent for the secured parties referred to therein, as amended, restated, modified or replaced from time to time.

 

1


ABL Collateral Documents ” shall mean the ABL Collateral Agreement and any security agreement or other agreement, document or instrument pursuant to which a Lien is now or hereafter granted securing any ABL Claims or under which rights or remedies with respect to such Liens are at any time governed.

ABL Credit Agreement ” shall have the meaning set forth in the recitals.

ABL Designated Cash Management Obligations ” shall mean “Secured Cash Management Obligations” as defined in the ABL Credit Agreement.

ABL Designated Hedging Obligations ” shall mean “Secured Hedging Obligations” as defined in the ABL Credit Agreement.

ABL Facility First Priority Collatera l ” shall mean all Common Collateral consisting of the following:

(1) all Accounts;

(2) (v) all Money and cash, (w) Deposit Accounts (and Money and cash, checks, other negotiable instruments, funds and other evidences of payments held therein), (x) all Payment Intangibles, (y) all proceeds from business interruption insurance and (z) all Securities, Security Entitlements and Securities Accounts, in each case, to the extent constituting cash or cash equivalents or representing a claim to cash equivalents; provided that any of the foregoing that consists of identifiable Term Loan/Cash Flow Revolver Priority Proceeds shall not be included in ABL Facility First Priority Collateral;

(3) to the extent involving or governing any of the items referred to in the preceding clauses (1) and (2), all Documents, General Intangibles (excluding intellectual property), Instruments (including promissory notes but excluding intercompany notes) and Commercial Tort Claims (it being understood that a Commercial Tort Claim does not “involve” or “govern” clauses (1) and (2) solely because a claim for money damages is made), provided that to the extent any of the foregoing also relates to Term Priority Collateral, only that portion related to the items referred to in the preceding clauses (1) and (2) (other than Term Loan/Cash Flow Revolver Priority Proceeds, except for Term Loan/Cash Flow Revolver Priority Proceeds which are not identifiable) shall be included in the ABL Facility First Priority Collateral;

(4) to the extent evidencing or governing any of the items referred to in the preceding clauses (1) through (3), all Supporting Obligations; provided that to the extent any of the foregoing also relates to Term Priority Collateral, only that portion related to the items referred to in the preceding clauses (1) through (3) (other than Term Loan/Cash Flow Revolver Priority Proceeds, except for Term Loan/Cash Flow Revolver Priority Proceeds which are not identifiable) shall be included in the ABL Facility First Priority Collateral;

 

2


(5) all books and Records relating to the foregoing (including all books, databases, customer lists and Records, whether tangible or electronic, to the extent they contain any information relating to any of the foregoing);

(6) all proceeds of any of the foregoing, including all collateral security and guarantees with respect to any of the foregoing and all cash, Money, Instruments, Securities, Financial Assets and Deposit Accounts received as proceeds of any ABL Facility First Priority Collateral (“ ABL Priority Proceeds ”); provided , however , that no proceeds of ABL Priority Proceeds will constitute ABL Facility First Priority Collateral unless such proceeds of ABL Priority Proceeds are of the type that would otherwise constitute ABL Facility First Priority Collateral.

For the avoidance of doubt, under no circumstances shall any assets excluded from the ABL Collateral pursuant to any ABL Collateral Document constitute ABL Facility First Priority Collateral.

ABL Lenders ” shall mean the Persons holding ABL Claims, including the ABL Agent.

ABL Loan Documents ” shall mean the ABL Credit Agreement, the ABL Collateral Documents and each of the other agreements, documents and instruments providing for, evidencing or securing any Obligation under the ABL Credit Agreement (including each agreement, document or instrument providing for or evidencing an ABL Designated Hedging Obligation or ABL Designated Cash Management Obligation) and any other related document or instrument executed or delivered pursuant to any ABL Collateral Document at any time or otherwise evidencing or securing any Obligation arising under any ABL Loan Document.

ABL Other Claims ” shall mean any Obligations arising under an ABL Loan Document that do not constitute ABL Priority Claims.

ABL Priority Claims ” shall mean the aggregate of (a) (i) the Obligations arising under the ABL Loan Documents to the extent the principal amount thereof is permitted to be incurred pursuant to Section 6.01(y) of the Term Loan/Cash Flow Revolver Agreement, as such Term Loan/Cash Flow Revolver Agreement in effect on the date hereof (other than ABL Designated Cash Management Obligations and ABL Designated Hedging Obligations), plus any interest, fees, attorneys fees, costs, expenses and indemnities payable on account of such Obligations or otherwise in respect of, or arising under, the ABL Credit Agreement or the ABL Loan Documents related thereto or any of them, including all fees and expenses of the ABL Agent thereunder (the amounts under this clause (i), the “ ABL Credit Agreement Claims ”) and (ii) $150,000,000 constituting DIP Financing, to the extent incurred in accordance with the terms hereof, (b) the principal amount of all indebtedness incurred under the ABL Designated Hedging Obligations (calculated, at any given date, as the maximum aggregate amount, giving effect to any netting agreements, that would be required to be paid if all Secured Hedging Agreements (as such term is defined in the ABL Credit Agreement) underlying such ABL Designated Hedging Obligations were terminated as of such date) and (c) up to $30,000,000 of ABL Designated Cash Management Obligations, including, in the case of each of clauses (a), (b) and (c) above, all interest and expenses accrued or accruing (or that would, absent the commencement of an

 

3


Insolvency or Liquidation Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the relevant ABL Loan Document whether or not the claim for such interest or expense is allowed or allowable as a claim in such Insolvency or Liquidation Proceeding.

ABL Recovery ” shall have the meaning set forth in Section 6.4.

Accounts ” shall mean all Accounts (as defined in the UCC), all Health-Care-Insurance Receivables (as defined in the UCC) and all Medicare and Medicaid rights to payments, payments and reimbursement obligations of third party payors.

Agreement ” shall mean this Agreement, as amended, renewed, extended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

Bankruptcy Law ” shall mean Title 11 of the United States Code and any similar Federal, state or foreign law for the relief of debtors.

Borrower ” shall have the meaning set forth in the preamble.

Cash Collateral ” shall mean any Common Collateral consisting of Money or cash equivalents, any Security Entitlement and any Financial Assets.

Cash Dominion Event ” shall have the meaning assigned to such term in the ABL Credit Agreement.

Closing Date ” shall mean April 29, 2016.

Common Collateral ” shall mean collectively, the ABL Collateral and the Term Loan/Cash Flow Revolver Collateral.

Credit Agreements ” shall mean the collective reference to the ABL Credit Agreement and the Term Loan/Cash Flow Revolver Agreement.

Credit Suisse ” shall have the meaning set forth in the preamble.

Deposit Account Collateral ” shall mean that part of the Common Collateral comprised of or contained in Deposit Accounts.

DIP Financing ” shall have the meaning set forth in Section 6.1.

Discharge of ABL Priority Claims ” shall mean, except to the extent otherwise provided in Section 5.7 below, (i) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all outstanding ABL Credit Agreement Claims, (ii) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all other ABL Priority Claims that are due and payable or otherwise accrued and owing at or prior to the time the Obligations referred to in clause (i) are paid and (iii) with respect to letters of credit outstanding under the ABL Credit Agreement, delivery of cash

 

4


collateral in compliance with the ABL Credit Agreement or the making of other arrangements reasonably satisfactory to issuing banks thereunder, in each case after or concurrently with the termination of all commitments to extend credit under the ABL Credit Agreement; provided that the Discharge of ABL Priority Claims shall not be deemed to have occurred if such payments are made with the proceeds of other ABL Priority Claims that constitute an exchange or replacement for or a refinancing of such Obligations or ABL Priority Claims. In the event the ABL Priority Claims are modified and the Obligations are paid over time or otherwise modified pursuant to Section 1129 of the United States Bankruptcy Code (or any successor provision), the ABL Priority Claims shall be deemed to be discharged only when the final payment is made, in cash, in respect of such Obligations and any obligations pursuant to such new indebtedness shall have been satisfied.

Discharge of Term Priority Claims ” shall mean, except to the extent otherwise provided in Section 5.7 below, (i) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all outstanding Term Loan/Cash Flow Revolver Agreement Claims, (ii) the payment in full in cash (other than indemnification and contingent obligations for which no claim has been made) of all Obligations in respect of all other Term Loan/Cash Flow Revolver Priority Claims that are due and payable or otherwise accrued and owing at or prior to the time the Obligations referred to in clause (i) are paid, in each case after or concurrently with the termination of all commitments to extend credit that would constitute Term Loan/Cash Flow Revolver Priority Claims; provided that the Discharge of Term Priority Claims shall not be deemed to have occurred if such payments are made with the proceeds of other Term Loan/Cash Flow Revolver Priority Claims that constitute an exchange or replacement for or a refinancing of such Obligations or Term Loan/Cash Flow Revolver Priority Claims. In the event the Term Loan/Cash Flow Revolver Priority Claims are modified and the Obligations are paid over time or otherwise modified pursuant to Section 1129 of the United States Bankruptcy Code (or any successor provision), the Term Loan/Cash Flow Revolver Priority Claims shall be deemed to be discharged only when the final payment is made, in cash, in respect of such Obligations and any obligations pursuant to such new indebtedness shall have been satisfied.

Exercise Any Secured Creditor Remedies ” or “ Exercise of Any Secured Creditor Remedies ” shall mean, except as otherwise provided in the final sentence of this definition:

(a) the taking by any Lender of any action to enforce or realize upon any Lien, including the institution of any foreclosure proceedings or the noticing of any public or private sale pursuant to Article 9 of the Uniform Commercial Code or other applicable law;

(b) the exercise by any Lender of any right or remedy provided to a secured creditor on account of a Lien under any of the ABL Loan Documents or Term Loan/Cash Flow Revolver Loan Documents, as applicable, under applicable law, in an Insolvency or Liquidation Proceeding or otherwise, including the election to retain any of the Common Collateral in satisfaction of any Obligation secured by a Lien;

 

5


(c) the taking of any action by any Lender or the exercise of any right or remedy by any Lender in respect of the collection on, setoff against, marshaling of, injunction respecting or foreclosure on the Common Collateral or the proceeds thereof;

(d) the appointment, on the application of a Lender, of a receiver, receiver and manager or interim receiver of all or part of the Common Collateral;

(e) the sale, lease, license or other disposition of all or any portion of the Common Collateral by private or public sale conducted by a Lender or by any other means at the direction of a Lender permissible under applicable law;

(f) the exercise of any other right of a secured creditor under Part 6 of Article 9 of the Uniform Commercial Code or under provisions of similar effect other applicable law; and

(g) the exercise by a Lender of any voting rights relating to any Equity Interests included in the Common Collateral.

For the avoidance of doubt, none of the following shall be deemed to constitute an Exercise of Any Secured Creditor Remedies: (i) the filing of a proof of claim in any Insolvency or Liquidation Proceeding or seeking adequate protection, (ii) the exercise of rights pursuant to the ABL Loan Documents by the ABL Agent during the continuance of a Cash Dominion Event, (iii) the exercise of rights pursuant to the ABL Loan Documents by the ABL Agent in respect of clauses (c) and (e) above, to the extent such actions solely relate to a de minimis amount of Common Collateral (not to exceed an amount equal to $2,000,000 in the aggregate based on the fair market value of such Common Collateral), (iv) the reduction of advance rates by the ABL Agent or the ABL Lenders, (v) the modification of eligibility criteria with respect to the Borrowing Base (as defined in the ABL Credit Agreement) by the ABL Agent or the ABL Lenders or (vi) the imposition of Availability Reserves (as defined in the ABL Credit Agreement) by the ABL Agent or the ABL Lenders.

First Priority Agent ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Agent, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent, as applicable.

First Priority Claims ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Priority Claims, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Priority Claims, as applicable.

First Priority Collateral ” shall mean, with respect to (a) the ABL Agent and the ABL Lenders, the ABL Facility First Priority Collateral, and (b) the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders, the Term/Cash Flow Revolver Facility First Priority Collateral, as applicable.

First Priority Documents ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Loan Documents, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Loan Documents, as applicable.

 

6


First Priority Lenders ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the ABL Lenders, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Lenders, as applicable.

Grantors ” shall mean the Borrower, and each of the Borrower’s Subsidiaries that has granted or purported to grant a Lien in any or all of its assets under an ABL Collateral Document or a Term Loan/Cash Flow Revolver Collateral Document.

Hedging Agreement ” shall have the meaning set forth in the ABL Credit Agreement.

Indebtedness ” shall mean and include all obligations that constitute “Indebtedness” within the meaning of the ABL Credit Agreement or the Term Loan/Cash Flow Revolver Agreement.

Insolvency or Liquidation Proceeding ” shall mean (a) any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to any of its assets, (c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

Lenders ” shall mean the collective reference to the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders.

Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

New York Courts ” shall have the meaning set forth in Section 8.7.

Obligations ” shall mean, with respect to any Person, any payment, performance or other obligations of such Person of any kind, including any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any Insolvency or Liquidation Proceeding. Without limiting the generality of the foregoing, the Obligations of any Grantor under any ABL Loan Document or Term Loan/Cash Flow Revolver Loan Document include the obligations to pay principal, interest (including interest accruing during the pendency of any Insolvency or Liquidation Proceeding, regardless of whether allowed or allowable in such proceeding) or premium on any Indebtedness, letter of credit commissions (if applicable), charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by such Grantor to reimburse any amount in respect of any of the foregoing that any ABL Lender or Term Loan/Cash Flow Revolver Lender, in its sole discretion, may elect to pay or advance on behalf of such Grantor.

 

7


Payment Collateral ” shall mean all Accounts, Instruments, Chattel Paper, Letter-Of-Credit Rights, Deposit Accounts, Securities Accounts and Payment Intangibles, together with all Supporting Obligations in relation to the foregoing, in each case comprising a portion of the Common Collateral.

Payment Intangibles ” shall mean all Payment Intangibles (as defined in the UCC) in connection with purchases from and other goods and services provided by any Grantor.

Person ” shall mean any natural person, partnership, corporation, business trust, limited liability company, company, association, joint venture, governmental agency or other entity.

Pledged Collateral ” shall mean the Common Collateral in the possession of the ABL Agent (or its agents or bailees) or the Term Loan/Cash Flow Revolver Agent (or its agents or bailees), to the extent that possession thereof perfects a Lien thereon under the Uniform Commercial Code.

Real Estate Collateral ” shall mean the Term Loan/Cash Flow Revolver Collateral that consists of, at any time of determination, any fee interest of any Grantor in owned real property. For the avoidance of doubt, Real Estate Collateral shall not constitute ABL Collateral and the ABL Agent shall have no rights with respect to any Real Estate Collateral.

Required Lenders ” shall mean, with respect to any Credit Agreement, those Lenders the approval of which is required to approve an amendment or modification of, termination or waiver of any provision of or consent to any departure from such Credit Agreement (or would be required to effect such consent under this Agreement if such consent were treated as an amendment of the Credit Agreement), other than any such amendment, modification, termination, waiver or consent that would require approval of all, or a “super-majority” of, Lenders or each Lender affected thereby.

Second Priority Agen t” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Agent, as applicable.

Second Priority Documents ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Loan Documents, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Loan Documents, as applicable.

Second Priority Lenders ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Lenders, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Lenders, as applicable.

 

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Second Priority Claims ” shall mean, with respect to (a) any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Priority Claims, and (b) any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Priority Claims, as applicable.

Subsidiary ” shall mean any “subsidiary” of the Borrower.

Term Loan/Cash Flow Revolver Agent ” shall mean Credit Suisse, in its capacity as administrative agent and collateral agent for the Term Loan/Cash Flow Revolver Lenders under the Term Loan/Cash Flow Revolver Agreement and the other Term Loan/Cash Flow Revolver Loan Documents entered into pursuant to the Term Loan/Cash Flow Revolver Agreement, together with its successors and permitted assigns under the Term Loan/Cash Flow Revolver Agreement exercising substantially the same rights and powers.

Term Loan/Cash Flow Revolver Agreement ” shall have the meaning set forth in the recitals.

Term Loan/Cash Flow Revolver Claims ” shall mean the Term Loan/Cash Flow Revolver Priority Claims and the Term Loan/Cash Flow Revolver Other Claims.

Term Loan/Cash Flow Revolver Collateral ” shall mean all of the assets of any Grantor, whether real, personal or mixed, upon which a Lien is granted or purported to be granted to the Term Loan/Cash Flow Revolver Agent under any of the Term Loan/Cash Flow Revolver Collateral Documents.

Term Loan/Cash Flow Revolver Collateral Agreement ” shall mean the Guarantee and Collateral Agreement dated as of April 29, 2016, among the Borrower, the Subsidiaries of the Borrower from time to time party thereto and Credit Suisse, as administrative agent for the secured parties referred to therein, as amended, restated, modified or replaced from time to time.

Term Loan/Cash Flow Revolver Collateral Documents ” shall mean the Term Loan/Cash Flow Revolver Collateral Agreement and any security agreement, mortgage or other agreement, document or instrument pursuant to which a Lien is now or hereafter granted securing any Term Loan/Cash Flow Revolver Claims or under which rights or remedies with respect to such Liens are at any time governed.

Term Loan/Cash Flow Revolver Designated Cash Management Obligations ” shall mean “Secured Cash Management Obligations” as defined in the Term Loan/Cash Flow Revolver Collateral Agreement.

Term Loan/Cash Flow Revolver Designated Hedging Obligations ” shall mean “Secured Hedging Obligations” as defined in the Term Loan/Cash Flow Revolver Collateral Agreement.

Term/Cash Flow Revolver Facility First Priority Collateral ” shall mean all Term Loan/Cash Flow Revolver Collateral (other than Accounts and all other ABL Facility First Priority Collateral) and all collateral security and guarantees with respect to any Term/Cash Flow Revolver Facility First Priority Collateral and all proceeds of any of the foregoing, including all

 

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cash, Money, Instruments, Securities, Financial Assets and Deposit Accounts received as proceeds of any Term/Cash Flow Revolver Facility First Priority Collateral (“ Term Loan/Cash Flow Revolver Priority Proceeds ”); provided , however , no proceeds of Term Loan/Cash Flow Revolver Priority Proceeds will constitute Term/Cash Flow Revolver Facility First Priority Collateral unless such proceeds of Term Loan/Cash Flow Revolver Priority Proceeds would otherwise constitute Term/Cash Flow Revolver Facility First Priority Collateral; provided that any of the foregoing that consists of identifiable ABL Priority Proceeds shall not be included in Term/Cash Flow Revolver Facility First Priority Collateral. For the avoidance of doubt, under no circumstances shall any assets excluded from the Term Loan/Cash Flow Revolver Collateral pursuant to any Term Loan/Cash Flow Revolver Collateral Document constitute Term/Cash Flow Revolver Facility First Priority Collateral.

Term Loan/Cash Flow Revolver Lenders ” shall mean the Persons holding Term Loan/Cash Flow Revolver Claims, including the Term Loan/Cash Flow Revolver Agent.

Term Loan/Cash Flow Revolver Loan Documents ” shall mean the Term Loan/Cash Flow Revolver Agreement, the Term Loan/Cash Flow Revolver Collateral Documents and each of the other agreements, documents and instruments providing for, evidencing or securing any Obligation under the Term Loan/Cash Flow Revolver Agreement (including each agreement, document or instrument providing for or evidencing a Term Loan/Cash Flow Revolver Designated Hedging Obligation or Term Loan/Cash Flow Revolver Designated Cash Management Obligation) and any other related document or instrument executed or delivered pursuant to any Term Loan/Cash Flow Revolver Collateral Document at any time or otherwise evidencing or securing any Obligation arising under any such Term Loan/Cash Flow Revolver Collateral Document.

Term Loan/Cash Flow Revolver Other Claims ” shall mean any Obligations arising under a Term Loan/Cash Flow Revolver Loan Document that do not constitute Term Loan/Cash Flow Revolver Priority Claims.

Term Loan/Cash Flow Revolver Priority Claims ” shall mean the aggregate of (a) (i) the Obligations arising under the Term Loan/Cash Flow Revolver Loan Documents to the extent the principal amount thereof is permitted to be incurred pursuant to Section 6.01(y) of the ABL Credit Agreement, as such ABL Credit Agreement in effect on the date hereof (other than Term Loan/Cash Flow Revolver Designated Cash Management Obligations and Term Loan/Cash Flow Revolver Designated Hedging Obligations), plus any interest, fees, attorneys fees, costs, expenses and indemnities payable on account of such Obligations or otherwise in respect of, or arising under, the Term Loan/Cash Flow Revolver Agreement or the Term Loan/Cash Flow Revolver Loan Documents related thereto or any of them, including al fees and expenses of the Term Loan/Cash Flow Revolver Agent thereunder (the amounts under this clause (i), the “ Term Loan/Cash Flow Revolver Agreement Claims ”), and (ii) $150,000,000 constituting DIP Financing, to the extent incurred in accordance with the terms hereof, (b) the principal amount of all indebtedness incurred under the Term Loan/Cash Flow Revolver Designated Hedging Obligations (calculated, at any given date, as the maximum aggregate amount, giving effect to any netting agreements, that would be required to be paid if all Hedging Agreements (as such term is defined in the Term Loan/Cash Flow Revolver Agreement) underlying such Term Loan/Cash Flow Revolver Designated Hedging Obligations were

 

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terminated as of such date) and (c) up to $30,000,000 of Term Loan/Cash Flow Revolver Designated Cash Management Obligations, including, in the case of each of clauses (a), (b) and (c) above, all interest and expenses accrued or accruing (or that would, absent the commencement of an Insolvency or Liquidation Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the relevant Term Loan/Cash Flow Revolver Loan Document whether or not the claim for such interest or expense is allowed or allowable as a claim in such Insolvency or Liquidation Proceeding.

Term Loan/Cash Flow Revolver Recovery ” shall have the meaning set forth in Section 6.4.

UBS ” shall have the meaning set forth in the preamble.

Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

1.2. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified in accordance with this Agreement, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections shall be construed to refer to Sections of this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f) the term “or” is not exclusive. All capitalized terms not defined herein or by reference to another agreement shall have the meaning assigned to such term in the UCC. The term “Instrument” shall have the meaning specified in Article 9 of the UCC.

Section 2. Lien Priorities.

2.1. Subordination of Liens . Notwithstanding (i) the date, time, method, manner or order of filing or recordation of any document or instrument or grant, attachment or perfection (including any defect or deficiency or alleged defect or deficiency in any of the foregoing) of any Liens granted to the ABL Agent or the ABL Lenders on the Common Collateral or of any Liens granted to the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders on the Common Collateral, (ii) any provision of the UCC, any Bankruptcy Law, or other applicable law or the ABL Loan Documents or the Term Loan/Cash Flow Revolver Loan Documents, (iii) whether the ABL Agent or the Term Loan/Cash Flow Revolver Agent, either directly or through agents, holds possession of, or has

 

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control over, all or any part of the Common Collateral, (iv) the fact that any such Liens may be subordinated, voided, avoided, invalidated or lapsed or (v) any other circumstance of any kind or nature whatsoever, the ABL Agent, on behalf of itself and each applicable ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each applicable Term Loan/Cash Flow Revolver Lender, hereby agrees that:

(a) any Lien on the ABL Facility First Priority Collateral securing any ABL Priority Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Claims,

(b) any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the ABL Facility First Priority Collateral securing any ABL Priority Claims,

(c) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Priority Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Claims,

(d) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Priority Claims,

(e) any Lien on the ABL Facility First Priority Collateral securing any ABL Other Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims,

(f) any Lien on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the ABL Facility First Priority Collateral securing any ABL Other Claims,

 

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(g) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims now or hereafter held by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Other Claims, and

(h) any Lien on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Other Claims now or hereafter held by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Other Claims.

All Liens on the ABL Facility First Priority Collateral securing any ABL Priority Claims shall be and remain senior in all respects and prior to all Liens on the ABL Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Claims for all purposes, whether or not such Liens securing any ABL Priority Claims are subordinated to any Lien securing any other obligation of the Borrower, any other Grantor or any other Person, and all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any Term Loan/Cash Flow Revolver Priority Claims shall be and remain senior in all respects and prior to all Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing any ABL Claims for all purposes, whether or not such Liens securing any Term Loan/Cash Flow Revolver Claims are subordinated to any Lien securing any other obligation of the Borrower, any other Grantor or any other Person.

2.2. Prohibition on Contesting Liens . The ABL Agent, for itself and on behalf of each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each applicable Term Loan/Cash Flow Revolver Lender, agrees that it shall not (and hereby waives any right to) take any action to challenge, contest or support any other Person in contesting or challenging, directly or indirectly, in any proceeding (including any Insolvency or Liquidation Proceeding), the validity, perfection, priority or enforceability of (a) a Lien securing any ABL Claims held (or purported to be held) by or on behalf of the ABL Agent or any ABL Lender or any agent or trustee therefor in any Common Collateral or (b) a Lien securing any Term Loan/Cash Flow Revolver Claims held (or purported to be held) by or on behalf of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in any Common Collateral, as the case may be; provided , however , that nothing in this Agreement shall be construed (x) to prevent or impair the rights of the ABL Agent or any ABL Lender to enforce this Agreement (including the priority of the Liens securing the ABL Claims as provided in Section 2.1 with respect to any ABL Facility First Priority Collateral) or any of the ABL Loan Documents or (y) to prevent or impair the rights of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender to enforce this Agreement (including the priority of the Liens securing the Term Loan/Cash Flow Revolver Claims as provided in Section 2.1 with respect to any Term/Cash Flow Revolver Facility First Priority Collateral) or any of the Term Loan/Cash Flow Revolver Loan Documents.

 

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2.3. No New Liens .

(a) So long as the Discharge of ABL Priority Claims has not occurred, the Term Loan/Cash Flow Revolver Agent agrees, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, that it shall not acquire or hold any Lien on any assets of the Borrower or any other Grantor securing any Term Loan/Cash Flow Revolver Claims that are not also subject to the Lien in respect of the ABL Claims under the ABL Loan Documents (other than Liens on Real Estate Collateral). If the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender shall (nonetheless and in breach hereof) acquire or hold any Lien on any collateral of a Grantor that is not also subject to the Lien in respect of the ABL Claims under the ABL Loan Documents (other than Liens on Real Estate Collateral), then the Term Loan/Cash Flow Revolver Agent shall, without the need for any further consent of any party and notwithstanding anything to the contrary in any other document, be deemed to also hold and have held such Lien for the benefit of the ABL Agent as security for the ABL Claims (subject to the Lien priority and other terms hereof) and shall promptly notify the ABL Agent in writing of the existence of such Lien and in any event take such actions as may be requested by the ABL Agent to assign or release such Liens to the ABL Agent (and/or its designee) as security for the applicable ABL Claims.

(b) So long as the Discharge of Term Priority Claims has not occurred, the ABL Agent agrees, for itself and on behalf of each ABL Lender, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, that it shall not acquire or hold any Lien on any assets of the Borrower or any other Grantor securing any ABL Claims that are not also subject to the Lien in respect of the Term Loan/Cash Flow Revolver Claims under the Term Loan/Cash Flow Revolver Loan Documents. If the ABL Agent or any ABL Lender shall (nonetheless and in breach hereof) acquire or hold any Lien on any collateral of a Grantor that is not also subject to the Liens in respect of the Term Loan/Cash Flow Revolver Claims under the Term Loan/Cash Flow Revolver Loan Documents, then the ABL Agent shall, without the need for any further consent of any party and notwithstanding anything to the contrary in any other document, be deemed to also hold and have held such Lien for the benefit of the Term Loan/Cash Flow Revolver Agent as security for the Term Loan/Cash Flow Revolver Claims (subject to the Lien priority and other terms hereof) and shall promptly notify the Term Loan/Cash Flow Revolver Agent in writing of the existence of such Lien and in any event take such actions as may be requested by the Term Loan/Cash Flow Revolver Agent to assign or release such Liens to the Term Loan/Cash Flow Revolver Agent (and/or its designee) as security for the applicable Term Loan/Cash Flow Revolver Claims.

2.4. Perfection of Liens . With respect to any portion of the Common Collateral, neither the First Priority Agent nor the First Priority Lenders shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Common Collateral for the benefit of the Second Priority Agent and the Second Priority Lenders. The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders and shall not impose on the ABL

 

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Agent, the Term Loan/Cash Flow Revolver Agent, the ABL Lenders or the Term Loan/Cash Flow Revolver Lenders or any agent or trustee therefor any obligations in respect of the disposition of proceeds of any Common Collateral which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or governmental authority or any applicable law.

2.5. Waiver of Marshalling .

(a) Until the Discharge of ABL Priority Claims, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and the Term Loan/Cash Flow Revolver Lenders, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the ABL Facility First Priority Collateral or any other similar rights a junior secured creditor may have under applicable law with respect to the ABL Facility First Priority Collateral.

(b) Until the Discharge of Term Priority Claims, the ABL Agent, on behalf of itself and the ABL Lenders, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Term/Cash Flow Revolver Facility First Priority Collateral or any other similar rights a junior secured creditor may have under applicable law with respect to the Term/Cash Flow Revolver Facility First Priority Collateral.

Section 3. Enforcement.

3.1. Exercise of Remedies .

(a) So long as the Discharge of ABL Priority Claims has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, (i) neither the Term Loan/Cash Flow Revolver Agent nor any Term Loan/Cash Flow Revolver Lender will (x) Exercise Any Secured Creditor Remedies or seek to Exercise Any Secured Creditor Remedies with respect to any ABL Facility First Priority Collateral, (y) contest, protest or object to any Exercise of Any Secured Creditor Remedies with respect to the ABL Facility First Priority Collateral by the ABL Agent or any ABL Lender in respect of the ABL Priority Claims, the exercise of any right by the ABL Agent or any ABL Lender (or any agent or sub-agent on their behalf) in respect of the ABL Priority Claims under any lockbox agreement, control agreement or similar agreement or arrangement to which the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender either is a party or may have rights as a third party beneficiary, or any other exercise by any such party of any rights and remedies relating to the ABL Facility First Priority Collateral under the ABL Loan Documents or otherwise in respect of ABL Priority Claims, or (z) object to the forbearance by the ABL Lenders from bringing or pursuing any Exercise of Any Secured Creditor Remedies relating to the ABL Facility First Priority Collateral in respect of ABL Priority Claims and (ii) except as otherwise provided herein, the ABL Agent and the ABL Lenders shall have the exclusive right to Exercise Any Secured Creditor Remedies (including setoff and the right to credit bid their debt) and in connection therewith make determinations regarding the release,

 

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disposition or restrictions with respect to the ABL Facility First Priority Collateral without any consultation with or the consent of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender; provided , however , that (A) in any Insolvency or Liquidation Proceeding commenced by or against the Borrower or any other Grantor, the Term Loan/Cash Flow Revolver Agent may file a proof of claim or statement of interest with respect to the applicable Term Loan/Cash Flow Revolver Claims and (B) the Term Loan/Cash Flow Revolver Agent may take any action (not adverse to the prior Liens on the ABL Facility First Priority Collateral securing the ABL Priority Claims, or the rights of the ABL Agent or the ABL Lenders to exercise remedies in respect thereof) in order to create, prove, perfect, preserve or protect (but not enforce) its rights in, and perfection and priority of its Lien on, the ABL Facility First Priority Collateral. In exercising rights and remedies with respect to the ABL Facility First Priority Collateral, the ABL Agent and the ABL Lenders may enforce the provisions of the ABL Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of ABL Facility First Priority Collateral or other collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured lender under the uniform commercial code of any applicable jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

(b) So long as the Discharge of Term Priority Claims has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor, (i) neither the ABL Agent nor any ABL Lender will (x) Exercise Any Secured Creditor Remedies or seek to Exercise Any Secured Creditor Remedies with respect to any Term/Cash Flow Revolver Facility First Priority Collateral, (y) contest, protest or object to any Exercise of Any Secured Creditor Remedies with respect to the Term/Cash Flow Revolver Facility First Priority Collateral by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in respect of the Term Loan/Cash Flow Revolver Priority Claims, the exercise of any right by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender (or any agent or sub-agent on their behalf) in respect of the Term Loan/Cash Flow Revolver Priority Claims under any control agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the ABL Agent or any ABL Lender either is a party or may have rights as a third party beneficiary, or any other exercise by any such party, of any rights and remedies relating to the Term/Cash Flow Revolver Facility First Priority Collateral under the Term Loan/Cash Flow Revolver Loan Documents or otherwise in respect of Term Loan/Cash Flow Revolver Priority Claims, or (z) object to the forbearance by the Term Loan/Cash Flow Revolver Lenders from bringing or pursuing any Exercise of Any Secured Creditor Remedies relating to the Term/Cash Flow Revolver Facility First Priority Collateral in respect of Term Loan/Cash Flow Revolver Priority Claims and (ii) except as otherwise provided herein, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have the exclusive right to Exercise Any Secured Creditor Remedies (including setoff and the right to credit bid their debt) and in connection therewith make determinations regarding the release, disposition or restrictions with respect to the Term/Cash Flow Revolver Facility First Priority Collateral without any consultation with or the consent of the ABL Agent or any ABL Lender; provided , however , that (A) in any Insolvency or Liquidation Proceeding commenced by or against the Borrower or any other Grantor, the ABL Agent may file a proof of claim or statement of interest with respect to the applicable ABL Claims and (B) the ABL Agent

 

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may take any action (not adverse to the prior Liens on the Term/Cash Flow Revolver Facility First Priority Collateral securing the Term Loan/Cash Flow Revolver Priority Claims, or the rights of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders to exercise remedies in respect thereof) in order to create, prove, perfect, preserve or protect (but not enforce) its rights in, and perfection and priority of its Lien on, the Term/Cash Flow Revolver Facility First Priority Collateral. In exercising rights and remedies with respect to the Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders may enforce the provisions of the Term Loan/Cash Flow Revolver Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Term/Cash Flow Revolver Facility First Priority Collateral or other collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured lender under the uniform commercial code of any applicable jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

(c) So long as the Discharge of ABL Priority Claims has not occurred, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that it will not take or receive any ABL Facility First Priority Collateral or any proceeds of ABL Facility First Priority Collateral in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) with respect to any ABL Facility First Priority Collateral. Without limiting the generality of the foregoing, unless and until the Discharge of ABL Priority Claims has occurred, except as expressly provided in the proviso in clause (ii) of Section 3.1(a), the sole right of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders with respect to the ABL Facility First Priority Collateral is to hold a Lien on the ABL Facility First Priority Collateral pursuant to the Term Loan/Cash Flow Revolver Loan Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of ABL Priority Claims has occurred. So long as the Discharge of Term Priority Claims has not occurred, the ABL Agent, on behalf of itself and each ABL Lender, agrees that it will not take or receive any Term/Cash Flow Revolver Facility First Priority Collateral or any proceeds of Term/Cash Flow Revolver Facility First Priority Collateral in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) with respect to any Term/Cash Flow Revolver Facility First Priority Collateral. Without limiting the generality of the foregoing, unless and until the Discharge of Term Priority Claims has occurred, except as expressly provided in the proviso in clause (ii) of Section 3.1(b), the sole right of the ABL Agent and the ABL Lenders with respect to the Term/Cash Flow Revolver Facility First Priority Collateral is to hold a Lien on the Term/Cash Flow Revolver Facility First Priority Collateral pursuant to the ABL Loan Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of Term Priority Claims has occurred.

(d) Subject to the proviso in clause (ii) of Section 3.1(a) above, (i) the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, agrees that the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders will not take any action that would hinder any Exercise of Any Secured Creditor Remedies undertaken by the ABL Agent or the ABL Lenders with respect to the ABL Facility

 

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First Priority Collateral under the ABL Loan Documents, including any sale, lease, exchange, transfer or other disposition of the ABL Facility First Priority Collateral, whether by foreclosure or otherwise, and (ii) the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, hereby waives any and all rights it or any Term Loan/Cash Flow Revolver Lender may have as a junior lien creditor or otherwise to object to the manner in which the ABL Agent or the ABL Lenders seek to enforce or collect the ABL Priority Claims with respect to the ABL Facility First Priority Collateral or the Liens granted in any of the ABL Facility First Priority Collateral, regardless of whether any action or failure to act by or on behalf of the ABL Agent or the ABL Lenders is adverse to the interests of the Term Loan/Cash Flow Revolver Lenders. Subject to the proviso in clause (ii) of Section 3.1(b) above, (i) the ABL Agent, for itself and on behalf of each ABL Lender, agrees that the ABL Agent and the ABL Lenders will not take any action that would hinder any Exercise of Any Secured Creditor Remedies undertaken by the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders with respect to the Term/Cash Flow Revolver Facility First Priority Collateral under the Term Loan/Cash Flow Revolver Loan Documents, including any sale, lease, exchange, transfer or other disposition of the Term/Cash Flow Revolver Facility First Priority Collateral, whether by foreclosure or otherwise, and (ii) the ABL Agent, for itself and on behalf of each ABL Lender, hereby waives any and all rights it or any ABL Lender may have as a junior lien creditor or otherwise to object to the manner in which the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders seek to enforce or collect the Term Loan/Cash Flow Revolver Priority Claims with respect to the Term/Cash Flow Revolver Facility First Priority Collateral or the Liens granted in any of the Term/Cash Flow Revolver Facility First Priority Collateral, regardless of whether any action or failure to act by or on behalf of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders is adverse to the interests of the Term Loan/Cash Flow Revolver Lenders.

(e) The Term Loan/Cash Flow Revolver Agent hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Term Loan/Cash Flow Revolver Loan Document shall be deemed to restrict in any way the rights and remedies of the ABL Agent or the ABL Lenders with respect to the ABL Facility First Priority Collateral as set forth in this Agreement and the ABL Loan Documents. The ABL Agent hereby acknowledges and agrees that no covenant, agreement or restriction contained in any ABL Loan Document shall be deemed to restrict in any way the rights and remedies of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders with respect to the Term/Cash Flow Revolver Facility First Priority Collateral as set forth in this Agreement and the Term Loan/Cash Flow Revolver Loan Documents.

 

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3.2. Cooperation .

(a) Subject to the proviso in clause (ii) of Section 3.1(a), the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that, unless and until the Discharge of ABL Priority Claims has occurred, it will not commence, or join with any Person (other than the ABL Lenders and the ABL Agent upon the request thereof) in commencing, any enforcement, collection, execution, levy or foreclosure action or proceeding with respect to any Lien held by it in the ABL Facility First Priority Collateral under any of the Term Loan/Cash Flow Revolver Loan Documents or otherwise in respect of the Term Loan/Cash Flow Revolver Claims relating to the ABL Facility First Priority Collateral.

(b) Subject to the proviso in clause (ii) of Section 3.1(b), the ABL Agent, on behalf of itself and each ABL Lender, agrees that, unless and until the Discharge of Term Priority Claims has occurred, it will not commence, or join with any Person (other than the Term Loan/Cash Flow Revolver Lenders and the Term Loan/Cash Flow Revolver Agent upon the request thereof) in commencing, any enforcement, collection, execution, levy or foreclosure action or proceeding with respect to any Lien held by it in the Term/Cash Flow Revolver Facility First Priority Collateral under any of the ABL Loan Documents or otherwise in respect of the ABL Claims relating to the Term/Cash Flow Revolver Facility First Priority Collateral.

3.3. Actions Upon Breach .

(a) If any Term Loan/Cash Flow Revolver Lender, in contravention of the terms of this Agreement, in any way takes or attempts or threatens to take any action with respect to the ABL Facility First Priority Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), this Agreement shall create an irrebuttable presumption and admission by such Term Loan/Cash Flow Revolver Lender that relief against such Term Loan/Cash Flow Revolver Lender by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the ABL Lenders, it being understood and agreed by the Term Loan/Cash Flow Revolver Agent on behalf of each Term Loan/Cash Flow Revolver Lender that (i) the ABL Lenders’ damages from its actions may at that time be difficult to ascertain and may be irreparable and (ii) each Term Loan/Cash Flow Revolver Lender waives any defense that the Grantors and/or the ABL Lenders cannot demonstrate damage and/or be made whole by the awarding of damages.

(b) If any ABL Lender, in contravention of the terms of this Agreement, in any way takes or attempts or threatens to take any action with respect to the Term/Cash Flow Revolver Facility First Priority Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), this Agreement shall create an irrebuttable presumption and admission by such ABL Lender that relief against such ABL Lender by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the Term Loan/Cash Flow Revolver Lenders, it being understood and agreed by the ABL Agent on behalf of each ABL Lender that (i) the Term Loan/Cash Flow Revolver Lenders’ damages from its actions may at that time be difficult to ascertain and may be irreparable and (ii) each ABL Lender waives any defense that the Grantors and/or the Term Loan/Cash Flow Revolver Lenders cannot demonstrate damage and/or be made whole by the awarding of damages.

 

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Section 4. Payments.

4.1. Revolving Nature of ABL and Term Priority Claims .

(a) The Term Loan/Cash Flow Revolver Agent, for and on behalf of itself and each Term Loan/Cash Flow Revolver Lender, expressly acknowledges and agrees that (i) the ABL Credit Agreement includes a revolving commitment, that in the ordinary course of business the ABL Agent and the ABL Lenders will apply payments and make advances thereunder, and that no application of any Payment Collateral or Cash Collateral or the release of any Lien by the ABL Agent upon any portion of the Common Collateral in connection with a permitted disposition under the ABL Credit Agreement shall constitute the exercise of remedies prohibited under this Agreement; (ii) subject to the limitations set forth herein, the amount of the ABL Priority Claims that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed; and (iii) all Payment Collateral or Cash Collateral received by the ABL Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, to the ABL Priority Claims at any time; provided , however , that from and after the date on which the ABL Agent (or any ABL Lender) commences the Exercise of Any Secured Creditor Remedies with respect to any of the Common Collateral (other than, prior to the acceleration of any of the Term Loan/Cash Flow Revolver Priority Claims, the exercise of its rights during a Cash Dominion Event), all amounts received by the ABL Agent or any ABL Lender in respect of any ABL Claims shall be applied as specified in this Section 4. The Lien priority set forth in this Agreement shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of the ABL Priority Claims, the ABL Other Claims, the Term Loan/Cash Flow Revolver Priority Claims or the Term Loan/Cash Flow Revolver Other Claims, or any portion thereof.

(b) The ABL Agent, for and on behalf of itself and each ABL Lender, expressly acknowledges and agrees that (i) the Term Loan/Cash Flow Revolver Agreement includes revolving commitments, that in the ordinary course of business the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders will apply payments and make advances thereunder, and that no application of any Payment Collateral or Cash Collateral or the release of any Lien by the Term Loan/Cash Flow Revolver Agent upon any portion of the Common Collateral in connection with a permitted disposition under the Term Loan/Cash Flow Revolver Agreement shall constitute the exercise of remedies prohibited under this Agreement; (ii) subject to the limitations set forth herein, the amount of the Term Loan/Cash Flow Revolver Priority Claims that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed; and (iii) all Payment Collateral or Cash Collateral received by the Term Loan/Cash Flow Revolver Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, to the Term Loan/Cash Flow Revolver Priority Claims at any time; provided , however , that from and after the date on which the Term Loan/Cash Flow Revolver Agent (or any Term Loan/Cash Flow Revolver Lender) commences the Exercise of Any Secured Creditor Remedies with respect to any of the Common Collateral, all amounts received by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in respect of any Term Loan/Cash Flow Revolver Claims shall be applied as specified in this Section 4. The Lien priority set forth in this Agreement shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment,

 

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reborrowing, increase, replacement, renewal, restatement or refinancing of the ABL Priority Claims, the ABL Other Claims, the Term Loan/Cash Flow Revolver Priority Claims or the Term Loan/Cash Flow Revolver Other Claims, or any portion thereof.

4.2. Application of Proceeds of ABL Facility First Priority Collateral . The ABL Agent, on behalf of itself and each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, hereby agree that the ABL Facility First Priority Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such ABL Facility First Priority Collateral upon the Exercise of Any Secured Creditor Remedies, shall be applied:

first , to the payment of the ABL Priority Claims in accordance with the ABL Loan Documents,

second , to the payment of the Term Loan/Cash Flow Revolver Priority Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents,

third , to the payment of ABL Other Claims in accordance with the ABL Loan Documents,

fourth , to the payment of Term Loan/Cash Flow Revolver Other Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents, and

fifth , the balance, if any, to the Grantors or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

4.3. Application of Proceeds of Term/Cash Flow Revolver Facility First Priority Collateral . The ABL Agent, on behalf of itself and each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, hereby agree that the Term/Cash Flow Revolver Facility First Priority Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Term/Cash Flow Revolver Facility First Priority Collateral upon the Exercise of Any Secured Creditor Remedies, shall be applied:

first , to the payment of the Term Loan/Cash Flow Revolver Priority Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents,

second , to the payment of the ABL Priority Claims in accordance with the ABL Loan Documents,

third , to the payment of Term Loan/Cash Flow Revolver Other Claims in accordance with the Term Loan/Cash Flow Revolver Loan Documents,

fourth , to the payment of ABL Other Claims in accordance with the ABL Loan Documents, and

fifth , the balance, if any, to the Grantors or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

 

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4.4. Payments Over .

