THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR, SUBJECT TO SECTION 11 HEREOF, AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Common Stock of
NEUEHEALTH, INC.
Dated as of June [__], 2024 (the “Effective Date”)
WHEREAS, NeueHealth, Inc., a Delaware corporation (the “Company”), has entered into a Loan and Security Agreement of even date herewith (as amended and in effect from time to time, the “Loan Agreement”) with Hercules Capital, Inc., a Maryland corporation, in its capacity as administrative and collateral agent (“Agent”), [___________], a [___________] (the “Warrantholder”), and the other parties thereto;
WHEREAS, pursuant to the Loan Agreement and as additional consideration to the Warrantholder for, among other things, its agreements in the Loan Agreement, the Company has agreed to issue to the Warrantholder this Warrant Agreement, evidencing the right to purchase shares of the Company’s Common Stock (this “Warrant”, “Warrant Agreement”, or “Agreement”);
NOW, THEREFORE, in consideration of the Warrantholder having executed and delivered the Loan Agreement and provided the financial accommodations contemplated therein, and in consideration of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:
SECTION 1.GRANT OF THE RIGHT TO PURCHASE COMMON STOCK.
(a) For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase, from the Company, up to the aggregate number of fully paid and non-assessable shares of Common Stock (as defined below) as determined pursuant to Section 1(b) below, at a purchase price per share equal to the Exercise Price (as defined below). The number and Exercise Price of such shares are subject to adjustment as provided in Section 8 below. As used herein, the following terms shall have the following meanings:
“Act” means the Securities Act of 1933, as amended.
“Charter” means the Company’s Certificate of Incorporation or other constitutional document, as may be amended and in effect from time to time.
“Committed Tranche Advance” means the Tranche 1 Advance, the Tranche 2 Advance or a Tranche 3 Advance (in each case, as defined in the Loan Agreement).
“Common Stock” means the Company’s common stock, $0.0001 par value per share, as presently constituted under the Charter, and any class and/or series of Company capital stock for or into which such common stock may be converted or exchanged in a reorganization, recapitalization or similar transaction.
“Exercise Price” means $0.01, subject to adjustment from time to time in accordance with the provisions of this Warrant.
“Hercules Affiliate” means any Person that is a Control Investment Affiliate (as defined in the Loan Agreement as of the Effective Date) of the Warrantholder.
“Liquid Sale” means the closing of a Merger Event in which the consideration received by the Company and/or its stockholders, as applicable, consists solely of cash and/or Marketable Securities.
“Marketable Securities” in connection with a Merger Event means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by the Warrantholder in connection with the Merger Event were the Warrantholder to exercise this Warrant on or prior to the closing thereof is then traded on a national securities exchange or over-the-counter market; and (iii) following the closing of such Merger Event, the Warrantholder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by the Warrantholder in such Merger Event were the Warrantholder to exercise this Warrant in full on or prior to the closing of such Merger Event, except to the extent that any such restriction (a) arises solely under federal or state securities laws, rules or regulations and (b) does not extend beyond six (6) months from the closing of such Merger Event.
“Merger Event” means any of the following: (i) a sale, lease, exclusive license or other transfer of all or substantially all assets of the Company, (ii) any merger or consolidation involving the Company in which the Company is not the surviving entity or in which the outstanding shares of the Company’s capital stock are otherwise converted into or exchanged for shares of capital stock or other securities or property of another entity, or (iii) any sale by holders of the outstanding voting equity securities of the Company in a single transaction or series of related transactions of shares constituting a majority of the outstanding combined voting power of the Company.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.
“Purchase Price” means, with respect to any exercise of this Warrant, an amount equal to the then-effective Exercise Price multiplied by the number of shares of Common Stock as to which this Warrant is then exercised.
(b) Number of Shares. This Warrant shall be exercisable for a number of shares of Common Stock equal to: (i) Seven Hundred Fifty Thousand (750,000) shares of Common Stock, multiplied by the fraction obtained by dividing (A) the aggregate original principal amount of the Committed Tranche Advances that the Warrantholder makes to the Borrower (as defined in the Loan Agreement) by (B) One Hundred Million Dollars ($100,000,000), plus (ii) automatically upon the making (if any) of any Tranche 4 Advance (as defined in the Loan Agreement) that the Warrantholder makes to the Borrower (as defined in the Loan Agreement), Five Hundred Thousand (500,000) shares of Common Stock multiplied by the fraction obtained by dividing (A) the aggregate original principal amount of Tranche 4 Advances (as defined in the Loan Agreement) that the Warrantholder makes to the Borrower (as defined in the Loan Agreement) by (B) Fifty Million Dollars ($50,000,000), in each case, subject to adjustment from time to time in accordance with the provisions of this Warrant. For the avoidance of doubt, this Warrant, together with all other warrants issued to other lenders under the Loan Agreement on the date this Warrant was originally issued, shall be exercisable for up to One Million Two Hundred Fifty Thousand (1,250,000) shares of Common Stock in the aggregate, subject to adjustment from time to time in accordance with the provisions of this Warrant.
SECTION 2.TERM OF THE AGREEMENT.
The term of this Agreement and the right to purchase Common Stock as granted herein shall commence on the Effective Date and, subject to Section 8(a) below, shall be exercisable until 5:00 p.m. (Eastern Time) on the seventh (7th) anniversary of the Effective Date.
SECTION 3.EXERCISE OF THE PURCHASE RIGHTS.
(a) Exercise. The purchase rights set forth in this Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit I (the “Notice of Exercise”), duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance with the terms set forth below, and in no event later than three (3) business days thereafter, the Company or its transfer agent shall either (i) issue to the Warrantholder a certificate for the number of shares of Common Stock purchased or (ii) credit the same via book entry to the Warrantholder, and the Company shall execute the acknowledgment of exercise in the form attached hereto as Exhibit II (the “Acknowledgment of Exercise”) indicating the number of shares of Common Stock which remain subject to future purchases under this Warrant, if any.
The Purchase Price may be paid at the Warrantholder’s election either (i) by cash or check, or (ii) by surrender of all or a portion of this Warrant for shares of Common Stock to be exercised under this Agreement and, if applicable, an amended Agreement setting forth the remaining number of shares purchasable hereunder, as determined below (“Net Issuance”). If the Warrantholder elects the Net Issuance method, the Company will issue shares of Common Stock in accordance with the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Common Stock to be issued to the Warrantholder.
Y = the number of shares of Common Stock requested to be exercised under this Agreement.
A = the then-current fair market value of one (1) share of Common Stock at the time of exercise of this Warrant.
B = the then-effective Exercise Price.
For purposes of the above calculation, the current fair market value of shares of Common Stock shall mean with respect to each share of Common Stock:
(i) at all times when the Common Stock is traded on a national securities exchange, inter-dealer quotation system or over-the-counter bulletin board service, the average of the closing prices over a five (5) day period ending three days before the day the current fair market value of the securities is being determined;
(ii) if the exercise is in connection with a Merger Event, the fair market value of a share of Common Stock shall be deemed to be the per share value received by the holders of the outstanding shares of Common Stock pursuant to such Merger Event as determined in accordance with the definitive transaction documents executed among the parties in connection therewith; or
(iii) in cases other than as described in the foregoing clauses (i) and (ii), the current fair market value of a share of Common Stock shall be determined in good faith by the Company’s Board of Directors.
Upon partial exercise by either cash or Net Issuance, prior to the expiration or earlier termination hereof, the Company shall promptly issue an amended Agreement representing the remaining number of shares purchasable hereunder. All other terms and conditions of such amended Agreement shall be identical to those contained herein, including, but not limited to the Effective Date hereof.
(b) Exercise Prior to Expiration. To the extent this Warrant is not previously exercised as to all shares of Common Stock subject hereto, and if the then-current fair market value of one share of Common Stock is greater than the Exercise Price then in effect, or, in the case of a Liquid Sale, where the value per share of Common Stock (as determined as of the closing of such Liquid Sale in accordance with the definitive agreements executed by the parties in connection with such Merger Event) to be paid to the holders thereof is greater than the Exercise Price then in effect, this Agreement shall be deemed automatically exercised on a Net Issuance basis pursuant to Section 3(a) above (even if not surrendered) as of immediately before its expiration determined in accordance with Section 2 above. For purposes of such automatic exercise, the fair market value of one share of Common Stock upon such expiration shall be determined pursuant to Section 3(a). To the extent this Warrant or any portion hereof is deemed automatically exercised pursuant to this Section 3(b), the Company agrees to promptly notify the Warrantholder of the number of shares of Common Stock if any, the Warrantholder is to receive by reason of such automatic exercise, and to issue or cause its transfer agent to issue a certificate or a book-entry credit to the Warrantholder evidencing such shares.
SECTION 4.RESERVATION OF SHARES.
During the term of this Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise of the rights to purchase Common Stock as provided for herein. If at any time during the term hereof the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant in full, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.
SECTION 5.NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Agreement, but in lieu of such fractional shares the Company shall make a cash payment therefor in an amount equal to the product of (a) the current fair market value of a share of Common Stock (as determined Section 3(a) above) then in effect multiplied by (b) the fraction of a share.
SECTION 6.NO RIGHTS AS SHAREHOLDER.
Without limitation of any provision hereof, the Warrantholder agrees that this Agreement does not entitle the Warrantholder to any voting rights or other rights as a shareholder of the Company prior to the exercise of any of the purchase rights set forth in this Agreement.
SECTION 7.WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of the registered holder of this Agreement. The Warrantholder’s initial address, for purposes of such registry, is set forth in Section 12(g) below. The Warrantholder may change such address by giving written notice of such changed address to the Company.
SECTION 8.ADJUSTMENT RIGHTS.
The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment from time to time, as follows:
(a)Merger Event.
(i)In connection with a Merger Event that is a Liquid Sale, this Warrant shall, on and after the closing thereof, automatically and without further action on the part of any party or other person, represent the right to receive the consideration payable on or in respect of all shares of Common Stock that are issuable hereunder as of immediately prior to the closing of such Merger Event less the Purchase Price for all such shares of Common Stock (such consideration to include both the consideration payable at the closing of such Merger Event and all deferred consideration payable thereafter, if any, including, but not limited to, payments of amounts deposited at such closing into escrow and payments in the nature of earn-outs, milestone payments or other performance-based payments), and such Merger Event consideration shall be paid to the Warrantholder as and when it is paid to the holders of the outstanding shares of Common Stock.
(ii)In connection with a Merger Event that is not a Liquid Sale, the Company shall cause the successor or surviving entity to assume this Warrant and the obligations of the Company hereunder on the closing thereof, and thereafter this Warrant shall be exercisable for the same number and type of securities or other property as the Warrantholder would have received in consideration for the shares of Common Stock issuable hereunder had it exercised this Warrant in full as of immediately prior to such closing, at an aggregate Exercise Price no greater than the aggregate Exercise Price in effect as of immediately prior to such closing, and subject to further adjustment from time to time in accordance with the provisions of this Warrant.
(iii)The provisions of this Section 8(a) shall similarly apply to successive Merger Events.
(b)Reclassification of Shares. Except for Merger Events subject to Section 8(a) above, if the Company at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Agreement exist into the same or a different number of securities of any other class or classes of securities, this Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change. The provisions of this Section 8(b) shall similarly apply to successive combination, reclassification, exchange, subdivision or other change.
(c)Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Common Stock, (i) in the case of a subdivision, the Exercise Price shall be proportionately decreased (but such decrease shall not result in the Exercise Price being less than $0.01 per share) and the number of shares for which this Warrant is exercisable shall be proportionately increased or (ii) in the case of a combination, the Exercise Price shall be proportionately increased and the number of shares for which this Warrant is exercisable shall be proportionately decreased.
(d)Dividends. If the Company at any time while this Agreement is outstanding and unexpired shall:
(i)pay a dividend with respect to the Common Stock payable in additional shares of Common Stock, then the Exercise Price shall be adjusted (but such adjustment shall not result in the Exercise Price being less than $0.01 per share), from and after the date of determination of shareholders entitled to receive such dividend, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution, and the number of shares of Common Stock for which this Warrant is exercisable shall be proportionately increased; or
(ii)make any other dividend or distribution on or with respect to Common Stock, except any dividend or distribution (A) in cash or (B) specifically provided for in any other clause of this Section 8, then, in each such case, provision shall be made by the Company such that the Warrantholder shall receive upon exercise or conversion of this Warrant a
proportionate share of any such dividend or distribution as though it were the holder of the Common Stock (or other stock for which the Common Stock is convertible) as of the record date fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution.
(e)Notice of Certain Events. If: (i) the Company shall declare any dividend or distribution upon its outstanding Common Stock, payable in stock, cash, property or other securities; (ii) the Company shall offer for subscription pro rata to holders of its Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any Merger Event; or (iv) there shall be any voluntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall provide to the Warrantholder: (A) at least thirty (30) days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of such Merger Event, dissolution, liquidation or winding up; and (B) in the case of any such Merger Event, dissolution, liquidation or winding up, at least thirty (30) days’ prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding up).
Each such written notice shall set forth, in reasonable detail, (i) the event requiring the notice, and (ii) if any adjustment is required to be made, (A) the amount of such adjustment, (B) the method by which such adjustment was calculated, (C) the adjusted Exercise Price (if the Exercise Price has been adjusted), and (D) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given in accordance with Section 12(g) below.
(f)Timely Notice. Failure to timely provide such notice required by Section 8(e) above shall entitle the Warrantholder to retain the benefit of the applicable notice period notwithstanding anything to the contrary contained in any insufficient notice received by the Warrantholder. For purposes of this Section 8(f), and notwithstanding anything to the contrary in Section 12(g) below, the notice period shall begin on the date the Warrantholder actually receives a written notice containing all the information required to be provided in such Section 12(g).
SECTION 9.REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a)Reservation of Common Stock. The Company covenants and agrees that all shares of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, that the Common Stock issuable pursuant to this Agreement may be subject to restrictions on transfer under state and/or federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies of its Charter and bylaws currently in effect. The issuance of certificates or book-entry credit for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and related issuance of shares of Common Stock. The Company further covenants and agrees that the Company will, at all times during the term hereof, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.
(b)Due Authority. The execution and delivery by the Company of this Agreement and the performance of all obligations of the Company hereunder, including the issuance to the Warrantholder of the right to acquire the shares of Common Stock, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement: (i) does not violate the Charter or the Company’s current bylaws; (ii) does not contravene any law or governmental rule, regulation or order applicable to the Company; and (iii) except as could not reasonably be expected to have a Material Adverse Effect (as defined in the Loan Agreement), does not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which the Company is a party or by which it is bound. This Agreement constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally (including, without limitation, fraudulent conveyance laws) and by general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(c)Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Agreement, except for any applicable filing of notices pursuant to Regulation D under the Act and any filing required by applicable state securities law, which filings, if applicable, will be effective by the time required thereby.
(d)Exempt Transaction. Subject to the accuracy of the Warrantholder’s representations in Section 10 below, the issuance of the Common Stock upon exercise of this Agreement will constitute a transaction exempt from the registration requirements of Section 5 of the Act, in reliance upon Section 4(a)(2) thereof.
(e)Information Rights. At all times (if any) prior to the earlier to occur of (i) the date on which all shares of Common Stock issued on exercise of this Warrant have been sold, or (ii) the expiration or earlier termination of this Warrant, when the Company shall not be required to file reports pursuant to Section 13 or 15(d) of the Exchange Act or shall not have timely filed all such required reports, the Warrantholder shall be entitled to the information rights contained in Sections 7.1(b), 7.1(c) and 7.1(j) of the Loan Agreement (provided that the Warrantholder shall be deemed to be subject to the provisions of Section 11.13 of the Loan Agreement with respect to such information (together with any additional information provided pursuant to Section 12(f) below) as though it were a Lender (as defined in the Loan Agreement) and such information was Confidential Information (as defined in the Loan Agreement), and in any such event Sections 7.1(b), 7.1(c),7.1(j) and, to the extent set forth above, Section 11.13 of the Loan Agreement are hereby incorporated into this Agreement by this reference as though fully set forth herein, provided, however, that the Company shall not be required to deliver a Compliance Certificate once all Indebtedness (as defined in the Loan Agreement) owed by the Company to the Warrantholder has been repaid.
(f)Rule 144 Compliance. The Company shall, at all times prior to the earlier to occur of (i) the date of sale or other disposition by Warrantholder of this Warrant or all shares of Common Stock issued on exercise of this Warrant and (ii) the expiration or earlier termination of this Warrant if the Warrant has not been exercised in full or in part on such date, use commercially reasonable efforts to timely file all reports required under the Exchange Act and otherwise timely take all actions necessary to permit the Warrantholder to sell or otherwise
dispose of this Warrant and the shares of Common Stock issued on exercise hereof pursuant to Rule 144 promulgated under the Act (“Rule 144”), provided that the foregoing shall not apply in the event of a Merger Event following which the successor or surviving entity is not subject to the reporting requirements of the Exchange Act. If the Warrantholder proposes to sell Common Stock issuable upon the exercise of this Agreement in compliance with Rule 144, then, upon the Warrantholder’s written request to the Company, the Company shall furnish to the Warrantholder, within five (5) business days after receipt of such request, a written statement confirming the Company’s compliance with the filing and other requirements of such Rule 144.
SECTION 10.REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:
(a)Investment Purpose. This Warrant and the shares issued on exercise hereof will be acquired for investment and not with a view to the sale or distribution of any part thereof in violation of applicable federal and state securities laws, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.
(b)Private Issue. The Warrantholder understands that (i) the Common Stock issuable upon exercise of this Agreement is not, as of the Effective Date, registered under the Act or qualified under applicable state securities laws, and (ii) the Company’s reliance on exemption from such registration is predicated on the representations set forth in this Section 10.
(c)Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.
(d)Accredited Investor. The Warrantholder is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Act, as presently in effect (“Regulation D”).
(e)No Short Sales. The Warrantholder has not at any time on or prior to the Effective Date engaged in any short sales or equivalent transactions in the Common Stock. Warrantholder agrees that at all times from and after the Effective Date and on or before the expiration or earlier termination of this Warrant, it shall not engage in any short sales or equivalent transactions in the Common Stock.
(f)Non-Reliance. The Warrantholder (i) is a sophisticated institutional accredited investor with extensive expertise and experience in financial and business matters and in evaluating private companies and purchasing and selling their securities; (ii) has conducted and relied upon its own due diligence investigation of the Company and its own in-depth analysis of the merits and risks of this Agreement in making its investment decision and has not relied upon any information provided by Moelis & Company, LLC (“Moelis”) or any investigation of the Company conducted by Moelis; and (iii) agrees that Moelis shall have no liability to the Warrantholder in connection with entering into this Agreement.
SECTION 11.TRANSFERS.
(a)Subject to Section 11(b) below and compliance with applicable federal and state securities laws, this Agreement and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes) upon receipt by the Warrantholder of the prior written consent of the Company and surrender of this Agreement properly endorsed. The transfer of this Agreement which has been consented to by the Company in accordance with this Section 11 shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit III (the “Transfer Notice”), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered owner hereof as the owner for all purposes. Notwithstanding anything herein or in any legend to the contrary, the Company shall not require an opinion of counsel in connection with any sale, assignment or other transfer by the Warrantholder of this Warrant (or any portion hereof or any interest herein) or of any shares of Common Stock issued upon any exercise hereof to an affiliate (as defined in Regulation D) of the Warrantholder, provided that such affiliate is an “accredited investor” as defined in Regulation D.
(b)In the event of any transfer to an Hercules Affiliate, the transfer requirements set forth in Section 11(a) above shall be satisfied by Warrantholder delivering to the Company a Transfer Notice; provided that: (i) Warrantholder will not be required to surrender this Warrant; (ii) the Company will note such Hercules Affiliate as the Warrantholder in the Company’s records and, as applicable, with any transfer agent; (iii) such Hercules Affiliate will otherwise be deemed to be the “Warrantholder” of this Warrant with respect to the transferred portion thereof; and (iv) the Company hereby consents to the transfer of this Agreement and all rights hereunder, in whole or in part, to any Hercules Affiliate. Such Notice of Transfer shall be deemed delivered and effective, notwithstanding any request to confirm receipt or acknowledgment contained therein. By its acceptance of such transfer, such Hercules Affiliate, on and as of the date of such transfer, hereby makes to the Company each of the representations and warranties set forth in Section 10 above and agrees to be bound by all of the terms and conditions of this Warrant as if it were the original Warrantholder hereof.
SECTION 12.MISCELLANEOUS.
(c)Effective Date. The provisions of this Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof. This Agreement shall be binding upon any successors or assigns of the Company.
(d)Remedies. In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific performance for any default where the Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable. The Company expressly agrees that it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement.
(e)No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance of any
of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.
(f)Additional Documents. In the event the Company shall not be required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, the Company agrees to supply the Warrantholder from time to time upon its written request for purposes of Warrantholder’s compliance (as determined by Warrantholder in its reasonable discretion) with regulatory, accounting and reporting requirements applicable to Warrantholder, including (without limitation) the following information: (i) annual and quarterly financial statements substantially in forms that would be required to be contained in a filing with the Securities and Exchange Commission (the “SEC”) on Forms 10-K and 10-Q of the Company, if the Company were required to file such forms, (ii) promptly after the occurrence of an event required to be therein reported, such other information containing substantially the same information that would be required to be contained in filings with the SEC on Form 8-K under Items 1.01, 1.02, 1.03, 2.01, 4.01, 4.02, 5.01 and 5.02(b) and (c) (other than with respect to information otherwise required or contemplated by subclause (3) of Item 5.02(c) or Item 402 of Regulation S-K promulgated by the SEC) as in effect on the date hereof if the Company were required to file such reports; provided, however, that no such current report will be required to include as an exhibit, or to include a summary of the terms of, any employment or compensatory arrangement agreement, plan or understanding between the Company (or any of its subsidiaries) and any director, manager or executive officer of the Company (or any of its subsidiaries), and (iii) the most recent Charter; provided, however, that (1) no such reports referenced under clause (ii) above shall be required to be furnished if (x) it would cause competitive harm or (y) any such information would otherwise constitute trade secrets, privileged or confidential information obtained from another person, (2) in no event shall such reports be required to contain any “segment reporting”, and (3) in no event shall reports referenced in clause (ii) above be required to include as an exhibit copies of any agreements, financial statements or other items that would be required to be filed as exhibits to a current report on Form 8-K.
(g)Attorneys’ Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to attorneys’ fees and expenses and all costs of proceedings incurred in enforcing this Agreement. For the purposes of this Section 12(e), attorneys’ fees shall include without limitation fees incurred in connection with the following: (i) contempt proceedings; (ii) discovery; (iii) any motion, proceeding or other activity of any kind in connection with an insolvency proceeding; (iv) garnishment, levy, and debtor and third party examinations; and (v) post-judgment motions and proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment.
(h)Severability. In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.
(i)Notices. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication that is required, contemplated, or permitted under this Agreement or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) personal delivery to the party to be notified, (ii) when sent by confirmed telex, electronic transmission or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt, and shall be addressed to the party to be notified as follows:
If to the Warrantholder:
[WARRANTHOLDER]
Legal Department
Attention: Chief Legal Officer Tom Hertzberg, Michael MacMahon and Brian Powers
1 North B Street, Suite 2000
San Mateo, CA 94401
Email: legal@htgc.com, thertzberg@htgc.com, mmahon@htgc.com, bpowers@htgc.com
Telephone: 650-289-3060
With a copy to:
DLA PIPER LLP (US)
4365 Executive Drive, Suite 1100
San Diego, California 92121-2133
Attn: Parker Zangoei
Email: parker.zangoei@us.dlapiper.com
Telephone: 858-677-1420
If to the Company:
NEUEHEALTH, INC.
Attention: General Counsel
800 Norman Center Drive, Suite 900
Minneapolis, MN 55437
Email: jcraig@neuehealth.com
With a copy (which shall not constitute notice) to:
SIMPSON THACHER & BARTLETT LLP
2475 Hanover Street
Palo Alto, CA 94304
Attn: William Brentani
Email: wbrentani@stblaw.com
or to such other address as each party may designate for itself by like notice.
(j)Entire Agreement; Amendments. This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof, and supersedes and replaces in their entirety any prior proposals, term sheets, letters, negotiations or
other documents or agreements, whether written or oral, with respect to the subject matter hereof. None of the terms of this Agreement may be amended except by an instrument executed by each of the parties hereto.
(k)Headings. The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provisions hereof.
(l)Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed (or had an opportunity to discuss) with its counsel this Agreement and, specifically, the provisions of Sections 12(n), 12(o), 12(p), 12(q) and 12(r) hereof.
(m)No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
(n)No Waiver. No omission or delay by the Warrantholder at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by the Company at any time designated, shall be a waiver of any such right or remedy to which the Warrantholder is entitled, nor shall it in any way affect the right of the Warrantholder to enforce such provisions thereafter during the term of this Agreement.
(o)Survival. All agreements, representations and warranties contained in this Agreement or in any document delivered pursuant hereto shall be for the benefit of the Warrantholder and shall survive the execution and delivery of this Agreement and the expiration or other termination of this Agreement.
(p)Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
(q)Consent to Jurisdiction and Venue. All judicial proceedings arising in or under or related to this Agreement may be brought in any state or federal court of competent jurisdiction located in the State of New York. Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 12(g) above, and shall be deemed effective and received as set forth in such Section 12(g). Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.
(r)Mutual Waiver of Jury Trial. Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes arising under or in connection with this Warrant be resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND THE WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM,
COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY THE COMPANY AGAINST THE WARRANTHOLDER OR ITS ASSIGNEE OR BY THE WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY RELATING TO THIS WARRANT. This waiver extends to all such Claims, including Claims that involve persons or entities other than the Company and the Warrantholder; Claims that arise out of or are in any way connected to the relationship between the Company and the Warrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement.
(s)Arbitration. If the Mutual Waiver of Jury Trial set forth in Section 12(p) above is ineffective or unenforceable, the parties agree that all Claims shall be submitted to binding arbitration in accordance with the commercial arbitration rules of JAMS (the “Rules”), such arbitration to occur before one arbitrator, which arbitrator shall be a retired New York state judge or a retired Federal court judge. Such proceeding shall be conducted in the City of New York, borough of Manhattan, State of New York, with New York rules of evidence and discovery applicable to such arbitration. The decision of the arbitrator shall be binding on the parties, and shall be final and nonappealable to the maximum extent permitted by law. Any judgment rendered by the arbitrator may be entered in a court of competent jurisdiction and enforced by the prevailing party as a final judgment of such court.
(t)Pre-arbitration Relief. In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction identified in Section 12(o) above, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by binding arbitration.
(u)Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts (including by facsimile or electronic delivery (PDF), and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.
(v)Specific Performance. The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to the Warrantholder by reason of the Company’s failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement shall be specifically enforceable by the Warrantholder. If the Warrantholder institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that the Warrantholder has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.
(w)Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.
(x)Legends. To the extent required by applicable laws, this Warrant and the shares of Common Stock issuable hereunder (and the securities issuable, directly or indirectly, upon conversion of such shares of Common Stock, if any) may be imprinted with a restricted securities legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION RELATED THERETO OR, SUBJECT TO SECTION 11 OF THE WARRANT AGREEMENT DATED JUNE [__], 2024, BETWEEN THE COMPANY AND [WARRANTHOLDER], AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY STATE SECURITIES LAWS.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the Effective Date.
COMPANY: NEUEHEALTH, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
WARRANTHOLDER: [WARRANTHOLDER]
By:______________________________
Name: __________________________
Title: __________________________
EXHIBIT I
NOTICE OF EXERCISE
To: NEUEHEALTH, INC.
(1) The undersigned Warrantholder hereby elects to purchase [_______] shares of the Common Stock of NeueHealth, Inc., a Delaware corporation, pursuant to the terms of the Warrant Agreement dated as of June [__], 2024 (the “Warrant Agreement”) between NeueHealth, Inc. and the Warrantholder, and [CASH PAYMENT: tenders herewith payment of the Purchase Price in full, together with all applicable transfer taxes, if any.][NET ISSUANCE: elects pursuant to Section 3(a) of the Warrant Agreement to effect a Net Issuance.]
(2) Please issue a certificate or certificates or book-entry credit(s) representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.
_________________________________
(Name)
_________________________________
(Address)
WARRANTHOLDER: [WARRANTHOLDER]
By: ______________________________
Name: ______________________________
Title: ______________________________
EXHIBIT II
ACKNOWLEDGMENT OF EXERCISE
The undersigned [____________________________________], hereby acknowledges receipt of the “Notice of Exercise” from [WARRANTHOLDER] to purchase [____] shares of the Common Stock of NeueHealth, Inc., a Delaware corporation, pursuant to the terms of the Warrant Agreement by and between NeueHealth, Inc. and [WARRANTHOLDER] dated as of June [__], 2024 (the “Warrant Agreement”), and further acknowledges that [______] shares remain subject to purchase under the terms of the Warrant Agreement.
COMPANY: NEUEHEALTH, INC.
By: ________________________________
Title: ________________________________
Date: ________________________________
EXHIBIT III
TRANSFER NOTICE
(To transfer or assign the foregoing Agreement execute this form and supply required information. Do not use this form to purchase shares.)
We refer to a certain Warrant Agreement entered into between NeueHealth, Inc., a Delaware corporation, and [WARRANTHOLDER] on June [__], 2024 (the “Agreement”).
FOR VALUE RECEIVED, the right to subscribe for and purchase ________ shares of the Common Stock under and subject to the foregoing Agreement and all other related rights evidenced thereby are hereby transferred and assigned to
_________________________________________________________________
(Please Print)
whose address is: _________________________________________
Dated: ____________________________________
Holder’s Signature: _______________________________
On behalf of [WARRANTHOLDER]
Holder’s Address: 1 North B Street, Suite 2000, San Mateo, CA 94401
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Agreement.
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made and dated as of June 21, 2024 (the “Closing Date”) and is entered into by and among NEUEHEALTH, INC., a Delaware corporation (formerly known as BRIGHT HEALTH GROUP, INC.) (“Company”), each other Original Borrower, and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), the Original Guarantor, each Additional Guarantor from time to time party hereto, the several banks and other financial institutions or entities from time to time party hereto as lenders (each, a “Lender”, and collectively “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lenders (in such capacities, including any successors and assigns, “Agent”).
RECITALS
A. Loan Parties have requested Lenders make available to Borrower up to four (4) tranches of term loans in an aggregate principal amount of up to One Hundred Fifty Million Dollars ($150,000,000) (the “Term Loans”); and
B. Lenders are willing to make the Term Loans on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, Loan Parties, Agent and Lenders agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1When used herein, the following capitalized terms shall have the following meanings:
“1940 Act” has the meaning given to it in Section 5.6(b).
“Account Control Agreement(s)” means any agreement entered into by and among Agent, the applicable Loan Party and a third-party bank or other institution (including a Securities Intermediary) in which the applicable Loan Party maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s security interest in the subject account or accounts.
“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers shall be redacted for security purposes if and when filed publicly by the Company.
“ACO REACH Deficit Obligation” means any and all amounts owed by Company or any of its Subsidiaries in connection with the ACO REACH Model for Performance Years 2023 and earlier, including without limitation any “Shared Losses” or “Other Monies Owed” (as such
terms are defined in the ACO REACH Model Participation Agreement) and any interest assessed by CMS on such amounts pursuant to 42 C.F.R. § 405.378.
“ACO REACH Model” means the Accountable Care Organization Realizing Equity, Access and Community Health Model implemented by CMS under section 1115A of the Social Security Act.
“ACO REACH Model Participation Agreement” means the participation agreement(s), as amended, between CMS and NeueHealth Advantage ACO, LLC, NeueHealth Community ACO, LLC, NeueHealth Premier ACO, LLC and, to the extent applicable, Company and any of its other Subsidiaries for participation as an accountable care organization in the ACO REACH Model.
“Acquisition” means any transaction or series of related transactions (including without limitation by way of merger or in licensing arrangement) for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business, line of business, product line or division or other unit of operation of a Person, or (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether or not involving a merger, consolidation or similar transaction with such other Person, or otherwise causing any Person to become a Subsidiary of any Loan Party.
“Additional Borrower” means a Person that has delivered a Joinder Agreement pursuant to Section 7.13 and elected to become a ‘Borrower’ thereunder.
“Additional Guarantor” means each Person that has delivered a Joinder Agreement pursuant to Section 7.13 and elected to become a ‘Guarantor’ thereunder.
“Adjusted EBITDA” means, with respect to Company and its consolidated Subsidiaries for any period,
(a) Net Income for such period; plus
(b) without duplication and to the extent deducted in the calculation of Net Income:
(i) Interest Expense for such period; plus
(ii) total depreciation expense for such period; plus
(iii) total amortization expense for such period; plus
(iv) federal, state, local and foreign income tax expenses payable by Company and its Subsidiaries for such period; plus
(v) all non-cash expenses, losses or charges for such period (other than any such non-cash expenses, losses or charges that represent an accrual or reserve for future cash expenses, losses or charges), including, without limitation, (A) non-cash compensation charges resulting from stock options, stock appreciation rights, restricted
stock grants or other equity incentive programs, and (B) non-cash expenses, losses or charges for such period in connection with (v) non-cash impairment charges or asset write-offs or write-downs related to goodwill and long-lived assets, (w) unrealized losses resulting from mark-to-market accounting in respect of Hedging Agreements, (x) unrealized losses on equity investments, (y) increases in liabilities resulting from mark-to-market accounting in respect of securities underlying derivative securities and (z) unrealized losses on earnouts and other deferred payments (including expenses related thereto) in connection with any Permitted Investment, to the extent required to be included in the calculation of Net Income in accordance with GAAP as an accounting adjustment and to the extent that the actual amount payable or paid in respect of such earn-out or other deferred payment exceeds the liability booked by the applicable Person therefor; plus
(vi) net income (or loss) attributable to discontinued operations for such period, as determined in accordance with GAAP, provided that the aggregate amount of addbacks associated with expenses incurred by Loan Parties that are not entitled to reimbursement from the discontinued operations pursuant to this clause (b)(vi) shall not exceed (A) Five Million Dollars ($5,000,000.00) for any twelve-month period ending on or prior to March 31, 2025, or (B) Two Million Five Hundred Thousand Dollars ($2,500,000) for any twelve-month period ending thereafter, plus
(vii) to the extent expensed, transaction costs, fees and expenses for such period relating to (A) the Loan Documents paid within thirty (30) days after the Closing Date in an aggregate amount not to exceed Three Million Dollars ($3,000,000), plus (B) the negotiation and execution of any amendments, waivers and modifications to the Loan Documents after the Closing Date, plus (C) Acquisitions permitted hereunder that are incurred prior to the date that is ninety (90) days after the consummation of such Acquisition, plus any Permitted Transfer or the incurrence of Permitted Indebtedness; provided, any such addbacks for periods commencing on the Closing Date under this clause (b)(vii)(C) do not exceed Ten Million Dollars ($10,000,000) for any twelve-month period; plus
(viii) the amount of any restructuring charges or reserves (which, for the avoidance of doubt, shall include retention, severance, systems establishment cost, excess pension charges, contract termination costs, including future lease commitments, and costs to consolidate facilities and relocate employees) for such period; provided that the aggregate amount of such restructuring charges or reserves added back pursuant to this clause (b)(viii) shall not exceed Two Million Five Hundred Thousand Dollars ($2,500,000) for any twelve-month period; plus
(ix) (A) losses directly arising from the bankruptcy of the Babylon Medical Group publicly announced in August 2023, and (B) gains on troubled restructurings of Parent and its Subsidiaries; provided, that a Responsible Officer shall have provided a reasonably detailed statement or schedule of such amounts; plus
(x) cash or non-cash compensation charges resulting from long term incentive compensation granted by the Company in May 2024, in an amount not exceeding
Six Million Seven Hundred Fifty Thousand Dollars ($6,750,000) for any twelve-month period; minus
(c) the sum, without duplication of the amounts for such period, but solely to the extent increasing Net Income for such period, of:
(i) any extraordinary gains and any non-cash items of income for such period; plus
(ii) interest income; plus
(iii) software development costs and research development costs, in each case, to the extent capitalized during such period; plus
(iv) any credit for United States federal income taxes or other taxes measured by income taxes or any distribution with respect to the foregoing for such period; plus
(v) unrealized gains resulting from mark-to-market accounting in respect of Hedging Agreements; plus
(vi) capitalized lease payments for such period, so long as any such lease would be classified and accounted for as an operating lease under GAAP as applied immediately prior to January 1, 2019.
“Advance(s)” means a Term Loan Advance.
“Advance Date” means the funding date of any Advance.
“Advance Request” means a request for an Advance submitted by Borrower (or Company, on its behalf) to Agent in substantially the form of Exhibit A, which account numbers shall be redacted for security purposes if and when filed publicly by Borrower.
“Affiliate” means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question, (b) in the case of any Loan Party, (i) any Person directly or indirectly owning, controlling or holding with power to vote twenty percent (20%) or more of the outstanding voting securities of such Loan Party, or (ii) any Person twenty percent (20%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by such Loan Party with power to vote such securities, (c) in the case of any other Person other than a Loan Party, (i) any Person directly or indirectly owning, controlling or holding with power to vote a majority or more of the outstanding voting securities of such Person, or (ii) any Person a majority or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by such Person with power to vote such securities, or (d) any Person related by blood or marriage to any Person described in subsection (a), or, as applicable, (b) or (c) of this definition. As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Agent” has the meaning given to it in the Preamble.
“Agreement” means this Loan and Security Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Amortization Date” means June 1, 2027.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Loan Party or any of their respective Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
“Anti-Terrorism Laws” means any applicable laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.
“Assignee” has the meaning given to it in Section 11.14.
“Bankruptcy Code” means the federal bankruptcy law of the United States as from time to time in effect, currently as Title 11 of the United States Code. Section references to current sections of the Bankruptcy Code shall refer to comparable sections of any revised version thereof if section numbering is changed.
“Blocked Person” means: (a) any Person listed in the annex to, or that is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned fifty percent or more or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC.
“Board of Directors” means, with respect to any Person that is a corporation, its board of directors, with respect to any Person that is a limited liability company, its board of managers, managing member, board of members or similar governing body, and with respect to any other Person that is another form of a legal entity, such Person’s governing body in accordance with its Organizational Documents.
“Borrower” has the meaning given to it in the Preamble.
“Borrower Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold or that are under clinical investigation or development by any Loan Party or any of its Subsidiaries or which any Loan Party or any of their respective Subsidiaries intends to sell, license, or distribute in the future including any products or service offerings under development, collectively.
“Borrower’s Books” means Borrower’s or any Loan Party’s books and records including ledgers, records regarding any Loan Party’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.
“BHCC” means Bright Health Company of California, Inc., a California corporation.
“BHCF” means Bright Health Insurance Company of Florida, a Florida corporation.
“BHCI” means Bright Health Insurance Company of Illinois, an Illinois corporation.
“BHCT” means Bright HealthCare Insurance Company of Texas, a Texas corporation (in receivership).
“Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.
“Cash” means all cash, cash equivalents and liquid funds.
“CFC” means a Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code that is owned, within the meaning of Section 958(a) of the Code, by a United States shareholder within the meaning of Section 951(b) of the Code.
“CFC Holdco” means a Subsidiary that has no material assets other than the Equity Interests or the Equity Interests and Indebtedness or one of more CFCs or CFC Holdcos.
“Change in Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of Securities Exchange Act of 1934, as amended) excluding NEA, shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under Securities Exchange Act of 1934, as amended), directly or indirectly, of fifty percent (50.0%) or more of the ordinary voting power for the election of directors, partners, managers and members, as applicable, of Company (determined on a fully diluted basis); (b) during any period of twelve (12) consecutive months, a majority of the members of the Board of Directors of Company cease to be composed of individuals (i) who were members of that Board of Directors on the first (1st) day of such period, (ii) whose election or nomination to that Board of Directors was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that Board of Directors or (iii) whose election or nomination to that Board of Directors was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that Board of Directors; (c) NEA collectively sells, disposes or divests of twenty percent (20.0%) or more of the ordinary voting power owned or controlled by NEA as of the Closing Date for the election of directors, partners, managers and members, as applicable, of Company (determined on a fully diluted basis); or (d) at any time, Company shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding stock, partnership,
membership, or other ownership interest or other equity securities of each Subsidiary of Company (other than any Joint Venture Company or as permitted by Section 7.8 or 7.9 or as otherwise not prohibited under this Agreement) free and clear of all Liens (other than Permitted Liens).
“Charter” means, with respect to any Person, such Person’s incorporation, formation or equivalent documents, as in effect from time to time.
“Claims” has the meaning given to it in Section 11.11(a).
“Closing Date” has the meaning given to it in the Preamble.
“CMG” means Centrum Medical Group, PLLC, a professional limited liability company organized under the laws of Texas.
“CMH” means Centrum Medical Holdings, LLC, a Delaware limited liability company.
“CMS” means The Centers for Medicare and Medicaid Services, or any successor Governmental Authority thereto.
“CMS Liable Insurance Subsidiary” means (a) prior to the complete satisfaction of the CMS Settlement, BHCT, BHCF, BHCI and BHCC, and (b) thereafter, nil.
“CMS Settlement” means agreements between CMS and the Company and/or any of its Subsidiaries concerning the obligation to repay CMS for any payment obligation owed by Company and/or any of its Subsidiaries in connection with the risk-adjustment program set forth in the Public Law No. 111-148 (2010) (Patient Protection and Affordable Care Act), as amended, including as set forth in the letters titled (a) “RE: Bright HealthCare Insurance Company of Texas Repayment Plan Approval and Letter of Agreement” dated September 14, 2023 by and between CMS and BHCT, (b) “RE: Bright Health Insurance Company of Florida (BHIC-FL) Repayment Plan Approval and Letter of Agreement” dated September 14, 2023 by and between CMS and BHCF, (c) “RE: Bright Health Insurance Company of Illinois (BHIC-IL) Repayment Plan Approval and Letter of Agreement” dated September 14, 2023 by and between CMS and BHCI, and (d) “RE: Bright Health Insurance Company (BHIC-CO) Repayment Plan Approval and Letter of Agreement” dated September 14, 2023 by and between CMS and BHCC, in each case, as amended, restated, supplemented or modified from time to time. For the avoidance of doubt, the CMS Settlement is inclusive of any and all interest assessed by CMS pursuant to 45 C.F.R. § 30.18 with respect to the CMS Settlement.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” has the meaning given to it in Section 3.1.
“Collateral Agreement” means (a) any Management Agreements or any other Management Documents, and (b) in the case of a Joint Venture Company, its Organizational Documents.
“Collateral Assignment” means (a) any and all Collateral Assignments of Collateral Agreements (to which a Loan Party to party thereto) entered into by a Loan Party in favor of Agent on or about the Closing Date, as the same may be amended, restated, supplemented or otherwise modified from time to time, and (b) any Collateral Assignment of any Collateral Agreements (to which a Loan Party to party thereto) executed after the Closing Date by a Loan Party in favor of the Agent, on behalf of the Lenders in accordance with this Agreement.
“Collateral Claim” means any and all present and future “claims” (used in its broadest sense, as contemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of a Lender now or hereafter arising or existing under or relating to this Agreement and the other Loan Documents, whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a guaranty or a letter of credit, and whether arising under contract, in tort, by law, or otherwise, any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against a Loan Party under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, including reasonable attorneys’ fees and costs, and any prepayment or termination premiums.
“Company” has the meaning given to it in the Preamble.
“Compliance Certificate” means a certificate in the form attached hereto Exhibit E.
“Confidential Information” has the meaning given to it in Section 11.13.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any Indebtedness, lease (excluding operating leases of real property), dividend, letter of credit or other payment obligation of another Person, including any such payment obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed, without duplication of the primary obligation, to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise and “Controlling” and “Controlled” have meanings correlative thereto.
“Control Investment Affiliate” means, as to any Person, any other Person that (a) directly or indirectly, is in Control of, is Controlled by, or is under common Control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies.
“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by a Loan Party or in which a Loan Party now holds or hereafter acquires any interest.
“Copyrights” means all copyrights, whether registered or unregistered, arising under the laws of the United States of America or of any other country.
“Corporate Integrity Agreement” is an agreement executed by the OIG and healthcare providers and other entities as part of the settlement of federal healthcare program investigations arising under a variety of civil false claims statutes.
“Debtor Relief Laws” is the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event, circumstance or condition that has occurred or exists, that would, with the passage of time or the requirement that notice be given or both, become an Event of Default.
“Deposit Accounts” means any “deposit accounts”, as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.
“Disqualified Equity Interests” means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition (a) mature or are mandatorily redeemable (other than solely for Qualified Equity Interests) pursuant to a sinking fund obligation or otherwise on or before the date falling one hundred eighty (180) days after the Term Loan Maturity Date at the time such Equity Interests are issued (it being understood that if any such redemption is in part only such part coming into effect before one hundred eighty (180) days before the Term Loan Maturity Date shall constitute Disqualified Equity Interests) (except 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 event shall be subject to the prior repayment in full of the Secured Obligations (other than Surviving Obligations)), (b) are redeemable at the option (except 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 event shall be subject to the prior repayment in full of the Secured Obligations (other than Surviving Obligations)) of the holder thereof (other than solely for Qualified
Equity Interests), in whole or in part on or before the date falling one hundred eighty (180) days after the Term Loan Maturity Date at the time such Equity Interests are issued, (c) provide for scheduled payments of dividends in cash or cash equivalents on or before the date falling one hundred eighty (180) days after the Term Loan Maturity Date at the time such Equity Interests are issued, or (d) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is one hundred eighty (180) days after the Term Loan Maturity Date; provided that if such Equity Interests are issued pursuant to any plan for the benefit of any employee, officer, director, manager or consultant of a Loan Party, any Subsidiary thereof, or any Physician Group or by any such plan to such employee, officer, director, manager or consultant, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by a Loan Party, any Subsidiary thereof, or any Physician Group in order to satisfy applicable statutory or regulatory obligations or as a result of the termination, death or disability of such employee, officer director, manager or consultant.
“Division” means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, Section 17-220 of the Delaware Revised Uniform Limited Partnership Act for limited partnerships formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity.
“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.
“Due Diligence Fee” means Fifty Thousand Dollars ($50,000), which fee has been paid to Agent and received by Agent prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.
“End of Term Charge” has the meaning given to it in Section 2.6.
“Enforcement Action” means, with respect to any Lender and with respect to any Collateral Claim of such Lender or any item of Collateral in which such Lender has or claims a security interest lien or right of offset, any action, whether judicial or nonjudicial, to repossess, collect, accelerate, offset, recoup, give notification to third parties with respect to, sell, dispose of, foreclose upon, give notice of sale, disposition, or foreclosure with respect to, or obtain equitable or injunctive relief with respect to, such Collateral Claim or Collateral. The filing, or the joining in the filing, by any Lender of an involuntary bankruptcy or Insolvency Proceeding against a Loan Party also is an Enforcement Action.
“Equity Interests” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Event of Default” has the meaning given to it in Section 9.
“Excluded Accounts” means any of the following Deposit Accounts which are designated as such in writing to Agent as of the Closing Date or, with respect to any Deposit Account opened after the Closing Date, in the next Compliance Certificate delivered after such Deposit Account is opened: (a) Deposit Accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of a Loan Party’s employees holding an aggregate amount across all such accounts of not more than amounts needed for the then next two (2) payroll cycles, (b) any Deposit Account which is a zero-balance disbursement account, (c) any Deposit Account which is solely used for disbursements and payments of withheld income taxes, payroll taxes and/or federal, state or local employee taxes, (d) any Deposit Account which is solely used as a trust account, escrow account, or other fiduciary account, and (e) the Governmental Collection Accounts.
“Excluded Assets” has the meaning given to it in Section 3.2.
“Excluded Subsidiary” means any direct or indirect Subsidiary of any Loan Party that is (a)(i) a Foreign Subsidiary, (ii) a CFC or any Subsidiary that is a direct or indirect Subsidiary of a CFC, or (iii) a CFC Holdco, in each case to the extent that: (x) the pledge of all of the Equity Interests of such Subsidiary as Collateral, (y) the guarantee by such Subsidiary of the Secured Obligations, or (z) the execution of a Joinder Agreement by such Subsidiary, would result in material adverse tax consequences to a Loan Party (as reasonably determined by Company), (b) a non-profit corporation (including NeueHealth Networks of Texas, Inc., a Texas non-profit corporation, for so long as it remains a non-profit corporation), (c) an Insurance Subsidiary, or (d) a Joint Venture Company.
“Exclusion Event” means an event or events resulting in the exclusion of a Loan Party from participation in any Medical Reimbursement Program.
“Financial Statements” has the meaning given to it in Section 7.1.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.
“Governmental Account Debtor” means an account debtor making payments under Medicare, Medicaid, TRICARE and any other healthcare program operated by or financed in whole or in part by any federal, state or local government (but specifically excluding Medicare Advantage plans).
“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, or registration, required by or issued by or from any Governmental Authority.
“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions on behalf of any government or any court, in each case whether associated with a state or locality of the United States, the United States, or a foreign government.
“Governmental Collection Account” means any bank account in the name of a Loan Party, Subsidiary thereof or any Physician Group which collects the proceeds of any accounts owing from Governmental Account Debtors.
“Governmental Healthcare Receivables” means any and all rights to payment from Medicare, Medicaid, TRICARE and any other health care program operated by or financed in whole or in part by any federal, state or local government (but specifically excluding Medicare Advantage plans).
“Guarantor” means Original Guarantor or an Additional Guarantor.
“Guaranty” means the guarantee of the Secured Obligations provided by the Guarantors under Section 12.
“Healthcare Laws” means all applicable healthcare and health insurance Requirements of Law governing the operations, activities or services of the business of the Loan Parties or any Subsidiary, including without limitation: (a) all applicable Requirements of Law relating to: (i) billing and collection and utilization review practices relating to the payment for and provision of healthcare services, or (ii) operation and management of a managed care entity, an accountable care organization, independent practice association or equivalent provider network organization, value-based enterprise, risk-bearing entity, risk-sharing models or equivalent models that engage in provider rate negotiation or provider network development, including 42 C.F.R. Part 425, the ACO REACH Model Participation Agreement and other mandatory guidance and instructions for the ACO REACH Model, and applicable healthcare and insurance Requirements of Law related to the same; (b) all applicable Requirements of Law governing the corporate practice of medicine, patient brokering, patient healthcare, patient abuse, clinical personnel and fee splitting, (c) all applicable federal and state fraud and abuse laws, including, the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(b)), the Stark Law (42 U.S.C. §1395nn), the civil False Claims Act (31 U.S.C. §3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), the exclusion laws (42 U.S.C. § 1320a-7), and the Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a); (d) HIPAA; 42 CFR Part 2, and any applicable equivalent state counterpart thereof the purpose of which is to ensure the privacy and security of individually identifiable health information or patient healthcare information; (e) applicable Requirements of Laws governing government healthcare programs, including the Medicare Regulations and the Medicaid Regulations; (f) applicable Requirements of Law regulating pharmacies and the practice of pharmacy; (g) applicable state controlled substance Requirements of Law, the Controlled Substances Act, 21 U.S.C. § 801 et seq.; (h) the Clinical Laboratory Improvement Act (42 U.S.C. §§ 263a et seq.); (i) applicable Requirements of Law regulating the provision of free or discounted healthcare or health services; (j) healthcare quality
and safety Requirements of Law of HHS and other applicable state Governmental Authorities; (k) all applicable Requirements of Law pursuant to which Healthcare Permits are issued; each of (a) through (k) as may be amended from time to time and the regulations promulgated pursuant to each such law.
“Healthcare Permit” means all Governmental Approvals, variances, certifications, or other authorization or approval by a Governmental Authority required under Healthcare Laws applicable to the business of a Loan Party.
“Hedging Agreement” means any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect Company or its Subsidiaries against fluctuation in interest rates, currency exchange rates or commodity price.
“Hercules” has the meaning given to it in the Preamble.
“HHS” has the meaning set forth in the definition of “OIG.”
“HIPAA” means, collectively, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic Clinical Health (HITECH) Act and the implementing regulations thereto.
“Indebtedness” means, without duplication: (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within ninety (90) days), including reimbursement and other obligations with respect to surety bonds, banker’s acceptances or similar instruments and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, (d) all obligations to purchase, redeem, retire or defease Disqualified Equity Interests, (e) “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature arising out of purchase and sale contracts (to the extent such obligation is reflected as a liability on the balance sheet in accordance with GAAP (other than those arising in the ordinary course of business, and excluding (i) customary indemnification obligations in connection with Permitted Transfers or Permitted Investments, and (ii) ordinary course compensation related arrangements entered into with any physician group), (f) net obligations in respect of Hedging Agreements, (g) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, and (h) all Contingent Obligations (in the case of letters of credit, to the extent drawn upon).
“Indemnified Person” has the meaning given to it in Section 6.3.
“Information Privacy and Security Laws” means all Requirements of Law applicable to the Loan Parties’ business that regulate the privacy, security, collection, storage, use, disclosure, retention, transfer or processing of Personal and Protected Information, and all regulations promulgated thereunder, including, the Genetic Information Nondiscrimination Act of 2008 (42 U.S.C. § 2000ff) and its implementing regulations, the Federal Trade Commission Act, including the Health Breach Notification Rule (16 C.F.R. Part 318), the CAN-SPAM Act, the
Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, state data security laws, state genetic information laws, state social security number protection laws, state consumer protection laws, state data breach notification laws, and applicable laws concerning minimum security requirements or requirements for website privacy policies and practices, call or electronic monitoring or recording or any outbound communications (including outbound calling and text messaging, telemarketing, and e-mail marketing). For the avoidance of doubt, Information Privacy and Security Laws do not include Healthcare Laws.
“Initial Facility Charge” means Three Hundred Thousand Dollars ($300,000), which is payable to Lenders in accordance with Section 4.1(i).
“Insolvency Proceeding” means any proceeding by or against any Person under the United States Bankruptcy Code, or any other federal or state bankruptcy, liquidation, rehabilitation, conservation, moratorium, receivership, or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, administration, arrangement, receivership or other similar relief proceedings in the applicable jurisdiction from time to time in effect and affecting the rights of creditors generally.
“Insurance Business” means the business conducted by each Insurance Subsidiary, including without limitation with respect to any commercial health plans or prescription drug plans, Medicare Advantage and/or Medicare Part D prescription drug benefit products, Medicaid managed care plans or similar agreements with State Medicaid agencies, and other managed care, insurance and health benefit programs and administrative services, offered through, by or on behalf of any such Insurance Subsidiary.
“Insurance Subsidiary” means each of the Company’s Affiliates listed in Annex C attached hereto.
“Intellectual Property” means all of a Loan Party’s Copyrights, Trademarks, Patents, in-bound Licenses, trade secrets and inventions, and mask works, all of a Loan Party’s applications therefor and reissues, extensions, or renewals thereof, together with such Loan Party’s rights to sue for past, present and future infringement of Intellectual Property.
“Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date between Loan Parties party thereto and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.
“Interest Expense” means for any period, total cash interest expense (including that attributable to capital lease obligations) of Company and its consolidated Subsidiaries for such period with respect to all outstanding Indebtedness of such Persons (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedging Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).
“Investment” means (a) any beneficial ownership (including stock, partnership interests, limited liability company interests, or other equity securities or ownership interests) of or in any Person, (b) any loan, advance or capital contribution to any Person or (c) any Acquisition.
“IRS” means the United States Internal Revenue Service.
“Joinder Agreements” means for each Subsidiary required to join as an Additional Borrower or a Guarantor pursuant to Section 7.13, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.
“Joint Venture Company” means (a) any Subsidiary of Company from time to time that is a bona fide joint venture that is (i) involved in the same or similar line of business as the Loan Parties, and (ii) not created for the primary purpose to avoid such Subsidiary’s obligation to grant a Lien over its Collateral, nor to release any Loan Party from such obligations, which as of the Closing Date includes the Company’s Affiliates listed in paragraph 1 of Annex B attached hereto, and (b) any Subsidiary of any of the foregoing Persons, which as of the Closing Date includes the Company’s Affiliates listed in paragraph 2 of Annex B attached hereto.
“Joint Venture Counterparty” means (a) in relation to PMAF, PMA II, LLC, a Delaware limited liability company, (b) in relation to CMH, RRD Healthcare, LLC, a Florida limited liability company, or (c) in relation to any other Joint Venture Company (excluding Persons falling under clause (b) of the definition of Joint Venture Company), each holder of its Equity Interests other than Company or its Subsidiaries.
“Lenders” has the meaning given to it in the Preamble.
“Liabilities” has the meaning given to it in Section 6.3.
“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests in Intellectual Property.
“Licensed Personnel” means any Person (including any physician or other healthcare professional) employed or contracted by a Loan Party, any Subsidiary of a Loan Party, or a Physician Group who is required by any Governmental Authority to maintain a healthcare or health insurance licensure or certification to perform the business of insurance or the delivery, administration, or management of health care or medical items, services or supplies.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.
“Loan” means the Advances made under this Agreement.
“Loan Documents” means this Agreement (including any schedules and exhibits thereto), the Collateral Assignments any promissory note delivered by a Loan Party to any Lender to evidence Advances (if any), the ACH Authorization, the Account Control Agreements, any
Joinder Agreement, all UCC Financing Statements, the Subordination Agreement, the Pledge Agreement, the Intellectual Property Security Agreement, and any other documents executed by a Loan Party in favor of the Agent or any Lender in connection with the foregoing, as the same may from time to time be amended, modified, supplemented or restated but in all cases excluding the Warrant.
“Loan Party” means a Borrower or a Guarantor.
“Management Agreements” means, collectively, any business support services agreement or similar management or professional services agreement, including all exhibits thereto (including, without limitation, all HIPAA business associate agreements), between a Loan Party or any of its Subsidiaries and a Physician Group pursuant to which such Loan Party or Subsidiary provides certain administrative services to such Physician Group in connection with the provision by such Physician Group of medical or related services to their respective clinic clients.
“Management Documents” means, collectively, the Management Agreements and any stock transfer restriction agreements, succession agreements, membership interest transfer restriction agreements or option agreements (including any replacement agreements of the same) between a Loan Party or any of its Subsidiaries and a Physician Group and all other agreements, documents, schedules, exhibits, and instruments attached thereto, and to which such Loan Party or Subsidiary is a party or which was executed for the benefit of such Loan Party or Subsidiary, in each case, as in effect as of the Closing Date, or entered into thereafter in accordance with the terms of this Agreement, and as amended, restated, supplemented or otherwise modified from time to time as permitted by the terms of this Agreement. Including, but not limited to, any revolving credit agreements or security agreements.
“Margin Stock” means any “margin stock” as defined in Regulation U.
“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Loan Parties, Subsidiaries of the Loan Parties, or the Physician Group, taken as a whole; or (ii) the ability of the Loan Parties (taken as a whole) to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or (iii) the ability of Agent or Lenders to enforce any material portion of their respective rights or remedies, taken as a whole, with respect to the Secured Obligations; or (iv) a material part of the Collateral or Agent’s Liens on the Collateral or the priority of such Liens other than, in the case of the preceding clause (iii) and this clause (iv), to the extent resulting solely from any actions or inactions on the part of Agent and/or any Lender (where applicable, despite timely receipt of information regarding any Loan Party as required by this Agreement).
“Material Agreement” means any agreement or other contractual arrangement, the termination of which before the end of its stated term would be reasonably expected to result in a Material Adverse Effect, individually or in the aggregate.
“Maximum Rate” has the meaning given to it in Section 2.3.
“Maximum Term Loan Amount” means One Hundred Fifty Million and No/100 Dollars ($150,000,000).
“Medicaid” means that means-tested entitlement program under Title XIX of the Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility criteria, as set forth at Section 1396, et seq. of Title 42 of the United States Code, as amended, and any statute succeeding thereto.
“Medicaid Regulations” means, collectively, (i) all federal statutes (whether set forth in Title XIX of the Social Security Act or elsewhere) affecting the medical assistance program established by Title XIX of the Social Security Act and any statutes succeeding thereto; (ii) all applicable provisions of all federal regulations, and orders of all federal Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (i) above; and (iii) all state statutes, and plans for medical assistance enacted in connection with the statutes and provisions described in clauses (i) and (ii) above; and (iv) all applicable provisions of all state regulations and orders of all state Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (iii) above, in each case as may be amended, supplemented or otherwise modified from time to time.
“Medical Reimbursement Programs” means a collective reference to Medicare, Medicaid and any other healthcare program operated by or financed in whole or in part by any domestic federal, state or local government and any other non-government funded third party payor programs.
“Medicare” means that government-sponsored entitlement program under Title XVIII of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at 42 U.S.C. Section 1395, et seq., as amended, and any statute succeeding thereto.
“Medicare Advantage” has the meaning assigned to such term in the Medicare Regulations.
“Medicare Regulations” means, collectively, (i) all federal statutes (whether set forth in Title XVIII of the Social Security Act or elsewhere) affecting the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act and any statutes succeeding thereto; and (ii) all applicable provisions of all regulations, manuals, bulletins, and orders promulgated by the applicable Governmental Authorities (including the Centers for Medicare & Medicaid Services (“CMS”), the OIG, HHS, or any Governmental Authority that is a successor agency to CMS, OIG or HHS) pursuant to the statutes described in clause (i) above or otherwise having the force of law, as each may be amended, supplemented or otherwise modified from time to time.
“MPHC” means Medical Practice Holding Company, LLC, a Delaware limited liability company.
“MPHC II” means Medical Practice Holding Company II, LLC, a Delaware limited liability company
“NEA” means NEA Management Company, LLC, a Delaware limited liability company and its Control Investment Affiliates.
“NEA Credit Agreement” means that certain Credit Agreement, dated as of August 4, 2023, by and among Company, NEA 18 Venture Growth Equity, L.P., a Delaware limited partnership, and the other financial institutions from time to time party thereto, as amended, restated, supplemented or modified from time to time.
“Net Income” means for any period, the consolidated net income (or loss) of Company and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from the calculation of “Net Income” (a) the income (or deficit) of any such Person accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or one of its Subsidiaries, (b) the income (or deficit) of any such Person (other than a Subsidiary of Company) in which Company or one of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by Company or such Subsidiary in the form of dividends or similar distributions, and (c) the undistributed earnings of any Subsidiary of Company to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.
“Non-Disclosure Agreement” means that certain Confidentiality Agreement by and between the Company and Hercules Capital, Inc., a Maryland corporation, dated as of February 16, 2024.
“OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained by OFAC pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.
“OIG” means The Office of Inspector General of the United States Department of Health and Human Services (“HHS”) and any successor thereof.
“Organizational Documents” means with respect to any Person, such Person’s Charter, and (a) if such Person is a corporation, its bylaws, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto, and (d) if such Person is a Joint Venture Company, its shareholders agreements, joint venture agreements or similar binding agreements relating to any Joint Venture Company.
“Original Borrower” means each of the Company’s Affiliates listed on Annex A attached hereto.
“Original Guarantor” means NEUEHEALTH PARTNERS TEXAS RBE, LLC, a Delaware limited liability company.
“Participant Register” has the meaning given to it in Section 11.8.
“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement a Loan Party now holds or hereafter acquires any interest.
“Patents” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country.
“Payment Date” has the meaning given to it in Section 2.2(e).
“Perfection Certificate” means each completed certificate entitled “Perfection Certificate”, dated as of the Closing Date, delivered by Company to Agent and Lenders, signed by Company (as amended pursuant to the terms of this Agreement).
“Permitted Indebtedness” means:
(i)Indebtedness of Borrower in favor of any Lender or Agent arising under this Agreement or any other Loan Document;
(ii)Indebtedness existing on the Closing Date which is disclosed in Schedule 1A;
(iii)Indebtedness in an aggregate principal amount of up to Four Million Dollars ($4,000,000) outstanding at any time secured by a Lien described in clause (vii) of the defined term of “Permitted Liens,” provided such Indebtedness does not exceed the cost of the Equipment, software or other Intellectual Property financed with such Indebtedness;
(iv)Indebtedness to trade creditors incurred in the ordinary course of business (not more than one hundred twenty (120) days overdue);
(v)Indebtedness incurred in the ordinary course of business (A) with corporate credit cards, credit card processing services, employee credit card programs, debit cards, stored value cards, purchase cards (including so “P-cards”) or other similar cash management services in an aggregate principal outstanding amount not to exceed Two Million Dollars ($2,000,000) at any time, and (B) in respect of netting services, overdraft protections, automatic clearinghouse arrangements, and other cash management and similar arrangements;
(vi)Indebtedness that also constitutes a Permitted Investment or is secured by a Permitted Lien;
(vii)Subordinated Indebtedness, including for the avoidance of doubt any Indebtedness arising under the NEA Credit Agreement that is subject to the terms of a Subordination Agreement;
(viii)[reserved];
(ix)other Indebtedness in an aggregate principal amount not to exceed Two Million Dollars ($2,000,000) at any time outstanding, provided that the aggregate principal amount of such Indebtedness secured by a Permitted Lien shall not exceed Zero Dollars ($0) prior to the complete satisfaction of the CMS Settlement and the ACO REACH Deficit Obligation, and thereafter, shall not exceed One Million Dollars ($1,000,000);
(x)Indebtedness between or among a Loan Party, any Subsidiary of a Loan Party and any Physician Group, other than any Indebtedness owed by a Loan Party to the Original Guarantor; provided, that such Indebtedness is unsecured and otherwise permitted as a Permitted Investment;
(xi)intercompany Indebtedness of any Loan Party owing to another Loan Party (other than Original Guarantor);
(xii)Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;
(xiii)Indebtedness consisting of financing of insurance premiums in the ordinary course of business;
(xiv)Indebtedness in respect of netting services, overdraft protection and similar arrangements in connection with deposit or securities accounts in the ordinary course of business;
(xv)Indebtedness consisting of (i) guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds, bid bonds, appeal bonds, completion guarantees, letters of credit and similar obligations, (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, entered into in the ordinary course of business, and (iii) guarantees with respect to Indebtedness of any Loan Party, any Physician Group or any of their respective Subsidiaries, to the extent that such Person that is obligated under such guaranty could have incurred such underlying Indebtedness;
(xvi)Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;
(xvii)extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased, other than the amount of accrued interest, fees and premiums, if any, or the terms modified to impose materially more
burdensome terms upon any Loan Party or Physician Group or their respective Subsidiaries, as the case may be, and subject to any limitations on the aggregate amount of such Indebtedness;
(xviii)accrued expenses, deferred rent expense, deferred revenue, deferred Taxes and deferred compensation and customary obligations under employment arrangements in each case incurred in the ordinary course of business;
(xix)customary payables with respect to money orders or wire transfers;
(xx)the mark-to-market value of obligations under any Hedging Agreements incurred in the ordinary course of business;
(xxi)Indebtedness in respect of the CMS Settlement, so long as the Indebtedness under this clause (xxi) does not at any time exceed Two Hundred Eighty Million Dollars ($280,000,000), plus the amount of accrued payment-in-kind interest, so long as the rate of such payment-of-kind interest is no greater than such rate as of the Closing Date; and
(xxii)Indebtedness in respect of the ACO REACH Deficit Obligation, so long as the Indebtedness under this clause (xxii) does not exceed Eighty Million Dollars ($80,000,000) at any time.
“Permitted Investment” means:
(i)Investments existing on the Closing Date which are disclosed in Schedule 1B;
(ii)(A) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (B) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (C) certificates of deposit issued by any bank with assets of at least Five Hundred Million Dollars ($500,000,000) maturing no more than one year from the date of investment therein, and (D) money market accounts;
(iii)repurchases or redemptions of stock of Company from its former or existing employees, officers, directors or consultants and of any physician investors in a Physician Group under the terms of applicable repurchase agreements or similar agreements at the original issuance price, or the then-current market value, of such securities which are (A) paid in full from proceeds of sale of Company’s Qualified Equity Interests, (B) satisfied by issue of Subordinated Indebtedness to such Persons, (C) paid in Cash with the prior written consent of Agent in Agent’s sole and absolute discretion, or (D) in an amount not to exceed Zero Dollars ($0) (or after the complete satisfaction of the CMS Settlement and the ACO REACH Deficit Obligation, Three Million Dollars ($3,000,000)) during the term of
this Agreement, provided that no Event of Default has occurred and is continuing or would exist after giving effect to the repurchases under this clause (D);
(iv)Investments in connection with Permitted Transfers;
(v)Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of a Loan Party’s business;
(vi)Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subsection (vi) shall not apply to Investments of any Loan Party in any Subsidiary of a Loan Party;
(vii)Investments consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Company pursuant to employee stock purchase plans or other similar agreements approved by Company’s Board of Directors;
(viii)Investments consisting of: (A) travel advances and employee relocation loans in the ordinary course of business, and (B) loans to employees, officers, managers or directors relating to the purchase of equity securities of Company pursuant to employee stock purchase plans or agreements approved by Company’s Board of Directors or similar governing body; not to exceed One Million Dollars ($1,000,000) in the aggregate for (A) and (B), collectively, at any time;
(ix)Investments (A) by a Loan Party in or to another Loan Party (other than Original Guarantor), and (B) by any Loan Party in any Subsidiaries (other than Excluded Subsidiaries), provided that each such Subsidiary enters into a Joinder Agreement in accordance with Section 7.13;
(x)joint ventures or strategic alliances in the ordinary course of a Loan Party’s business consisting of the nonexclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by the Loan Parties do not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any fiscal year;
(xi)advances to Physician Groups in an amount not to exceed (A) an approximate amount necessary to fund payroll, real estate leases, fees and other operating expenses for a two (2) month period, and (B) amounts of accrued management fees in accordance with the Management Agreements;
(xii)advances to or Investments in any Joint Venture Company in the ordinary course of business, so long as the advances and Investments made pursuant to this clause (xii) does not at any time exceed the sum of all dividends and other distributions made by the Joint Venture Companies to the Loan Parties (excluding all costs, Taxes and other
deductions payable with respect to such distributions) in the trailing three-month period ending on the last day of the most recently ended calendar month;
(xiii)Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of the Loan Parties;
(xiv)Investments consisting of Deposit Accounts permitted by this Agreement;
(xv)to the extent constituting Investments, (A) Permitted Transfers, and (B) transactions permitted under clauses (v)(B),(xi),(xiii), (xiv) and (but only in relation to the preceding clauses) (xvii) of the definition of Permitted Indebtedness;
(xvi)Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business;
(xvii)additional Investments that do not exceed One Million Dollars ($1,000,000) in the aggregate at any time outstanding;
(xviii)to the extent constituting Investments, deposits made in connection with the occurrence of actions permitted under clause (vi), (xii) and (xiv) of the definition of Permitted Liens;
(xix)Investments by a Specified Investment Subsidiary (A) that are contributed, directly or indirectly, to another Insurance Subsidiary for application towards discharge of the CMS Settlement, or (B) with the prior written consent of Agent; provided that, in each case, such Investment is permitted by an insurance regulatory authority under applicable insurance regulatory laws;
(xx)Investments by an Insurance Subsidiary in accordance with its investment policy and consistent with past practice, so long as such investment policy (A) has been approved by its Board of Directors, (B) is consistent with applicable law, and (C) is in effect as of the Closing Date, or has been amended, restated, supplemented or otherwise modified with the prior written consent of Agent, acting in its sole discretion; and
(xxi)Investments in or acquisitions of any medical clinic or Physician Group in an aggregate amount, less the aggregate amount of Cash and accounts receivable of such medical clinic or Physician Group, not to exceed Three Million Dollars ($3,000,000) in any fiscal year of Company.
“Permitted Liens” means:
(i)Liens in favor of Agent or Lenders;
(ii)Liens existing on the Closing Date which are disclosed in Schedule 1C;
(iii)Liens for Taxes, fees, assessments or other governmental charges or levies, either not yet due or that are being contested in good faith by appropriate proceedings diligently conducted; provided, that adequate reserves are maintained therefor on Borrower’s Books in accordance with GAAP;
(iv)Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;
(v)Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder;
(vi)the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds;
(vii)Liens on Equipment or software or other intellectual property constituting purchase money Liens and other Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;
(viii)Liens incurred in connection with Subordinated Indebtedness;
(ix)leasehold interests in leases or subleases and licenses (other than with respect to Licenses not constituting a Permitted Transfer) granted in the ordinary course of business and not interfering in any material respect with the business of the licensor;
(x)Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due;
(xi)Liens on insurance proceeds securing the payment of financed insurance premiums that are paid on or before the date they become due and payable (provided that such Liens extend only to such insurance proceeds and not to any other property or assets);
(xii)statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms;
(xiii)easements, servitudes, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property;
(xiv)(A) Liens on Cash securing obligations permitted under clause (viii) of the definition of “Permitted Indebtedness” securing a principal amount of up to 105% of the amount of such Indebtedness, (B) security deposits in connection with real property leases entered into in the ordinary course of business, and (C) Liens securing Indebtedness under clause (xv)(ii) of the definition of “Permitted Indebtedness” securing a principal amount of up to 105% of the amount of such Indebtedness;
(xv)Liens that qualify as Permitted Transfers;
(xvi)Liens imposed by Requirements of Law or deposits to secure the performance of bids, tenders, trade contracts (other than for borrowed money), leases (including leases, sub-leases and licenses of real property), government contracts, statutory obligations, surety, stay, customs and appeal bonds, performance and return of money bonds and other obligations of a like nature incurred in each case in the ordinary course of business;
(xvii)Liens arising from precautionary UCC financing statements relating to operating leases, finance leases and similar arrangements;
(xviii)Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (i) through (xviii) above; provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any payment thereon) does not increase;
(xix)Liens securing obligations to vendors entered into in the ordinary course of business; provided that (A) such Liens attach to specific, and not substantially all of the, assets of Company or, as applicable, its Subsidiary, and the aggregate principal amount of outstanding Indebtedness or other obligations secured by such Liens does not exceed Two Hundred Fifty Thousand Dollars ($250,000); and
(xx)Liens securing obligations under clause (xv) of the definition of Permitted Indebtedness.
“Permitted Transfers” means:
(i)sales of Inventory in the ordinary course of business;
(ii)licenses and similar arrangements for the use of or otherwise granting any right under any Intellectual Property in the ordinary course of business on an arms’ length basis, including in connection with business development transactions, co-development or co-promotion transactions, collaborations, licensing, partnering or similar transactions with third parties and that are entered into with commercially reasonable terms, that are not
exclusive or could not reasonably result in a legal transfer of title of the licensed property, that may be exclusive in respects other than territory or may be exclusive as to territory but only as to discrete geographical areas outside of the United States of America in the ordinary course of business;
(iii)Transfers by and among Loan Parties (other than a Transfer by a Loan Party to Original Guarantor);
(iv)Transfers constituting the making of Permitted Investments, or the granting of Permitted Liens;
(v)dispositions of worn-out, obsolete or surplus Equipment in the ordinary course of business;
(vi)the abandonment, cancellation, allowing to lapse, or other disposition of Trademarks or Trademark Licenses that are no longer used or useful to the Insurance Business of the Loan Parties or are no longer economically practicable to maintain;
(vii)to the extent constituting Transfers, Transfers in connection with Permitted Indebtedness, Permitted Liens, Permitted Investments and as contemplated under Sections 7.7, 7.9 and 7.23;
(viii)leasing or subleasing assets in the ordinary course of business;
(ix)settlement or write-off of accounts receivable or sale, discount or compromise of overdue accounts receivable for collection in the ordinary course of business consistent with past practice;
(x)other Transfers of assets having a fair market value of not more than One Million Dollars ($1,000,000) in the aggregate in any fiscal year; and
(xi)any transfers required pursuant to the terms of any Organizational Documents of any Joint Venture Company as in effect on the Closing Date, as amended, supplemented or otherwise modified from time to time to the extent in a manner that is not materially adverse to the interests of the Lenders in their capacities as such.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.
“Personal and Protected Information” shall mean any information, in any form, that: (i) is collected, used, disclosed, processed, or retained by a Loan Party with respect to such Loan Party’s business and is protected as “personal information,” “personal data,” “personally identifiable information” or an equivalent term under a contract to which a Loan Party is a party, including information regarding any of the Loan Party’s business’ customers, suppliers, employees, and agents, that relates to an identifiable individual person such as an individual’s name, address, age, gender, identification number, income, family status, citizenship, employment, assets,
liabilities, source of funds, payment records, or credit information; or (ii) is governed, regulated or protected by one or more Information Privacy and Security Laws. For the avoidance of doubt, Personal and Protected Information does not include information governed by Healthcare Laws.
“Physician Group” means each of (a) Associates MD Medical Group, Inc., a Delaware corporation, (b) PMAFH, (c) CMG, and (d) any other professional corporation, professional limited liability company or other professional practice entity, from time to time party to a Management Document, of which Agent has been duly notified and the terms of which comply with the requirements set forth in this Agreement.
“Pledge Agreement” means the Pledge Agreement dated as of the Closing Date between each Loan Party thereto and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.
“PMAF” means Premier Medical Associates of Florida, LLC, a Delaware limited liability company.
“PMAFH” means Premier Medical Associates of Florida Healthcare, P.A., a professional association organized under the laws of the state of Delaware
“Prepayment Charge” has the meaning given to it in Section 2.5.
“Prime Rate” means the “prime rate” as reported in The Wall Street Journal or any successor publication thereto.
“Publicity Materials” has the meaning given to it in Section 11.19.
“Qualified Cash” means an amount equal to (a) the aggregate amount of each Loan Party’s unrestricted Cash held in accounts in the United States subject to an Account Control Agreement in favor of Agent, minus (b) the Qualified Cash Payables Amount.
“Qualified Cash Payables Amount” means the amount of the Loan Parties’ trade payables under GAAP not paid after the 90th day following the invoice for such account payable.
“Qualified Equity Interests” means any Equity Interests that are not Disqualified Equity Interests.
“Receivables” means (i) all of the Loan Parties’ Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.
“Register” has the meaning given to it in Section 11.7.
“Regulation T” means Regulation T of the Federal Reserve Board.
“Regulation U” means Regulation U of the Federal Reserve Board.
“Regulation X” means Regulation X of the Federal Reserve Board.
“Remaining Term PIK Toggle Election” means the Company’s election, which may be made at any time after the Year-1 PIK Toggle Period, upon which election (a) up to two and one-half of one percent (2.50%) of Term Loan PIK Interest then accrued (as elected by Company) shall be transferred to Term Loan Cash Interest (such percentage, the “Remaining Toggled Percentage”), (b) the Term Loan Cash Interest Rate shall be increased by the percentage equal to the Remaining Toggled Percentage for such period on a one-to-one percentage point basis, and (c) the Term Loan PIK Interest Rate shall be reduced by the percentage equal to the Remaining Toggled Percentage for the same period on a one-to-one percentage point basis.
“Remaining Toggled Percentage” has the meaning as set forth in the definition of “Remaining Term PIK Toggle Election.”
“Required Lenders” means at any time, the holders of more than fifty percent (50%) of the sum of the aggregate unpaid principal amount of the Term Loans then outstanding.
“Restricted License” means any material License or other agreement with respect to which a Loan Party is a party that prohibits or otherwise restricts such Loan Party from granting a security interest in such Loan Party’s interest in such License or agreement or any other property.
“Responsible Officer” is any of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Legal Officer, Secretary or Controller of Company.
“Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities), in each case that are applicable to and binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Rights to Payment” has the meaning given to it in Section 3.1.
“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of any comprehensive Sanctions (including Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, and the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) regions of Ukraine).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained OFAC or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those
administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or His Majesty’s Treasury of the United Kingdom.
“Secured Obligations” means Borrower’s payment, reimbursement or other monetary obligations under this Agreement and any Loan Document (other than the Warrant), including any obligation to pay any amount now owing or later arising.
“Specified Insurance Subsidiary” means an Insurance Subsidiary that is not a CMS Liable Insurance Subsidiary.
“Specified Physician Group” means each Physician Group party to a Management Agreement with any Loan Party or any Subsidiary other than a Joint Venture Company or any direct or indirect subsidiary of a Joint Venture Company.
“State Regulatory Capital” has the meaning given to it in Section 7.1(o).
“Stock Purchase Agreement” means that certain Stock Purchase Agreement dated June 29, 2023 by and among Molina Healthcare, Inc., a Delaware corporation (“Molina”), BHCC, Central Health Plan of California, Inc., a California corporation (“CHP”), Universal Care, Inc. d/b/a Brand New Day, a California corporation (“BND”) and the Company, pursuant to which, among other things, BHCC sold all of its shares of capital stock in CHP and BNP to Molina, as amended by that certain Amendment to Stock Purchase Agreement dated December 13, 2023 by and among Molina, BHCC, CHP, BND and the Company, and as the same is in effect on the Closing Date (or as further amended, restated, supplemented or otherwise modified from time to time with the prior written consent of Agent (not to be unreasonably withheld, conditioned or delayed to the extent such amendment is not adverse to Agent or Lenders)).
“Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations (a) on terms and conditions substantially consistent with the terms of the Subordination Agreement referred to in clause (a) of the definition of Subordination Agreement, or (b) otherwise, satisfactory to Agent in its reasonable discretion and subject to a Subordination Agreement in form and substance satisfactory to Agent in its sole discretion.
“Subordination Agreement” means (a) that certain subordination agreement among the Loan Parties, Agent and the creditors to the NEA Credit Agreement dated as of the Closing Date, and (b) any other subordination agreement entered into after the Closing Date between the Loan Parties, Agent and any creditor party to Subordinated Indebtedness after the Closing Date, in each case, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Subsequent Financing” means the closing of any financing by issue of Qualified Equity Interests of Company which is broadly marketed to multiple investors and becomes effective after the Closing Date.
“Subsidiary” means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which a Loan Party owns or controls, either directly or indirectly, fifty percent (50.0%) or more of the outstanding voting securities, including each entity
listed on Annex 1 hereto; provided, that (a) no Physician Group shall be deemed to be a Subsidiary of a Loan Party for purposes of this Agreement, and (b) each Joint Venture Company shall be deemed to constitute a Subsidiary.
“Surviving Obligations” means Secured Obligations that are inchoate indemnity obligations, inchoate reimbursement obligations and/or other obligations which, by their terms, are to survive the termination of this Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1 Commitment”, “Tranche 2 Commitment”, “Tranche 3 Commitment” or “Tranche 4 Commitment”, as the case may be, opposite such Lender’s name on Schedule 1.1.
“Term Loan” means any Term Loan Advance made under this Agreement.
“Term Loan Advance” means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3 Advance, Tranche 4 Advance and any other funds advanced under Section 2.2(a).
“Term Loan Cash Interest” means the amount (if any) of interest accrued in respect of any Advances pursuant to the Term Loan Cash Interest Rate.