(a) Any ABL Facility First Priority Collateral or proceeds thereof received by the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) relating to the ABL Facility First Priority Collateral prior to the Discharge of ABL Priority Claims shall be segregated and held in trust for the benefit of and forthwith paid over to the ABL Agent (and/or its designees) for the benefit of the ABL Lenders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The ABL Agent is hereby authorized to make any such endorsements as agent for the Term Loan/Cash Flow Revolver Agent or any such Term Loan/Cash Flow Revolver Lender. This authorization is coupled with an interest and is irrevocable.

(b) Any Term/Cash Flow Revolver Facility First Priority Collateral or proceeds thereof received by the ABL Agent or any ABL Lender in connection with the Exercise of Any Secured Creditor Remedies (including setoff or recoupment) relating to the Term/Cash Flow Revolver Facility First Priority Collateral prior to the Discharge of Term Priority Claims shall be segregated and held in trust for the benefit of and forthwith paid over to the Term Loan/Cash Flow Revolver Agent (and/or its designees) for the benefit of the Term Loan/Cash Flow Revolver Lenders in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The Term Loan/Cash Flow Revolver Agent is hereby authorized to make any such endorsements as agent for the ABL Agent or any such ABL Lender. This authorization is coupled with an interest and is irrevocable.

(c) Promptly upon the Discharge of ABL Priority Claims, the ABL Agent shall deliver written notice confirming the same to the Term Loan/Cash Flow Revolver Agent; provided that the failure to give any such notice shall not result in any liability of the ABL Agent or the ABL Lenders or in the modification, alteration, impairment or waiver of the rights of any party hereunder. Promptly upon the Discharge of Term Priority Claims, the Term Loan/Cash Flow Revolver Agent shall deliver written notice confirming the same to the ABL Agent; provided that the failure to give any such notice shall not result in any liability of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders or in the modification, alteration, impairment or waiver of the rights of any party hereunder.

4.5. Common Collateral .

Notwithstanding anything contained in this Agreement to the contrary, in the event of any disposition or series of related dispositions in connection with the Exercise of Any Secured Creditor Remedies that includes (i) Equity Interests issued by a Grantor that has an interest in any ABL Facility First Priority Collateral or (ii) a combination of both ABL Facility First Priority Collateral and Term/Cash Flow Revolver Facility First Priority Collateral, then solely for purposes of this Agreement, unless otherwise agreed by the ABL Agent and the Term Loan/Cash Flow Revolver Agent, the proceeds of any such disposition shall be allocated to the ABL Facility First Priority Collateral in an amount equal to the sum of (A) the book value determined in accordance with GAAP of any ABL Facility First Priority Collateral consisting of Accounts that are the subject of such disposition (or, in the case of a disposition of Equity Interests issued by a Grantor, any ABL Facility First Priority Collateral consisting of Accounts in

 

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which such Grantor has an interest), determined as of the date of such disposition, and (B) the fair market value of all other ABL Facility First Priority Collateral that is the subject of such disposition (or, in the case of a disposition of Equity Interests issued by a Grantor, any other ABL Facility First Priority Collateral in which such Grantor has an interest), determined as of the date of such disposition.

Section 5. Other Agreements.

5.1. Releases .

(a) If, at any time any Grantor or the holder of any ABL Priority Claim delivers notice to the Term Loan/Cash Flow Revolver Agent that any specified ABL Facility First Priority Collateral is sold, transferred or otherwise disposed of (including for such purpose, in the case of the sale of equity interests in any Subsidiary, any ABL Facility First Priority Collateral held by such Subsidiary or any direct or indirect Subsidiary thereof):

(i) by the owner of such ABL Facility First Priority Collateral in a transaction permitted under the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement and each other ABL Loan Document and Term Loan/Cash Flow Revolver Loan Document; or

(ii) during the existence of any Event of Default under (and as defined in) the ABL Credit Agreement to the extent the ABL Agent has consented to such sale, transfer or disposition;

then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the Term Loan/Cash Flow Revolver Lenders upon such ABL Facility First Priority Collateral will automatically be released and discharged as and when, but only to the extent, such Liens on such ABL Facility First Priority Collateral securing ABL Priority Claims are released and discharged. Upon delivery to the Term Loan/Cash Flow Revolver Agent of a notice from the ABL Agent stating that any release of Liens securing or supporting the ABL Priority Claims on any ABL Facility First Priority Collateral has become effective (or shall become effective upon the Term Loan/Cash Flow Revolver Agent’s release), the Term Loan/Cash Flow Revolver Agent will promptly execute and deliver such instruments, releases, termination statements or other documents confirming such release on customary terms at the expense of the Borrower.

The Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, hereby irrevocably constitutes and appoints the ABL Agent and any officer or agent of the ABL Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Term Loan/Cash Flow Revolver Agent or such Term Loan/Cash Flow Revolver Lender or in the ABL Agent’s own name, from time to time in the ABL Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1(a), to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Section 5.1(a), including any termination statements, endorsements or other instruments of transfer or release.

(b) If, at any time any Grantor or the holder of any Term Loan/Cash Flow Revolver Priority Claim delivers notice to the ABL Agent that any specified Term/Cash Flow Revolver

 

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Facility First Priority Collateral (including all or substantially all of the equity interests of a Grantor or any of its Subsidiaries) (including for such purpose, in the case of the sale of equity interests in any Subsidiary, any Term/Cash Flow Revolver Facility First Priority Collateral held by such Subsidiary or any direct or indirect Subsidiary thereof) is sold, transferred or otherwise disposed of:

(i) by the owner of such Term/Cash Flow Revolver Facility First Priority Collateral in a transaction permitted under the Term Loan/Cash Flow Revolver Agreement, the ABL Credit Agreement and each other Term Loan/Cash Flow Revolver Loan Document and ABL Loan Document; or

(ii) during the existence of any Event of Default under (and as defined in) the Term Loan/Cash Flow Revolver Agreement to the extent the Term Loan/Cash Flow Revolver Agent has consented to such sale, transfer or disposition;

then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the ABL Lenders upon such Term/Cash Flow Revolver Facility First Priority Collateral will automatically be released and discharged as and when, but only to the extent, such Liens on such Term/Cash Flow Revolver Facility First Priority Collateral securing Term Loan/Cash Flow Revolver Priority Claims are released and discharged. Upon delivery to the ABL Agent of a notice from the Term Loan/Cash Flow Revolver Agent stating that any release of Liens securing or supporting the Term Loan/Cash Flow Revolver Priority Claims on any Term/Cash Flow Revolver Facility First Priority Collateral has become effective (or shall become effective upon the ABL Agent’s release), the ABL Agent will promptly execute and deliver such instruments, releases, termination statements or other documents confirming such release on customary terms at the expense of the Borrower. In the case of the sale of all or substantially all of the capital stock of a Grantor or any of its Subsidiaries, the guarantee in favor of the ABL Lenders, if any, made by such Grantor or Subsidiary will automatically be released and discharged (i) as and when, but only to the extent, the guarantee by such Grantor or Subsidiary of Term Loan/Cash Flow Revolver Claims is released and discharged and (ii) subject to payment of proceeds from the sale of such capital stock to the ABL Agent to the extent provided in Section 4.5.

The ABL Agent, for itself and on behalf of each applicable ABL Lender, hereby irrevocably constitutes and appoints the Term Loan/Cash Flow Revolver Agent and any officer or agent of the Term Loan/Cash Flow Revolver Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the ABL Agent or such ABL Lender or in the Term Loan/Cash Flow Revolver Agent’s own name, from time to time in the Term Loan/Cash Flow Revolver Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1(b), to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Section 5.1(b), including any termination statements, endorsements or other instruments of transfer or release.

(c) Unless and until the Discharge of ABL Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent, for itself and on behalf of each Term Loan/Cash Flow Revolver Lender, hereby consents to the application, whether prior to or after a default, of

 

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proceeds of ABL Facility First Priority Collateral to the repayment of ABL Priority Claims pursuant to the ABL Loan Documents; provided that nothing in this Section 5.1(c) shall be construed to prevent or impair the rights of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders to receive proceeds in connection with the Term Loan/Cash Flow Revolver Claims not otherwise in contravention of this Agreement.

(d) Unless and until the Discharge of Term Priority Claims has occurred, the ABL Agent, for itself and on behalf of each ABL Lender, hereby consents to the application, whether prior to or after a default, of proceeds of Term/Cash Flow Revolver Facility First Priority Collateral to the repayment of Term Loan/Cash Flow Revolver Priority Claims pursuant to the Term Loan/Cash Flow Revolver Loan Documents; provided that nothing in this Section 5.1(d) shall be construed to prevent or impair the rights of the ABL Agent or the ABL Lenders to receive proceeds in connection with the ABL Claims not otherwise in contravention of this Agreement.

5.2. Insurance .

(a) Proceeds of Common Collateral include insurance proceeds and, therefore, the Lien priority set forth in this Agreement shall govern the ultimate disposition of insurance proceeds.

(b) Unless and until the Discharge of ABL Priority Claims has occurred, the ABL Agent and the ABL Lenders shall have the sole and exclusive right, subject to the rights of the Grantors under the ABL Loan Documents, to adjust settlement for any insurance policy covering the ABL Facility First Priority Collateral (including, for the avoidance of doubt, any business interruption insurance) in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the ABL Facility First Priority Collateral. Unless and until the Discharge of ABL Priority Claims has occurred, subject to the rights of the Grantors under the ABL Loan Documents, all proceeds of any such policy and any such award if in respect of the ABL Facility First Priority Collateral shall be paid in accordance with the terms of Section 4.2. If the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender shall, at any time, receive any proceeds of any such insurance policy or any such award in contravention of this Agreement, it shall pay such proceeds over to the ABL Agent in accordance with the terms of Section 4.4.

(c) Unless and until the Discharge of Term Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have the sole and exclusive right, subject to the rights of the Grantors under the Term Loan/Cash Flow Revolver Loan Documents, to adjust settlement for any insurance policy covering the Term/Cash Flow Revolver Facility First Priority Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Term/Cash Flow Revolver Facility First Priority Collateral. Unless and until the Discharge of Term Priority Claims has occurred, subject to the rights of the Grantors under the Term Loan/Cash Flow Revolver Loan Documents, all proceeds of any such policy and any such award if in respect of the Term/Cash Flow Revolver Facility First Priority Collateral shall be paid in accordance with the terms of Section 4.3. If the ABL Agent or any ABL Lender shall, at any time, receive any proceeds of any such insurance policy or any such award in contravention of this Agreement, it shall pay such proceeds over to the Term Loan/Cash Flow Revolver Agent in accordance with the terms of Section 4.4.

 

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5.3. Amendments to ABL Loan Documents and Term Loan/Cash Flow Revolver Loan Documents .

(a) The Term Loan/Cash Flow Revolver Agent, on behalf of itself and the Term Loan/Cash Flow Revolver Lenders, hereby agrees that, without affecting the obligations of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders hereunder, the ABL Agent and the ABL Lenders may, at any time and from time to time, in their sole discretion without the consent of or notice to the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify any of the ABL Loan Documents in any manner whatsoever, including, to:

(i) change the manner, place, time, or terms of payment or renew, alter or increase, all or any of the Obligations under the ABL Loan Documents or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the Obligations under the ABL Loan Documents or any of the ABL Loan Documents;

(ii) retain or, subject to Section 2.3, obtain a Lien on any property of any Person to secure any of the ABL Claims, and in connection therewith to enter into any additional ABL Loan Documents;

(iii) amend, or grant any waiver, compromise, or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the ABL Claims;

(iv) subject to Section 5.1, release its Lien on any Common Collateral or other property;

(v) exercise or refrain from exercising any rights against the Borrower, any Grantor, or any other Person;

(vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the ABL Claims; and

(vii) otherwise manage and supervise the ABL Claims as the ABL Agent shall deem appropriate.

(b) The ABL Agent, on behalf of itself and the ABL Lenders, hereby agrees that, without affecting the obligations of the ABL Agent and the ABL Lenders hereunder, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders may, at any time and from time to time, in their sole discretion without the consent of or notice to the ABL Agent or any ABL Lender (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the ABL Agent or

 

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any ABL Lender or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify any of the Term Loan/Cash Flow Revolver Loan Documents in any manner whatsoever, including, to:

(i) change the manner, place, time, or terms of payment or renew, alter or increase, all or any of the Obligations under the Term Loan/Cash Flow Revolver Loan Documents or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the Obligations under the Term Loan/Cash Flow Revolver Loan Documents or any of the Term Loan/Cash Flow Revolver Loan Documents;

(ii) retain or, subject to Section 2.3, obtain a Lien on any property of any Person to secure any of the Term Loan/Cash Flow Revolver Claims, and in connection therewith to enter into any additional Term Loan/Cash Flow Revolver Loan Documents;

(iii) amend, or grant any waiver, compromise, or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the Term Loan/Cash Flow Revolver Claims;

(iv) subject to Section 5.1, release its Lien on any Common Collateral or other property;

(v) exercise or refrain from exercising any rights against the Borrower, any Grantor, or any other Person;

(vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the Term Loan/Cash Flow Revolver Claims; and

(vii) otherwise manage and supervise the Term Loan/Cash Flow Revolver Claims as the Term Loan/Cash Flow Revolver Agent shall deem appropriate.

(c) The ABL Claims and the Term Loan/Cash Flow Revolver Claims may be refinanced or replaced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is required to permit the refinancing or replacement transaction under the ABL Credit Agreement or the Term Loan/Cash Flow Revolver Agreement) of the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders, as the case may be, all without affecting the Lien priorities provided for herein or the other provisions hereof, provided , however , that the holders of such refinancing or replacement indebtedness (or an authorized agent or trustee on their behalf) bind themselves in writing to the terms of this Agreement pursuant to such documents or agreements (including amendments, replacements or supplements to this Agreement) as the ABL Agent (in the case of a refinancing or replacement transaction relating to the Term Loan/Cash Flow Revolver Claims) or the Term Loan/Cash Flow Revolver Agent (in the case of a refinancing or replacement transaction relating to the ABL Claims), shall reasonably request and in form and substance reasonably acceptable to the ABL Agent (in the case of a refinancing or replacement transaction relating to the Term Loan/Cash Flow Revolver Claims) or the Term Loan/Cash Flow Revolver Agent (in the case of a refinancing or replacement transaction relating to the ABL Claims), and any such refinancing or replacement transaction shall be in accordance with any applicable provisions of both the ABL Loan Documents (unless waived thereunder) and the Term Loan/Cash Flow Revolver Loan Documents (unless waived thereunder). Following any refinancing or replacement transaction

 

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relating to the Term Loan/Cash Flow Revolver Claims (i) the Term Loan/Cash Flow Revolver Agreement shall be any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of such refinancing or replacement indebtedness and identified as such in such agreement and (ii) the Term Loan/Cash Flow Revolver Agent shall be the Person identified as such in such agreement. Following any refinancing or replacement transaction relating to the ABL Claims (i) the ABL Credit Agreement shall be any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of such refinancing or replacement indebtedness and identified as such in such agreement and (ii) the ABL Agent shall be the Person identified as such in such agreement.

(d) In the event that the ABL Agent or the ABL Lenders enter into any amendment, waiver or consent in respect of or replace any of the ABL Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any ABL Collateral Document or changing in any manner the rights of the ABL Agent, the ABL Lenders, the Borrower or any other Grantor thereunder in respect of the ABL Facility First Priority Collateral, then such amendment, waiver or consent (other than those effecting any release of any Liens in ABL Facility First Priority Collateral except as provided in Section 5.1) shall apply automatically to any comparable provision of each comparable Term Loan/Cash Flow Revolver Collateral Document (but solely as to ABL Facility First Priority Collateral) without the consent of the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender and without any action by the Term Loan/Cash Flow Revolver Lenders, the Borrower or any other Grantor; provided that such amendment, waiver or consent does not materially adversely affect the rights of the Term Loan/Cash Flow Revolver Lenders or the interests of the Term Loan/Cash Flow Revolver Lenders in the ABL Facility First Priority Collateral unless the rights and interests of all other creditors of the Borrower or such Grantor, as the case may be, that have a security interest in the affected collateral are affected in a like and similar manner (without regard to the fact that the Lien of such ABL Collateral Document is senior to the Lien of the comparable Term Loan/Cash Flow Revolver Collateral Document). The ABL Agent shall give written notice of such amendment, waiver or consent to the Term Loan/Cash Flow Revolver Agent; provided that the failure to give such notice shall not affect the effectiveness of such amendment, waiver or consent with respect to the provisions of any Term Loan/Cash Flow Revolver Collateral Documents as set forth in this Section 5.3(d).

(e) In the event that the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders enter into any amendment, waiver or consent in respect of or replace any of the Term Loan/Cash Flow Revolver Collateral Documents (other than any Term Loan/Cash Flow Revolver Collateral Documents granting or governing Liens on any Real Estate Collateral) for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any Term Loan/Cash Flow Revolver Collateral Document (other than any Term Loan/Cash Flow Revolver Collateral Documents granting or governing Liens on any Real Estate Collateral) or changing in any manner the rights of the Term Loan/Cash Flow Revolver Agent, the Term Loan/Cash Flow Revolver Lenders, the Borrower or any other Grantor thereunder in respect of the Term/Cash Flow Revolver Facility First Priority Collateral (other than in respect of any Real Estate Collateral), then such amendment, waiver or consent (other than those effecting any release of any Liens in Term/Cash Flow Revolver Facility First Priority Collateral except as provided in Section 5.1) shall apply automatically to any comparable

 

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provision of each comparable ABL Collateral Document (but solely as to Term/Cash Flow Revolver Facility First Priority Collateral) without the consent of the ABL Agent or any ABL Lender and without any action by the ABL Lenders, the Borrower or any other Grantor; provided that such amendment, waiver or consent does not materially adversely affect the rights of the ABL Lenders or the interests of the ABL Lenders in the Term/Cash Flow Revolver Facility First Priority Collateral unless the rights and interests of all other creditors of the Borrower or such Grantor, as the case may be, that have a security interest in the affected collateral are affected in a like and similar manner (without regard to the fact that the Lien of such Term Loan/Cash Flow Revolver Collateral Document is senior to the Lien of the comparable ABL Collateral Document). The Term Loan/Cash Flow Revolver Agent shall give written notice of such amendment, waiver or consent to the ABL Agent; provided that the failure to give such notice shall not affect the effectiveness of such amendment, waiver or consent with respect to the provisions of any ABL Collateral Document as set forth in this Section 5.3(e).

5.4. Rights As Unsecured Creditors . Notwithstanding anything to the contrary in this Agreement, the Second Priority Agents and the Second Priority Lenders may exercise rights and remedies as an unsecured creditor against the Borrower or any Subsidiary that has guaranteed the Second Priority Claims in accordance with the terms of the applicable Second Priority Documents and applicable law, in each case to the extent not inconsistent with the provisions of this Agreement. Nothing in this Agreement shall prohibit the receipt by any Second Priority Agent or any Second Priority Lender of the required payments of interest and principal so long as such receipt is not the direct or indirect result of (a) the exercise by any Second Priority Agent or any Second Priority Lender of rights or remedies as a secured creditor in respect of the applicable portion of the Common Collateral or (b) enforcement in contravention of this Agreement of any Lien in respect of Second Priority Claims held by any of them. In the event any Second Priority Agent or any Second Priority Lender becomes a judgment lien creditor or other secured creditor in respect of Common Collateral as a result of its enforcement of its rights as an unsecured creditor in respect of Second Priority Claims or otherwise, such judgment or other lien shall be subordinated to the Liens securing First Priority Claims on the same basis as the other Liens securing the Second Priority Claims are so subordinated to such Liens securing First Priority Claims under this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies the ABL Agent or the ABL Lenders may have with respect to the ABL Facility First Priority Collateral, or any rights or remedies the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders may have with respect to the Term/Cash Flow Revolver Facility First Priority Collateral.

5.5. First Priority Agent as Gratuitous Bailee for Perfection .

(a) The ABL Agent agrees to hold the Pledged Collateral that is part of the ABL Facility First Priority Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the Term Loan/Cash Flow Revolver Agent and any assignee solely for the purpose of perfecting the security interest granted in such Pledged Collateral pursuant to the Term Loan/Cash Flow Revolver Collateral Documents, subject to the terms and conditions of this Section 5.5 (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC). The Term Loan/Cash Flow Revolver Agent agrees to hold the Pledged Collateral that is part of the

 

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Term/Cash Flow Revolver Facility First Priority Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the ABL Agent and any assignee solely for the purpose of perfecting the security interest granted in such Pledged Collateral pursuant to the ABL Collateral Documents, subject to the terms and conditions of this Section 5.5 (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC).

(b) The ABL Agent agrees to hold the Deposit Account Collateral that is part of the Common Collateral and controlled by the ABL Agent as gratuitous bailee for the Term Loan/Cash Flow Revolver Agent and any assignee solely for the purpose of perfecting the security interest granted in such Deposit Account Collateral pursuant to the Term Loan/Cash Flow Revolver Collateral Documents, subject to the terms and conditions of this Section 5.5. The Term Loan/Cash Flow Revolver Agent agrees to hold the collateral controlled by the Term Loan/Cash Flow Revolver Agent as gratuitous bailee for the ABL Agent and any assignee solely for the purpose of perfecting the security interest granted in such collateral pursuant to the ABL Collateral Documents, subject to the terms and conditions of this Section 5.5.

(c) In the event that the ABL Agent (or its agent or bailees) has Lien filings against Intellectual Property that is part of the ABL Facility First Priority Collateral that are necessary for the perfection of Liens in such ABL Facility First Priority Collateral, the ABL Agent agrees to hold such Liens as gratuitous bailee for the Term Loan/Cash Flow Revolver Agent and any assignee solely for the purpose of perfecting the security interest granted in such Liens pursuant to the Term Loan/Cash Flow Revolver Collateral Documents, subject to the terms and conditions of this Section 5.5. In the event that the Term Loan/Cash Flow Revolver Agent (or its agent or bailees) has Lien filings against Intellectual Property that is part of the Term/Cash Flow Revolver Facility First Priority Collateral that are necessary for the perfection of Liens in such Term/Cash Flow Revolver Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent agrees to hold such Liens as gratuitous bailee for the ABL Agent and any assignee solely for the purpose of perfecting the security interest granted in such Liens pursuant to the ABL Collateral Documents, subject to the terms and conditions of this Section 5.5.

(d) Except as otherwise specifically provided herein (including Sections 3.1 and 4), until the Discharge of ABL Priority Claims has occurred, the ABL Agent shall be entitled to deal with the Pledged Collateral constituting ABL Facility First Priority Collateral in accordance with the terms of the ABL Loan Documents as if the Liens under the Term Loan/Cash Flow Revolver Collateral Documents did not exist. The rights of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders with respect to such Pledged Collateral shall at all times be subject to the terms of this Agreement. Except as otherwise specifically provided herein (including Sections 3.1 and 4), until the Discharge of Term Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent shall be entitled to deal with the Pledged Collateral constituting Term/Cash Flow Revolver Facility First Priority Collateral in accordance with the terms of the Term Loan/Cash Flow Revolver Loan Documents as if the Liens under the ABL Collateral Documents did not exist. The rights of the ABL Agent and the ABL Lenders with respect to such Pledged Collateral shall at all times be subject to the terms of this Agreement.

(e) The First Priority Agent shall have no obligation whatsoever to any Second Priority Agent or any Second Priority Lender to assure that the Pledged Collateral is genuine or owned

 

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by the Grantors or to protect or preserve rights or benefits of any Person or any rights pertaining to the applicable portion of the Common Collateral except as expressly set forth in this Section 5.5. The duties or responsibilities of the First Priority Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as gratuitous bailee for each Second Priority Agent for purposes of perfecting the Lien held by the Second Priority Lenders.

(f) The First Priority Agent shall not have by reason of the Second Priority Documents or this Agreement or any other document a fiduciary relationship in respect of any Second Priority Agent or any Second Priority Lender and the Second Priority Agent on its own behalf, and on behalf of the Second Priority Lenders hereby waives and releases the First Priority Agent from all claims and liabilities arising pursuant to the First Priority Agent’s role under this Section 5.5, as agent and gratuitous bailee with respect to the applicable portion of the Common Collateral.

(g) Upon the Discharge of ABL Priority Claims, the ABL Agent shall deliver to the Term Loan/Cash Flow Revolver Agent, to the extent that it is legally permitted to do so, the remaining Pledged Collateral (if any) and Deposit Account Collateral (if any) constituting ABL Facility First Priority Collateral in its possession or under its control, together with any necessary endorsements (or otherwise allow the Term Loan/Cash Flow Revolver Agent to obtain control of such Pledged Collateral and Deposit Account Collateral) or as a court of competent jurisdiction may otherwise direct. The Borrower shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify the ABL Agent for loss or damage suffered by the ABL Agent as a result of such transfer except for loss or damage suffered by the ABL Agent primarily as a result of its own willful misconduct, gross negligence or bad faith. The ABL Agent has no obligation to follow instructions from the Term Loan/Cash Flow Revolver Agent in contravention of this Agreement.

(h) Upon the Discharge of Term Priority Claims, the Term Loan/Cash Flow Revolver Agent shall deliver to the ABL Agent, to the extent that it is legally permitted to do so, the remaining Pledged Collateral (if any) constituting Term/Cash Flow Revolver Facility First Priority Collateral in its possession or under its control, together with any necessary endorsements (or otherwise allow the ABL Agent to obtain control of such Pledged Collateral) or as a court of competent jurisdiction may otherwise direct. The Borrower shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify the Term Loan/Cash Flow Revolver Agent for loss or damage suffered by the Term Loan/Cash Flow Revolver Agent as a result of such transfer except for loss or damage suffered by the Term Loan/Cash Flow Revolver Agent primarily as a result of its own willful misconduct, gross negligence or bad faith. The Term Loan/Cash Flow Revolver Agent has no obligation to follow instructions from the ABL Agent in contravention of this Agreement.

5.6. Access to Premises and Cooperation .

(a) If the ABL Agent takes any enforcement action with respect to the ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders (i) shall cooperate with the ABL Agent (at the sole cost and expense of the ABL Agent and the ABL Lenders and subject to the condition that the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have no obligation or duty to take any action or refrain from taking any action that could reasonably be expected to

 

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result in the incurrence of any liability or damage to the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders) in its efforts to enforce its security interest in the ABL Facility First Priority Collateral and to assemble the ABL Facility First Priority Collateral, (ii) shall not take any action designed or intended to hinder or restrict in any respect the ABL Agent from enforcing its security interest in the ABL Facility First Priority Collateral or assembling the ABL Facility First Priority Collateral, and (iii) shall permit the ABL Agent, its employees, agents, advisers and representatives, at the sole cost and expense of the ABL Lenders and upon reasonable advance notice, to use the Term/Cash Flow Revolver Facility First Priority Collateral (including (x) equipment, processors, computers and other machinery related to the storage or processing of records, documents or files, (y) intellectual property and (z) Real Estate Collateral), for a period not to exceed 180 days after the taking of such enforcement action, for purposes of (A) assembling the ABL Facility First Priority Collateral, (B) selling any or all of the ABL Facility First Priority Collateral in the ordinary course of business or otherwise, (C) removing any or all of the ABL Facility First Priority Collateral located in or on such Term/Cash Flow Revolver Facility First Priority Collateral, if any, or (D) taking reasonable actions to protect, secure, and otherwise enforce the rights of the ABL Agent and the ABL Lenders in and to the ABL Facility First Priority Collateral; provided , however , that nothing contained in this Agreement shall restrict the rights of the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders from selling, assigning or otherwise transferring any Term/Cash Flow Revolver Facility First Priority Collateral prior to the expiration of such 180 day period if the purchaser, assignee or transferee thereof agrees to be bound by the provisions of this Section 5.6. If any stay or other order prohibiting the exercise of remedies with respect to the ABL Facility First Priority Collateral has been entered by a court of competent jurisdiction, such 180 day period shall be tolled during the pendency of any such stay or other order.

(b) During the period of actual use or control by the ABL Agent or its agents or representatives of any Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral), the ABL Agent and the ABL Lenders shall (i) be responsible for the ordinary course third party expenses related thereto, and (ii) be obligated to repair at their expense any physical damage to such Term/Cash Flow Revolver Facility First Priority Collateral resulting from such use or control, and to leave such Term/Cash Flow Revolver Facility First Priority Collateral in substantially the same condition as it was at the commencement of such use or control, ordinary wear and tear excepted. The ABL Agent and the ABL Lenders jointly and severally agree to pay, indemnify and hold the Term Loan/Cash Flow Revolver Agent and its officers, directors, employees and agents harmless from and against any liability, cost, expense, loss or damages, including legal fees and expenses, resulting from the gross negligence or willful misconduct of the ABL Agent or any of its agents, representatives or invitees in its or their operation of such Term/Cash Flow Revolver Facility First Priority Collateral. Notwithstanding the foregoing, in no event shall the ABL Agent or the ABL Lenders have any liability to the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders pursuant to this Section 5.6 as a result of the condition of any Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) existing prior to the date of the exercise by the ABL Agent and the ABL Lenders of their rights under this Section 5.6, and the ABL Agent and the ABL Lenders shall have no duty or liability to maintain the Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) in a condition or manner better than that in which it was maintained prior to the use thereof by the ABL Agent, or

 

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for any diminution in the value of the Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) that results solely from ordinary wear and tear resulting from the use of the Term/Cash Flow Revolver Facility First Priority Collateral (including any Real Estate Collateral) by the ABL Agent in the manner and for the time periods specified under this Section 5.6. Without limiting the rights granted in this paragraph, the ABL Agent and the ABL Lenders shall cooperate with the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders in connection with any efforts made by the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders to sell the Term/Cash Flow Revolver Facility First Priority Collateral.

(c) If the Term Loan/Cash Flow Revolver Agent takes any enforcement action with respect to the Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Agent and the ABL Lenders (i) shall cooperate with the Term Loan/Cash Flow Revolver Agent (at the sole cost and expense of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders and subject to the condition that the ABL Agent and the ABL Lenders shall have no obligation or duty to take any action or refrain from taking any action that could reasonably be expected to result in the incurrence of any liability or damage to the ABL Agent or the ABL Lenders) in its efforts to enforce its security interest in the Term/Cash Flow Revolver Facility First Priority Collateral and assemble the Term/Cash Flow Revolver Facility First Priority Collateral and (ii) shall not take any action designed or intended to hinder or restrict in any respect the Term Loan/Cash Flow Revolver Agent from enforcing its security interest in the Term/Cash Flow Revolver Facility First Priority Collateral or from assembling the Term/Cash Flow Revolver Facility First Priority Collateral.

(d) The Term Loan/Cash Flow Revolver Agent agrees that if the ABL Agent shall require rights available under any permit or license controlled by the Term Loan/Cash Flow Revolver Agent in order to realize on any ABL Facility First Priority Collateral, the Term Loan/Cash Flow Revolver Agent shall take all such actions as shall be available to it (at the sole expense of the Grantors), consistent with applicable law and reasonably requested by the ABL Agent to make such rights available to the ABL Agent, subject to the Lien of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders. The ABL Agent agrees that if the Term Loan/Cash Flow Revolver Agent shall require rights available under any permit or license controlled by the ABL Agent in order to realize on any Term/Cash Flow Revolver Facility First Priority Collateral, the ABL Agent shall take all such actions as shall be available to it (at the sole expense of the Grantors), consistent with applicable law and reasonably requested by the Term Loan/Cash Flow Revolver Agent to make such rights available to the Term Loan/Cash Flow Revolver Agent, subject to the Liens of the ABL Agent and the ABL Lenders.

5.7. No Release If Event of Default; Reinstatement .

(a) If, at any time after the Discharge of ABL Priority Claims has occurred, the Borrower incurs any ABL Priority Claims, then such Discharge of ABL Priority Claims shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken prior to the date of such designation as a result of the occurrence of such first Discharge of ABL Priority Claims), and the applicable agreement governing such ABL Priority Claims shall automatically be treated as the ABL Credit Agreement for all purposes of this

 

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Agreement, including for purposes of the Lien priorities and rights in respect of Common Collateral set forth herein and the granting by the ABL Agent of amendments, waivers and consents hereunder. Upon receipt of notice of such incurrence (including the identity of the new ABL Agent), the Term Loan/Cash Flow Revolver Agent shall promptly (i) enter into such documents and agreements (at the expense of the Borrower), including amendments or supplements to this Agreement, as the Borrower or such new ABL Agent shall reasonably request in writing in order to provide the new ABL Agent the rights of the ABL Agent contemplated hereby and (ii) to the extent then held by the Term Loan/Cash Flow Revolver Agent, deliver to the ABL Agent the Pledged Collateral or Deposit Collateral that is ABL Facility First Priority Collateral together with any necessary endorsements (or otherwise allow such ABL Agent to obtain possession or control of such Pledged Collateral).

(b) If, at any time after the Discharge of Term Priority Claims has occurred, the Borrower incurs any Term Loan/Cash Flow Revolver Priority Claims, then such Discharge of Term Priority Claims shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken prior to the date of such designation as a result of the occurrence of such first Discharge of Term Priority Claims), and the applicable agreement governing such Term Loan/Cash Flow Revolver Priority Claims shall automatically be treated as the Term Loan/Cash Flow Revolver Agreement for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Common Collateral set forth herein and the granting by the Term Loan/Cash Flow Revolver Agent of amendments, waivers and consents hereunder. Upon receipt of notice of such incurrence (including the identity of the new Term Loan/Cash Flow Revolver Agent), the ABL Agent shall promptly (i) enter into such documents and agreements (at the expense of the Borrower), including amendments or supplements to this Agreement, as the Borrower or such new Term Loan/Cash Flow Revolver Agent shall reasonably request in writing in order to provide the new Term Loan/Cash Flow Revolver Agent the rights of the Term Loan/Cash Flow Revolver Agent contemplated hereby and (ii) to the extent then held by the ABL Agent, deliver to the Term Loan/Cash Flow Revolver Agent the Pledged Collateral or Deposit Collateral that is Term/Cash Flow Revolver Facility First Priority Collateral together with any necessary endorsements (or otherwise allow such Term Loan/Cash Flow Revolver Agent to obtain possession or control of such Pledged Collateral).

5.8. Legends . Upon the request of either the ABL Agent or the Term Loan/Cash Flow Revolver Agent, each party hereto agrees that each Credit Agreement and each other agreement that constitutes an ABL Collateral Document or a Term Loan/Cash Flow Revolver Collateral Agreement shall contain the applicable provisions set forth on Schedule II hereto, or similar provisions approved by the ABL Agent and the Term Loan/Cash Flow Revolver Agent, which approval shall not be unreasonably withheld or delayed.

Section 6. Insolvency or Liquidation Proceedings.

6.1. Financing Issues . If the Borrower or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding and shall move for the approval of the use of cash collateral or of financing (“ DIP Financing ”) under Section 363 or Section 364 of Title 11 of the United States Code or under any similar provision in any Bankruptcy Law, then each Second Priority Agent, on behalf of itself and each Second Priority Lender, agrees that it will raise no objection to, and will not support any objection to, and will not otherwise contest (a)

 

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such DIP Financing, the Liens on First Priority Collateral securing such DIP Financing (the “ DIP Financing Liens ”) or the use of cash collateral that constitutes First Priority Collateral, in each case unless the First Priority Agent or the First Priority Lenders shall then object or support an objection to such DIP Financing, DIP Financing Liens or use of cash collateral, and will not request adequate protection or any other relief in connection therewith (except to the extent permitted by Section 6.3) and, to the extent the Liens securing the First Priority Claims under the applicable Credit Agreement or, if no such Credit Agreement exists, under the other First Priority Documents are subordinated or pari passu with such DIP Financing Liens, will subordinate its Liens in the First Priority Collateral to such DIP Financing Liens on the same basis as the other Liens on First Priority Collateral securing the Second Priority Claims are so subordinated to Liens securing First Priority Claims under this Agreement, (b) any motion for relief from the automatic stay or from any injunction against foreclosure or enforcement in respect of First Priority Claims made by the First Priority Agent or any holder of First Priority Claims, (c) any lawful exercise by any holder of First Priority Claims of the right to credit bid First Priority Claims at any sale in foreclosure solely of First Priority Collateral, (d) any other request for judicial relief made in any court by any holder of First Priority Claims relating to the lawful enforcement of any Lien on First Priority Collateral or (e) any order relating to a sale of assets comprised of First Priority Collateral of any Grantor for which the First Priority Agent has consented that provides, to the extent the sale of First Priority Collateral is to be free and clear of Liens, that the Liens securing the First Priority Claims and the Second Priority Claims will attach to the proceeds of the sale on the same basis of priority as set forth in this Agreement; provided that all Liens granted to the ABL Agent or the Term Loan/Cash Flow Revolver Agent in any Insolvency or Liquidation Proceeding are intended by the parties hereto to be and shall be deemed to be subject to the Lien priority and the other terms and conditions of this Agreement.

6.2. Relief from the Automatic Stay . Until the Discharge of ABL Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that none of them shall seek relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the ABL Facility First Priority Collateral, without the prior written consent of the ABL Agent and the Required Lenders under the ABL Credit Agreement. Until the Discharge of Term Priority Claims has occurred, the ABL Agent, on behalf of itself and each ABL Lender, agrees that none of them shall seek relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Term/Cash Flow Revolver Facility First Priority Collateral, without the prior written consent of the Term Loan/Cash Flow Revolver Agent and the Required Lenders under the Term Loan/Cash Flow Revolver Agreement.

6.3. Adequate Protection . Except to the extent provided in Section 6.1, nothing in this Agreement shall limit the rights of the ABL Agent and the ABL Lenders, on the one hand, and the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders, on the other hand, from seeking or requesting adequate protection with respect to their interests in the applicable Common Collateral in any Insolvency or Liquidation Proceeding, including adequate protection in the form of a cash payment, periodic cash payments, cash payments of interest, additional collateral or otherwise; provided that (a) in the event that the ABL Agent, on behalf of itself or any of the ABL Lenders, seeks or requests adequate protection in respect of the ABL Claims and such adequate protection is granted in the form of

 

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additional collateral comprising assets of the type of assets that constitute Term/Cash Flow Revolver Facility First Priority Collateral, then the ABL Agent, on behalf of itself and each of the ABL Lenders, agrees, subject to Section 2.3, that the Term Loan/Cash Flow Revolver Agent shall also be granted a senior Lien on such collateral as security for the Term Loan/Cash Flow Revolver Priority Claims and that any Lien on such collateral securing the ABL Claims shall be subordinate to the Lien on such collateral securing the Term Loan/Cash Flow Revolver Priority Claims and (b) in the event that the Term Loan/Cash Flow Revolver Agent, on behalf of itself or any of the Term Loan/Cash Flow Revolver Lenders, seeks or requests adequate protection in respect of the Term Loan/Cash Flow Revolver Claims and such adequate protection is granted in the form of additional collateral comprising assets of the type of assets that constitute ABL Facility First Priority Collateral, then the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each of the Term Loan/Cash Flow Revolver Lenders, agrees, subject to Section 2.3, that the ABL Agent shall also be granted a senior Lien on such collateral as security for the ABL Priority Claims and that any Lien on such collateral securing the Term Loan/Cash Flow Revolver Claims shall be subordinate to the Lien on such collateral securing the ABL Priority Claims.

6.4. Avoidance Issues .

(a) If any ABL Lender is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Borrower or any other Grantor (or any trustee, receiver or similar person therefor), because the payment of such amount was declared to be fraudulent or preferential in any respect or for any other reason, any amount (an “ ABL Recovery ”), whether received as proceeds of security, enforcement of any right of setoff or otherwise, then as among the parties hereto the ABL Claims shall be deemed to be reinstated to the extent of such ABL Recovery and to be outstanding as if such payment had not occurred and the ABL Lenders shall be entitled, to the extent they are entitled hereunder, to a Discharge of ABL Priority Claims with respect to all such recovered amounts and shall have all rights hereunder until such time. If this Agreement shall have been terminated prior to such ABL Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto.

(b) If any Term Loan/Cash Flow Revolver Lender is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Borrower or any other Grantor (or any trustee, receiver or similar person therefor), because the payment of such amount was declared to be fraudulent or preferential in any respect or for any other reason, any amount (a “ Term Loan/Cash Flow Revolver Recovery ”), whether received as proceeds of security, enforcement of any right of setoff or otherwise, then as among the parties hereto the Term Loan/Cash Flow Revolver Claims shall be deemed to be reinstated to the extent of such Term Loan/Cash Flow Revolver Recovery and to be outstanding as if such payment had not occurred and the Term Loan/Cash Flow Revolver Lenders shall be entitled, to the extent they are entitled hereunder, to a Discharge of Term Priority Claims with respect to all such recovered amounts and shall have all rights hereunder until such time. If this Agreement shall have been terminated prior to such Term Loan/Cash Flow Revolver Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto.

 

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6.5. Application . This Agreement, which the parties hereto expressly acknowledge as a “subordination agreement” within the meaning of, and enforceable under, Section 510(a) of the United States Bankruptcy Code (or any successor provision), shall be applicable prior to and after the commencement of any Insolvency or Liquidation Proceeding. All references herein to any Grantor shall apply to any trustee for such Person and such Person as debtor in possession. The relative rights as to the Common Collateral and proceeds thereof shall continue after the filing thereof on the same basis as prior to the date of the petition, subject to any court order approving the financing of, or use of cash collateral by, any Grantor.

6.6. Waivers . Until the Discharge of ABL Priority Claims has occurred, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, (a) will not assert or enforce any claim under, Section 506(c) of the United States Bankruptcy Code (or any successor provision) senior to or on a parity with the Liens on ABL Facility First Priority Collateral securing the ABL Priority Claims for costs or expenses of preserving or disposing of any ABL Collateral and (b) waives any claim it may now or hereafter have arising out of the election by any ABL Lender of the application of Section 1111(b)(2) of the United States Bankruptcy Code (or any successor provision) with respect to any ABL Facility First Priority Collateral. Until the Discharge of Term Priority Claims has occurred, the ABL Agent, on behalf of itself and each ABL Lender, (a) will not assert or enforce any claim under Section 506(c) of the United States Bankruptcy Code (or any successor provision) senior to or on a parity with the Liens on Term/Cash Flow Revolver Facility First Priority Collateral securing the Term Loan/Cash Flow Revolver Priority Claims for costs or expenses of preserving or disposing of any Term Loan/Cash Flow Revolver Collateral and (b) waives any claim it may now or hereafter have arising out of the election by any Term Loan/Cash Flow Revolver Lender of the application of Section 1111(b)(2) of the United States Bankruptcy Code (or any successor provision) with respect to any Term/Cash Flow Revolver Facility First Priority Collateral.

6.7. Separate Grants of Liens . Each Term Loan/Cash Flow Revolver Lender and each ABL Lender acknowledges and agrees that (a) the grants of Liens pursuant to the ABL Collateral Documents and the Term Loan/Cash Flow Revolver Collateral Documents constitute two separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Common Collateral, the Term Loan/Cash Flow Revolver Claims are fundamentally different from the ABL Claims and must be separately classified in any plan of reorganization (or other plans of similar effect under any Bankruptcy Law) proposed or adopted in an Insolvency or Liquidation Proceeding. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders in respect of the Common Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders hereby acknowledge and agree that all distributions shall be made as if there were separate classes of ABL Claims and Term Loan/Cash Flow Revolver Claims against the Grantors, with the effect being that, to the extent that the aggregate value of the ABL Facility First Priority Collateral or Term/Cash Flow Revolver Facility First Priority Collateral is sufficient, the ABL Lenders or the Term Loan/Cash Flow Revolver Lenders, respectively, shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest that is available from each pool of Priority

 

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Collateral for each of the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders, respectively, before any distribution is made in respect of the claims held by the other Lenders from such Priority Collateral, with the other Lenders hereby agreeing to turn over to the respective other Lenders amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the aggregate recoveries.

6.8. Purchase Right .

(a) If (i) an Event of Default (as defined in the Term Loan/Cash Flow Revolver Agreement) under paragraph (g) or (h) of Article VII of the Term Loan/Cash Flow Revolver Agreement has occurred and is continuing or (ii) the ABL Agent or any ABL Lender has taken any action to Exercise Any Secured Creditor Remedies (each such event described in clauses (i) and (ii) herein above, a “ Purchase Option Event ”), the Term Loan/Cash Flow Revolver Lenders shall have the opportunity to purchase (at par and without premium) all (but not less than all) of the ABL Priority Claims pursuant to this Section 6.8; provided, that such option shall expire if the Term Loan/Cash Flow Revolver Lenders fail to deliver a written notice (a “ Purchase Notice ”) to the ABL Agent within fifteen (15) Business Days following the first date the Term Loan/Cash Flow Revolver Agent obtains actual knowledge of the occurrence of a Purchase Option Event, which Purchase Notice shall (A) be signed by the applicable Term Loan/Cash Flow Revolver Lenders committing to such purchase (the “ Purchasing Creditors ”) and indicate the percentage of the ABL Priority Claims to be purchased by each Purchasing Creditor (which aggregate commitments must add up to 100% of the ABL Priority Claims) and (B) state that (1) it is a Purchase Notice delivered pursuant to Section 6.8 of this Agreement and (2) the offer contained therein is irrevocable. Upon receipt of such Purchase Notice by the ABL Agent, the Purchasing Creditors shall have from the date of delivery thereof to and including the date that is five (5) Business Days after the Purchase Notice was received by the ABL Agent to purchase all (but not less than all) of the ABL Priority Claims pursuant to this Section 6.8 (the date of such purchase, the “ Purchase Date ”).