“Term Loan Cash Interest Rate” means, for any day, a per annum rate of interest equal to the greater of (a) (i) the Prime Rate plus (ii) one and three-twentieths of one percent (1.15%), and (b) nine and thirteen-twentieths of one percent (9.65%).
“Term Loan Maturity Date” means June 1, 2028; provided that if such day is not a Business Day, the Term Loan Maturity Date shall be the immediately subsequent Business Day.
“Term Loan PIK Interest” means the amount (if any) of interest accrued pursuant to the Term Loan PIK Interest Rate added to principal pursuant to Section 2.1(d)(ii).
“Term Loan PIK Interest Rate” means, for any day, a per annum rate of interest equal to two and one-half of one percent (2.50%).
“Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by a Loan Party or in which a Loan Party now holds or hereafter acquires any interest.
“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States
of America, any State thereof or any other country or any political subdivision thereof, and all goodwill associated therewith or symbolized thereby.
“Tranche” means the Tranche 1 Advance, Tranche 2 Advance, Tranche 3 Advance, and/or Tranche 4 Advance, as applicable.
“Tranche 1 Advance” has the meaning given to it in Section 2.2(a).
“Tranche 1 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading Tranche 1 Commitment opposite such Lender’s name on Schedule 1.1.
“Tranche 2 Advances” has the meaning given to it in Section 2.2(a).
“Tranche 2 Availability Period” means the period commencing on the Tranche 2 Milestone Date and ending on December 31, 2024.
“Tranche 2 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading Tranche 2 Commitment opposite such Lender’s name on Schedule 1.1.
“Tranche 2 Milestone Date” means the later of (a) November 10, 2024 and (b) the first date on which (i) the Company has achieved the “Consolidation Condition” or the “2025 Stars Condition”, in each case, as defined in the Stock Purchase Agreement, and (ii) there has been no material adjustments to the expected payment amount of the “Consolidation and Adjustment Escrow Amount” (as defined in the Stock Purchase Agreement) after giving effect to the “CHP Enrollee Adjustment” (as defined in the Stock Purchase Agreement), if any; in each case, based upon written evidence provided to, reviewed and approved by Agent in its reasonable discretion.
“Tranche 3 Advances” has the meaning given to it in Section 2.2(a).
“Tranche 3 Availability Period” means the period commencing on the Tranche 3 Milestone Date and ending on September 15, 2025. Notwithstanding the generality of the foregoing, following Company’s written request and conditioned on approval by the Lenders’ investment committee in its sole discretion, the Tranche 3 Availability Period may commence on such earlier date as the Agent shall designate in writing.
“Tranche 3 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading Tranche 3 Commitment opposite such Lender’s name on Schedule 1.1.
“Tranche 3 Milestone Date” means the later of (a) February 15, 2025 and (b) the first date on which (i) the Company has satisfied in full the CMS Settlement and the ACO REACH Deficit Obligation, and (ii) after giving effect to the aforementioned clause (i) and the draw down in full of the available Tranche 3 Advances, the Loan Parties maintain Qualified Cash in an amount greater than or equal to Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000); in
each case, based upon written evidence provided to, reviewed and approved by Agent in its reasonable discretion.
“Tranche 4 Advances” has the meaning given to it in Section 2.2(a).
“Tranche 4 Availability Period” means the period commencing on the Closing Date and ending on the Amortization Date.
“Tranche 4 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading Tranche 4 Commitment opposite such Lender’s name on Schedule 1.1.
“Tranche Facility Charge” means with respect to any Tranche 2 Advance, Tranche 3 Advance or Tranche 4 Advance, one percent (1.00%) of such Advance, which is payable, in each case, to Lenders in accordance with Section 4.2(d).
“Transfer” has the meaning given to it in Section 7.8.
“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of New York; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of New York, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
“Undrawn Commitment” means as to any Lender, the sum of (a) such Lender’s undrawn Tranche 2 Commitment, if any, following the expiration of the Tranche 2 Availability Period, plus (b) such Lender’s undrawn Tranche 3 Commitment, if any, following the expiration of the Tranche 3 Availability Period.
“Warrant” means any warrant entered into in connection with the Loan in accordance with this Agreement, as may be amended, restated or modified from time to time.
“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 one hundred percent (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.
“Year-1 Cash Percentage” has the meaning as set forth in the definition of “Year-1 PIK Toggle Election.”
“Year-1 PIK Toggle Election” means Company’s election, which may be made during the Year-1 PIK Toggle Period, upon which election, (a) one and nine-tenths of one percent (1.90%) of Term Loan Cash Interest then accrued (as elected by Company) (such percentage, the “Year-1 Cash Percentage”) shall be transferred to two and one-twentieth of one percent (2.05%) of Term Loan PIK Interest for such period (such percentage, the “Year-1 PIK Percentage”), (b) the Term Loan Cash Interest Rate shall be reduced by the percentage equal to the Year-1 Cash Percentage for such period, and (c) the Term Loan PIK Interest Rate shall be increased by the Year-1 PIK Percentage for such period.
“Year-1 PIK Percentage” has the meaning as set forth in the definition of “Year-1 PIK Toggle Election.”
“Year-1 PIK Toggle Period” means the period commencing on the Closing Date and ending on the date that is twelve (12) months after the Closing Date.
1.2[Reserved].
1.3Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP as in effect on the Closing Date, and all financial computations hereunder shall be computed in accordance with GAAP as in effect on the Closing Date, consistently applied; provided, that notwithstanding the foregoing (a) with respect to the accounting for leases as either operating leases or capital leases and the impact of such accounting in accordance with FASB ASC 842 on the definitions and covenants herein, GAAP as in effect on December 31, 2018 shall be applied, and (b) for purposes of determining compliance with any covenant contained herein, Indebtedness of any Loan Party or Physician Group or any of their respective Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC. For all purposes under the Loan Documents, in connection with any Division or plan of Division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
1.4If at any time any change in GAAP would affect the computation of any financial requirement set forth in any Loan Document, and either Company or the Required Lenders shall so request, Agent, Lenders and Company shall negotiate in good faith to amend such requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, such requirement shall continue to be computed in accordance with GAAP prior to such change. Notwithstanding the foregoing, any obligations of a Person that are or would have been
treated as operating leases for purposes of GAAP prior to the issuance by the Financial Accounting Standards Board on February 25, 2016 of an Accounting Standards Update (the “ASU”) shall continue to be accounted for as operating leases for purposes of all financial definitions, calculations and covenants for purpose of this Agreement (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective or retroactive basis or otherwise) to be treated as capitalized lease obligations in accordance with GAAP (other than for purposes of the delivery of, or representations regarding, financial statements prepared in accordance with GAAP).
1.5Any reference in any Loan Document to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a Division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a Division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale or transfer, or similar term, as applicable, to, of or with a separate Person. Any Division of a limited liability company shall constitute a separate Person under the Loan Documents (and each Division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity) on the first date of its existence. In connection with any Division, if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then such asset shall be deemed to have been transferred from the original Person to the subsequent Person.
1.6Unless otherwise expressly provided herein, if any delivery or other performance obligation (other than payments) under the Loan Documents falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day.
SECTION 2. THE LOAN
2.1[Reserved]
2.2Term Loan Advances.
(a)Advances.
(i)Tranche 1. Subject to the terms and conditions of this Agreement, on the Closing Date, Lenders will severally (and not jointly) make, and Borrower agrees to draw, a Term Loan Advance in an aggregate principal amount equal to Thirty Million Dollars ($30,000,000) (such Term Loan Advance, the “Tranche 1 Advance”).
(ii)Tranche 2. Subject to the terms and conditions of this Agreement, Borrower may request, and the Lenders shall severally (and not jointly) make, in each case, during the Tranche 2 Availability Period, a Term Loan Advance in an aggregate principal amount equal to Twenty-Five Million Dollars ($25,000,000) (such Term Loan Advance, the “Tranche 2 Advance”).
(iii)Tranche 3. Subject to the terms and conditions of this Agreement, Borrower may request, and the Lenders shall severally (and not jointly) make, in each case, during the Tranche 3 Availability Period, one or more additional Term Loan Advances in minimum increments of Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000) (or if less, the remaining amount of Term Loan Advances available to be drawn pursuant to this Section 2.2(a)(iii)) in an aggregate principal amount up to (x) Forty-Five Million Dollars ($45,000,000) plus (y) the undrawn Tranche 2 Commitment, if any, following the expiration of the Tranche 2 Availability Period (such Term Loan Advance, a “Tranche 3 Advance”, and, collectively, the “Tranche 3 Advances”).
(iv)Tranche 4. Subject to the terms and conditions of this Agreement, Borrower may request, and the Lenders shall severally (and not jointly) make, in each case, during the Tranche 4 Availability Period, and conditioned on approval by Lenders’ investment committee in its sole discretion, one or more additional Term Loan Advances in minimum increments of Ten Million Dollars ($10,000,000) (or if less, the remaining amount of Term Loan Advances available to be drawn pursuant to this Section 2.2(a)(iv)) in an aggregate principal amount up to Fifty Million Dollars ($50,000,000) plus the aggregate sum of the Undrawn Commitment (such Term Loan Advance, a “Tranche 4 Advance”, and, collectively, the “Tranche 4 Advances”).
(b)Maximum Term Loan Amount. The initial outstanding amount of each of the Term Loan Advances shall not, in the aggregate, exceed the Maximum Term Loan Amount plus, for the avoidance of doubt, any amount equal to the payment-in-kind interest added to principal pursuant to Section 2.2(d)(ii). Each Term Loan Advance funded by each Lender shall not exceed its respective Term Commitment plus, for the avoidance of doubt, any amount equal to the Term Loan PIK Interest Rate added to principal pursuant to Section 2.2(d)(ii). After repayment, no Term Loan Advance (or any portion thereof) may be reborrowed.
(c)Advance Request. To obtain a Term Loan Advance, Company, on behalf of Borrower, shall complete, sign and deliver an Advance Request at least one (1) Business Day before the Closing Date and at least five (5) Business Days before each Advance Date other than the Closing Date to Agent. Lenders shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent set forth in Section 4 and applicable to such Term Loan Advance is satisfied as of the requested Advance Date. The proceeds of any Term Loan Advance shall be deposited into an account that is subject to an Account Control Agreement.
(d)Interest.
(i)Term Loan Cash Interest Rate. In addition to interest accrued pursuant to the Term Loan PIK Interest Rate, the principal balance (including, for the avoidance of doubt, any capitalized PIK Interest added to principal pursuant to Section 2.2(d)(ii) and subject to any Year-1 PIK Toggle Election pursuant to Section 2.1(d)(iii) and Remaining Term PIK Toggle Election pursuant to
Section 2.1(d)(iii)) of each Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Cash Interest Rate based on a year consisting of three hundred sixty (360) days, with interest computed daily based on the actual number of days elapsed. The Term Loan Cash Interest Rate will float and change on the day the Prime Rate changes from time to time.
(i)Term Loan PIK Interest Rate. In addition to interest accrued pursuant to the Term Loan Cash Interest Rate, the principal balance (including, for the avoidance of doubt, any capitalized Term Loan PIK Interest added to the principal pursuant to this Section 2.1(d)(ii) and subject to any Year-1 PIK Toggle Election pursuant to Section 2.1(d)(iii) and Remaining Term PIK Toggle Election pursuant to Section 2.1(d)(iii)) of each Term Loan Advance shall bear interest thereon from the applicable Advance Date at the Term Loan PIK Interest Rate based on a year consisting of three hundred sixty (360) days, with interest computed daily based on the actual number of days elapsed, which amount shall automatically be added to the outstanding principal balance so as to increase the outstanding principal balance of such Term Loan Advance on each Payment Date for such Advance, which principal amount shall accrue interest payable as provided in Section 2.2(d)(i) and which accrued and unpaid amount shall be payable when the principal amount of the Advance is payable in accordance with Section 2.2(e).
(ii)PIK Toggle Elections. During the Year-1 Toggle Period, Company may make a Year-1 PIK Toggle Election for any Fiscal Quarter of the Year-1 Toggle Period. To make a Year-1 PIK Toggle Election, Company shall deliver, by hand delivery or facsimile or other electronic transmission if arrangements for doing so have been approved in writing (including via email) by Agent, a written request to the Agent five (5) Business Days prior to the last date of such applicable Fiscal Quarter (the “PIK Toggle Notice”). Each PIK Toggle Notice shall be irrevocable. After the Year-1 Toggle Period, Company may make a Remaining Term PIK Toggle Election for any Fiscal Quarter following the Year-1 Toggle Period. To make a Remaining Term PIK Toggle Election, Company shall deliver, by hand delivery or facsimile or other electronic transmission if arrangements for doing so have been approved in writing (including via email) by Agent, a written request to the Agent five (5) Business Days prior to the last date of such applicable Fiscal Quarter (the “Remaining PIK Toggle Notice”). Each Remaining PIK Toggle Notice shall be irrevocable. At any time, Company may elect in its sole discretion to (1) convert any deferred Term Loan PIK Interest to Term Loan Cash Interest at a 1.00 to 1.00 exchange ratio, or (2) convert any Term Loan Cash Interest so converted pursuant to clause (1), to Term Loan PIK Interest, at a 1.00 to 1.00 exchange ratio.
(e)Payment. Borrower will pay accrued but unpaid interest on each Term Loan Advance in arrears on the first Business Day of each calendar month (each such date, a “Payment Date”), beginning the calendar month immediately after the Advance Date. Borrower shall repay the aggregate principal balance of the Term Loan Advances that is
outstanding on the day immediately subsequent to the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than inchoate indemnity obligations which, by their terms, survive termination of this Agreement) are repaid. The entire principal balance of the Term Loan Advances and all accrued but unpaid interest hereunder, and all other Secured Obligations with respect to the Term Loan Advances, shall be due and payable on the Term Loan Maturity Date. Borrower shall, subject to Addendum 1, make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense. If a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately following Business Day. Agent or Lenders will initiate debit entries to Borrower’s account as authorized on the ACH Authorization (i) on each Payment Date of all periodic obligations payable to Lenders under each Term Loan Advance and (ii) reasonable and documented out-of-pocket legal fees and costs incurred by Agent or Lenders in connection with Section 11.12; provided that (X) with respect to clause (i) above, in the event that Lenders or Agent informs Borrower that any Lender will not initiate a debit entry to Borrower’s account for a certain amount of the periodic obligations due on a specific Payment Date, Borrower shall pay to the Agent for the benefit of such Lender(s) such amount of periodic obligations in full in immediately available funds on such Payment Date; provided, further, that, (Y) with respect to clause (i) above, if Lenders or Agent informs Borrower that any Lender will not initiate a debit entry as described above later than the date that is three (3) Business Days prior to such Payment Date, Borrower shall pay to the Agent for the benefit of such Lender(s) such amount of periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which Lenders or Agent so notifies Borrower (and, for the avoidance of doubt, notwithstanding anything to the contrary herein, no Default or Event of Default shall arise from any non-payment of such amount prior to the expiration of such three (3) Business Day period), and (Z); with respect to clause (ii) above, in the event that Lenders or Agent informs Borrower that any Lender will not initiate a debit entry to Borrower’s account for specified reasonable and documented out-of-pocket legal fees and costs incurred by Agent or Lenders, Borrower shall pay to such Lender such amount in full in immediately available funds within three (3) Business Days. Once repaid, no Term Loan Advance or any portion thereof may be reborrowed.
2.3Maximum Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine that Borrower has actually paid to Lenders an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower shall be applied as follows: first, to the payment of the Secured Obligations consisting of the outstanding principal; second, after all principal is repaid, to the payment of Lenders’ accrued interest, reasonable costs and documented out-of-pocket costs, expenses, and professional fees and
any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.
2.4Default Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to four percent (4%) of such past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, all outstanding Term Loans, and to the extent overdue, other Secured Obligations (including principal, interest, compounded interest, and professional fees), shall bear interest at a rate per annum equal to the rate set forth in Section 2.2(d) plus four percent (4%) per annum. In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth in Section 2.2(d) or 2.4, as applicable.
2.5Prepayment. At its option, Borrower may prepay all or a portion of the outstanding Advances by paying the entire principal balance (or such portion thereof), all accrued and unpaid interest thereon, all unpaid Lenders’ fees and reasonable and documented out-of-pocket expenses due hereunder accrued to the date of the repayment (including, without limitation, the End of Term Charge when due in accordance with Section 2.6(a)), together with a prepayment charge equal to the following percentage of the outstanding principal amount of such Advance being so prepaid: with respect to each Advance (which Advance amount shall include, for the avoidance of doubt, any principal that has been added to the principal balance of such Advance pursuant to Section 2.2(d)(ii)) (a) if the principal amount of such Advance is prepaid on or prior to the date which is twelve (12) months following the Closing Date, three percent (3.00)%; (b) if the principal amount of such Advance is prepaid after the date which is twelve (12) months following the Closing Date but on or prior to the date which is twenty-four (24) months following the Closing Date, two percent (2.00)%; and (c) thereafter through the day before the Term Loan Maturity Date, one percent (1.00)% (each, a “Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable calculation of Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of the Advances. Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and the Prepayment Charge upon the occurrence of a Change in Control or any other prepayment hereunder. Notwithstanding the foregoing, Agent and Lenders agree the Prepayment Charge shall be waived if Agent, any Lender or any of their respective Affiliates (in their sole and absolute discretion) refinance the Advances prior to the Term Loan Maturity Date. Any amounts paid under this Section shall be applied by Agent to the then unpaid amount of any Term Loan Advances pro rata (together with any interest thereon). For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately succeeding Business Day.
2.6End of Term Charge.
(a)On any date that Borrower partially prepays the outstanding Term Loan Advances pursuant to Section 2.5, Borrower shall pay Lenders a charge of equal to two
and one-half of one percent (2.50%) multiplied by the principal amount of such Term Loan Advances being prepaid.
(a)On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the entirety of the outstanding Secured Obligations (other than Surviving Obligations), and (iii) the date that the outstanding Secured Obligations become due and payable, Borrower shall pay Lenders a charge equal to (x) two and one-half of one percent (2.50%) multiplied by the aggregate original principal amount of such Term Loan Advances made hereunder minus (y) the aggregate amount of payments made pursuant to Section 2.6(a) (each payment under Section 2.6(a) and Section 2.6(b), individually and collectively, the “End of Term Charge”).
(b)Notwithstanding the required payment date of such End of Term Charge, the applicable pro rata portion of the End of Term Charge shall be deemed earned by Lenders as of each date that an applicable Term Loan Advance is made. For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately succeeding Business Day.
2.7Pro Rata Treatment. Each payment (including prepayment) on account of any fee and any reduction of the Term Loan Advances shall be made pro rata according to the Term Commitments of the relevant Lenders.
2.8Taxes; Increased Costs. Each Loan Party, Agent and Lenders each hereby agree to the terms and conditions set forth on Addendum 1 attached hereto.
2.9Treatment of Prepayment Charge and End of Term Charge. Each Loan Party agrees that any Prepayment Charge and any End of Term Charge payable shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination, and each Loan Party agrees that it is reasonable under the circumstances currently existing and existing as of the Closing Date. The Prepayment Charge and the End of Term Charge shall also be payable in the event the Secured Obligations (and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure, or by any other means. Each Loan Party expressly waives (to the fullest extent it may lawfully do so) the provisions of any present or future statute or law that prohibits or may prohibit the collection of the foregoing Prepayment Charge and End of Term Charge in connection with any such acceleration. Each Loan Party agrees (to the fullest extent that each may lawfully do so): (a) each of the Prepayment Charge and the End of Term Charge is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (b) each of the Prepayment Charge and the End of Term Charge shall be payable notwithstanding the then prevailing market rates at the time payment is made; (c) there has been a course of conduct between Lenders and Borrower giving specific consideration in this transaction for such agreement to pay the Prepayment Charge and the End of Term Charge as a charge (and not interest) in the event of prepayment or acceleration; and (d) Borrower shall be estopped from claiming differently than as agreed to in this Section. Each Loan Party expressly acknowledges that its agreement to pay each of the Prepayment Charge and the End of Term Charge to Lenders
as herein described was on the Closing Date and continues to be a material inducement to Lenders to provide the Term Loan Advances.
SECTION 3. SECURITY INTEREST
3.1Grant of Security Interest. As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, each Loan Party grants to Agent a security interest in all of such Loan Party’s right, title, and interest in, to and under all of such Loan Party’s personal property and other assets including without limitation the following (except as set forth herein) whether now owned or hereafter acquired (collectively, but excluding the Excluded Assets, the “Collateral”): (a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and intangible personal property of such Loan Party whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, such Loan Party and wherever located, and any of such Loan Party’s property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.
3.2Notwithstanding the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include (a) any “intent to use” trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise, provided, that upon submission and acceptance by the United States Patent and Trademark Office of an amendment to allege use of an intent-to-use trademark application pursuant to 15 U.S.C. Section 1051(c) (or any successor provision) such intent-to-use application shall constitute Collateral, (b) licenses or contracts, which by their terms require the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, Sections 9406, 9407 and 9408 of the UCC (or any successor provision or provisions) of any relevant jurisdiction and the Bankruptcy Code or under principles of equity (except where the terms of such license or contract would otherwise permit the grant of a Lien thereon upon obtaining the consent of a Loan Party or any of its Affiliates), (c) any Excluded Account and the cash and cash equivalents contained therein (including securities entitlements and related assets), (d) any interest of any Loan Party as a lessee under an equipment lease if such Loan Party is prohibited by the terms of such lease from granting a security interest in such lease or under which such an assignment or Lien would cause a default to occur under such lease; provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by any Loan Party, Agent or any Lender, (e) any commercial tort claim (as defined in the UCC) that does not exceed Five Hundred Thousand Dollars ($500,000), (f) any property or asset to the extent that such grant of a security interest is prohibited by any Requirement of Law of a Governmental Authority or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property, except to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other document providing for such prohibition,
breach, default or termination or requiring such consent is ineffective under Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity; provided, however, that such security interest shall attach immediately at such time as such Requirement of Law is not effective or applicable, or such prohibition, breach, default or termination is no longer applicable or is waived, and to the extent severable, shall attach immediately to any portion of the Collateral that does not result in such consequences, (g) any assets owned by an Excluded Subsidiary, (h) with respect to any Excluded Subsidiary that is a CFC or a CFC Holdco, Equity Interests of such CFC or CFC Holdco; provided that one hundred percent (100%) of the non-voting equity interests and sixty-five percent (65%) of the voting equity interests of any such Excluded Subsidiary that is a CFC or a CFC Holdco directly owned by a Loan Party shall not be Excluded Assets, (i) those assets as to which Agent in consultation with the Company determines (acting reasonably) in writing that (x) the cost of obtaining a Lien or perfection thereof are excessive in relation to the benefit to the Lenders of the security to be afforded thereby, or (y) would result in adverse tax consequences to the Loan Parties or their respective Subsidiaries, (k)(i) motor vehicles, aircraft, aircraft engines and other assets subject to certificates of title to the extent perfection of the security interest in such assets cannot be accomplished by the filing of a UCC financing statement (or equivalent), and (ii) letter-of-credit rights not constituting supporting obligations of other Collateral, and (l) (i) to the extent and for so long as the grant of a Lien in the same is prohibited by applicable law, any Equity Interests issued by Bright Health Insurance Company of New York, a New York corporation and (ii) to the extent and for so long as the grant of a Lien in the same is prohibited by its Organizational Documents, any Equity Interests issued by PMAF (together, “Excluded Assets”).
3.3 Upon termination of all commitments and obligations of the Lenders hereunder or under the other Loan Documents to make any further Advances and repayment in full of all Secured Obligations (other than Surviving Obligations), all security interests in the Collateral granted under the Loan Documents shall immediately terminate and all rights on the Collateral shall automatically revert to each Loan Party without the need for any other action by any Person. Upon any Transfer of any assets not prohibited by this Agreement or upon any Loan Party becoming any Excluded Subsidiary, all security interests in such assets or the assets of such Excluded Subsidiary shall immediately terminate without the need for any other action by any Person. Agent shall promptly on request and at Borrower’s expense execute such documents and take such other steps as are reasonably necessary for the Loan Parties to evidence such termination, all at Borrower’s sole cost and expense.
3.4The security interest granted in Section 3.1 shall continue until the Secured Obligations (other than Surviving Obligations) have been paid in full and Lender has no further commitment or obligation hereunder or under the other Loan Documents to make any further Advances, and Agent shall, at Borrower’s expense, take all actions reasonably requested by Borrower to evidence such termination.
SECTION 4. CONDITIONS PRECEDENT TO LOAN
The obligations of Lenders to make the Loan hereunder are subject to the satisfaction by the Loan Parties of the following conditions:
4.1Initial Advance. On or prior to the Closing Date, the Loan Parties shall have delivered to Agent the following:
(a)duly executed copies of the Loan Documents to be entered into on the Closing Date, a copy of the duly executed Warrant and all other documents and instruments reasonably required by Agent to be executed and/or delivered on or prior to the Closing Date to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral, in all cases in form and substance reasonably acceptable to Agent;
(b)a duly executed Account Control Agreement with respect to the Deposit Account into which the proceeds of the Tranche 1 Advance shall be deposited;
(c)a customary legal opinion of counsel for the Loan Parties in form and substance reasonably acceptable to Agent;
(d)a copy of resolutions of each Loan Party’s Board of Directors, certified by an officer of such Loan Party, evidencing (i) approval of the Loan and other transactions evidenced by the Loan Documents and the Warrant, (ii) authorizing a specified person or persons to execute the Loan Documents to which it is a party on its behalf, and (iii) authorizing a specified person or persons, on its behalf, to sign all documents and notices (including, if relevant, any Advance Request or other relevant notice) to be signed by it under or in connection with the Loan Documents to which it is a party;
(e)certified copies of the Charter of each Loan Party, certified by the Secretary of State of the applicable jurisdiction of organization and the other Organizational Documents, as amended through the Closing Date, of such Loan Party, certified by an officer of such Loan Party;
(f)other than to the extent permitted to be delivered after the Closing Date pursuant to Section 7.26, a certificate of good standing for each Loan Party from its jurisdiction of organization;
(g) copies, dated as of a recent date, of such searches for financing statements filed in the central filing office of the jurisdiction of incorporation or organization, as applicable, of each Loan Party, Joint Venture Company and Physician Group, in each case, reflecting the existence of only Liens that constitute Permitted Liens or Liens have been or, in connection with the initial Term Loan Advance, will be terminated or released;
(h)copies of each Management Agreement with respect to each Physician Group, duly executed by the parties thereto, and each other Management Document;
(i)copies of the Organizational Documents with respect to each Joint Venture Company;
(j)payment of the Due Diligence Fee (to the extent not paid to Agent before the Closing Date), Initial Facility Charge and reimbursement of Agent’s and Lenders’ current expenses to the extent reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance;
(k)a duly executed copy of the Perfection Certificate and each exhibit and addendum thereto;
(l)all certificates of insurance and copies of each insurance policy required hereunder;
(m)a closing certificate, duly executed by Company’s Chief Executive Officer or Chief Financial Officer, certifying the requirements set forth in Sections 4.2(b) and 4.3(b);
(n)[reserved];
(o)[reserved];
(o)(i) the certificates representing the Equity Interests required to be pledged pursuant to the Pledge Agreement, together with an undated stock power or similar instrument of transfer for each such certificate endorsed in blank by a duly authorized officer of the pledgor thereof, and (ii) each material debt instrument (if any) endorsed in blank (or accompanied by a transfer form endorsed in blank) by the pledgor thereof required to be pledged to Agent under the Pledge Agreement;
(p)evidence that the maturity date of the NEA Credit Agreement will be no earlier than ninety-one (91) days after the Term Loan Maturity Date; and
(q)evidence that MPHC has obtained all consents necessary to permit MPHC to grant Liens over all its Equity Interests in PMAF in favor of Agent.
4.2All Advances. On each Advance Date:
(a)Agent shall have received an Advance Request for the relevant Advance as required by Section 2.2(c), duly executed by Company’s Chief Executive Officer or Chief Financial Officer;
(b)The representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the applicable Advance Date with the same effect as though made on and as of such Advance Date, except to the extent such representations and warranties expressly relate to an earlier date and after giving effect in all cases to any standard(s) of materiality as to such representations and warranties;
(c)The proceeds of the Advance made on such Advance Date shall be deposited into a Deposit Account that is subject to an Account Control Agreement;
(d)With respect to any Advance (other than the Tranche 1 Advances) made available on such Advance Date, the Loan Parties shall have paid (or substantially concurrently will pay) the Tranche Facility Charge applicable to such Advance; and
(e)Each Advance Request shall be deemed to constitute a representation and warranty by each Loan Party on the relevant Advance Date as to the matters specified in subsection (b) of this Section 4.2 and Section 4.3.
4.3No Default. As of the Closing Date and at the time of and immediately after each Advance Date, (a) no Default or Event of Default has occurred and is continuing, and (b) no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES
Each Loan Party represents and warrants that:
5.1Corporate Status; Execution and Delivery; Binding Effect. Each Loan Party is a corporation or limited liability company duly organized and other than any Loan Party set forth in Section 7.26, legally existing and in good standing under the laws of its jurisdiction of incorporation or formation, and is duly qualified as a foreign corporation, limited liability company or partnership, as the case may be, in all jurisdictions in which the nature of its business or location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect. Each Loan Party’s present name, former names (if any), locations, place of formation, tax identification number, organizational identification number and other information are correctly set forth in Exhibit B, as may be updated by such Loan Party in a written notice (including any Compliance Certificate) provided to Agent after the Closing Date in accordance with this Agreement. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by the such Loan Party. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of each Loan Party, enforceable against such Loan Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors’ rights generally and by general principles of equity.
5.2Collateral.
(a)Each Loan Party owns or otherwise has the rights to use the Collateral, free of all Liens, except for Permitted Liens. Each Loan Party has the power and authority to grant to Agent a Lien on the Collateral as security for the Secured Obligations.
(b)No Loan Party or, to the knowledge of any Responsible Officer, any Physician Group, Joint Venture Counterparty or Joint Venture Company is in breach of any Collateral Agreement that gives the applicable Loan Party, Physician Group, Joint Venture Counterparty or Joint Venture Company, as applicable, the right to terminate such
Collateral Agreement, if (to the extent any Physician Group, Joint Venture Counterparty or Joint Venture Company has such right of termination) a Loan Party has received notice, has become aware or has reason to believe that such Physician Group, Joint Venture Counterparty or Joint Venture Company intends to exercise such right of termination. Each Loan Party has the power and authority to collaterally assign each Collateral Agreement (to which such Loan Party is party thereto) to Agent; provided, the representation under this clause (b) relating to any Collateral Agreement entered into after the Closing Date is given in relation to that Collateral Agreement on or after the date such Collateral Agreement is delivered in accordance with Section 4.1(h) or Section 7.25 (as appropriate). No Collateral Agreement has been collaterally assigned or pledged to any other party other than a Loan Party; and any consent of any Physician Group, Joint Venture Company, Joint Venture Counterparty or any other Person required for any Collateral Assignment in accordance with this Agreement has been obtained or, in relation to any Collateral Agreement delivered after the Closing Date, will be obtained on or before the date such Collateral Assignment is required to be entered into in accordance with this Agreement.
5.3Consents. Each Loan Party’s execution, delivery and performance of this Agreement and all other Loan Documents to which it is a party, and Company’s execution of the Warrant (i) have been duly authorized by all necessary action of such Loan Party in accordance with its Organizational Documents and applicable law, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens, (iii) do not violate any (A) provisions of such Loan Party’s Organizational Documents or (B) except as would not reasonably be expected to have a Material Adverse Effect, any, law, regulation, order, injunction, judgment, decree or writ to which such Loan Party is subject, and (iv) except as described on Schedule 5.3, do not violate any contract or agreement or require the consent or approval of any other Person or Governmental Authority which has not already been obtained and that could reasonably be expected to have a Material Adverse Effect. The individual or individuals executing the Loan Documents on behalf of the Loan Parties and the Warrant on behalf of Company are duly authorized to do so.
5.4Material Adverse Effect. No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing. No Loan Party is aware of any event or circumstance that is likely to occur that is reasonably expected to result in a Material Adverse Effect.
5.5Actions Before Governmental Authorities. There are no actions, suits claims, disputes or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of any Loan Party, threatened in writing against or affecting any Loan Party or its property, that, if adversely determined, would reasonably be expected to result in a Material Adverse Effect.
5.6Laws.
(a)Except as set forth on Schedule 5.6, no Loan Party nor any of its Subsidiaries nor Physician Group is in violation of any Requirement of Law applicable to such Person, including any Anti-Terrorism Laws and Anti-Corruption Laws, rule or
regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority to which such Loan Party or such Subsidiaries are subject, where such violation or default could reasonably be expected to result in a Material Adverse Effect. No Loan Party is in default in any manner under any agreement to which it is a party or by which it is bound for which such default could reasonably be expected to result in a Material Adverse Effect. For the avoidance of doubt, this Section 5.6 does not apply to compliance with Healthcare Laws, which is set forth in Section 5.16.
(b)No Loan Party nor any of its Subsidiaries is an “investment company,” a company that would be an “investment company” except for the exclusion from the definition of “investment company” in Section 3(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), or a company “controlled” by an “investment company” under the 1940 Act. No Loan Party nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Each Loan Party and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act. No Loan Party nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. No Loan Party’s nor any of its Subsidiaries’ properties or assets have been used by such Loan Party or such Subsidiary or, to each Loan Party’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws. Each Loan Party and each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue in all material respects their respective businesses as currently conducted.
(c)No Loan Party, any of its Subsidiaries, nor to the knowledge of any Loan Party, any Loan Party’s or its Subsidiaries’ Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. No Loan Party, nor any of its Subsidiaries, any Physician Group, or (to the knowledge of any Loan Party) any of their Affiliates or agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law. None of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in violation of any applicable Anti-Corruption Laws, Anti-Terrorism Laws or for the purpose of financing any activities or business of or with any Person that, at the time of such financing, is a Sanctioned Person or in any Sanctioned Country, in each case, except to the extent authorized under applicable Sanctions laws, or (b) for any payment to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
5.7Information Correct and Current. No written information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of any Loan Party to Agent in connection with any Loan Document or included therein or delivered pursuant thereto (other than financial or business projections, or information of a general economic or industry nature) (“Information”) contained as of the date such Information was furnished, when taken as a whole with all other Information given or furnished to Agent or any Lender, any material misstatement of fact or, when taken together with all other such Information, omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which such Information was furnished (after giving effect to all supplements and updates), not materially misleading at the time such statement was made or deemed made provided, however, that no representation is made with respect to (i) any information of a general economic or industry nature, (ii) any forward looking statements or estimates or (iii) any pro forma financial statements or financial projections. Additionally, any and all financial or business projections provided by any Loan Party to Agent under the Loan Documents, were provided in good faith and based on assumptions believed to be reasonable at the time prepared (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of any Loan Party, that no assurance is given that any particular projections will be realized and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results by a material amount).
5.8Tax Matters. Except as set forth on Schedule 5.8, (a) each Loan Party, its Subsidiaries, and the Physician Groups have filed all federal and state income Tax returns and other material Tax returns that they are required to file (taking into account any timely filed extensions), (b) each Loan Party, its Subsidiaries, and the Physician Groups have duly paid all federal and state income Taxes and other material Taxes or installments thereof that they are required to pay (except Taxes being contested in good faith by appropriate proceedings and for which such Loan Party, its Subsidiaries, and the Physician Groups maintain adequate reserves in accordance with GAAP), and which Taxes, if not paid, individually or in the aggregate, would exceed Two-Hundred Fifty Thousand Dollars ($250,000), and (c) to the best of each Loan Party’s knowledge, no proposed or pending Tax assessments, deficiencies, audits or other proceedings with respect to such Loan Party, any Subsidiary, or any Physician Group have had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
5.9Intellectual Property Claims. Each Loan Party is the sole owner of, or otherwise has the right to use, the Intellectual Property used in or otherwise necessary for such Loan Party’s business. Except as described on Schedule 5.9, (i) each of the Copyrights, Trademarks and Patents owned by each Loan Party is, to such Loan Party’s knowledge, valid and enforceable (other than applications for registration), (ii) no part of the Intellectual Property owned by such Loan Party has been judged invalid or unenforceable, in whole or
in part, and (iii) no written claim has been made to such Loan Party that the ownership of or use of any part of the Intellectual Property violates the intellectual property rights of any third party, in each case to the extent such lack of validity and enforceability, judgment or claim would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. Exhibit C is a true, correct and complete list, in all material respects, of each of such Loan Party’s registered Patents, registered Trademarks, registered Copyrights, and material agreements under which each Loan Party licenses Intellectual Property from third parties (other than shrink-wrap software licenses or other than “off-the-shelf” licenses or open-source software or other licenses which, if terminated, would not reasonably be expected to result in a Material Adverse Effect), together with application or registration numbers, as applicable, owned by such Loan Party or any Subsidiary. No Loan Party is in breach of, and no Loan Party has failed to perform any obligations under, any of the foregoing contracts, licenses or agreements and, to such Loan Party’s knowledge, no third party to any such contract, license or agreement is in breach thereof or has failed to perform any obligations thereunder, in each case to the extent such breach or failure would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents.
5.10Intellectual Property.
(a)Except as described on Schedule 5.10, each Loan Party owns or has the right to use all Intellectual Property necessary or material in the operation or conduct of such Loan Party’s business as currently conducted. Without limiting the generality of the foregoing, except for restrictions that are unenforceable under Division 9 of the UCC or otherwise permitted under this Agreement with respect to Licenses, each Loan Party has the right, to the extent necessary or material in the operation or conduct of such Loan Party’s business as currently conducted, to freely transfer, license or assign Intellectual Property necessary or material in the operation or conduct of such Loan Party’s business as currently conducted (other than Intellectual Property licensed to such Loan Party under a Restricted License), without material condition, restriction or payment of any kind (other than customary conditions, restrictions and covenants in inbound license agreements, payments in the ordinary course of business, and conditions or requirements customarily associated with licenses of Trademarks) to any third party, and such Loan Party owns or has the right to use, to the extent necessary or material in the operation or conduct of such Loan Party’s business as currently conducted, pursuant to valid licenses, all material software development tools, library functions, compilers and all other third-party software and other technology or works of authorship that are material in the operation or conduct of such Loan Party’s business and used by such Loan Party in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products except customary conditions, restrictions and covenants in inbound license agreements and equipment leases where such Loan Party is the licensee or lessee. Except as disclosed on Schedule 5.10 (as updated from time to time after the Closing Date), no Loan Party is a party to, nor is it bound by, any Restricted License (other than software as a service agreements or click-through agreements for off-the-shelf software that are commercially available to the public).
(b)No Loan Party nor any of its Subsidiaries have used any material software or other materials that are subject to an open-source or similar license (including but not limited to the General Public License, Lesser General Public License, Mozilla Public License, or Affero License) in a manner that would require such Loan Party or any of its Subsidiaries to (other than with respect to such open-source software or materials themselves) (i) distribute to third parties any Borrower Product at no charge or a minimal charge (royalty-free basis); (ii) license to any third parties the right to modify, make derivative works based on, decompile, disassemble, or reverse engineer any Borrower Product; or (iii) disclose or distribute any Borrower Product in source code form.
(c)Each License that is a Material Agreement is in full force and effect and is legal, valid, binding, and enforceable in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability. Except as set forth on Schedule 5.10(c), to the knowledge of any Loan Party, (i) neither such Loan Party nor any of its Subsidiaries, as applicable, is in breach of or default in any manner that would reasonably be expected to materially and adversely affect the Borrower Products under any Material Agreement to which it is a party or may otherwise be bound, and (ii) no circumstances or grounds exist that would give rise to a claim of breach or right of rescission, termination, revision, non-renewal or amendment of any of the Licenses that are Material Agreements, in each case to an extent that such breach or right would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents.
5.11Borrower Products. Except as set forth on Schedule 5.11, no Intellectual Property owned by any Loan Party, Borrower Product owned by any Loan Party, or, to the knowledge of any Loan Party, Borrower Product licensed to any Loan Party has been or is subject to any actual or, to the knowledge of any Loan Party, threatened in writing litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency, except for routine prosecution of such Intellectual Property in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any manner such Loan Party’s use, transfer or licensing thereof or that would reasonably be expected to adversely affect the validity, use or enforceability thereof in each case to an extent that would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates any Loan Party to grant licenses or ownership interest in any future Intellectual Property to be used in the operation or conduct of the business of such Loan Party or Borrower Products to an extent that would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. No Loan Party has received any written notice or claim challenging or questioning such Loan Party’s ownership in any Intellectual Property used in the operation or conduct of the business of such Loan Party (or written notice of any claim challenging or questioning the ownership in any licensed
Intellectual Property of the owner thereof) or alleging that any third party has any claim of legal or beneficial ownership with respect to any Intellectual Property owned by or purported to be owned by any Loan Party, in each case that would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. To the knowledge of any Loan Party, no Loan Party’s use of its Intellectual Property in the operation or conduct of the business of such Loan Party nor the production and sale of Borrower Products related to the operation or conduct of the business of such Loan Party infringes the Intellectual Property or other rights of others, other than infringements that would not reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents.
5.12Financial Accounts. Exhibit D, as may be updated by Company in a written notice provided to Agent after the Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which each Loan Party or any Subsidiary maintains Deposit Accounts and (b) all institutions at which each Loan Party or any Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies the name, address of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.