(b) On the Purchase Date, the ABL Lenders shall, subject to any required approval of any governmental authority and any limitation in the ABL Credit Agreement, in each case then in effect, if any, sell to the Purchasing Creditors all (but not less than all) of the ABL Priority Claims. On such Purchase Date, the Purchasing Creditors shall (i) pay to the ABL Agent, for the benefit of the ABL Lenders, as directed by the ABL Agent, in immediately available funds the full amount (at par and without premium) of all ABL Priority Claims then outstanding together with all accrued and unpaid interest and fees thereon, all in the amounts specified by the ABL Agent and determined in accordance with the applicable ABL Loan Documents and (ii) furnish such amount of cash collateral in immediately available funds as the ABL Agent determines in accordance with the ABL Loan Documents is required to secure the ABL Lenders in connection with any issued and outstanding letters of credit issued under the ABL Credit Agreement but not in any event in an amount greater than 105% of the aggregate undrawn amount of all such outstanding letters of credit (provided that any excess of such cash collateral for such letters of credit remaining at such time when there are no longer any such letters of credit outstanding shall be promptly paid over to the Term Loan/Cash Flow Revolver Agent). Interest and fees shall be calculated to but excluding the Purchase Date if the amounts so paid by the Purchasing Creditors to the bank account designated by the ABL Agent are received in such bank account prior to

 

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1:00 p.m., New York time, and interest shall be calculated to and including such Purchase Date if the amounts so paid by the Purchasing Creditors to the bank account designated by the ABL Agent are received in such bank account after 1:00 p.m., New York time.

(c) Any purchase pursuant to the purchase option set forth in this Section 6.8 shall, except as provided below, be expressly made without representation or warranty of any kind by the ABL Agent or the other ABL Lenders as to the ABL Obligations, the collateral or otherwise, and without recourse to the ABL Agent and the other ABL Lenders as to the ABL Obligations, the collateral or otherwise, except that the ABL Agent and each of the ABL Lenders, severally as to itself only, shall represent and warrant only as to the matters set forth in the assignment agreement to be entered into as provided herein in connection with such purchase, which shall be limited to: (i) the principal amount of the ABL Obligations being sold by it, (ii) that such Person has not created any Lien on any ABL Obligations being sold by it, and (iii) that such Person has the right to assign the ABL Obligations being assigned by it and its assignment agreement has been duly authorized.

(d) Upon notice to the Loan Parties by the Term Loan/Cash Flow Revolver Agent that the purchase of ABL Priority Claims pursuant to this Section 6.8 has been consummated by delivery of the purchase price to the ABL Agent (and ABL Agent’s confirmation of receipt of the purchase price), the Grantors shall treat the Purchasing Creditors as holders of the ABL Priority Claims and the Term Loan/Cash Flow Revolver Agent shall be deemed appointed to act in such capacity as the “agent”, “administrative agent” or “collateral agent” (or analogous capacity) (the “ Replacement Agent ”), as swingline lender (or analogous capacity)(the “ Replacement Swingline Lender ”) and as issuing lender (or analogous capacity) (the “ Replacement Issuing Lender ”) under the ABL Loan Documents, for all purposes hereunder and under each ABL Loan Document (it being agreed that the ABL Agent shall have no obligation to act as such replacement “agent”, “administrative agent” or “collateral agent” (or analogous capacity), the ABL swingline lender shall have no obligation to act as such replacement “swingline lender” (or analogous capacity) and no ABL issuing lender shall have an obligation to act as such replacement “issuing lender” (or analogous capacity) with respect to the issuance of any new letters of credit). In connection with any purchase of ABL Priority Claims pursuant to this Section 6.8, each ABL Lender and ABL Agent agrees to enter into and deliver to the applicable Term Loan/Cash Flow Revolver Lenders on the Purchase Date, as a condition to closing, an assignment agreement customarily used by the ABL Agent in connection with the ABL Credit Agreement and, at the expense of the Grantors, the ABL Agent and each other ABL Lender shall deliver all possessory collateral (if any), together with any necessary endorsements and other documents (including any applicable stock powers or bond powers), then in its possession or in the possession of its agent or bailee, or turn over control as to any pledged collateral, deposit accounts or securities accounts of which it or its agent or bailee then has control, as the case may be, to the Replacement Agent, and deliver the loan register and all other records pertaining to the ABL Priority Claims to the Replacement Agent and otherwise take such actions as may be reasonably appropriate to effect an orderly transition to the Replacement Agent. Upon the consummation of the purchase of the ABL Priority Claims pursuant to this Section 6.8, the ABL Agent (and all other agents under the ABL Credit Agreement) shall be deemed to have resigned as an “agent” or “administrative agent” and “collateral agent” (or analogous capacity) for the ABL Lenders under the ABL Loan Documents, the ABL swingline lender shall be deemed to have resigned as ABL swingline lender (or analogous capacity) and

 

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each of the ABL issuing lenders shall be deemed to have resigned as an ABL issuing lender (or analogous capacity) with respect to the issuance of any new letters of credit; provided that the ABL Agent (and all other agents under the ABL Credit Agreement) shall be entitled to all of the rights and benefits of a former “agent”, “administrative agent” or “collateral agent” (or analogous capacity), the ABL swingline lender shall be entitled to all of the rights and benefits of a swingline lender (or analogous capacity) for any periods during which it served as the swingline lender and each of the ABL issuing lenders shall be entitled to all of the rights and benefits of an issuing lender with respect to any outstanding letters of credit issued by it and for all periods during which it serves as an issuing lender, in each instance under the ABL Credit Agreement.

(e) Notwithstanding the foregoing purchase of the ABL Priority Claims by the Purchasing Creditors, the ABL Lenders shall retain those contingent indemnification obligations and other obligations under the ABL Loan Documents which by their express terms would survive any repayment of the ABL Priority Claims pursuant to this Section 6.8.

Section 7. Reliance; Waivers; etc.

7.1. Reliance . The consent by the First Priority Lenders to the execution and delivery of the Second Priority Documents to which the First Priority Lenders have consented and all loans and other extensions of credit made or deemed made on and after the date hereof by the First Priority Lenders to the Borrower or any Subsidiary shall be deemed to have been given and made in reliance upon this Agreement. The Second Priority Agent, on behalf of itself and each applicable Second Priority Lender, acknowledges that it and the applicable Second Priority Lenders are not entitled to rely on any credit decision or other decisions made by the First Lien Agent or any First Priority Lender in taking or not taking any action under the applicable Second Priority Document or this Agreement.

7.2. No Warranties or Liability . Except as set forth in Section 8.15, neither the First Priority Agent nor any First Priority Lender shall have been deemed to have made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the First Priority Documents, the ownership of any Common Collateral or the perfection or priority of any Liens thereon. The First Priority Lenders will be entitled to manage and supervise their respective loans and extensions of credit under the First Priority Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the First Priority Lenders may manage their loans and extensions of credit without regard to any rights or interests that any Second Priority Agent or any of the Second Priority Lenders have in the Common Collateral or otherwise, except as otherwise provided in this Agreement. Neither the First Priority Agent nor any First Priority Lender shall have any duty to any Second Priority Agent or any Second Priority Lender to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Borrower or any Subsidiary thereof (including the Second Priority Documents), regardless of any knowledge thereof that they may have or be charged with. Except as expressly set forth in this Agreement, the First Priority Agent, the First Priority Lenders, the Second Priority Agent and the Second Priority Lenders have not otherwise made to each other, nor do they hereby make to each other, any warranties, express or implied, nor do they assume any liability to each

 

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other with respect to (a) the enforceability, validity, value or collectibility of any of the First Priority Claims, the Second Priority Claims or any guarantee or security which may have been granted to any of them in connection therewith, (b) the Borrower’s title to or right to transfer any of the Common Collateral or (c) any other matter except as expressly set forth in this Agreement.

7.3. Obligations Unconditional . All rights, interests, agreements and obligations of the First Lien Agent and the First Priority Lenders, and the Second Priority Agent and the Second Priority Lenders, respectively, hereunder shall remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any First Priority Documents or any Second Priority Documents;

(b) any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Priority Claims or Second Priority Claims, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of the ABL Credit Agreement or any other ABL Loan Document or of the terms of the Term Loan/Cash Flow Revolver Agreement or any other Term Loan/Cash Flow Revolver Loan Document;

(c) any exchange of any security interest in any Common Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Priority Claims or Second Priority Claims or any guarantee thereof;

(d) the commencement of any Insolvency or Liquidation Proceeding in respect of the Borrower or any other Grantor; or

(e) any other circumstances that otherwise might constitute a defense available to, or a discharge of, the Borrower or any other Grantor in respect of the First Priority Claims, or of any Second Priority Agent or any Second Priority Lenders in respect of this Agreement.

Section 8. Miscellaneous.

8.1. Conflicts . Subject to Section 8.19, in the event of any conflict between the provisions of this Agreement and the provisions of any ABL Loan Document or any Term Loan/Cash Flow Revolver Loan Document, the provisions of this Agreement shall govern.

8.2. Term of this Agreement; Severability . Subject to Section 5.7 and Section 6.4, (i) if no Event of Default has occurred and is continuing under either Credit Agreement (as such term is defined in the applicable Credit Agreement), this Agreement shall terminate upon the first to occur of the Discharge of ABL Priority Claims or the Discharge of Term Priority Claims and (ii) if an Event of Default has occurred and is continuing under either Credit Agreement (as such term is defined in the applicable Credit Agreement), this Agreement shall terminate upon the Discharge of ABL Priority Claims, the Discharge of Term Priority Claims and the payment in full in cash of all ABL Other Claims and Term Loan/Cash Flow Revolver Other Claims (other than, in each case, indemnification and contingent obligations for

 

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which no claim has been made). This is a continuing agreement of lien subordination and the First Priority Lenders may continue, at any time and without notice to the Second Priority Agent or any Second Priority Lender, to extend credit and other financial accommodations and lend monies to or for the benefit of the Borrower or any other Grantor constituting First Priority Claims in reliance hereon. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

8.3. Amendments; Waivers . No amendment, modification or waiver of any of the provisions of this Agreement by the ABL Agent or the Term Loan/Cash Flow Revolver Agent shall be deemed to be made unless the same shall be in writing signed on behalf of the party making the same or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. The Borrower and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights or obligations are affected.

8.4. Information Concerning Financial Condition of the Borrower and the Subsidiaries . Neither the First Priority Agent nor any First Priority Lender shall have any obligation to the Second Priority Agent or any Second Priority Lender to keep the Second Priority Agent or any Second Priority Lender informed of, and the Second Priority Agent and the Second Priority Lenders shall not be entitled to rely on the First Priority Agent or the First Priority Lenders with respect to, (a) the financial condition of the Borrower and the Subsidiaries and all endorsers and/or guarantors of the First Priority Claims or the Second Priority Claims and (b) all other circumstances bearing upon the risk of nonpayment of the First Priority Claims or the Second Priority Claims. The ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall have no duty to advise any other party hereunder of information known to it or them regarding such condition or any such circumstances or otherwise. In the event that the ABL Agent, any ABL Lender, the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to any other party, it or they shall be under no obligation (w) to make, and the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided, (x) to provide any additional information or to provide any such information on any subsequent occasion, (y) to undertake any investigation or (z) to disclose any information that, pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential. Nothing in this section shall amend, modify or otherwise affect the confidentiality obligations of the ABL Agent and the ABL Lenders under the ABL Credit Agreement and of the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders under the Term Loan/Cash Flow Revolver Agreement.

 

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8.5. Subrogation . The Term Loan/Cash Flow Revolver Agent, for and on behalf of itself and the Term Loan/Cash Flow Revolver Lenders, agrees that no payment to the ABL Agent or any ABL Lender pursuant to the provisions of this Agreement shall entitle the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender to exercise any rights of subrogation in respect thereof until the Discharge of ABL Priority Claims shall have occurred. Following the Discharge of ABL Priority Claims, the ABL Agent agrees to execute such documents, agreements, and instruments as the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the ABL Priority Claims resulting from payments to the ABL Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the ABL Agent are paid by such Person upon request for payment thereof. The ABL Agent, for and on behalf of itself and the ABL Lenders, agrees that no payment to the Term Loan/Cash Flow Revolver Agent or any Term Loan/Cash Flow Revolver Lender pursuant to the provisions of this Agreement shall entitle the ABL Agent or any ABL Lender to exercise any rights of subrogation in respect thereof until the Discharge of Term Priority Claims shall have occurred. Following the Discharge of Term Priority Claims, the Term Loan/Cash Flow Revolver Agent agrees to execute such documents, agreements, and instruments as the ABL Agent or any ABL Lender may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the Term Loan/Cash Flow Revolver Claims resulting from payments to the Term Loan/Cash Flow Revolver Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the Term Loan/Cash Flow Revolver Agent are paid by such Person upon request for payment thereof.

8.6. Application of Payments .

(a) Except as otherwise provided herein, all payments received by the ABL Lenders may be applied, reversed and reapplied, in whole or in part, to such part of the ABL Priority Claims as the ABL Lenders, in their sole discretion, deem appropriate, consistent with the terms of the ABL Loan Documents. Except as otherwise provided herein, the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, assents to any such extension or postponement of the time of payment of the ABL Priority Claims or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security that may at any time secure any part of the ABL Priority Claims and to the addition or release of any other Person primarily or secondarily liable therefor.

(b) Except as otherwise provided herein, all payments received by the Term Loan/Cash Flow Revolver Lenders may be applied, reversed and reapplied, in whole or in part, to such part of the Term Loan/Cash Flow Revolver Priority Claims as the Term Loan/Cash Flow Revolver Lenders, in their sole discretion, deem appropriate, consistent with the terms of the Term Loan/Cash Flow Revolver Loan Documents. Except as otherwise provided herein, the ABL Agent, on behalf of itself and each ABL Lender, assents to any such extension or postponement of the time of payment of the Term Loan/Cash Flow Revolver Priority Claims or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security that may at any time secure any part of the Term Loan/Cash Flow Revolver Priority Claims and to the addition or release of any other Person primarily or secondarily liable therefor.

 

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8.7. Consent to Jurisdiction; Waivers . Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any state or federal court located in New York, New York (the “ New York Courts ”), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Term Loan/Cash Flow Revolver Loan Document or ABL Loan Document, or for recognition or enforcement of any judgment. Each of the parties hereto irrevocably consents that all service of process may be made by registered mail directed to such party as provided in Section 8.8 for such party. Service so made shall be deemed to be completed three days after the same shall be posted as aforesaid. Each of the parties hereto irrevocably and unconditionally waives, to the extent it may legally and effectively do so, any objection to any action instituted hereunder in any such court based on forum non conveniens, and any objection to the venue of any action instituted hereunder in any such court. Each of the parties hereto irrevocably and unconditionally waives, to the extent it may legally and effectively do so, any right it may have to trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Agreement, or any course of conduct, course of dealing, verbal or written statement or action of any party hereto in connection with the subject matter hereof.

8.8. Notices . All notices to the ABL Lenders and the Term Loan/Cash Flow Revolver Lenders permitted or required under this Agreement may be sent to the ABL Agent or the Term Loan/Cash Flow Revolver Agent as provided in the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement, the other relevant ABL Loan Documents or the other relevant Term Loan/Cash Flow Revolver Loan Documents, as applicable. Unless otherwise specifically provided herein or therein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, electronically mailed or sent by courier service or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or electronic mail or upon receipt via U.S. mail (registered or certified, with postage prepaid and properly addressed). For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties. Each First Priority Agent hereby agrees to promptly notify each Second Priority Agent upon payment in full in cash of all Indebtedness under the applicable First Priority Documents (other than indemnification and contingent obligations for which no claim has been made).

8.9. Further Assurances . The ABL Agent, on behalf of itself and each ABL Lender, and the Term Loan/Cash Flow Revolver Agent, on behalf of itself and each Term Loan/Cash Flow Revolver Lender, agrees that each of them shall take such further action and shall execute and deliver to the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent and the Term Loan/Cash Flow Revolver Lenders such additional documents and instruments (in recordable form, if requested) as the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent or the Term Loan/Cash Flow Revolver Lenders may reasonably request, at the expense of the Borrower, to effectuate the terms of and the Lien priorities contemplated by this Agreement.

8.10. Governing Law . This Agreement shall be construed in accordance with and governed by the laws of the State of New York.

 

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8.11. No Third Party Beneficiaries; Binding on Successors and Assigns . This Agreement shall be binding upon the ABL Agent, the ABL Lenders, the Term Loan/Cash Flow Revolver Agent, the Term Loan/Cash Flow Revolver Lenders, the Borrower, the Borrower’s Subsidiaries party hereto and their respective permitted successors and assigns. No other Person shall have or be entitled to assert rights or benefits hereunder. Without limiting the generality of the foregoing (a) any person to whom a Lender assigns or otherwise transfers all or any portion of the ABL Claims or the Term Loan/Cash Flow Revolver Claims, as applicable, in accordance with the applicable ABL Loan Documents or Term Loan/Cash Flow Revolver Loan Documents, as the case may be, shall become vested with all the rights and obligations in respect thereof granted to such Lenders, without any further consent or action of the other Lenders and (b) any counterparty to a Hedging Agreement or an agreement relating to Cash Management Obligations (as such terms are defined in the ABL Credit Agreement or the Term Loan/Cash Flow Revolver Agreement, as applicable) that accepts the benefit of any Common Collateral in accordance with the ABL Collateral Documents or the Term Loan/Cash Flow Revolver Collateral Documents, as applicable, shall be deemed to have agreed to be bound by the terms of this Agreement.

8.12. Specific Performance . Each First Priority Agent may demand specific performance of this Agreement. Each Second Priority Agent, on behalf of itself and each Second Priority Lender, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action that may be brought by the First Priority Agent.

8.13. Section Titles . The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Agreement.

8.14. Counterparts . This Agreement may be executed in one or more counterparts, including by means of facsimile, each of which shall be an original and all of which shall together constitute one and the same document. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other customary means of electronic transmission (e.g., “PDF”) shall be as effective as delivery of a manually executed counterpart hereof.

8.15. Authorization . By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement. The ABL Agent represents and warrants that this Agreement is binding upon the ABL Lenders. The Term Loan/Cash Flow Revolver Agent represents and warrants that this Agreement is binding upon the Term Loan/Cash Flow Revolver Lenders.

8.16. Effectiveness . This Agreement shall become effective when executed and delivered by the parties hereto. This Agreement shall be effective both before and after the commencement of any Insolvency or Liquidation Proceeding. All references to the Borrower or any other Grantor shall include the Borrower or any other Grantor as debtor and debtor-in-possession and any receiver or trustee for the Borrower or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding.

 

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8.17. ABL Agent and Term Loan/Cash Flow Revolver Agent . It is understood and agreed that (a) UBS is entering into this Agreement in its capacity as collateral agent under the ABL Credit Agreement and the provisions of Article VIII of the ABL Credit Agreement applicable to UBS as collateral agent thereunder shall also apply to UBS as ABL Agent hereunder and (b) Credit Suisse is entering in this Agreement in its capacity as collateral agent under the Term Loan/Cash Flow Revolver Agreement and the provisions of Article VIII of the Term Loan/Cash Flow Revolver Agreement applicable to Credit Suisse as collateral agent thereunder shall also apply to Credit Suisse as Term Loan/Cash Flow Revolver Agent hereunder.

8.18. Relative Rights . Notwithstanding anything in this Agreement to the contrary (except to the extent contemplated by Section 5.3(d) or (e)), nothing in this Agreement is intended to or will (a) amend, waive or otherwise modify the provisions of the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other ABL Loan Document or Term Loan/Cash Flow Revolver Loan Documents entered into in connection with the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other ABL Loan Document or Term Loan/Cash Flow Revolver Loan Document or permit the Borrower or any Subsidiary to take any action, or fail to take any action, to the extent such action or failure would otherwise constitute a breach of, or default under, the ABL Credit Agreement or any other ABL Loan Documents entered into in connection with the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other Term Loan/Cash Flow Revolver Loan Documents entered into in connection with the Term Loan/Cash Flow Revolver Loan Documents, (b) change the relative priorities of the ABL Priority Claims, the ABL Other Claims or the Liens granted under the ABL Loan Documents on the Common Collateral (or any other assets) as among the ABL Lenders, or change the relative priorities of the Term Loan/Cash Flow Revolver Priority Claims, the Term Loan/Cash Flow Revolver Other Claims or the Liens granted under the Term Loan/Cash Flow Revolver Loan Documents on the Common Collateral (or any other assets) as among the Term Loan/Cash Flow Revolver Lenders, (c) otherwise change the relative rights of the ABL Lenders in respect of the Common Collateral as among such ABL Lenders, or the relative rights of the Term Loan/Cash Flow Revolver Lenders in respect of the Common Collateral as among such Term Loan/Cash Flow Revolver Lenders or (d) obligate the Borrower or any Subsidiary to take any action, or fail to take any action, that would otherwise constitute a breach of, or default under, the ABL Credit Agreement or any other ABL Loan Document entered into in connection with the ABL Credit Agreement, the Term Loan/Cash Flow Revolver Agreement or any other Term Loan/Cash Flow Revolver Loan Documents entered into in connection with the Term Loan/Cash Flow Revolver Agreement. None of the Borrower or any Subsidiary shall have any rights hereunder except as expressly set forth herein (including as set forth in Section 8.3).

8.19. Supplements . Upon the execution by any Subsidiary of the Borrower of a supplement hereto in form and substance satisfactory to the ABL Agent and the Term Loan/Cash Flow Revolver Agent, such Subsidiary shall be a party to this Agreement and shall be bound by the provisions hereof to the same extent as the Borrower and each other Grantor are so bound.

 

46


QUORUM HEALTH CORPORATION,
By:  

 

  Name:
  Title:
Address:

Signature Page to Intercreditor Agreement


Anna Hospital Corporation   Marion Hospital Corporation
Big Bend Hospital Corporation   Massillon Community Health System LLC
Big Spring Hospital Corporation   Massillon Health System LLC
Blue Island Hospital Company, LLC   Massillon Holdings, LLC
Blue Island Illinois Holdings, LLC   McKenzie Tennessee Hospital Company, LLC
Blue Ridge Georgia Holdings, LLC   MMC of Nevada, LLC
Centre Hospital Corporation   Monroe HMA, LLC
Clinton Hospital Corporation   MWMC Holdings, LLC
CSRA Holdings, LLC   National Healthcare of Mt. Vernon, Inc.
Deming Hospital Corporation   Phillips Hospital Corporation
DHSC, LLC   QHC California Holdings, LLC
Evanston Hospital Corporation   QHG of Massillon, Inc.
Forrest City Arkansas Hospital Company, LLC   Quorum Health Investment Company, LLC
Forrest City Hospital Corporation   Quorum Health Resources, LLC
Fort Payne Hospital Corporation   Red Bud Hospital Corporation
Galesburg Hospital Corporation   Red Bud Illinois Hospital Company, LLC
Granite City Hospital Corporation   San Miguel Hospital Corporation
Granite City Illinois Hospital Company, LLC   Sunbury Hospital Company, LLC
Greenville Hospital Corporation   Tooele Hospital Corporation
Hamlet H.M.A., LLC   Triad of Oregon, LLC
Hospital of Barstow, Inc.   Watsonville Hospital Corporation
Hospital of Louisa, Inc.   Waukegan Hospital Corporation
Jackson Hospital Corporation   Waukegan Illinois Hospital Company, LLC
Lexington Hospital Corporation   Williamston Hospital Corporation
  Winder HMA, LLC
    On behalf of each of the above entities:
    by  

 

      Name:   Michael J. Culotta
      Title:   President

Signature Page to Intercreditor Agreement


CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH, as Term Loan/Cash
Flow Revolver Agent
By:  

 

  Name:
  Title:
By:  

 

  Name:
  Title:
Address:

Signature Page to Intercreditor Agreement


UBS AG, STAMFORD BRANCH,
as ABL Agent
By:  

 

  Name:
  Title:
By:  

 

  Name:
  Title:
Address:
600 Washington Boulevard
Stamford, Connecticut 06901
Attention: DL – UBS Agency
Telecopier: (203) 719-3888
Email: DL-UBSAgency@ubs.com
with copies to:
1285 Avenue of the Americas
New York, New York 10019
Attention: Alfred Scoyni
Email: Alfred.scoyni@ubs.com
and
1285 Avenue of the Americas
New York, New York 10019
Attention: Kristine Shryock
Email: Kristine.Shryock@ubs.com

Signature Page to Intercreditor Agreement


SCHEDULE I

Subsidiary Guarantors

 

Anna Hospital Corporation

Big Bend Hospital Corporation

Big Spring Hospital Corporation

Blue Island Hospital Company, LLC

Blue Island Illinois Holdings, LLC

Blue Ridge Georgia Holdings, LLC

Centre Hospital Corporation

Clinton Hospital Corporation

CSRA Holdings, LLC

Deming Hospital Corporation

DHSC, LLC

Evanston Hospital Corporation

Forrest City Arkansas Hospital Company, LLC

Forrest City Hospital Corporation

Fort Payne Hospital Corporation

Galesburg Hospital Corporation

Granite City Hospital Corporation

Granite City Illinois Hospital Company, LLC

Greenville Hospital Corporation

Hamlet H.M.A., LLC

Hospital of Barstow, Inc.

Hospital of Louisa, Inc.

Jackson Hospital Corporation

Lexington Hospital Corporation

  

Marion Hospital Corporation

Massillon Community Health System LLC

Massillon Health System LLC

Massillon Holdings, LLC

McKenzie Tennessee Hospital Company, LLC

MMC of Nevada, LLC

Monroe HMA, LLC

MWMC Holdings, LLC

National Healthcare of Mt. Vernon, Inc.

Phillips Hospital Corporation

QHC California Holdings, LLC

QHG of Massillon, Inc.

Quorum Health Investment Company, LLC

Quorum Health Resources, LLC

Red Bud Hospital Corporation

Red Bud Illinois Hospital Company, LLC

San Miguel Hospital Corporation

Sunbury Hospital Company, LLC

Tooele Hospital Corporation

Triad of Oregon, LLC

Watsonville Hospital Corporation

Waukegan Hospital Corporation

Waukegan Illinois Hospital Company, LLC

Williamston Hospital Corporation

Winder HMA, LLC


SCHEDULE II

Provision for Credit Agreements

“Reference is made to the ABL Intercreditor Agreement dated as of April [29], 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto, UBS AG, STAMFORD BRANCH, as ABL Agent (as defined therein), and Credit Suisse AG, Cayman Islands Branch, as Term Loan/Cash Flow Revolver Agent (as defined therein). Each Lender hereunder (a) consents to the subordination of Liens provided for in the ABL Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the ABL Intercreditor Agreement and (c) authorizes and instructs the [ABL Agent] [Term Loan/Cash Flow Revolver Agent] to enter into the ABL Intercreditor Agreement as [ABL Agent] [Term Loan/Cash Flow Revolver Agent] and on behalf of such Lender. The foregoing provisions are intended as an inducement to the Lenders under the Credit Agreement to extend credit and such Lenders are intended third party beneficiaries of such provisions and the provisions of the ABL Intercreditor Agreement.”

Provision for Security Documents

“Reference is made to the ABL Intercreditor Agreement dated as of April [29], 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto, UBS AG, STAMFORD BRANCH, as ABL Agent (as defined therein), and Credit Suisse AG, Cayman Islands Branch, as Term Loan/Cash Flow Revolver Agent (as defined therein). Notwithstanding anything herein to the contrary, the lien and security interest granted to the [Collateral Agent], for the benefit of the secured parties hereunder, pursuant to this Agreement and the exercise of any right or remedy by the [Collateral Agent] and the other secured parties hereunder are subject to the provisions of the ABL Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of the ABL Intercreditor Agreement and this Agreement, the provisions of the ABL Intercreditor Agreement shall control.”


EXHIBIT B

FORM OF

QUORUM HEALTH CORPORATION

ADMINISTRATIVE QUESTIONNAIRE

Please accurately complete the following information and return via Fax to the attention of Agency Administration at UBS AG, Stamford Branch as soon as possible, at Fax No. (203) 719-4176.

 

LENDER LEGAL NAME TO APPEAR IN DOCUMENTATION:

GENERAL INFORMATION - DOMESTIC LENDING OFFICE:

 

Institution Name:  

 

Street Address:  

 

City, State, Zip Code:  

 

GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:

 

Institution Name:  

 

Street Address:  

 

City, State, Zip Code:  

 

POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:

CREDIT CONTACTS:

 

Primary Contact:  

 

Street Address:  

 

City, State, Zip Code:  

 

Phone Number:  

 

Fax Number:  

 

Backup Contact:  

 

Street Address:  

 

City, State, Zip Code:  

 

Phone Number:  

 

Fax Number:  

 


TAX WITHHOLDING:

 

United States Person   Y   N  
(as defined in Section 7701(a)(30) of the Code)      
Enclose Form W-8 or W-9, as applicable      
Tax ID Number                                                    

POST-CLOSING, ONGOING ADMIN. CONTACTS / NOTIFICATION METHODS:

ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.

 

Contact:  

 

Street Address:  

 

City, State, Zip Code:  

 

Phone Number:  

 

Fax Number:  

 

PAYMENT INSTRUCTIONS:

 

Name of Bank to which funds are to be transferred:  

 

 

Routing Transit/ABA number of Bank to which funds are to be transferred:  

 

Name of Account, if applicable:  

 

Account Number:  

 

Additional information:  

 

 

MAILINGS:

Please specify the person to whom the Borrower should send financial and compliance information received subsequent to the closing (if different from primary credit contact):

 

Name:  

 

Street Address:  

 

City, State, Zip Code:  

 

 

2


It is very important that all the above information be accurately completed and that this questionnaire be returned to the person specified in the introductory paragraph of this questionnaire as soon as possible. If there is someone other than yourself who should receive this questionnaire, please notify us of that person’s name and Fax number and we will Fax a copy of the questionnaire. If you have any questions about this form, please call Agency Administration at UBS AG, Stamford Branch.

 

3


EXHIBIT C

FORM OF

ASSIGNMENT AND ACCEPTANCE

Reference is made to the ABL Credit Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Quorum Health Corporation, a Delaware corporation (the “ Borrower ”), the Lenders (as defined in Article I of the Credit Agreement), and UBS AG, STAMFORD BRANCH, as administrative agent (in such capacity, the “ Administrative Agent ”), and as collateral agent for the Lenders. Terms defined in the Credit Agreement are used herein with the same meanings.

1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below (but not prior to the registration of the information contained herein in the Register pursuant to Section 9.04(d) of the Credit Agreement), the interests set forth below (the “ Assigned Interest ”) in the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the amounts and percentages set forth below of (i) the Commitments of the Assignor on the Effective Date and (ii) the Loans owing to the Assignor which are outstanding on the Effective Date. Each of the Assignor and the Assignee hereby makes and agrees to be bound by all the representations, warranties and agreements set forth in Section 9.04(c) of the Credit Agreement, a copy of which has been received by each such party. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

2. This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if the Assignee is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, any forms referred to in Section 2.20(e) of the Credit Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is not already a Lender under the Credit Agreement, a completed Administrative Questionnaire and (iii) unless waived or reduced in the sole discretion of the Administrative Agent, a processing and recordation fee of $3,500. 1

3. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York.

 

1   Such fee may be waived or reduced in the sole discretion of the Administrative Agent and will not apply in the case of an assignment by a Lender to an Approved Fund that is managed by such Lender or an Affiliate of such Lender or by an entity or an Affiliate of an entity that administers or manages such Lender.


Date of Assignment:

Legal Name of Assignor (“ Assignor ”):

Legal Name of Assignee (“ Assignee ”):

Assignee’s Address for Notices:

Effective Date of Assignment (“ Effective Date ”):

 

Class of Loans/Commitments Assigned

   Principal Amount
Assigned
   Percentage of Loans/Commitments
of the applicable Class Assigned
(set forth, to at least 8 decimals, as
a percentage of the aggregate
Loans and Commitments, of the
applicable Class, of all Lenders)
 
   $                      
   $                      

[Remainder of Page Intentionally Left Blank]

 

2


Accepted

 

UBS AG, STAMFORD BRANCH, as Administrative Agent,
  by:  

 

    Name:
    Title:
   

 

    Name:
    Title:
[QUORUM HEALTH CORPORATION],
  by:  

 

    Name:
    Title: ] 2

 

2   Consent of the Borrower is only required in the case of an assignment of a Revolving Credit Commitment; provided , that the consent of the Borrower shall not be required for any assignment (a) made to another Lender or an Affiliate of a Lender or (b) after the occurrence and during the continuance of any Event of Default.

 

3


The terms set forth above are hereby agreed to:
                     , as Assignor,
by:  

 

  Name:  
  Title:  
                     , as Assignee,
by:  

 

  Name:  
  Title:  

 

4


EXHIBIT D

FORM OF

BORROWING REQUEST

UBS AG, Stamford Branch,

as Administrative Agent for

    the Lenders referred to below,

677 Washington Boulevard

Stamford, Connecticut 06901

Attention: Banking Products Services Agency

[DATE] 1

Ladies and Gentlemen:

The undersigned, Quorum Healthcare Corporation, a Delaware corporation, (the “ Borrower ”), refers to the ABL Credit Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the lenders from time to time party thereto (the “ Lenders ”) and UBS AG, Stamford Branch, as administrative agent (in such capacity, the “ Administrative Agent ”) and collateral agent for the Lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives the Administrative Agent notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in connection therewith sets forth below the terms on which such Borrowing is requested to be made:

 

(A)   Type of Borrowing 2  

 

 
(B)   Date of Borrowing 3  

 

 
(C)   Account Number and Location  

 

 
(D)   Principal Amount of Borrowing  

 

 
(E)   Interest Period 4  

 

 

 

1   The Administrative Agent must be notified irrevocably by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon) (New York City time), three Business Days before a proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of a proposed Borrowing, in each case to be confirmed promptly by hand delivery or fax of a Borrowing Request to the Administrative Agent.
2   Specify whether such Borrowing is to be Revolving Credit Borrowing or Swingline Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing.
3   Date of Borrowing must be a Business Day.
4   If such Borrowing is to be a Eurodollar Borrowing, specify the Interest Period with respect thereto.


The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation of such Loan) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this paragraph being called a “ Breakage Event ”) or (b) any default in the making of any payment or prepayment of any Eurodollar Loan required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this paragraph shall be delivered to the Borrower and shall be conclusive absent manifest error.

The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, on the date of this Borrowing Request and on the date of the related Borrowing, the conditions to lending specified in paragraphs (b) and (c) of Section 4.01 of the Credit Agreement have been satisfied.

 

QUORUM HEALTH CORPORATION,
  by  

 

   

Name:

Title:

 

2


EXHIBIT E

FORM OF

GUARANTEE AND COLLATERAL AGREEMENT

(See attached)


EXECUTION VERSION

ABL GUARANTEE AND COLLATERAL AGREEMENT

dated as of

April 29, 2016

among

QUORUM HEALTH CORPORATION,

as Borrower,

the Subsidiaries of the Borrower

from time to time party hereto

and

UBS AG, STAMFORD BRANCH

as Collateral Agent

Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are expressly subject in all respects to the terms of the ABL Intercreditor Agreement (as defined in, and entered into in accordance with the provisions of, the ABL Credit Agreement referred to herein). In the event of any conflict or inconsistency between the provisions of this Agreement and the terms of the ABL Intercreditor Agreement, the terms of the ABL Intercreditor Agreement shall control.

 

 


TABLE OF CONTENTS

 

         Page  
ARTICLE I   
Definitions   

SECTION 1.01.

 

ABL Credit Agreement

     1   

SECTION 1.02.

 

Other Defined Terms

     2   
ARTICLE II   
Guarantee   

SECTION 2.01.

 

Guarantee

     7   

SECTION 2.02.

 

Guarantee of Payment

     7   

SECTION 2.03.

 

No Limitations, Etc.

     7   

SECTION 2.04.

 

Reinstatement

     9   

SECTION 2.05.

 

Agreement To Pay; Subrogation

     9   

SECTION 2.06.

 

Information

     9   
ARTICLE III   
Pledge of Securities   

SECTION 3.01.

 

Pledge

     9   

SECTION 3.02.

 

Delivery of the Pledged Collateral

     10   

SECTION 3.03.

 

Representations, Warranties and Covenants

     11   

SECTION 3.04.

 

Certification of Limited Liability Company Interests and Limited Partnership Interests

     12   

SECTION 3.05.

 

Registration in Nominee Name; Denominations

     12   

SECTION 3.06.

 

Voting Rights; Dividends and Interest, Etc.

     13   
ARTICLE IV   
Security Interests in Personal Property   

SECTION 4.01.

 

Security Interest

     15   

SECTION 4.02.

 

Representations and Warranties

     17   

SECTION 4.03.

 

Covenants

     19   

SECTION 4.04.

 

Other Actions

     22   

SECTION 4.05.

 

Covenants Regarding Patent, Trademark and Copyright Collateral

     24   


ARTICLE V   
Remedies   

SECTION 5.01.

 

Remedies Upon Default

     26   

SECTION 5.02.

 

Application of Proceeds

     28   

SECTION 5.03.

 

Grant of License to Use Intellectual Property

     29   

SECTION 5.04.

 

Securities Act, Etc.

     29   
ARTICLE VI   
Indemnity, Subrogation and Subordination   

SECTION 6.01.

 

Indemnity and Subrogation

     30   

SECTION 6.02.

 

Contribution and Subrogation

     30   

SECTION 6.03.

 

Subordination

     31   
ARTICLE VII   
Miscellaneous   

SECTION 7.01.

 

Notices

     31   

SECTION 7.02.

 

Security Interest Absolute

     32   

SECTION 7.03.

 

Survival of Agreement

     32   

SECTION 7.04.

 

Binding Effect; Several Agreement

     32   

SECTION 7.05.

 

Successors and Assigns

     33   

SECTION 7.06.

 

Collateral Agent’s Fees and Expenses; Indemnification

     33   

SECTION 7.07.

 

Collateral Agent Appointed Attorney-in-Fact

     34   

SECTION 7.08.

 

Applicable Law

     35   

SECTION 7.09.

 

Waivers; Amendment

     35   

SECTION 7.10.

 

WAIVER OF JURY TRIAL

     35   

SECTION 7.11.

 

Severability

     36   

SECTION 7.12.

 

Counterparts

     36   

SECTION 7.13.

 

Headings

     36   

SECTION 7.14.

 

Jurisdiction; Consent to Service of Process

     36   

SECTION 7.15.

 

Termination or Release

     37   

SECTION 7.16.

 

Additional Subsidiaries

     38   

SECTION 7.17.

 

Right of Setoff

     38   

 

ii


Schedules

 

Schedule I    Exact Legal Names of Each Grantor
Schedule II    Guarantors
Schedule III    Equity Interests; Stock Ownership; Pledged Debt Securities
Schedule IV    Debt Instruments; Advances
Schedule V    Intellectual Property
Schedule VI    Commercial Tort Claims

Exhibits

 

Exhibit A    Form of Supplement

 

iii


ABL GUARANTEE AND COLLATERAL AGREEMENT dated as of April 29, 2016 (this “ Agreement ”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “ Borrower ”), the Subsidiaries from time to time party hereto and UBS AG, STAMFORD BRANCH (“ UBS ”), as collateral agent (in such capacity, the “ Collateral Agent ”).

PRELIMINARY STATEMENT

Reference is made to (a) the Credit Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ABL Credit Agreement” ), among the Borrower, the lenders from time to time party thereto (each, a “ Lender ” and collectively, the “ Lenders ”) and UBS AG, Stamford Branch, as administrative agent (in such capacity, the “ Administrative Agent ”) and Collateral Agent, and (b) the ABL Intercreditor Agreement.

The Lenders and Issuing Banks have agreed to extend credit to the Borrower pursuant to, and upon the terms and conditions specified in, the ABL Credit Agreement. The obligations of the Lenders and Issuing Banks to extend credit to the Borrower are conditioned upon, among other things, the execution and delivery of this Agreement by the Borrower and each Grantor.

Concurrent with the execution and delivery of this Agreement, the Borrower and/or one or more of the Guarantors will enter into the Term Loan Agreement, the Term Loan Collateral Agreement and the ABL Intercreditor Agreement. Following execution and delivery of the Term Loan Agreement, the Term Loan Collateral Agreement and the ABL Intercreditor Agreement, this Agreement shall be subject to the ABL Intercreditor Agreement.

Each Guarantor is an Affiliate of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the ABL Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders and Issuing Banks to extend such credit. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. ABL Credit Agreement. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings set forth in the ABL Credit Agreement. All capitalized terms defined in the New York UCC (as such term is defined herein) and not defined in this Agreement have the meanings specified therein. All references to the Uniform Commercial Code shall mean the New York UCC; provided that if, by reason of mandatory provisions of law, the perfection, the effect of perfection or non-perfection or priority of a security interest is governed by the personal


property security laws of any jurisdiction other than New York, “UCC” shall mean those personal property security laws as in effect in such other jurisdiction for the purposes of the provisions hereof relating to such perfection or priority and for the definitions related to such provisions.

(b) The rules of construction specified in Section 1.02 of the ABL Credit Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

Accounts ” shall mean all Accounts (as defined in the New York UCC), all Health-Care-Insurance Receivables (as defined in the New York UCC) and all Medicare and Medicaid rights to payments, payments and reimbursement obligations of third party payors.

Accounts Receivable ” shall mean all Accounts, all Payment Intangibles and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.

Administrative Agent ” shall have the meaning assigned to such term in the preliminary statement.

Article 9 Collateral ” shall have the meaning assigned to such term in Section 4.01.

Bank Loan Obligations ” shall mean (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower under the ABL Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations of the Borrower to any of the Bank Loan Secured Parties under the ABL Credit Agreement and each of the other Loan Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrower under or pursuant to the ABL Credit Agreement and each of the other Loan Documents and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents; provided, however, none of the terms

 

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“Bank Loan Obligations” or “Secured Hedging Obligations” shall create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support) any Excluded Swap Obligations of such Guarantor.

Bank Loan Secured Parties ” shall mean (a) the Administrative Agent, (b) the Collateral Agent, (c) the Lenders, (d) the Issuing Banks, (e) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (f) the successors and permitted assigns of each of the foregoing.

Bank Product Obligations ” shall mean the due and punctual payment and performance of all obligations of each Loan Party (or, in the case of a Cash Management Agreement, a Subsidiary of a Loan Party) under each Hedging Agreement or Cash Management Agreement that (a) is in effect on the Closing Date with a counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (b) is entered into after the Closing Date with any counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement or Cash Management Agreement is entered into.

Bank Product Secured Parties ” shall mean each counterparty to any Hedging Agreement or Cash Management Agreement with a Loan Party or, in the case of a Cash Management Agreement, a Subsidiary of a Loan Party, that either (a) is in effect on the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (b) is entered into after the Closing Date if such counterparty is the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement or Cash Management Agreement is entered into.

Borrower ” shall have the meaning assigned to such term in the preamble.

Collateral ” shall mean the Article 9 Collateral and the Pledged Collateral.

Collateral Agent ” shall have the meaning assigned to such term in the preamble.

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

Copyright License ” shall mean any written agreement, now or hereafter in effect, granting any right to any third person under any registered copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any registered copyright now or hereafter owned by any third person, and all rights of such Grantor under any such agreement.

Copyrights ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all registered copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee,

 

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transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any successor office or any similar office in any other country), including those registered and pending copyrights listed on Schedule V.

Discharge of Term Priority Claims ” shall have the meaning assigned to such term in the ABL Intercreditor Agreement.

Event of Default ” shall mean any Event of Default under and as defined in the ABL Credit Agreement, as the context requires, provided that any notice, lapse of time or other condition precedent to the occurrence of such Event of Default shall have been satisfied.

Excluded Swap Obligation ” means, with respect to each Guarantor, any Swap Obligation if, and to the extent that, the Guarantee by such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Guarantor becomes effective with respect to such related Swap Obligation.

Federal Securities Laws ” shall have the meaning assigned to such term in Section 5.04.

General Intangibles ” shall mean all (a) General Intangibles (as defined in the New York UCC) and (b) choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts or Payment Intangibles.

Grantors ” shall mean the Borrower and the Guarantors.

Guarantors ” shall mean (a) the Subsidiaries identified on Schedule II hereto as Guarantors and (b) each other Subsidiary that becomes a party to this Agreement as a Guarantor after the Closing Date.

Indemnified Amount ” has the meaning assigned to such term in Section 6.02.

 

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Intellectual Property ” shall mean all intellectual property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation and registrations, and all additions and improvements to any of the foregoing.

License ” shall mean any Patent License, Trademark License, Copyright License or other license or sublicense agreement relating to Intellectual Property to which any Grantor is a party, including those listed on Schedule V.

New York UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

Obligations ” shall mean (a) the Bank Loan Obligations and (b) the Bank Product Obligations; provided, however, the term “Obligations” shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support) any Excluded Swap Obligations of such Guarantor.

Patent License ” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third person, is in existence, and all rights of any Grantor under any such agreement.