5.13Employee Loans. Except for loans constituting Permitted Investments or as described on Schedule 5.13, no Loan Party has outstanding loans to any employee, officer or director of such Loan Party nor has such Loan Party guaranteed the payment of any loan made to an employee, officer or director of such Loan Party by a third party.
5.14Capitalization and Subsidiaries. No Loan Party owns any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached as Schedule 5.14, as may be updated by Company in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.
5.15Solvency. The fair salable value of the Loan Parties’ consolidated assets (including goodwill minus disposition costs) exceeds the fair value of the Loan Parties’ consolidated liabilities; the Loan Parties, taken as a whole, are not left with unreasonably small capital after the transactions in this Agreement and the Loan Parties and their Subsidiaries, on a consolidated basis are able to pay their debts (including trade debts) as they mature in the ordinary course. The amount of any contingent liability at any time shall be computed as the amount that would reasonably be expected to become an actual and matured liability.
5.16Compliance with Healthcare Laws, Information Privacy and Security Laws, and Medical Reimbursement Program requirements.
(a)Except as disclosed on Schedule 5.16(a), each Loan Party, each Subsidiary of such Loan Party, and, to the knowledge of each Loan Party, each Physician Group is and has been during the past six (6) years in compliance, in all material respects, with all applicable Healthcare Laws, the applicable Requirements of Law and participation
requirements of any Medical Reimbursement Program, and applicable Information Privacy and Security Laws, which are applicable to it, its business, or its operations. Without limiting the generality of the foregoing, no Loan Party has received written notice by a Governmental Authority of any material violation (or of any investigation, audit, or other proceeding involving allegations of any material violation) of any Healthcare Laws, Information Privacy and Security Laws, or the Requirements of Law or participation requirements of any Medical Reimbursement Program, and no investigation, inspection, audit or other proceeding involving allegations of any material violation of Healthcare Laws, Information Privacy and Security Laws, or the Requirements of Law or participation requirements of any Medical Reimbursement Program is, to the knowledge of such Loan Party, threatened in writing, other than audits or inspections conducted in the ordinary course.
(b)Except as would not reasonably be expected to have individually or in the aggregate, a Material Adverse Effect, no Loan Party, Subsidiary of a Loan Party, or, to the knowledge of each Loan Party, Physician Group has failed to repay any overpayments received from, or has failed to refund any amount due to, any Medical Reimbursement Program; nor received written notice of any overpayment or material refunds due to a Medical Reimbursement Program, in each case other than notices of a non-material nature received in the ordinary course.
(c)No Loan Party, nor any Subsidiary of such Loan Party, has been debarred or excluded from participation under any Medical Reimbursement Program. No Loan Party, Subsidiary of Loan Party, or any Physician Group has been debarred or excluded from participation under a Medical Reimbursement Program, (i) as of the Closing Date, or (ii) after the Closing Date, save as disclosed in writing to the Agent (provided that no disclosure may be made if such debarring or exclusion could reasonably be expected to have a Material Adverse Effect). To the knowledge of any Loan Party, there is no investigation, audit, claim review, or similar action, pending, or threatened, which could reasonably be expected to result in a suspension, revocation, termination, restriction, limitation, or non-renewal of any participation in a Medical Reimbursement Program or result in any exclusion from any Medical Reimbursement Program.
(d)No Loan Party, any Subsidiary of such Loan Party, nor any Physician Group is a party to any Corporate Integrity Agreement, deferred prosecution agreements, monitoring agreements, consent decrees, settlement orders or similar agreements with or imposed by any Governmental Authority.
(e)The terms of the Management Documents are in compliance in all material respects with all applicable Healthcare Laws, and, to the knowledge of each Loan Party, the parties to such Management Documents have performed their respective obligations under such Management Documents in compliance, in all material respects, with all applicable Healthcare Laws, and which, if not complied with, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(f)To the knowledge of each Loan Party, each Subsidiary of a Loan Party, and each Physician Group, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Licensed Personnel have complied and currently are in compliance with all applicable Healthcare Laws, and hold all professional healthcare and health insurance licenses and applicable Healthcare Permits required in the performance of such Licensed Personnel’s duties for a Loan Party, each Subsidiary of Loan Party, and each Physician Group.
(g)As of the Closing Date, the amount currently owed to CMS in connection with the ACO REACH Deficit Obligation is set forth in Schedule 5.16(g).
5.17Healthcare Permits. (a) Each Loan Party, each Subsidiary of such Loan Party, and, each Physician Group has obtained all necessary Healthcare Permits and other rights from, and have made all necessary declarations and filings with, all applicable Governmental Authorities, and all courts and other tribunals necessary to engage in the management and/or operation of their respective business, in each case where failure to obtain such Healthcare Permits or make such declarations and filings would reasonably be expected to have a Material Adverse Effect; (b) each such Healthcare Permit is valid and in full force and effect, and each Loan Party, each Subsidiary of such Loan Party, and, each Physician Group is in material compliance with the terms and conditions of all such Healthcare Permits; and (c) no Loan Party, nor any Subsidiary of such Loan Party, nor any Physician Group has received written notice, or to the knowledge of any Loan Party, any oral notice, from any Governmental Authority with respect to the revocation, suspension, restriction, limitation or termination of any Healthcare Permit nor, to the knowledge of such Loan Party, is any such action proposed, threatened in writing or under investigation, in each case where such revocation, suspension, restriction, limitation or termination could reasonably be expected to have a Material Adverse Effect.
5.18Insurance Subsidiaries.
(a)Except for the CMS Settlement, items reserved in each Insurance Subsidiary’s financial statements, or as otherwise disclosed on Schedule 5.18(a), there are no material outstanding disputes or liabilities of any Insurance Subsidiary.
(b)As of the Closing Date, the amount set forth on Schedule 5.18(b) of the CMS Settlement has been paid to CMS.
(c)Each Loan Party, Subsidiary of Loan Party, and Physician Group, to the extent applicable, is in compliance with the requirements of its obligations under the CMS Settlement.
5.19Regulation U, T, and X. None of the proceeds of any Loans will be used for any purpose which violates the provisions of Regulation U, Regulation T or Regulation X.
SECTION 6. INSURANCE; INDEMNIFICATION
6.1Coverage. The Loan Parties shall cause to be carried and maintained commercial general liability insurance covering Company and its Subsidiaries, on an occurrence form, against risks and in such amounts customarily insured against in Borrower’s line of business. Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3. The Loan Parties must maintain a minimum of Four Million Dollars ($4,000,000) of commercial general liability insurance (including any umbrella policies) for each occurrence. The Loan Parties maintain and shall continue to maintain a minimum of Four Million Dollars ($4,000,000) of directors’ and officers’ “side A” insurance for each occurrence and Ten Million Dollars ($10,000,000) in the aggregate. So long as there are any Secured Obligations outstanding (other than Surviving Obligations), the Loan Parties shall also cause to be carried and maintained insurance upon the business and assets of Company and its Subsidiaries, as may be required by applicable law, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated, as determined by Borrower in good faith. If the Loan Parties fail to obtain the insurance called for by this Section 6.1 or fails to pay when due and payable any premium thereon or fails to pay any other amount which the Loan Parties are obligated to pay under this Agreement or any other Loan Document which is required to preserve the Collateral, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent shall be due and payable promptly upon written demand for reimbursement thereof, bearing interest at the rate then applicable to the Secured Obligations, and secured by the Collateral. Agent will make reasonable efforts to provide Company with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Agent are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event of Default.
6.2Certificates. All certificates of insurance of the Loan Parties must (a) evidence each Loan Party’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2, including reflecting Agent (shown as “Hercules Capital, Inc., as Agent, and its successors and/or assigns”) as an additional insured for commercial general liability, a lenders loss payable for all risk property damage insurance, subject to the insurer’s approval, and a lenders loss payable for property insurance and additional insured for liability insurance for any future insurance that the Loan Parties may acquire from such insurer, (b) include additional insured endorsements for liability and lender’s loss payable endorsements for all risk property damage insurance, and (c) provide for a minimum of thirty (30) days advance written notice to Agent of cancellation (other than cancellation for non-payment of premiums, for which ten (10) days’ advance written notice shall be sufficient) .
6.3Indemnity. The Loan Parties agree to indemnify and hold Agent, Lenders and their officers, directors, employees, agents, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all third-party claims, costs, expenses, damages and liabilities (including such claims, reasonable and documented out-of-pocket costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable and documented out-of-pocket attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon
any appeal) (collectively, “Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases Liabilities to the extent such Liabilities arise solely out of gross negligence or willful misconduct of any Indemnified Person or changes in income tax rates. In addition, this Section 6.3 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under, and otherwise shall survive the expiration or other termination of, this Agreement, in each case, subject to the applicable statute of limitations.
SECTION 7. COVENANTS OF LOAN PARTIES
Each Loan Party agrees as follows:
7.1Financial Reports. Company shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):
(a)within thirty (30) days after the end of the first two months of each calendar quarter, unaudited interim and year-to-date financial statements as of the end of such month (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows (inclusive of a cash breakout by Loan Party and depository institution and account number, in a manner consistent with the methodology Borrower is utilizing in its reporting as of the Closing Date) accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Company or any of its consolidated Subsidiaries) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, all certified by a duly authorized officer of Company to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) that they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements;
(b)within forty-five (45) days after the end of each calendar quarter, unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Company or any of its consolidated Subsidiaries) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, certified by a duly authorized officer of Company to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) that they do
not contain certain non-cash items that are customarily included in annual financial statements;
(c)within forty-five (45) days after the end of each calendar quarter, unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against such Person or any of its consolidated Subsidiaries) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, for each of (x) PMAF, (y) CMH, and (z) each other Joint Venture Company that Agent shall reasonably request, in each case certified by such Joint Venture Company’s (or Company’s) Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) that they do not contain certain non-cash items that are customarily included in annual financial statements;
(d)within ninety (90) days (or, if Company ceases to be subject to SEC reporting rules, one hundred eighty (180) days) after the end of each fiscal year, audited financial statements as of the end of such year (prepared on a consolidated basis) covering Company, the Physician Groups and each of their consolidated Subsidiaries (which may be the audited financial statements of Company and its consolidated Subsidiaries), including balance sheet and related statements of income and cash flows and a statement of stockholders’ equity as of the end of such fiscal year, and setting forth in comparative form the corresponding figures for the preceding fiscal year, certified without qualification (other than any “going concern” statement that is due to the impending maturity of the Secured Obligations or any other Indebtedness within 12 months or any impending or potential breach of any financial covenant, in each case after the date of such opinion) by Grant Thornton, LLP, any “Big Four” accountancy firm or any other firm of independent certified public accountants selected by Company and reasonably acceptable to Agent, accompanied by any management report from such accountants;
(e)within thirty (30) days after the end of each calendar month (or, in the case of the last month of a calendar quarter, forty-five (45) days after the end of such month), a Compliance Certificate;
(f)within thirty (30) days after the end of each calendar month (or, in the case of the last month of a calendar quarter, forty-five (45) days after the end of such month), a report showing agings of accounts receivable and accounts payable;
(g)promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements, information or reports that Company has made available to holders of its common stock generally or other shareholders and securities holders generally and copies of any regular, periodic and special reports or registration statements that Company files with the Securities and Exchange Commission or any
Governmental Authority that may be substituted therefor, or any national securities exchange;
(h)with each Compliance Certificate delivered in relation to the last month of a calendar quarter, copies of any material Governmental Approvals obtained by Company or any of its Subsidiaries during the three-month period ending with the month covered by such Compliance Certificate;
(i)within thirty (30) days after each regularly scheduled meeting of the Board of Directors of the Company, the written presentation (e.g. PowerPoint presentation) provided to, or if no written presentation is available, the minutes of, any general session of such meeting (but excluding, for the avoidance of doubt, any executive session of such meeting), provided that the Company may redact such minutes to the extent reasonably necessary (A) to preserve attorney-client privilege, or to protect proprietary information or information subject to confidentiality obligations to which the Company is subject, or (B) where such redacted material relates to Agent or the Lenders (or Borrower’s strategy regarding the Loans);
(j)financial and business projections for each fiscal year within fifteen (15) days following their approval by Company’s Board of Directors, and in any event, by April 15th of such fiscal year, as well as budgets, operating plans and other financial information reasonably requested in writing by Agent;
(k)a copy of any, if any, annual 409A valuation report of Company within ten (10) Business Days after such report becomes available to Company;
(l)annually or otherwise with the Compliance Certificate next delivered with the financial statements delivered under Section 7.1(c) (A) a summary of insurance, showing any changes to the insurance policies required to be maintained in accordance with Section 6.1, and (B), renewal statements (including renewed certificates of insurance) and copies of the insurance policies of Company and its Subsidiaries, which have not already been provided;
(m)prompt (but in any event no more than three (3) Business Days’) notice of:
(i)any legal process that in the reasonable judgement of the Company is likely to result in damages, expenses or liabilities in excess of Five Hundred Thousand Dollars ($500,000);
(ii)if Company or any Subsidiary has knowledge that Company, or any Subsidiary or Affiliate of Company, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering;
(iii)the receipt of any written notice from any Governmental Authority (i) of the expiration without renewal, revocation or suspension of, or the institution
of any proceedings to revoke or suspend, any license now or hereafter held by the Company or any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect, or (ii) of the institution of any disciplinary proceedings against or in respect of the Company or any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for a for-cause audit by the U.S. Department of Health and Human Services which could reasonably be expected to have a Material Adverse Effect;
(iv)with respect to an Insurance Subsidiary: (x)(1) it has received a request or directive from any Governmental Authority which requires it to submit a capital maintenance or restoration plan that restricts the payment of dividends by any Insurance Subsidiary, directly or indirectly, to a Loan Party, or (2) it has submitted a capital maintenance or restoration plan to any Governmental Authority or has entered into a memorandum or agreement with any such Governmental Authority, in each case which plan, memorandum or agreement restricts the payment of dividends by any Insurance Subsidiary, directly or indirectly, to a Loan Party, and (y) copies of any such plan, memorandum, or agreement; or
(v)the merger, dissolution, liquidation or consolidation of an Insurance Subsidiary;
(n)with each Compliance Certificate delivered in relation to the last month of a calendar quarter, key performance indicators that any Lender (through the Agent) may reasonably request with not less than one calendar quarter’s written notice, to the extent such request will not present an undue burden or cost on the Company, as reasonably determined by Company;
(o)a summary of each Insurance Subsidiary’s statutory net worth in accordance with statutory accounting principles (the “State Regulatory Capital”) and any related capital or other statutory requirements imposed by any Governmental Authority to which such Insurance Subsidiary is subject within sixty (60) days of each fiscal quarter or within ninety (90) days after the end of each fiscal year; and
(p)promptly after each required quarterly or annual applicable statutory filing under applicable insurance regulatory laws, copies of the filed statutory financial statements of the Insurance Subsidiaries prepared in accordance with GAAP or SAP, as applicable.
No Loan Party shall without the consent of Agent (not to be unreasonably withheld, delayed or conditioned) make any change in its (a) accounting policies or reporting practices, except as required by GAAP, (b) fiscal years or fiscal quarters, or (c) fiscal year end from December 31.
The executed Compliance Certificate, and all Financial Statements required to be delivered under clauses (a), (b), (c) and (d) above shall be sent in accordance with the
instructions specified in Addendum 5 or as otherwise provided by Agent to Company by way of written notice from time to time.
Notwithstanding the foregoing, documents required to be delivered under Section 7.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Company emails a link thereto or electronic copy thereof to Agent or are otherwise filed or furnished with the SEC and first available at www.sec.gov.
Notwithstanding anything to the contrary in this Agreement or any other Loan Document, in no event shall any Loan Party or any Subsidiary be required to provide any information (i) which constitutes a trade secret of the Loan Parties or any Subsidiary, (ii) in respect of which disclosure to Agent or any Lender (or their respective representatives or contractors) is prohibited by Requirements of Law or binding agreement with any third party, or (iii) which is subject to attorney-client or similar privilege or constitutes attorney work-product.
7.2Management Rights.
(a)(i) The Loan Parties shall permit any representative that Agent authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of the Loan Parties at reasonable times and upon reasonable notice during normal business hours; provided, however, that so long as no Event of Default has occurred and is continuing, such examinations shall be limited to no more often than once per fiscal year. In addition, in connection with such inspections, any such representative shall have the right to meet with senior management of the Loan Parties to discuss such books of account and records at reasonable times and upon reasonable notice during normal business hours, and (ii) any Lender shall be entitled at reasonable times and intervals and upon reasonable notice during normal business hours to consult with and advise the senior management of the Loan Parties concerning significant business issues affecting the Loan Parties provided such consultations shall not unreasonably interfere with the Loan Parties’ business operations. The parties intend that the rights granted Lenders under this clause (ii) shall constitute “management rights” within the meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by a Lender with respect to any business issues shall not be deemed to give such Lender, nor be deemed an exercise by such Lender of, control over the Loan Parties’ management or policies.
(b)Agent, Lenders and their respective representatives shall not require or perform any act that would cause any Person (including the Loan Parties) to violate any Healthcare Laws, including HIPAA. In the event that Agent or Lenders propose to undertake activities that any Loan Party reasonably believes would constitute services of a “business associate,” as defined at 45 C.F.R. 160.103, the parties hereto agree to review the matter and, where appropriate, Agent or Lenders may take action to comply with HIPAA, including, without limitation, executing a HIPAA business associate agreement with the applicable Person.
7.3Further Assurances. Each Loan Party shall, and shall cause each other Loan Party to, from time to time execute, deliver and file, alone or with Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, promissory notes or other documents to perfect, give the priority to Agent’s Lien on the Collateral contemplated by the Loan Documents or otherwise evidence Agent’s rights herein. Each Loan Party shall from time to time procure any instruments or documents as may be reasonably requested by Agent, and take all further action that may be necessary, or that Agent may reasonably request, in each case to perfect and protect the Liens granted hereby or pursuant to applicable Loan Documents. In addition, and for such purposes only, each Loan Party hereby authorizes Agent to file such financing statements (including an indication that the financing statement covers “all assets or all personal property” of such Loan Party in accordance with Section 9504 of the UCC), collateral assignments, notices, control agreements, security agreements and other documents without the signature of such Loan Party either in Agent’s name or in the name of Agent as agent and attorney-in-fact for such Loan Party. Each Loan Party shall protect and defend such Loan Party’s title to the Collateral and Agent’s Lien thereon against all material claims and demands of all Persons claiming any interest adverse to such Loan Party or Agent other than Permitted Liens.
7.4Indebtedness. No Loan Party shall (a) create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary or, to the extent permitted by applicable law and within its control, or any Physician Group to do so, other than Permitted Indebtedness, or (b) prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except for (i) the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion, (ii) purchase money Indebtedness pursuant to its then applicable payment schedule, (iii) prepayment by any Subsidiary of (A) inter-company Indebtedness owed by such Subsidiary to a Loan Party, or (B) if such Subsidiary is not a Loan Party, intercompany Indebtedness owed by such Subsidiary to another Subsidiary that is not a Loan Party, or (iv) payments made on Subordinated Indebtedness permitted under the relevant Subordination Agreement or as otherwise permitted hereunder or approved in writing by Agent.
7.5Collateral. Each Loan Party shall, and shall cause each Subsidiary or, to the extent permitted by applicable law and within its control, each Physician Group to, at all times keep the Collateral and all other property and assets used in such Loan Party’s (or such Subsidiary’s or Physician Group’s) business or in which such Loan Party (or such Subsidiary or Physician Group) now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting (x) to the knowledge of any Loan Party, any Physician Group or Joint Venture Company in each case with a value of One Million Dollars ($1,000,000) or more, or (y) the Collateral in each case with a value of One Million Dollars ($1,000,000) or more, such other property and assets, or any Liens thereon; provided, however, that the Collateral and such other property and assets may be subject to Permitted Liens. No Loan Party shall, nor shall it permit any Subsidiary or, to the extent permitted by applicable law and within its control, any Physician Group to, enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Loan Party (or
such Subsidiary or Physician Group) to create, incur, assume or suffer to exist any Lien upon any of its property (including Intellectual Property), whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is a party other than in each case (a) this Agreement and the other Loan Documents, (b) any agreements governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) or letters of credit otherwise permitted hereby, (c) customary restrictions on the assignment of leases, licenses and other agreements, (d) agreements and arrangements relating exclusively to any Excluded Assets, (e) restrictions and conditions imposed by Requirements of Law, and (f) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements (other than in respect of any Wholly-Owned Subsidiary) entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person. Each Loan Party shall cause its Subsidiaries and, to the extent permitted by applicable law and within its control, the Physician Groups to (i) protect and defend such Subsidiary’s (or Physician Group’s) title to its assets from and against all Persons claiming any interest materially adverse to such Subsidiary (or such Physician Group), (ii) at all times to keep such Subsidiary’s (or such Physician Group’s) property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens, provided however there shall be no Liens whatever on any Equity Interests issued by PMAF), other than (A) Liens granted under the Loan Documents or otherwise securing the Obligations and (B) Permitted Liens, and shall give Agent prompt written notice of any legal process affecting (x) to the knowledge of any Loan Party, any Physician Group or Joint Venture Company, in each case, where such legal process has a value of One Million Dollars ($1,000,000) or more, or (y) the Collateral in each case with a value of One Million Dollars ($1,000,000) or more.
7.6Investments. No Loan Party shall directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any Subsidiary or, to the extent permitted by applicable law and within its control, or any Physician Group to do so, other than Permitted Investments.
7.7Distributions.
(a)No Loan Party shall, nor shall it allow any Subsidiary or, to the extent permitted by applicable law and within its control, any Physician Group to, (a) repurchase or redeem any class of stock or other Equity Interest other than (i) pursuant to clause (iii) of the definition of Permitted Investment, or (ii) the conversion of any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (b) declare or pay any cash dividend or make any other cash distribution on any class of stock or other Equity Interest, except that (i) a Subsidiary may pay dividends or make other distributions to such Loan Party or any Subsidiary of such Loan Party, and (ii) any Physician Group or Joint Venture Company may make payments to any Loan Party and may make cash distributions in amounts necessary for its members to pay any Tax liability arising out of such member’s membership in any Physician Group or Joint Venture Company; provided that, any non-Wholly Owned Subsidiary may pay
such cash dividend or may make such cash distribution on any class of stock or other Equity Interest on a pro rata basis in the ordinary course of business and in accordance with past practice, (c) except for Permitted Investments, lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate at any time outstanding, or (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate in any fiscal year.
(b)No Loan Party shall, nor shall it allow any Subsidiary to, directly or indirectly create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Insurance Subsidiary to: (i) pay dividends or make any other distribution on any Subsidiary’s Equity Interests owned by the Loan Parties or their Subsidiaries, (ii) pay any Indebtedness owed to the Loan Parties or their Subsidiaries, (iii) make loans or advances to the Loan Parties or their Subsidiaries, or (iv) transfer any of its property to the Loan Parties or their Subsidiaries.
7.8Transfers. Except for Permitted Transfers, no Loan Party shall, nor shall it permit any Subsidiary or, to the extent permitted by applicable law and within its control, any Physician Group to, voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey (“Transfer”) any equitable, beneficial or legal interest in any material portion of its assets (including, without limitation, pursuant to a Division).
7.9Mergers and Consolidations. No Loan Party shall, nor shall it permit any of its Subsidiaries or, to the extent permitted by applicable law and within its control, any Physician Group to merge, dissolve, liquidate, consolidate with or into another Person, or dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person other than (a) mergers or consolidations of (i) a Subsidiary which is not a Loan Party (other than an Insurance Subsidiary) into another Subsidiary (other than an Insurance Subsidiary) or into another Loan Party, (ii) a Loan Party into another Loan Party (other than Original Guarantor), or (iii) an Insurance Subsidiary into another Insurance Subsidiary, so long as to the extent any Insurance Subsidiary involved in such merger or consolidation is a CMS Liable Insurance Subsidiary, such CMS Liable Insurance Subsidiary is the surviving Person, and (b) the solvent liquidation of a Subsidiary of Loan Party provided that (i) no Event of Default is continuing, and (ii) all the assets of such Subsidiary are distributed to such Loan Party. Notwithstanding the foregoing, a Physician Group may merge or consolidate (x) with another Physician Group, and (y) into a Loan Party (other than Original Guarantor). Each Loan Party may form or acquire any Subsidiary so long as such Loan Party complies in all respects with the requirements set forth in Section 7.13.
7.10Taxes. Each Loan Party shall, and shall cause each of its Subsidiaries and each Physician Group to, (a) pay when due (or within any applicable grace period and proper extensions) all material Taxes of any nature whatsoever now or hereafter imposed or assessed against such Loan Party, such Subsidiary, such Physician Group, or the Collateral or upon such Loan Party’s (or such Subsidiary’s or Physician Group’s) ownership, possession, use, operation or disposition thereof or upon such Loan Party’s (or such
Subsidiary’s, or Physician Group’s) rents, receipts or earnings arising therefrom other than any Taxes contested in good faith and by appropriate proceedings diligently conducted for which adequate reserves are maintained in accordance with GAAP, and (b) accurately file on or before the due date therefor (taking into account any applicable grace period and proper extensions) all federal and state income Tax returns and other material Tax returns required to be filed.
7.11Corporate Changes.
(a)No Loan Party nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without five (5) Business Days’ prior written notice to Agent.
(b)No Loan Party nor any Subsidiary (other than any Specified Insurance Subsidiary) shall suffer a Change in Control.
(c)No Loan Party nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States of America.
(d)If any Loan Party intends to add any new offices or business locations, including warehouses, containing any portion of such Loan Party’s assets or property (other than portable electronic equipment) valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000), then such Loan Party will use commercially reasonable endeavors to cause the landlord of any such new offices or business locations, including warehouses, to execute and deliver a landlord consent in form and substance reasonably satisfactory to Agent.
(e)If any Loan Party intends to deliver any portion of such Loan Party’s assets or property (other than portable electronic equipment) valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000) to a bailee, and Agent and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which such Loan Party intends to deliver the Collateral, then such Loan Party will use commercially reasonable endeavors to cause such bailee to execute and deliver a bailee agreement in form and substance reasonably satisfactory to Agent.
(f)No Loan Party will, nor will it permit any Subsidiary to, engage to any material extent in any business other than those businesses conducted by such Loan Party and its Subsidiaries on the Closing Date or any businesses that are similar, reasonably related, corollary, ancillary, complementary or incidental thereto or in support thereof or representing a reasonable expansion or development thereof.
(g)Without the prior written consent of Agent, no Loan Party will make, or agree to make, any modification, amendment or waiver of any of the terms or provisions of such Loan Party’s Organizational Documents that is adverse to Agent or any of the Lenders.
7.12Deposit Accounts.
(a)No Loan Party shall maintain any Deposit Accounts, or accounts holding Investment Property, except (i) with respect to which Agent has an Account Control Agreement, (ii) any Excluded Account, (iii) Deposit Accounts with a total balance held in all such accounts in the aggregate of less than Two Hundred Fifty Thousand Dollars ($250,000) at any time that are not subject to an Account Control Agreement, and (iv) any other Deposit Account or account holding Investment Property which is opened after the Closing Date provided that (A) the respective Loan Party provides an Account Control Agreement to Agent within forty-five (45) days of the date such Deposit Account or account holding Investment Property is opened and, (B) during the period before effectiveness of the Account Control Agreement, the amount on deposit in all such Deposit Accounts in aggregate shall not exceed One Hundred Thousand Dollars ($100,000).
(b) Each Loan Party, any Subsidiary of such Loan Party, and the Physician Groups shall cause all payments in respect of Accounts payable by any Governmental Account Debtor owing to such Person to be wire transferred or sent via automated clearing house (ACH) directly to the Governmental Collection Accounts. Agent and Lenders hereby disclaim any right or interest (including any security interest or right of offset (or set-off)) in or to such Governmental Collection Account.
7.13Joinder of Subsidiaries. Company shall promptly notify Agent of (i) each Subsidiary formed or acquired subsequent to the Closing Date (including any new Subsidiary formed by Division) other than an Excluded Subsidiary, (ii) each Subsidiary that ceases to be an Excluded Subsidiary subsequent to the Closing Date, or (iii) each Joint Venture Company directly owned by a Loan Party that becomes a Wholly Owned Subsidiary of such Loan Party subsequent to the Closing Date, and, in each case, within thirty (30) days of the date of such notification (or such longer period of time as agreed to by Agent in writing in its sole discretion), Company shall cause any such Subsidiary to execute and deliver to Agent a Joinder Agreement to become a Borrower or Guarantor, and such other documents and instruments as shall be reasonably requested by Agent to effectuate the transactions contemplated by such Joinder Agreement (in each case in form and substance reasonably acceptable to Agent).
7.14CMS Settlement. No Loan Party shall, nor shall it permit any of its Subsidiaries or, to the extent permitted by applicable law and within its control, any Physician Group to make any payments under the CMS Settlement until the “Consolidation and Adjustment Escrow Amount” (as defined in the Stock Purchase Agreement) has been reimbursed in full to the Loan Parties; provided that, notwithstanding the foregoing, any Insurance Subsidiary may directly or indirectly utilize State Regulatory Capital or any other asset of any Insurance Subsidiary, to the extent permissible under applicable law, to, directly or indirectly, make payments pursuant to the CMS Settlement or, upon the complete satisfaction of the portion of the CMS Settlement for which such Insurance Subsidiary is liable, contribute to any other Insurance Subsidiary in accordance with the terms of this Agreement.
7.15Notification of Event of Default. Each Loan Party shall notify Agent promptly (but in any event within two (2) Business Days) after becoming aware of the occurrence of any Event of Default.
7.16[Reserved].
7.17Use of Proceeds. Borrower agrees that the proceeds of the Loans shall be used solely to pay related fees and expenses in connection with this Agreement and for working capital and general corporate purposes (but excluding any payments pursuant to the CMS Settlement prior to the date on which the following conditions are satisfied: (a) the Tranche 3 Milestone has been satisfied, and (b) the “Consolidation and Adjustment Escrow Amount” (as defined in the Stock Purchase Agreement) has been reimbursed in full to the Loan Parties). The proceeds of the Loans will not be used (i) in violation of Anti-Corruption Laws or for the purpose of financing any activities or business of or with any Person that, at the time of such financing, is a Sanctioned Person or in any Sanctioned Country, in each case, except to the extent authorized under applicable Sanctions laws or (ii) for the purpose of “purchasing or carrying” any Margin Stock.
7.18[Reserved].
7.19Material Agreement. No Loan Party shall (a) without the consent of Agent, terminate any License that is a Material Agreement or amend any such License in a manner, in each case, that is reasonably likely to have a material negative impact on the interests of Agent or Lenders under the Loan Documents, and (b) with each Compliance Certificate delivered in relation to the last month of a calendar quarter, give written notice to Agent of entering into a Material Agreement or materially amending or terminating a Material Agreement.
7.20Compliance with Laws.
(a)Each Loan Party (i) shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations), and (ii) shall, or cause its Subsidiaries to, obtain and maintain all Governmental Approvals reasonably necessary in connection with the conduct of such Loan Party’s business, in each case where failure to comply with clauses (i) or (ii) could reasonably be expected to have a Material Adverse Effect. No Loan Party shall become an “investment company,” a company that would be an “investment company” except for the exclusion from the definition of “investment company” in Section 3(c) of the 1940 Act, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation X, T and U of the Federal Reserve Board of Governors).
(b)No Loan Party nor any of its Subsidiaries shall, nor shall such Loan Party or any of its Subsidiaries permit any Affiliate to, directly or indirectly, (i) knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists in violation of applicable Sanctions, (ii) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the
making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (iii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iv) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti Terrorism Law.
(c)Each Loan Party has implemented and shall maintain in effect policies and procedures designed to ensure compliance by such Loan Party, its Subsidiaries and their respective directors, officers, employees and agents with applicable Anti-Corruption Laws and Sanctions, and such Loan Party, its Subsidiaries and their respective officers and employees and to the knowledge of such Loan Party its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.
(d)No Loan Party, nor any of its Subsidiaries or any of their respective directors, officers or employees, or to the knowledge of such Loan Party, any agent for such Loan Party or its Subsidiaries that will act in any capacity in connection with or benefit from the Loan, is a Sanctioned Person. No Loan, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.
7.21Financial Covenants.
(a)Minimum Cash. The Loan Parties shall maintain at all times Qualified Cash in an amount greater than or equal to Fifteen Million Dollars ($15,000,000).
(b)Minimum Adjusted EBITDA. Beginning with the fiscal quarter ending September 30, 2024, the Loan Parties shall maintain Adjusted EBITDA, measured as of the last day of any fiscal quarter of Company and calculated for the trailing twelve (12) month ending on such measurement date, equal to at least the lower of (i) Forty Million Dollars ($40,000,000), and (ii) the amount set forth opposite such measurement date below:
| | | | | |
| Measurement Date | Adjusted EBITDA |
| September 30, 2024 | $943 |
| December 31, 2024 | $17,393 |
| March 31, 2025 | $21,552 |
| June 30, 2025 | $30,077 |
| September 30, 2025 | $37,537 |
| December 31, 2025 | $40,000 |
| March 31, 2026 | $40,000 |
| June 30, 2026 | $40,000 |
| |
| |
| |
| |
| | | | | |
| |
| September 30, 2026 | $40,000 |
| December 31, 2026 | $40,000 |
| March 31, 2027 | $40,000 |
| June 30, 2027 | $40,000 |
| September 30, 2027 | $40,000 |
| December 31, 2027 | $40,000 |
| March 31, 2028 | $40,000 |
7.22Intellectual Property. Each Loan Party shall (i) use commercially reasonable efforts to protect, defend and maintain the validity and enforceability of its Intellectual Property where failure to do so would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents; (ii) promptly advise Agent in writing upon becoming aware of infringements of its Intellectual Property that would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents; and (iii) subject to reasonable business judgement, not allow any Intellectual Property owned by such Loan Party to be abandoned, forfeited or dedicated to the public without Agent’s written consent if such abandonment, forfeiture or dedication to the public would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. If any Loan Party (a) obtains any issued Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, or (b) applies for any Patent or the registration of any Trademark, in each case where failure to so obtain or apply would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents then such Loan Party shall, within fifteen (15) Business Days for Copyrights and mask works, and within thirty (30) Business Days for Patents and Trademarks, as applicable, provide written notice thereof to Agent and shall execute and deliver to the Agent for filing with the United States Patent and Trademark Office or United States Copyright Office, as applicable, such intellectual property security agreements and other documents and take such other actions as Agent may reasonably request in its good faith business judgment to perfect and maintain a first priority perfected security interest (subject only to Permitted Liens) in favor of Agent in such property. If any Loan Party decides to register any Copyrights or mask works in the United States Copyright Office where failure to register would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents, such Loan Party shall: (x) provide Agent with at least fifteen (15) days prior written notice of such Loan Party’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest (subject
only to Permitted Liens) in favor of Agent in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office. Each Loan Party shall provide to Agent with each Compliance Certificate delivered for the last month of a calendar quarter copies of all applications that it files for the registration of Patents, Trademarks, or Copyrights made during the three-month period ending with the month covered by such Compliance Certificate. Thereafter, each Loan Party shall provide, promptly as and to the extent requested by Agent in writing, evidence of the recording of the intellectual property security agreement required for Agent to perfect and maintain a first priority perfected security interest (subject only to Permitted Liens) in such property. Within thirty (30) days of doing so, each Loan Party shall provide written notice to Agent of its entering into or becoming bound by any Restricted License (other than licenses, software as a service or similar agreements for off-the-shelf software that are commercially available to the public). Each Loan Party shall take such commercially reasonable steps as Agent reasonably requests to obtain the consent of, or waiver by, any Person whose consent or waiver is necessary for (1) any Restricted License (other than licenses, software as a service or similar agreements for off-the-shelf software that are commercially available to the public) to be deemed “Collateral” and for Agent to have a security interest in it that is otherwise restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (2) Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Agent’s rights and remedies under this Agreement and the other Loan Documents.
7.23Transactions with Affiliates. No Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly, enter into or permit to exist any transaction of any kind with any Affiliate of such Loan Party or such Subsidiary on terms that are less favorable to such Loan Party or such Subsidiary, as the case may be, than those that would be obtained in an arm’s length transaction from a Person who is not an Affiliate of such Loan Party or such Subsidiary other than (a) as otherwise described on Schedule 7.23 and any amendment, replacement and refinancing thereof that do not impose materially more burdensome terms upon any Loan Party or Subsidiary, (b) Subordinated Indebtedness or equity investments by Company’s investors in such Loan Party or its Subsidiaries, provided that such equity investment does not constitute a Change in Control, (c) transactions between Loan Parties (other than Original Guarantor) and transactions between Subsidiaries which are not Loan Parties, (d) to the extent approved by such Loan Party’s Board of Directors or a duly authorized committee thereof or a duly authorized officer of such Loan Party, reasonable and customary expenses, severance, or employee benefit arrangements for directors and officers of such Loan Party, any Physician Group or any of their respective Subsidiaries, (e) to the extent approved by such Loan Party’s Board of Directors or a duly authorized committee thereof or a duly authorized officer of such Loan Party, compensation and benefits arrangements for directors, officers and other employees of the Loan Parties and their Subsidiaries, (f) transactions consisting of (i) payment of directors’ and officers’ fees and reimbursement of costs and expenses incurred in connection with attending board of director (or comparable governing body) meetings, (ii) reimbursement of out-of-pocket costs and expenses of directors, officers and employees incurred in the ordinary course of
business and (iii) customary indemnities to officers and directors, (g) Permitted Investments, Permitted Indebtedness and transactions permitted by Section 7.7, (h) sales of stock in such Loan Party to Affiliates of such Loan Party not otherwise prohibited by the Loan Documents (including under Section 7.11) and the granting of registration and other customary rights in connection therewith, and (i) transactions with customers, clients, suppliers or joint ventures purchasers, sellers of goods or services or providers of employees or other labor entered into in the ordinary course of business, which are fair to Company and/or its applicable Subsidiary in the good faith determination of the Board of Directors (or similar governing body) of Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party.
7.24Government Compliance. Each Loan Party shall cause the operations and property of such Loan Party and each of its Subsidiaries, and to the extent permitted by applicable law and within its control, each Physician Group to comply with all applicable Healthcare Laws where failure to comply would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. Without limiting the foregoing, the operations and property of each Loan Party, each Subsidiary of such Loan Party, and to the extent within its control, each Physician Group shall take reasonable steps to comply with HIPAA where failure to comply would reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents. Each Loan Party has established and maintains a corporate compliance program that (i) addresses the material Requirements of Law, including all applicable Healthcare Laws, of Governmental Authorities having jurisdiction over its business and operations and the laws of any Medical Reimbursement Program applicable to such Loan Party, and (ii) has been structured to account for the General Compliance Program Guidance issued by the U.S. Department of Health and Human Services regarding characteristics of effective corporate compliance programs except to the extent where failure to establish and maintain such programs would not reasonably be expected to materially and adversely affect such Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents.
7.25Physician Groups and Joint Venture Companies.
(a)Each Loan Party shall cause each Collateral Agreement entered into after the Closing Date to be substantially in the form entered into (or otherwise approved by Agent) as of the Closing Date, including, where applicable, provisions pursuant to which each Specified Physician Group grants a perfected Lien on all or substantially all of its assets to secure its payment obligations owing to such Loan Party thereunder, or otherwise in such form as approved by Agent in its reasonable discretion from time to time thereafter. No Loan Party shall (and shall procure that no Joint Venture Company will) amend, modify or waive any provision of a Collateral Agreement (except for such amendments, modifications or waivers which are required to comply with any applicable law, are permitted by this Agreement or are consented to by Agent) if the effect thereof would be to: (i) in the case of a Management Document, waive, reduce or delay payments due
thereunder, except to the extent the amount due to be paid by such Physician Group exceeds the total cash of such Physician Group after payment of expenses in the ordinary course of business, (ii) release any security interest granted to secure the payments due under a Collateral Agreement or impair the rights and remedies to enforce such security interest, (iii) impair the collateral assignment of all rights, remedies and Liens under such Collateral Agreement in favor of Agent, or (iv) otherwise adversely affect Agent’s interest therein, in any material respect.
(b)Each Loan Party shall, with respect to any Person that becomes a Physician Group or Joint Venture Company after the Closing Date, notify Agent, and with respect to each such new Physician Group or, as the case may be, Joint Venture Company, shall deliver to Agent the following not later than the then-next Compliance Certificate is due in accordance with the terms of this Agreement for the calendar quarter then ended: (i) a copy of the Organizational Documents of such Physician Group or, as the case may be, Joint Venture Company, certified by the Secretary of State of the jurisdiction of incorporation, if applicable; (ii) in the case of any Physician Group, a copy of the Management Documents to which such Physician Group is a party; (iii) in the case of any Specified Physician Group, evidence that such Loan Party has a perfected Lien in substantially all assets of such Physician Group in accordance with subsection (e) below, including a copy of the file-stamped UCC-1 Financing Statement; (iv) (x) a duly executed Collateral Assignment in respect of such Specified Physician Group or, as the case may be, such Joint Venture Company, in each case, that is formed or becomes a Joint Venture Company or Joint Venture Counterparty after the Closing Date (and, for avoidance of doubt, excluding any newly acquired or newly formed subsidiaries of any Joint Venture Company or Joint Venture Counterparty existing as of the date hereof) and, in each case, the applicable Collateral Agreement and (y) an acknowledgement with respect to such Collateral Assignment and certain related matters, substantially in the same form as the acknowledgement entered into as of the Closing Date by the Specified Physician Group (excluding any non-Specified Physician Group) in favor of Agent (or a duly executed joinder by such new Specified Physician Group to the acknowledgement letter entered into as of the Closing Date); and (v) evidence that cash management and auto-debit arrangements consistent with the requirements of subsection (f) below are in effect with respect to such new Physician Group or, as the case may be, Joint Venture Company.