Patents ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office (or any successor or any similar offices in any other country), including those listed on Schedule V, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to exclude others from making, using and/or selling the inventions disclosed or claimed therein.

Pledged Collateral ” shall have the meaning assigned to such term in Section 3.01.

Pledged Debt Securities ” shall have the meaning assigned to such term in Section 3.01.

Pledged Securities ” shall mean any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

 

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Pledged Stock ” shall have the meaning assigned to such term in Section 3.01.

Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 or that otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder at the time such Swap Obligation is incurred (including as a result of any this Agreement or any other Guarantee or other support agreement in respect of the obligations of such Guarantor by the Borrower or another Person that constitutes an “eligible contract participant”).

Secured Parties ” shall mean the Bank Loan Secured Parties and any Bank Product Secured Parties.

Security Interest ” shall have the meaning assigned to such term in Section 4.01.

Swap Obligation ” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

Term Facility First Priority Collateral ” shall have the meaning assigned to the term “Term/Cash Flow Revolver Facility First Priority Collateral” in the ABL Intercreditor Agreement.

Term Loan Collateral Agent ” shall have the meaning assigned to the term “Term Loan/Cash Flow Revolver Agent” in the ABL Intercreditor Agreement.

Term Loan Collateral Agreement ” shall have the meaning assigned to the term “Term Loan/Cash Flow Revolver Collateral Agreement” in the ABL Intercreditor Agreement.

Trademark License ” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third person, and all rights of any Grantor under any such agreement.

Trademarks ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all registered trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and applications for registration (other than intent-to-use applications) in the United States Patent and Trademark Office (or any successor office) or any similar offices in any State of the United States, and all extensions or renewals thereof, including those listed on Schedule V, and (b) all goodwill associated therewith or symbolized thereby.

 

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Unfunded Advances/Participations ” shall mean (a) with respect to the Administrative Agent, the aggregate amount, if any (i) made available to the Borrower on the assumption that each Lender has made its portion of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.02(d) of the ABL Credit Agreement and (ii) with respect to which a corresponding amount shall not in fact have been returned to the Administrative Agent by the Borrower or made available to the Administrative Agent by any such Lender, (b) with respect to the Swingline Lender, the aggregate amount, if any, of participations in respect of any outstanding Swingline Loan that shall not have been funded by the Revolving Lenders in accordance with Section 2.22(d) of the ABL Credit Agreement and (c) with respect to any Issuing Bank, the aggregate amount, if any, of participations in respect of any outstanding LC Disbursement that shall not have been funded by the Revolving Lenders in accordance with Section 2.23(e) of the ABL Credit Agreement.

ARTICLE II

Guarantee

SECTION 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation, and hereby waives any provision of applicable law to the contrary that may be waived by such Guarantor. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any Obligation, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 2.02. Guarantee of Payment. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy, insolvency, receivership or similar proceeding shall have stayed the accrual or collection of any of the Obligations or operated as a discharge thereof) and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrower or any other person. Each Guarantor agrees that its guarantee hereunder is continuing in nature as to the Obligations and applies to all Obligations, whether currently existing or hereafter incurred.

SECTION 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment

 

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or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement, (iii) the release of, or any impairment of or failure to perfect any Lien on or security interest in, any security held by the Collateral Agent or any other Secured Party for the Obligations or any of them, (iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations (other than unasserted contingent indemnity obligations)). To the fullest extent permitted by applicable law and in accordance with the Loan Documents, each Guarantor expressly authorizes the Collateral Agent to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in its sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the payment in full in cash of all the Obligations (other than unasserted contingent indemnity obligations). To the fullest extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without adversely affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.

 

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SECTION 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of the Borrower, any other Loan Party or otherwise.

SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Obligation owed by such party when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will, promptly upon written notice thereof from the Collateral Agent, forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against the Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.

SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Collateral Agent nor any other Secured Party will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

ARTICLE III

Pledge of Securities

SECTION 3.01. Pledge. As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under (a)(i) the Equity Interests owned by such Grantor on the date hereof (including all such Equity Interests listed on Schedule III), (ii) any other Equity Interests obtained in the future by such Grantor and (iii) the certificates representing all such Equity Interests (all the foregoing collectively referred to herein as the “Pledged Stock”); ( provided , however , that the Pledged Stock shall not include any Excluded Equity Interests, (b)(i) the debt securities held by such Grantor on the date hereof (including all such debt securities listed opposite the name of such Grantor on Schedule III), (ii) any debt securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments evidencing such debt securities (excluding any promissory notes issued by employees of any Grantor) (all the foregoing

 

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collectively referred to herein as the “ Pledged Debt Securities ”), (c) all other property that may be delivered to and held by the Collateral Agent (or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee) pursuant to the terms of this Section 3.01, (d) subject to Section 3.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a) and (b) above, (e) subject to Section 3.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the “ Pledged Collateral ”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, forever; subject, however, to the terms, covenants and conditions hereinafter set forth.

SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent (or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee) any and all certificates, promissory notes, instruments or other documents representing or evidencing Pledged Securities (other than Pledged Debt Securities with a face amount less than $1,000,000, Equity Interests in Non-Significant Subsidiaries and minority Equity Interests).

(b) [Reserved].

(c) Upon delivery to the Collateral Agent (or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee), (i) any certificate, instrument or document representing or evidencing Pledged Securities shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer satisfactory to the Collateral Agent and duly executed in blank and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the applicable securities, which schedule shall be attached hereto as Schedule III and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of the pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

 

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(d) In accordance with the terms of the ABL Intercreditor Agreement, all Pledged Collateral delivered to the Collateral Agent shall be held by the Collateral Agent as gratuitous bailee for the secured parties under the Term Loan Agreement solely for the purpose of perfecting the security interest therein granted under the Term Loan Collateral Agreement.

(e) Prior to the Discharge of Term Priority Claims, to the extent any Grantor is required hereunder to deliver Collateral to the Collateral Agent for purposes of possession or control and is unable to do so as a result of having previously delivered such Collateral to the Term Loan Collateral Agent in accordance with the terms of the Term Loan Collateral Agreement and the ABL Intercreditor Agreement, such Grantor’s obligations hereunder with respect to such delivery shall be deemed satisfied by the delivery to the Term Loan Collateral Agent, acting as a gratuitous bailee for the Secured Parties.

SECTION 3.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that:

(a) As of the Closing Date, Schedule III correctly sets forth the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by such Pledged Stock and includes all Equity Interests (other than Equity Interests issued by Non-Significant Subsidiaries and minority Equity Interests), debt securities and promissory notes required to be pledged hereunder (to the extent not waived or extended in accordance with the terms of the ABL Credit Agreement);

(b) as of the Closing Date, Schedule IV correctly sets forth all promissory notes and other evidence of indebtedness required to be pledged hereunder including all intercompany notes between the Borrower and any subsidiary of the Borrower and any subsidiary of the Borrower and any other such subsidiary required to be pledged hereunder;

(c) the Pledged Stock and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof;

(d) except for the security interests granted hereunder (or otherwise permitted under the ABL Credit Agreement or the other Loan Documents), each Grantor (i) is and, subject to any transfers made in compliance with the ABL Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule III as owned by such Grantor, (ii) holds the same free and clear of all Liens other than Liens permitted by Section 6.02 of the ABL Credit Agreement, and (iii) will not create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than any security interests and Liens that are made in compliance with the ABL Credit Agreement or the other Loan Documents;

 

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(e) except for restrictions and limitations imposed by the Loan Documents or securities or other laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder other than Liens permitted by Section 6.02 of the ABL Credit Agreement;

(f) each Grantor (i) has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or therein against any and all Liens (other than any Lien created or permitted by the Loan Documents), however arising, of all persons whomsoever;

(g) no material consent or approval of any Governmental Authority or any securities exchange was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(h) by virtue of the execution and delivery by each Grantor of this Agreement and subject to the Lien priorities set forth in the ABL Intercreditor Agreement, when any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement (or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee), the Collateral Agent will obtain, for the benefit of the Secured Parties, a legal, valid and perfected first priority lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations; and

(i) the pledge effected hereby is effective to vest in the Collateral Agent, for the ratable benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein and in the ABL Intercreditor Agreement.

SECTION 3.04. Certification of Limited Liability Company Interests and Limited Partnership Interests. If any Pledged Collateral is not a security pursuant to Section 8-103 of the UCC, no Grantor shall take any action that, under such Section, converts such Pledged Collateral into such a security without causing the issuer thereof to issue to it certificates or instruments evidencing such Pledged Collateral, which it shall promptly deliver to the Collateral Agent (or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee) as provided in Section 3.02, or complying with Section 4.04(b) hereof.

SECTION 3.05. Registration in Nominee Name; Denominations. The Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) at any time or, in the case of Term Facility First Priority Collateral, at any time after the Discharge of Term Priority Claims, upon the occurrence and during the continuance of an Event of Default, to hold the Pledged Securities in its own name as

 

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pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent. Each Grantor will promptly give to the Collateral Agent copies of any material written notices or other material written communications received by it with respect to Pledged Securities in its capacity as the registered owner thereof. After the occurrence and during the continuance of an Event of Default, the Collateral Agent shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

SECTION 3.06. Voting Rights; Dividends and Interest, Etc . (a) Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the Grantors notice of its intent to exercise its rights under this Agreement (which notice shall be deemed to have been given immediately upon the occurrence of an Event of Default under paragraph (g) or (h) of Article VII of the ABL Credit Agreement):

(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the ABL Credit Agreement and the other Loan Documents; provided, however, that such rights and powers shall not be exercised in any manner that could reasonably be expected to materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the Collateral Agent or the other Secured Parties under this Agreement, the ABL Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.

(ii) The Collateral Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to each Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (i) above.

(iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the ABL Credit Agreement, the other Loan Documents, and applicable law; provided, however, that any noncash dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of

 

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any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the ratable benefit of the Secured Parties and shall be forthwith delivered to the Collateral Agent (or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee) in the same form as so received (with any necessary endorsement or instrument of assignment). This paragraph (iii) shall not apply to dividends between or among the Borrower, the Guarantors and any Subsidiaries only of property subject to a perfected security interest under this Agreement.

(b) To the fullest extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 3.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06 shall cease, and, subject to the ABL Intercreditor Agreement, all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and, subject to, in the case of ABL Facility First Priority Collateral, the rights of the ABL Collateral Agent and the obligations of the Grantors under the ABL Facility Loan Documents and the ABL Intercreditor Agreement, shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement or instrument of assignment). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. Promptly after all Events of Default have been cured or waived and each applicable Grantor has delivered to the Administrative Agent certificates to that effect, the Collateral Agent shall repay to each applicable Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 3.06, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of

 

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this Section 3.06, shall cease, and, subject to compliance with any applicable healthcare laws, all such rights shall thereupon become vested in the Collateral Agent, subject to, in the case of ABL Facility First Priority Collateral, the rights of the ABL Collateral Agent and the obligations of the Grantors under the ABL Facility Loan Documents and the ABL Intercreditor Agreement, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived and each applicable Grantor has delivered to the Administrative Agent a certificate to that effect, such voting and consensual rights shall automatically vest in the applicable Grantor, and the Collateral Agent shall (1) take such steps reasonably requested by the applicable Grantor, at such Grantor’s expense, to allow all Pledged Securities registered under its name to be registered under the name of the applicable Grantor and (2) promptly repay to each applicable Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise have been permitted to retain pursuant to the terms of paragraph (a) of this Section 3.06 that were not applied to repay the Obligations.

(d) Any notice given by the Collateral Agent to the Grantors exercising its rights under paragraph (a) of this Section 3.06 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

ARTICLE IV

Security Interests in Personal Property

SECTION 4.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, a security interest (the “Security Interest”), in all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article 9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

 

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(iii) all cash, Payment Intangibles and Deposit Accounts

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

(viii) all Inventory;

(ix) all Investment Property;

(x) all Letter-of-Credit Rights;

(xi) all Commercial Tort Claims;

(xii) all books and records pertaining to the Article 9 Collateral; and

(xiii) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing.

Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, any Excluded Asset or any Excluded Equity Interests.

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) indicate the Article 9 Collateral as “all assets” of such Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates. Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.

The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.

 

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Notwithstanding anything to the contrary provided herein, no Grantor shall be required to (a) deliver any certificates evidencing Equity Interests issued by Non-Significant Subsidiaries or minority Equity Interests, (b) take steps to perfect any security interest with respect to letter of credit rights and commercial tort claims (except to the extent perfected through the filing of Uniform Commercial Code financing statements) or (c) enter into or deliver security documents governed by laws of a jurisdiction other than the United States or any State thereof or the District of Columbia.

(c) The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.

SECTION 4.02. Representations and Warranties . The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:

(a) Each Grantor has good and valid rights in and marketable title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent, for the ratable benefit of the Secured Parties, the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval that has been obtained or any other consent where the failure to obtain such consent could not reasonably be expected to have a Material Adverse Effect.

(b) The Schedules attached hereto have been duly prepared and completed and the information set forth therein is true and correct in all material respects as of the Closing Date and (x) the exact legal name of each Grantor in Schedule I and (y) the jurisdiction of formation or organization of each Grantor in Schedule I is true and correct in all material respects as of the Closing Date. Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Article 9 Collateral have been prepared by the Collateral Agent based upon the information provided to the Administrative Agent and the Secured Parties in the applicable Schedules attached hereto for filing in each governmental, municipal or other office specified in Schedule I (or specified by notice from the Borrower to the Administrative Agent after the Closing Date in the case of filings, recordings or registrations required by Sections 5.06 or 5.12 of the ABL Credit Agreement), which are all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in the Article 9 Collateral consisting of United States Patents, Trademarks, Copyrights and exclusive Copyright Licenses (to the extent that perfection can be achieved by such filings)) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent

 

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filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements. Each Grantor represents and warrants that a fully executed short form agreement in form and substance reasonably satisfactory to the Collateral Agent, and containing a description of all Article 9 Collateral consisting of pending and issued United States Patents and United States Trademarks and United States Copyrights will be delivered to the Collateral Agent as of or prior to the Closing Date for timely recording with the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. §261, 15 U.S.C. §1060 or 17 U.S.C. §205 and the regulations thereunder.

(c) As of the Closing Date, Schedule I correctly sets forth (i) the exact legal name of each Grantor, as such name appears in its respective certificate of formation or organization; (ii) the jurisdiction of formation or organization of each Grantor that is a registered organization; (iii) the Organizational Identification Number, if any, issued by the jurisdiction of formation or organization of each Grantor that is a registered organization; (iv) the chief executive office of each Grantor; and (v) all locations where Grantor maintains any material books or records relating to any Accounts Receivables.

(d) As of the Closing Date, Schedule V correctly sets forth, in proper form for filing with (a) the United States Patent and Trademark Office a list of each issued and pending Patents and Trademarks, including, as applicable, the name of the registered owner and the registration number of each Patent and Trademark owned by any Grantor and (b) the United States Copyright Office a list of each Copyright, including the name of the registered owner and the registration number of each Copyright owned by any Grantor.

(e) The Security Interest constitutes (i) a legal and valid security interest in all Article 9 Collateral securing the payment and performance of the Obligations, (ii) subject to the qualifications and filings described in Section 4.02(b) (including payment of applicable fees in connection therewith), a perfected security interest in all Article 9 Collateral in which and to the extent a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) a security interest that shall be perfected in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens expressly permitted pursuant to Section 6.02 of the ABL Credit Agreement or the other Loan Documents that have priority as a matter of law and Liens in respect of the Term Facility First Priority Collateral under the Term Loan Documents.

(f) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of the ABL Credit Agreement or the other Loan Documents. No Grantor has filed or consented to the filing

 

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of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office, (iii) any notice under the Assignment of Claims Act, or (iv) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.02 of the ABL Credit Agreement or the other Loan Documents. As of the Closing Date, no Grantor holds any Commercial Tort Claims in an amount in excess of $1,000,000 except as indicated on Schedule VI.

SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change in (i) its legal name and/or address, (ii) its identity or type of organization or corporate structure, (iii) its Federal Taxpayer Identification Number or organizational identification number or (iv) its jurisdiction of organization. Each Grantor agrees promptly to provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the first sentence of this paragraph. Each Grantor agrees not to effect or permit any change referred to in the first sentence of this paragraph unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Article 9 Collateral (except, with respect to priority, as otherwise set forth in the ABL Intercreditor Agreement). Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Article 9 Collateral owned or held by such Grantor is damaged or destroyed.

(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records (in all material respects) with respect to the Article 9 Collateral owned by it as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include complete accounting records (in all material respects) indicating all material payments and proceeds received with respect to any part of the Article 9 Collateral.

(c) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a) of the ABL Credit Agreement, the Borrower shall deliver to the Collateral Agent a certificate executed by a Responsible Officer of the Borrower setting forth in the format of Schedule V all Intellectual Property of any Grantor in existence on the date thereof that, if it had existed on the Closing Date, would have been required to be listed in such Schedule, and not then listed on such Schedules or previously so identified to the Collateral Agent.

(d) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral against all persons

 

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and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien not permitted pursuant to Section 6.02 of the ABL Credit Agreement.

(e) Each Grantor agrees, at its own expense, promptly to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to obtain, preserve, protect and perfect (to the extent that perfection can be achieved under any applicable law by such filings and actions) the Security Interest and the rights and remedies created hereby, including the payment of any fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing or continuation statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable to any Grantor under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note or other instrument with a face amount in excess of $1,000,000, such note or instrument shall be promptly pledged and delivered to the Collateral Agent, duly endorsed in a manner reasonably satisfactory to the Collateral Agent.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule V or adding additional schedules hereto to identify specifically any asset or item of a Grantor that may, in the Collateral Agent’s reasonable judgment, constitute Copyrights, Licenses, Patents or Trademarks; provided that any Grantor shall have the right, exercisable within 30 days after it has been notified by the Collateral Agent of the specific identification of such Collateral, to advise the Collateral Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral. Each Grantor agrees that it will use its commercially reasonable efforts to take such action as shall be necessary, and which the Collateral Agent may from time to time reasonably request, in order that all representations and warranties hereunder shall be true and correct in all material respects with respect to such Collateral within 45 days after the date it has been notified by the Collateral Agent of the specific identification of such Collateral and any such request.

(f) The Collateral Agent and such persons as the Collateral Agent may designate shall have the right to inspect, subject to a reasonable prior notice to each Grantor, the Article 9 Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Article 9 Collateral is located, to discuss the applicable Grantor’s affairs with the officers of such Grantor and its independent accountants and to verify the existence, validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Article 9 Collateral, including, in the case of Accounts or other Article 9 Collateral in the possession of any third person, after the occurrence and during the continuance of an Event of Default, by contacting Account Debtors or the third person possessing such Article 9 Collateral for the purpose of making such a verification, subject in each case to the requirements of applicable law, including healthcare laws, data privacy and third

 

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party confidentiality obligations all at the expense of the Borrower; provided that, (i) other than with respect to the verification of any such Accounts as part of a collateral field examination, excluding any such visits and inspections during the continuation of an Event of Default, only one such visit during any fiscal year shall be at the Borrower’s expense and (ii) any such verification of Accounts as part of a collateral field examination shall be conducted in accordance with the provisions set forth in Section 5.07 of the ABL Credit Agreement. The Collateral Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Party, subject in each case to the requirements of applicable law, including healthcare laws, data privacy and third party confidentiality obligations.

(g) At its option, upon the occurrence and during the continuation of a Default or an Event of Default, the Collateral Agent may with five Business Days’ prior written notice to the relevant Grantor discharge past due Taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not expressly permitted pursuant to Section 5.03 or Section 6.02 of the ABL Credit Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the ABL Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent within five Business Days after written demand for any reasonable payment made or any reasonable expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided , however , that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to Taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

(h) If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other person valued in excess of $1,000,000 to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent, subject to the terms of the ABL Intercreditor Agreement, for the ratable benefit of the Secured Parties. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other person granting the security interest.

(i) Except to the extent otherwise expressly agreed by the Collateral Agent, each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance in accordance with Section 7.06 of this Agreement.

(j) No Grantor shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the

 

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Article 9 Collateral or permit any notice to be filed under the Assignment of Claims Act, except, in each case, as expressly permitted by Section 6.02 of the ABL Credit Agreement. No Grantor shall make or permit to be made any transfer of the Article 9 Collateral, except as permitted by the ABL Credit Agreement.

(k) No Grantor will, without the Collateral Agent’s prior written consent, grant any extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof (unless the aggregate amount of such compromised or settled Accounts in any fiscal year is not in excess of $2,500,000), release, wholly or partly, any person liable for the payment thereof (unless the aggregate amount of such compromised or settled Accounts in any fiscal year is not in excess of $2,500,000) or allow any credit or discount whatsoever thereon (unless the aggregate amount of such compromised or settled Accounts in any fiscal year is not in excess of $2,500,000), other than extensions, credits, discounts, compromises, compoundings or settlements in each case granted or made in the ordinary course of business.

(l) Each Grantor, at its own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance with the requirements set forth in Section 5.02 of the ABL Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, upon the occurrence and during the continuance of an Event of Default and subject to the ABL Intercreditor Agreement, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto ( provided that the Collateral Agent shall give five Business Days’ prior written notice to such Grantor prior to exercising its rights in such capacity). In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or under the ABL Credit Agreement or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of any Grantor hereunder or any Default or Event of Default, in its sole reasonable discretion, upon notice to the Grantors, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent reasonably deems advisable. All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, out-of-pocket expenses and other charges relating thereto, shall be payable, within five Business Days of written demand (accompanied by supporting documentation therefor in reasonable detail) by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby.

SECTION 4.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest in the Article 9 Collateral, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a) Instruments. If any Grantor shall at any time hold or acquire any Instruments (other than any Instruments in an amount no greater than $1,000,000), that have not been pledged hereunder, such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent or, prior to the Discharge of Term Priority Claims and with respect to Term Facility First Priority Collateral, deliver the same to the Term Loan Collateral Agent, as gratuitous bailee, accompanied by such undated instruments of endorsement, transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.

 

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(b) Investment Property . Without limiting each Grantor’s obligations under Article III, if any securities now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Administrative Agent thereof and, at the Administrative Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Collateral Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor are held by such Grantor or its nominee through a securities intermediary or commodity intermediary in a securities account or commodity account for which perfection by “control” or control agreements are required under the Term Loan Documents, such Grantor shall promptly notify the Administrative Agent thereof and, at the Administrative Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, cause such securities intermediary or commodity intermediary, as the case may be, to agree to comply with entitlement orders or other instructions from the Collateral Agent (or the Term Loan Collateral Agent, pursuant to the ABL Intercreditor Agreement) to such securities intermediary as to such security entitlements or to apply any value distributed on account of any commodity contract as directed by the Collateral Agent (or the Term Loan Collateral Agent, pursuant to the ABL Intercreditor Agreement) to such commodity intermediary, as the case may be, in each case without further consent of any Grantor, such nominee, or any other Person (other than, subject to the ABL Intercreditor Agreement, the Term Loan Collateral Agent). The Collateral Agent agrees with each of the Grantors that the Collateral Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing. The provisions of this paragraph shall not apply to any financial assets or other investment property credited to a securities account for which the Collateral Agent is the securities intermediary, unless otherwise requested by the Collateral Agent.

(c) Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any material Electronic Chattel Paper or any material “ transferable record ”, as that term is defined in Section 201 of the Federal Electronic

 

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Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof and, at the reasonable request of the Collateral Agent, shall take such action as the Collateral Agent may reasonably request to vest in the Collateral Agent or, prior to the Discharge of Term Priority Claims and with respect to the Term Facility First Priority Collateral, to the Term Loan Collateral Agent, as gratuitous bailee, control under New York UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record. Notwithstanding the foregoing, no Grantor shall be obligated to deliver to the Collateral Agent any Electronic Chattel Paper held by such Grantor with a face amount less than $1,000,000, provided that the aggregate face amount of the Electronic Chattel Paper so excluded pursuant to this sentence shall not exceed $5,000,000 at any time.

(d) Commercial Tort Claims. If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated to exceed $1,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor including a summary description of such claim and grant to the Collateral Agent, for the ratable benefit of the Secured Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.

SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral. In each case unless otherwise decided by such Grantor in its reasonable business judgment or except as to such Collateral that is not material to the business of such Grantor: (a) Each Grantor agrees that it will not, and will not permit any of its licensees to, do any act, or omit to do any act, whereby any Patent that is material to the conduct of such Grantor’s business may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent with the relevant patent number to the extent necessary and sufficient to establish and preserve its maximum rights under applicable patent laws, to the extent required by applicable law.

(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark,

 

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(iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law, to the extent required by applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through its licensees or sublicensees) will, for each work covered by a material Copyright or exclusive Copyright License, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice to the extent necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws, to the extent required by applicable law.

(d) Each Grantor shall notify the Collateral Agent promptly if it knows that any Patent, Trademark or Copyright material to the conduct of its business has or is likely to become abandoned, lost or dedicated to the public, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor’s ownership of any such Patent, Trademark, Copyright or exclusive Copyright License, its right to register the same, or its right to keep and maintain the same.

(e) If any Grantor, either itself or through any agent, employee, licensee or designee, files an application for any Patent, Trademark, Copyright or exclusive Copyright License (or for the registration of any Trademark, Copyright or exclusive Copyright License) with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, or otherwise acquires any such Patent, Trademark, Copyright or exclusive Copyright License (or any application with respect thereto), the Grantor shall so notify the Collateral Agent, and, upon request of the Collateral Agent, shall execute and deliver any and all agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Security Interest in such Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed.

(f) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks, Copyrights and exclusive Copyright License that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties.

 

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(g) In the event that any Grantor knows or has reason to believe that any Article 9 Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor’s business has been or is about to be infringed, misappropriated or diluted by a third person, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions, if consistent with good business judgment, as are reasonably appropriate under the circumstances to protect such Article 9 Collateral.

(h) Upon the occurrence and during the continuance of an Event of Default, upon the reasonable request of the Collateral Agent, each Grantor shall use its best efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License, and each other material License, to effect the assignment of all such Grantor’s right, title and interest thereunder to the Collateral Agent, for the ratable benefit of the Secured Parties, or its designee.

ARTICLE V

Remedies

SECTION 5.01. Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Article 9 Collateral consisting of Intellectual Property or Licenses, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantor to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the requirements of applicable law, including any applicable healthcare laws, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the

 

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distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Collateral Agent shall give each applicable Grantor 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by applicable law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by applicable law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity

 

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to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. To the fullest extent permitted under applicable law, any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. Any remedies provided in this Section 5.01 shall be subject to the ABL Intercreditor Agreement.

SECTION 5.02. Application of Proceeds. Subject to the terms of the ABL Intercreditor Agreement, if an Event of Default shall have occurred and is continuing, the Collateral Agent shall apply the proceeds of any collection, sale, foreclosure or other realization upon any Collateral, including any Collateral consisting of cash, as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent or the Collateral Agent (in their respective capacities as such hereunder or under any other Loan Document, as applicable) in connection with such collection, sale, foreclosure or realization or otherwise in connection with this Agreement, any other Loan Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent and/or the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other reasonable out-of-pocket costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document, as applicable;

SECOND, to the payment in full of Unfunded Advances/Participations (the amounts so applied to be distributed between or among the Administrative Agent, the Swingline Lender and any Issuing Bank pro rata in accordance with the amounts of Unfunded Advances/Participations owed to them on the date of any such distribution);

THIRD, to the payment in full of all Obligations consisting of interest, fees and indemnities owing to the Bank Loan Secured Parties (the amounts so applied to be distributed among the Bank Loan Secured Parties pro rata in accordance with the amounts of such Obligations owed to them on the date of any such distribution);

FOURTH, to the payment in full of all other Obligations, other than such portion (if any) of Secured Cash Management Obligations that is in excess of the lesser of $30,000,000 and the amount of the Bank Product Reserve with respect to Secured Cash Management Obligations at such time (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of such Obligations owed to them on the date of any such distribution);

FIFTH, to the payment in full of Obligations consisting of such portion (if any) of Secured Cash Management Obligations that is in excess of the amount of the Bank Product Reserve with respect to Secured Cash Management Obligations at such time but not in excess of $30,000,000 (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of such Obligations owed to them on the date of any such distribution);

 

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SIXTH, to the payment in full of Obligations consisting of such portion (if any) of Secured Cash Management Obligations that is in excess of $30,000,000 (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of such Obligations owed to them on the date of any such distribution);

SEVENTH, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion (subject to the ABL Intercreditor Agreement) as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. Notwithstanding the foregoing, the proceeds of any collection, sale, foreclosure or realization upon any Collateral of any Grantor, including any collateral consisting of cash, shall not be applied to any Excluded Swap Obligation of such Grantor and shall instead be applied to other secured obligations.

SECTION 5.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors), to use, license or sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent may be exercised, at the option of the Collateral Agent, and shall be effective only upon the occurrence and during the continuation of an Event of Default; provided , however , that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon each Grantor notwithstanding any subsequent cure of an Event of Default.

SECTION 5.04. Securities Act, Etc. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the U.S. Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “ Federal Securities Laws ”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal

 

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Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable “blue sky” or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion (a) to the fullest extent permitted by applicable Federal Securities Laws, may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.

ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), the Borrower agrees that (a) in the event a payment shall be made by any Guarantor under this Agreement, the Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part a claim of any Secured Party, the Borrower shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 6.02. Contribution and Subrogation. Each Guarantor (a “ Contributing Guarantor ”) agrees (subject to Section 6.03) that, in the event a payment

 

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shall be made by any other Guarantor hereunder in respect of any Obligation, or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Obligation owed to any Secured Party, and such other Guarantor (the “ Claiming Guarantor ”) shall not have been fully indemnified by the Borrower as provided in Section 6.01, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to (i) the amount of such payment or (ii) the greater of the book value or the fair market value of such assets (the “ Indemnified Amount ”), as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the Closing Date and the denominator shall be the aggregate net worth of all the Guarantors on the Closing Date (or, in the case of any Guarantor becoming a party hereto after the Closing Date, the date on which such party became a Guarantor hereunder). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the rights of such Claiming Guarantor under Section 6.01 to the extent of such payment. Notwithstanding the foregoing, to the extent that any Claiming Guarantor’s right to indemnification hereunder arises from a payment or sale of Collateral made to satisfy Obligations constituting Swap Obligations, only those Contributing Guarantors for whom such Swap Obligations do not constitute Excluded Swap Obligations shall indemnify such Claiming Guarantor, with the fraction set forth in the second preceding sentence being modified as appropriate to provide for indemnification of the entire Indemnified Amount.

SECTION 6.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Obligations (other than contingent indemnification obligations for which no claim has been made). No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of its obligations hereunder.

(b) The Borrower and each Guarantor hereby agree that all Indebtedness and other monetary obligations owed by it to the Borrower or any Subsidiary shall be fully subordinated to the payment in full in cash of the Obligations (other than contingent indemnification obligations for which no claim has been made); provided that, nothing in this Section 6.03(b) shall prohibit any payments or distributions permitted by the ABL Credit Agreement.

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the ABL Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it in care of the Borrower as provided in Section 9.01 of the ABL Credit Agreement.

 

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SECTION 7.02. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the ABL Credit Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the ABL Credit Agreement, any other Loan Document or any other agreement or instrument relating to the foregoing, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement.

SECTION 7.03. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders, the Issuing Banks and the other Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of Letters of Credit, regardless of any investigation made by any Lender or any other Secured Party or on their behalf and notwithstanding that the Collateral Agent, any Lender, any Issuing Bank or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the ABL Credit Agreement, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan, or any fee or any other amount payable under any Loan Document is outstanding and unpaid or the aggregate LC Exposure does not equal zero (except for outstanding Letters of Credit subject to arrangements satisfactory to the Administrative Agent and the Issuing Bank of such Letters of Credit) and so long as the Commitments have not expired or terminated.

SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall become effective as to any Loan Party when a counterpart hereof executed on behalf of such Loan Party shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Loan Party and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Loan Party, the Collateral Agent and the other Secured Parties and their respective successors and permitted assigns, except that no Loan Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated or permitted by this Agreement or the ABL Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Loan Party and may be amended, modified,

 

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supplemented, waived or released with respect to any Loan Party without the approval of any other Loan Party and without affecting the obligations of any other Loan Party hereunder.

SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and permitted assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and permitted assigns.

SECTION 7.06. Collateral Agent’s Fees and Expenses; Indemnification. (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 9.05 of the ABL Credit Agreement.

(b) Without limitation or duplication of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Collateral Agent and the other Indemnitees against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities, penalties and related reasonable out of pocket expenses, including the reasonable fees, charges and disbursements of one counsel in each relevant jurisdiction (and any such additional counsel, if necessary, as a result of actual or potential conflicts of interest) for all Indemnitees, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of, the execution, delivery or performance of this Agreement or any agreement or instrument contemplated hereby or any claim, litigation, investigation or proceeding relating to any of the foregoing or to the Collateral, regardless of whether any Indemnitee is a party thereto or whether initiated by a third party or by a Loan Party or any Affiliate thereof; provided , however , that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, penalties or related expenses are determined by a court of competent jurisdiction by final judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee. To the extent permitted by applicable law, neither any Grantor nor the Collateral Agent nor any Indemnitee shall assert, and each hereby waives any claim against any Indemnitee, any Grantor and the Collateral Agent, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of proceeds thereof.

(c) Any such amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement, any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement, any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any other

 

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Secured Party. All amounts due under this Section 7.06 shall be payable within 30 days after written demand therefor and shall bear interest, on and from the date of demand, at the rate specified in Section 2.06(a) of the ABL Credit Agreement.

(d) BY ACCEPTING THE BENEFITS OF THIS AGREEMENT AND THE GUARANTEES AND SECURITY INTERESTS CREATED HEREBY, EACH SECURED PARTY ACKNOWLEDGES THE PROVISIONS OF ARTICLE VIII OF THE ABL CREDIT AGREEMENT AND AGREES TO BE BOUND BY SUCH PROVISIONS AS FULLY AS IF THEY WERE SET FORTH HEREIN.

SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Collateral Agent as the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor ( provided , that to the extent written notice is not required hereunder, the Collateral Agent shall use commercially reasonable efforts to provide notice to such Grantor, though its rights hereunder are not conditioned thereon) (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, (b) upon three Business Days’ prior written notice to such Grantor, to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral, (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral, (d) upon three Business Days’ prior written notice to such Grantor, to send verifications of Accounts Receivable to any Account Debtor, (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral, (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral, (g) upon three Business Days’ prior written notice to such Grantor, to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent, and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement in accordance with its terms, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided , however , that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, wilful misconduct or bad faith.

 

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SECTION 7.08. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.09. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, the Administrative Agent, any Lender, any Issuing Bank or any other Secured Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, the Administrative Agent, the Lenders, the Issuing Banks and the other Secured Parties hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.09, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Collateral Agent, any Issuing Bank or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

(b) Subject to the terms of Section 9.08(b)(C) of the ABL Credit Agreement, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent (acting at the direction, or with the consent, of the Required Lenders) and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the ABL Credit Agreement.

SECTION 7.10. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

 

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SECTION 7.11. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7.12. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 7.04. Delivery of an executed signature page to this Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 7.13. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 7.14. Jurisdiction; Consent to Service of Process. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America, sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Collateral Agent, the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Grantor or its properties in the courts of any jurisdiction.

(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section 7.14. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

36


(c) Each of the parties hereto hereby irrevocably consents to service of process in the manner provided for notices in Section 7.01. Nothing in this Agreement or any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by law.

SECTION 7.15. Termination or Release. (a) Subject to Section 2.04, this Agreement, the guarantees made herein, the Security Interest, the pledge of the Pledged Collateral and all other security interests granted hereby shall automatically terminate and be released when all the Obligations (other than contingent indemnification obligations for which no claim has been made) have been paid in full in cash and the Lenders and other Bank Loan Secured Parties have no further commitment to lend under the ABL Credit Agreement, the aggregate LC Exposure has been reduced to zero (or the only outstanding Letters of Credit have become subject to arrangements reasonably satisfactory to the Administrative Agent and the Issuing Banks of such Letters of Credit) and the Issuing Banks have no further obligations to issue Letters of Credit under the Credit Agreement.

(b) A Guarantor shall automatically be released from its obligations hereunder and the Security Interests created hereunder in the Collateral of such Guarantor shall be automatically released upon the consummation of any transaction permitted by the ABL Credit Agreement (or consented to in writing pursuant to Section 9.08 of the ABL Credit Agreement) as a result of which such Guarantor ceases to be a Subsidiary, or in accordance with Section 9.09(c) of the ABL Credit Agreement.

(c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the ABL Credit Agreement to any person that is not the Borrower or a Guarantor, or, upon the effectiveness of any written consent to the release of the Security Interest granted hereby in any Collateral pursuant to Section 9.08 of the ABL Credit Agreement, the Security Interest in such Collateral shall be automatically released.

(d) Upon notification by the Borrower to the Collateral Agent that a Guarantor is a Non-Significant Subsidiary, and would not be required to become a Guarantor in accordance with the ABL Credit Agreement, the Collateral Agent shall release the obligations of such Subsidiary hereunder and the Security Interests created hereunder in the Collateral of such Guarantor.

(e) In connection with any termination or release pursuant to paragraph (a), (b), (c) or (d) above, the Collateral Agent shall promptly execute and deliver to any Grantor, at such Grantor’s expense, all Uniform Commercial Code termination statements and similar documents that such Grantor shall reasonably request to evidence such termination or release, and all assignments or other instruments of transfer as may be necessary to reassign to such Grantor all rights, titles and interests in any relevant Intellectual Property as may have been assigned to the Collateral Agent and/or its designees, subject to any disposition thereof that may have been made by the

 

37


Collateral Agent and/or its designees in accordance with the terms of this Agreement, and all rights and license granted to the Collateral Agent and/or its designees in or to any such Intellectual Property pursuant to this Agreement shall automatically and immediately terminate and all rights shall automatically and immediately revert to such Grantor. Any execution and delivery of documents pursuant to this Section 7.15 shall be without recourse to or representation or warranty by the Collateral Agent or any Secured Party. Without limiting the provisions of Section 7.06, the Borrower shall reimburse the Collateral Agent upon demand for all costs and out of pocket expenses, including the reasonable fees, charges and expenses of counsel, incurred by it in connection with any action contemplated by this Section 7.15.

SECTION 7.16. Additional Subsidiaries. Any Subsidiary that is required to become a party hereto pursuant to Section 5.12 of the ABL Credit Agreement shall enter into this Agreement as a Guarantor and a Grantor. Upon execution and delivery by the Collateral Agent and such Subsidiary of a supplement in the form of Exhibit A hereto, such Subsidiary shall become a Guarantor and a Grantor hereunder with the same force and effect as if originally named as a Guarantor and a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Loan Party hereunder. The rights and obligations of each Loan Party hereunder shall remain in full force and effect notwithstanding the addition of any new Loan Party as a party to this Agreement.

SECTION 7.17. Right of Setoff. If an Event of Default shall have occurred and is continuing, each Secured Party and its Affiliates hereby are authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all Collateral (including any deposits (general or special, time or demand, provisional or final (other than tax accounts, trust accounts or payroll accounts))) at any time held and other obligations at any time owing by such Secured Party or any of its Affiliates to or for the credit or the account of any Grantor against any and all of the obligations of such Grantor now or hereafter existing under this Agreement, the other Loan Documents held by such Secured Party, provided that at such time such obligations are due or payable. The rights of each Secured Party and its Affiliates under this Section 7.17 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party or its Affiliates may have. The applicable Secured Party shall notify such Grantor and the Collateral Agent of any such setoff and application made by such Secured Party, provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, each Secured Party expressly waives its right of setoff (and any similar right including bankers’ liens) with respect to all lockboxes, deposit accounts and other cash management accounts maintained by any Grantor and into which any collections for Government Accounts are deposited. For purposes hereof, “Government Accounts” means all accounts on which any federal or state government unit or any intermediary for any federal or state government unit is the obligor.

 

38


SECTION 7.18. ABL INTERCREDITOR AGREEMENT GOVERNS . NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT FOR THE BENEFIT OF THE SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT AND THE OTHER SECURED PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE ABL INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THE ABL INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE PROVISIONS OF THE ABL INTERCREDITOR AGREEMENT SHALL CONTROL.

[Remainder of page intentionally left blank]

 

39


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

QUORUM HEALTH CORPORATION,
  by  

 

    Name:  
    Title:  

 

Signature Page to ABL Guarantee and Collateral Agreement


Anna Hospital Corporation

Big Bend Hospital Corporation

Big Spring Hospital Corporation

Blue Island Hospital Company, LLC

Blue Island Illinois Holdings, LLC

Blue Ridge Georgia Holdings, LLC

Centre Hospital Corporation

Clinton Hospital Corporation

CSRA Holdings, LLC

Deming Hospital Corporation

DHSC, LLC

Evanston Hospital Corporation

Forrest City Arkansas Hospital Company, LLC

Forrest City Hospital Corporation

Fort Payne Hospital Corporation

Galesburg Hospital Corporation

Granite City Hospital Corporation

Granite City Illinois Hospital Company, LLC

Greenville Hospital Corporation

Hamlet H.M.A., LLC

Hospital of Barstow, Inc.

Hospital of Louisa, Inc.

Jackson Hospital Corporation

Lexington Hospital Corporation

 

Marion Hospital Corporation

Massillon Community Health System LLC

Massillon Health System LLC

Massillon Holdings, LLC

McKenzie Tennessee Hospital Company, LLC

MMC of Nevada, LLC

Monroe HMA, LLC

MWMC Holdings, LLC

National Healthcare of Mt. Vernon, Inc.

Phillips Hospital Corporation

QHC California Holdings, LLC

QHG of Massillon, Inc.

Quorum Health Investment Company, LLC

Quorum Health Resources, LLC

Red Bud Hospital Corporation

Red Bud Illinois Hospital Company, LLC

San Miguel Hospital Corporation

Sunbury Hospital Company, LLC

Tooele Hospital Corporation

Triad of Oregon, LLC

Watsonville Hospital Corporation

Waukegan Hospital Corporation

Waukegan Illinois Hospital Company, LLC

Williamston Hospital Corporation

Winder HMA, LLC

 

On behalf of each of the above entities:
by  

 

  Name:  
  Title:  

 

Signature Page to ABL Guarantee and Collateral Agreement


UBS AG, STAMFORD BRANCH, as Collateral Agent,
  by  

 

    Name:  
    Title:  
  by  

 

    Name:  
    Title:  

 

 

Signature Page to ABL Guarantee and Collateral Agreement


Schedule I to the Guarantee and

Collateral Agreement

EXACT LEGAL NAMES AND OTHER INFORMATION

 

Exact Legal Name of
Grantor

 

Jurisdiction

of

Formation

 

Organizational

ID

 

Address of

Chief Executive

Office

 

Address Where

Guarantor Maintains
Equipment or Other
Collateral

 

Accounts

Receivable

                     
                     
                     


Schedule II to the Guarantee and

Collateral Agreement

GUARANTORS


Schedule III to the Guarantee and

Collateral Agreement

EQUITY INTERESTS

 

Issuer

   Number of
Certificate
   Registered
Owner
   Number and
Class of
Equity Interest
   Percentage
of Equity
Interests
           
           
           

PLEDGED DEBT SECURITIES

 

Issuer

   Principal
Amount
   Date of Note    Maturity Date
        
        
        


Schedule IV to the Guarantee and

Collateral Agreement

DEBT INSTRUMENTS; ADVANCES


Schedule V to the Guarantee and

Collateral Agreement

U.S. COPYRIGHTS OWNED BY [NAME OR GRANTOR]

[Make a separate page of Schedule V for each Grantor and state if no copyrights are owned. List in numerical order by Registration No.]

U.S. Copyright Registrations

 

Title

 

Reg. No.

 

Author

         
         

Pending U.S. Copyright Applications for Registration

 

Title

 

Author

 

Class

 

Date Filed

             
             

Non-U.S. Copyright Registrations

[List in alphabetical order by country/numerical order by Registration No. within each country.]

 

Country

 

Title

 

Reg. No.

 

Author

             
             

Non-U.S. Pending Copyright Applications for Registration

[List in alphabetical order by country.]

 

Country

 

Title

 

Author

 

Class

 

Date Filed

                 
                 


LICENSES

[Make a separate page of Schedule V for each Grantor, and state if any Grantor is not a party to a license/sublicense.]

 

I. Licenses/Sublicenses of [Name of Grantor] as Licensor/Sublicensor on Date Hereof

 

A. Copyrights

[List U.S. copyrights in numerical order by Registration No. List non-U.S. copyrights by country in alphabetical order with Registration Nos. within each country in numerical order.]

U.S. Copyrights

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

Title of

U.S.

Copyright

  

Author

  

Reg. No.

           
           
           

Non-U.S. Copyrights

 

Country

 

Licensee Name

and Address

 

Date of

License/

Sublicense

 

Title of

Non-U.S.

Copyrights

 

Author

 

Reg. No.

         
         
         

 

V-2


B. Patents

[List U.S. patent Nos. and U.S. patent application Nos. in numerical order. List non-U.S. patent Nos. and non-U.S. application in alphabetical order by country, with numbers within each country in numerical order.]