(c)Each Loan Party shall provide Agent with the Compliance Certificate delivered for the last month in each calendar quarter with copies of any new Collateral Agreement or any material amendment to any existing Collateral Agreement entered into during the three month period covered by such Compliance Certificate.
(d)Each Loan Party shall promptly notify Agent, and provide a detailed description of the event or circumstance, including the proposed plan of action and such other information as Agent may reasonably require, if a Collateral Agreement is terminated, or if any written notice of termination thereof is given or received by a party thereto or, to the knowledge of any Responsible Officer, any other event has occurred which would, subject to receipt of notice or passage of time, result in the termination of a Collateral Agreement.
(e)Each Loan Party shall cause each Specified Physician Group to (i) grant a security interest in favor of the applicable Loan Party on all assets of such Specified Physician Group (other than Governmental Healthcare Receivables, any Governmental Collection Account, patient or medical records, controlled substances or any other assets of such Physician Group that may only be owned, directly or indirectly, by a Person licensed to practice medicine) to secure the obligations owing pursuant to the Management Documents in favor of such Loan Party, (ii) take all steps reasonably required to perfect and maintain perfection of such security interest, including filing appropriate UCC-1 financing statements, entering into appropriate documents or arrangements reasonably satisfactory to Agent to establish “control” for purposes of the Code over any deposit account of the Specified Physician Groups (if permitted by applicable law), and (iii) require each Specified Physician Group to notify the applicable Loan Party of any change in legal name, jurisdiction of organization or other change to such Specified Physician Group or the collateral in which it has granted a Lien in favor of a Loan Party to secure the obligations under the Management Documents, which change requires the applicable Loan Party to take any action to ensure continued perfection of its Lien in such collateral, and shall with the Compliance Certificate for the last month of a calendar quarter next delivered, notify Agent of such change occurring during the period covered by such Compliance Certificate together with a copy (file stamped, to the extent practicable) of any UCC-3 financing statement amendment filed or a copy of any other document entered into or evidence of any action taken, as applicable, to ensure continued perfection of such Loan Party’s Lien.
(f)Each Loan Party shall (and shall procure that PMAF and CMH will), with respect to each Physician Group, use commercially reasonable efforts, to the extent permitted by Requirements of Law, to, (i) maintain the capability to auto-debit all fees and other payments owed by such Physician Group pursuant to any Collateral Agreement from a Deposit Account maintained by such Physician Group and shall debit such fees and other payments promptly upon such payments becoming due and payable, but no less frequently than every week; or (ii) require proceeds of Deposit Accounts of such Physician Group to be directed to a Deposit Account maintained in the name of a Loan Party (or, if such Physician Group is PMAFH or CMG, to a Deposit Account maintained in the name of PMAF or CMH, respectively).
(g)Each Loan Party shall, to the extent permitted by applicable law, not permit any Specified Physician Group to guaranty, or grant a Lien on any material portion of its assets to secure Indebtedness of such Loan Party without concurrently entering into a guaranty with respect to the Secured Obligations or granting to Agent a Lien on the same assets, as applicable, provided that any Lien in favor of Agent in accordance with the foregoing shall have first priority except to the extent provided otherwise in this Agreement.
(h)Each Loan Party shall, to the extent permitted by applicable law, not permit any Physician Group to (i) hold, at any time, an aggregate amount of Cash on the balance sheet of such Physician Group in excess of the sum of (A) One Hundred Thousand Dollars ($100,000) plus (B) the aggregate accounts receivable received by such Specified Physician Group during the three (3) Business Day period prior to the transfer of any funds to a Loan
Party (or, in the case of any non-Specified Physician Group, a Joint Venture Company) in accordance with the terms of this Agreement, (ii) own fixed assets with an aggregate book value in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate for such Physician Group, (iii) own Intellectual Property that is material to the business of Company and each of its Subsidiaries, as a whole, or (iv) conduct any business other than providing services as described in the Management Agreement or related thereto for the benefit of such Loan Party (or, in the case of any non-Specified Physician Group, a Joint Venture Company).
(i)Each Loan Party shall to the extent permitted by applicable law and within their control cause each Specified Physician Group and each Joint Venture Company to comply with all terms of the respective Collateral Agreements.
7.26Post-Closing. Each Loan Party shall:
(a)deliver to Agent, in form and substance acceptable to Agent in its sole discretion, within five (5) days of the Closing Date (or such later date as Agent may determine in its reasonable discretion), evidence that all Equity Interests issued by PMAF and held by MPHC as of June 21, 2024 has been transferred to MPHC II;
(b)deliver to Agent, in form and substance acceptable to Agent in its sole discretion, within ten (10) Business Days of the Closing Date (or such later date as Agent may determine in its reasonable discretion), (1) copies of good standing certificates for (i) PMAF, (ii) PMAFH, (iii) BHCC, (iv) BHIC, and (v) Bright Health Insurance Company of Tennessee, a Tennessee corporation, and (2) a Joinder Agreement executed by BHCC;
(c)deliver to Agent, in form and substance acceptable to Agent in its sole discretion, within forty-five (45) days of the Closing Date (or such later date as Agent may determine in its reasonable discretion):
(i)duly executed Account Control Agreement(s) with respect to each Deposit Account and account holding Investment Property (other than an Excluded Account) maintained by a Loan Party;
(ii)all endorsements of each insurance policy required under Section 6.2;
(iii)copies of the amendment to the Management Agreement to which Associates MD Medical Group, Inc., a Delaware corporation, is a party, substantially in the form agreed by Agent and the Company (including the inclusion of security grant language); and
(iv)copies of all acknowledgements in relation to each Collateral Assignment relating to the Management Documents with each Specified Physician Group, duly executed by the parties thereto (other than Agent); and
(d)use commercially reasonable efforts to deliver to Agent, in form and substance acceptable to Agent in its sole discretion, within forty-five (45) days of the Closing Date (or such later date as Agent may determine in its sole discretion):
(i)duly executed landlord consents for offices or business locations, including warehouses, containing in excess of Five Hundred Thousand Dollars ($500,000) of the assets or property of the Loan Parties;
(ii)duly executed bailee agreements for any bailee location holding a portion of assets or property of the Loan Parties valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000); and
(iii)copies of the amendment to the Management Agreement to which CMG is a party substantially in the form agreed by Agent and the Company.
SECTION 8. RIGHT TO INVEST
Until the earlier of (a) the first date on which Agent or Lenders take any action under Section 10 (or otherwise take enforcement action or exercise remedies against a Loan Party at a time when an Event of Default has occurred and is continuing), and (b) termination of all commitments and obligations of the Lenders hereunder or under the other Loan Documents to make any further Advances and repayment in full of all Secured Obligations (other than Surviving Obligations), Lenders or their assignees or nominees shall have the right, in their discretion, to participate in any Subsequent Financing in an aggregate amount of up to Five Million Dollars ($5,000,000) on the same terms, conditions and pricing afforded to others participating in any such Subsequent Financing.
SECTION 9. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall be an “Event of Default”:
9.1Payments. A Loan Party fails to pay (a) any scheduled payment of principal or amount of interest when due under this Agreement or any of the other Loan Documents on the applicable due date, or (b) any other amount due on the Secured Obligations on its due date; provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of (A) Agent or Lenders (or Agent or any Lender’s bank), or (B) Borrower’s bank if Borrower had the funds to make the payment when due and makes the payment within three (3) Business Days following Borrower’s knowledge of such failure to pay; or
9.2Covenants. A Loan Party breaches or defaults in the performance of any covenant under this Agreement, or any of the other Loan Documents, and (a) with respect to a Default under any covenant under this Agreement (other than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.16, 7.17, 7.19(a), 7.21, 7.22, 7.24 and 7.25), any other Loan Document, or any other agreement among any Loan Party, Agent and Lenders, such Default continues for more than fifteen (15) Business Days after the earlier of the date on which (i) Agent or Lenders has given written notice of such Default to Company and (ii) any Loan
Party has actual knowledge of such Default, or (b) with respect to a Default under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.16, 7.17, 7.19(a), 7.21, 7.22, 7.24 and 7.25, the occurrence of such Default; or
9.3Material Adverse Effect. A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect; or
9.4Representations. Any representation or warranty made by any Loan Party in any Loan Document or, as of the Closing Date, in the Warrant shall have been false or misleading in any material respect when made or when deemed made; or
9.5Insolvency. (a) The Loan Parties, taken as a whole, fail to be solvent according to the criteria set forth in Section 5.15; (b) a Loan Party, any of its Subsidiaries (other than any Insurance Subsidiary), or any Physician Group begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against a Loan Party, any of its Subsidiaries (other than any Insurance Subsidiary), or any Physician Group and is not dismissed or stayed within forty-five (45) days (but no Advances shall be made while any of the conditions described in clause (a) exist or until any Insolvency Proceeding is dismissed); or
9.6Judgments; Penalties; Settlements. (a) One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least One Million Dollars ($1,000,000) (not covered by independent third-party insurance as to which liability has not been rejected by such insurance carrier) shall be rendered against any Loan Party or any of its Subsidiaries by any Governmental Authority, and the same are not, within forty-five (45) days after the entry, assessment or issuance thereof, discharged, vacated, or after execution thereof, or stayed pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Advances shall be made prior to the discharge, or stay of such fine, penalty, judgment, order or decree); (b) any Insurance Subsidiary enters into one or more litigation settlement agreements with any plaintiff or claimant at any time after the Closing Date (regardless of whether the litigation action commenced before or after the Closing Date) (“Litigation Settlement Agreement”) involving the payment of money by any Insurance Subsidiary in an amount, individually or in the aggregate, of at least Fifteen Million Dollars ($15,000,000) (regardless of insurance coverage); or (c) any Loan Party is obligated to pay, or makes an Investment into an Insurance Subsidiary where such proceeds are (directly or indirectly) used to pay, amounts owing under a Litigation Settlement Agreement in an amount, individually or in the aggregate, of at least One Million Dollars ($1,000,000); or
9.7Attachment; Levy; Restraint on Business.
(i) The service of process seeking to attach, by trustee or similar process, any material funds of the Loan Parties taken as a whole, any of its Subsidiaries (other than any Insurance Subsidiary), or any Physician Group (in each case, when taken as a whole), or (ii) a notice of lien or levy is filed against any of any Loan Party’s or any of its Subsidiaries’ (other than any Insurance Subsidiary) material assets (when taken as a whole) by any
Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within thirty (30) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise), in each case, unless such action (A) is being contested in good faith and by appropriate proceedings diligently conducted or (B) would otherwise constitute a Permitted Lien; provided, however, no Advances shall be made during any thirty (30) days cure period; or
(ii) any material portion of the assets of all Loan Parties taken as a whole, any of their respective Subsidiaries (other than any Insurance Subsidiary), or any Physician Group (in each case, when taken as a whole) is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents any Loan Party from conducting all or any material part of the business of the Loan Parties as a whole, and the same under subclauses (i) and (ii) hereof are not, within for thirty (30) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise) in each case, unless such action (A) is being contested in good faith and by appropriate proceedings diligently conducted or (B) would otherwise constitute a Permitted Lien; or
9.8Governmental Approvals and Healthcare Permits. Any material Governmental Approval or Healthcare Permit (but not any local business license) shall have been (a) revoked, rescinded, suspended or materially adversely modified or not renewed in the ordinary course for a full term, or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or Healthcare Permit or that could reasonably be expected to result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, materially adverse modification or non-renewal and causes, or could reasonably be expected to cause, a Material Adverse Effect;
9.9Collateral Agreements. The occurrence of a material breach, or default, or similar concept (however defined) under any Collateral Agreement that has a material adverse impact on Agent’s interest or materially and adversely impacts any Loan Party’s ability to perform or pay the Secured Obligations in accordance with the Loan Documents that has not been cured within thirty (30) days after the occurrence thereof; or
9.10Other Obligations. The occurrence of any default under any agreement or obligation of (a) Company or any of its Subsidiaries in connection with the ACO REACH Deficit Obligation or the CMS Settlement resulting in a right or obligation of a Governmental Authority to pursue debt collection, except as set forth in Schedule 9.10(a), or (b) a Loan Party with a third party involving any Indebtedness in excess of One Million Dollars ($1,000,000) (other than a Loan Document) resulting in a right by such third party, whether or not exercised, to accelerate the maturity of such Indebtedness; or
9.11Stop Trade. At any time, an SEC stop trade order or NASDAQ market trading suspension of the common stock of Company shall be in effect for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days, excluding in
all cases a suspension of all trading on a public market, provided that Company shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list the common stock of Company on another public market within sixty (60) days of such notice.
SECTION 10. REMEDIES
10.1General. Upon the occurrence and during the continuance of any one or more Events of Default, Agent may, and at the direction of the Required Lenders shall, accelerate and demand payment of all or any part of the outstanding Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable (provided, that upon the occurrence and during the continuance of an Event of Default of the type described in clause (b) or (c) of Section 9.5, all of the Secured Obligations (including, without limitation, the Prepayment Charge and the End of Term Charge) shall automatically be accelerated and made due and payable, in each case without any further notice or act). Each Loan Party hereby irrevocably appoints Agent as its lawful attorney-in-fact to: (a) exercisable following the occurrence and during the continuance of an Event of Default, (i) sign such Loan Party’s name on any invoice or bill of lading for any account or drafts against account debtors; (ii) demand, collect, sue, and give releases to any account debtor for monies due, settle and adjust disputes and claims about the accounts directly with account debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Agent’s or such Loan Party’s name, as Agent may elect); (iii) make, settle, and adjust all claims under such Loan Party’s insurance policies; (iv) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (v) transfer the Collateral into the name of Agent or a third party as the UCC permits; and (vi) receive, open and dispose of mail addressed to a Loan Party; and (b) (i) endorse such Loan Party’s name on any checks, payment instruments, or other forms of payment or security; and (ii) notify all account debtors to pay Agent directly. Each Loan Party hereby appoints Agent as its lawful attorney-in-fact to sign such Loan Party’s name on any documents necessary to perfect or continue the perfection of Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Secured Obligations (other than Surviving Obligations) have been paid in full and Lender has no further commitment or obligation hereunder or under the other Loan Documents to make any further Advances. Agent’s foregoing appointment as each Loan Party’s attorney in fact, and all of Agent’s rights and powers, coupled with an interest, are irrevocable until all Secured Obligations (other than Surviving Obligations) have been fully repaid and performed and Lender has no further commitment or obligation thereunder or under the other Loan Documents to make any further Advances. Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral. All Agent’s rights and remedies shall be cumulative and not exclusive.
10.2Collection; Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction of the Required Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Agent may elect. Any such sale may be made either at public or private sale at its place of business or elsewhere. Each Loan Party agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Company. Agent may require a Loan Party to assemble the Collateral and make it available to Agent at a place designated by Agent that is reasonably convenient to Agent and such Loan Party. The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the following order of priorities:
First, to Agent, in an amount equal to the sum of all fees owing to Agent hereunder and under any other Loan Document;
Second, to Agent and Lenders in an amount sufficient to pay in full Agent’s and Lenders’ reasonable documented out of pocket costs and professionals’ and advisors’ fees and expenses as described in Section 11.12;
Third, to Lenders, ratably, in an amount equal to the sum of all accrued interest owing to Lenders on the Term Loan Advances hereunder;
Fourth, to Lenders, ratably, in an amount equal to the sum of the outstanding principal and premium, if any owing to Lenders from Borrower on the Term Loan Advances hereunder;
Fifth, to Lenders and Agent, ratably (in proportion to all remaining Secured Obligations owing to each), in an amount equal to the sum of all other outstanding and unpaid Secured Obligations (including principal, interest, and the default rate interest set forth in Section 2.4, if required under this Agreement), in such order and priority as Agent may choose in its sole discretion; and
Finally, after the full and final payment in Cash of all of the Secured Obligations (other than Surviving Obligations) to Borrower or its representatives or as a court of competent jurisdiction may direct.
Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.
10.3No Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of a Loan Party or any other Person, and each Loan Party expressly waives all rights, if any, to require Agent to marshal any Collateral.
10.4Waivers. Each Loan Party waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Agent on which such Loan Party is liable.
10.5Cumulative Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.
SECTION 11. MISCELLANEOUS
11.1Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
11.2Notice. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:
(a)If to Agent:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer Tom Hertzberg, Michael MacMahon and Brian Powers
1 North B Street, Suite 2000
San Mateo, CA 94401
email: [ ]
Telephone: [ ]
(b)If to Lenders:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer Tom Hertzberg, Michael MacMahon and Brian Powers
1 North B Street, Suite 2000
San Mateo, CA 94401
email: [ ]
Telephone: [ ]
(c)If to the Loan Parties:
NeueHealth, Inc.
Attention: General Counsel
8000 Norman Center Drive
Suite 900
Minneapolis, MN 55437
email: [ ]
with a copy (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
Attention: William Brentani
425 Lexington Avenue
New York, NY 10017
or to such other address as each party may designate for itself by like notice.
11.3Entire Agreement; Amendments.
(a)This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Agent’s proposal letter dated May 10, 2024 and the Non-Disclosure Agreement).
(b)Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.3(b). The Required Lenders and Loan Parties party to the relevant Loan Document may, or, with the written consent of the Required Lenders, Agent and Loan Parties party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of Lenders or of Loan Parties hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan Advance, reduce the stated rate of any interest (or fee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by Loan Parties of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Loan Party from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of Section 11.18 or Addendum 3 without the written consent of Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon the applicable Loan Parties, Lenders, Agent and all future holders of the Loans.
11.4No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
11.5No Waiver. The powers conferred upon Agent and Lenders by this Agreement are solely to protect their rights hereunder and under the other Loan Documents and their interest in the Collateral and shall not impose any duty upon Agent or Lenders to exercise any such powers. No omission or delay by Agent or Lenders at any time to enforce any right or remedy reserved to them, or to require performance of any of the terms, covenants or provisions hereof by any Loan Party at any time designated, shall be a waiver of any such right or remedy to which Agent or Lenders is entitled, nor shall it in any way affect the right of Agent or Lenders to enforce such provisions thereafter.
11.6Survival. All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Agent and Lenders and shall survive the execution and delivery of this Agreement. All representations and warranties made in this Agreement shall survive execution. All covenants made in this Agreement shall continue in full force until this Agreement has terminated pursuant to its terms and all Secured Obligations (other than the Surviving Obligations) have been satisfied. Sections 6.3, 11.9, 11.10, 11.11, 11.14, 11.15, 11.17 and 11.18 shall survive the termination of this Agreement.
11.7Successors and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on each Loan Party and its permitted assigns (if any). No Loan Party shall assign its obligations under this Agreement or any of the other Loan Documents without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect. Agent and the Lenders may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to the Loan Parties, and all of such rights shall inure to the benefit of Agent’s and the Lenders’ successors and assigns; provided that as long as no Event of Default has occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its rights hereunder or under the Loan Documents to any Person that is a direct competitor of Borrower (whether as an operating company or direct or indirect parent with voting control over such operating company) or a distressed debt or vulture fund (in each case, as reasonably determined by Agent), it being acknowledged that in all cases, any transfer to an
Affiliate of any Lender or Agent shall be allowed. Notwithstanding the foregoing, (x) in connection with any assignment by a Lender as a result of a forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and Agent and Lenders may assign, transfer or endorse its rights hereunder and under the other Loan Documents to any Person or party and (y) in connection with a Lender’s own financing or securitization transactions, the restrictions set forth herein shall not apply and Agent and Lenders may assign, transfer or endorse its rights hereunder and under the other Loan Documents to any Person or party providing such financing or formed to undertake such securitization transaction and any transferee of such Person or party upon the occurrence of and during the continuance of a default, event of default or similar occurrence with respect to such financing or securitization transaction; provided that no such sale, transfer, pledge or assignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute any such Person or party for such Lender as a party hereto until Agent shall have received and accepted an effective assignment agreement from such Person or party in form satisfactory to Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such assignee as Agent reasonably shall require. Agent, acting solely for this purpose as a non-fiduciary agent of the Loan Parties, shall maintain at one of its offices in the United States a register for the recordation of the names and addresses of Lender(s), and the Term Commitments of, and principal amounts (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 Loan Parties, Agent and Lender(s) shall 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. The Register shall be available for inspection by any Loan Party and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
11.8Participations. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Loan Parties, 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, 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, Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register. Each Loan Party agrees that each participant shall be entitled to the benefits of the provisions in Addendum 1 attached hereto (subject to the requirements and limitations therein, including the requirements under Section 7 of Addendum 1 attached hereto (it being understood that the documentation required under Section 7 of Addendum 1 attached hereto shall be
delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.7; provided that (A) such participant shall not be entitled to receive any greater payment under Addendum 1 attached hereto, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law that occurs after the participant acquired the applicable participation, (B) each Lender agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with Borrower to effectuate the provisions of Addendum 1 with respect to its participant(s), (C) no such participation shall release any Lender from any of its obligations under any Loan Document and (D) if no Event of Default has occurred and is continuing, no participant may be a direct competitor (whether as an operating company or direct or indirect parent with voting control over such operating company) of Borrower (as reasonably determined by Agent).
11.9Governing Law. This Agreement and the other Loan Documents have been negotiated and delivered to Agent and Lenders in the State of New York, and shall have been accepted by Agent and Lenders in the State of New York. Payment to Agent and Lenders by Borrower of the Secured Obligations is due in the State of New York. This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
11.10Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.11 is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court located in the State of New York. By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan), 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 the transactions relating hereto or thereto, 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 Federal (to the extent permitted by law) or New York State court; (b) waives any objection as to jurisdiction or venue referred to in clause (a) of this Section; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents. Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2 and shall be deemed effective and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.
11.11Mutual Waiver of Jury Trial / Judicial Reference.
(a)Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF THE LOAN PARTIES, AGENT AND LENDERS SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY ANY LOAN PARTY AGAINST AGENT, LENDERS OR THEIR RESPECTIVE ASSIGNEE OR BY AGENT, LENDERS OR THEIR RESPECTIVE ASSIGNEE AGAINST ANY LOAN PARTY. This waiver extends to all such Claims, including Claims that involve Persons other than Agent, any Loan Party or any Lenders; Claims that arise out of or are in any way connected to the relationship among Loan Parties, Agent and Lenders; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.
(b)If the waiver of jury trial set forth in Section 11.11(a) is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of New York, New York. Such proceeding shall be conducted in New York, New York, with New York rules of evidence and discovery applicable to such proceeding.
(c)In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.10, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.
11.12Professional Fees. Each Loan Party promises to pay Agent’s and Lenders’ reasonable, documented out of pocket fees and expenses necessary to finalize the Loan Documents, including but not limited to reasonable documented out of pocket attorneys’ fees, UCC searches, filing costs, and other related expenses. In addition, each Loan Party promises to pay any and all reasonable documented out of pocket attorneys’ and other reasonable documented out of pocket professionals’ fees (excluding, for the avoidance of doubt, costs of in-house counsel) and reasonable documented out of pocket expenses incurred by Agent and Lenders in connection with or related to: (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to any Loan Party or the Collateral, and any appeal or review thereof; and (g) any
bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to any Loan Party, the Collateral, the Loan Documents, including representing Agent or Lenders in any adversary proceeding or contested matter commenced or continued by or on behalf of any Loan Party’s estate, and any appeal or review thereof.
11.13Confidentiality. Agent and Lenders acknowledge that items of Collateral and information provided to Agent and Lenders by the Loan Parties are confidential and proprietary information of the Loan Parties (the “Confidential Information”). Accordingly, Agent and Lenders agree that any Confidential Information it may obtain in connection with the Loan Documents or in the course of acquiring, administering, or perfecting Agent’s security interest in the Collateral shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Company, except that Agent and Lenders may disclose any such information:
(a)to its Affiliates and its partners, investors, lenders, directors, officers, employees, agents, advisors, counsel, accountants, representative and other professional advisors if Agent or Lenders in their reasonable discretion determines that access to such information is needed in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this Section or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information and in any case are no less restrictive than this Section 11.13;
(b)if such information is generally available to the public or to the extent such information becomes publicly available other than as a result of a breach of this Section or becomes available to Agent or any Lender, or any of their respective Affiliates on a non-confidential basis from a source other than a Loan Party;
(c)if required or appropriate in any report, statement or testimony required by law or order of any Governmental Authority to be submitted to any Governmental Authority having or claiming to have jurisdiction over Agent or Lenders and any rating agency;
(d)if required or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s or Lenders’ counsel;
(e)to comply with any legal requirement or law applicable to Agent or Lenders or demanded by any Governmental Authority;
(f)to the extent reasonably necessary in connection with the exercise of, or preparing to exercise, or the enforcement of, or preparing to enforce, any right or remedy under any Loan Document (including Agent’s sale, lease, or other disposition of Collateral after the occurrence and during the continuance of an Event of Default), or any action or proceeding relating to any Loan Document;
(g)to any participant or assignee of Agent or Lenders or any bona fide prospective participant or assignee, provided, that such participant or assignee or prospective participant or assignee is subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information which are no are no less restrictive than this Section 11.13;
(h)to any investor or bona fide potential investor in Agent or Lenders; provided that such investor, potential investor, Affiliate or client is subject to confidentiality obligations with respect to the Confidential Information which are no are no less restrictive than this Section 11.13;
(i)otherwise to the extent consisting of general portfolio information that does not identify any Loan Party; or
(j)otherwise with the prior written consent of Company; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents. Agent’s and Lenders’ obligations under this Section 11.13 shall supersede all of their respective obligations under the Non-Disclosure Agreement.
11.14Assignment of Rights. Each Loan Party acknowledges and understands that Agent or Lenders may, subject to Section 11.7, sell and assign all or part of its interest hereunder and under the Loan Documents to any Person or entity (an “Assignee”). After such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and Lenders hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and Lenders shall retain all rights, powers and remedies hereby given. No such assignment by Agent or Lenders shall relieve any Loan Party of any of its obligations hereunder. Lenders agree that in the event of any transfer by it of the promissory note(s) (if any), it will endorse thereon a notation as to the portion of the principal of the promissory note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last paid thereon.
11.15Revival of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against a Loan Party for liquidation or reorganization, if such Loan Party becomes insolvent or makes an assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of such Loan Party’s assets, or if any payment or transfer of Collateral is recovered from Agent or Lenders. The Loan Documents and the Secured Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, Lenders or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full and final payment to Agent or Lenders in Cash.
11.16Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.
11.17No Third-Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lenders and Loan Parties unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, Lenders and the Loan Parties party thereto.
11.18Agency. Agent and each Lender hereby agree to the terms and conditions set forth on Addendum 3 attached hereto. Each Loan Party acknowledges and agrees to the terms and conditions set forth on Addendum 3 attached hereto.
11.19Publicity. Notwithstanding anything else herein to the contrary, each Loan Party hereby agrees that the Agent and Lender may, at Agent’s or such Lender's sole expense, and without any prior approval by or compensation to such Loan Party, make a public announcement of the transactions contemplated by this Agreement, and may publicize or use (a) the other party’s name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the “Publicity Materials”); (b) the names of officers of such other parties in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning such party, in each case, (i) to the extent such information is not deemed confidential in accordance with Section 11.13, and (ii) provided that any such logos, trademarks or servicemarks are used in a manner that does not imply any sponsorship or endorsement by any Loan Party and is in any event consistent with the Loan Parties’ own presentations of such logos, trademarks or servicemarks and such use is solely in a manner not intended to or reasonably likely to harm or disparage any Loan Party or the reputation or goodwill of any of them.
11.20Multiple Borrowers. Each Borrower hereby agrees to the terms and conditions set forth on Addendum 4 attached hereto.
11.21Managerial Assistance. Each Loan Party acknowledges that Hercules Capital, Inc. has elected to be regulated as a business development company under the 1940 Act, and as such is required to make available significant managerial assistance to its portfolio companies. Significant managerial assistance may include, but is not limited to,
guidance and counsel concerning the portfolio company’s management, operations, business objectives and policies, arrangement of financing, management of relationships with financing sources, recruitment of management personnel and evaluation of acquisition and divestiture opportunities. Each Loan Party hereby acknowledges and agrees that it may request such assistance at any time from Hercules Capital, Inc. by contacting [ ].
11.22Electronic Execution of Certain Other Documents. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
11.23Modifications to Loan Documents. This Agreement and each other Loan Document shall be construed to be in accordance with any and all federal and state statutes, regulations, principles and interpretations including, without limitation, those of the foregoing pertaining to taxes, Medicare, Medicaid or other government programs. In the event (a) of any change in any federal, state or local laws, rules, regulations, or interpretations of the same, at any time during the term of this Agreement that makes all or any part of this Agreement or any other Loan Document illegal; or (b) any party hereto determines, based upon the advice of counsel that all or any part of this Agreement is illegal, then the parties hereto will negotiate in good faith to amend this Agreement in a manner consistent with applicable laws.
SECTION 12. GUARANTY.
12.1Guaranty. Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, to Agent on behalf of the Lenders the due and prompt payment (whether at stated maturity, upon acceleration or otherwise and at all times thereafter), performance and discharge of all Secured Obligations. Each Guarantor further agrees that the Secured Obligations may be increased, amended, extended, renewed or otherwise modified in whole or in part without notice to or consent from such Guarantor, and that such actions will not affect the liability of such Guarantor under this Guaranty. All terms of this Guaranty apply to and may be enforced by or on behalf of any domestic or foreign branch or Affiliate of any Lender that extended any portion of the Secured Obligations. Each Guarantor hereby agrees that it is jointly and severally liable for this Guaranty. This guaranty of the Secured Obligations includes in all cases all such Secured Obligations which arise after the filing of a bankruptcy petition with respect to any Loan Party and all such Secured Obligations which would become due but
for the operation of (i) the automatic stay under Section 362(a) of the Bankruptcy Code, (ii) Section 502(b) of the Bankruptcy Code, or (iii) Section 506(b) of the Bankruptcy Code, including interest accruing under the Loan Documents after the filing of a bankruptcy petition, whether or not allowed or allowable as a claim in the Insolvency Proceeding. This Guaranty is a guaranty of prompt and punctual payment of the Secured Obligations, whether at stated maturity, by acceleration or otherwise, and is not merely a guaranty of collection.
12.1Limitation of Liability. Notwithstanding any other provision of this Guaranty, the amount guaranteed by each Guarantor hereunder shall be limited to the extent, if any, required so that its obligations under this Guaranty will not constitute a fraudulent transfer or conveyance and not be subject to avoidance under any applicable Debtor Relief Law or any state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, Uniform Voidable Transactions Act or similar statute or common law.
12.2Term; Reinstatement.
(a)This Guaranty is a continuing guaranty and shall terminate only upon repayment in full of all Secured Obligations (other than Surviving Obligations). If, notwithstanding the foregoing, any Guarantor shall have any nonwaivable right under applicable law or otherwise to terminate or revoke this Guaranty, such Guarantor agrees that such termination or revocation shall not be effective until such applicable Lender receives written notice of such termination or revocation. Such notice shall not affect any Lender’s right and power to enforce rights arising prior to receipt thereof. If any Lender makes Advances or takes any other action after such Guarantor’s termination or revocation but prior to receipt of the requisite notice, any such Lender’s rights with respect thereto shall be the same as if such termination or revocation had not occurred.
(b)Each Guarantor’s liability hereunder shall be reinstated and revived, and any Lender’s rights shall continue, if at any time all or part of any payment of any Secured Obligation is rescinded or must otherwise be returned by any Lender or any other Person upon the bankruptcy, insolvency or reorganization of Borrower or any other Guarantor or for any other reason, all as though such payment had not been made and this Guaranty shall be reinstated if the Agreement had expired or terminated and all of the Secured Obligations had been satisfied prior to the restoration or return of the payment.
12.3Guaranty Absolute and Unconditional; Waiver of Defenses. The liability of each Guarantor under this Guaranty is irrevocable, continuing, unconditional and absolute and the obligations of each Guarantor under this Guaranty will not be reduced, limited, impaired, discharged, subject to setoff, counterclaim, recoupment, or termination, or otherwise affected for any reason (other than repayment in full of all Secured Obligations (other than Surviving Obligations)), and each Guarantor hereby irrevocably waives any defenses to enforcement it may have (now or in the future) based on or arising out of any defense of any Loan Party or the unenforceability of all or any part of the Secured Obligations or any Loan Document or any related agreement or instrument from any cause, or the cessation from any cause of the liability of any Loan Party or any other Person liable for the Secured Obligations, other than repayment in full of all Secured Obligations (other
than Surviving Obligations). Without limiting the foregoing, the obligations of any Loan Party hereunder are not discharged or impaired or otherwise affected by, without limitation: (a) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, change in terms or compromise of any of the Secured Obligations or any other obligation of any Loan Party under any Loan Document, by operation of law or otherwise; (b) any rescission, waiver, amendment or other modification of any Loan Document or any other agreement, including any increase in the Secured Obligations; (c) any change in the corporate existence, structure or ownership of any Loan Party or any of its Subsidiaries; (d) any Insolvency Proceeding affecting any Person, or their assets or any resulting release or discharge of any obligation of any Person; (e) the existence of any claim, setoff or other rights which any Loan Party may have at any time against any Lender or any other Person, whether in connection herewith or in any unrelated transactions; (f) any sale, disposition, application of proceeds, taking, exchange, substitution, release, impairment, or non-perfection of any collateral, or any taking, release, impairment, amendment, waiver, or other modification of any guaranty, for the Secured Obligations; (g) any default in the performance of the Secured Obligations; (h) any failure of any Lender or such Lender’s Affiliates to disclose to any Loan Party any information relating to the business, condition, operations, performance, properties, or prospects of any other Loan Party now or hereafter known to such Person; (i) the release or reduction of liability of any Loan Party, or other guarantor or surety, with respect to the Secured Obligations; (j) the failure of any Loan Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise; or (k) any other circumstance (including any statute of limitations) or manner of administering the Loans or any existence of or reliance on any representation by any Lender that might vary the risk of any Loan Party or otherwise operate as a defense available to, or a legal or equitable discharge of, any Loan Party or any other guarantor or surety (other than repayment in full of all Secured Obligations (other than Surviving Obligations)). Each Loan Party agrees that the payment of all sums payable under the Loan Documents or any part thereof or other act which tolls any statute of limitations applicable to the Loan Documents shall similarly operate to toll the statute of limitations applicable to such Loan Party’s liability under this Guaranty.
12.4Waivers and Acknowledgments.
(a)Each Guarantor hereby unconditionally and irrevocably waives (i) any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all presently existing and future Secured Obligations, (ii) promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor, and any other notice with respect to any of the Secured Obligations and this Guaranty, and any requirement that any Lender protect, secure, perfect, or insure any Lien or any property subject thereto and (iii) any defense based on any right of set-off or recoupment or counterclaim against or in respect of the obligations of such Guarantor under this Guaranty.
(b)Each Guarantor acknowledges that it has received adequate consideration for entering into this Guaranty and that all waivers and acknowledgments under this
Section 12 by such Guarantor are knowingly made and that the Lenders would not enter into the Agreement but for this Guaranty.
(c)Each Guarantor (i) acknowledges and agrees that any Lender will not have any duty to advise of or otherwise disclose any information known to it regarding Borrower’s financial condition or assets or of all other circumstances bearing upon the risk of nonpayment of the Secured Obligations or the nature, scope and extent of the risks that each Guarantor assumes and incurs under this Guaranty and (ii) assumes all responsibility for being and keeping itself informed of such circumstances and risks.
(d)Each Guarantor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations hereunder.
(e)Each Guarantor acknowledges that any Lender may, at its election and without notice to or demand upon such Guarantor, foreclose on any Collateral or other collateral held by it by one or more judicial or non-judicial sales, accept an assignment of any such Collateral or other collateral in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with Borrower or any other Loan Party or guarantor, or exercise any other right or remedy available to it against Borrower or any other Loan Party or guarantor, without affecting or impairing in any way the liability of any Guarantor hereunder except on the occurrence of the repayment in full of all Secured Obligations (other than Surviving Obligations). Each Guarantor hereby waives any defense arising out of such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of subrogation, reimbursement, exoneration, contribution, or indemnification, or other right or remedy of such Guarantor against Borrower or any other Loan Party or guarantor or any Collateral or any other collateral.
12.5Agreement to Pay; Subrogation; Etc. Without limiting any other right that any Lender has at law or in equity against any Loan Party, if any Loan Party fails to pay any Secured Obligation when and as due, whether at maturity, by acceleration, after notice of prepayment, or otherwise, each other Loan Party agrees to promptly pay the amount of such unpaid Obligations to Agent in cash. Each Loan Party hereby waives and no Loan Party shall exercise any rights which it may acquire by reason of any payment made under this Guaranty, whether by way of subrogation, reimbursement or otherwise, in each case, until the prior repayment in full of all Secured Obligations (other than Surviving Obligations). Any amount paid to any Loan Party on account of any payment made under this Guaranty prior to repayment in full of all Secured Obligations (other than Surviving Obligations) shall be held in trust for the benefit of Agent and promptly turned over to Agent. So long as any Secured Obligations remain outstanding, each Loan Party will not take any action or commence any proceeding against any Loan Party, whether in connection with an Insolvency Proceeding or otherwise, to recover any amounts in respect of payments made to any Lender under this Guaranty.
12.6Taxes. For the avoidance of doubt, each Guarantor agrees to observe and perform each of the terms and conditions set forth in Addendum 1 as it relates to such Guarantor in connection with any payments or performance under this Guaranty.
12.7Additional Guarantors. Each Person that is required to become a Guarantor pursuant to Section 7.13 will become a Guarantor, with the same force and effect as if they were originally named as a Guarantor herein, for all purposes of this Agreement upon the execution and delivery by such Person of a joinder in form and substance acceptable to Agent. Each reference to “Guarantor” or “Loan Party” (or any words of like import referring to a Guarantor) in this Agreement or any other Loan Document shall also mean such additional Guarantor; and each reference in this Agreement or any other Loan Document to this “Guaranty” or “Agreement” (or words of like import referring to this Agreement) shall mean this Agreement as supplemented by such joinder. No consent of any other Loan Party will be required for the execution and delivery of any such joinder. The rights and obligations of each Loan Party will remain in full force and effect notwithstanding the addition of any Guarantor as a party to this Agreement.
12.8Cumulative Liability. The liability of each Loan Party as a Guarantor under this Section 12 is in addition to and shall be cumulative with all liabilities of such Loan Party to any Lender under this Agreement and the other Loan Documents to which such Loan Party is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.
SECTION 13. NON-RELIANCE.
Each Lender is (a) is a sophisticated institutional accredited investor with extensive expertise and experience in financial and business matters and in evaluating private companies and purchasing and selling their securities and indebtedness; (b) has conducted and relied upon its own due diligence investigation of the Company and its own in-depth analysis of the merits and risks of this Agreement in making its investment decision and has not relied upon any information provided by Moelis & Company, LLC (“Moelis”) or any investigation of the Company conducted by Moelis; and (c) agrees that Moelis shall have no liability to any Lender in connection with entering into this Agreement.
(SIGNATURES TO FOLLOW)
IN WITNESS WHEREOF, Borrower, Agent and Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.
COMPANY AND ORIGINAL BORROWER:
NeueHealth, Inc.
Signature: /s/ Jeff Craig_____________
Print Name: Jeff Craig
Title: General Counsel and Corporate Secretary
ORIGINAL BORROWERS:
Bright Health Services, Inc.,
Bright Health Management, Inc.,
Bright Health Company of California, Inc.,
Medical Practice Holding Company, LLC
NeueHealth Advantage ACO, LLC
NeueHealth, LLC
NeueHealth Community ACO, LLC
Signature: /s/ Jeff Craig_____________
Print Name: Jeff Craig
Title: Secretary
[Loan and Security Agreement Signature Page]
ORIGINAL BORROWERS:
NeueHealth Collaborative Care, LLC
NeueHealth Premier ACO, LLC
NeueHealth Accountable Care, LLC
NeueHealth Partners, LLC
NeueHealth Partner Services, LLC
NeueHealth Partners of Florida, LLC
NeueHealth Partners of California, LLC
NeueHealth Partners Florida RBE, LLC
Signature: /s/ Jonathan Bakewicz______
Print Name: Jonathan Bakewicz
Title: Secretary
ORIGINAL GUARANTOR:
NeueHealth Partners Texas RBE, LLC
Signature: /s/ Jeff Craig_____________
Print Name: Jeff Craig
Title: Secretary
[Loan and Security Agreement Signature Page]
Accepted in San Mateo, California:
AGENT:
HERCULES CAPITAL, INC.
Signature: /s/ Seth Meyer___________
Print Name: Seth Meyer
Title: Chief Financial Officer
LENDERS:
HERCULES CAPITAL, INC.
Signature: /s/ Seth Meyer___________
Print Name: Seth Meyer
Title: Chief Financial Officer
HERCULES PRIVATE GLOBAL VENTURE GROWTH FUND I L.P.
BY: Hercules Adviser LLC, its Investment Adviser
Signature: /s/ Seth Meyer___________
Print Name: Seth Meyer
Title: Authorized Signatory
HERCULES PRIVATE CREDIT FUND 1 L.P.
BY: Hercules Adviser LLC, its Investment Adviser
Signature: /s/ Seth Meyer___________
Print Name: Seth Meyer
Title: Authorized Signatory
[Signature page to Loan and Security Agreement]
Table of Addenda, Exhibits and Schedules
Annex A: Original Borrowers
Annex B: Original Joint Venture Companies
Annex C: Original Insurance Subsidiaries
Addendum 1: Taxes; Increased Costs
Addendum 2: [Reserved]
Addendum 3: Agent and Lender Terms
Addendum 4: Multiple Loan Party Terms
Addendum 5: Delivery Instructions
Exhibit A: Advance Request
Attachment to Advance Request
Exhibit B: Name, Locations, and Other Information
Exhibit C: Patents, Trademarks, Copyrights and Licenses
Exhibit D: Deposit Accounts and Investment Accounts
Exhibit E: Compliance Certificate
Exhibit F: Joinder Agreement
Exhibit G: Form of Warrant
Exhibit H: ACH Debit Authorization Agreement
Exhibit I: [Reserved.]
Exhibit J-1: Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-2: Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-3: Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-4: Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Schedule 1.1 Commitments
Schedule 1 [Reserved.]
Schedule 1A Existing Permitted Indebtedness
Schedule 1B Existing Permitted Investments
Schedule 1C Existing Permitted Liens
Schedule 5.3 Consents, Etc.
Schedule 5.6 Laws
Schedule 5.8 Tax Matters
Schedule 5.9 Intellectual Property Claims
Schedule 5.10 Intellectual Property
Schedule 5.11 Borrower Products
Schedule 5.13 Employee Loans
Schedule 5.14 Subsidiaries
Schedule 5.16(a) Healthcare Laws
Schedule 5.16(g) ACO REACH Deficit Obligation
Schedule 5.18(a) Material Outstanding Disputes and Liabilities of Insurance Subsidiaries
Schedule 5.18(b) CMS Settlement
Schedule 7.23 Affiliate Transactions
Schedule 9.10(a) Other Obligations
ANNEX A to LOAN AND SECURITY AGREEMENT
ORIGINAL BORROWERS
1.Company
2.Bright Health Services, Inc., a Delaware corporation
3.Bright Health Management, Inc., a Delaware corporation
4.NeueHealth Collaborative Care, LLC, a Delaware limited liability company
5.MPHC
6.MPHC II
7.NeueHealth Advantage ACO, LLC, a Delaware limited liability company
8.NeueHealth Premier ACO, LLC, a Delaware limited liability company
9.NeueHealth Accountable Care, LLC, a Delaware limited liability company
10.NeueHealth Partners, LLC, a Delaware limited liability company
11.NeueHealth, LLC, a Delaware limited liability company
12.NeueHealth Community ACO, LLC, a Delaware limited liability company
13.NeueHealth Partner Services, LLC, a Delaware limited liability company
14.NeueHealth Partners of Florida, LLC, a Delaware limited liability company
15.NeueHealth Partners of California, LLC, a Delaware limited liability company
16.NeueHealth Partners Florida RBE, LLC, a Delaware limited liability company
ANNEX B to LOAN AND SECURITY AGREEMENT
ORIGINAL JOINT VENTURE COMPANIES
1.Joint Venture Companies
(a)PMAF
(b)CMH
2.Subsidiaries of Joint Venture Companies
(a)NeueHealth Partners of Central Florida, LLC, a Delaware limited liability company
(b)Premier Specialty Care, LLC, a Delaware limited liability company
(c)Med Care Centers, LLC, a Florida limited liability company
(d)Med Care Express, LLC, a Florida limited liability company
(e)Centrum Pharmacy, LLC, a Delaware limited liability company
(f)Medlife Wellness Centers, LLC, a Florida limited liability company
(g)Centrum Specialty Network, LLC, a Florida limited liability company
(h)Centrum Health IP, LLC, a Delaware limited liability company
(i)Centrum Medical Holdings of Texas, LLC, a Delaware limited liability company
(j)Med Plan Clinic, LLC, a Florida limited liability company
(k)Medcare Quality Medical Centers, LLC, a Florida limited liability company
(l)Centrum Medical Center – Airport, LLC, a Florida limited liability company
(m)Centrum Medical Center – East Hialeah, LLC, a Florida limited liability company
(n)Centrum Medical Center – West Hialeah, LLC, a Florida limited liability company
(o)Centrum Medical Center – Miami Gardens, LLC, a Florida limited liability company
(p)Centrum Medical Center –South Dade, LLC, a Florida limited liability company
(q)Centrum Medical Center – Westchester, LLC, a Florida limited liability company
(r)Centrum Medical Center – Little Havana 27 Ave, LLC, a Florida limited liability company
(s)Centrum Medical Center – Little Havana 12 Ave, LLC, a Florida limited liability company
(t)Centrum Medical Centers of Coral Springs, LLC, a Florida limited liability company
(u)Centrum Medical Centers of Margate, LLC, a Florida limited liability company
(v)Centrum Medical Centers of Davie, LLC, a Florida limited liability company
(w)Centrum Medical Centers of Hallandale, LLC, a Florida limited liability company
(x)Centrum Medical Centers of Lighthouse Point, LLC, a Florida limited liability company
(y)Centrum Medical Centers of Fort Lauderdale, LLC, a Florida limited liability company
(z)Centrum Medical Centers of Sheridan, LLC, a Florida limited liability company
(aa)Centrum Medical Centers of Miramar, LLC, a Florida limited liability company
(ab)Centrum Medical Center – Homestead, LLC, a Florida limited liability company
(ac)Quantum Inpatient Medical Services, LLC, a Florida limited liability company
ANNEX C to LOAN AND SECURITY AGREEMENT
ORIGINAL INSURANCE SUBSIDIARIES
1.BHCF
2.BHCI
3.BHCT
4.Bright Health Company of Arizona, an Arizona corporation
5.Bright Health Company of Georgia, a Georgia domestic insurance company
6.Bright Health Company of North Carolina, a North Carolina corporation
7.Bright Health Company of South Carolina, Inc., a South Carolina corporation
8.Bright Health Insurance Company, a Colorado corporation
9.Bright Health Insurance Company of New York, a New York corporation
10.Bright Health Insurance Company of Ohio, Inc., an Ohio corporation
11.Bright Health Insurance Company of Tennessee, a Tennessee corporation
12.True Health New Mexico, Inc., a New Mexico corporation
ADDENDUM 1 to LOAN AND SECURITY AGREEMENT
TAXES; INCREASED COSTS
1.Defined Terms. For purposes of this Addendum 1:
a.“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
b.“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Term Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or Term Commitment or (B) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2 or Section 4 of this Addendum 1, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 7 of this Addendum 1 and (iv) any withholding Taxes imposed under FATCA.
c.“FATCA” means Sections 1471 through 1474 of the Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities (and any related laws, regulations or official administrative practices) implementing the foregoing.
d.“Foreign Lender” means a Lender that is not a U.S. Person.
e.“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.
f.“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
g.“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
h.“Recipient” means Agent or any Lender, as applicable.
i.“Withholding Agent” means Borrower and Agent.
2.Payments Free of Taxes. Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2 or Section 4 of this Addendum 1) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
3.Payment of Other Taxes by Borrower. Without duplication of other amounts payable by Borrower under this Addendum 1, Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.
4.Indemnification by Borrower. Borrower shall indemnify each Recipient, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under Section 2 of this Addendum 1 or this Section 4) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate describing the amount of such payment or liability delivered to Borrower by a Lender (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. In addition, Borrower agrees to pay, and to hold Agent and any Lender harmless from, any and all liabilities with respect to, or resulting from any delay
in paying, any and all excise, sales or other similar Taxes (other than Excluded Taxes of Agent or such Lender) that may be payable or determined to be payable with respect to any of the Collateral.
5.Indemnification by Lenders. Each Lender shall severally indemnify Agent, within ten (10) days after demand therefor, for (a) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified Agent for such Indemnified Taxes and without limiting the obligation of Borrower to do so), (b) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.8 of the Agreement relating to the maintenance of a Participant Register and (c) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by 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. A certificate as to the amount of such payment or liability delivered to any Lender by Agent shall be conclusive absent manifest error. Each Lender hereby authorizes 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 Agent to Lenders from any other source against any amount due to Agent under this Section 5.
6.Evidence of Payments. As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to the provisions of this Addendum 1, Borrower shall deliver to 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 Agent.
7.Status of Lenders.
a.Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Agent, at the time or times prescribed by applicable law or reasonably requested by Borrower or Agent, such properly completed and executed documentation reasonably requested by Borrower or Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Agent, including IRS Form W-9, as will enable Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 7(b)(i), 7(b)(ii) and 7(b)(iv) of this Addendum 1) shall not be required if in such Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
b.Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person,
i.any Lender that is a U.S. Person shall deliver to Borrower and Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax; provided, however, that if the Lender is a disregarded entity for U.S. federal income tax purposes, it shall provide the appropriate withholding form of its beneficial owner;
ii.any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), whichever of the following is applicable:
A.in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
B.executed copies of IRS Form W-8ECI;
C.in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or
D.to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;
iii.any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Agent to determine the withholding or deduction required to be made; and
iv.if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or 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 Borrower or Agent as may be necessary for Borrower and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iv), “FATCA” shall include any amendments made to FATCA after the Closing Date.
a.Each Lender 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 Borrower and Agent in writing of its legal inability to do so.
b.To the extent legally permissible, (i) in the event that Agent is a U.S. Person, Agent shall deliver an IRS Form W-9 to Borrower and (ii) if Agent is not a U.S. Person, Agent shall deliver to Borrower the applicable IRS Form W-8 certifying its exemption or reduction from U.S. withholding Taxes with respect to amounts payable hereunder, on or prior to the date Agent becomes a party to this Agreement. Upon reasonable request of Borrower, Agent shall provide updated documentation previously provided (or a successor form thereto), provided that the Agent
acknowledges that such request shall be considered reasonable when any documentation previously delivered has expired or become obsolete or invalid.
8.Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to the provisions of this Addendum 1 (including by the payment of additional amounts pursuant to the provisions of this Addendum 1), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under the provisions of this Addendum 1 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 8 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 8, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 8 the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 8 shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
9.Increased Costs. If any change in applicable law shall subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, and the result shall be to increase the cost to such Recipient of making, converting to, continuing or maintaining any Term Loan Advance or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by such Recipient (whether of principal, interest or any other amount), then, upon the request of such Recipient, Borrower will pay to such Recipient such additional amount or amounts as will compensate such Recipient for such additional costs incurred or reduction suffered.
10.Mitigation Obligations. If any Lender requests compensation under Section 9 of this Addendum 1 or otherwise requires that the Borrower pay any Indemnified Taxes to any Lender or Governmental Authority pursuant to this Addendum 1, then at the request of the Borrower, such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to this Addendum 1 in the future, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.
The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
11.Survival. Each party’s obligations under the provisions of this Addendum 1 shall survive the resignation or replacement of Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
ADDENDUM 2 to LOAN AND SECURITY AGREEMENT
[Reserved]
ADDENDUM 3 to LOAN AND SECURITY AGREEMENT
Agent and Lender Terms
(a)Each Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its behalf as Agent hereunder and under the other Loan Documents and irrevocably authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Agent shall have only those duties which are specified in this Agreement, and it may perform such duties by or through its agents, representatives or employees. In performing its duties on behalf of Lenders, Agent shall exercise the same care which it would exercise in dealing with loans made for its own account, but it shall not be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of all or any of the Loan Documents, or for any representations, warranties, recitals or statements made therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents furnished or delivered in connection herewith or therewith by Agent to any Lender or by or on behalf of any Loan Party to Agent or any Lender, or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein, as to the use of the proceeds of the Term Loan Advances, the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent. Agent shall not be responsible for insuring the Collateral or for the payment of any Taxes, assessments, charges or any other charges or liens of any nature whatsoever upon the Collateral or otherwise for the maintenance of the Collateral, except in the event Agent enters into possession of a part or all of the Collateral, in which event Agent shall preserve the part in its possession. Unless the officers of Agent acting in their capacity as officer of Agent on Borrower’s account have actual knowledge thereof or have been notified in writing thereof by Lenders, Agent shall not be required to ascertain or inquire as to the existence or possible existence of any Event of Default.
(b)Neither Agent nor any of its officers, directors, employees, attorneys, representatives or agents shall be liable to Lenders for any action taken or omitted hereunder or under any of the other Loan Documents or in connection herewith or therewith unless caused by its or their gross negligence or willful misconduct. No provision of this Agreement or of any other Loan Document shall be deemed to impose any duty or obligation on Agent to perform any act or to exercise any power in any jurisdiction in which it shall be illegal, or shall be deemed to impose any duty or obligation on Agent to perform any act or exercise any right or power if such performance or exercise (a) would subject Agent to a Tax in a jurisdiction where it is not then subject to a Tax or (b) would require Agent to qualify to do business in any jurisdiction where it is not so qualified. Without prejudice to the generality of the
foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or (where so instructed) refraining from acting under this Agreement or under any of the other Loan Documents in accordance with the instructions of Lenders. Agent shall be entitled to refrain from exercising any power, discretion or authority vested in it under this Agreement unless and until it has obtained the written instructions of Lenders. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Agent in its individual capacity. With respect to its participation in the Loan Agreement hereunder, Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same rights and powers as though it were not performing the duties and functions delegated to it hereunder and the term “Lender” or “Lenders” or any similar term shall unless the context clearly indicates otherwise include Agent in its individual capacity.
(c)Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of e-mail, to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct, Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and conforming to the requirements of this Agreement or any of the other Loan Documents. Agent may consult with counsel, and any opinion or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken, not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith. Agent shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction. Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by this Agreement and the other Loan Documents at the request or direction of Lenders unless Agent shall have been provided by Lenders with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction.
(d)Each Lender agrees to indemnify Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting the obligation of Borrower to do so), according to its respective Term Commitment percentages (based upon the total outstanding Term Commitments) in effect on the date on which indemnification is sought under this Addendum 3, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against Agent in any way relating to or arising out of, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by Agent under or in connection with any of the foregoing; The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
(e)To the extent not reimbursed either by Borrower or from the application of Collateral proceeds pursuant to Section 10.2, a Lender (the “Indemnified Lender”) shall be indemnified by the other Lender (an “Indemnifying Lender”), on a several basis in proportion to each Lender’s pro rata portion of the Term Commitment, and each Indemnifying Lender agrees to reimburse the Indemnified Lender for the Indemnifying Lender’s pro rata share of the following items (an “Indemnified Payment”):
(i)all reasonable out-of-pocket costs and expenses of the Indemnified Lender incurred by the Indemnified Lender in connection with the discharge of its activities under this Agreement or the Loan Agreement, including reasonable legal expenses and attorneys’ fees; provided, that the Indemnified Lender shall consult with the other Lender regarding the incurrence of such costs and expenses at reasonable intervals (but not more often than monthly) and any such reasonable costs and expenses shall be “Claims” hereunder notwithstanding any disagreement by the other Lender as to their incurrence; and
(ii)from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, which may be imposed on, incurred by or asserted against the Indemnified Lender in any way relating to or arising out of this Agreement, or any action taken or omitted by the Indemnified Lender hereunder;
provided, however, that the Indemnified Lender shall not be reimbursed or indemnified for an Indemnified Payment, except to the extent that the Indemnified Lender paid more than its ratable share of such payment. All Indemnified Payments as set forth in this clause (e) to an Indemnified Lender are intended to be paid ratably by the other Lender.
(f)Agent in Its Individual Capacity. The Person serving as 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 Agent and the term “Lender” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity.
(g)Exculpatory Provisions. Agent shall have no duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Agent shall not:
(i)be subject to any fiduciary, advisory or other implied duties, regardless of whether any Default or any Event of Default has occurred and is continuing;
(ii)have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by Lenders, provided that Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable law; and
(iii)except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and Agent shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by any Person serving as Agent or any of its Affiliates in any capacity.
(h)In connection with any lawful exercise of Enforcement Actions hereunder, neither any Agent nor any Lender or any of its partners, or any of their respective directors, officers, employees, attorneys, accountants, or agents shall be liable as such for any action taken or omitted by it or them, except for its or their own fraud, gross negligence or willful misconduct with respect to such actions or its obligations under this Agreement.
(i)Each Lender and Agent may execute any of its powers and perform any duties hereunder either directly or by or through agents or attorneys-in-fact. Each Lender and Agent shall be entitled to advice of counsel concerning all matters pertaining to such powers and duties. No Lender or Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it, if the selection of such agents or attorneys-in-fact was done without gross negligence or willful misconduct.
(j)Each Lender agrees that it will make its own independent investigation of the financial condition and affairs of the Loan Parties in connection with the making of Term Loan Advances pursuant to the Loan Agreement and has made and shall continue to make its own appraisal of the creditworthiness of the Loan Parties. Neither Agent nor any Lender shall have any duty or responsibility either initially or on a continuing basis to make any such investigation or any such appraisal on behalf of all Lenders or to provide the other Lenders with any credit or other information with respect thereto whether coming into its possession before the Closing Date or any time or times thereafter and shall further have no responsibility with respect to the accuracy of or the completeness of the information provided to Lenders by the Loan Parties.
ADDENDUM 4 to LOAN AND SECURITY AGREEMENT
Multiple Loan Party Terms
(a)Loan Party’s Agent. Each Loan Party hereby irrevocably appoints Company as its agent, attorney-in-fact and legal representative for all purposes, including (i) for each Borrower, requesting disbursement of the Term Loan, and (ii) for each Loan Party, (A) receiving account statements and other notices and communications to Loan Parties (or any of them) from Agent or any Lender, and (B) to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Loan Party notwithstanding that they may affect such Loan Party, without reference to or the consent of such Loan Party, with such Loan Party to be bound as though such Loan Party itself had executed or made the agreements or effected the amendments, supplements or variations. Agent may rely, and shall be fully protected in relying, on any request for the Term Loan Advances, disbursement instruction, report, information or any other notice or communication made or given by Company, whether in its own name or on behalf of one or more of the other Loan Parties, and Agent shall not have any obligation to make any inquiry or request any confirmation from or on behalf of any other Loan Party as to the binding effect on it of any such request, instruction, report, information, other notice or communication, nor shall the joint and several character of Loan Parties’ obligations hereunder be affected thereby. Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by Company or given to Company under any Loan Document on behalf of another Loan Party or in connection with any Loan Document (whether or not known to any other Loan Party and whether occurring before or after such other Loan Party became an Loan Party under any Loan Document) shall be binding for all purposes on that Loan Party as if that Loan Party had expressly made, given or concurred with it.
(b)Waivers. Each Loan Party hereby waives with respect to the Secured Obligations incurred by any other Loan Party: (i) any right to require Agent to institute suit against, or to exhaust its rights and remedies against, such other Loan Party or any other person, or to proceed against any property of any kind which secures all or any part of the Secured Obligations, or to exercise any right of offset or other right with respect to any reserves, credits or deposit accounts held by or maintained with Agent or any Indebtedness of Agent or any Lender to such other Loan Party, or to exercise any other right or power, or pursue any other remedy Agent or any Lender may have; (ii) any defense arising by reason of any disability or other defense of such other Loan Party or any guarantor or any endorser, co-maker or other person, or by reason of the cessation from any cause whatsoever of any liability of such other Loan Party or any guarantor or any endorser, co-maker or other person, with respect to all or any part of the Secured Obligations, or by reason of any act or omission of Agent or others which directly or indirectly results in the discharge or release of such other Loan Party or any guarantor or any other person or any Secured Obligations or any security therefor, whether by operation of law or otherwise; (iii) any defense arising by reason of any failure of Agent to obtain, perfect, maintain or keep in force any Lien on, any property of any Loan Party
or any other person; (iv) any defense based upon or arising out of any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against such other Loan Party or any guarantor or any endorser, co-maker or other person, including without limitation any discharge of, or bar against collecting, any of the Secured Obligations (including without limitation any interest thereon), in or as a result of any such proceeding. Until all of the Secured Obligations have been paid and discharged in full (other than Surviving Obligations), nothing shall discharge or satisfy the liability of any Loan Party hereunder except the full performance and payment of all of the Secured Obligations (other than Surviving Obligations). If any claim is ever made upon Agent for repayment or recovery of any amount or amounts received by Agent in payment of or on account of any of the Secured Obligations, because of any claim that any such payment constituted a preferential transfer or fraudulent conveyance, or for any other reason whatsoever, and Agent repays all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over Agent or any of its property, or by reason of any settlement or compromise of any such claim effected by Agent with any such claimant (including without limitation the any other Loan Party), then and in any such event, each Loan Party agrees that any such judgment, decree, order, settlement and compromise shall be binding upon such Loan Party, notwithstanding any revocation or release of this Agreement or the cancellation of any note or other instrument evidencing any of the Secured Obligations, or any release of any of the Secured Obligations, and each Loan Party shall be and remain liable to Agent and Lenders under this Agreement for the amount so repaid or recovered, to the same extent as if such amount had never originally been received by Agent or any Lender, and the provisions of this sentence shall survive, and continue in effect, notwithstanding any revocation or release of this Agreement. Each Loan Party hereby expressly and unconditionally waives all rights of subrogation, reimbursement and indemnity of every kind against any other Loan Party, and all rights of recourse to any assets or property of any other Loan Party, and all rights to any collateral or security held for the payment and performance of any Secured Obligations, including (but not limited to) any of the foregoing rights which Loan Party may have under any present or future document or agreement with any other Loan Party or other person, and including (but not limited to) any of the foregoing rights which any Loan Party may have under any equitable doctrine of subrogation, implied contract, or unjust enrichment, or any other equitable or legal doctrine.
(c)Consents. Each Loan Party hereby consents and agrees that, without notice to or by Loan Party (except any notices expressly required by the Loan Documents) and without affecting or impairing in any way the obligations or liability of Loan Party hereunder, Agent may, from time to time before or after revocation of this Agreement, do any one or more of the following in its sole and absolute discretion: (i) accept partial payments of, compromise or settle, renew, extend the time for the payment, discharge, or performance of, refuse to enforce, and release all or any parties to, any or all of the Secured Obligations; (ii) grant any other indulgence to any Loan Party or any other Person in respect of any or all of the Secured Obligations or any other matter; (iii) accept, release, waive, surrender, enforce, exchange, modify, impair, or extend the time for the performance, discharge, or payment of, any and all property of any kind securing any or
all of the Secured Obligations or any guaranty of any or all of the Secured Obligations, or on which Agent at any time may have a Lien, or refuse to enforce its rights or make any compromise or settlement or agreement therefor in respect of any or all of such property; (iv) substitute or add, or take any action or omit to take any action which results in the release of, any one or more other Loan Parties or any endorsers or guarantors of all or any part of the Secured Obligations, including, without limitation one or more parties to this Agreement, regardless of any destruction or impairment of any right of contribution or other right of the Loan Parties; (v) apply any sums received in respect of the Secured Obligations from any other Loan Party, any guarantor, endorser, or co-signer, or from the disposition of any Collateral or security, to the Secured Obligations that are then due and payable. Each Loan Party consents and agrees that Agent shall be under no obligation to marshal any assets in favor of the Loan Parties, or against or in payment of any or all of the Secured Obligations. Each Loan Party further consents and agrees that Agent shall have no duties or responsibilities whatsoever with respect to any property securing any or all of the Secured Obligations. Without limiting the generality of the foregoing, Agent shall have no obligation to monitor, verify, audit, examine, or obtain or maintain any insurance with respect to, any property securing any or all of the Secured Obligations.
(d)Independent Liability. Each Loan Party hereby agrees that one or more successive or concurrent actions may be brought hereon against such Loan Party, in the same action in which any other Loan Party may be sued or in separate actions, as often as deemed advisable by Agent. Each Loan Party is fully aware of the financial condition of each other Loan Party and is executing and delivering this Agreement based solely upon its own independent investigation of all matters pertinent hereto, and such Loan Party is not relying in any manner upon any representation or statement of Agent or any Lender with respect thereto. Each Loan Party represents and warrants that it is in a position to obtain, and each Loan Party hereby assumes full responsibility for obtaining, any additional information concerning any other Loan Party’s financial condition and any other matter pertinent hereto as such Loan Party may desire, and such Loan Party is not relying upon or expecting Agent to furnish to it any information now or hereafter in Agent’s possession concerning the same or any other matter.
(e)Subordination. All Indebtedness of a Loan Party now or hereafter arising held by another Loan Party is subordinated to the Secured Obligations and the Loan Party holding the Indebtedness shall take all actions reasonably requested by Agent to effect, to enforce and to give notice of such subordination.
ADDENDUM 5 to LOAN AND SECURITY AGREEMENT
Delivery Instructions
The Compliance Certificate shall be uploaded and executed via Lumonic1. All other financial reports required to be furnished to Agent pursuant to Section 7.1 shall be submitted via Lumonic.
The Compliance Certificate and other financial reports required to be furnished to Agent pursuant to Section 7.1 may be sent to [ ] with a copy to [ ], should access to Lumonic be temporarily unavailable.
1 All references to Lumonic shall be interpreted as the Portfolio Management Software currently in use by Agent. Lumonic can be reached at the following URL: https://lumonic.com/
EXHIBIT A
ADVANCE REQUEST
To: Agent: Date: __________, 202[ ]
Hercules Capital, Inc. (“Agent”)
1 North B Street, Suite 2000
San Mateo, CA 94401
email: [ ]
Attn:
Neuehealth, Inc., a Delaware corporation (the “Company”), on behalf of all Borrowers, hereby requests Agent to cause Lenders to make a[Tranche 1] [Tranche 2] [Tranche 3] [Tranche 4] Advance in the amount of _____________________ Dollars ($________________) (the “Advance Amount”) on ______________, _____ (the “Advance Date”) pursuant to the Loan and Security Agreement between (among others) Borrower, Agent and Lenders (the “Agreement”). Capitalized words and other terms used but not otherwise defined herein are used with the same meanings as defined in the Agreement.
Please:
(a) Issue a check payable to Company ________
or
(b) Wire Funds to Company’s account ________
Bank: _____________________________
Address: _____________________________
_____________________________
ABA Number: _____________________________
Account Number: _____________________________
Account Name: _____________________________
Contact Person: _____________________________
Phone Number
To Verify Wire Info: _____________________________
Email address: _____________________________
Company, on behalf of Borrower, represents that the conditions precedent to the Advance set forth in the Agreement shall be satisfied upon the making of such Advance, including but not limited to: (i) that no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing; (ii) that the representations and warranties set forth in the Loan Documents are and shall be true and correct in all material respects on and as of the Advance Date 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 and after giving effect in all cases to any standard(s) of materiality as to such representations and warranties; and
(iii) that as of the Advance Date, no Default or Event of Default has occurred and is continuing. Borrower understands and acknowledges that Agent has the right to review the financial information supporting this representation and, based upon such review in its reasonable discretion, Lenders may decline to fund the requested Advance.
Company, on behalf of Borrower, hereby represents that Borrower’s corporate status and locations have not changed since the date of the Agreement or, if the Attachment to this Advance Request is completed, are as set forth in the Attachment to this Advance Request.
[Company hereby authorizes Agent to deduct an amount from the proceeds of this Advance to be applied towards the payment of the Tranche Facility Charge applicable to this Advance.]2
Company agrees to notify Agent promptly before the funding of the Loan if any of the matters which have been represented above shall not be true and correct on the Advance Date and if Agent has received no such notice before the Advance Date then the statements set forth above shall be deemed to have been made and shall be deemed to be true and correct as of the Advance Date.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
This Advance Request is duly executed as of the date set forth above.
COMPANY: NEUEHEALTH, INC., on behalf of all Borrowers
SIGNATURE:________________________
TITLE:_____________________________
PRINT NAME:______________________
2 Applicable for any Advance other than a Tranche 1 Advance.
ATTACHMENT TO ADVANCE REQUEST
Dated: _______________________
[Company’s current legal name and organizational status [have not changed since last provided to Agent][have changed since last provided to Agent as follows:
Legal Name: [ ]
Type of organization: [ ]
State of organization: [ ]
Organization file number: [ ]]
The street addresses, cities, states and postal codes of Company’s current chief executive office locations or principal place of business [have not changed since last provided to Agent][have changed since last provided to Agent as follows:]
[ ò ]]
EXHIBIT B
NAME, LOCATIONS, AND OTHER INFORMATION
1. Borrower represents and warrants to Agent that Borrower’s current legal name and organizational status as of the Closing Date is as follows:
Legal Name: NeueHealth, Inc.
Type of organization: Corporation
State of organization: Delaware
Organization file number: 5800109
Borrower’s fiscal year ends on December 31
Borrower’s federal employee tax identification number is: 47-4991293
2. Borrower represents and warrants to Agent that for five (5) years prior to the Closing Date, Borrower did not do business under any other name or organization or form except the following:
Legal Name: Bright Health Group, Inc.
Used during dates of: 2021 - 2024
Type of Organization: Corporation
State of organization: Delaware
Organization file Number: 5800109
Borrower’s fiscal year ends on December 31
Borrower’s federal employer tax identification number is: 47-4991293
Legal Name: Bright Health, Inc.
Used during dates of: 2016 - 2021
Type of Organization: Corporation
State of organization: Delaware
Organization file Number: 5800109
Borrower’s fiscal year ends on December 31
Borrower’s federal employer tax identification number is: 47-4991293
3. Borrower represents and warrants to Agent that its chief executive office is located at 9250 NW 36th Street, Suite 420, Doral, FL 33178.
EXHIBIT C
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
| | | | | | | | | | | | | | |
| Trademarks/Trademark Applications |
| Registered Owner | Mark | Serial/Registration Number | Country | |
| [ ] | [ ] | [ ] | [ ] | |
EXHIBIT D
DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS
The following are all financial institutions at which Company and its Subsidiaries maintain Deposit Accounts:
| | | | | | | | | | | | | | |
| Institution Name | Branch Address | Account Number | Account Purpose | Name of Account Owner |
| [ ] | [ ] | [ ] | [ ] | [ ] |
The following are all financial institutions at which Company and its Subsidiaries maintain securities accounts:
NONE.
EXHIBIT E
COMPLIANCE CERTIFICATE
Hercules Capital, Inc. (as “Agent”)
1 North B Street, Suite 2000
San Mateo, CA 94401
Reference is made to that certain Loan and Security Agreement dated [ ], 2024 and the Loan Documents (as defined therein) entered into in connection with such Loan and Security Agreement all as may be amended from time to time (hereinafter referred to collectively as the “Loan Agreement”) by and among Hercules Capital, Inc. (“Agent”), the several banks and other financial institutions or entities from time to time party thereto (each, a “Lender” and, collectively, “Lenders”), Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), and each Guarantor from time to time party thereto. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement.
The undersigned is an Officer of Company, knowledgeable of all Company financial matters, and is authorized, on behalf of Company, to provide certification of information regarding Company; hereby certifies, on behalf of Company, that:
(a)Company is in compliance for the period ending ___________ of all covenants, conditions and terms of the Loan Agreement;
(b) other than as described below (provided that the exceptions noted below shall not apply to an earlier date and shall not cure any Default or Event of Default arising from any false or incorrect misrepresentations and warranties previously made),all representations and warranties contained in the Loan Agreement are true and correct on and as of the date of this Compliance Certificate 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, after giving effect in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations and warranties; and
(c)any financial statements delivered with this Compliance Certificate are prepared in accordance with GAAP (except for the absence of footnotes with respect to unaudited financial statements, for the absence of footnotes and subject to normal year-end adjustments and for which monthly statements, do not contain certain non-cash items that are customarily included in quarterly and annual financial statements) and are consistent from one period to the next except as explained below.
| | | | | | | | |
| REPORTING REQUIREMENT | REQUIRED | CHECK IF ATTACHED |
| Interim Financial Statements | Monthly within 30 days | [N/A][x] |
| | | | | | | | |
| Interim Financial Statements | Quarterly within 45 days | [N/A][x] |
| Joint Venture Company Interim Financial Statements | Quarterly within 45 days | [N/A][x] |
| Audited Financial Statements | FYE within 90 days | [N/A][x] |
ACCOUNTS OF LOAN PARTIES AND THEIR SUBSIDIARIES AND AFFILIATES
The undersigned hereby also confirms, on behalf of Company, that the below disclosed accounts represent all depository accounts and securities accounts presently open in the name of each Loan Party or their Subsidiary/Affiliate, as applicable.
Each new account that has been opened since delivery of the previous Compliance Certificate is designated below with a “*”.
Each Excluded Account is designated below with a “**”.
| | | | | | | | | | | | | | | | | | | | |
| | Depository AC # | Financial Institution | Account Type (Depository / Securities) | Last Month Ending Account Balance | Purpose of Account |
| LOAN PARTY Name/Address: | |
| 1 | | | | | |
| 2 | | | | | |
| 3 | | | | | |
| 4 | | | | | |
| 5 | | | | | |
| 6 | | | | | |
| 7 | | | | | |
|
| SUBSIDIARY Name/Address | |
The following disclosures are made in relation to the representations and warranties in the Loan Documents:[ ]
| | | | | | | | | | | |
| Name of Test | Required Level | Actual Level | In Compliance Y/N? |
| Minimum Cash Covenant | $15,000,000 | | |
| Minimum Adjusted EBITDA Covenant | See Section 7.21(b) | | |
INSURANCE POLICIES OF COMPANY AND ITS SUBSIDIARIES
[with Compliance Certificate delivered with annual statements unless delivered during the previous 12 months] (A) a summary of insurance, showing any changes to the insurance policies required to be maintained in accordance with Section 6.1, and (B), renewal statements (including renewed certificates of insurance) and copies of the insurance policies of Company and its Subsidiaries
Very Truly Yours,
NEUEHEALTH, INC.
By: ____________________________
Name: _____________________________
Its: ____________________________
EXHIBIT F
FORM OF JOINDER AGREEMENT
This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [ ], 20[ ], and is entered into by and between__________________., a ___________ corporation (“Subsidiary”), and HERCULES CAPITAL, INC., a Maryland corporation (as “Agent”).
RECITALS
A.Subsidiary’s Affiliate, Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower and each Additional Borrower prior to the date of this Joinder Agreement (together with Company and each Original Borrower, individually or collectively, as the context may require, “Existing Borrower”), and each Guarantor from time to time party thereto has entered into that certain Loan and Security Agreement dated [ ], 2024, with the several banks and other financial institutions or entities from time to time party thereto as lender (collectively, “Lenders”), each other Borrower that is party thereto, and Agent, (as may be amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), together with the other agreements executed and delivered in connection therewith; and
B. Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from Existing Borrower’s execution of the Loan Agreement and the other agreements executed and delivered in connection therewith.
AGREEMENT
NOW THEREFORE, Subsidiary and Agent agree as follows:
1.The recitals set forth above are incorporated into and made part of this Joinder Agreement. Capitalized terms not defined herein shall have the meaning provided in the Loan Agreement.
2. By signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were [Borrower][Guarantor] (as defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided however, that (a) with respect to (i) Section 5.1 of the Loan Agreement, Subsidiary represents that it is an entity duly organized, legally existing and in good standing under the laws of [ ], (b) neither Agent nor Lenders shall have any duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other Loan Documents, (c) that if Subsidiary is covered by Existing Borrower’s insurance, Subsidiary shall not be required to maintain separate insurance or comply with the provisions of Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Existing Borrower satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to provide Agent separate Financial Statements. To the extent that Agent or Lenders has any duties, responsibilities or obligations arising under or related to the Loan Agreement or the other Loan Documents, those duties, responsibilities or obligations shall flow only to Existing Borrower and not to Subsidiary or any other Person or entity. By way of example (and not an exclusive list): (i)
Agent’s providing notice to Existing Borrower in accordance with the Loan Agreement or as otherwise agreed among Existing Borrower, Agent and Lenders shall be deemed provided to Subsidiary; (ii) [Lenders’ providing an Advance to Existing Borrower shall be deemed an Advance to Subsidiary; and (iii)]3 Subsidiary shall have no right to request an Advance or make any other demand on Lenders.
3.[Subsidiary agrees not to certificate its equity securities without Agent’s prior written consent, which consent may be conditioned on the delivery of such equity securities to Agent in order to perfect Agent’s security interest in such equity securities.]9
Subsidiary acknowledges that it benefits, both directly and indirectly, from the Loan Agreement, and hereby waives, for itself and on behalf on any and all successors in interest (including without limitation any assignee for the benefit of creditors, receiver, bankruptcy trustee or itself as debtor-in-possession under any bankruptcy proceeding) to the fullest extent provided by law, any and all claims, rights or defenses (other than the defense of payment in full) to the enforcement of this Joinder Agreement on the basis that (a) it failed to receive adequate consideration for the execution and delivery of this Joinder Agreement or (b) its obligations under this Joinder Agreement are avoidable as a fraudulent conveyance.
5.As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Subsidiary grants to Agent a security interest in all of Subsidiary’s right, title, and interest in and to its Collateral.
6.This Joinder Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3 Not required if Subsidiary will join as a Guarantor.
[SIGNATURE PAGE TO JOINDER AGREEMENT]
SUBSIDIARY:
_________________________________.
By:
Name:
Title:
Address:
Telephone: ___________
email: ____________
AGENT:
HERCULES CAPITAL, INC.
By:____________________________________
Name:__________________________________
Title: ___________________________________
Address:
1 North B Street, Suite 2000
San Mateo, CA 94401
email: [ ]
Telephone: [ ]
EXHIBIT H
ACH DEBIT AUTHORIZATION AGREEMENT
Hercules Capital, Inc.
1 North B Street, Suite 2000
San Mateo, CA 94401
Re: Loan and Security Agreement dated [__________], 2024 (the “Agreement”) by and among Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), each Guarantor from time to time party thereto, Hercules Capital, Inc., as administrative agent and collateral agent (“Agent”) and the lenders party thereto (collectively, the “Lenders”)
In connection with the above referenced Agreement, Borrower hereby authorizes Agent to initiate debit entries for (i) the periodic payments due under the Agreement and (ii) reasonable documented out-of-pocket legal fees and costs incurred by Agent or Lenders pursuant to Section 11.12 of the Agreement to Borrower’s account indicated below. Borrower authorizes the depository institution named below to debit to such account.
| | | | | |
DEPOSITORY NAME | BRANCH |
CITY | STATE AND ZIP CODE |
TRANSIT/ABA NUMBER | ACCOUNT NUMBER |
This authority will remain in full force and effect so long as any amounts are due under the Agreement.
____________________________________________
(Company, on behalf of each Borrower)
By: _________________________________________
Name: _________________________________________
Date: ________________________________________
EXHIBIT J-1
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan and Security Agreement dated as of [__________], 2024 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among by and among Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower, and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), each Guarantor from time to time party thereto, the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lenders (in such capacity, the “Agent”).
Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10-percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished Agent and Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform Borrower and Agent, and (2) the undersigned shall have at all times furnished Borrower and Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
Date: _____________ ___, 20___ [NAME OF LENDER]
By: ____________________________
Name: ____________________________
Title: ____________________________
EXHIBIT J-2
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan and Security Agreement dated as of [__________], 2024 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among by and among Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower, and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), each Guarantor from time to time party thereto, the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lenders (in such capacity, the “Agent”).
Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10-percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
Date: _____________ ___, 20___ [NAME OF PARTICIPANT]
By: ____________________________
Name: ____________________________
Title: ____________________________
EXHIBIT J-3
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan and Security Agreement dated as of [__________], 2024 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among by and among Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower, and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), each Guarantor from time to time party thereto, the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lenders (in such capacity, the “Agent”).
Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect to such participation, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “10-percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
Date: _____________ ___, 20___ [NAME OF PARTICIPANT]
By: ____________________________
Name: ____________________________
Title: ____________________________
EXHIBIT J-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan and Security Agreement dated as of [__________], 2024 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among by and among Neuehealth, Inc., a Delaware corporation (“Company”), each other Original Borrower, and each Additional Borrower (together with Company and each Original Borrower, individually or collectively, as the context may require, “Borrower”), each Guarantor from time to time party thereto, the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lenders (in such capacity, the “Agent”).
Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Loan Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “10-percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished Agent and Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform Borrower and Agent, and (2) the undersigned shall have at all times furnished Borrower and Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
Date: _____________ ___, 20___ [NAME OF LENDER]
By: ____________________________
Name: ____________________________
Title: ____________________________
SCHEDULE 1.1
COMMITMENTS
| | | | | | | | | | | | | | |
| LENDERS | TRANCHE 1 COMMITMENT | TRANCHE 2 COMMITMENT | TRANCHE 3 COMMITMENT | TRANCHE 4 COMMITMENT* |
| HERCULES CAPITAL, INC. | $24,750,000 | $20,625,000 | $37,125,000 | $50,000,000 |
| HERCULES PRIVATE GLOBAL VENTURE GROWTH FUND I L.P. | $3,000,000 | $2,500,000 | $4,500,000 | $0 |
| HERCULES PRIVATE CREDIT FUND 1 L.P. | $2,250,000 | $1,875,000 | $3,375,000 | $0 |
| TOTAL COMMITMENTS | $30,000,000 | $25,000,000 | $45,000,000 | $50,000,000 |
* Subject to the terms and conditions of this Agreement (including approval by the Lenders’ investment committee(s) in their sole discretion).