U.S. Patents

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

Issue Date

  

Patent No.

        
        
        

U.S. Patent Applications

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

Date Filed

  

Application No.

        
        
        

Non-U.S. Patents

 

Country

  

Licensee Name

and Address

  

Date of License/

Sublicense

  

Issue

Date

  

Non-U.S.

Patent No.

           
           
           

Non-U.S. Patent Applications

 

Country

  

Licensee Name

and Address

  

Date of License/

Sublicense

  

Date

Filed

  

Application No.

           
           
           

 

V-3


C. Trademarks

[List U.S. trademark Nos. and U.S. trademark application Nos. in numerical order. List non-U.S. trademark Nos. and non-U.S. application Nos. with trademark Nos. within each country in numerical order.]

U.S. Trademarks

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

U.S. Mark

  

Reg. Date

  

Reg. No.

           
           
           

U.S. Trademark Applications

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

U.S. Mark

  

Date Filed

  

Application No.

           
           
           

Non-U.S. Trademarks

 

Country

  

Licensee Name

and Address

  

Date of License/

Sublicense

  

Non-U.S.

Mark

  

Reg. Date

  

Reg. No.

              
              
              

Non-U.S. Trademark Applications

 

Country

  

Licensee Name

and Address

  

Date of License/

Sublicense

  

Non-U.S.

Mark

  

Date

Filed

  

Application No.

              
              
              

 

V-4


D. Others

 

Licensee Name

and Address

  

Date of License/

Sublicense

  

Subject

Matter

     
     
     

 

V-5


II. Licenses/Sublicenses of [Name of Grantor] as Licensee/Sublicensee on Date Hereof

 

A.Copyrights

[List U.S. copyrights in numerical order by Registration No. List non-U.S. copyrights by country in alphabetical order, with Registration Nos. within each country in numerical order.]

U.S. Copyrights

 

Licensor Name and

Address

  

Date of License/

Sublicense

  

Title of

U.S. Copyright

  

Author

  

Reg. No.

           
           
           

Non-U.S. Copyrights

 

Country

  

Licensor Name

and Address

  

Date of

License/

Sublicense

  

Title of

Non-U.S.

Copyrights

  

Author

  

Reg. No.

              
              
              

 

V-6


B. Patents

[List U.S. patent Nos. and U.S. patent application Nos. in numerical order. List non-U.S. patent Nos. and non-U.S. application Nos. in alphabetical order by country with patent Nos. within each country in numerical order.]

U.S. Patents

 

Licensor Name

and Address

  

Date of

License/

Sublicense

  

Issue Date

  

Patent No.

        
        
        

U.S. Patent Applications

 

Licensor Name

and Address

  

Date of License/

Sublicense

  

Date Filed

  

Application No.

        
        
        

Non-U.S. Patents

 

Country

  

Licensor Name

and Address

  

Date of License/

Sublicense

  

Issue

Date

  

Non-U.S.

Patent No.

           
           
           

Non-U.S. Patent Applications

 

Country

  

Licensor Name

and Address

  

Date of License/

Sublicense

  

Date

Filed

  

Application No.

           
           
           

 

V-7


C. Trademarks

[List U.S. trademark Nos. and U.S. trademark application Nos. in numerical order. List non-U.S. trademark Nos. and non-U.S. application Nos. with trademark Nos. within each country in numerical order.]

U.S. Trademarks

 

Licensor Name

and Address

  

Date of License/

Sublicense

  

U.S. Mark

  

Reg. Date

  

Reg. No.

           
           
           

U.S. Trademark Applications

 

Licensor Name

and Address

  

Date of License/

Sublicense

  

U.S. Mark

  

Date

Filed

  

Application No.

           
           
           

Non-U.S. Trademarks

 

Country

  

Licensor Name

and Address

  

Date of License/

Sublicense

  

Non-U.S.

Mark

  

Reg. Date

  

Reg. No.

              
              
              

Non-U.S. Trademark Applications

 

Country

  

Licensor Name

and Address

  

Date of License/

Sublicense

  

Non-U.S.

Mark

  

Date

Filed

  

Application No.

              
              
              

 

V-8


D. Others

 

Licensor Name and Address

  

Date of License/

Sublicense

  

Subject Matter

     
     
     

 

V-9


PATENTS OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule V for each Grantor and state if no patents are owned. List in numerical order by Patent No./Patent Application No.]

U.S. Patents

 

Patent No.

  

Issue Date

  
  
  

U.S. Patent Applications

 

Patent Application No.

  

Filing Date

  
  
  

Non-U.S. Patents

[List non-U.S. patents and non-U.S. patent applications by country in alphabetical order, with patent Nos. and patent application Nos. within each country in numerical order.]

 

Country

  

Issue Date

  

Patent No.

     
     
     

Non-U.S. Patent Applications

 

Country

  

Filing Date

  

Patent Application No.

     
     
     

 

V-10


TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule V for each Grantor and state if no trademarks/trade names are owned. List in numerical order by trademark Registration/Application No.]

U.S. Trademark Registrations

 

Mark

  

Reg. Date

  

Reg. No.

     
     
     

U.S. Trademark Applications

 

Mark

  

Filing Date

  

Application No.

     
     
     

State Trademark Registrations

[List in alphabetical order by state/numerical order by trademark No. within each state.]

 

State

  

Mark

  

Reg. Date

  

Reg. No.

        
        
        

Non-U.S. Trademark Registrations

[List non-U.S. trademarks and non-U.S. trademark applications by country in alphabetical order, with Registration Nos. and application Nos. within each country in numerical order.]

 

Country

  

Mark

  

Reg. Date

  

Reg. No.

        
        
        

Non-U.S. Trademark Applications

 

Country

  

Mark

  

Application Date

  

Application No.

        
        
        

 

V-11


Trade Names

 

Country(s) Where Used

  

Trade Names

  
  
  

 

V-12


Schedule VI to the Guarantee and

Collateral Agreement

COMMERCIAL TORT CLAIMS


Exhibit A to the Guarantee and

Collateral Agreement

SUPPLEMENT NO. [●] (this “ Supplement ”) dated as of [●], 20[●] to the Guarantee and Collateral Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Guarantee and Collateral Agreement ”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “ Borrower ”), each Subsidiary from time to time party thereto (each such Subsidiary individually a “ Guarantor ” and collectively, the “ Guarantors ”; the Guarantors and the Borrower are referred to collectively herein as the “ Grantors ”) and UBS AG, STAMFORD BRANCH (together with its affiliates “ UBS ”), as administrative agent and as collateral agent (in such capacity, the “ Collateral Agent ”) for the Secured Parties (as defined therein).

A. Reference is made to the Credit Agreement dated as of April 29, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ ABL Credit Agreement ”), among the Borrower, the lenders from time to time party thereto (the “ Lenders ”) and UBS AG, Stamford Branch, as administrative agent for the Lenders and as Collateral Agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the ABL Credit Agreement or the Guarantee and Collateral Agreement referred to therein, as applicable.

C. The Grantors have entered into the Guarantee and Collateral Agreement in order to induce the Lenders to make Loans. Section 7.16 of the Guarantee and Collateral Agreement provides that additional Subsidiaries may become Guarantors and Grantors under the Guarantee and Collateral Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “ New Subsidiary ”) is executing this Supplement in accordance with the requirements of the ABL Credit Agreement to become a Guarantor and a Grantor under the Guarantee and Collateral Agreement in order to induce the Lenders to make additional Loans and as consideration for Loans previously made.

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

SECTION 1. In accordance with Section 7.16 of the Guarantee and Collateral Agreement, the New Subsidiary by its signature below becomes a Grantor and Guarantor under the Guarantee and Collateral Agreement with the same force and effect as if originally named therein as a Grantor and Guarantor and the New Subsidiary hereby (a) agrees to all the terms and provisions of the Guarantee and Collateral Agreement applicable to it as a Grantor and Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor and Guarantor thereunder are true and correct in all material respects on and as of the date hereof. In furtherance of


the foregoing, the New Subsidiary, as security for the payment and performance in full of the Obligations (as defined in the Guarantee and Collateral Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Guarantee and Collateral Agreement) of the New Subsidiary. Each reference to a “Grantor” or a “Guarantor” in the Guarantee and Collateral Agreement shall be deemed to include the New Subsidiary. The Guarantee and Collateral Agreement is hereby incorporated herein by reference.

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Subsidiary and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Subsidiary hereby represents and warrants that as of the date hereof (a) set forth on Schedule I attached hereto is a true and correct schedule of (i) any and all Equity Interests and Pledged Debt Securities now owned by the New Subsidiary and required to be pledged under the Guarantee and Collateral Agreement, other than Equity Interests issued by Non-Significant Subsidiaries and minority Equity Interests, and (ii) any and all Intellectual Property now owned by the New Subsidiary and that would have been required to be listed on Schedule V to the Guarantee and Collateral Agreement on the Closing Date and (b) set forth under its signature hereto, is the true and correct legal name of the New Subsidiary and its jurisdiction of organization.

SECTION 5. Except as expressly supplemented hereby, the Guarantee and Collateral Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guarantee and Collateral Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).

 

A-2


The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall (except as otherwise expressly permitted by the Guarantee and Collateral Agreement) be in writing and given as provided in Section 9.01 of the ABL Credit Agreement. All communications and notices hereunder to the New Subsidiary shall be given to it in care of the Borrower as provided in Section 9.01 of the ABL Credit Agreement.

SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of one counsel for the Collateral Agent in each relevant jurisdiction.

 

A-3


IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly executed this Supplement to the Guarantee and Collateral Agreement as of the day and year first above written.

 

[NAME OF NEW SUBSIDIARY],
  by  

 

    Name:
    Title:
    Address:
    Legal Name:
    Jurisdiction of Formation:

UBS AG, STAMFORD BRANCH, as

Collateral Agent,

  by  

 

    Name:
    Title:
  by  

 

    Name:
    Title:

 

A-4


Collateral of the New Subsidiary

EQUITY INTERESTS

 

Issuer

   Number of
Certificate
   Registered
Owner
   Number and
Class of
Equity Interest
   Percentage
of Equity
Interests
           
           
           

PLEDGED DEBT SECURITIES

 

Issuer

   Principal
Amount
   Date of Note    Maturity Date
        
        
        


INTELLECTUAL PROPERTY

[Follow format of Schedule III to the

Guarantee and Collateral Agreement.]


EXHIBIT F-1

FORM OF OPINION

OF BASS BERRY & SIMS PLC

(See attached)


LOGO

150 Third Avenue South, Suite 2800

Nashville, TN 37201

(615) 742-6200

April [29], 2016

** DRAFT **

UBS AG, Stamford Branch,

as Administrative Agent and Collateral Agent

600 Washington Boulevard

Stamford, Connecticut 06901

and

Each of the Lenders party to the Credit Agreement

described below on the date hereof

Ladies and Gentlemen:

We have acted as special counsel to (i) Quorum Health Corporation, a Delaware corporation (“ Borrower ”), (ii) Lexington Hospital Corporation, a Tennessee corporation (the “ Tennessee Opinion Entity ”) and (iii) each of the other Delaware Opinion Entities (as defined on Exhibit A ) listed on Exhibit A attached hereto, in connection with that certain ABL Credit Agreement, dated as of even date herewith (the “ Credit Agreement ”), among Borrower, the Lenders listed on the signature pages thereto and UBS AG, Stamford Branch, as Administrative Agent and Collateral Agent (the “ Agent ”). We have been requested by Borrower to render this opinion pursuant to Section 4.02(b)(i) of the Credit Agreement. The Tennessee Opinion Entity and the Delaware Opinion Entities are referred to herein, collectively, as the “ Opinion Entities ” and each, individually, as an “ Opinion Entity ”. Capitalized terms used but not otherwise defined herein have the same meanings as in the Credit Agreement.

In connection with this opinion, we have examined:

(1) the Credit Agreement;

(2) that certain ABL Guarantee and Collateral Agreement (the “ Security Agreement ”), dated as of the date hereof, among the Opinion Entities, certain other Subsidiaries of the Borrower, and the Collateral Agent;

(3) those certain financing statements naming each Delaware Opinion Entity as a debtor and the Collateral Agent as secured party, relating to the security interests granted to the Collateral Agent pursuant to the Security Agreement, to be filed in the Office of the Secretary of State of Delaware (collectively, the “ Delaware Financing Statements ”); and


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April [29], 2016

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(4) that certain financing statement naming the Tennessee Opinion Entity as debtor and the Collateral Agent as secured party, relating to the security interests granted to the Collateral Agent pursuant to the Security Agreement, to be filed in the Office of the Secretary of State of Tennessee (the “ Tennessee Financing Statement ” and, together with the Delaware Financing Statements, collectively, the “ Financing Statements ”).

The Credit Agreement and the Security Agreement are sometimes herein referred to collectively as the “ Transaction Documents ”.

We have also reviewed the certificate of incorporation, charter or articles of organization, as applicable, and the bylaws or operating agreement, as applicable, of each Opinion Entity (collectively, the “ Organizational Documents ”), and such corporate or limited liability company, as applicable, records of the Opinion Entities, such certificates of public officials and such other matters regarding the Opinion Entities as we have deemed necessary or appropriate for purposes of this opinion letter. As to factual matters, we have assumed the correctness of and relied upon statements and other representations of the Opinion Entities and the officers thereof set forth in the Transaction Documents and in certificates provided pursuant to or in connection with the Transaction Documents or otherwise provided to us, and upon certificates of public officials, and we have made no independent inquiries or investigations. We have assumed that all of the documents we have reviewed are the valid and binding obligations of the parties thereto. For purposes of the opinions on the existence and good standing of each Opinion Entity, we have relied solely upon certificates of good standing of recent date issued by the Secretary of State of Delaware or the Secretary of State of Tennessee, as applicable.

In making such examination and in expressing our opinions, we have further assumed, without investigation or inquiry:

(a) the due organization and existence of all parties to the Transaction Documents, except to the extent that we express an opinion in Paragraphs 1 – 3 below regarding the existence of the Opinion Entities,

(b) the legal capacity of all natural persons,

(c) the due authorization of the Transaction Documents by all parties thereto, except to the extent that we express an opinion in Paragraphs 1 – 3 below regarding the authorization of the Transaction Documents by the Opinion Entities,


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(d) the due execution and delivery of the Transaction Documents by all parties thereto, except to the extent that we express an opinion in Paragraph 4 below regarding the execution and delivery of the Transaction Documents by the Opinion Entities,

(e) that all parties to the Transaction Documents have the legal right, power and authority to enter into the Transaction Documents and to consummate the transactions contemplated thereby, except to the extent that we express an opinion in Paragraphs 1 – 3 below regarding the corporate or limited liability company, as applicable, power and corporate or limited liability company, as applicable, authority of the Opinion Entities,

(f) that all signatures on any executed documents furnished to us are genuine, all original documents submitted to us are authentic originals and all certified or other reproductions of documents submitted to us conform to the original documents,

(g) that each Opinion Entity owns, beneficially and of record, the property and/or interests in property that it purports to transfer, or in which it purports to grant a lien or security interest, pursuant to the Transaction Documents,

(h) that all property descriptions used in the Transaction Documents accurately and sufficiently describe the subject property,

(i) that the security interests of the Transaction Documents have attached and are in full force and effect under the law applicable thereto,

(j) that, notwithstanding any broader descriptions of the Collateral (as defined in the Security Agreement) that may have been used in the Transaction Documents, none of the Collateral (as defined in the Security Agreement) consists of as-extracted collateral or timber to be cut,

(k) that the Financing Statements will be appropriately recorded and filed in the offices referred to herein, and

(l) that the indebtedness incurred and obligations undertaken pursuant to the Transaction Documents have been incurred and undertaken for adequate consideration.

Based upon the foregoing and subject to the assumptions, limitations and qualifications herein set forth, we are of the opinion that:

1. Each Delaware Corporation is an existing Delaware corporation, in good standing under the laws of Delaware. Each Delaware Corporation has all necessary corporate power and corporate authority to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents. The execution and delivery of the Transaction


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April [29], 2016

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Documents and the performance of the provisions thereunder and the grant by the Delaware Corporations of security interests pursuant to the Transaction Documents have been duly authorized by all necessary corporate actions on the part of the Delaware Corporations.

2. Each Delaware Limited Liability Company is an existing Delaware limited liability company, in good standing under the laws of Delaware. Each Delaware Limited Liability Company has all necessary limited liability company power and limited liability company authority to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents and the performance of the provisions thereunder and the grant by the Delaware Limited Liability Companies of security interests pursuant to the Transaction Documents have been duly authorized by all necessary limited liability company actions on the part of the Delaware Limited Liability Company.

3. The Tennessee Corporation is an existing Tennessee corporation, in good standing under the laws of Tennessee. The Tennessee Corporation has all necessary corporate power and corporate authority to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents and the performance of the provisions thereunder and the grant by the Tennessee Corporation of security interests pursuant to the Transaction Documents have been duly authorized by all necessary corporate actions on the part of the Tennessee Corporation.

4. The Transaction Documents have been duly executed and delivered by the Opinion Entities.

5. The execution and delivery of the Transaction Documents and the consummation of the financing transaction that is the subject thereof do not (a) violate any statute or regulation of the United States of America or the State of Tennessee or the Delaware General Corporation Law or the Delaware Limited Liability Company Act that are applicable to the Opinion Entities or their assets and that, in our experience, are normally applicable to transactions of the types contemplated by the Transaction Documents, (b) contravene any Opinion Entity’s Organizational Documents, or (c) constitute a default under or breach of the terms of, or an event that, with the lapse of time or the giving of notice, or both, would constitute a default under or breach of, or result in the creation or imposition of any Lien (other than Liens evidenced by the Transaction Documents in favor of the Agent and the Lenders) on the assets of any Opinion Entity pursuant to the terms of, the agreements identified on Exhibit B hereto to which an Opinion Entity is a party or by which it or its properties is bound.

6. Except for the filings discussed herein, no authorization of, notice to, consent of, approval by, order of or filing with any United States federal governmental authority or any governmental authority in Tennessee or in Delaware under the Delaware General Corporation Law or the Delaware Limited Liability Company Act is required for the execution and delivery of the Transaction Documents by the Opinion Entities.


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April [29], 2016

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**DRAFT**

 

7. Each of the Financing Statements is in proper form for filing with the Office of the Secretary of State of Tennessee or the Office of the Secretary of State of Delaware, as applicable.

8. Upon the filing of the Delaware Financing Statements in the Office of the Secretary of State of Delaware, pursuant to authorization by the corresponding Delaware Opinion Entity, the security interests created pursuant to the Security Agreement in the personal property of each Delaware Opinion Entity that is described both in the Security Agreement and in the corresponding Delaware Financing Statement will be perfected to the extent that a security interest therein may be perfected by the filing of a financing statement in Delaware under Article 9 of the Uniform Commercial Code as in effect on the date hereof in Delaware (the “ Delaware UCC ”); provided, however , that:

(a) continuation statements must be filed timely to prevent a lapse in the effectiveness of a filed financing statement,

(b) additional filings may be necessary if a Delaware Opinion Entity changes its name or location or if a new debtor becomes bound by the Security Agreement,

(c) the perfection of a security interest in proceeds is limited to the extent provided in Section 9-315 of the Delaware UCC,

(d) Section 552 of the federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor prior to the commencement of the case,

(e) under applicable provisions of the Delaware UCC, the law of a jurisdiction other than Delaware may govern (i) perfection of a security interest in collateral in which the security interest is perfected by possession, (ii) perfection of a security interest in collateral consisting of fixtures in which the security interest is perfected by a fixture filing, (iii) perfection of a security interest in collateral consisting of timber to be cut, (iv) perfection of a security interest in as-extracted collateral, (v) perfection of an agricultural lien on farm products, and (vi) perfection of a security interest in collateral consisting of goods covered by a certificate of title, deposit accounts, investment property or letter of credit rights, and

(f) catch-all references in the Security Agreement to “assets” and “personal property” are probably overbroad and accordingly ineffective to result in the inclusion of any types or items of collateral not otherwise described with greater precision.


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April [29], 2016

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9. Upon the filing of the Tennessee Financing Statement in the Office of the Secretary of State of Tennessee, pursuant to authorization by the Tennessee Opinion Entity, the security interests created pursuant to the Security Agreement in the personal property of the Tennessee Opinion Entity that is described both in the Security Agreement and in the Tennessee Financing Statement will be perfected to the extent that a security interest therein may be perfected by the filing of a financing statement in Tennessee under Article 9 of the Uniform Commercial Code as in effect on the date hereof in Tennessee (the “ Tennessee UCC ”); provided, however , that:

(a) continuation statements must be filed timely to prevent a lapse in the effectiveness of a filed financing statement,

(b) additional filings may be necessary if the Tennessee Opinion Entity changes its name or location or if a new debtor becomes bound by the Security Agreement,

(c) the perfection of a security interest in proceeds is limited to the extent provided in Section 9-315 of the Tennessee UCC,

(d) Section 552 of the federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor prior to the commencement of the case,

(e) under applicable provisions of the Tennessee UCC, the law of a jurisdiction other than Tennessee may govern (i) perfection of a security interest in collateral in which the security interest is perfected by possession, (ii) perfection of a security interest in collateral consisting of fixtures in which the security interest is perfected by a fixture filing, (iii) perfection of a security interest in collateral consisting of timber to be cut, (iv) perfection of a security interest in as-extracted collateral, (v) perfection of an agricultural lien on farm products, and (vi) perfection of a security interest in collateral consisting of goods covered by a certificate of title, deposit accounts, investment property or letter of credit rights, and

(f) catch-all references in the Security Agreement to “assets” and “personal property” are probably overbroad and accordingly ineffective to result in the inclusion of any types or items of collateral not otherwise described with greater precision.


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April [29], 2016

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**DRAFT**

 

The opinions expressed herein are limited to the federal laws of the United States of America, the laws of Tennessee, the Delaware General Corporation Law, the Delaware Limited Liability Company Act and Article 9 of the Delaware UCC. Our opinions as to the Delaware Opinion Entities regarding corporate power, corporate authority, limited liability company power, limited liability company authority, existence, authorization, execution and delivery of documents and other matters of corporate or limited liability company law, and the Delaware UCC, are based solely upon our review of the latest unofficial compilations of the Delaware General Corporation Law, the Delaware Limited Liability Company Act and Article 9 of the Delaware UCC that were available to us, and we have not examined any other Delaware statutes or any court decisions from Delaware.

The opinions expressed herein are qualified as follows:

(a) We express no opinion as to the title to any property or the priority of any lien on or any security or other interest in any property.

(b) We express no opinion with respect to any matters that would require us to perform a mathematical calculation or make a determination as to financial or accounting matters (including but not limited to compliance or noncompliance with financial covenants or ratios).

(c) The authorization, validity, binding nature and enforceability of the Security Agreement may be subject to corporation law restrictions relating to capital or other financial adequacy that would be applicable in the event that any indebtedness, obligation, liability or undertaking of the Opinion Entities as Guarantors under the Security Agreement is deemed to be a dividend or distribution.

Our opinion is rendered as of the date hereof, and we assume no obligation to advise you of changes in law or fact (or the effect thereof on the opinions expressed herein) that hereafter may come to our attention.

The opinions rendered herein are solely for the benefit of the Agent, the Lenders and their respective successors and assigns in connection with the transactions that are the subject of the Transaction Documents, and this opinion letter may not be delivered to or relied upon by any other person nor quoted or reproduced in any report or other document without our prior written consent in each case; provided, however, that a copy of this opinion letter may be furnished to your regulators, accountants, attorneys and other professional advisors for the purpose of confirming its existence, and this opinion letter may be disclosed in connection with any legal or regulatory proceeding relating to the subject matter hereof; and provided further that (i) reliance by any assignee must be actual and reasonable under the circumstances existing at the time of assignment, and (ii) each such assignee shall be deemed to have the knowledge of the addressees as of the date hereof with respect to matters related to the opinions rendered herein.


UBS AG, Stamford Branch, as Administrative Agent and Collateral Agent

April [29], 2016

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**DRAFT**

 

Very truly yours,
DRAFT


Exhibit A

Delaware Opinion Parties

As used herein, “ Delaware Corporation ” and “ Delaware Corporations ” means and refers to Borrower and each of the following:

 

  1. Hospital of Barstow, Inc.

 

  2. National Healthcare of Mt. Vernon, Inc.

 

  3. Watsonville Hospital Corporation

As used herein, “ Delaware LLC ” and “ Delaware LLCs ” means and refers to each of the following:

 

  1. Blue Island Hospital Company, LLC

 

  2. Blue Island Illinois Holdings, LLC

 

  3. Blue Ridge Georgia Holdings, LLC

 

  4. CSRA Holdings, LLC

 

  5. DHSC, LLC

 

  6. Massillon Community Health System LLC

 

  7. Massillon Health System LLC

 

  8. Massillon Holdings, LLC

 

  9. McKenzie Tennessee Hospital Company, LLC

 

  10. MMC of Nevada, LLC

 

  11. MWMC Holdings, LLC

 

  12. QHC California Holdings, LLC

 

  13. Quorum Health Investment Company, LLC

 

  14. Quorum Health Resources, LLC

 

  15. Sunbury Hospital Company, LLC

 

  16. Triad of Oregon, LLC

As used herein, “ Delaware Opinion Entity ” and “ Delaware Opinion Entities ” means and refers to each of the Delaware Corporations and the Delaware LLCs.


Exhibit B

Specified Agreements

Indenture dated as of April [22], 2016, among Borrower, the Guarantors and Regions Bank, an Alabama banking corporation, as Trustee, relating to the issuance by Borrower of its 11.625% Senior Notes due 2023.

Credit Agreement dated as of April [29], 2016, among Borrower, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent.

ABL Intercreditor Agreement dated as of April [29], 2016, among Agent, as ABL Agent, Credit Suisse AG, Cayman Islands Branch, as Term Loan/Cash Flow Revolver Agent, Borrower and the Guarantors.


EXHIBIT F-2

FORM OF

GENERAL COUNSEL OPINION

(See attached)


PRIVILEGED AND CONFIDENTIAL

April 29, 2016

The Lenders and the Agent Referred to Below

c/o UBS AG, Stamford Branch,

as Administrative Agent and Collateral Agent

600 Washington Boulevard

Stamford, Connecticut 06901

 

  RE: ABL Credit Agreement, dated as of April 29, 2016

Ladies and Gentlemen:

I am Senior Vice President and General Counsel of Quorum Health Corporation, a Delaware corporation (the “ Borrower ”), and have acted as Counsel for the Borrower and each of the Subsidiaries listed on the Schedule of Guarantors attached hereto as Schedule I (each a “ Guarantor “and, collectively, the “ Guarantors ”, and together with the Borrower, the “ Credit Parties ”) in connection with the ABL Credit Agreement, dated as of even date herewith (the “ Credit Agreement ”), among the Borrower, UBS AG, Stamford Branch, as Administrative Agent and Collateral Agent (the “ Agent ”), and the Lenders listed on the signature pages thereto.

This opinion is delivered to you pursuant to subsection Section 4.02(b)(ii) of the Credit Agreement. All capitalized terms used herein that are defined in, or by reference in, the Credit Agreement have the meanings assigned to such terms therein, or by reference therein, unless otherwise defined herein. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on my part except to the extent otherwise expressly stated, and I express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon.

In connection with this opinion, I have (i) investigated such questions of law, (ii) examined originals or certified, conformed or reproduction copies of such agreements, instruments, documents, and records of the Credit Parties, such certificates of public officials and such other documents, and (iii) received such information from officers and representatives of the Credit Parties, as I have deemed necessary or appropriate for the purposes of this opinion. For purposes of the opinions on the existence and good standing of each Credit Party, I have relied solely upon certificates of existence of recent date issued by the Secretary of State of the applicable state of incorporation or formation. I have examined, among other documents, the following:

(a) an executed copy of the Credit Agreement; and


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(b) an executed copy of the ABL Guarantee and Collateral Agreement, dated as of the date hereof, among the Credit Parties and the Collateral Agent.

The documents referred to in items (a) and (b) above, inclusive, are referred to herein as the “ Transaction Documents ”.

In all such examinations, I have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures on original or certified, conformed or reproduction copies of documents of all parties (other than with respect to the Credit Parties to the extent signed in my presence), the authenticity of original and certified documents and the conformity to original or certified documents of all copies submitted to me as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, I have relied upon, and assume the accuracy of, certificates and oral or written statements and other information of or from public officials and others, and assume compliance on the part of all parties to the Transaction Documents with their covenants and agreements contained therein.

With respect to the opinions expressed in clauses (ii) and (iv) of paragraph (b) below, my opinions are limited (x) to my actual knowledge of the respective business activities and properties of the Credit Parties in respect of such matters and without any independent investigation or verification on my part and (y) to my review of only those laws and regulations that, in my experience, are normally applicable to transactions of the type contemplated by the Transaction Documents.

To the extent it may be relevant to the opinions expressed herein, I have assumed that the parties to the Transaction Documents, other than the Credit Parties, have the corporate power to enter into and perform such documents and that (except as set forth in paragraph (b) below) such documents have been duly authorized, executed and delivered by, and constitute legal, valid and binding obligations of, such parties.

Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth therein, I am of the opinion that:

(a) Each Guarantor is a corporation, limited liability company, or limited partnership validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all power and authority necessary to execute, deliver and perform its obligations under the Transaction Documents.

(b) The execution and delivery by each Credit Party of the Transaction Documents and the performance by each Credit Party of its respective obligations under each of the Transaction Documents and the borrowings by the Borrower and the grant by each Credit Party


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of the security interests pursuant to the Transaction Documents to which it is a party (i) have been authorized, in the case of each Guarantor, by all necessary action by such Guarantor, (ii) do not require under present law any filing or registration by any Credit Party with, or approval or consent to any Credit Party of, any governmental agency or authority of the State of Tennessee that has not been made or obtained, except those required in the ordinary course of business in connection with the future performance, if any, by each Credit Party of its respective obligations under certain covenants contained in the Transaction Documents to which it is a party or pursuant to securities or other laws that may be applicable to the disposition of any collateral subject thereto, (iii) do not contravene any provision of the certificate of incorporation or bylaws or similar organizational document of any Guarantor, (iv) do not violate any present law, or present regulation of any governmental agency or authority, of the State of Tennessee known by me to be applicable to any Credit Party or its properties, (v) do not breach or cause a default under any agreement or violate any court decree or order binding upon such Credit Party or its property (this opinion being limited (x) to those agreements, decrees or orders that are identified on Exhibit A attached hereto and (y) in that I express no opinion with respect to any breach, default or violation not readily ascertainable from the face of any such agreement, decree or order, or arising under or based upon any cross default provision insofar as it relates to a default under an agreement not so identified to me, or arising under or based upon any covenant of a financial or numerical nature or requiring computation), and (vi) will not result in or require the creation or imposition of any Lien (other than Liens evidenced by the Transaction Documents in favor of the Agent and the Lenders) upon any properties of a Credit Party pursuant to the provisions of any agreement (this opinion being limited to those agreements that are identified on Exhibit A attached hereto).

(c) The Transaction Documents have been duly executed and delivered on behalf of each Guarantor that is a party thereto.

To my actual knowledge, I am not aware of any pending legal proceeding before, or pending investigation by, any court or administrative agency or authority, or any arbitration tribunal, against or directly affecting the Credit Parties, or any of their respective properties, which seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief in connection with or which would adversely affect the legality, validity or enforceability of, any of the Transaction Documents or the transactions contemplated thereby.

I have issued certain limited opinions above as to the corporate, limited liability company, or limited partnership existence, good standing and authority of the Guarantors under the law of their respective states of organization. I do not purport to be an expert in matters of law of jurisdictions other than the State of Tennessee and the federal law of the United States of America, and have issued my opinions based solely upon my review of the corporate record of each Guarantor.


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The opinions set forth above are subject to the following qualifications and limitations:

 

  (a) I express no opinion regarding the application of federal or state securities laws to the transactions contemplated in the Transaction Documents;

 

  (b) I express no opinion regarding (i) the effect of fraudulent conveyance, fraudulent transfer and other similar laws relating to or affecting the rights of creditors and (ii) restrictions relating to capital adequacy that may be applicable to any Guarantor to the extent any Transaction Document may be deemed a dividend or distribution; and

 

  (c) To the extent that section 8.31 of the Revised Model Business Corporation Act (as adopted in any state in which a Credit Party is incorporated) or other corporation law analogous thereto may apply, I have assumed the transactions described in the Transaction Documents are fair to the Credit Parties.

I am qualified to practice law in the State of Tennessee, and I am no expert in and express no opinions as to the laws of other jurisdictions other than to the federal laws of the United States of America and the laws of the State of Tennessee, as currently in effect. I assume no obligation to supplement this opinion if any applicable laws change after the date hereof or if I become aware of any facts that might change the opinions expressed herein after the date hereof.

The opinions expressed herein are solely for the benefit of the Lenders and the Agent and may not be relied on in any manner or for any purpose by any other person or entity.

 

Very truly yours,
R. Harold McCard, Jr.
Senior Vice President and General Counsel


Schedule I

Schedule of Guarantors

 

1. Anna Hospital Corporation

 

2. Big Bend Hospital Corporation

 

3. Big Spring Hospital Corporation

 

4. Blue Island Hospital Company, LLC

 

5. Blue Island Illinois Holdings, LLC

 

6. Blue Ridge Georgia Holdings, LLC

 

7. Centre Hospital Corporation

 

8. Clinton Hospital Corporation

 

9. CSRA Holdings, LLC

 

10. Deming Hospital Corporation

 

11. DHSC, LLC

 

12. Evanston Hospital Corporation

 

13. Forrest City Arkansas Hospital Company, LLC

 

14. Forrest City Hospital Corporation

 

15. Fort Payne Hospital Corporation

 

16. Galesburg Hospital Corporation

 

17. Granite City Hospital Corporation

 

18. Granite City Illinois Hospital Company, LLC

 

19. Greenville Hospital Corporation

 

20. Hamlet H.M.A., LLC

 

21. Hospital of Barstow, Inc.

 

22. Hospital of Louisa, Inc.

 

23. Jackson Hospital Corporation

 

24. Lexington Hospital Corporation

 

25. Marion Hospital Corporation

 

26. Massillon Community Health System LLC

 

27. Massillon Health System LLC

 

28. Massillon Holdings, LLC

 

29. McKenzie Tennessee Hospital Company, LLC

 

30. MMC of Nevada, LLC

 

31. Monroe HMA, LLC

 

32. MWMC Holdings, LLC

 

33. National Healthcare of Mt. Vernon, Inc.

 

34. Phillips Hospital Corporation

 

35. QHC California Holdings, LLC

 

36. QHG of Massillon, Inc.

 

37. Quorum Health Investment Company, LLC

 

38. Quorum Health Resources, LLC

 

39. Red Bud Hospital Corporation

 

40. Red Bud Illinois Hospital Company, LLC

 

41. San Miguel Hospital Corporation

 

42. Sunbury Hospital Company, LLC


43. Tooele Hospital Corporation

 

44. Triad of Oregon, LLC

 

45. Watsonville Hospital Corporation

 

46. Waukegan Hospital Corporation

 

47. Waukegan Illinois Hospital Company, LLC

 

48. Williamston Hospital Corporation

 

49. Winder HMA, LLC


Exhibit A

Specified Agreement

Indenture dated as of April 22, 2016, among Borrower, the Guarantors and Regions Bank, an Alabama banking corporation, as Trustee, relating to the issuance by Borrower of its 11.625% Senior Notes due 2023


EXHIBIT F-3

FORM OF

Local US Opinion Request

The Opinions below should be provided by local counsel:

1. Each [OPINION PARTY] is a [corporation/limited liability company/limited partnership] [validly existing] 1 and in good standing under the laws of the State of [STATE]. Each [OPINION PARTY] has all necessary power and authority to execute and deliver the Agreements 2 and to perform its obligations thereunder.

2. (a) The execution and delivery by the [OPINION PARTY] of the Agreements, the performance by the [OPINION PARTY] of its obligations thereunder [and the grant by the [OPINION PARTY] of security interests pursuant to the Agreements] (i) have been duly authorized by all requisite action on the part of the [OPINION PARTY] and (ii) do not violate the [Certificate of Incorporation or By-laws/Certificate of Formation or operating agreement] of the [OPINION PARTY].

(b) The execution and delivery by the [OPINION PARTY] of the Agreements and the performance by the [OPINION PARTY] of its obligations thereunder do not [(i)] violate any law, rule or regulation of the State of [STATE][ and (ii) will not result in the creation or imposition of any lien, charge or encumbrance under any [State] law upon any property or assets of the [OPINION PARTY]].

3. Each of the Agreements has been duly executed and delivered by each [OPINION PARTY] party thereto.

4. No authorization, approval or other action by, and no notice to, consent of, order of or filing with, any [STATE] governmental authority is required to be made or obtained by the [OPINION PARTY] in connection with the execution, delivery and performance by the [OPINION PARTY] of the Agreements.

5. The security interest in that portion of the [Collateral] (as defined in each Security Agreement in which a security interest may be perfected by the filing in the State of [STATE] of financing statements under the [STATE] UCC (such portion, the “ UCC Filing Collateral ”) will be perfected upon the filing of the [STATE] Financing Statements, describing the UCC Filing Collateral, in the [STATE] Filing Office.

 

1   Terms used for “valid existence” may vary by state and entity type.
2   The term “Agreements” should refer to all agreements being executed by the relevant entities.


Documents Reviewed. The documents local counsel should review should include:

 

  (a) the Credit Agreement,

 

  (b) Agreements to be executed by covered entities

 

  (c) UCC financing statements

 

  (d) Organizational documents

 

  (e) Authorizing resolutions

 

2


EXHIBIT G

FORM OF

BORROWING BASE CERTIFICATE

UBS AG, Stamford Branch, as Administrative Agent

600 Washington Blvd

Stamford, CT 06901

Attention: Asset Based Lending

The undersigned hereby certifies that:

 

  1. I am a Responsible Officer of the Borrower (as defined below).

 

  2. In accordance with Section 5.04(d) of the ABL Credit Agreement dated as of April 29, 2016 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Quorum Health Corporation, a Delaware corporation (the “ Borrower ”), the lenders party thereto from time to time, UBS AG, Stamford Branch, as administrative agent (in such capacity, the “ Administrative Agent ”) and as collateral agent (in such capacity, the “ Collateral Agent ”), attached hereto as Annex 1 is a true and accurate calculation of the Borrowing Base as of             , 2016, determined in accordance with the requirements of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein have the meanings specified in the Credit Agreement.

[Signature page follows]


IN WITNESS WHEREOF , the undersigned has caused this Borrowing Base Certificate to be duly executed as of the date first written above.

 

QUORUM HEALTH CORPORATION
By:  

 

  Name:  
  Title:  

[Signature Page to Borrowing Base Certificate]


Annex I

Borrowing Base Calculation

See attached.

Exhibit 10.3

QUORUM HEALTH CORPORATION

2016 STOCK AWARD PLAN

 

1. Purpose .

The purpose of this Plan is to strengthen Quorum Health Corporation, a Delaware corporation (the “Company”), and its Subsidiaries by providing a retention tool and an incentive to its and their employees, officers, consultants and directors and thereby encouraging them to devote their abilities and industry to the success of the Company’s and its Subsidiaries’ business enterprises. It is intended that this purpose be achieved by extending to employees (including future employees who have received a formal written offer of employment), officers, consultants and directors of the Company and its Subsidiaries an added long-term incentive for high levels of performance and unusual efforts through the grant of Incentive Stock Options, Non-qualified Stock Options, Stock Appreciation Rights, Performance Units, Performance Shares, Share Awards, Restricted Stock and Restricted Stock Units (as each term is herein defined).

 

2. Definitions .

For purposes of the Plan:

2.1 “Affiliate” means any entity, directly or indirectly, controlled by, controlling or under common control with the Company or any corporation or other entity acquiring, directly or indirectly, all or substantially all the assets and business of the Company, whether by operation of law or otherwise.

2.2 “Agreement” means the written agreement between the Company and a Grantee evidencing the grant of an Award and setting forth the terms and conditions thereof.

2.3 “Award” means a grant of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, a Performance Award, a Share Award or any or all of them.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Cause” means, except as otherwise set forth herein or in an applicable Award Agreement,

(a) in the case of a Grantee whose employment with the Company or a Subsidiary is subject to the terms of an employment agreement between such Grantee and the Company or Subsidiary, which employment agreement includes a definition of “Cause”, the term “Cause” as used in this Plan or any Agreement shall have the meaning set forth in such employment agreement during the period that such employment agreement remains in effect; and

(b) in all other cases, (i) intentional failure to perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the performance of duties, (iii) involvement in a transaction in connection with the performance of duties to the Company or any of its Subsidiaries which transaction is adverse to the interests of the Company or any of its Subsidiaries and which is engaged in for personal profit or (iv) willful violation of any law, rule or regulation in connection with the performance of duties (other than traffic violations or similar offenses); provided, however, that following a Change in Control clause (i) of this Section 2.6(b) shall not constitute “Cause.”


2.6 “Change in Capitalization” means any increase or reduction in the number of Shares, or any change (including, but not limited to, in the case of a spin-off, dividend or other distribution in respect of Shares, a change in value) in the Shares or exchange of Shares for a different number or kind of shares or other securities of the Company or another corporation, by reason of a reclassification, recapitalization, merger, consolidation, reorganization, spin-off, split-up, issuance of warrants or rights or debentures, stock dividend, stock split or reverse stock split, cash dividend, property dividend, extraordinary cash dividend, combination or exchange of shares, repurchase of shares, change in corporate structure or otherwise.

2.7 A “Change in Control” shall mean the occurrence of any of the following, unless otherwise determined by the Committee in an applicable Agreement or other written agreement approved by the Committee:

(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of the then outstanding Shares or the combined voting power of the Company’s then outstanding Voting Securities; provided , however , that in determining whether a Change in Control has occurred pursuant to this Section 2.8(a), Shares or Voting Securities which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person the majority of the voting power, voting equity securities or equity interest of which is owned, directly or indirectly, by the Company (for purposes of this definition, a “Related Entity”), (ii) the Company or any Related Entity, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined);

(b) The individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the members of the Board or, following a Merger (as hereinafter defined) which results in a Parent Corporation (as hereinafter defined), the board of directors of the ultimate Parent Corporation; provided, however, that if the election, or nomination for election by the Company’s common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered a member of the Incumbent Board; provided further , however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of the actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Proxy Contest; or

 

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(c) The consummation of:

(i) A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger where:

(A) the stockholders of the Company immediately before such Merger own directly or indirectly immediately following such Merger at least fifty percent (50%) of the combined voting power of the outstanding voting securities of (x) the corporation resulting from such Merger (the “Surviving Corporation”), if fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly, by another Person (a “Parent Corporation”), or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation; and

(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger constitute at least a majority of the members of the board of directors of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation;

(ii) A complete liquidation or dissolution of the Company; or

(iii) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Related Entity or under conditions that would constitute a Non-Control Transaction with the disposition of assets being regarded as a Merger for this purpose or the distribution to the Company’s stockholders of the stock of a Related Entity or any other assets).

Notwithstanding the foregoing, (A) a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting Securities by the Company which, by reducing the number of Shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Shares or Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Shares or Voting Securities which increases the percentage of the then outstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur, and (B) unless otherwise provided in the applicable Agreement, with respect to any Award constituting a “deferral of compensation” subject to Section 409A of the Code, solely for purposes of determining the timing of a payment pursuant to the Agreement, a Change in Control shall mean a “change in the ownership” of the Company, a “change in the effective control” of the Company, or a “change in the ownership of a substantial portion of the assets” of the Company as such terms are defined in Section 1.409A-3(i)(5) of the Treasury Regulations.

 

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If a Grantee’s employment is terminated by the Company without Cause prior to the date of a Change in Control but the Grantee reasonably demonstrates that the termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a change in control or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which has been threatened or proposed, such termination shall be deemed to have occurred after a Change in Control for purposes of this Plan provided a Change in Control shall actually have occurred.

2.8 “Code” means the Internal Revenue Code of 1986, as amended.

2.9 “Committee” means a committee, as described in Section 3.1, appointed by the Board from time to time to administer the Plan and to perform the functions set forth herein.

2.10 “Company” means Quorum Health Corporation.

2.11 “Director” means a director of the Company.

2.12 “Disability” means:

(a) in the case of a Grantee whose employment with the Company or a Subsidiary is subject to the terms of an employment agreement between such Grantee and the Company or Subsidiary, which employment agreement includes a definition of “Disability”, the term “Disability” as used in this Plan or any Agreement shall have the meaning set forth in such employment agreement during the period that such employment agreement remains in effect;

(b) in the case of a Grantee to whom Section 2.12(a) does not apply and who participates in the Company’s long-term disability plan, if any, the term “Disability” as used in such plan; or

(c) in all other cases, a physical or mental infirmity which impairs the Grantee’s ability to perform substantially all his or her duties for a period of ninety-one (91) consecutive days.

2.13 “Division” means any of the operating units or divisions of the Company designated as a Division by the Committee.

2.14 “Dividend Equivalent Right” means a right to receive all or some portion of the cash dividends that are or would be payable with respect to Shares, as determined by the Committee; provided, that subject to Section 12, no Dividend Equivalent Rights shall be granted with respect to unexercised Options or Stock Appreciation Rights.