AMENDMENT NO. 3 TO CREDIT AGREEMENT
This AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of June 21, 2024 (this “Amendment”), in respect of the Credit Agreement, dated as of August 4, 2023 (as amended by Amendment No. 1, dated as of October 2, 2023, Incremental Amendment No. 2, dated as of April 8, 2024 and as further amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time prior to giving effect to this Amendment, the “Credit Agreement”), among NeueHealth, Inc. (f/k/a Bright Health Group, Inc.), a Delaware corporation (the “Company”) and the Lenders party hereto.
WHEREAS, the Company desires and the Lenders party hereto, which constitute 100% of the Lenders as of the Amendment No. 3 Effective Date (as defined below), are willing to consent, pursuant to Section 15.1 of the Credit Agreement, certain amendments to the Credit Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement as amended by this Amendment (the “Amended Credit Agreement”). The rules of construction and other interpretive provisions specified in Section 1.2 of the Amended Credit Agreement shall apply to this Amendment, including terms defined in the preamble and recitals hereto.
Section 2Amendments. Subject to the occurrence of the Amendment No. 3 Effective Date each of the parties hereto agrees that, effective on the Amendment No. 3 Effective Date, the Credit Agreement shall be amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: single-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto.
Section 3Effect of Agreement; Reaffirmation; Etc.
(a)Except as expressly set forth herein or in the Amended Credit Agreement, this Amendment (x) shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders under the Credit Agreement or under any other Loan Document and (y) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or of any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Without limiting the foregoing, the Company hereby affirms acknowledges and agrees that each Loan Document to which it is a party is hereby confirmed and ratified and shall remain in full force and effect according to its respective terms (in the case of the Credit Agreement, as amended hereby.
(b)From and after the Amendment No. 3 Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the “Credit Agreement” in any other Loan Document shall be deemed a reference to the Credit Agreement, as amended hereby. From and after the Amendment No. 3 Effective Date, this Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.
Section 4Representations of the Company. The Company hereby represents and warrants that as of the Amendment No. 3 Effective Date:
(a)the representations and warranties of the Company set forth in this Agreement (other than Section 9.5) and the other Loan Documents shall be true and correct in all material respects with the same effect as if then made (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); provided that to the extent any such representation or warranty is already qualified by materiality or material adverse effect, such representation or warranty shall be true and correct in all respects; and
(b)no Event of Default or Unmatured Event of Default has occurred and is continuing.
Section 5Governing Law. This Amendment and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby shall be governed by, and construed in accordance with, the law of the State of New York.
Section 6Counterparts. This Amendment 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. Delivery of an executed counterpart of a signature page of this Amendment that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Amendment.
Section 7Miscellaneous. Sections 15.6 and 15.20 of the Credit Agreement are incorporated herein by reference and apply mutatis mutandis. On and after the effectiveness of this Amendment, this Amendment shall for all purposes constitute a Loan Document.
Section 8Effectiveness. This Amendment shall become effective on the date (the “Amendment No. 3 Effective Date”) when:
(a)the Company and the Lenders party hereto, which constitute 100% of the Lenders under the Credit Agreement on the Amendment No. 3 Effective Date, shall have received from the Company and each Lender party hereto as of the date hereof a counterpart of this Amendment signed on behalf of such party, and
(b)the Company shall have paid all reasonable fees and out-of-pocket and documented costs and expenses of the Lenders in connection with the execution and delivery of this Amendment (including, without limitation, the reasonable fees and expenses of Latham & Watkins LLP, counsel to the Lenders).
Section 9No Novation. Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Credit Agreement or instruments securing the same, which shall remain in full force and effect, except to any extent modified hereby or by instruments executed concurrently herewith and except to the extent repaid as provided herein. Nothing implied in this Amendment or in any other document contemplated hereby shall be construed as a release or other discharge of the Company under any Loan Document from any of its obligations and liabilities as a Company under any of the Loan Documents, except, in each case, to any extent modified hereby and except to the extent repaid as provided herein.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
NEUEHEALTH, INC.
By: /s/ Jeff Craig
Name: Jeff Craig
Title: General Counsel and Corporate Secretary
[Signature Page to Amendment No. 3 to Credit Agreement]
NEA 18 VENTURE GROWTH EQUITY, L.P., as a Lender
BY: NEA PARTNERS 18 VGE, L.P., Its General Partner
BY: NEA 18 VGE, LLC, Its General Partner
By: /s/ Stephanie Brecher
Name: Stephanie Brecher
Title: Chief Legal Officer
NEW ENTERPRISE ASSOCIATES 17, L.P., as a Lender
BY: NEA PARTNERS 17, L.P., Its General Partner
BY: NEA 17 GP, LLC, Its General Partner
By: /s/ Stephanie Brecher
Name: Stephanie Brecher
Title: Chief Legal Officer
NEW ENTERPRISE ASSOCIATES 16, L.P., as a Lender
BY: NEA PARTNERS 16, L.P., Its General Partner
BY: NEA 16 GP, LLC, Its General Partner
By: /s/ Stephanie Brecher
Name: Stephanie Brecher
Title: Chief Legal Officer
NEW ENTERPRISE ASSOCIATES 15, L.P., as a Lender
BY: NEA PARTNERS 15, L.P., Its General Partner
BY: NEA 15 GP, LLC, Its General Partner
By: /s/ Stephanie Brecher
Name: Stephanie Brecher
Title: Chief Legal Officer
[Signature Page to Amendment No. 3 to Credit Agreement]
CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM, as a Lender
By: /s/ Margot Wirth
Name: Margot Wirth
Title: Director of Private Equity
[Signature Page to Amendment No. 3 to Credit Agreement]
Exhibit A
[Amendments to Credit Agreement attached].
Exhibit A to Amendment No. 2 3
Conformed version through Amendment No. 2 3
CREDIT AGREEMENT
dated as of August 4, 2023,
among
NEUEHEALTH, INC.
(F/K/A BRIGHT HEALTH GROUP, INC.),
as the Company,
and
THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders
as amended by
INCREMENTAL AMENDMENT NO. 1 TO CREDIT AGREEMENT
dated as of October 2, 2023,
and as amended by
INCREMENTAL AMENDMENT NO. 2 TO CREDIT AGREEMENT
dated as of April 8, 2024,
and as amended by
AMENDMENT NO. 3 TO CREDIT AGREEMENT
dated as of June 21, 2024
Table of Contents
Page
| | | | | | | | | | | | | | |
| SECTION 1 | DEFINITIONS..................................................................................................................1 |
| 1.1 | Definitions..............................................................................................................................1 |
| 1.2 | Other Interpretive Provisions................................................................................................25 |
| 1.3 | Limited Condition Transactions...........................................................................................26 |
| 1.4 | Divisions.............................................................................................................................27 |
| 1.5 | Timing of Payment or Performance...................................................................................27 |
| 1.6 | Exchange Rates.....................................................................................................................27 |
| SECTION 2 | COMMITMENTS OF THE LENDERS AND BORROWING PROCEDURES...........27 |
| 2.1 | Commitments........................................................................................................................27 |
| 2.2 | Loan Procedures.................................................................................................................30 |
| 2.3 | [Reserved].............................................................................................................................30 |
| 2.4 | Funding of Borrowings.........................................................................................................30 |
| 2.5 | [Reserved]...........................................................................................................................31 |
| SECTION 3 | EVIDENCING OF LOANS..........................................................................................31 |
| 3.1 | Notes...................................................................................................................................31 |
| 3.2 | Recordkeeping....................................................................................................................31 |
| SECTION 4 | INTEREST......................................................................................................................31 |
| 4.1 | Interest Rates........................................................................................................................31 |
| 4.2 | Interest Payment Dates.........................................................................................................31 |
| 4.3 | PIK Interest.........................................................................................................................32 |
| 4.4 | Computation of Interest; Payment of Interest.....................................................................32 |
| | | | | | | | | | | | | | |
| SECTION 5 | FEES................................................................................................................................32 |
| 5.1 | Undrawn Commitment Fee..................................................................................................32 |
| 5.2 | [Reserved]...........................................................................................................................33 |
| 5.3 | [Reserved]...........................................................................................................................33 |
| SECTION 6 | REDUCTION OR TERMINATION OF THE COMMITMENT; PREPAYMENTS....33 |
| 6.1 | Reduction or Termination of the Commitment....................................................................33 |
| 6.2 | Prepayments..........................................................................................................................33 |
| 6.3 | Manner of Prepayments......................................................................................................34 |
| 6.4 | Repayments........................................................................................................................34 |
| SECTION 7 | MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.........................34 |
| | | | | | | | | | | | | | |
| 7.1 | Making of Payments...........................................................................................................34 |
| 7.2 | Application of Certain Payments..........................................................................................34 |
| 7.3 | Due Date Extension..............................................................................................................34 |
| 7.4 | Setoff....................................................................................................................................34 |
| 7.5 | Proration of Payments........................................................................................................35 |
| 7.6 | Taxes.....................................................................................................................................35 |
| SECTION 8 | INCREASED COSTS.....................................................................................................38 |
| 8.1 | Increased Costs.....................................................................................................................38 |
| 8.2 | [Reserved].............................................................................................................................39 |
| 8.3 | [Reserved].............................................................................................................................39 |
| 8.4 | [Reserved].............................................................................................................................39 |
| 8.5 | Discretion of Lenders as to Manner of Funding...................................................................39 |
| 8.6 | Mitigation of Circumstances; Replacement of Lenders.......................................................39 |
| 8.7 | Conclusiveness of Statements............................................................................................41 |
| SECTION 9 | REPRESENTATIONS AND WARRANTIES...............................................................41 |
| 9.1 | Organization.........................................................................................................................41 |
| 9.2 | Authorization; No Conflict...................................................................................................41 |
| 9.3 | Validity and Binding Nature.................................................................................................41 |
| 9.4 | Financial Condition..............................................................................................................41 |
| 9.5 | No Material Adverse Change.............................................................................................42 |
| 9.6 | Litigation and Guarantee Obligations...................................................................................42 |
| 9.7 | Ownership of Properties; Liens............................................................................................42 |
| 9.8 | Equity Ownership.................................................................................................................42 |
| 9.9 | Pension Plans........................................................................................................................42 |
| 9.10 | Investment Company Act.....................................................................................................43 |
| 9.11 | Regulation U, T, and X.........................................................................................................43 |
| | | | | | | | | | | | | | |
| 9.12 | Taxes.....................................................................................................................................43 |
| 9.13 | Solvency, etc. .....................................................................................................................44 |
| 9.14 | Environmental Matters.........................................................................................................44 |
| 9.15 | Insurance...............................................................................................................................44 |
| 9.16 | [Reserved].............................................................................................................................44 |
| 9.17 | Information...........................................................................................................................44 |
| 9.18 | Intellectual Property.............................................................................................................45 |
| 9.19 | Labor Matters.......................................................................................................................45 |
| | | | | | | | | | | | | | |
| 9.20 | No Default............................................................................................................................45 |
| 9.21 | Material Licenses..................................................................................................................45 |
| 9.22 | Compliance with Material Laws.........................................................................................46 |
| 9.23 | [Reserved]...........................................................................................................................46 |
| 9.24 | [Reserved]...........................................................................................................................46 |
| 9.25 | PATRIOT Act; OFAC; Sanctions and Anti-Corruption and Anti-Money
Laundering Laws..................................................................................................................46 |
| SECTION 10 | AFFIRMATIVE COVENANTS.....................................................................................46 |
| 10.1 | Reports, Certificates and Other Information......................................................................47 |
| 10.2 | Books, Records and Inspections...........................................................................................49 |
| 10.3 | Maintenance of Property; Insurance.....................................................................................49 |
| 10.4 | Compliance with Laws; Payment of Taxes and Liabilities..................................................50 |
| 10.5 | Maintenance of Existence; Material Licenses......................................................................50 |
| 10.6 | Use of Proceeds....................................................................................................................50 |
| 10.7 | Employee Benefit Plans......................................................................................................51 |
| 10.8 | Environmental Matters.........................................................................................................51 |
| SECTION 11 | NEGATIVE COVENANTS............................................................................................51 |
| 11.1 | Debt....................................................................................................................................52 |
| 11.2 | Liens.....................................................................................................................................54 |
| 11.3 | Restricted Payments.............................................................................................................57 |
| 11.4 | Mergers, Consolidations, Sales............................................................................................58 |
| 11.5 | Modification of Organizational Documents.......................................................................60 |
| 11.6 | Transactions with Affiliates................................................................................................60 |
| 11.7 | Inconsistent Agreements.......................................................................................................60 |
| 11.8 | Business Activities...............................................................................................................61 |
| 11.9 | Investments...........................................................................................................................61 |
| | | | | | | | | | | | | | |
| 11.10 | Anti-Layering.......................................................................................................................62 |
| 11.11 | Fiscal Year..........................................................................................................................63 |
| SECTION 12 | CONDITIONS OF LENDING, ETC. ............................................................................63 |
| 12.1 | Effective Date.......................................................................................................................63 |
| 12.2 | Conditions.............................................................................................................................64 |
| SECTION 13 | EVENTS OF DEFAULT AND THEIR EFFECT.........................................................65 |
| 13.1 | Events of Default................................................................................................................65 |
| 13.2 | Effect of Event of Default....................................................................................................66 |
| | | | | | | | | | | | | | |
| SECTION 14 | ACKNOWLEDGEMENT OF LENDERS; CERTAIN TAX MATTERS...................67 |
| 14.1 | [Reserved]...........................................................................................................................67 |
| 14.2 | [Reserved].............................................................................................................................67 |
| 14.3 | [Reserved].............................................................................................................................67 |
| 14.4 | [Reserved].............................................................................................................................67 |
| 14.5 | [Reserved].............................................................................................................................67 |
| 14.6 | Acknowledgments of Lenders..............................................................................................67 |
| 14.7 | [Reserved]...........................................................................................................................68 |
| 14.8 | [Reserved]...........................................................................................................................68 |
| 14.9 | [Reserved]...........................................................................................................................68 |
| 14.10 | Certain Tax Matters............................................................................................................68 |
| SECTION 15 | GENERAL.......................................................................................................................68 |
| 15.1 | Waiver; Amendments...........................................................................................................68 |
| 15.2 | Notices..................................................................................................................................69 |
| 15.3 | Accounting Terms; GAAP...................................................................................................70 |
| 15.4 | Costs and Expenses............................................................................................................71 |
| 15.5 | Successors and Assigns........................................................................................................72 |
| 15.6 | Forum Selection and Consent to Jurisdiction.....................................................................76 |
| 15.7 | Governing Law.....................................................................................................................76 |
| 15.8 | Confidentiality......................................................................................................................76 |
| 15.9 | Severability.........................................................................................................................78 |
| 15.10 | Nature of Remedies..............................................................................................................78 |
| 15.11 | Entire Agreement..................................................................................................................78 |
| 15.12 | [Reserved].............................................................................................................................78 |
| 15.13 | Captions................................................................................................................................78 |
| 15.14 | Customer Identification - Certain Notices............................................................................78 |
| 15.15 | Indemnification by the Company.......................................................................................79 |
| | | | | | | | | | | | | | |
| 15.16 | Limitations on Liability........................................................................................................79 |
| 15.17 | Posting of Communication.................................................................................................80 |
| 15.18 | Counterparts; Effectiveness; Electronic Execution..............................................................80 |
| 15.19 | Acknowledgement Regarding Any Supported QFCs.........................................................81 |
| 15.20 | WAIVER OF JURY TRIAL................................................................................................81 |
| 15.21 | Statutory Notice-Oral Commitments..................................................................................82 |
| | | | | | | | | | | | | | |
| 15.22 | Survival of Representation, Warranties and Agreements.....................................................82 |
| 15.23 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions.....................82 |
| 15.24 | No Fiduciary Relationship....................................................................................................83 |
| SECTION 16 | SUBORDINATION........................................................................................................83 |
| 16.1 | Liquidation; Dissolution; Bankruptcy..................................................................................83 |
| 16.2 | No Cash Payments in Respect of the Obligations; Certain Other Agreements..................84 |
| 16.3 | Acceleration of Loans.........................................................................................................85 |
| 16.4 | When Distribution Must Be Paid Over...............................................................................85 |
| 16.5 | Notice by Company..............................................................................................................85 |
| 16.6 | Subrogation...........................................................................................................................85 |
| 16.7 | Relative Rights.....................................................................................................................85 |
| 16.8 | Subordination May Not Be Impaired by Company............................................................86 |
| 16.9 | Distribution or Notice to Representative..............................................................................86 |
| 16.10 | Authorization to Effect Subordination.................................................................................86 |
| 16.11 | Amendments; Third Party Beneficiaries..............................................................................86 |
ANNEXES
ANNEX A Lenders and Commitments
ANNEX B Addresses for Notices
ANNEX C Regulated Subsidiaries
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of August 4, 2023 (this “Agreement”), is entered into among NEUEHEALTH, INC. (F/K/A BRIGHT HEALTH GROUP, INC.) (the “Company”), NEA 18 Venture Growth Equity, L.P. and the financial institutions from time to time party hereto as lenders (together with their respective successors and assigns, the “Lenders”).
In consideration of the mutual agreements herein contained, the parties hereto agree as follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the following meanings:
“2023-1 Commitment Increase” has the meaning assigned to such term in Amendment No. 1.
“2023 Warrantholders’ Agreement” has the meaning assigned to such term in Section 12.1 (i).
“2024 Warrantholders’ Agreement” means that certain Warrantholders’ Agreement, dated as of April 8, 2024 by and among the Company and the other parties thereto.
“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of the Equity Interests of any Person causing such Person to become a Subsidiary or (c) a merger or consolidation or any other combination with another Person.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Company.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” of any Person means (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and (b) with respect to any Lender, any entity administered or managed by such Lender or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans. The term “control”, as used with respect to any Person, 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 Stock, by agreement or otherwise. The terms “controlling”, “controlled” and “under common control” have meanings correlative thereto. Notwithstanding the
foregoing, for all purposes under this Agreement NEA 18 Venture Growth Equity, L.P., its respective Affiliates and Approved Funds shall be deemed not to be Affiliates of the Company and its Subsidiaries.
“Agent-Related Person” has the meaning assigned to such term in Section 15.4.2.
“Agreement” has the meaning assigned to such term in the Preamble.
“All-In Yield” shall mean, as to any Debt, the yield thereof, whether in the form of interest rate, margin, OID, upfront fees or other fees (other than consent fees, amendment fees and ticking fees and other than Equity Kickers or any Equity Interests, warrants or other equity linked interests or securities in connection therewith) paid by the Company to all providers of such Debt; provided that OID and upfront fees shall be equated to interest rate assuming a four-year life to maturity (or, if less, the stated life to maturity at the time of incurrence of the applicable Debt).
“Amendment No. 1” means Incremental Amendment No. 1 to Credit Agreement, dated as of October 2, 2023, among the Company, NEA 18 Venture Growth Equity, L.P. and California State Teachers’ Retirement System.
“Amendment No. 1 Effective Date” has the meaning assigned to such term in Amendment No. 1, which date was October 2, 2023.
“Amendment No. 2” means Incremental Amendment No. 2 to Credit Agreement, dated as of April 8, 2024, among the Company, NEA 18 Venture Growth Equity, L.P., NEA 18 Venture Growth Equity, L.P., New Enterprise Associates 17, L.P., New Enterprise Associates 16, L.P. and New Enterprise Associates 15, L.P.
“Amendment No. 2 Effective Date” has the meaning assigned to such term in Amendment No. 2, which date was April 8, 2024.
“Ancillary Document” has the meaning assigned to such term in Section 15.18.
“Anti-Corruption Laws” means all Laws of any jurisdiction applicable to the Company or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Approved Electronic Platform” has the meaning assigned to such term in Section 14.3.
“Approved Fund” has the meaning assigned to such term in Section 15.5(b).
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 15.5), and accepted by the Company, in the form of Exhibit G or any other form (including electronic records generated by the use of an electronic platform) approved by the Company in its reasonable discretion.
“Attorney Costs” means, with respect to any Person, all reasonable and documented and invoiced fees and charges of any counsel to such Person, and all reasonable and documented court costs and similar legal expenses.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of any Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 CFR § 101slug 0.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BHC Act Affiliate” means, with respect to any Person, an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. § 1841(k)) of such Person.
“Board of Directors” means, 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.
“Borrowing” means Loans of the same class made on the same date.
“Borrowing Minimum” means $1,000,000.
“Borrowing Multiple” means $100,000.
“Borrowing Request” means a request by the Company for a Borrowing in accordance with Section 2.2.1, which shall be substantially in the form of Exhibit A or
any other form approved by the Required Lenders consistent with the requirements of Section 2.2.1.
“Business Day” means, any day (other than a Saturday or a Sunday) on which banks are open for business in New York City.
“Cash Interest” shall have the meaning provided in Section 4.4(b).
“Change in Law” means the occurrence after the Effective Date of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender (or, for purposes of Section 8.1(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Effective Date (other than any such request, guideline or directive to comply with any law, rule or regulation that was in effect on the Effective Date); provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) 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, issued or implemented.
“Change of Control” means (A) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act (or any successor provision)), other than the Permitted Holders, of Equity Interests in the Company representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of the Company and (B) the ownership, directly or indirectly, beneficially or of record, by the Permitted Holders of Equity Interests in the Company representing in the aggregate a lesser percentage of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of the Company than such Person or group.
Notwithstanding anything to the contrary in this definition or any provision of Rule 13d-3 of the Exchange Act (or any successor provision), (i) a Person or group shall not be deemed to beneficially own Voting Stock (x) to be acquired by such Person or group pursuant to an equity or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement or (y) solely as a result of veto or approval rights in any joint venture agreement, shareholder agreement, investor rights agreement or other similar agreement, (ii) if any group (other than a Permitted Holder) includes one or more Permitted Holders, the issued and outstanding
Voting Stock of the Company owned, directly or indirectly, by any Permitted Holders that are part of such group shall not be treated as being beneficially owned by such group or any other member of such group for purposes of determining whether a Change of Control has occurred, (iii) a Person or group (other than Permitted Holders) will not be deemed to beneficially own Voting Stock of another Person as a result of its ownership of Equity Interests or other securities of such other Person’s Parent Entity (or related contractual rights) unless it owns more than 50.0% of the total voting power of the Voting Stock of such Person’s Parent Entity and (iv) the right to acquire Voting Stock (so long as such Person does not have the right to direct the voting of the Voting Stock subject to such right) or any veto power in connection with the acquisition or disposition of Voting Stock will not cause a party to be a beneficial owner.
“Code” means the Internal Revenue Code of 1986, as amended.
“Commitment” means, as to any Lender, such Lender’s commitment to make Loans under this Agreement as set forth on Annex A under the caption “Commitment”, or in the Assignment and Assumption pursuant to which such Lender assumed its Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 6.1 or 8.6, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 15.5 or (c) increased pursuant to Section 2.1.2. The initial amount of each Lender’s commitment to make Loans is set forth on Annex A and (a) the aggregate amount of the Commitments as of the Effective Date was $60,000,000 and (b) the aggregate amount of the Commitments as of the Incremental Amendment No. 1 Effective Date (after giving effect to (1) all borrowings before the Amendment No. 1 Effective Date and the corresponding reductions in Commitments resulting therefrom and (2) the 2023-1 Commitment Increase) is $16,400,000; provided that such Annex A and the aggregate amount of the Commitments may be updated in the manner set forth in such Annex A.
“Commitment Increase” has the meaning assigned to such term in Section 2.1.2(a).
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.) and any successor statute, and any rule, regulation, or order promulgated thereunder, in each case as amended from time to time.
“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Company pursuant to this Agreement or any other Loan Document or the transactions contemplated herein or therein that is distributed to any Lender by means of electronic communications pursuant to Section 14.3.
“Company” has the meaning assigned to such term in the Preamble.
“Compliance Certificate” means a Compliance Certificate which shall be in substantially the form of Exhibit F or such other form as may be reasonably acceptable to the Required Lenders.
“Computation Period” means each period of four consecutive Fiscal Quarters of the Company for which financial statements have been (or are required to have been) delivered, pursuant to Section 10.1.1 or 10.1.2, ending on the last day of any such Fiscal Quarter.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Total Assets” means, at any date, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP, as reflected in the consolidated financial statements of the Company most recently delivered to the Lenders pursuant to Section 10.1.1 or 10.1.2 hereof (or, prior to the first delivery of any such financial statements, as of the end of the Fiscal Quarter ended March 31, 2023.
“Controlled Group” means all members of a controlled group of corporations, all members of a controlled group of trades or businesses (whether or not incorporated) under common control and all members of an affiliated service group which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.
“Covered Entity” means any of (a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Matters” means (a) the execution or delivery of this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, or the performance by the parties hereto of their respective obligations hereunder or thereunder, (b) any Loan or the use of the proceeds therefrom, (c) any actual or alleged presence or release of Hazardous Substances on or from any property owned or operated by the Company or any of its Subsidiaries, or any Environmental Claim related in any way to the Company or any of its Subsidiaries or (d) Proceeding relating to any of the foregoing, regardless of whether or not such Proceeding is brought by the Company or its equity holders, Affiliates, creditors or any other third Person and whether or not based on contract, tort or any other theory and regardless of whether any Agent-Related Person, Lender-Related Person or Indemnitee is a party thereto.
“Covered Party” has the meaning assigned to such term in Section 15.19(b).
“DDTL Commitment Expiration Date” means the earlier of (a) the date on which the Commitments have been fully drawn and reduced to zero in accordance with Section 2.1, Section 6.1 and/or Section 13, and (b) the date that is 9 months after the Effective Date.
“Debt” of any Person means, without duplication, (a) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (b) all borrowed
money of such Person, whether or not evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Financing Lease Obligation, (d) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts or similar obligations payable in the ordinary course of business), including any purchase price adjustment, earnout or deferred payment of a similar nature incurred in connection with an acquisition (but only to the extent that such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person; provided that if such Person has not assumed or otherwise become liable for such indebtedness, such indebtedness shall be measured at the fair market value of such property securing such indebtedness at the time of determination, (f) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of suchPerson, (g) all Hedging Obligations of such Person, (h) all obligations of such Person in respect of mandatory redemption or cash mandatory dividend or similar rights on all Disqualified Equity Interests of such Person, (i) all Guarantee Obligations of such Person with respect to Debt of others and (j) all Debt of any partnership of which such Person is a general partner, solely to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Debt expressly provide that such Person is not liable therefor; provided, further, that Debt shall not include (i) prepaid or deferred revenue arising in the ordinary course of business, (ii) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy warrants or other unperformed obligations of the seller of such asset, (iii) amounts owed to dissenting equityholders in connection with, or as a result of, their exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto (including any accrued interest), with respect to any Acquisition permitted under the Loan Documents, (iv) liabilities associated with customer prepayments and deposits and other accrued obligations (including transfer pricing), in each case incurred in the ordinary course of business, (v) Non-Financing Lease Obligations or other obligations under or in respect of straight-line leases, operating leases or sale leasebacks (except resulting in Financing Lease Obligation), (vi) customary obligations under employment agreements and deferred compensation arrangements, (vii) contingent post-closing purchase price adjustments, non-compete or consulting obligations or earn-outs to which the seller in an Acquisition or Investment may become entitled and (viii) indebtedness of any Parent Entity appearing on the balance sheet of the Company or any of its Subsidiary solely by reason of “pushdown” accounting under GAAP.
“Default Rate” means an interest rate equal to 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans.
“Default Right” has the meaning assigned to such term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed to fund any portion of its Commitment within one Business Day of the date required to be funded by it
hereunder, unless the subject of a good faith dispute, (b) has notified the Company or any Lender in writing, or has otherwise indicated through a public statement, that it does not intend to comply with its funding obligations generally under agreements in which it commits to extend credit, (c) has failed, within three Business Days after receipt of a written request from the Required Lenders, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Commitments, (d) has otherwise failed to pay over to any Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, (e) has, or has a direct or indirect 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 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 (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action (as defined in Section 15.23); provided that (i) the Required Lenders and the Company may declare (A) by joint notice to the Lenders that a Defaulting Lender is no longer a “Defaulting Lender” or (B) that a Lender is not a Defaulting Lender if in the case of both clauses (A) and (B) the Required Lenders and the Company each determine, in its sole respective discretion, that (x) the circumstances that resulted in such Lender becoming a “Defaulting Lender” no longer apply or (y) it is satisfied that such Lender will continue to perform its funding obligations hereunder and (ii) a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of Voting Stock in such Lender or a parent company thereof by a Governmental Authority or an instrumentality thereof so long as such ownership or acquisition of Equity Interests does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.
“Disqualified Equity Interests” means, with respect to any Person, any Equity Interests of such Person that, by their terms (or by the terms of any securities or other Equity Interests into which they are convertible or for which they are exchangeable) or upon the happening of any event or condition, (i) mature or are mandatorily redeemable (other than solely for Equity Interests that are not otherwise Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) are redeemable at the option of the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), in whole or in part (iii) provide for scheduled payments or dividends in cash or (iv) are or become convertible into or exchangeable for Debt or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date then in effect, except, in the case of clauses (i) and (ii), if as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of such a change of control or asset sale event are subject to the prior payment in full of all Obligations that are accrued and payable (other than contingent amounts not yet due) and the termination of the Commitments; provided that if such Equity Interests are issued pursuant to a plan for the benefit of the Company or its subsidiaries or by any such plan to employees, such Equity
Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Company or its subsidiaries in order to satisfy applicable statutory or regulatory obligations.
“Dollars” and “$” means dollars in lawful currency of the United States.
“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.
“Effective Date” means the date on which the conditions specified in Section 12.1 are satisfied (or waived in accordance with Section 15.1), which date is August 4, 2023.
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Employee Investors” means the current, former or future officers, directors, employees, managers, consultants and other advisors, representatives and affiliates (and Immediate Family Members of the foregoing) of the Company, the Subsidiaries or any other Parent Entity who are or who become direct or indirect investors in the Company or any other Parent Entity, including any such officers, directors, employees, managers, consultants and other advisors, representatives and affiliates (and any Immediate Family Members of the foregoing) owning through an Equityholding Vehicle.
“Equityholding Vehicle” means any Parent Entity and any equityholder thereof through which current, former or future officers, directors, employees, managers, members, partners, independent contractors or consultants (or any Immediate Family Member of the foregoing) of the Company, the Subsidiaries or any other Parent Entity that holds Equity Interests of such Parent Entity.
“Equity Interests” means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the Effective Date, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership, interests in a
trust, interests in other unincorporated organizations or any other equivalent of such ownership interest, but excluding any debt securities convertible into such Equity Interests.
“Environmental Claims” means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for any violation of, or liability arising under, any Environmental Law, including any release or threatened release of any Hazardous Substance.
“Environmental Laws” means all Laws relating to any matter arising out of or relating to public or workplace health and safety, pollution or protection of the environment or natural resources, including to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Substance.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder.
“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.
“Event of Default” means any of the events described in Section 13.1.
“Excluded Taxes” means (a) Taxes based upon, or measured by, the Lender’s (or a branch of the Lender’s) overall net income, overall net receipts or overall net profits, and franchise Taxes and branch profits Taxes, but, in each case, only to the extent such Taxes are Other Connection Taxes or are imposed by a taxing authority (i) in a jurisdiction in which such Lender is organized, (ii) in a jurisdiction in which such Lender’s principal office is located or (iii) in a jurisdiction in which such Lender’s lending office (or branch) in respect of which payments under this Agreement are made is located; (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than as a result of an assignment made at the request of the Company pursuant to Section 8.6(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 7.6, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office; (c) Taxes attributable to a Recipient’s failure to comply with Section 7.6(d); and (d) any U.S. federal withholding Taxes imposed under FATCA.
“Exposure” means, with respect to any Lender at any time, the aggregate amount of such Lender’s Loans outstanding at such time.
“Extended Commitments” has the meaning assigned to such term in the definition of Extension Permitted Amendment.
“Extended Loans” has the meaning assigned to such term in the definition of Extension Permitted Amendment.
“Extending Lenders” has the meaning assigned to such term in Section 15.1.1(a).
“Extension Agreement” means an Extension Agreement, in form and substance reasonably satisfactory to the Required Lenders, among the Company, the Required Lenders and one or more Extending Lenders, effecting an Extension Permitted Amendment and such other amendments hereto and to the other Loan Documents as are contemplated by Section 15.1.1.
“Extension Offer” has the meaning assigned to such term in Section 15.1.1(a).
“Extension Permitted Amendment” means an amendment to this Agreement and the other Loan Documents, effected in connection with an Extension Offer pursuant to Section 15.1.1, providing for an extension of the DDTL Commitment Expiration Date or Maturity Date applicable to the Extending Lenders’ Loans and/or Commitments of the applicable Extension Request Class (such Loans or Commitments being referred to as the “Extended Loans” or “Extended Commitments”, as applicable) and, in connection therewith, (a) any increase or decrease in the rate of interest accruing on such Extended Loans, (b) any increase in the fees payable to, or the inclusion of new fees to be payable to, the Extending Lenders in respect of such Extension Offer or their Extended Loans or Extended Commitments, (c) such amendments to this Agreement and the other Loan Documents as shall be appropriate, in the reasonable judgment of the Required Lenders, 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 (d) any additional amendments to the terms of this Agreement applicable to the applicable Loans and/or Commitments of the Extending Lenders that are (i) no more favorable to such Extending Lenders than the terms of this Agreement prior to giving effect to such Extension Permitted Amendments (as determined in good faith by the Company) or (ii) applicable only to periods after the Maturity Date then in effect (determined prior to giving effect to such Extension Permitted Amendment).
“Extension Request Class” has the meaning assigned to such term in Section 15.1.1(a).
“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements with respect thereto (or any law, regulation, rule, promulgation, guidance notes, practices or official agreement implementing any such intergovernmental agreements).
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.
“Financing Lease Obligation” means, as applied to any Person, an obligation that is required to be accounted for as a financing or capital lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP. At the time any determination thereof is to be made, the amount of the liability in respect of a financing or capital lease would be the amount required to be reflected as a liability on such balance sheet (excluding the footnotes thereto) in accordance with GAAP.
“Fiscal Quarter” means a fiscal quarter of a Fiscal Year.
“Fiscal Year” means the fiscal year of the Company and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal Year 2022” or “2022 Fiscal Year”) refer to the Fiscal Year ending on December 31 of such calendar year.
“Funded Debt” means any indebtedness described in clause (a) or (b) of the definition of “Debt”.
“GAAP” means United States generally accepted accounting principles which are applicable to the circumstances as of any date of determination and as in effect from time to time.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantee Obligation” means, with respect to any Person, each obligation and liability of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other monetary obligation of any other Person in a manner, which directly or indirectly, including any obligations of such Person, directly or indirectly, (i) to purchase, repurchase, or otherwise acquire any debt or other monetary obligation of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any debt or other monetary obligation of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, (iii) to lease property or to purchase securities, property or services from such other Person with the purpose of assuring the owner of such indebtedness or monetary obligation of the ability of such other Person to make payment of the indebtedness or obligation, (iv) which induces the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person or (v) to assure a creditor against loss: provided that the term Guarantee Obligations shall
not include endorsement of instruments in the course of collection or deposit or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Debt). The amount of any Guarantee Obligation shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum stated principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.
“Hazardous Substances” means (a) any petroleum or petroleum products, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or release of, which is prohibited, limited or regulated by any Governmental Authority or could give rise to liability, or for which any duty or standard of care is imposed, pursuant to any Environmental Law.
“Hedging Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement, foreign exchange contract, futures contract, option contract, synthetic cap and any other agreement or arrangement, each of which is designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.
“Hedging Obligation” means, with respect to any Person, any liability (other than an accounting liability which is offset by a corresponding asset pursuant to shortcut method hedge accounting) of such Person under any Hedging Agreement.
"Hercules Debt" means the Debt and other obligations under the Hercules Credit Agreement or any other "Loan Document" (as defined in the Hercules Credit Agreement).
"Hercules Credit Agreement" means the Loan and Security Agreement, dated as of June 21, 2024 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time) by and among the Company, the guarantors from time to time party thereto and the several banks and other financial institutions or entities from time to time party thereto.
"Hercules Credit Agreement Termination Date" shall have the meaning assigned to "Term Loan Maturity Date" in the Hercules Credit Agreement.
"Hercules Credit Documents" shall have the meaning assigned to the term "Loan Documents" in the Hercules Credit Agreement.
“Immediate Family Members” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, domestic partner, former domestic partner, sibling, mother in law, father in law, son in law and daughter in law (including adoptive relationships), any trust, partnership or other bona fide estate planning vehicle the only beneficiaries of which are any of the foregoing individuals, such individual’s estate (or an executor or administrator acting on its behalf), heirs,
legatees or any private foundation or fund that is controlled by any of the foregoing individuals or any donor advised fund of which any such individual is the donor.
“Incremental Amendment” as the meaning assigned to such term in Section 2.1.2(b).
“Increased Amount Date” has the meaning assigned to such term in Section 2.1.2(b).
“Incremental Lender” means any Lender or other financial institution with respect to a Commitment Increase.
“Incremental Loan” has the meaning assigned to such term in Section 2.1.2(a).
“Incur” means create, issue, assume, guarantee, incur or otherwise become directly or indirectly liable, contingently or otherwise, for any Debt; provided, however, that any Debt of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Section 11.1:
(a) amortization of debt discount or the accretion of principal with respect to a non‑interest bearing or other discount security;
(b) the payment of regularly scheduled interest and payment of fees in the form of additional Debt of the same instrument, including any PIK Interest and PIK Fees, and the payment of regularly scheduled dividends on Equity Interests in the form of additional Equity Interests of the same class and with the same terms; and
(c) the obligation to pay a premium in respect of Debt arising in connection with the issuance of a notice of prepayment, redemption, repurchase, defeasance, acquisition or similar payment or making of a mandatory offer to prepay, redeem, repurchase, defease, acquire, or similarly pay such Debt;
will not be deemed to be the Incurrence of Debt.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Company under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 15.16.
“Ineligible Institution” has the meaning assigned to such term in Section 15.5(b).
“Information” has the meaning assigned to such term in Section 15.8.
“Insurance Subsidiary” means any Subsidiary which is subject to the regulation of, is required to file statements with, and holds an active risk-bearing license issued by any governmental body, agency or official in any state or territory of the United States or the District of Columbia which regulates insurance companies or the doing of an insurance business therein.
“Interest Payment Date” means the last day of each March, June, September and December and the Maturity Date.
“Interest Period” means, with respect to any Loans, the period commencing on the date of Borrowing of such Loans or, if an Interest Payment Date in respect of such Loans
has occurred, the date immediately following the last such Interest Payment Date, and ending on first Interest Payment Date thereafter.
“Investment” means, with respect to any Person, any investment in another Person, whether by means of (a) the purchase or other acquisition of Equity Interests or Debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee Obligation with respect to any obligation of, or purchase or other acquisition of any other Debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, excluding, in the case of the Company and its Subsidiaries, intercompany loans among the Company and the Subsidiaries, advances or Debt related to cash management arrangements and made in the ordinary course of business or (c) the purchase or other acquisition (in one transaction or a series of transactions) of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (i) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any payments in cash or Permitted Investments actually received by such investor representing principal payments in respect of such Investment, but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (ii) any Investment in the form of a guarantee shall be equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof, as determined in good faith by a Responsible Officer of the Company, (iii) any Investment in the form of a transfer of Equity Interests or other non-cash property or services by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value of such Equity Interests or other property or services as of the time of the transfer, minus, any payments actually received by such investor representing a Return in respect of such Investment, but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to,
such Investment after the date of such Investment, and (iv) any Investment (other than any Investment referred to in clause (i), (ii) or (iii) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Debt or other securities of any other Person shall be the original cost of such Investment, except that the amount of any Investment in the form of an Acquisition shall be the acquisition consideration, minus the amount of any portion of such Investment that has been repaid to the investor as a Return in respect of such Investment, but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 11.9, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Responsible Officer of the Company. For the avoidance of doubt, if the Company or any Subsidiary issues, sells or otherwise disposes of any Equity Interests of a Person that is a Subsidiary such that, after giving effect thereto, such Person is no longer a Subsidiary, any Investment by the Company or any Subsidiary in such Person
remaining after giving effect thereto shall not be deemed to be a new Investment at such time.
“Investors” mean, collectively (and including each of their respective successors) New Enterprise Associates, Bessemer Venture Partners and Greenspring Associates, and each of its Affiliates and any funds, partnerships, other co-investment vehicles and managed account arrangements established, operated, managed, advised or controlled directly or indirectly by the foregoing, but not including, however, any operating portfolio companies of any of the foregoing.
“IRS” means the United States Internal Revenue Service.
“Law” means any statute, rule, regulation, order, permit, license, judgment, award or decree of any Governmental Authority.
“LCT Election” means the Company’s election, by notice to the Lenders, to exercise its right to designate any permitted Acquisition or Investment as a Limited Condition Transaction pursuant to the terms hereof.
“LCT Test Date” means the date on which the definitive agreement for an applicable Limited Condition Transaction is entered into.
“Lender” has the meaning assigned to such term in the Preamble. References to the “Lenders” shall include any Person that is added to Annex A pursuant to the terms hereof after the Effective Date.
“Lender-Related Person” has the meaning assigned to such term in Section 15.17.
“Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“Lien” means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including an interest in respect of Financing Lease Obligations) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise; provided that in no event shall a Non-Financing Lease Obligation be deemed to be a Lien.
“Limited Condition Transaction” means any Acquisition or Investment by the Company or one or more of the Subsidiaries permitted hereunder, the consummation of which is not conditioned on the availability of, or on obtaining, third party financing.
“Loan” has the meaning assigned to such term in Section 2.1.1.