2.15 “Eligible Individual” means any of the following individuals who is designated by the Committee as eligible to receive Awards subject to the conditions set forth herein: (a) any Director or Employee, (b) any individual to whom the Company or a Subsidiary has extended a formal, written offer of employment, or (c) any consultant or advisor of the Company or a Subsidiary.

 

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2.16 “Employee” means any person, including an officer (whether or not also a Director) in the regular full-time employment of the Company or any of its Subsidiaries, but excludes, in the case of an Incentive Stock Option, an employee of any Subsidiary that is not a “subsidiary corporation” of the Company as defined in Code Section 424(f).

2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.18 “Fair Market Value” means, unless otherwise determined by the Committee, the closing price of the relevant security as reported on the composite tape of New York Stock Exchange issues (or if, at the date of determination, the security is not so listed or if the principal market on which it is traded is not the New York Stock Exchange, such other reporting system as shall be selected by the Committee) on the relevant date, or if no sale of the security is reported for that date, the next preceding day for which there is a reported sale. In the event that Fair Market Value of a security cannot be determined in the manner described above, the Fair Market Value shall be the value established by the Board in good faith.

2.19 “Good Reason” shall mean, unless otherwise provided in an Agreement, the occurrence after a Change in Control of any of the following events or conditions with respect to a Grantee:

(a) a change in the Grantee’s status, title, position or responsibilities (including reporting responsibilities) which, in the Grantee’s reasonable judgment, represents an adverse change from the Grantee’s status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Grantee of any duties or responsibilities which, in the Grantee’s reasonable judgment, are inconsistent with the Grantee’s status, title, position or responsibilities; or any removal of the Grantee from or failure to reappoint or reelect the Grantee to any of such offices or positions, except in connection with the termination of the Grantee’s employment for Disability, Cause, as a result of the Grantee’s death or by the Grantee other than for Good Reason;

(b) a reduction in the Grantee’s annual base salary below the amount as in effect immediately prior to the Change in Control;

(c) the relocation of the offices of the Grantee’s place of employment to a location more than twenty-five (25) miles from the location of such employment immediately prior to such Change in Control, or requiring the Grantee to be based anywhere other than such offices, except to the extent the Grantee was not previously assigned to a principal location and except for required travel on business to the extent substantially consistent with the Grantee’s business travel obligations at the time of the Change in Control;

(d) the failure to pay to the Grantee any portion of the Grantee’s current compensation or to pay to the Grantee any portion of an installment of deferred compensation under any deferred compensation program of the Company or any of its Subsidiaries in which the Grantee participated, within seven (7) days of the date such compensation is due;

(e) the failure to (A) continue in effect (without reduction in benefit level, and/or reward opportunities) any material compensation or employee benefit plan in which the Grantee was participating immediately prior to the Change in Control, unless a substitute or

 

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replacement plan has been implemented which provides substantially identical compensation or benefits to the Grantee or (B) provide the Grantee with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other compensation or employee benefit plan, program and practice in which the Grantee was participating immediately prior to the Change in Control; or

(f) the failure of the Company to obtain from its successors or assigns the express assumption and agreements required under Section 13 hereof.

Any event or condition described in Section 2.19(a), (b), (c), (d), or (f) which occurs at any time prior to the date of a Change in Control and (A) which occurred after the Company entered into a definitive agreement, the consummation of which would constitute a Change in Control or (B) which the Grantee reasonably demonstrates was at the request of a third party who has indicated an intention or has taken steps reasonably calculated to effect a Change in Control, shall constitute Good Reason for purposes of this Agreement, notwithstanding that it occurred prior to a Change in Control.

2.20 “Grantee” means a person to whom an Award has been granted under the Plan.

2.21 “Grant Price” means the price established at the time of a grant of a Stock Appreciation Right used to determine whether there is any payment due upon exercise of the Stock Appreciation Right.

2.22 “Incentive Stock Option” means an Option satisfying the requirements of Section 422 of the Code and designated by the Committee as an Incentive Stock Option.

2.23 “Non-employee Director” means a Director who is not an Employee.

2.24 “Non-qualified Stock Option” means an Option which is not an Incentive Stock Option.

2.25 “Option” means a Non-qualified Stock Option, an Incentive Stock Option or either or both of them.

2.26 “Optionee” means a person to whom an Option has been granted under the Plan.

2.27 “Outside Director” means a director of the Company who is an “outside director” within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.

2.28 “Parent” means any corporation which is a parent corporation within the meaning of Section 424(e) of the Code with respect to the Company.

2.29 “Performance Awards” means Performance Units, Performance Shares or either or both of them.

2.30 “Performance-Based Compensation” means any Award that is intended to constitute “qualified performance based compensation” within the meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.

 

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2.31 “Performance Cycle” means the time period specified by the Committee at the time Performance Awards are granted during which the performance of the Company, a Subsidiary or a Division will be measured.

2.32 “Performance Objectives” has the meaning set forth in Section 9.

2.33 “Performance Shares” means Shares issued or transferred to an Eligible Individual under Section 9.

2.34 “Performance Units” means performance units granted to an Eligible Individual under Section 9.

2.35 “Plan” means this Quorum Health Corporation 2016 Stock Award Plan, as amended and restated from time to time.

2.36 “Restricted Stock” means Shares issued or transferred to an Eligible Individual pursuant to Section 8.1.

2.37 “Restricted Stock Unit” means rights granted to an Eligible Individual under Section 8.2 representing a number of hypothetical Shares.

2.38 “Share Award” means an Award of Shares granted pursuant to Section 10.

2.39 “Shares” means shares of the Common Stock of the Company, par value $.01 per share, and any other securities into which such shares are changed or for which such shares are exchanged.

2.40 “Stock Appreciation Right” means a right to receive all or some portion of the increase in the value of the Shares as provided in Section 6 hereof.

2.41 “Subsidiary” means (i) except as provided in subsection (ii) below, any corporation which is a subsidiary corporation within the meaning of Section 424(f) of the Code with respect to the Company, and (ii) in relation to the eligibility to receive Awards other than Incentive Stock Options and continued employment for purposes of Awards (unless the Committee determines otherwise), any entity, whether or not incorporated, in which the Company directly or indirectly owns 50% or more of the outstanding equity or other ownership interests.

2.42 “Successor Corporation” means a corporation, or a Parent or Subsidiary thereof within the meaning of Section 424(a) of the Code, which issues or assumes a stock option in a transaction to which Section 424(a) of the Code applies.

2.43 “Ten-Percent Stockholder” means an Eligible Individual, who, at the time an Incentive Stock Option is to be granted to him or her, owns (within the meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, a Parent or a Subsidiary.

 

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3. Administration .

3.1 The Committee . The Plan shall be administered by the Committee, which shall hold meetings at such times as may be necessary for the proper administration of the Plan. The Committee shall keep minutes of its meetings. If the Committee consists of more than one (1) member, a quorum shall consist of not fewer than two (2) members of the Committee and a majority of a quorum may authorize any action. Any decision or determination reduced to writing and signed by a majority of all of the members of the Committee shall be as fully effective as if made by a majority vote at a meeting duly called and held. The Committee shall consist of at least one (1) Director and may consist of the entire Board; provided, however, that (A) with respect to any Award granted to an Eligible Individual who is subject to Section 16 of the Exchange Act, the Committee shall consist of at least two (2) Directors each of whom shall be a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act and (B) to the extent necessary for any Option or Award intended to qualify as Performance-Based Compensation to so qualify, the Committee shall consist of at least two (2) Directors, each of whom shall be an Outside Director. For purposes of the preceding sentence, if any member of the Committee fails to qualify as either a non-employee director (within the meaning of subsection (A) above) or an Outside Director, but recuses himself or herself or abstains from voting with respect to a particular action taken by the Committee, then the Committee, with respect to that action, shall be deemed to consist only of the members of the Committee who have not recused themselves or abstained from voting. Subject to applicable law, the Committee may delegate its authority under the Plan to any other person or persons.

3.2 Limitation of Liability . No member of the Committee shall be liable for any action, failure to act, determination or interpretation made in good faith with respect to this Plan or any transaction hereunder. The Company hereby agrees to indemnify each member of the Committee for all costs and expenses and, to the extent permitted by applicable law, any liability incurred in connection with defending against, responding to, negotiating for the settlement of or otherwise dealing with any claim, cause of action or dispute of any kind arising in connection with any actions in administering this Plan or in authorizing or denying authorization to any transaction hereunder.

3.3 Certain Powers . Subject to the express terms and conditions set forth herein, the Committee shall have the power from time to time to:

(a) determine those Eligible Individuals to whom Options shall be granted under the Plan and the number of such Options to be granted, prescribe the terms and conditions (which need not be identical) of each such Option, including the exercise price per Share, the vesting schedule and the duration of each Option, and make any amendment or modification to any Option Agreement consistent with the terms of the Plan;

(b) select those Eligible Individuals to whom Awards other than Options shall be granted under the Plan, determine the number of Shares in respect of which each Award is granted, the terms and conditions (which need not be identical) of each such Award, and make any amendment or modification to any Award Agreement consistent with the terms of the Plan;

 

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(c) construe and interpret the Plan and the Awards granted hereunder, establish, amend and revoke rules and regulations for the administration of the Plan, including, but not limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Agreement, in the manner and to the extent it shall deem necessary or advisable, including so that the Plan and the operation of the Plan comply with Rule 16b-3 under the Exchange Act, the Code to the extent applicable and other applicable law, and otherwise make the Plan fully effective. Without limiting the Committee’s authority under this Plan, but subject to any express limitations herein, the Committee shall have the authority to accelerate the exercisability or vesting of an Award, to extend the term or waive early termination provisions of an Award (subject to the maximum ten-year term under Section 5.3), and to waive the Company’s rights with respect to an Award or restrictive conditions of an Award (including forfeiture conditions), in any case in such circumstances as the Committee deems appropriate. All decisions and determinations by the Committee in the exercise of this power shall be final, binding and conclusive upon the Company, its Subsidiaries, the Grantees, and all other persons having any interest therein;

(d) determine the duration and purposes for leaves of absence which may be granted to a Grantee on an individual basis without constituting a termination of employment or service for purposes of the Plan;

(e) exercise its discretion with respect to the powers and rights granted to it as set forth in the Plan; and

(f) generally, exercise such powers and perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan.

3.4 Delegation . The Committee may delegate to one or more officers of the Company the authority to grant Awards to Eligible Individuals (other than to himself or herself) and/or determine the number of Shares subject to each Award (by resolution that specifies the total number of Shares subject to the Awards that may be awarded by the officer and the terms of any such Awards), provided that such delegation is made in accordance with the Delaware General Corporation Law and with respect to Awards that are not intended to qualify as Performance-Based Compensation and that are not made to executive officers of the Company covered by Rule 16b-3 under the Exchange Act.

 

4. Shares Subject to the Plan; Grant Limitations .

4.1 Shares Subject to the Plan . The maximum number of Shares that may be made the subject of Awards granted under the Plan is 4,700,000 Shares. The Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company’s treasury, or partly out of each, such number of Shares as shall be determined by the Board.

4.2 Grant Limitations . The following grant limitations shall apply when making Awards pursuant to the Plan:

(a) In any calendar year, no Eligible Individual may be granted Awards in the aggregate in respect of more than 1,000,000 Shares,

 

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(b) In any calendar year, no Non-Employee Director may be granted Awards in the aggregate in respect of more than 100,000 Shares, and the maximum grant date fair value of all Awards granted during any calendar year to a single Non-Employee Director shall not exceed $1,000,000, and

(c) In no event shall more than an aggregate of 100,000 Shares be issued upon the exercise of Incentive Stock Options granted under the Plan.

4.3 Fungible Plan Design . Upon the granting of an Award, the number of Shares available under Section 4.1 for the granting of further Awards shall be reduced as follows:

(a) In connection with the granting of an Option or a Stock Appreciation Right to be settled in Shares, the number of Shares shall be reduced by the number of Shares in respect of which the Award is granted or denominated, regardless of the actual number of Shares issued upon settlement of the Award.

(b) In connection with the granting of an Award in the form of Restricted Stock (including Restricted Stock Units), Performance Awards (including Shares issued in respect to Performance Awards), and other Awards that are granted as “full value awards” shall reduce the number of shares that may be the subject to Awards under the Plan by 1.5 Shares for each Share subject to such an Award.

4.4 Shares Returned to the Plan. Whenever any outstanding Award or portion thereof expires, is canceled, is forfeited, is settled in cash or is otherwise terminated for any reason without having been exercised or payment having been made in respect of the Award (or such portion thereof to which the expiration, forfeiture, cash settlement or other termination occurs), the Shares allocable to the expired, canceled, forfeited, cash-settled or otherwise terminated portion of the Award may again be the subject of Awards granted hereunder. With regard to Awards referred to in Section 4.3(b), for each Share subject to an Award that is cancelled, forfeited, settled in cash or other otherwise terminated as provided in the foregoing sentence, 1.5 Shares may again be the subject of Awards under the Plan. Notwithstanding the foregoing, the following events shall not result in any increase in Shares available for issuance of Awards under the Plan or such Shares again becoming available for issuance of Awards:

(a) Withholding of Shares to pay the exercise price or Withholding Taxes on any Award,

(b) The excess of the number of Shares subject to any stock-settled Stock Appreciation Rights over the number of Shares actually issued in settlement thereof,

(c) Tendering of Shares to pay for Option exercise prices or Withholding Taxes (i.e., net settlement of Shares), and

(d) The purchase of Shares on the open market as a result of Option exercises.

4.5 Minimum Vesting Period . Unless otherwise determined by the Committee, in no event shall an Award to a Participant other than a Non-Employee Director and not subject to performance-based conditions have a vesting schedule resulting in such Award vesting in full

 

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prior to the third anniversary of the grant date. For purposes of clarity, this restriction will not prohibit any Award from having partial vesting dates prior to the third anniversary of the grant date in accordance with a proportionate vesting schedule determined at the discretion of the Committee, so long as such Award does not vest in full prior to the third anniversary of the grant date.

 

5. Option Grants for Eligible Individuals .

5.1 Authority of Committee . Subject to the provisions of the Plan, the Committee shall have full and final authority to select those Eligible Individuals who will receive Options, and the terms and conditions of the grant to such Eligible Individuals shall be set forth in an Agreement. Incentive Stock Options may be granted only to Eligible Individuals who are employees of the Company or any Subsidiary.

5.2 Exercise Price . The purchase price or the manner in which the exercise price is to be determined for Shares under each Option shall be determined by the Committee and set forth in the Agreement; provided , however , that the exercise price per Share under each Non-qualified Stock Option and each Incentive Stock Option shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (110% in the case of an Incentive Stock Option granted to a Ten-Percent Stockholder).

5.3 Maximum Duration . Options granted hereunder shall be for such term as the Committee shall determine, provided that an Incentive Stock Option shall not be exercisable after the expiration of ten (10) years from the date it is granted (five (5) years in the case of an Incentive Stock Option granted to a Ten-Percent Stockholder) and a Non-qualified Stock Option shall not be exercisable after the expiration of ten (10) years from the date it is granted; provided, however, that unless the Committee provides otherwise, an Option (other than an Incentive Stock Option) may, upon the death of the Optionee prior to the expiration of the Option, be exercised for up to one (1) year following the date of the Optionee’s death even if such period extends beyond ten (10) years from the date the Option is granted. The Committee may, subsequent to the granting of any Option, extend the term thereof, but in no event shall the term as so extended exceed the maximum term provided for in the preceding sentence.

5.4 Vesting . Subject to Section 5.10, each Option shall become exercisable in such installments (which need not be equal) and at such times as may be designated by the Committee and set forth in the Agreement. To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires. The Committee may accelerate the exercisability of any Option or portion thereof at any time.

5.5 Deferred Delivery of Option Shares . The Committee may, in its discretion, permit Optionees to elect to defer the issuance of Shares upon the exercise of one or more Non-qualified Stock Options granted pursuant to the Plan. The terms and conditions of such deferral shall be determined at the time of the grant of the Option or thereafter and shall be set forth in the Agreement evidencing the Option.

 

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5.6 Limitations on Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined as of the date of the grant) of Shares with respect to which Incentive Stock Options granted under the Plan are exercisable by an Optionee for the first time during any calendar year exceeds $100,000, such Incentive Stock Options shall be treated as Non-qualified Stock Options. In applying the limitation in the preceding sentence in the case of multiple Option grants, Options which were intended to be Incentive Stock Options shall be treated as Non-qualified Stock Options according to the order in which they were granted such that the most recently granted Options are first treated as Non-qualified Stock Options.

5.7 Non-Transferability . No Option shall be transferable by the Optionee otherwise than by will or by the laws of descent and distribution or, in the case of an Option other than an Incentive Stock Option, pursuant to a domestic relations order (within the meaning of Rule 16a-12 promulgated under the Exchange Act), and an Option shall be exercisable during the lifetime of such Optionee only by the Optionee or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee may set forth in the Agreement evidencing an Option (other than an Incentive Stock Option), at the time of grant or thereafter, that the Option may be transferred to members of the Optionee’s immediate family, to trusts solely for the benefit of such immediate family members, to entities described in Section 501(c)(3) of the Code and to partnerships in which such family members, trusts and/or such exempt entities are the only partners, and for purposes of this Plan, a transferee of an Option shall be deemed to be the Optionee. For this purpose, immediate family means the Optionee’s spouse, parents, children, stepchildren and grandchildren and the spouses of such parents, children, stepchildren and grandchildren. The terms of an Option shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Optionee.

5.8 Method of Exercise . The exercise of an Option shall be made by a written notice delivered in person or by mail to the Secretary of the Company at the Company’s principal executive office, specifying the number of Shares to be exercised and, to the extent applicable, accompanied by payment therefor and otherwise in accordance with the Agreement pursuant to which the Option was granted, or by such other methods as may be provided by the Committee. The exercise price for any Shares purchased pursuant to the exercise of an Option shall be paid in either of the following forms (a) cash or (b) the transfer, either actually or by attestation, to the Company of Shares owned by the Optionee prior to the exercise of the Option, such transfer to be upon such terms and conditions as determined by the Committee or (c) a combination of cash and the transfer of Shares; provided, however , that the Committee may determine at any time that the exercise price shall be paid only in cash. In addition, Options may be exercised through a registered broker-dealer or directly with the Company pursuant to such cashless exercise procedures which are, from time to time, deemed acceptable by the Committee. Any Shares transferred to the Company as payment of the exercise price under an Option shall be valued at their Fair Market Value on the day of exercise of such Option. If requested by the Committee, the Optionee shall deliver the Agreement evidencing the Option to the Secretary of the Company who shall endorse thereon a notation of such exercise and return such Agreement to the Optionee. The Committee shall determine the extent to which fractional Shares may be issued.

5.9 Rights of Optionees . No Optionee shall be deemed for any purpose to be the owner of any Shares subject to any Option unless and until (a) the Option shall have been exercised pursuant to the terms thereof, (b) the Company shall have issued and delivered Shares

 

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to the Optionee, and (c) the Optionee’s name shall have been entered as a stockholder of record on the books of the Company or otherwise evidenced by a “book entry” (i.e., a computerized or manual entry) in the records of the Company or its designated agent. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such Shares, subject to such terms and conditions as may be set forth in the applicable Agreement.

5.10 Effect of Change in Control . Section 13(b) shall control the treatment of any Options outstanding at the time of a Change in Control. Except as otherwise provided by the Committee, any Options that are exercisable as of a Change in Control shall remain exercisable for a period ending not before the earlier of (x) the six (6) month anniversary of the Change in Control or (y) the expiration of the stated term of the Option.

 

6. Stock Appreciation Rights .

The Committee may in its discretion, either alone or in connection with the grant of an Option, grant Stock Appreciation Rights in accordance with the Plan, the terms and conditions of which shall be set forth in an Agreement. If granted in connection with an Option, a Stock Appreciation Right shall cover the same Shares covered by the Option (or such lesser number of Shares as the Committee may determine) and shall, except as provided in this Section 6, be subject to the same terms and conditions as the related Option.

6.1 Time of Grant . A Stock Appreciation Right may be granted (a) at any time if unrelated to an Option, or (b) if related to an Option, either at the time of grant or at any time thereafter during the term of the Option.

6.2 Stock Appreciation Right Related to an Option .

(a) Exercise . A Stock Appreciation Right granted in connection with an Option shall be exercisable at such time or times and only to the extent that the related Option is exercisable, will not be transferable except to the extent the related Option may be transferable, and will have a Grant Price equal to the exercise price of the related Option. A Stock Appreciation Right granted in connection with an Incentive Stock Option shall be exercisable only if the Fair Market Value of a Share on the date of exercise exceeds the exercise price specified in the related Incentive Stock Option Agreement. In no event shall a Stock Appreciation Right related to an Option have a term of greater than ten (10) years.

(b) Amount Payable . Upon the exercise of a Stock Appreciation Right related to an Option, the Grantee shall be entitled to receive an amount determined by multiplying (i) the excess of the Fair Market Value of a Share on the date of exercise of such Stock Appreciation Right over the Grant Price of the Stock Appreciation Right, by (ii) the number of Shares as to which such Stock Appreciation Right is being exercised. Notwithstanding the foregoing, the Committee may limit in any manner the amount payable with respect to any Stock Appreciation Right by including such a limit in the Agreement evidencing the Stock Appreciation Right at the time it is granted.

(c) Treatment of Related Options and Stock Appreciation Rights Upon Exercise . Upon the exercise of a Stock Appreciation Right granted in connection with an Option, the Option shall be canceled to the extent of the number of Shares as to which the Stock

 

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Appreciation Right is exercised, and upon the exercise of an Option granted in connection with a Stock Appreciation Right, the Stock Appreciation Right shall be canceled to the extent of the number of Shares as to which the Option is exercised or surrendered.

6.3 Stock Appreciation Right Unrelated to an Option . The Committee may grant to Eligible Individuals Stock Appreciation Rights unrelated to Options. Stock Appreciation Rights unrelated to Options shall contain such terms and conditions as to exercisability (subject to Section 6.7), vesting and duration as the Committee shall determine, but in no event shall they have a term of greater than ten (10) years. The Committee shall establish the Grant Price at the time each Stock Appreciation Right unrelated to an Option is granted, which shall not be less than the Fair Market Value of a Share on the date the Stock Appreciation Right is granted. Upon exercise of a Stock Appreciation Right unrelated to an Option, the Grantee shall be entitled to receive an amount determined by multiplying (a) the excess of the Fair Market Value of a Share on the date of exercise of such Stock Appreciation Right over the Grant Price of the Stock Appreciation Right, by (b) the number of Shares as to which the Stock Appreciation Right is being exercised. Notwithstanding the foregoing, the Committee may limit in any manner the amount payable with respect to any Stock Appreciation Right by including such a limit in the Agreement evidencing the Stock Appreciation Right at the time it is granted.

6.4 Non-Transferability . No Stock Appreciation Right shall be transferable by the Grantee otherwise than by will or by the laws of descent and distribution or pursuant to a domestic relations order (within the meaning of Rule 16a-12 promulgated under the Exchange Act), and such Stock Appreciation Right shall be exercisable during the lifetime of such Grantee only by the Grantee or his or her guardian or legal representative; provided, that the Committee may provide limited transferability provisions with respect to Stock Appreciation Rights similar to those described in Section 5.7. The terms of such Stock Appreciation Right shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Grantee.

6.5 Method of Exercise . Stock Appreciation Rights shall be exercised by a Grantee by a written notice delivered in person or by mail to the Secretary of the Company at the Company’s principal executive office, specifying the number of Shares with respect to which the Stock Appreciation Right is being exercised, or by any other method permitted by the Committee. If requested by the Committee, the Grantee shall deliver the Agreement evidencing the Stock Appreciation Right being exercised and the Agreement evidencing any related Option to the Secretary of the Company who shall endorse thereon a notation of such exercise and return such Agreement to the Grantee.

6.6 Form of Payment . Payment of the amount determined under Sections 6.2(b) or 6.3 may be made in the discretion of the Committee solely in whole Shares in a number determined at their Fair Market Value on the date of exercise of the Stock Appreciation Right, or solely in cash, or in a combination of cash and Shares. Unless otherwise determined by the Committee, if the amount payable in Shares results in a fractional Share, payment for the fractional Share will be made in cash.

6.7 Effect of Change in Control . Section 13(b) shall control the treatment of any Stock Appreciation Rights outstanding at the time of a Change in Control. Except as otherwise

 

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provided by the Committee, any Stock Appreciation Rights that are exercisable as of a Change in Control shall remain exercisable for a period ending not before the earlier of (x) the six (6) month anniversary of the Change in Control or (y) the expiration of the stated term of the Stock Appreciation Right.

 

7. Limitations on Repricing .

Notwithstanding anything in the Plan to the contrary, except as permitted or required by the provisions of Sections 12 or 13 hereof, the Committee shall not have the power to (i) lower the Option Price of an Option after it is granted, (ii) lower the Grant Price of a Stock Appreciation Right after it is granted, (iii) cancel an Option when the exercise price thereof exceeds the Fair Market Value of the underlying Shares in exchange for cash or another Award or grant substitute Options with a lower exercise price than the cancelled Options, (iv) cancel a Stock Appreciation Right when the Grant Price exceeds the Fair Market Value of the underlying Shares in exchange for cash or another Award, or (v) take any other action with respect to an Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal securities exchange on which the Shares are traded, in each case without the approval of the Company’s stockholders.

 

8. Restricted Stock and Restricted Stock Units .

8.1 Restricted Stock . The Committee may grant Awards to Eligible Individuals of Restricted Stock, which shall be evidenced by an Agreement between the Company and the Grantee. Each Agreement shall contain such restrictions, terms and conditions as the Committee may, in its discretion, determine and (without limiting the generality of the foregoing) such Agreements may require that an appropriate legend be placed on Share certificates, if any. The Committee may, in its discretion, provide that a Participant’s ownership of Restricted Stock prior to the lapse of any transfer restrictions or any other applicable restrictions shall, in lieu of such certificates, be evidenced by a “book entry” ( i.e ., a computerized or manual entry) in the records of the Company or its designated agent in the name of the Participant who has received such Award, and confirmation and account statements sent to the Participant with respect to such book entry Shares may bear the restrictive legend referenced in the preceding sentence. Such records of the Company or such agent shall, absent manifest error, be binding on all Participants who receive Restricted Stock Awards evidenced in such manner. Awards of Restricted Stock shall be subject to the terms and provisions set forth below in this Section 8.1.

(a) Rights of Grantee . Subject to the foregoing provisions concerning book entry issuance, Shares of Restricted Stock granted pursuant to an Award hereunder shall be issued in the name of the Grantee as soon as reasonably practicable after the Award is granted provided that the Grantee has executed an Agreement evidencing the Award, the appropriate blank stock powers and, in the discretion of the Committee, an escrow agreement and any other documents which the Committee may require as a condition to the issuance of such Shares. If a Grantee shall fail to execute the Agreement evidencing a Restricted Stock Award, or any documents which the Committee may require within the time period prescribed by the Committee at the time the Award is granted, the Award shall be null and void. At the discretion of the Committee, Shares issued in connection with a Restricted Stock Award shall be deposited together with the stock powers with an escrow agent (which may be the Company) designated by

 

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the Committee. Unless the Committee determines otherwise and as set forth in the Agreement, upon delivery of the Shares to the escrow agent, the Grantee shall have all of the rights of a stockholder with respect to such Shares, including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares.

(b) Non-Transferability . Until all restrictions upon the Shares of Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth in Section 8.1(c), such Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated other than pursuant to the laws of descent and distribution.

(c) Lapse of Restrictions .

(i) Generally . Restrictions upon Shares of Restricted Stock awarded hereunder shall lapse at such time or times and on such terms and conditions as the Committee may determine. The Agreement evidencing the Award shall set forth any such restrictions.

(ii) Effect of Change in Control . Section 13(b) shall control the treatment of any Shares of Restricted Stock then outstanding in the event of a Change in Control.

(d) Treatment of Dividends . At the time an Award of Shares of Restricted Stock is granted, the Committee may, in its discretion, determine that the payment to the Grantee of dividends, or a specified portion thereof, declared or paid on such Shares by the Company shall be (a) deferred until the lapsing of the restrictions imposed upon such Shares and (b) held by the Company for the account of the Grantee until such time. In the event that dividends are to be deferred, the Committee shall determine whether such dividends are to be reinvested in Shares (which shall be held as additional Shares of Restricted Stock) or held in cash. If deferred dividends are to be held in cash, there may be credited at the end of each year (or portion thereof) interest on the amount of the account at the beginning of the year at a rate per annum as the Committee, in its discretion, may determine. Payment of deferred dividends in respect of Shares of Restricted Stock (whether held in cash or as additional Shares of Restricted Stock), together with interest accrued thereon, if any, shall be made upon the lapsing of restrictions imposed on the Shares in respect of which the deferred dividends were paid, and any dividends deferred (together with any interest accrued thereon) in respect of any Shares of Restricted Stock shall be forfeited upon the forfeiture of such Shares.

(e) Delivery of Shares . Upon the lapse of the restrictions on Shares of Restricted Stock, the Committee shall cause a stock certificate to be delivered to the Grantee with respect to such Shares, free of all restrictions hereunder (or, in the case of book entry Shares, such restrictions and legend shall be removed from the confirmation and account statements delivered to the Participant or the Participant’s beneficiary or estate, as the case may be, in book-entry form).

8.2 Restricted Stock Units . The Committee may grant to Eligible Individuals Awards of Restricted Stock Units, which shall be evidenced by an Agreement. Each such Agreement shall contain such restrictions, terms and conditions as the Committee may, in its discretion, determine. Awards of Restricted Stock Units shall be subject to the terms and provisions set forth below in this Section 8.2.

 

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(a) Payment of Awards . Each Restricted Stock Unit shall represent the right of a Grantee to receive a payment upon vesting of the Restricted Stock Unit or on any later date specified by the Committee equal to the Fair Market Value of a Share as of the date the Restricted Stock Unit was granted, the vesting date or such other date as determined by the Committee at the time the Restricted Stock Unit was granted. The Committee may, at the time a Restricted Stock Unit is granted, provide a limitation on the amount payable in respect of each Restricted Stock Unit and may provide for Dividend Equivalent Rights with respect to such Award; provided, that no Dividend Equivalent Rights shall be paid except to the extent the underlying Restricted Stock Unit is paid or settled. The Committee may provide for the settlement of Restricted Stock Units in cash or with Shares having a Fair Market Value equal to the payment to which the Grantee has become entitled.

(b) Non-Transferability . Until all restrictions upon Restricted Stock Units awarded to a Grantee shall have lapsed in the manner set forth in this Section 8.2, such Restricted Stock Units shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated other than pursuant to the laws of descent and distribution.

(c) Effect of Change in Control . Section 13(b) shall control the treatment of any Restricted Stock Units then outstanding in the event of a Change in Control.

 

9. Performance Awards.

9.1 Performance Units . The Committee, in its discretion, may grant Awards of Performance Units to Eligible Individuals, the terms and conditions of which shall be set forth in an Agreement between the Company and the Grantee; provided that no Eligible Individual may be granted Performance Awards in the aggregate in respect of more than 1,000,000 Shares with respect to any calendar year. Contingent upon the attainment of specified Performance Objectives within the Performance Cycle, Performance Units represent the right to receive payment as provided in Section 9.1(b) of (i) the Fair Market Value of a Share on the date the Performance Unit was granted, the date the Performance Unit became vested or any other date specified by the Committee or (ii) a percentage (which may be more than 100%) of the amount described in clause (i) depending on the level of Performance Objective attainment; provided, however , that the Committee may at the time a Performance Unit is granted specify a maximum amount payable in respect of a vested Performance Unit. Each Agreement shall specify the number of Performance Units to which it relates, the Performance Objectives which must be satisfied in order for the Performance Units to vest and the Performance Cycle within which such Performance Objectives must be satisfied. At the time a Performance Unit is granted, the Committee may provide for Dividend Equivalent Rights with respect to such Award; provided, that no Dividend Equivalent Rights shall be paid except to the extent the underlying Performance Unit is paid or settled.

(a) Vesting and Forfeiture . Subject to Sections 9.3(c) and 9.4, a Grantee shall become vested with respect to the Performance Units to the extent that the Performance Objectives set forth in the Agreement are satisfied for the Performance Cycle.

 

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(b) Non-Transferability . Until all restrictions upon Performance Units awarded to a Grantee shall have lapsed in the manner set forth in this Section 9.1, such Performance Units shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated other than pursuant to the laws of descent and distribution.

(c) Payment of Awards . Subject to Section 9.3(c), payment to Grantees in respect of vested Performance Units shall be made as soon as practicable after the last day of the Performance Cycle to which such Award relates unless the Agreement evidencing the Award provides for the deferral of payment, in which event the terms and conditions of the deferral shall be set forth in the Agreement. Subject to Section 9.4, such payments may be made entirely in Shares valued at their Fair Market Value, entirely in cash, or in such combination of Shares and cash as the Committee in its discretion shall determine at any time prior to such payment, provided, however , that if the Committee in its discretion determines to make such payment entirely or partially in Shares of Restricted Stock, the Committee must determine the extent to which such payment will be in Shares of Restricted Stock and the terms of such Restricted Stock at the time the Award is granted.

9.2 Performance Shares . The Committee, in its discretion, may grant Awards of Performance Shares to Eligible Individuals, the terms and conditions of which shall be set forth in an Agreement between the Company and the Grantee. Awards of Performance Shares shall be subject to the following terms and provisions:

(a) Rights of Grantee . The Committee shall provide at the time an Award of Performance Shares is made the time or times at which the actual Shares represented by such Award shall be issued in the name of the Grantee; provided, however , that no Performance Shares shall be issued until the Grantee has executed an Agreement evidencing the Award, the appropriate blank stock powers and, in the discretion of the Committee, an escrow agreement and any other documents which the Committee may require as a condition to the issuance of such Performance Shares. If a Grantee shall fail to execute the Agreement evidencing an Award of Performance Shares, the appropriate blank stock powers and, in the discretion of the Committee, an escrow agreement and any other documents which the Committee may require within the time period prescribed by the Committee at the time the Award is granted, the Award shall be null and void. At the discretion of the Committee, Shares issued in connection with an Award of Performance Shares shall be deposited together with the stock powers with an escrow agent (which may be the Company) designated by the Committee. Alternatively, the Committee may, in its discretion, provide that Performance Shares shall be evidenced by the book entry procedures set forth in Section 8.1. Except as restricted by the terms of the Agreement, upon delivery of the Shares to the escrow agent, or the book entry of such Shares, the Grantee shall have, in the discretion of the Committee, all of the rights of a stockholder with respect to such Shares, including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares.

(b) Non-Transferability . Until any restrictions upon the Performance Shares awarded to a Grantee shall have lapsed in the manner set forth in Section 9.2(c) or 9.4, such Performance Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated other than pursuant to the laws of descent and distribution, nor shall they be delivered to the Grantee . The Committee may also impose such other restrictions and conditions on the Performance Shares, if any, as it deems appropriate.

 

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(c) Lapse of Restrictions . Subject to Sections 9.3(c) and 9.4, restrictions upon Performance Shares awarded hereunder shall lapse and such Performance Shares shall become vested at such time or times and on such terms, conditions and satisfaction of Performance Objectives as the Committee may, in its discretion, determine at the time an Award is granted.

(d) Treatment of Dividends . The payment to the Grantee of dividends declared or paid on Shares represented by an Award of Performance Shares which have been issued by the Company to the Grantee shall be deferred until the lapsing of the restrictions imposed upon such Performance Shares and held by the Company or its agent for the account of the Grantee until such time. The Committee shall determine whether such dividends are to be reinvested in shares of Stock (which shall be held as additional Performance Shares) or held in cash. If deferred dividends are to be held in cash, there may be credited at the end of each year (or portion thereof) interest on the amount of the account at the beginning of the year at a rate per annum as the Committee, in its discretion, may determine. Payment of deferred dividends in respect of Performance Shares (whether held in cash or in additional Performance Shares), together with interest accrued thereon, if any, shall be made upon the lapsing of restrictions imposed on the Performance Shares in respect of which the deferred dividends were paid, and any dividends deferred (together with any interest accrued thereon) in respect of any Performance Shares shall be forfeited upon the forfeiture of such Performance Shares.

(e) Delivery of Shares . Upon the lapse of the restrictions on Performance Shares awarded hereunder, the Committee shall cause a stock certificate to be delivered to the Grantee with respect to such Shares, free of all restrictions hereunder, or in the case of book entry Shares, such restrictions and legend shall be removed from the confirmation and account statements delivered to the Participant or the Participant’s beneficiary or estate, as the case may be, in book entry form.

9.3 Performance Objectives .

(a) Establishment . Performance Objectives for Performance Awards may be expressed in terms of (i) earnings per Share, (ii) net revenue, (iii) adjusted EBITDA (iv) Share price, (v) pre-tax profits, (vi) net earnings, (vii) return on equity or assets, (viii) operating income, (ix) EBITDA margin, (x) EBITDA margin improvement, (xi) bad debt expense, (xii) cash receipts, (xiii) uncompensated care expense, (xiv) days in net revenue in net patient accounts receivable, (xv) gross income, (xvi) net income (before or after taxes), (xvii) cash flow; (xviii) gross profit, (xix) gross profit return on investment, (xx) gross margin return on investment, (xxi) gross margin; (xxii) operating margin, (xxiii) working capital, (xxiv) earnings before interest and taxes, (xxv) return on capital, (xxvi) return on invested capital, (xxvii) revenue growth, (xxviii) annual recurring revenues, (xxix) recurring revenues, (xxx) total shareholder return, (xxxi) economic value added, (xxxii) specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and/or other offsets and adjustments as may be established by the Committee in its sole discretion, (xxxiii) reduction in operating expenses, or

 

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(xxxiv) any combination of the foregoing. Performance Objectives may be in respect of the performance of the Company, any of its Subsidiaries, any of its Divisions or any combination thereof. Performance Objectives may be absolute or relative (to prior performance of the Company or to the performance of one or more other entities or external indices) and may be expressed in terms of a progression within a specified range. The Performance Objectives with respect to a Performance Cycle shall be established in writing by the Committee by the earlier of (x) the date on which a quarter of the Performance Cycle has elapsed or (y) the date which is ninety (90) days after the commencement of the Performance Cycle, and in any event while the performance relating to the Performance Objectives remain substantially uncertain.

(b) Effect of Certain Events . At the time of the granting of a Performance Award, or at any time thereafter, in either case to the extent permitted under Section 162(m) of the Code and the regulations thereunder without adversely affecting the treatment of the Performance Award as Performance-Based Compensation, the Committee may provide for the manner in which performance will be measured against the Performance Objectives (or may adjust the Performance Objectives) to reflect the impact of specified corporate transactions, accounting or tax law changes, items that are unusual in nature or infrequently occurring, other extraordinary or nonrecurring events or any other event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management.

(c) Determination of Performance . Prior to the vesting, payment, settlement or lapsing of any restrictions with respect to any Performance Award that is intended to constitute Performance-Based Compensation made to a Grantee who is subject to Section 162(m) of the Code, the Committee shall certify in writing that the applicable Performance Objectives have been satisfied to the extent necessary for such Award to qualify as Performance Based Compensation.

9.4 Effect of Change in Control . Section 13(b) shall control the treatment of any Performance Units then outstanding in the event of a Change in Control.

 

10. Share Awards .

The Committee may grant a Share Award to any Eligible Individual on such terms and conditions as the Committee may determine in its sole discretion. Share Awards may be made as additional compensation for services rendered by the Eligible Individual or may be in lieu of cash or other compensation to which the Eligible Individual is entitled from the Company.

 

11. Effect of a Termination of Employment .

The Agreement evidencing the grant of each Award shall set forth the terms and conditions applicable to such Award upon a termination or change in the status of the employment of the Grantee by the Company, a Subsidiary or a Division (including a termination or change by reason of the sale of a Subsidiary or a Division), which shall be as the Committee may, in its discretion, determine at the time the Award is granted or thereafter.

 

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12. Adjustment Upon Changes in Capitalization .

In the event of a Change in Capitalization, the Committee shall conclusively determine the appropriate adjustments to (i) the maximum number and class of Shares or other stock or securities with respect to which Awards may be granted under the Plan, (ii) the number and class of Shares or other stock or securities which are subject to outstanding Awards granted under the Plan and the exercise price therefor, if applicable, and (iii) the Performance Objectives.

Any such adjustment in the Shares or other stock or securities (a) subject to outstanding Incentive Stock Options (including any adjustments in the exercise price) shall be made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only to the extent permitted by Sections 422 and 424 of the Code or (b) subject to outstanding Awards that are intended to qualify as Performance-Based Compensation shall be made in such a manner as not to adversely affect the treatment of the Awards as Performance-Based Compensation. In addition, (a) no adjustment to any Award that is not subject to Section 409A of the Code shall be made in a manner that would subject the Award to Section 409A of the Code and (b) any adjustment to an Award that is subject to Section 409A of the Code shall be made only in a manner and to the extent permitted by Section 409A of the Code. If, by reason of a Change in Capitalization, a Grantee of an Award shall be entitled to, or an Optionee shall be entitled to exercise an Option with respect to, new, additional or different shares of stock or securities of the Company or any other corporation, such new, additional or different shares shall thereupon be subject to all of the conditions, restrictions and performance criteria which were applicable to the Shares subject to the Award or Option, as the case may be, prior to such Change in Capitalization.

 

13. Effect of Certain Transactions; Effect of Change in Control .

(a) Effect of Certain Transactions. Subject to Sections 5.10, 6.7, 8.2(b) and 9.4 or as otherwise provided in an Agreement, in the event of (a) the liquidation or dissolution of the Company or (b) a merger or consolidation of the Company (a “Transaction”), the Plan and the Awards issued hereunder shall continue in effect in accordance with their respective terms, except that following a Transaction either (i) each outstanding Award shall be treated as provided for in the agreement entered into in connection with the Transaction or (ii) if not so provided in such agreement, each Grantee shall be entitled to receive in respect of each Share subject to any outstanding Awards, as the case may be, upon exercise of any Option or Stock Appreciation Right or payment or transfer in respect of any Award, the same number and kind of stock, securities, cash, property or other consideration that each holder of a Share was entitled to receive in the Transaction in respect of a Share; provided, however , that such stock, securities, cash, property, or other consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the Awards prior to such Transaction. For the avoidance of doubt, the Committee may, without the consent of any Grantee, provide for the cancellation of outstanding Awards in connection with a Transaction in exchange for the payment in cash or property equal in value to the Fair Market Value of the Shares underlying such Awards, less, in the case of Options (and Stock Appreciation Rights), the aggregate exercise price (or Grant Price) thereof; provided that Options with an aggregate exercise price that is equal to or in excess of the aggregate Fair Market Value of the Shares underlying such Options, and Stock Appreciation Rights whose Grant Price is equal to or in excess of the Fair Market Value of a

 

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Share to which such Stock Appreciation Rights relate, may be cancelled in connection with such Transaction without any consideration being paid in respect thereof. The treatment of any Award as provided in this Section 13(a) shall be conclusively presumed to be appropriate for purposes of Section 12.

(b) Effect of Change in Control . Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control, the following provisions of this Section 13(b) shall apply except to the extent an Award Agreement provides for a different treatment (in which case the Award Agreement shall govern and this Section 13(b) shall not be applicable):

(i) If and to the extent that outstanding Awards under the Plan (A) are assumed by the successor corporation (or affiliate thereto) or continued or (B) are replaced with equity awards that preserve the existing value of the Awards at the time of the Change in Control and provide for subsequent payout in accordance with a vesting schedule and Performance Objectives, as applicable, that are the same or more favorable to the Participants than the vesting schedule and Performance Objectives applicable to the Awards, then all such Awards or such substitutes thereof shall remain outstanding and be governed by their respective terms and the provisions of the Plan, subject to Section 13(b)(iv) below.

(ii) If and to the extent that outstanding Awards under the Plan are not assumed, continued or replaced in accordance with Section 13(b)(i) above, then upon the Change in Control the following treatment (referred to as “Change-in-Control Treatment”) shall apply to such Awards: (A) outstanding Options and Stock Appreciation Rights shall immediately vest and become exercisable; (B) the restrictions and other conditions applicable to outstanding Restricted Shares, Restricted Stock Units and Stock Awards, including vesting requirements, shall immediately lapse; such Awards shall be free of all restrictions and fully vested; and, with respect to Restricted Stock Units, shall be payable immediately in accordance with their terms or, if later, as of the earliest permissible date under Code Section 409A; and (C) outstanding Performance Awards granted under the Plan shall immediately vest and shall become immediately payable in accordance with their terms as if the Performance Objectives have been achieved at the target performance level.

(iii) If and to the extent that outstanding Awards under the Plan are not assumed, continued or replaced in accordance with Section 13(b)(i) above, then in connection with the application of the Change-in-Control Treatment set forth in Section 13(b)(ii) above, the Board may, in its sole discretion, provide for cancellation of such outstanding Awards at the time of the Change in Control in which case a payment of cash, property or a combination thereof shall be made to each such Grantee upon the consummation of the Change in Control that is determined by the Board in its sole discretion and that is at least equal to the excess (if any) of the value of the consideration that would be received in such Change in Control by the holders of the Company’s securities relating to such Awards over the exercise or purchase price (if any) for such Awards (except that, in the case of an Option or Stock Appreciation Right, such payment shall be limited as necessary to prevent the Option or Stock Appreciation Right from being subject to the additional tax under Code Section 409A).

 

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(iv) If and to the extent that (A) outstanding Awards are assumed, continued or replaced in accordance with Section 13(b)(i) above and (B) a Grantee’s employment with, or performance of services for, the Company or any of its Subsidiaries or successors is terminated by the Company or such Subsidiary or successor for any reasons other than Cause or by such Grantee for Good Reason, in each case, within the two-year period commencing on the Change in Control, then, as of the date of such Participant’s termination, the Change-in-Control Treatment set forth in Section 13(b)(ii) above shall apply to all assumed or replaced Awards of such Participant then outstanding.

(v) Outstanding Options or Stock Appreciation Rights that are assumed, continued or replaced in accordance with Section 13(b)(i) may be exercised by the Grantee in accordance with the applicable terms and conditions of such Award as set forth in the applicable Agreement or elsewhere; provided, however, that Options or Stock Appreciation Rights that become exercisable in accordance with Section 13(b)(iv) may be exercised until the expiration of the original full term of such Option or Stock Appreciation Right notwithstanding the other original terms and conditions of such Award, to the extent allowed without such Option or Stock Appreciation Right becoming subject to the additional tax under Code Section 409A).

 

14. Interpretation .

Following the required registration of any equity security of the Company pursuant to Section 12 of the Exchange Act:

(a) The Plan is intended to comply with Rule 16b-3 promulgated under the Exchange Act and the Committee shall interpret and administer the provisions of the Plan or any Agreement in a manner consistent therewith. Any provisions inconsistent with such Rule shall be inoperative and shall not affect the validity of the Plan.

(b) Unless otherwise expressly stated in the relevant Agreement, each Option, Stock Appreciation Right and Performance Award granted under the Plan is intended to be Performance-Based Compensation. The Committee shall not be entitled to exercise any discretion otherwise authorized hereunder with respect to such Awards if the ability to exercise such discretion or the exercise of such discretion itself would cause the compensation attributable to such Awards to fail to qualify as Performance-Based Compensation.

(c) To the extent that any legal requirement of Section 16 of the Exchange Act or Section 162(m) of the Code as set forth in the Plan ceases to be required under Section 16 of the Exchange Act or Section 162(m) of the Code, that Plan provision shall cease to apply.

 

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15. Termination and Amendment of the Plan or Modification of Awards .

15.1 Plan Amendment or Termination . The Plan shall terminate on the day preceding the tenth anniversary of the Effective Date and no Award may be granted thereafter. The Board may sooner terminate the Plan and the Board may at any time and from time to time amend, modify or suspend the Plan; provided, however , that:

(a) no such amendment, modification, suspension or termination shall impair or adversely alter any Awards theretofore granted under the Plan, except with the written consent of the Grantee, nor shall any amendment, modification, suspension or termination deprive any Grantee of any Shares which he or she may have acquired through or as a result of the Plan; and

(b) to the extent necessary under any applicable law, regulation or exchange requirement with which the Committee determines it is necessary or desirable for the Company to comply, no amendment shall be effective unless approved by the stockholders of the Company in accordance with applicable law, regulation or exchange requirement.

15.2 Modification of Awards . No modification of an Award shall adversely alter or impair any rights or obligations under the Award without the written consent of the Grantee, as the case may be.

 

16. Non-Exclusivity of the Plan .

The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangement or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

 

17. Limitation of Liability .

As illustrative of the limitations of liability of the Company, but not intended to be exhaustive thereof, nothing in the Plan shall be construed to:

(a) give any person any right to be granted an Award other than at the sole discretion of the Committee;

(b) give any person any rights whatsoever with respect to Shares except as specifically provided in the Plan;

(c) limit in any way the right of the Company or any Subsidiary to terminate the employment of any person at any time; or

(d) be evidence of any agreement or understanding, expressed or implied, that the Company will employ any person at any particular rate of compensation or for any particular period of time.

 

18. Regulations and Other Approvals; Governing Law .

18.1 Governing Law . Except as to matters of federal law, the Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles thereof.

 

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18.2 Other Laws . The obligation of the Company to sell or deliver Shares with respect to Awards granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee. The Board may make such changes as may be necessary or appropriate to comply with the rules and regulations of any government authority, or to obtain for Eligible Individuals granted Incentive Stock Options the tax benefits under the applicable provisions of the Code and regulations promulgated thereunder. Each Award is subject to the requirement that, if at any time the Committee determines, in its discretion, that the listing, registration or qualification of Shares issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Shares, no Awards shall be granted or payment made or Shares issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions as acceptable to the Committee.

18.3 Securities Matters . Notwithstanding anything contained in the Plan or any Agreement to the contrary, in the event that the disposition of Shares acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required by the Securities Act and Rule 144 or other regulations thereunder. The Committee may require any individual receiving Shares pursuant to an Award granted under the Plan, as a condition precedent to receipt of such Shares, to represent and warrant to the Company in writing that the Shares acquired by such individual are acquired without a view to any distribution thereof and will not be sold or transferred other than pursuant to an effective registration thereof under the Securities Act or pursuant to an exemption applicable under the Securities Act or the rules and regulations promulgated thereunder. Any certificates evidencing any such Shares shall be appropriately amended or have an appropriate legend placed thereon to reflect their status as restricted securities as aforesaid.

18.4 Compliance With Section 409A . All Awards granted under the plan are intended either not to be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to be administered, operated and construed in compliance with Section 409A of the Code and any guidance issued thereunder. Notwithstanding this or any other provision of the Plan to the contrary, the Committee may amend the Plan or any Award granted hereunder in any manner, or take any other action, that it determines, in its sole discretion, is necessary, appropriate or advisable to cause the Plan or any Award granted hereunder to comply with Section 409A and any guidance issued thereunder. In the event that it is reasonably determined by the Board or Committee that, as a result of Section 409A of the Code, payments in respect of any Award under the Plan may not be made at the time contemplated by the terms of the Plan or the relevant Agreement, as the case may be, without causing the Participant holding such Award to be subject to taxation under Section 409A of the Code, the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code; which, if the Participant is a “specified employee” within the meaning of the Section 409A, generally shall be the first day following the six-month period beginning on the date of Participant’s termination of employment. Any such action, once taken, shall be deemed to be effective from the earliest date necessary to avoid a violation of Section 409A and shall be

 

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final, binding and conclusive on all Eligible Individuals and other individuals having or claiming any right or interest under the Plan. Although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Participant for any tax, interest, or penalties that Participant might owe as a result of the grant, holding, vesting, exercise, or payment of any Award under the Plan.

 

19. Miscellaneous .

19.1 Forfeiture and Clawback Provisions . Pursuant to its general authority to determine the terms and conditions applicable to Awards granted under the Plan, the Committee shall have the right to provide, in an Award Agreement, or to require a Participant to agree by separate written or electronic instrument at or after grant, that all Awards (including any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) will be subject to repayment or reimbursement to the extent set forth in any recoupment or clawback provisions which may be included in any such Agreement or separate instrument. In addition, without limiting the foregoing, any Award granted pursuant to this Plan shall be subject to repayment or reimbursement by the Participant to the Company (i) to the extent that the Participant becomes subject to any recoupment or clawback policy hereafter adopted by the Company, including any such policy adopted by the Company to comply with the requirements of any applicable laws, rules or regulations, including pursuant to final SEC rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (ii) to the extent provided under any applicable laws which impose mandatory recoupment, under circumstances set forth in such applicable laws, including the Sarbanes-Oxley Act of 2002.

19.2 Multiple Agreements . The terms of each Award may differ from other Awards granted under the Plan at the same time or at some other time. The Committee may also grant more than one Award to a given Eligible Individual during the term of the Plan, either in addition to, or in substitution for, one or more Awards previously granted to that Eligible Individual.

19.3 Beneficiary Designation . Each Grantee may, from time to time, name one or more individuals (each, a “Beneficiary”) to whom any benefit under the Plan is to be paid or who may exercise any rights of the Grantee under any Award granted under the Plan in the event of the Grantee’s death before he or she receives any or all of such benefit or exercises such Option. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Company, and will be effective only when filed by the Grantee in writing with the Company during the Grantee’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantee’s death and rights to be exercised following the Grantee’s death shall be paid to or exercised by the Grantee’s estate.

19.4 Withholding of Taxes .

(a) At such times as an Optionee or Grantee recognizes taxable income in connection with the receipt of Shares or cash hereunder (a “Taxable Event”), the Optionee or

 

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Grantee shall pay to the Company an amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld by the Company in connection with the Taxable Event (the “Withholding Taxes”) prior to the issuance, or release from escrow, of such Shares or the payment of such cash. The Company shall have the right to deduct from any payment of cash to an Optionee or Grantee an amount equal to the Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. The Committee may provide in an Agreement evidencing an Award at the time of grant or thereafter that the Optionee or Grantee, in satisfaction of the obligation to pay Withholding Taxes to the Company, may elect to have withheld a portion of the Shares issuable to him or her pursuant to the Award having an aggregate Fair Market Value equal to the Withholding Taxes. In the event Shares are withheld by the Company to satisfy any obligation to pay Withholding Taxes, such Shares shall be retired and cancelled and shall not thereafter be available to grant an Award with respect thereto. In determining the procedures by which Shares will be withheld for Withholding Taxes, to the extent required to avoid the Company’s incurring an adverse accounting charge, the amount of any Shares so withheld shall not exceed the amount necessary to satisfy Withholding Taxes determined using the minimum statutory withholding rates for federal, state, local and/or foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income.

(b) If an Optionee makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any Share or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock Option within the two-year period commencing on the day after the date of the grant or within the one-year period commencing on the day after the date of transfer of such Share or Shares to the Optionee pursuant to such exercise, the Optionee shall, within ten (10) days of such disposition, notify the Company thereof, by delivery of written notice to the Company at its principal executive office.

19.5 Effective Date . The effective date of this Plan shall be April 1, 2016 (the “Effective Date”), subject only to the approval by the holders of a majority of the securities of the Company entitled to vote thereon, in accordance with the applicable laws.

 

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Exhibit 10.4

RESTRICTED STOCK AWARD AGREEMENT

Quorum Health Corporation

2016 Stock Option and Award Plan

THIS AGREEMENT between you and Quorum Health Corporation, a Delaware corporation (the “ Company ”) governs an Award of the Company’s Restricted Stock in the amount and on the date specified in your Award notification (the “ Date of Grant ”).

WHEREAS, the Company has adopted the Quorum Health Corporation 2016 Stock Award Plan (the “ Plan ”) in order to provide additional incentive to certain employees and directors of the Company and its Subsidiaries; and

WHEREAS, the Compensation Committee of the Company’s Board of Directors (the “ Committee ”) has determined to grant to you this Award of Restricted Stock as provided herein to encourage your efforts toward the continuing success of the Company.

NOW, THEREFORE, the parties hereto agree as follows:

1. Grant of Restricted Stock .

1.1 The Company hereby grants to you this Award of Shares of Restricted Stock in the number set out in an electronic notification by the Company’s stock option plan administrator, as may be appointed from time to time (the “ Plan Administrator ”). The Shares of Restricted Stock granted pursuant to this Award shall be issued in the form of a book entry of Shares in your name as soon as reasonably practicable after the Date of Grant and shall be subject to your (or your estate’s, if applicable) acknowledgement and acceptance of this Agreement by electronic means to the Plan Administrator as provided in Section 9 hereof, or as you have been otherwise instructed.

1.2 This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are hereby incorporated by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

2. Restrictions on Transfer .

The Shares of Restricted Stock issued under this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated until all restrictions on such Restricted Stock shall have lapsed in the manner provided in Section 3, 4 or 5 hereof.

3. Lapse of Restrictions Generally .

Except as provided in Sections 4, 5 and 6 hereof, one-third (1/3) of the number of Shares of Restricted Stock issued hereunder (rounded to the nearest whole Share, if necessary) shall vest, and the restrictions with respect to such Restricted Stock shall lapse, on each of the first three (3) anniversaries of the Date of Grant.


4. Effect of Certain Terminations of Employment .

If your employment terminates as a result of your death or Disability, in each case if such termination occurs on or after the Date of Grant, all Shares of Restricted Stock which have not become vested in accordance with Section 3 or 5 hereof shall vest, and the restrictions thereon shall lapse as of the date of such termination. If your employment is terminated by your employer for any reason other than for Cause, then the restrictions on the entire Award shall lapse on the later of (i) the first anniversary of the Date of Grant or (ii) the date of your termination of employment.

5. Effect of Change in Control .

In the event of a Change in Control of the Company at any time on or after the Date of Grant, the terms of the Plan shall control the vesting of any Shares of Restricted Stock which have not become vested in accordance with Section 3 or 4 hereof.

6. Forfeiture of Restricted Stock .

Upon the termination of your employment by you, the Company or its Subsidiaries for any reason other than those set forth in Section 4 hereof prior to such vesting, in addition to the circumstance described in Section 9(a) hereof, any and all Shares of Restricted Stock which have not become vested in accordance with Section 3, 4 or 5 hereof shall be forfeited and shall revert to the Company.

7. Delivery of Restricted Stock .

7.1 Except as otherwise provided in Section 7.2 hereof, evidence of the book entry of Shares or, if requested by you prior to such lapse of restrictions, a stock certificate with respect to the Shares of Restricted Stock for which the restrictions have lapsed pursuant to Section 3, 4 or 5 hereof, shall be delivered to you as soon as practicable following the date on which the restrictions on such Shares of Restricted Stock have lapsed, free of all restrictions hereunder.

7.2 Evidence of the book entry of Shares with respect to Shares of Restricted Stock in respect of which the restrictions have lapsed upon your death pursuant to Section 4 hereof or, if requested by the executors or administrators of your estate upon such lapse of restrictions, a stock certificate with respect to such Shares of Restricted Stock, shall be delivered to the executors or administrators of your estate as soon as practicable following the Company’s receipt of notification of your death, free of all restrictions hereunder. In the event of your death, all references herein to “you” shall also include your executors, administrators, heirs or assigns.

8. Dividends and Voting Rights .

Subject to Section 9(a) hereof, upon issuance of the Shares of Restricted Stock, you shall have all of the rights of a stockholder with respect to such Shares, including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect thereto; provided , however , that dividends or distributions declared or paid on the Restricted Stock by the Company shall be deferred and reinvested in Shares of Restricted Stock based on the Fair Market Value of a Share of the Company’s common stock on the date such dividend or distribution is

 

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paid or made (provided that no fractional Shares will be issued), and the additional Shares of Restricted Stock thus acquired shall be subject to the same restrictions on transfer and forfeiture and the same vesting schedule as the Restricted Stock in respect of which such dividends or distributions were made.

9. Acknowledgement and Acceptance of Award Agreement .

(a) The Shares of Restricted Stock granted to you pursuant to this Award shall be subject to your acknowledgement and acceptance of the Award and the terms of this Agreement to the Company or its Plan Administrator (including by electronic means, if so provided) no later than the earlier of (i) 180 days from the Date of Grant and (ii) the date that is immediately prior to the date that the Restricted Stock vests pursuant to Section 4 or 5 hereof (the “ Return Date ”); provided that if you die before your Return Date, this requirement shall be deemed to be satisfied if the executor or administrator of your estate acknowledges and accepts this Agreement through the Company or its Plan Administrator no later than ninety (90) days following your death (the “ Executor Return Date ”). If this Agreement is not so acknowledged and accepted on or prior to your Return Date or the Executor Return Date, as applicable, the Award of Shares of Restricted Stock evidenced by this Agreement shall be forfeited, and neither you nor your heirs, executors, administrators or successors shall have any rights with respect thereto.

(b) If this Agreement is so acknowledged and accepted on or prior to your Return Date or the Executor Return Date, as applicable, all dividends and other distributions paid or made with respect to the Shares of Restricted Stock granted hereunder prior to your Return Date or the Executor Return Date shall be treated in the manner provided in Section 8 hereof.

10. No Right to Continued Employment .

Nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate your employment, nor confer upon you any right to continuing employment by the Company or any of its Subsidiaries or continuing service as a Board member.

11. Withholding of Taxes .

Prior to the delivery to you of a stock certificate or evidence of the book entry of Shares with respect to the Shares of Restricted Stock in respect of which all restrictions have lapsed, you shall pay to the Company or the Company’s Plan Administrator, the federal, state and local income taxes and other amounts as may be required by law to be withheld by the Company (the “ Withholding Taxes ”) with respect to such Restricted Stock. By acknowledging and accepting this Agreement in the manner provided in Section 9 hereof, you shall be deemed to elect to have the Company or the Plan Administrator withhold a portion of such Restricted Stock having an aggregate Fair Market Value equal to the Withholding Taxes in satisfaction thereof, such election to continue in effect until you notify the Company or its Plan Administrator before such delivery that you shall satisfy such obligation in cash, in which event the Company or the Plan Administrator shall not withhold a portion of such Restricted Stock as otherwise provided in this Section 11.

 

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12. Acknowledgement that You Are Bound by the Plan; Clawback

(a) By acknowledging and accepting this Award and the terms of this Agreement you hereby confirm the availability and your review of a copy of the Plan and the Prospectus, and other documents provided to you in connection with this Award by the Company or its Plan Administrator, and you agree to be bound by all the terms and provisions thereof.

(b) The Shares issued to you hereunder, any distributions with respect to such Shares (including any cash dividends or other distributions) received by you or your personal representative, and any proceeds received by you or your personal representative from the disposition or transfer of any such Shares shall be subject to mandatory repayment by you to the Company to the extent you are, or in the future become, subject to (i) any Company or Affiliate “clawback” or recoupment policy that is adopted by the Company, including to comply with the requirements of any applicable laws, rules or regulations, or (ii) any applicable laws which impose mandatory recoupment, under circumstances set forth in such applicable laws, in each case as provided in Section 19.1 of the Plan.

13. Modification of Agreement .

This Agreement may be modified, amended, supplemented or terminated, and any terms or conditions may be waived, but only by a written instrument executed by both parties hereto; provided that the Company may modify, amend, supplement or terminate this Agreement in a writing signed by the Company without any further action by you if such modification, amendment, supplement or termination does not adversely affect your rights hereunder.

14. Severability .

Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

15. Governing Law .

The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof.

16. Successors in Interest .

This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of your legal representatives. All obligations imposed upon the Company and all rights granted to you under this Agreement shall be binding upon the Company’s successors and upon your heirs, executors, administrators and successors.

17. Resolution of Disputes .

Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall first be referred to the

 

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Chief Executive Officer for informal resolution, and if necessary, referred to the Committee for its determination. Any determination made hereunder shall be final, binding and conclusive on you, your heirs, executors, administrators and successors, and the Company and its Subsidiaries for all purposes.

18. Entire Agreement .

This Agreement and the terms and conditions of the Plan constitute the entire understanding between you and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

19. Headings .

The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

20. Notice .

All notifications and other communications hereunder shall be in writing and, unless otherwise provided herein, shall be deemed to have been given when received by the party to whom such notice is to be given at its address set forth below, or such other address for the party as shall be specified by notice given pursuant hereto:

(a) If to the Company, by regular mail to:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attention: General Counsel

(b) If to you or your legal representative, to such person at the address as reflected in the records of the Company.

21. Consent to Jurisdiction .

Each party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Tennessee and of the United States of America, in each case located in the County of Williamson, for any actions, suits or proceedings arising out of or relating to this Agreement, the Award or the Plan and the transactions contemplated hereby and thereby (“ Litigation ”) (and agrees not to commence any Litigation except in any such court), and further agrees that service of process, summons, notice or document by U.S. certified mail to such party’s respective address set forth in Section 20 hereof shall be effective service of process for any Litigation brought against such party in any such court. Each party hereby irrevocably and unconditionally waives any objection to the laying of venue of any litigation in the courts of the State of Tennessee or of the United States of America, in each case located in the County of Williamson, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any Litigation brought in any such court has been brought in an inconvenient forum.

 

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22. Deemed Execution . On the date of your electronic acceptance of the terms of the Award and this Agreement, this Agreement shall be deemed to have been executed and delivered by you and the Company.

 

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Exhibit 10.5

QUORUM HEALTH CORPORATION

2016 EMPLOYEE PERFORMANCE INCENTIVE PLAN

ARTICLE I

PURPOSE

The purpose of the Quorum Health Corporation 2016 Employee Performance Incentive Plan (the “ Plan ”) is to promote the interests of Quorum Health Corporation (the “ Company ”) and its stockholders by providing additional compensation as incentive to certain employees of the Company or its subsidiaries and affiliates who contribute materially to the success of the Company. The Company intends that, in part, certain Awards issued under the Plan satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (collectively, the “ Code ”).

ARTICLE II

DEFINITIONS

The following terms when used in the Plan shall, for the purposes of the Plan, have the following meanings:

2.1  “Award” shall mean bonus incentive compensation paid in cash.

2.2  “Beneficiary” means the person, persons or estate entitled to receive payment under the Plan following a Participant’s death.

2.3  “Board” shall mean the Board of Directors of the Company.

2.4  “Cause” shall mean the Participant’s (i) intentional failure to perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the performance of duties, (iii) involvement in a transaction in connection with the performance of duties to the Company which transaction is adverse to the interests of the Company and which is engaged in for personal profit or (iv) willful violation of any law, rule or regulation in connection with the performance of duties (other than traffic violations or similar offenses).

2.5  “Code” shall have the meaning set forth in Article I.

2.6  “Committee” shall have the meaning set forth in Section 3.3.

2.7  “Company” shall have the meaning set forth in Article I.

2.8  “Covered Employee” shall have the meaning set forth in Code Section 162(m)(3), including Treasury Regulation Section 1.162-27(c)(2).

2.9  “Determination Date” means the earlier of: (a) the 90th day of the Performance Cycle, or (b) the date as of which 25% of the Performance Cycle has elapsed. The Determination Date shall be a date on which the outcome of the Performance Goals are substantially uncertain.


2.10  “Deferred Bonus Award” shall mean any Award whose payment has been designated by the Plan Administrator or Committee to be deferred as set forth in Section 5.2.

2.11  “Fiscal Year” shall mean the Company’s accounting year of 12 months commencing on January 1st of each year and ending the following December 31 st .

2.12  “Mid-Year Participant” shall mean any Participant in the Plan who does not commence participation on the first day of the Performance Cycle.

2.13  “Operating Unit” shall mean any hospital or group of hospitals, clinic or group of clinics, medical office building or group of medical office buildings, nursing facility or group of nursing facilities, any other operating unit designated by the Plan Administrator or the Committee (as applicable) or any combination of any of the foregoing.

2.14  “Outside Director” shall mean a director of the Company who is an “outside director” within the meaning of Treasury Regulation Section 1.162-27(e)(3).

2.15  “Participant” shall mean an employee of the Company as may be designated by the Chief Executive Officer and the Chief Financial Officer of the Company (or by the Committee with respect to a Covered Employee) to participate in the Plan with respect to each Performance Cycle.

2.16  “Participation Period” shall mean the period of time during which an individual is actually a Participant in the Plan for any Performance Cycle.

2.17  “Performance-Based Compensation” shall mean any Award that is intended to constitute “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code and the Treasury Regulations promulgated thereunder.

2.18  “Performance Cycle” means the period of time over which a Performance Objective is measured to determine an Award pursuant to the Plan, which shall generally be the Fiscal Year unless the Committee establishes a different period of time with respect to any Award.

2.19 “Performance Objective” shall mean one or more performance goals based on the criteria described in Section 4.4 and established as described herein with respect to an individual Participant for the Performance Cycle.

2.20  “Plan” shall have the meaning set forth in Article I.

2.21  “Plan Administrator” shall have the meaning set forth in Section 3.2.

2.22  “Pro-Rata Award” shall have the meaning set forth in Section 5.8.

2.23  “Qualifying Termination” shall mean the termination of the Participant’s employment due to death, disability, termination without Cause, and, if such Participant is a party to an employment, change in control or similar agreement with the Company and “good reason” is defined in such agreement, a termination by the Participant for “good reason” as such term is defined in the applicable agreement.

 

2


2.24  “Regulations” shall have the meaning set forth in Section 3.4.

2.25  “Section 409A” shall mean Section 409A of the Code and the applicable Treasury Regulations and guidance promulgated thereunder.

2.26  “Treasury Regulation” shall mean a regulation promulgated by the United States Department of the Treasury .

ARTICLE III

ADMINISTRATION

3.1 Remuneration payable under the Plan is intended to constitute Performance-Based Compensation for those Participants who are Covered Employees under the Plan, and the Plan shall be construed and administered in accordance with such intention. The Committee shall be authorized to exercise discretion under this Plan in respect of a Covered Employee only to the extent that such exercise will not cause an Award held by a Covered Employee to fail to constitute Performance-Based Compensation.

3.2 The Plan shall be administered, under the supervision of the Board, by the Chief Executive Officer and the Chief Financial Officer of the Company (collectively, the “Plan Administrator” ), except as otherwise provided herein.

3.3 Notwithstanding Section 3.2, for Participants who are Covered Employees, the Plan shall be administered by the Compensation Committee of the Board, or a subcommittee thereof (the “Committee” ), consisting of not fewer than two (2) Outside Directors.

3.4 The Plan Administrator (or, with respect to any Covered Employee, the Committee) may, from time to time, (i) adopt rules and regulations ( “Regulations” ) for carrying out the provisions and purposes of the Plan and make such determinations, not inconsistent with the terms of the Plan, as the Plan Administrator (or the Committee, if applicable) shall deem appropriate, and (ii) alter, amend or revoke any Regulation so adopted.

3.5 The interpretation and construction of any provision of the Plan by the Plan Administrator (or, with respect to any Covered Employee, the Committee) shall be final and conclusive.

3.6 No member of the Board, including members of the Committee, nor the Chief Executive Officer or the Chief Financial Officer of the Company, shall be liable for any action, failure to act, determination or interpretation made in good faith with respect to this Plan or any transaction hereunder or for any action, failure to act, determination or interpretation made by another member, officer, agent or employee of the Board, the Committee or the Company in administering this Plan. The Company hereby agrees to indemnify each member of the Board, including members of the Committee, and the Chief Executive Officer and the Chief Financial Officer of the Company, for all costs and expenses and, to the extent permitted by applicable

 

3


law, any liability incurred in connection with defending against, responding to, negotiating for the settlement of or otherwise dealing with any claim, cause of action or dispute of any kind arising by reason of an event(s) described in the immediately preceding sentence.

ARTICLE IV

PERFORMANCE INCENTIVE AWARDS

4.1 For each Performance Cycle of the Company, the Plan Administrator (or, with respect to any Covered Employee, the Committee) shall determine the following:

 

  (a) The employees who will participate in the Plan for such Performance Cycle;

 

  (b) The basis(es) for determining the amount of the Awards to such Participants and if the Performance Cycle is to be other than the Fiscal Year, such other period of time;

 

  (c) The Performance Objectives applicable to an Award; and

 

  (d) Whether the Award will be a Deferred Bonus Award.

With respect to Participants who are not Covered Employees, the basis(es) for determining the amount of the Awards shall be dependent upon the attainment by the Company of specified Performance Objectives, as further described in Section 4.4. With respect to Participants who are Covered Employees, the basis(es) for determining the amount of the Awards is set forth in Section 4.2. The Plan Administrator (or, with respect to any Covered Employee, the Committee) shall decide at the time of the grant of an Award whether the Award will be a Deferred Bonus Award subject to the provisions set forth in Section 5.2.

Participants may be granted more than one Award in respect of any Performance Cycle, which Awards may be subject to the attainment of different Performance Objectives or may be subject to different payment criteria (e.g., a Deferred Bonus Award may be granted in addition to an Award that is not a Deferred Bonus Award and may be subject to the same or different Performance Objectives).

4.2 For each Participant who is a Covered Employee, the Committee shall establish in writing one or more objectively determinable Performance Objectives based on the criteria described in Section 4.4 of the Plan no later than the Determination Date and at a time when the achievement of such Performance Objective (or Objectives) is substantially uncertain.

In establishing objectively determinable Performance Objectives, the Committee shall also state, in terms of an objective formula or standard, the method for computing the amount of the Award payable to the Covered Employee if a Performance Objective(s) is attained. In addition, the formula or standard shall specify the individual Covered Employee or class of Covered Employees to which it applies. No Award shall be paid to a Covered Employee unless

 

4


the Committee determines and certifies in writing, prior to the payment of such Award and in accordance with Section 162(m)(4)(C)(iii) of the Code, that the Performance Objectives applicable to the Covered Employee have been achieved.

4.3 For any Participant who is not a Covered Employee, Performance Objectives, whether quantitative or qualitative, may be established. The Plan Administrator shall establish the specific targets for the selected measures.

4.4 Performance criteria for Awards under the Plan shall be one or more of the following Performance Objectives:

 

  (1) Financial Performance Criteria:

 

  a. Earnings per share;

 

  b. Continuing operations earnings per share;

 

  c. Operating income;

 

  d. Gross income;

 

  e. Net income (before or after taxes);

 

  f. Cash flows from operating activities;

 

  g. Gross profit;

 

  h. Gross profit return on investment;

 

  i. Gross margin return on investment;

 

  j. Gross margin;

 

  k. Operating margin;

 

  l. Working capital;

 

  m. Earnings before interest and taxes;

 

  n. Earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted EBITDA, and EBITDA-based goals, including (without limitation) EBITDA target, divisional hospital EBITDA, adjusted or modified EBITDA, EBITDA margin, and EBITDA margin improvement;

 

  o. Return on equity;

 

  p. Return on assets;

 

5


  q. Return on capital;

 

  r. Return on invested capital;

 

  s. Net revenues;

 

  t. Divisional hospital revenue;

 

  u. Gross revenues;

 

  v. Revenue growth;

 

  w. Annual recurring revenues;

 

  x. Recurring revenues;

 

  y. Service revenues;

 

  z. License revenues;

 

  aa. Cash receipts targets;

 

  bb. Sales or market share;

 

  cc. Total shareholder return;

 

  dd. Total shareholder return percentile rank target;

 

  ee. Non-self pay admissions growth;

 

  ff. Division hospital non-self pay admissions growth;

 

  gg. Economic value added;

 

  hh. Specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and/or other offsets and adjustments as may be established by the Committee in its sole discretion;

 

  ii. Bad debt expense;

 

  jj. Uncompensated care expense;

 

  kk. The fair market value or trading price of a share of stock;

 

  ll. Valuations or trading prices of other securities issued by the Company or its subsidiaries;

 

6


  mm. Days net revenue in net patient accounts receivable;

 

  nn. The growth in the value of an investment in the stock assuming the reinvestment of dividends; and/or

 

  oo. Reduction in operating expenses.

 

  (2) Qualitative Performance Criteria:

 

  a. Physician and mid-level provider recruitment;

 

  b. Capital expenditures;

 

  c. Capital expenditures within the established capital budget;

 

  d. Overall clinical compliance;

 

  e. Clinic operating results;

 

  f. Physician practice (clinic) operations improvement;

 

  g. Meaningful use, attainment, compliance, or reimbursement;

 

  h. Peer group performance in volume, revenue, earnings growth, and stock price appreciation;

 

  i. Key operating statistics;

 

  j. Case/resource management program;

 

  k. Productivity management;

 

  l. Quality indicators/clinical compliance;

 

  m. Patient safety;

 

  n. Operating expenses per equivalent patient day;

 

  i. Operating expenses are all income statement expenses excluding rent, depreciation, amortization, management fee expense and interest expense;

 

  ii. Equivalent patient days is a method of adjusting the number of patient days to compensate for outpatient service rendered;

 

  o. Performance improvements;

 

  p. Adjusted admissions growth;

 

7


  q. Exceeding industry performance;

 

  r. compliance with or attainment of payor objectives to improve quality and reduce cost, including readmission reductions and value-based purchasing, reporting, measurement and improvement; and/or

 

  s. Discretionary. An amount equal to a specified percentage of each Participant’s salary or a lump sum amount may be awarded based upon other objective or (other than a Covered Employee) subjective criteria that recognize accomplishments of a Participant during the year. Focus will be on quality, service, regulatory compliance, and accomplishment of specific unique projects, among other items.

Performance Objectives may be set at a specific level or may be expressed as relative to prior performance or to the performance of one or more other entities or external indices and may be expressed in terms of a progression within a specified range. Performance Objectives may also be based upon individual Participant performance goals, as determined by the Plan Administrator or, if applicable, the Committee, in its sole discretion. The Plan Administrator or, in the case of a Covered Employee, the Committee, may at the time Performance Objectives are determined for a Performance Cycle, or at any time prior to the final determination of Awards in respect of that Performance Cycle and only to the extent permitted under Section 162(m) of the Code without adversely affecting the treatment of the Award as Performance-Based Compensation, provide for the manner in which performance will be measured against the Performance Objectives (or to the extent permitted under Section 162(m) of the Code without adversely affecting the treatment of an Award as Performance-Based Compensation, may adjust the Performance Objectives) to reflect the impact of (i) any stock dividend or split, recapitalization, combination or exchange of shares or other similar changes in the Company’s stock, (ii) specified corporate transactions (iii) special charges, (iv) changes in tax law or accounting standards required by generally accepted accounting principles, (v) changes in government reimbursement policies, (vi) event(s) either not directly related to the operations of the Company or not within reasonable control of the Company’s management; and (vii) items that are unusual in nature or infrequently occurring and other extraordinary or nonrecurring events.

In addition, and notwithstanding anything to the contrary contained herein, Awards that are not intended to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the Code may be based on the performance goals set forth herein or on such other performance goals as determined by the Plan Administrator in its sole discretion. With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the Code, to the extent permitted under Section 162(m) of the Code (including, without limitation, compliance with any requirements for stockholder approval), the Committee may also:

 

  (a) designate additional business criteria on which the performance goals may be based; or

 

  (b) adjust, modify or amend the aforementioned business criteria.

 

8


Where applicable, for purposes of making any determinations in respect of any Performance Objective, performance will generally be determined in accordance with generally accepted accounting principles, consistently applied.

4.5 Subject to Section 3.1, at any time after the commencement of a Performance Cycle for which Performance Objectives have been determined, but prior to the close thereof, the Plan Administrator may, in its discretion, add Participants, decrease targets, or increase or add to an Award(s).

ARTICLE V

PAYMENT OF PERFORMANCE INCENTIVE AWARDS

5.1  Payment of Awards . Subject to Section 5.2 and such forfeitures of Awards and other conditions as are provided in the Plan, the Awards made to Participants shall be paid as follows: as soon as practicable after the end of the Performance Cycle, the Plan Administrator (or, with respect to any Covered Employee, the Committee) shall determine the extent to which Awards have been earned on the basis of the actual performance in relation to the Performance Objectives as established for that Performance Cycle. Once determined, an Award shall be paid to a Participant only to the extent that the Participant met the targets for his or her Award as set forth in the Performance Criteria for his or her Award. Notwithstanding the foregoing, a lump sum discretionary Award may be paid to a Participant who is not a Covered Employee at any time during the Performance Cycle. No Awards shall be paid to a Covered Employee unless and until the Committee has certified in writing and in accordance with Section 162(m)(4)(C) of the Code that the Performance Objectives established with respect to the Covered Employee have been achieved. Subject to the foregoing, Awards or Pro-Rata Awards shall be paid at such time or times as are determined by the Plan Administrator or Committee; provided that, subject to Section 5.8, in no event shall the payment of any Awards or Pro-Rata Awards under the terms of the Plan be made to a Participant or Beneficiary later than 2  1 2 months following the end of the Fiscal Year for which such Award or Pro-Rata Award has been determined.

5.2  Payment of Deferred Bonus Awards . Subject to such other conditions as are provided in the Plan, the Deferred Bonus Awards shall be paid as follows:

(a) As soon as practicable after the end of the Performance Cycle, the Plan Administrator (or, with respect to any Covered Employee, the Committee) shall determine the extent to which Awards designated as Deferred Bonus Awards have been earned on the basis of the actual performance in relation to the Performance Objective as established for that Performance Cycle. Once determined, a Deferred Bonus Award shall be paid to a Participant only to the extent that the Participant met the targets for his or her Deferred Bonus Award as set forth in the Performance Criteria for his or her Deferred Bonus Award. No Deferred Bonus Awards shall be paid to a Covered Employee unless and until the Committee has certified in writing that the Performance Objectives established with respect to the Covered Employee have been achieved. Subject to the foregoing, Deferred Bonus Awards shall be paid on such date or dates following the Performance Cycle in which such Deferred Bonus Award had been

 

9


determined and shall be subject to such continued employment requirements as the Plan Administrator or, in the case of a Covered Employee, the Committee shall determine at the time the Deferred Bonus Award is granted.

(b) Notwithstanding the foregoing, (i) if a Pro-Rata Deferred Bonus Award becomes payable pursuant to Section 5.8 hereof, then such Pro-Rata Deferred Bonus Award shall be paid to the Participant or Beneficiary no later than 2  1 2 months following the end of the Fiscal Year for which such Deferred Bonus Award has been determined, and (ii) if a Qualifying Termination occurs after the end of the Fiscal Year in respect of which a Deferred Bonus Award is earned, the Deferred Bonus Award shall be paid to the Participant or Beneficiary within 30 days after the later of (x) the date of such termination, or (y) the date that the amount of the Deferred Bonus Award is determined pursuant to Section 5.2(a).

(c) If the short-term deferral exemption under Section 409A is unavailable, the Deferred Bonus Awards shall be granted and administered in a manner that complies with Section 409A, including the requirement that a Participant’s election to defer payment of a Deferred Bonus Award shall be made prior to the year in which such Deferred Bonus Award is earned. Payment of any Deferred Bonus Award shall be made only on a fixed date or dates or upon the occurrence of specified events permitted under Section 409A all of which shall be established at the time the Award is granted. Payment of Deferred Bonus Awards may not be further deferred beyond the payment date or dates specified in the Award at the time it is granted and may not be accelerated except as may be permitted under Section 409A.

5.3 The maximum amount that any individual Participant may receive relating to Awards made in respect of the performance in any Fiscal Year may not exceed ten million dollars ($10,000,000).

5.4 There shall be deducted from all payments of Awards any taxes required to be withheld by any government entity and paid over to any such government entity in respect of any such payment. Unless otherwise elected by the Participant, such deductions shall be at the established withholding tax rate. Participants may elect to have the deduction of taxes cover the amount of any applicable tax (the amount of withholding tax plus the incremental amount determined on the basis of the highest marginal tax rate applicable to such Participant).

5.5 Subject to Section 4.2 of the Plan, any individual other than a Covered Employee who becomes a Participant in the Plan due to employment, transfer or promotion during a Fiscal Year shall be eligible to receive a partial Award based upon the Participant’s base salary for the Participant’s Participation Period and his or her level of achievement in relation to Performance Objectives for the entire Fiscal Year or such shorter period established by the Plan Administrator or Committee. In no event, however, shall partial Awards be made to any Participant with a Participation Period in respect of any Performance Cycle of less than three months, except for discretionary awards under Section 4.4(2)(r).

 

10


5.6 With respect to any Participant who is not a Covered Employee, Awards may be adjusted for partial year responsibility, multiple facility responsibility and reassignments of a duration of at least three consecutive months.

5.7 Except as provided in Section 5.8, no Award shall be paid to a Participant who is not employed by the Company on the last day of the Performance Cycle for which an Award is to be or was earned.

5.8 If a Participant’s employment is terminated in a Qualifying Termination prior to the payment of an Award (including a Deferred Bonus Award), the Participant shall receive an Award (including a Deferred Bonus Award, if applicable) based upon his or her level of achievement in relation to the Performance Objectives established for the entire Performance Cycle multiplied by a fraction, the numerator of which is the number of days in the Participation Period and the denominator of which is 365 (a “Pro-Rata Award”). If such termination occurs after the end of the applicable Performance Cycle but before the payment of the Award, such fraction shall be one (1). With respect to Covered Employees, no Pro-Rata Award shall be paid unless and until the applicable Performance Objective(s) has been attained and the Committee has certified such attainment. Pro-Rata Awards (including Deferred Bonus Awards) payable pursuant to this Section 5.8 shall be paid in accordance with Sections 5.1 and 5.2, as applicable. Notwithstanding the foregoing, if a Participant is a party to an agreement or is a participant in any other plan that provides for a pro-rata payment of any Award under this Plan, the application of this Section 5.8 shall not result in a duplication of payment to the Participant under circumstances in which an Award is payable pursuant to this Section 5.8.

5.9 Notwithstanding anything contained in the Plan to the contrary, the Plan Administrator, or in the case of a Covered Employee, the Committee, in its sole discretion may reduce the amount of any Award whose Performance Objectives are based on one or more of the “qualitative performance criteria” listed in Section 4.4(2) for any Participant to any amount, including zero, prior to the end of the Performance Cycle for which such Award is earned.

5.10 Payment of each Award to a Participant shall be subject to the following provisions and conditions:

(a) No Participant shall have any right or interest, whether vested or otherwise, in the Plan or in any Award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Regulations that affect such Participant have been satisfied. Nothing contained in the Plan or in the Regulations shall require the Company to segregate cash or other property for purposes of payment of Awards under the Plan. Neither the adoption of the Plan nor its operation shall in any way affect the rights and power of the Company to dismiss and/or discharge any employee at any time.

(b) No rights under the Plan, contingent or otherwise, shall be assignable or subject to any encumbrance, pledge or charge of any nature.

 

11


ARTICLE VI

MISCELLANEOUS

6.1 By accepting any benefits under the Plan, each Participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or decision made under the Plan by the Company, the Board, the Plan Administrator, the Committee or any other committee appointed by the Board.

6.2 Any action taken or decision made by the Company, the Board, the Plan Administrator, the Committee, or any other committee appointed by the Board in the exercise of this power shall be final, binding and conclusive upon the Company, the Participants, the Beneficiaries, and all other persons having any interest therein.

6.3 The Board, the Plan Administrator, the Committee, or any other committee appointed by the Board may rely upon any information supplied to them by any officer of the Company and may rely upon the advice of counsel in connection with the administration of the Plan and shall be fully protected in relying upon such information or advice.

6.4 The Board may alter, amend, suspend or terminate the Plan; provided, however, that, except as permitted by the Plan, no such alteration, amendment, suspension or termination shall impair or adversely alter any Awards theretofore granted under the Plan, except with the consent of the respective Participant; and provided further, however, that, to the extent necessary under any applicable law, no such alteration, amendment, suspension or termination shall be effective unless approved by the shareholders of the Company in accordance with applicable law or regulation.

6.5 As illustrative of the limitations of liability of the Company, but not intended to be exhaustive thereof, nothing in the Plan shall be construed to:

 

  (a) Give any person any right to participate in the Plan other than at the sole discretion of the Plan Administrator or Committee, as applicable;

 

  (b) Give any person any rights whatsoever with respect to an Award except as specifically provided in this Plan;

 

  (c) Limit in any way the right of the Company to terminate the employment of any person at any time; or

 

  (d) Be evidence of any agreement or understanding, expressed or implied, that the Company will employ any person at any particular rate of compensation or for any particular period of time.

6.6 Except as to matters of federal law, the Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles thereof.

6.7 This Plan will be effective for all Fiscal Years beginning with 2016 by action of the Board.

 

12


6.8 The Plan and the granting of Awards shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required.

6.9 A person’s rights and interests under the Plan, including any Award previously made to such person or any amounts payable under the Plan may not be assigned, pledged, or transferred, except in the event of the Participant’s death, to a designated Beneficiary in accordance with the Plan, or in the absence of such designation, by will or the laws of descent or distribution.

6.10 Nothing in the Plan or in any notice of any Award shall confer upon any person the right to continue in the employment of the Company or any Affiliate or affect the right of the Company or any Affiliate to terminate the employment of any Participant.

6.11 Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant, Beneficiary or legal representative or any other person. To the extent that a person acquires a right to receive payment of an Award under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

6.12 It is intended that payments under the Plan qualify as short-term deferrals exempt from the requirements of Section 409A. In the event that any Award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A. The Plan and the terms of any Award shall be interpreted and construed accordingly. To the extent that payment of any Award is contingent upon a Participant’s execution a release and the applicable time period within which a release must be executed spans two taxable years, such Award shall be payable during the second taxable year. The Participant’s right to receive any installment payments pursuant to the Plan shall be treated as a right to receive a series of separate and distinct payments. If a Participant is a “specified employee” for purposes of Section 409A, the payment upon a termination of employment of any Award which is subject to Section 409A shall not be paid until one day after the date which is six (6) months from the date of termination. Although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Participant for any tax, interest, or penalties that Participant might owe as a result of the grant, holding, vesting, exercise, or payment of any Award under the Plan.

6.13 In the event that any provision of the Plan shall be considered illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been contained therein.

 

13


6.14 In the event the Board determines that a significant restatement of the Company’s financial results or other Company metrics for any of the three prior fiscal years for which audited financial statements have been prepared is required and (i) such restatement is the result of fraud or misconduct and (ii) the Award amount would have been lower had the results or metrics been properly calculated, the Committee has the authority to obtain reimbursement from any Participant responsible for the fraud or willful misconduct resulting in the restatement. Such reimbursement shall consist of any portion of any Award previously paid that is greater than it would have been if calculated based upon the restated financial results or metrics.

6.15 Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Committee shall have the right to provide or to require a Participant to agree by separate written or electronic instrument, that all Awards of such Participant shall be subject to the provisions of any claw-back policy implemented by the Company at any time, including, without limitation, the provisions of Section 6.14 and any other claw-back policy adopted to comply with the requirements of applicable law, including without limitation the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy.

 

14

Exhibit 10.6

 

 

QUORUM HEALTH CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


TABLE OF CONTENTS

 

         Page  

1.

 

PURPOSE

     1   

2.

 

DEFINITIONS AND CONSTRUCTION

     1   
 

2.1

  

Definitions

     1   
 

2.2

  

Captions; Section References

     5   
 

2.3

  

Severability

     5   

3.

 

ADMINISTRATION

     5   
 

3.1

  

The Committee

     5   
 

3.2

  

Authority of the Committee

     5   
 

3.3

  

Decisions Binding

     5   
 

3.4

  

Plan Administrator

     5   
 

3.5

  

Costs and Expenses

     5   
 

3.6

  

Indemnification

     6   

4.

 

PARTICIPATION IN THE PLAN

     6   
 

4.1

  

Notification of Participation

     6   
 

4.2

  

Termination of Participation

     6   

5.

 

BENEFITS UPON SEPARATION FROM SERVICE OR DEATH

     6   
 

5.1

  

Normal Retirement Benefit

     6   
 

5.2

  

Early Retirement Benefit

     6   
 

5.3

  

Disability Benefit

     7   
 

5.4

  

Death Benefit

     7   

6.

 

BENEFITS UPON CHANGE IN CONTROL

     7   
 

6.1

  

Change in Control Benefit

     7   
 

6.2

  

Certain Terminations of Employment

     7   

7.

 

BENEFICIARIES

     7   

8.

 

RABBI TRUST

     8   

9.

 

WITHHOLDING

     8   

10.

 

MODIFICATION AND TERMINATION

     8   
 

10.1

  

Amendment and Termination

     8   
 

10.2

  

Effect on Participants

     8   
 

10.3

  

No Obligation to Continue Plan

     8   

11.

 

CLAIMS AND REVIEW PROCEDURES

     8   

12.

 

MISCELLANEOUS PROVISIONS

     9   

 

- i -


TABLE OF CONTENTS

(continued)

 

         Page  
 

12.1

  

Non-Transferability

     9   
 

12.2

  

Payment of Benefits

     9   
 

12.3

  

No Rights of Employment

     9   
 

12.4

  

Applicable Law

     9   
 

12.5

  

Payment to Minors

     9   

EXHIBIT A

  

Participants and SERP Benefits

     9   

 

- ii -


QUORUM HEALTH CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS , as of April 28, 2016, CHS/Community Health Systems, Inc. maintains the CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan (the “ CHS Plan ”); and

WHEREAS , the board of directors of Community Health Systems, Inc. (“ CHS ”) has determined that it is appropriate and advisable to separate (i) thirty-eight (38) of CHS’s hospitals and related business operations and (ii) Quorum Health Resources, LLC, a hospital management and consulting services business, from CHS’s other hospitals and businesses; and

WHEREAS, to effectuate the foregoing, CHS and Quorum Health Corporation (“ QHC ” or the “ Company ”) have entered into a Separation and Distribution Agreement dated as of April 29, 2016 which provides for, among other things, the contribution from CHS to QHC of certain assets, the assumption by QHC of certain liabilities from CHS, and the distribution by CHS of all of the common stock of QHC owned by CHS to CHS’s shareholders (the “ Distribution ”); and

WHEREAS, CHS and QHC have entered into an Employee Matters Agreement that describes the principal employment, compensation, equity award and employee benefit plan arrangements between CHS and QHC in connection with the Distribution (the “ Employee Matters Agreement ”); and

WHEREAS, pursuant to the Employee Matters Agreement, QHC has agreed to establish this Quorum Health Corporation Supplemental Executive Retirement Plan (this “ Plan ”) to be effective no later than the effective date of the Distribution, and this Plan shall be effective as of April 29, 2016 (the “ Effective Date ”).

NOW, THEREFORE , the Plan shall provide as follows:

1. Purpose . The purpose of this Plan is to provide retirement benefits for certain officers and employees of the Company or its Subsidiaries who were eligible to receive benefits under the CHS Plan as of the Transition Date.

2. Definitions and Construction.

2.1 Definitions. As used in the Plan, terms defined parenthetically immediately after their use shall have the respective meanings provided by such definitions, and the following words and phrases shall have the meanings specified below (in either case, such terms shall apply equally to both the singular and plural forms of the terms defined), unless a different meaning is plainly required by the context:

(a) “Beneficiary” shall mean the person or persons designated by a Participant pursuant to Section 7 to receive the benefits to which a Participant is entitled upon the death of a Participant.

(b) “Board” shall mean the Board of Directors of the Company.

 

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(c) “Change in Control” shall mean the occurrence of any of the following events following the Distribution, but only to the extent such event would constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as set forth in Code Section 409A(a)(2)(A)(v) and defined in regulations promulgated by the U.S. Department of Treasury thereunder:

(1) An acquisition (other than directly from the Company) of any voting securities of the Company (“ Voting Securities ”) by any Person (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (“ Exchange Act ”)) immediately after which such Person has Beneficial Ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the then-outstanding shares of common stock of the Company (“ Shares ”) or the combined voting power of the Company’s then-outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred pursuant to this Section 2.1(e)(1), Shares or Voting Securities which are acquired in a Non-Control Acquisition (as hereinafter defined) shall not constitute an acquisition that would cause a Change in Control. A “ Non-Control Acquisition ” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by the Company or any Subsidiary, or (ii) any Person in connection with a Non-Control Transaction (as hereinafter defined);

(2) The individuals who, as of the date hereof, are members of the Board (“ Incumbent Board ”), cease for any reason to constitute at least a majority of the members of the Board or, following a Merger (as hereinafter defined) that results in the Company having a Parent Corporation (as hereinafter defined), the board of directors of the ultimate Parent Corporation; provided, however, that if the election, or nomination for election, by the Company’s common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened Election Contest (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (“ Proxy Contest ”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

(3) The consummation of:

(A) A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued (“ Merger ”), unless such Merger is a Non-Control Transaction. A Non-Control Transaction shall mean a Merger where:

(i) the stockholders of the Company immediately before such Merger own, directly or indirectly, immediately following such Merger, at least 50% of the combined voting power of the outstanding voting securities of (x) the corporation resulting from such Merger (“ Surviving Corporation ”), if 50% or more of the combined voting power of the then outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly, by another Person (“ Parent Corporation ”), or (y) if there are one or more Parent Corporations, the ultimate Parent Corporation; and

 

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(ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger, constitute at least a majority of the members of the board of directors of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if there are one or more Parent Corporations, the ultimate Parent Corporation.

(B) A complete liquidation or dissolution of the Company; or

(C) The sale or other disposition of all, or substantially all, of the assets of the Company to any Person (other than a transfer to a Subsidiary or under conditions that would constitute a Non-Control Transaction with the disposition of assets being regarded as a Merger for this purpose or the distribution to the Company’s stockholders of the stock of a Subsidiary or any other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (“ Subject Person ”) acquired Beneficial Ownership of more than the permitted amount of the then-outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting Securities by the Company which, by reducing the number of Shares or Voting Securities then-outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Shares or Voting Securities by the Company, and after such share acquisition by the Company the Subject Person becomes the Beneficial Owner of any additional Shares or Voting Securities which increases the percentage of the then-outstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

(d) “Change in Control SERP Benefit” with respect to a Participant, means the applicable lump sum payment amount set forth for such Participant under the applicable circumstances in the column “Benefit Upon a CIC” on the appropriate schedule of the attached Exhibit A .

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(f) “Committee” shall mean the Compensation Committee of the Board.

(g) “Company” shall have the meaning set forth in the Recitals.

(h) “Disabled Participant” shall mean any Participant who Separates from Service by reason of being Totally and Permanently Disabled.

(i) “Early Retirement Date” shall mean the date a Participant has been credited with at least five years of Service and is at least 55 years old.

(j) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

(k) “Key Employee” shall mean an employee (other than an Officer) of the Company or a Subsidiary who is a Participant.

(l) “Normal Retirement Date” shall mean the day of a Participant’s 65 th birthday.

 

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(m) “Officer” means any Participant who has been duly elected as an officer of the Company by the Board.

(n) “Participant” shall mean any employee of the Company or any Subsidiary who is listed on the attached Exhibit A . For the avoidance of doubt, any person who is not a Participant in this Plan on the Effective Date shall have no right to accrue any benefit under this Plan.

(o) “Rabbi Trust” shall mean the trust to be established by the Company in accordance with the provisions of Section 8.

(p) “Retired Participant” shall mean any Participant who has ceased to be an employee of the Company or a Subsidiary and who is entitled to receive a benefit under Section 5 of the Plan.

(q) “Separation from Service” or “Separate from Service” means a separation from service with the Company and each Subsidiary as set forth in Code Section 409A(a)(2)(A)(i) and defined in regulations promulgated by the U.S. Department of Treasury thereunder, provided, however, that a Participant shall not be deemed to have Separated from Service on account of a leave of absence until the first date immediately following the end of a 29-month period of leave (if the employment relationship is not terminated sooner) where such leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months and where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment.

(r) “SERP Benefit” with respect to a Participant, means the applicable lump sum payment amount set forth for such Participant under the applicable circumstances in the column “Benefit Upon Retirement” on the appropriate schedule of the attached Exhibit A .

(s) “Service” shall mean all years and completed months of service with CHS or any subsidiary of CHS following the date the person became a participant in the CHS Plan.

(t) “Specified Employee” means “specified employee” as defined in Code Section 409A(a)(2)(B)(i) and the regulations promulgated by the U.S. Department of Treasury thereunder. For purposes of the preceding sentence, “specified employee” means a “key employee” of the Company as defined in Code Section 416(i) without regard to paragraph (5) thereof. A Participant shall be a “key employee” of the Company if the Participant meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time during any 12-month period ending on December 31 (the “Identification Date”). If a Participant is a “key employee” of the Company as of the Identification Date, the Participant shall be treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the Identification Date.

(u) “Subsidiary” shall mean, with respect to the Company, any corporation or other entity of which a majority of its voting power, equity securities or equity interests is owned, directly or indirectly, by the Company.

 

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(v) “Total and Permanent Disability” shall mean a physical or mental condition that renders a Participant eligible for disability benefits under the long-term disability insurance program in effect at the Company on the date of this amendment and restatement of the Plan, even if such Participant no longer participates in such long-term disability program on the date such physical or mental condition occurs.

2.2 Captions; Section References. Section titles or captions contained in the Plan are inserted only as a matter of convenience and reference, and in no way define, limit, extend or describe the scope of the Plan, or the intent of any provision hereof. All references herein to Sections shall refer to Sections of the Plan unless the context clearly requires otherwise.

2.3 Severability. If any provision of the Plan, or the application thereof to any person, entity or circumstances, shall be invalid or unenforceable to any extent, the remainder of the Plan, and the application of such provision to other persons, entities or circumstances, shall not be affected thereby and the Plan shall be enforced to the greatest extent permitted by law.

3. Administration.

3.1 The Committee. The Plan shall be administered by the Committee. The Committee shall meet at such times and places as it determines and may meet through a telephone conference call.

3.2 Authority of the Committee. Subject to the provisions of the Plan, the Committee shall have full authority to:

(a) Construe and interpret the Plan.

(b) Establish, amend and rescind rules and regulations for the Plan’s administration.

(c) Make all other determinations which may be necessary or advisable for the administration of the Plan.

To the extent permitted by law, the Committee may delegate its authority as identified hereunder.

3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan, and all related orders or resolutions of the Board, shall be final, conclusive and binding upon all persons, including the Company, its stockholders, employees, Participants and their estates and Beneficiaries.

3.4 Plan Administrator. For purposes of ERISA, the Committee is the Plan administrator. Any claim for benefits under the Plan shall be made in writing to the Committee. The Committee and the claimant shall follow the claims procedures set forth in Department of Labor Regulation §2560.503-1.

3.5 Costs and Expenses. In discharging its duties under the Plan, the Committee may employ such counsel, accountants and consults as it deems necessary or appropriate. The Company shall pay all costs of such third parties and any other expenses incurred by the Committee with respect to the Plan.

 

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3.6 Indemnification. No member of the Committee, nor any officer or employee acting on behalf of the Committee, the Company, or its Subsidiaries shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee, and each and every officer or employee of the Company or its Subsidiaries acting on their behalf, shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination or interpretation.

4. Participation in the Plan.

4.1 Notification of Participation. Each Participant shall be notified that they are a Participant under the Plan.

4.2 Termination of Participation. A Participant who ceases to be an Officer or a Key Employee of the Company (as determined by the Committee), or who terminates employment with the Company and all Subsidiaries for any reason other than death or Total and Permanent Disability, shall not be entitled to any benefits hereunder unless that change of status occurs after the Participant has reached his or her Early Retirement Date.

5. Benefits Upon Separation from Service or Death.

5.1 Normal Retirement Benefit. A Participant (including, without limitation, a Specified Employee) who has been credited with at least five years of Service and Separates from Service by reason of retirement on or after the Participant’s Normal Retirement Date shall receive a single lump-sum payment, on the day immediately following the date that is six (6) months after the date of the Participant’s Separation from Service, in an amount that is equal to such Participant’s SERP Benefit as set forth on Exhibit A .

If a Participant who has had a Separation from Service and is entitled to a Normal Retirement Benefit under this Section 5.1 dies prior to the date of such payment, such payment shall be made, instead, to the Participant’s Beneficiary on the date that it otherwise would have been made to the Participant, or as soon as administratively feasible thereafter within the same taxable year (or, if later, by the 15th day of the third calendar month following the date the payment otherwise would have been made to the Participant, provided that neither the Participant nor Beneficiary shall be permitted, directly or indirectly, to designate the taxable year of payment).

5.2 Early Retirement Benefit. A Participant (including, without limitation, a Specified Employee) who Separates from Service by reason of retirement, prior to the Participant’s Normal Retirement Date, after attaining age 55 and who has been credited with at least five years of Service shall receive a single lump-sum payment on the day immediately following the date that is six (6) months after the date of the Participant’s Separation from Service, in an amount that is equal to such Participant’s SERP Benefit as set forth on Exhibit A . If a Participant who has had a Separation from Service and is entitled to an Early Retirement Benefit under this Section 5.2 dies prior to the date of such payment, such payment shall be made, instead, to the Participant’s Beneficiary on the date that it otherwise would have been made to the Participant, or as soon as administratively feasible thereafter within the same taxable year (or, if later, by the 15th day of the third calendar month following the date the payment otherwise would have been made to the Participant, provided that neither the Participant nor Beneficiary shall be permitted, directly or indirectly, to designate the taxable year of payment).

 

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5.3 Disability Benefit.

(a) A Disabled Participant (including, without limitation, a Specified Employee) shall receive a single lump-sum payment, on the later of (i) the day immediately following the date that is six (6) months after the date of the Participant’s Separation from Service by reason of becoming Totally and Permanently Disabled, or (ii) the first day of the month following the Participant’s 55 th birthday, in an amount that is equal to such Participant’s SERP Benefit as set forth on Exhibit A . This benefit shall be payable at the time prescribed in this Section 5.3(a) regardless of whether the Participant recovers from the disability before payment is due.

(b) If a Disabled Participant dies before the payment of the benefit described in Section 5.3(a), a death benefit shall be payable to the Disabled Participant’s Beneficiary. Such death benefit shall be a single lump-sum payment equal to the Participant’s SERP Benefit as set forth on Exhibit A . Such death benefit shall be paid to the Participant’s Beneficiary no later than ninety (90) days after the date of death (provided that neither the Participant nor Beneficiary shall be permitted, directly or indirectly, to designate the taxable year of payment).

5.4 Death Benefit. If a Participant who has been credited with five or more years of Service dies prior to incurring a Separation from Service, a single, lump-sum death benefit shall be paid to the deceased Participant’s Beneficiary. Such death benefit shall be the Participant’s SERP Benefit as set forth on Exhibit A . Such death benefit shall be paid to the deceased Participant’s Beneficiary no later than ninety (90) days after the date of death (provided that neither the Participant nor Beneficiary shall be permitted, directly or indirectly, to designate the taxable year of payment).

6. Benefits Upon Change in Control.

6.1 Change in Control Benefit. In the event of a Change in Control, the benefit of any Participant shall be paid out as soon as administratively feasible but no later than ninety (90) days after the Change in Control (provided that the Participant shall not be permitted, directly or indirectly, to designate the taxable year of payment) in a single lump-sum payment in an amount that is equal to such Participant’s Change in Control SERP Benefit as set forth on Exhibit A .

6.2 Certain Terminations of Employment. If a Participant’s employment is terminated by the Company prior to the date of a Change in Control, but the Participant reasonably demonstrates to the satisfaction of the Committee that the termination (i) was at the request of a third party who has indicated an intention to, or has taken steps reasonably calculated to, effect a Change in Control, or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control which has been threatened or proposed, such termination shall be deemed to have occurred after a Change in Control for purposes of the Plan, provided a Change in Control actually occurs. Such a Participant shall be entitled to receive the same benefits under the Plan as if the Participant had been an employee of the Company or a Subsidiary on the date the Change in Control actually occurs. Notwithstanding the foregoing, no payment under this Section 6.4 shall be made before the date that is six (6) months after the date of the Participant’s actual Separation from Service.

7. Beneficiaries. Each Participant shall have the right, by giving written notice to the Committee on such form as the Committee shall adopt, to designate a Beneficiary or Beneficiaries to receive payments which become available under the Plan should the Participant

 

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die. A Participant may change the designated Beneficiary by filing a new beneficiary designation form with the Committee. If a Participant dies and has not designated a Beneficiary, or if the Beneficiary predeceases the Participant, the estate of the deceased Participant shall be deemed to be the Beneficiary.

8. Rabbi Trust. The Company may establish a Rabbi Trust with a commercial bank or other financial or trust institution of which the Company would be considered the owner for Federal income tax purposes. If established, the Rabbi Trust will provide a source of funds to enable the Company to make payments to the Participants and their Beneficiaries pursuant to the terms of the Plan and will be administered in a manner consistent with the requirements of Code Section 409A. Payments to which Participants are entitled under the terms of the Plan shall be paid out of the Rabbi Trust to the extent of the assets therein. The assets of the Rabbi Trust will be subject to the claims of general creditors of the Company.

9. Withholding. The Company shall have the right to withhold from the payments to be made to any Participant or Beneficiary hereunder all amounts required to be so withheld under applicable law.

10. Modification and Termination.

10.1 Amendment and Termination. The Company reserves the right at any time, by action of the Board, to modify or amend, in whole or in part, any or all of the provisions of the Plan, or to terminate the Plan. In the event of Plan termination, benefits shall be payable at the time and in the manner provided in Sections 5 and 6; however, the Company may accelerate the time and form of payment pursuant to a termination and liquidation of the Plan in accordance with Code Section 409A and the regulations thereunder.

10.2 Effect on Participants. Notwithstanding the provisions of Section 10.1, no amendment, modification or termination of the Plan shall adversely affect:

(a) The SERP Benefit of any Participant, or the Beneficiary of any Participant, who has Separated from Service or died prior thereto.

(b) The right of any Participant then employed by the Company or a Subsidiary who has been credited with at least five years of Service to receive upon death, Separation from Service (including Separation from Service by reason of Total and Permanent Disability) or Change in Control, the benefit to which such person would have been entitled under the Plan prior to the amendment, modification or termination, provided, however, that the Company may accelerate the time and form of payment pursuant to a termination and liquidation of the Plan in accordance with Code Section 409A and the regulations thereunder.

10.3 No Obligation to Continue Plan. Although it is the intention of the Company that the Plan shall be continued indefinitely, the Plan is entirely voluntary on the part of the Company, and the continuance of the Plan is not a contractual obligation of the Company.

11. Claims and Review Procedures. The Committee shall establish and maintain reasonable procedures governing the filing of claims, notification of benefit determinations, and appeal of adverse benefit determinations in accordance with applicable law. Such procedures shall provide for adequate notice in writing to any Participant or Beneficiary whose claim for

 

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benefits under the Plan has been denied, setting forth the specific reasons for such denial and written in a manner calculated to be understood by the Participant or Beneficiary. Such procedures shall also afford a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied for a full and fair review by the Committee of the decision denying the claim.

12. Miscellaneous Provisions.

12.1 Non-Transferability. Neither the interest of a Participant or any other person in the Plan, nor the benefits payable hereunder, shall be subject to the claim of creditors of a Participant or their Beneficiaries and will not be subject to attachment, garnishment or any other legal process. Neither a Participant nor a Beneficiary may assign, sell, pledge or otherwise encumber any of their beneficial interest in the Plan, nor shall any such benefits be in any manner liable for, or subject to, the deeds, contracts, liabilities, engagements or torts of any Participant or their Beneficiary. All such payments and rights thereto are expressly declared to be non-assignable and non-transferable, and in the event of any attempted assignment or transfer (whether voluntary or involuntary) by a Participant or a Beneficiary, the Company shall have no further liability hereunder to such Participant or Beneficiary.

12.2 Payment of Benefits. Although the Company may establish the Rabbi Trust to fund its obligations under the Plan, the rights of Participants and Beneficiaries to receive payments under the Plan shall constitute only a general claim against the Company and will not be a lien or claim on any specific assets of the Company.

12.3 No Rights of Employment. The Plan shall not be deemed to constitute a contract of employment between a Participant and the Company or a Subsidiary. Nothing contained in the Plan shall be deemed to give any Participant the right to be retained in the employment of the Company or a Subsidiary. The Plan shall not interfere in any way with the Company’s or a Subsidiary’s right to discharge a Participant at any time, regardless of the effect which such discharge would have upon such Participant under the Plan, and such actions by the Company or a Subsidiary in discharging any Participant shall not be deemed a breach of contract, nor give rise to any rights or actions in favor of such Participant.

12.4 Applicable Law. The Plan shall be governed by, and construed in accordance with, the laws of the State of Tennessee without regard to its conflict of laws rules. It is intended that the Plan be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of highly compensated employees of the Company. As such, the Plan is intended to be exempt from certain otherwise applicable provisions of Title I of ERISA, and any ambiguities in construction shall be resolved in favor of an interpretation which will effectuate such intention. The Plan is intended to comply with Code Section 409A and the Treasury Regulations promulgated thereunder as applicable to nonqualified deferred compensation plans and shall be construed in furtherance of such intent. 

12.5 Payment to Minors. In making any payment to or for the benefit of any minor or incompetent Beneficiary, the Committee, in its sole, absolute and uncontrolled discretion, may, but need not, make such payment to a legal or natural guardian or other relative of such minor or court appointed committee of such incompetent, or to any adult with whom such minor or incompetent temporarily or permanently resides, and the receipt by such guardian, committee, relative or other person shall be a complete discharge of the Company, without any responsibility on its part or on the part of the Committee to see to the application thereof.

 

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IN WITNESS WHEREOF , the Company has caused the Plan to be executed by its duly authorized officer effective the 29th day of April, 2016, the Board having previously approved the Plan.

 

QUORUM HEALTH CORPORATION
By:  

/s/ R. Harold McCard, Jr.

Name:   R. Harold McCard, Jr.
Title:   Senior Vice President, General Counsel and Assistant Secretary

 

[Signature Page to QHC Supplemental Executive Retirement Plan]

Exhibit 10.9

INDEMNIFICATION AGREEMENT

INDEMNIFICATION AGREEMENT, dated as of [●], 201[●], by and among Quorum Health Corporation, a Delaware corporation (the “Company”), and the director and/or officer of the Company whose name appears on the signature page of this Agreement (“Indemnitee”).

RECITALS

A. Highly competent persons are becoming more reluctant to serve publicly-held corporations as directors or officers or in other capacities unless they are provided with reasonable protection through insurance or indemnification against risks of claims and actions against them arising out of their service to and activities on behalf of the corporations.

B. The Board of Directors of the Company (the “Board”) has determined that the Company should act to assure its directors and officers that there will be increased certainty of such protection in the future.

C. It is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

D. Indemnitee is willing to serve, to continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified.

E. In consideration of the benefits received and to be received by the Company in connection with actions taken and to be taken by the Board and by the officers of the Company, the Company has determined that it is in the best interest of the Company for the reasons set forth above to be a party to this Agreement and to provide indemnification to the directors and officers of the Company in connection with their service to and activities on behalf of the Company and its respective subsidiaries.

F. The Company acknowledges that for purposes of this Agreement the directors and officers of the Company who enter into this Agreement are serving in such capacities at the request of the Company.

G. The Company further acknowledges that such directors and officers are willing to serve, to continue to serve and to take on additional service for or on behalf of the Company, thereby benefiting the Company and its subsidiaries, on the condition that the Company enter into, and provide indemnification pursuant to, this Agreement.


AGREEMENT

In consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

1. DEFINITIONS.

(a) For purposes of this Agreement:

(i) “Affiliate” shall mean any corporation, partnership, joint venture, trust or other enterprise in respect of which Indemnitee is or was or will be serving as a director or officer directly or indirectly at the request of the Company, and including, but not limited to, service with respect to an employee benefit plan.

(ii) “Disinterested Director” shall mean a director of the Company who is not or was not a party to the Proceeding in respect of which indemnification is being sought by Indemnitee.

(iii) “Expenses” shall include all attorneys’ fees and costs, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses incurred in connection with asserting or defending claims.

(iv) “fines” shall include any excise taxes assessed on Indemnitee with respect to any employee benefit plan.

(v) “Independent Counsel” shall mean a law firm or lawyer that neither is presently nor in the past year has been retained to represent: (i) the Company or Indemnitee in any matter material to any such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder in any matter material to such other party. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any firm or person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing the Company or Indemnitee in an action to determine Indemnitee’s right to indemnification under this Agreement. All Expenses of the Independent Counsel incurred in connection with acting pursuant to this Agreement shall be borne by the Company.

(vi) “Losses” shall mean all expenses, liabilities, losses and claims (including attorneys’ fees, judgments, fines, excise taxes under the Employee Retirement Income Security Act of 1974, as amended from time to time, penalties and amounts to be paid in settlement) incurred in connection with any Proceeding.

(vii) “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative.

 

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(b) For purposes of this Agreement, a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement; the term “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and references to the “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify Indemnitee in its capacity as a director, officer, or employee or agent, so that Indemnitee shall stand in the same position under this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

2. SERVICE BY INDEMNITEE. Indemnitee agrees to begin or continue to serve the Company or any Affiliate as a director and/or officer. Notwithstanding anything contained herein, this Agreement shall not create a contract of employment between the Company and Indemnitee, and the termination of Indemnitee’s relationship with the Company or an Affiliate by either party hereto shall not be restricted by this Agreement.

3. INDEMNIFICATION. The Company agrees to indemnify Indemnitee for, and hold Indemnitee harmless from and against, any Losses or Expenses at any time incurred by or assessed against Indemnitee arising out of or in connection with the service of Indemnitee as a director or officer of the Company or of an Affiliate (collectively referred to as an “Officer or Director of the Company”) to the fullest extent permitted by the laws of the State of Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification. Without diminishing the scope of the indemnification provided by this Section, the rights of indemnification of Indemnitee provided hereunder shall include but shall not be limited to those rights set forth hereinafter.

4. ACTION OR PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be entitled to the indemnification rights provided herein if Indemnitee is a person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any Proceeding (other than an action by or in the right of the Indemnitee (unless approved in advance in writing by the Board) or the Company) by reason of (a) the fact that Indemnitee is or was an Officer or Director of the Company or any other entity which Indemnitee is or was or will be serving at the request of the Company, or (b) anything done or not done by Indemnitee in any such capacity.

5. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be entitled to the indemnification rights provided herein if Indemnitee is a person who was or is a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any Proceeding brought by or in the right of the Company to procure a judgment in its favor by reason of (a) the fact that Indemnitee is or was an Officer or Director of the Company or any Affiliate, or (b) anything done or not done by Indemnitee in any such capacity.

 

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Pursuant to this Section, Indemnitee shall be indemnified against Losses or Expenses incurred or suffered by Indemnitee or on Indemnitee’s behalf in connection with the defense or settlement of any Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing provisions of this Section, no such indemnification shall be made in respect of any claim, issue or matter as to which Delaware law expressly prohibits such indemnification by reason of an adjudication of liability of Indemnitee to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Losses and Expenses which the Court of Chancery or such other court shall deem proper.

6. INDEMNIFICATION FOR LOSSES AND EXPENSES OF PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been wholly successful on the merits or otherwise in any Proceeding referred to in Sections 3, 4 or 5 hereof on any claim, issue or matter therein, Indemnitee shall be indemnified against all Losses and Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company agrees to indemnify Indemnitee to the maximum extent permitted by law against all Losses and Expenses incurred by Indemnitee in connection with each successfully resolved claim, issue or matter. In any review or Proceeding to determine the extent of indemnification, the Company shall bear the burden of proving any lack of success and which amounts sought in indemnity are allocable to claims, issues or matters which were not successfully resolved. For purposes of this Section and without limitation, the termination of any such claim, issue or matter by dismissal with or without prejudice shall be deemed to be a successful resolution as to such claim, issue or matter.

7. PAYMENT FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of the fact that Indemnitee is or was an Officer or Director of the Company or any Affiliate, as the case may be, a witness in any Proceeding, the Company agrees to pay to Indemnitee all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

8. ADVANCEMENT OF EXPENSES AND COSTS. All Expenses incurred by or on behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee within three months) in connection with any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding within twenty (20) days after the receipt by the Company of a statement or statements from Indemnitee requesting from time to time such advance or advances, whether or not a determination to indemnify has been made under Section 9. Indemnitee’s entitlement to such advancement of Expenses shall include those incurred in connection with any Proceeding by Indemnitee seeking an adjudication or award in arbitration pursuant to this Agreement. The financial ability of Indemnitee to repay an advance shall not be a prerequisite to the making of such advance. Such statement or statements shall reasonably evidence such Expenses incurred (or reasonably expected to be incurred) by Indemnitee in connection therewith and shall include or be accompanied by a written undertaking by or on behalf of Indemnitee to repay such amount if it shall ultimately be determined that Indemnitee is not entitled to be indemnified therefor pursuant to the terms of this Agreement.

 

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9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.

(a) When seeking indemnification under this Agreement (which shall not include in any case the right of Indemnitee to receive payments pursuant to Section 7 and Section 8 hereof, which shall not be subject to this Section 9), Indemnitee shall submit a written request for indemnification to the Company. Determination of Indemnitee’s entitlement to indemnification shall be made promptly, but in no event later than sixty (60) days after receipt by the Company of Indemnitee’s written request for indemnification. The Secretary of the Company shall, promptly upon receipt of Indemnitee’s request for indemnification, advise the Board that Indemnitee has made such request for indemnification.

(b) The entitlement of Indemnitee to indemnification under this Agreement shall be determined, with respect to a person who is a director or officer at the time of such determination, in the specific case (1) by the Board by a majority vote of the Disinterested Directors, even though less than a quorum, or (2) by a committee of the Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum, or (3) if there are no Disinterested Directors, or if such Disinterested Directors so direct, by Independent Counsel, or (4) by the stockholders. The entitlement of the Indemnitee to indemnification shall be determined with respect to any person who is not a director or officer at the time of such determination by any means reasonably determined by the Company.

(c) In the event the determination of entitlement is to be made by Independent Counsel, such Independent Counsel shall be selected by the Board and approved by Indemnitee. Upon failure of the Board to so select such Independent Counsel or upon failure of Indemnitee to so approve, such Independent Counsel shall be selected by the American Arbitration Association of New York, New York or such other person as such Association shall designate to make such selection.

(d) If a determination is made pursuant to Section 9(b) that Indemnitee is not entitled to indemnification to the full extent of Indemnitee’s request, Indemnitee shall have the right to seek entitlement to indemnification in accordance with the procedures set forth in Section 10 hereof.

(e) If a determination with respect to entitlement to indemnification shall not have been made within sixty (60) days after receipt by the Company of such request, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be absolutely entitled to such indemnification, absent (i) misrepresentation by Indemnitee of a material fact in the request for indemnification or (ii) a final judicial determination that all or any part of such indemnification is expressly prohibited by law.

(f) The termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself,

 

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adversely affect the rights of Indemnitee to indemnification hereunder except as may be specifically provided herein, or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or create a presumption that (with respect to any criminal action or proceeding) Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

(g) For purposes of any determination of good faith hereunder, Indemnitee shall be deemed to have acted in good faith if in taking such action Indemnitee relied on the records or books of account of the Company or an Affiliate, including financial statements, or on information supplied to Indemnitee by the officers of the Company or an Affiliate in the course of their duties, or on the advice of legal counsel for the Company or an Affiliate or on information or records given or reports made to the Company or an Affiliate by an independent certified public accountant or by an appraiser or other expert selected with reasonable care to the Company or an Affiliate. The Company shall have the burden of establishing the absence of good faith. The provisions of this Section 9(g) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(h) The knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Company or an Affiliate shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

10. REMEDIES IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO ADVANCE EXPENSES.

(a) In the event that (i) a determination is made that Indemnitee is not entitled to indemnification hereunder, (ii) advances are not made pursuant to Section 8 hereof or (iii) payment has not been timely made following a determination of entitlement to indemnification pursuant to Section 9 hereof, Indemnitee shall be entitled to seek a final adjudication either through an arbitration proceeding or in an appropriate court of the State of Delaware or any other court of competent jurisdiction of Indemnitee’s entitlement to such indemnification or advance.

(b) In the event a determination has been made in accordance with the procedures set forth in Section 9 hereof, in whole or in part, that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration referred to in Section 10(a) shall be DE NOVO and Indemnitee shall not be prejudiced by reason of any such prior determination that Indemnitee is not entitled to indemnification, and the Company shall bear the burdens of proof specified in Sections 6 and 9 hereof in such proceeding.

(c) If a determination is made or deemed to have been made pursuant to the terms of Section 9 or 10 hereof that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration in the absence of (i) a misrepresentation of a material fact by Indemnitee or (ii) a final judicial determination that all or any part of such indemnification is expressly prohibited by law.

 

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(d) To the extent deemed appropriate by the court, interest shall be paid by the Company to Indemnitee at a reasonable interest rate for amounts which the Company indemnifies or is obliged to indemnify Indemnitee for the period commencing with the date on which Indemnitee requested indemnification (or reimbursement or advancement of any Expenses) and ending with the date on which such payment is made to Indemnitee by the Company.

11. EXPENSES INCURRED BY INDEMNITEE TO ENFORCE THIS AGREEMENT. All Expenses incurred by Indemnitee in connection with the preparation and submission of Indemnitee’s request for indemnification hereunder shall be borne by the Company. In the event that Indemnitee is a party to or intervenes in any proceeding in which the validity or enforceability of this Agreement is at issue or seeks an adjudication to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole in such action, shall be entitled to recover from the Company, and shall be indemnified by the Company against, any Expenses incurred by Indemnitee. If it is determined that Indemnitee is entitled to indemnification for part (but not all) of the indemnification so requested, Expenses incurred in seeking enforcement of such partial indemnification shall be reasonably prorated among the claims, issues or matters for which Indemnitee is entitled to indemnification and for claims, issues or matters for which Indemnitee is not so entitled.

12. NON-EXCLUSIVITY. The rights of indemnification and to receive advances as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under any law, certificate of incorporation, by-law, other agreement, vote of stockholders or resolution of directors or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. To the extent Indemnitee would be prejudiced thereby, no amendment, alteration, rescission or replacement of this Agreement or any provision hereof shall be effective as to Indemnitee with respect to any action taken or omitted by such Indemnitee in Indemnitee’s position with the Company or an Affiliate or any other entity which Indemnitee is or was serving at the request of the Company prior to such amendment, alteration, rescission or replacement.

13. DURATION OF AGREEMENT. This Agreement shall apply to any claim asserted and any Losses and Expenses incurred in connection with any claim asserted on or after the effective date of this Agreement and shall continue until and terminate upon the later of: (a) ten years after Indemnitee has ceased to occupy any of the positions or have any of the relationships described in Section 3, 4 or 5 hereof; or (b) one year after the final termination of all pending or threatened Proceedings of the kind described herein with respect to Indemnitee. This Agreement shall be binding upon the Company and its respective successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisee, executors, administrators or other legal representatives.

14. MAINTENANCE OF D&O INSURANCE.

(a) The Company hereby covenants and agrees with Indemnitee that, so long as Indemnitee shall continue to serve as an Officer or Director of the Company and thereafter so

 

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long as Indemnitee shall be subject to any possible claim or threatened, pending or completed Proceeding, whether civil, criminal or investigative, by reason of the fact that Indemnitee was an Officer or Director of the Company or any other entity which Indemnitee was serving at the request of the Company, the Company shall use commercially reasonable efforts to maintain in full force and effect (i) the directors’ and officers’ liability insurance issued by the insurer and having the policy amount and deductible as currently in effect with respect to directors and officers of the Company or any of its subsidiaries and (ii) any replacement or substitute policies issued by one or more reputable insurers providing in all respects coverage at least comparable to and in the same amount as that currently provided under such existing policy (collectively, “D&O Insurance”).

(b) In all policies of D&O Insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Company’s directors or officers most favorably insured by such policy.

(c) Notwithstanding anything to the contrary set forth in (a) above, the Company shall have no obligation to maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium cost for such insurance is disproportionate to the amount of coverage provided or the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit.

15. SEVERABILITY. Should any part, term or condition hereof be declared illegal or unenforceable or in conflict with any other law, the validity of the remaining portions or provisions hereof shall not be affected thereby, and the illegal or unenforceable portions hereof shall be and hereby are redrafted to conform with applicable law, while leaving the remaining portions hereof intact.

16. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

17. HEADINGS. Section headings are for convenience only and do not control or affect meaning or interpretation of any terms or provisions hereof.

18. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto.

19. NO DUPLICATIVE PAYMENT. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment (net of Expenses incurred in collecting such payment) under any insurance policy, contract, agreement or otherwise.

20. NOTICES. All notices, requests, demands and other communications provided for by this Agreement shall be in writing (including telecopier or similar writing) and shall be deemed to have been given at the time when mailed, enclosed in a registered or certified postpaid

 

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envelope, in any general or branch office of the United States Postal Service, or sent by Federal Express or other similar overnight courier service, addressed to the address of the parties stated below or to such changed address as such party may have fixed by notice or, if given by telecopier, when such telecopy is transmitted and the appropriate answerback is received.

(a) If to Indemnitee, to the address appearing on the signature page hereof.

(b) If to the Company to:

Quorum Health Corporation

1573 Mallory Lane

Suite 100

Brentwood, TN 37027

Attention: General Counsel

21. GOVERNING LAW. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without regard to its conflicts of law rules.

22. ENTIRE AGREEMENT. Subject to the provisions of Section 12 hereof, this Agreement constitutes the entire understanding between the parties and supersedes all proposals, commitments, writings, negotiations and understandings, oral and written, and all other communications between the parties relating to the subject matter hereof. This Agreement may not be amended or otherwise modified except in writing duly executed by all of the parties. A waiver by any party of any breach or violation of this Agreement shall not be deemed or construed as a waiver of any subsequent breach or violation thereof.

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

 

QUORUM HEALTH CORPORATION
By:  

 

Name:  

 

Title:  

 

INDEMNITEE
Name:  

 

Address:  

 

City and State:  

 

Telecopier Number:  

 

 

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Exhibit 99.1

 

LOGO

COMMUNITY HEALTH SYSTEMS COMPLETES SPIN-OFF OF

QUORUM HEALTH CORPORATION

FRANKLIN, Tenn. (April 29, 2016) – Community Health Systems, Inc. (NYSE: CYH) (“CHS”) today announced that it has completed the previously announced spin-off of Quorum Health Corporation (“QHC”). As a result of the spin-off, QHC is now an independent public company and listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “QHC.”

Commenting on the spin-off, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, Inc., said, “Today’s successful spin-off creates two healthcare companies that are positioned to create shareholder value and to pursue unique pathways for future success. At Community Health Systems, our smaller, refined portfolio creates immediate efficiencies and sharpens our focus on key, competitive markets where we can seek to capitalize on our greatest opportunities for sustainable growth. We are excited about QHC’s potential and extend our best wishes for success to QHC’s management team and board of directors.”

Commenting on the launch of QHC, Thomas D. Miller, president and chief executive officer of Quorum Health Corporation, said, “QHC launches with a clear vision to focus on improving the health care in every community where services are provided. At a time when rural hospitals are under siege, we will use our resources to help make these hospitals essential in their communities. We look forward with determination and enthusiasm to the opportunity ahead.”

As a result of the spin-off, QHC owns or leases a portfolio of 38 hospitals with an aggregate of 3,582 licensed beds. The hospitals are geographically diversified across 16 states, primarily located in cities or counties having populations of 50,000 or less. QHC also operates Quorum Health Resources, LLC, a leading hospital management advisory and consulting services business.

CHS remains one of the largest publicly traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country. Immediately following the completion of the spin-off, CHS’ stockholders own all of the outstanding shares of common stock of QHC.

Under the terms of the spin-off, CHS stockholders who held CHS common stock as of April 22, 2016, the record date, received a distribution of one share of QHC common stock for every four shares of CHS common stock, plus cash in lieu of any fractional shares.

Since April 20, 2016, QHC shares have traded on a “when-issued” basis on the NYSE under the symbol “QHC WI”. “When-issued” trading of QHC shares ended at the close of the market on April 29, 2016. “Regular-way” trading in QHC’s common stock is expected to begin under the symbol “QHC” on May 2, 2016, the first trading day following the completion of the spin-off.

In connection with the spin-off, CHS received approximately $1.2 billion of the net proceeds of certain financing arrangements entered into by QHC as part of the spinoff. CHS intends principally to use these proceeds to repay secured indebtedness, as well as certain expenses incurred in connection with the spin-off and such debt repayment transactions.

 

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CYH COMPLETES SPIN-OFF OF QUORUM HEALTH CORPORATION

Page 2

April 29, 2016

 

About Community Health Systems, Inc.

CHS is one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country. After giving effect to the spin-off noted above, through its subsidiaries, CHS currently owns, leases or operates 160 affiliated hospitals in 22 states with an aggregate of nearly 27,000 licensed beds.

CHS’ headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in CHS are traded on the NYSE under the symbol “CYH.” More information about CHS can be found on its website at www.chs.net .

About Quorum Health Corporation

QHC is an operator and manager of general acute care hospitals and outpatient services in the United States. QHC owns or leases a diversified portfolio of 38 affiliated hospitals with an aggregate of approximately 3,582 licensed beds. QHC also operates Quorum Health Resources, LLC, a leading hospital management advisory and consulting business.

Forward-Looking Statements

Certain statements contained in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the expected timing of regular-way trading in QHC’s common stock, the benefits of the spin-off transaction to either CHS or QHC, the market position of the business spun off, CHS’ intended use of the net proceeds distributed from QHC, and transactions and other events and other statements that are not historical facts. Such statements are based on the views and assumptions of the management of CHS and QHC and are subject to significant risks and uncertainties. There can be no assurance that the future events will occur as anticipated, if at all, or that actual results will be as expected. Actual future events or results may differ materially from these statements. Such differences may result from a number of factors, including but not limited to: possible negative effects on CHS’ or QHC’s business operations, assets or financial results as a result of the spin-off; a failure to obtain necessary regulatory approvals; a deterioration in the business or prospects of CHS or QHC; adverse developments in CHS’ or QHC’s markets; adverse developments in the U.S. or global capital markets, credit markets or economies generally; risks associated with CHS’ and QHC’s indebtedness, leverage and debt service obligations; CHS’ and QHC’s ability to successfully make acquisitions or complete divestitures; changes to CHS’ intended use of the net proceeds distributed from QHC; CHS’ and QHC’s ability to successfully integrate any acquired hospitals, or to recognize expected synergies from acquisitions or improved cash flows from divestitures; and changes in regulatory, social and political conditions. Additional risks and factors that may affect results are set forth in CHS’ and QHC’s filings with the Securities and Exchange Commission, including CHS’ most recent Annual Report on Form 10-K, current reports on Form 8-K and quarterly reports on Form 10-Q and QHC’s Registration Statement on Form 10, as amended. The forward-looking statements speak only as of the date of this communication. Neither CHS nor QHC undertakes any obligation to update these statements.

 

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CYH COMPLETES SPIN-OFF OF QUORUM HEALTH CORPORATION

Page 3

April 29, 2016

 

 

Contacts: Community Health Systems, Inc.

 

  Investors: W. Larry Cash
       President of Financial Services and Chief Financial Officer
       (615) 465-7000

 

  Media: Tomi Galin
       Senior Vice President, Corporate Communications,
           Marketing and Public Affairs
       (615) 628-6607

Quorum Health Corporation

 

  Investors: Michael J. Culotta
       Executive Vice President and Chief Financial Officer
       (615) 221-1400

 

  Media : Lisa Anderson
       Vice President, Marketing and Communications
       (615) 221-3793

 

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