“Loan Availability” means the Commitments of all of the Lenders.
“Loan Documents” means this Agreement, the Notes and all documents, instruments and agreements delivered in connection with the foregoing from time to time.
“Margin Stock” means any “margin stock” as defined in Regulation U.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business or properties of the Company and its Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Company to perform its payment Obligations under the Loan Documents or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company of any Loan Document.
“Material Law” means any separately enforceable provision of a Law whose violation by a Person would have a Material Adverse Effect on such Person.
“Material License” means (a) as to any Person, any license, permit, authorization, qualification, order or consent from, any recordation, registration, notice or filing with, any exemption by or other action in respect of, a Governmental Authority or other Person which if not obtained, held or made would have a Material Adverse Effect and (b) as to any Person who is a party to this Agreement or any of the other Loan Documents, any license, permit, authorization, qualification, order or consent from, any recordation, registration, notice or filing with, any exemption by or other action in respect of, a Governmental Authority or other Person that is necessary for the execution, delivery, consummation or performance by such party, or the legality, validity, binding effect or enforceability against such party, of this Agreement or such other Loan Document
“Maturity Date” means the later of (a) December 31, 2025. and (b) the date that is 91 days after the latest final stated maturity date in respect of any Senior Debt of the Company or any Subsidiary of the type described in clause (a) of the definition of Senior Debt not prohibited by Section 11.1 (regardless of when such Senior Debt is incurred or whether after the initial incurrence of such Senior Debt, such Senior Debt is prepaid,
repaid, redeemed, satisfied and discharged or otherwise no longer outstanding). Hercules Credit Agreement Termination Date.
“Moody’s” means Moody’s Investor Services, Inc. and any successor thereto of its rating business.
“Multiemployer Pension Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any other member of the Controlled Group may have any liability or obligation to contribute.
“Non-Financing Lease Obligations” means a lease obligation that is not required to be accounted for as a financing or capital lease on both the balance sheet and the income statement for financial reporting purposes in accordance with GAAP. For avoidance of doubt, a straight-line or operating lease shall be considered a Non-Financing Lease Obligation.
“Non-U.S. Lender” has the meaning assigned to such term in Section 7.6(d).
“Note” means a promissory note substantially in the form of Exhibit B.
“Obligations” means all obligations (monetary (including post-petition interest, allowed or not) or otherwise) of the Company under this Agreement and any other Loan Document including Attorney Costs, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Other Connection Taxes” means, with respect to any Lender, Taxes imposed as a result of a present or former connection between such Lender and the jurisdiction imposing such Taxes (other than a connection arising solely from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to, or enforced any Loan Document, or sold or assigned an interest in any Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed as a result of an assignment (other than an assignment made pursuant to Section 8.6(b)).
“Parent Entity” means any Person that is a direct or indirect parent company (which may be organized as, among other things, a partnership) of the Company.
“Participant” has the meaning assigned to such term in Section 15.5(c).
“Participant Register” has the meaning assigned to such term in Section 15.5(c).
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Requires to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.
“Pension Plan” means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding standards of ERISA (other than a Multiemployer Pension Plan), and as to which the Company or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time.
“Permitted Holders” means (a) each of the Investors and each Employee Investor (including, for the avoidance of doubt, any Investor or Employee Investor holding Equity Interests through an Equityholding Vehicle), (b) any Permitted Plan and (c) any Person who is acting solely as an underwriter or initial purchaser in connection with a public or private offering of Equity Interests of the Company or any Parent Entity, acting in such capacity.
“Permitted Investments” means:
(a) direct obligations of the United States of America (including U.S. Treasury bills, notes and bonds) that are backed by the full faith and credit of the United States of America;
(b) direct obligations of any agency of the United States of America that are backed by the full faith and credit of the United States of America and direct obligations of United States of America government-sponsored enterprises (including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation) that are rated the same as direct obligations of the United States of America;
(c) direct obligations of, and obligations fully guaranteed by, any State of the United States of America that, on the date of acquisition, are rated investment grade by Moody’s or by S&P, including general obligation and revenue notes and bonds, insured bonds (including all insured bonds having, on the date of acquisition, a credit rating of Aaa by Moody’s and AAA by S&P) and refunded bonds (reissued bonds collateralized by U.S. Treasury securities);
(d) Debt of any county or other local governmental body within the United States of America having, on the date of acquisition, a credit rating of Aaa by Moody’s or AAA by S&P, or Auction Rate Securities, Tax-Exempt
Commercial Paper or Variable Rate Demand Notes issued by such bodies that is, on the date of acquisition, rated at least A3/P-1/VMIG-1 by Moody’s or A-/A-1/SP-1 by S&P;
(e) commercial paper issued by any corporation or bank having a maturity of nine months or less and having, on the date of acquisition, a credit rating of at least P1 or the equivalent thereof from Moody’s or A1 or the equivalent thereof from S&P;
(f) money market investments, deposits, bankers acceptances, certificates of deposit, notes and other like instruments, in each case issued by any bank that has a combined capital and surplus and undivided profits of not less than US$500,000,000;
(g) money market funds and mutual funds consisting primarily of investments described in clauses (a) through (f) above, in each case having a credit rating of at least Aaa from Moody’s or AAA from S&P, and in each case having at least US$500,000,000 of assets under management; and
(h) money market investments, deposits, bankers acceptances, certificates of deposit, notes and other like instruments to the extent that (i) the issuing bank is organized under the laws of a country in which the Company or any of its Subsidiaries conducts operations and (ii) the aggregate amount of such instruments issued by any individual bank or its Affiliates held by the Company and its Subsidiaries does not exceed US$2,000,000.
“Permitted Plan” means any employee benefit plan of the Company, any Parent Entity or any of their Affiliates and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan.
“Person” means any natural person, corporation, partnership, trust, limited liability company, association or governmental authority, or any other entity, whether acting in an individual, fiduciary or other capacity.
“PIK Fees” shall have the meaning provided in Section 5.1.
“PIK Interest” shall have the meaning provided in Section 4.4(b).
“PIK Interest Election Notice” shall have the meaning provided in Section 4.4(c).
“Pro Rata Share” means (x) with respect to a Lender’s obligation to make Loans pursuant to Section 2.1.1 and with respect to Sections 5.1 and 6.1.2, in each case at any time prior to the Commitments being terminated or reduced to zero, the percentage obtained by dividing (i) such Lender’s Commitment at such time, by (ii) the Loan Availability at such time and (y) with respect to a Lender’s right to receive payments of principal, interest, fees, costs, and expenses with respect to any Loans at any time and otherwise at any time from and after the time the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (i) the aggregate unpaid principal
amount of such Lender’s Exposure at such time by (ii) the Total Outstandings at such time.
“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or judicial proceeding in any jurisdiction.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. § 5390(c)(8)(D).
“QFC Credit Support” has the meaning assigned to such term in Section 15.19(a).
“Recipient” means (a) the Required Lenders and (b) any Lender, as applicable.
“Refinancing Debt” has the meaning assigned to such term in Section 11.1(n).
“Register” has the meaning assigned to such term in Section 15.5(b).
“Regulated Subsidiaries” means the Subsidiaries of the Company listed on Annex C.
“Regulated Subsidiary Obligations” means all obligations (monetary or otherwise) of the Company to its Regulated Subsidiaries, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, to cure any deficit position of such Regulated Subsidiaries.
“Regulation D” means Regulation D of the Federal Reserve Board.
“Regulation T” means Regulation T of the Federal Reserve Board.
“Regulation U” means Regulation U of the Federal Reserve Board.
“Regulation X” means Regulation X of the Federal Reserve Board.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, partners, agents, managers, advisors, representatives and controlling persons of such Person.
“Replacement Lender” has the meaning assigned to such term in Section 8.6(b).
“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued thereunder as to which the PBGC has not waived the notification requirement of Section 4043(a), or the failure of a Pension Plan to meet the minimum funding standards of Section 412 of the Code (without regard to whether the
Pension Plan is a plan described in Section 4021(a)(2) of ERISA) or under Section 302 of ERISA.
“Required Lenders” means, at any time, Lenders who have Pro Rata Shares which exceed 50% as determined pursuant to clause (y) of the definition of “Pro Rata Share”; provided that the Required Lenders shall include all Lenders that are Affiliates or Approved Funds of NEA 18 Venture Growth Equity, L.P. at all times that such Lenders remains a Lender (unless such Lenders have assigned more than 50% of the aggregate amount of Loans and Commitments held by such Lenders as of the Effective Date to Persons that are not Affiliates or Approved Funds of NEA 18 Venture Growth Equity, L.P.). For purposes of this definition, Required Lenders shall be determined by excluding all Loans and Commitments held or beneficially owned by any Defaulting Lender.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means, with respect to any Person, the president, the chief executive officer, the chief financial officer, the treasurer, manager of treasury activities, any assistant treasurer, any executive vice president, any senior vice president, any senior vice president (finance), any vice president or the chief operating officer of such Person and any other individual or similar official thereof responsible for the administration of the obligations of such Person in respect of this Agreement, and, as to any document delivered on the Effective Date, shall include any secretary or assistant secretary or any other individual or similar official thereof with substantially equivalent responsibilities of the Company. Any document delivered hereunder that is signed by a Responsible Officer of the Company shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Company, and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Company. Unless otherwise specified, all references herein to a “Responsible Officer” shall refer to a Responsible Officer of the Company.
“Restricted Payment” has the meaning assigned to such term in Section 11.3.
“Return” means, with respect to any Investment, any dividend, distribution, interest, fee, premium, return of capital, repayment of principal, income, profit (from a disposition or otherwise) and any other similar amount received or realized in respect thereof.
“S&P” means S&P Global Ratings, a division of Standard & Poor’s Global Inc. and any successor thereto of its rating business.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of comprehensive Sanctions (which, as of the Effective Date, includes Crimea, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State or by the United Nations Security Council, the European Union, any European
Union member state, or Her Majesty’s Treasury of the United Kingdom, (b) any Person organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b) or (d) any Person otherwise the subject of any Sanction.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state, or Her Majesty’s Treasury of the United Kingdom.
“SEC” means the Securities and Exchange Commission or any other governmental authority succeeding to any of the principal functions thereof.
“Senior Debt” means (a) all indebtedness and other obligations under any Funded Debt that is senior to the Loans in any respect (including in payment priority, as a result of being guaranteed by any Subsidiary of the Company, by being secured by a Lien on any assets of the Company or any of its Subsidiaries or by being unsecured Debt that is not subordinated to the then-outstanding Senior Debt) the Hercules Debt and (b) all Regulated Subsidiary Obligations; provided that if the applicable regulator for a Regulated Subsidiary commences or seeks to commence a bankruptcy, receivership, insolvency proceeding or other similar proceeding against a Regulated Subsidiary prior to the repayment in full of all Senior Debt, the Regulated Subsidiary Obligations owed by the Company to such Regulated Subsidiary shall no longer be Senior Debt for purposes of this Agreement.
“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” within the meaning of Rule 1-02 of the SEC’s Regulation S-X; provided that each of Bright Health Insurance Company of Florida and Bright HealthCare Insurance Company of Texas shall be deemed not to constitute a “Significant Subsidiary” for all purposes under the Loan Documents.
“Solvent” means (i) the sum of the debt and liabilities (subordinated, contingent or otherwise) of the Company and its Subsidiaries, taken as a whole, does not exceed the fair value of the assets (at a fair valuation) of the Company and its Subsidiaries, taken as a whole; (ii) the present fair saleable value of the assets (at a fair valuation) of the Company and its Subsidiaries, taken as a whole, is greater than the amount that will be required to pay the probable liabilities of the Company and its Subsidiaries, taken as a whole, on their debts and other liabilities subordinated, contingent or otherwise as they become absolute and matured; (iii) the capital of the Company and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of the Company and its Subsidiaries, taken as a whole, as conducted or contemplated as of the relevant date; and (iv) the Company and its Subsidiaries, taken as a whole, have not incurred and do not intend to incur, or believe that they will incur, debts or other liabilities (including current obligations and contingent liabilities) beyond their ability to pay such debt or other liabilities as they become due (whether at maturity or otherwise). For the purposes hereof, the amount of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Spot Rate” for any currency means the rate determined by the Company to be the rate quoted by the Company as the spot rate for the purchase by the Company of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Company may obtain such spot rate from another financial institution designated by the Company if it does not have as of the date of determination a spot buying rate for any such currency.
“Subject Interest Period” shall have the meaning provided in Section 4.4(c).
“Subordinated Debt” means any Debt for borrowed money of the Company that is by its terms subordinated in right of payment to the Senior Debt in the same manner as the Obligations.
"Subordination Agreement" means (a) Section 16 and (b) the Subordination Agreement, dated as of June 21, 2024, among NEA 18 Venture Growth Equity L.P., New Enterprise Associates 17, L.P., New Enterprise Associates 16, L.P., New Enterprise Associates 15, L.P., California State Teachers' Retirement System and Hercules Capital, Inc.
“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, such number of outstanding Equity Interests as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company.
“Supported QFC” has the meaning assigned to such term in Section 15.19(a).
“Taxes” means any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.
“Termination Event” means, with respect to a Pension Plan or a Multiemployer Pension Plan, as applicable, (a) a Reportable Event, (b) the withdrawal of the Company or any other member of the Controlled Group from such Pension Plan during a plan year in which the Company or any other member of the Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or the imposition of a lien on the property of the Company or any other member of the Controlled Group pursuant to Section 4068 of ERISA, (c) the termination of such Pension Plan, the filing of a notice of intent to terminate the Pension Plan or the treatment of an amendment of such Pension Plan as a termination under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Pension Plan, (e) any event or condition that might
constitute grounds under Section 4042 of ERISA for the termination of, or appointment of a trustee to administer, such Pension Plan, (f) such Pension Plan is in “at risk” status within the meaning of Section 430(i) of the Code, or such Multiemployer Pension Plan is in “endangered status” or “critical status” within the meaning of Section 432(b) of the Code, or (g) a complete or partial withdrawal from a Multiemployer Pension Plan.
“Total Outstandings” means, at any time, the sum of the aggregate principal amount of all outstanding Loans.
“Total Plan Liability” means, at any time, the present value of all vested and unvested accrued benefits under the applicable Pension Plan(s), determined as of the then most recent valuation date for each applicable Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.
“Transactions” means (a) the execution, delivery and performance by the Company of the Loan Documents on the Effective Date, (b) the use of the proceeds thereof, and (c) the payment of the fees and expenses incurred in connection with the foregoing (such fees and expenses, the “Transaction Costs”).
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the creation or perfection of security interests.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unfunded Liability” means the amount (if any) by which the present value of all vested and unvested accrued benefits under the applicable Pension Plan(s) exceeds the fair market value of all assets allocable to those benefits, all determined as of the then most recent valuation date for each applicable Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.
“U.S. Dollars” and the sign “$” mean lawful money of the United States of America.
“U.S. Special Resolution Regimes” has the meaning assigned to such term in Section 15.19(a).
“Unmatured Event of Default” means any event that, if it continues uncured, will, with lapse of time or notice or both, constitute an Event of Default.
“Undrawn Commitment Fee Rate” means 0.50% per annum.
“Voting Stock” means, with respect to any Person, shares of such Person’s Equity Interests that is at the time generally entitled, without regard to contingencies, to vote in the election of the Board of Directors of such Person. To the extent that a partnership agreement, limited liability company agreement or other agreement governing a partnership or limited liability company provides that the members of the Board of Directors of such partnership or limited liability company (or, in the case of a limited partnership whose business and affairs are managed or controlled by its general partner, the Board of Directors of the general partner of such limited partnership) is appointed or designated by one or more Persons rather than by a vote of Voting Stock, each of the Persons who are entitled to appoint or designate the members of such Board of Directors will be deemed to own a percentage of Voting Stock of such partnership or limited liability company equal to (a) the aggregate votes entitled to be cast on such Board of Directors by the members of such Board of Directors which such Person or Persons are entitled to appoint or designate divided by (b) the aggregate number of votes of all members of such Board of Directors.
“Waiver” means the Second Amended and Restated Limited Waiver and Consent, dated as of June 29, 2023 (as amended, amended and restated, supplemented or otherwise modified from time to time) among the Company, the other parties party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
“Warrantholders’ Agreements” means the 2023 Warrantholders’ Agreement and 2024 Warrantholders’ Agreement.
“Wholly-Owned Subsidiary” means, as to any Person, a Subsidiary all of the Equity Interests of which (except directors’ qualifying Equity Interests) are at the time directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such Person.
“Withholding Certificate” has the meaning assigned to such term in Section 7.6(d).
“Write-Down and Conversion Powers” means (a) 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, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any
such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.2 Other Interpretive Provisions.
1.2.1 The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
1.2.2 Section, Annex and Exhibit references are to this Agreement unless otherwise specified.
1.2.3 The term “including” is not limiting and means “including without limitation.”
1.2.4 In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”
1.2.5 Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of any Loan Document, (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation and (iii) any reference herein or in any Loan Document to any Person shall be construed to include such Person’s successors and permitted assigns.
1.2.6 This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.
1.2.7 This Agreement and the other Loan Documents are the result of negotiations among, and have been reviewed by counsel to, the Company, the Lenders and the other parties thereto and are the products of all parties. Accordingly, they shall not be construed against the Lenders merely because of the Lenders’ involvement in their preparation.
1.3 Limited Condition Transactions. Solely for the purpose of (i) measuring the relevant ratios and baskets with respect to the incurrence of any Debt or the making of any permitted Acquisition or other Investment or (ii) determining the occurrence of any Event of Default or Unmatured Event of Default, in each case, in connection with a Limited Condition Transaction, if the Company makes an LCT Election, the date of determination in determining whether any such incurrence of any Debt or the making of any permitted Acquisition or other Investment is permitted shall be deemed to be the
LCT Test Date (provided that for the purpose of determining the occurrence of any Event of Default under Sections 13.1(a) or 13.1(c), such determination shall also be made at the time of the consummation of the Limited Condition Transaction), and if, after giving effect to the applicable Limited Condition Transaction and the other transactions to be entered into in connection therewith as if they had occurred as of such date of determination, ending prior to the LCT Test Date on a pro forma basis, the Company could have taken such action on the relevant LCT Test Date in compliance with any such ratio or basket, such ratio or basket shall be deemed to have been complied with. If the Company has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated and tested on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of debt and the use of proceeds thereof) have been consummated.
1.4 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws), including the Delaware Limited Liability Company Act: (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
1.5 Timing of Payment or Performance. Except as otherwise provided herein, when the payment of any obligation or the performance of any covenant, duty, or obligation is stated to be due or performance required on (or before) a day which is not a Business Day, the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
1.6 Exchange Rates. Notwithstanding the foregoing, for purposes of any determination under Section 10, Section 11 or Section 13 or any determination under any other provision of this Agreement expressly requiring the use of a current exchange rate, all amounts incurred, outstanding, or proposed to be Incurred or outstanding in currencies other than Dollars shall be translated into Dollars at the Spot Rate; provided, however, that for purposes of determining compliance with Section 11 with respect to the amount of any Debt, Investment, Lien, asset sale, or Restricted Payment in a currency other than Dollars, no Unmatured Event of Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Debt, Lien or Investment is Incurred or after such asset sale or Restricted Payment is made; provided that, for the avoidance of doubt, the foregoing provisions of this Section 1.6 shall otherwise apply to such Sections, including with respect to determining whether
any Debt, Lien, or Investment may be incurred or asset sale or Restricted Payment made at any time under such Sections.
SECTION 2 COMMITMENTS OF THE LENDERS AND BORROWING PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make loans to, the Company as follows:
2.1.1 Commitment. Each Lender with a Commitment severally agrees to make loans in U.S. Dollars (“Loans”) on and after the Effective Date from time to time until the DDTL Commitment Expiration Date in an amount equal to such Lender’s Pro Rata Share (for purposes of calculating any such Pro Rata Share, excluding any Loans attributable to PIK Interest or PIK Fees) of such aggregate amounts as the Company may request from all Lenders; provided that (i) the Total Outstandings (other than any Loans attributable to PIK Interest or PIK Fees) will not at any time exceed the Loan Availability and (ii) the Exposure of any Lender (other than any Loans attributable to PIK Interest or PIK Fees) will not at any time exceed its Commitment. The Commitment of each Lender shall be reduced by the aggregate amount of Loans funded by such Lender, but not the amount of Loans attributable to PIK Interest or PIK Fees. On the DDTL Commitment Expiration Date, the unused Commitments shall terminate. The Loans may be repaid or prepaid in accordance with the provisions hereof, but once repaid or prepaid may not be reborrowed.
2.1.2 Increase in Commitments and Incremental Loans.
(a) The Company may, at its option any time before the Maturity Date, seek to increase the Commitments (any such increase, a “Commitment Increase”) and/or Incur additional Loans (“Incremental Loans”) upon written notice to the Lenders.
(b) Any such notice delivered to the Lenders in connection with a Commitment Increase or any Incremental Loans shall be delivered at a time when no Unmatured Event of Default or Event of Default has occurred and is continuing and shall specify (i) the amount of such Commitment Increase or Incremental Loans (which shall not be less than $1,000,000 (unless otherwise agreed by the Required Lenders)) sought by the Company, (ii) the date (each, an “Increased Amount Date”) on which the Company proposes that such Commitment Increase shall be effective or such Incremental Loans shall be funded, which shall be a date not less than three Business Days after the date on which such notice is delivered to the Lenders (unless otherwise agreed by the Required Lenders in their reasonable discretion) and (iii) the identity of each Incremental Lender to whom the Company proposes any portion of such Commitment Increase be allocated or Incremental Loans be provided by and the amounts of such allocations or Incremental Loans. Commitment Increases and Incremental Loans may provided on a non pro-rata basis by one or more Lenders and/or other Persons (other than Ineligible Institutions)
reasonably acceptable the Company. No Commitment Increase shall become effective and no Incremental Loans shall be made until each of the Incremental Lenders extending
such Commitment Increase or providing such Incremental Loans and the Company shall have delivered to the Lenders a document in form reasonably satisfactory to the Required Lenders pursuant to which any such Incremental Lender states the amount of its Commitment Increase or Incremental Loans and agrees to assume and accept the obligations and rights of a Lender hereunder (“Incremental Amendment”), and the Company accepts such new Commitments or Incremental Loans.
(c) Notwithstanding the foregoing, no Commitment Increase shall be established and no Incremental Loans shall be incurred unless, subject to Section 1.3, (i) no Unmatured Event of Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such Commitment Increase or Incremental Loan; (ii) all fees and expenses, if any, owing in respect of such increase to the Lenders will have been paid; (iii) the Company shall deliver or cause to be delivered any customary legal opinions or other customary closing documents reasonably requested by the Lenders providing such Commitment Increase or Incremental Loan in connection with any such transaction and (iv) after giving effect to such Commitment Increase or Incremental Loan, the aggregate amount of all outstanding Commitments and the aggregate outstanding principal amount of all Loans, together with the aggregate principal amount of Debt outstanding and Incurred in reliance on Section 11.1(c), does not exceed $125,000,000 plus the amount of any interest and fees payable in kind and added to the principal amount of such Debt or any Loan (including any PIK Interest and PIK Fees).
(d) Upon the effectiveness of any Commitment Increase or Incurrence of any Incremental Loan of any Incremental Lender that is not already a Lender pursuant to this Section 2.1.2, such Incremental Lender shall be deemed to be a “Lender” hereunder, and henceforth shall be entitled to all the rights of, and benefits accruing to, Lenders hereunder and shall be bound by all agreements, acknowledgements and other obligations of Lenders hereunder.
(e) The terms of any such Commitment Increase and Incremental Loans (other than the All-In Yield, including the interest rate and any fees, applicable thereto) shall be identical to those of the other Commitments and Loans outstanding under this Agreement, including with respect to subordination. Each Commitment Increase shall be deemed for all purposes a Commitment and each Loan made thereunder and each Incremental Loan shall be deemed, for all purposes, a Loan. The Lenders are under no obligation to provide any Commitment Increase or Incremental Loan.
(f) The All-In Yield applicable to the Incremental Loans and any other Funded Debt of the Company shall be determined by the Company and the applicable Incremental Lenders or the lenders providing such Funded Debt, and shall be set forth in each applicable Incremental Amendment or agreement or instrument evidencing such Funded Debt; provided, however, that with respect to any Loans under a Commitment Increase, Subordinated Loans incurred pursuant to Section 11.1(q), Ssenior secured Debt incurred pursuant to Section 11.1(b)(i), Incremental Loans or any other Funded Debt that is pari passu or senior to the Subordinated Loans, unless otherwise agreed by NEA 18 Venture Growth Equity, L.P. in its sole discretion, if the All-In Yield applicable to such Incremental Loans or Funded Debt, as applicable, shall be greater than the applicable
All-In Yield payable pursuant to the terms of this Agreement as amended through the date of such calculation with respect to the Loans, then the interest rate with respect to the Loans, shall be increased by the applicable amount by which the All-In Yield of the Incremental Loans or loans under such other Funded Debt exceeds that of the Loans under this Agreement (the provisions of this Section 2.1.2(f), the “MFN Provision”).
(g) Incremental Loans may not permit the payment of cash interest in any period in which the Company elects to pay the Loans in PIK Interest and Incremental Loans may only be repaid on a pro rata or less than pro rata basis with the Loans.
(h) In connection with the incurrence or issuance of any Incremental Loans, preferred stock or any other Funded Debt, unless otherwise agreed by NEA 18 Venture Growth Equity, L.P. (such agreement not to be unreasonably withheld, conditioned or delayed), neither the Company nor any of its Subsidiaries may directly or indirectly issue any warrants, common stock or similar “equity kicker” (including any other equity derivative or synthetic instrument in lieu thereof, such as contingent value rights) (any such instrument, “Equity Upside”) to the providers of any such Incremental Loans, preferred stock or other Funded Debt; provided that, solely in connection with an issuance of Incremental Loans or any Subordinated Debt incurred pursuant to Section 11.1(q) hereof, the Company may issue Equity Upside in an amount not to exceed the aggregate amount of Warrants (calculated on a pro rata basis taking into account the amount of such Incremental Loans to be committed or incurred) issued or issuable pursuant to the Warrantholders’ Agreement (the provisions of this Section 2.1.2(h), the “Upside Cap”). By way of example, an incurrence of an additional $50.0 million on Incremental Loans would result in a maximum Equity Upside of 9.9% of the outstanding common stock of the Company giving pro forma effect to the conversion, exercise or exchange of any security convertible into, exercisable or exchangeable for common stock of the Company and vesting of any awards granted to directors and employees of the Company and its Subsidiaries.
2.2 Loan Procedures.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
(b) Each Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum.
2.2.1 Requests for Borrowings. To request a Borrowing, the Company shall notify each Lender of such request by submitting a Borrowing Request not later than noon, New York City time, five Business Days before the date of the proposed Borrowing. Each such Borrowing Request shall be irrevocable and shall be signed by a Responsible Officer of the Company. Each such Borrowing Request shall specify the
following information (to the extent applicable, in compliance with Sections 2.1.1 and 2.2(a)):
(i) the aggregate amount of such Borrowing;
(ii) the requested date of such Borrowing, which shall be a Business Day;
(iii) the location and number of the account of the Company to which funds are to be disbursed; and
(iv) that as of such date Sections 12.2.1(a) and 12.2.1(b) are satisfied.
Any such Borrowing Request may include a PIK Interest Election Notice. Promptly following a delivery of a Borrowing Request in accordance with this Section 2.2.1, the Company shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.
2.3 [Reserved].
2.4 Funding of Borrowings. Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof solely by wire transfer of immediately available
funds, by 1:00 p.m., New York City time, to the account of the Company most recently
designated by it for such purpose by notice to the Lenders.
2.5 [Reserved].
SECTION 3 EVIDENCING OF LOANS.
3.1 Notes. If so requested by any Lender by written notice to the Company,
the Loans of each Lender shall be evidenced by a Note, with appropriate insertions,
payable to such Lender in a face principal amount equal to such Lender’s Loans.
3.2 Recordkeeping. The Company, on behalf of each Lender, shall record in
its records, the date and amount of each Loan made by each Lender and each repayment
thereof. The aggregate unpaid principal amount so recorded shall be rebuttably
presumptive evidence of the principal amount of the Loans owing and unpaid. The
failure to so record any such amount or any error in so recording any such amount shall
not, however, limit or otherwise affect the Obligations of the Company hereunder or
under any Note to repay the principal amount of the Loans hereunder, together with all
interest accruing thereon.
SECTION 4 INTEREST.
Subject in all respects to Section 16any Subordination Agreement:
4.1 Interest Rates. The Company promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan until
such Loan is paid in full at a rate per annum equal to 15.00%; provided that (i) if any amount payable by the Company under the Loan Documents is not paid when due in accordance with the terms of this Agreement, whether at stated maturity, by acceleration or otherwise, during the continuance of an Event of Default under Section 13.1(a) or 13.1(c), then such overdue amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws; and (ii) accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable on demand; provided, further, that (a) no amount shall be payable pursuant to this Section 4.1 to a Defaulting Lender so long as such Lender shall be a Defaulting Lender, (b) no amounts shall accrue pursuant to this Section 4.1 on any overdue amount, reimbursement obligation in respect of any amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (c) any interest paid in the form of PIK Interest shall be deemed paid when due for all purposes of this Agreement and the other Loan Documents.
4.2 Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date in accordance with Section 4.4 and at the Maturity Date. After the Maturity Date, and at any time an Event of Default exists, accrued interest on all Loans shall be payable on demand.
4.3 PIK Interest. For the avoidance of doubt, once paid, PIK Interest and PIK Fees shall be treated as principal for all purposes hereunder and shall accrue interest thereon in accordance with Section 4.1 hereof.
4.4 Computation of Interest; Payment of Interest.
(a) Interest shall be computed for the actual number of days elapsed on the basis of a year of 365/366 days.
(b) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such Interest Payment Date at election of the Company in its sole discretion either (x) in cash (“Cash Interest”) or (y) in kind by capitalizing such interest and increasing the outstanding principal amount of such Loans by the amount of interest accrued in respect of such Loans during the applicable Interest Period (“PIK Interest”); (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of such Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of such Loan, including final maturity of such Loan.
(c) The Company may elect the form of interest payment with respect to Loans for each Interest Period by delivering a notice substantially in the form of Exhibit C (a “PIK Interest Election Notice”) (i) as part of the Borrowing Request or (ii) at any time prior to the applicable Interest Payment Date in respect of such Interest Period. Each PIK Interest Election Notice shall include information to the following effect: (i) the relevant Interest Payment Date applicable to such PIK Interest Election Notice; (ii) whether interest shall be paid on such Interest Payment Date (x) as Cash Interest or (y) as
PIK Interest; and (iii) if interest shall be paid as PIK Interest, the increase in the principal amount of the Loans to be effective upon the relevant interest payment date as a result of such payment and the principal amount of the Loans to be outstanding as of such Interest Payment Date after giving effect to such payment. If the Company does not deliver a PIK Interest Election Notice in respect of any Interest Period (any such Interest Period, a “Subject Interest Period”), the interest on the Loans for such Subject Interest Period will be payable on the Interest Payment Date in PIK Interest.
SECTION 5 FEES.
Subject in all respects to Section 16any Subordination Agreement:
5.1 Undrawn Commitment Fee. The Company agrees to pay to the each Lender based on such Lender’s Pro Rata Share an undrawn commitment fee in U.S. Dollars, which shall accrue at the Undrawn Commitment Fee Rate on the daily unused amount of the Commitment of such Lender during the period from the Effective Date to the DDTL Commitment Expiration Date; provided, that any undrawn commitment fee accrued with respect to any of the unused Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall be payable by the Company so long as such undrawn commitment fee shall otherwise have been due and payable by the Company prior to such time of such Lender becoming a Defaulting Lender. Undrawn commitment fees shall be payable in arrears on the last day of each Fiscal Quarter and on the DDTL Commitment Expiration Date for any period then ending for which such undrawn commitment fees shall not have previously been paid, at election of the Company in its sole discretion either (x) in cash or (y) in kind by capitalizing such fees and increasing the outstanding principal amount of Loans by the amount of fees accrued in respect of such Loans during the applicable period (“PIK Fees”). The unused commitment fee shall be computed for the actual number of days elapsed on the basis of a year of 365/366 days. For purposes of computing commitment fees, a Commitment of a Lender shall be deemed to be used to the extent of the outstanding Loans funded by such Lender other than any Loans attributable to PIK Interest and PIK Fees.
5.2 [Reserved]
5.3 [Reserved]
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENT; PREPAYMENTS.
6.1 Reduction or Termination of the Commitment.
6.1.1 Voluntary Reduction or Termination of the Commitment. The Company may from time to time on at least one Business Day’s prior written notice received by each Lender permanently reduce the Commitments to an amount not less than the Total Outstandings (other than any Loans attributable to PIK Interest or PIK Fees); provided that a notice of termination or reduction of the Commitments under this
Section 6.1.1 may state that such notice is conditioned upon the occurrence of one or more events specified therein, in which case such notice may be revoked by the Company (by notice to the Lenders on or prior to the specified effective date). Any such reduction shall be in an amount not less than the Borrowing Minimum or a higher integral multiple of the Borrowing Multiple. Concurrently with any such voluntary reduction of the Commitments to zero, the Company shall pay all interest on the Loans and all commitment fees.
6.1.2 All Reductions of the Commitments. All reductions of the Commitments shall reduce the Commitments ratably among the Lenders according to their respective Pro Rata Shares (excluding for such purposes any Loans attributable to PIK Interest or PIK Fees).
6.2 Prepayments.
6.2.1 Voluntary Prepayments. Subject in all respects to Section 16any Subordination Agreement, the Company may from time to time prepay the Loans in whole or in part; provided that the Company shall give each Lender written notice thereof, which shall be substantially in the form of Exhibit D, not later than 12:00 P.M., New York City time, on the proposed date of such prepayment, which shall, in each case, be a Business Day, specifying the Loans to be prepaid and the date and amount of prepayment. Any such partial prepayment shall be in an amount equal to the Borrowing Minimum or a higher integral multiple of the Borrowing Multiple and shall be accompanied by all accrued and unpaid interest on the principal amount of Loans so repaid.
6.3 Manner of Prepayments. Each voluntary partial prepayment shall be in a principal amount of the Borrowing Minimum or a higher integral multiple of the Borrowing Multiple.
6.4 Repayments. Subject in all respects to Section 16any Subordination Agreement, the Loans of each Lender shall be paid in full on the Maturity Date.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments.
(a) All cash payments of principal or interest on Loans denominated in U.S. Dollars, and of all fees, shall be made by the Company to each Lender in U.S. Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, not later than 12:00 P.M., New York City time, on the date due; and funds received after that hour shall be deemed to have been received by each Lender on the following Business Day. All payments under Section 8.1 shall be made by the Company directly to the Lender entitled thereto without setoff, counterclaim or other defense.
(b) [Reserved].
7.2 Application of Certain Payments. Prior to the exercise of remedies provided for in Section 13.2, voluntary prepayments shall be applied as set forth in Sections 6.2 and 6.3. After the exercise of remedies provided for in Section 13.2, but subject in all respects to Section 16any Subordination Agreement, all amounts collected or received by any Lender shall be applied in the following order, and concurrently with each remittance to any Lender of its share of any such payment, the Required Lenders shall advise such Lender as to the application of such payment: (i) first, to the payment of all fees, costs, expenses and indemnities of the Lenders, pro-rata, in each case then due and owing, until paid in full; (ii) second, to the payment of all of the Obligations consisting of accrued and unpaid interest, in each case then due and owing, to any Lender, pro-rata, until paid in full; (iii) third, to the payment of all Obligations consisting of principal, in each case then due and owing, to any Lender, pro-rata, until paid in full and (iv) fourth, to the Company or its successors or assigns or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
7.3 Due Date Extension. If any payment of principal or interest with respect to any of the Loans, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.
7.4 Setoff. The Company agrees that each Lender has, during the continuance of any Event of Default, all rights of set-off and bankers’ lien provided by applicable Law, in any currency, and in addition thereto, the Company agrees that at any time any Event of Default is there continuing, each Lender may apply to the payment of any Obligations of the Company hereunder, that are then due and owing, any and all balances, credits, deposits, accounts or moneys of the Company then or thereafter with such Lender; provided that the foregoing is subject in all respects to Section 16any Subordination Agreement.
7.5 Proration of Payments.
(a) Except as otherwise set forth in this Agreement, if any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise, on account of (i) principal of or interest on any Loan, but excluding any payment pursuant to Section 8.6 or 15.4) or (ii) other recoveries obtained by all Lenders on account of principal of and interest on the Loans then held by them, then such Lender shall purchase from the other Lenders such participations in the Loans held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery.
(b) Except as otherwise set forth in this Agreement, all Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionally to their respective Pro Rata Shares, it being understood that no Lender shall be responsible
for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.
7.6 Taxes.
(a) (i) To the extent permitted by applicable Law, all payments hereunder or under the Loan Documents (including any payment of principal, interest or fees) to, or for the benefit, of the Lenders shall be made by the Company free and clear of and without deduction or withholding for, or account of, any Taxes now or hereinafter imposed by any taxing authority.
(ii) In addition, the Company shall pay any Other Taxes to the relevant taxing authority in accordance with applicable Law, or at the option of the Required Lenders timely reimburse it for, Other Taxes.
(b) If the Company makes any payment hereunder or under any Loan Document in respect of which it is required by applicable Law to, and does in fact, deduct or withhold any Taxes, the Company shall pay the full amount deducted or withheld to the relevant taxing authority within the time allowed for payment under applicable Law. In addition, if the Taxes that the Company deducts or withholds are Indemnified Taxes, the Company shall increase the payment hereunder or under any such Loan Document such that after the reduction for the amount of such Taxes (and any Indemnified Taxes deducted or withheld with respect to the additional payments required under this Section 7.6(b)), the amounts received by the Lenders equal the amounts that would have been received had no such deduction or withholding been made.
(c) If any Lender is required by Law to make any payments of any Indemnified Taxes on or in relation to any amounts received or receivable hereunder or under any other Loan Document, or any Indemnified Tax is assessed against a Lender with respect to amounts received or receivable hereunder or under any other Loan Document, the Company will indemnify such Person against (i) such Indemnified Taxes (and any reasonable expenses associated with such Indemnified Taxes) and (ii) any Indemnified Taxes imposed as a result of the receipt of the payment under this Section 7.6(c), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by relevant taxing authority. A certificate prepared in good faith as to the amount of such payment by such Lender shall, absent manifest error, be final, conclusive, and binding on all parties.
(d) (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Company, at the time or times reasonably requested by the Company, such properly completed and executed documentation reasonably requested by the Company as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Company, shall
deliver such other documentation prescribed by applicable law or reasonably requested by the Company as will enable the Company to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 7.6(d)(ii), (iii), or (iv) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Each Lender that is not a United States person within the meaning of Code Section 7701(a)(30) (a “Non-U.S. Lender”) shall, to the extent it is legally entitled to, deliver to the Company on or prior to the Effective Date (or in the case of a Lender that is an assignee, on the date of such assignment to such Lender) two accurate and complete signed copies of IRS Form W‑8BEN, W‑8BEN‑E, W‑8ECI, or W‑8IMY (or any successor or other applicable form prescribed by the IRS), as applicable, certifying to such Lender’s entitlement to a complete exemption from, or a reduced rate in, United States withholding tax on interest payments to be made hereunder or any Loan. If a Lender that is a Non-U.S. Lender is claiming a complete exemption from withholding on interest pursuant to Code Sections 871(h) or 881(c), the Lender shall deliver (along with two accurate and complete signed copies of IRS Form W‑8BEN, or W‑8BEN‑E, as applicable) a certificate in form and substance reasonably acceptable to the Company to the effect that such Non-U.S. Lender is not a “bank” within the meaning of Code Section 881(c)(3)(A), a “10-percent shareholder” of the Company within the meaning of Code Section 881(c)(3)(B), or a “controlled foreign corporation” described in Code Section 881(c)(3)(C) (any such certificate, a “Withholding Certificate”). In addition, each Lender that is a Non-U.S. Lender agrees that from time to time after the Effective Date (or in the case of a Lender that is an assignee, after the date of the assignment to such Lender), when a lapse in time or a change in circumstances renders the prior certificates hereunder obsolete or inaccurate, such Lender shall, to the extent permitted under applicable Law, deliver to the Company two new and accurate and complete signed copies of IRS Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY (or any successor or other applicable forms prescribed by the IRS), and if applicable, a new Withholding Certificate, to confirm or establish the entitlement to an exemption from, or reduction in, United States withholding tax on interest payments to be made hereunder or any Loan.
(iii) Each Lender that is a United States person within the meaning of Code Section 7701(a)(30) shall provide two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form) to the Company on or prior to the Effective Date (or in the case of a Lender that is an assignee, on the date of such assignment to such Lender) certifying that such Lender is exempt from United States backup withholding tax. To the extent that a form provided pursuant to this Section 7.6(d)(iii) is rendered obsolete or inaccurate as result of a change in circumstances with respect to the status of a
Lender, such Lender shall, to the extent permitted by applicable Law, deliver to the Company revised forms necessary to confirm or establish the entitlement to such Lender’s exemption from United States backup withholding tax.
(iv) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Company at the time or times prescribed by Law and at such time or times reasonably requested by the Company 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 Company as may be necessary for the Company to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 7.6(d)(iv), “FATCA” shall include any amendments made to FATCA after the Effective Date.
(v) [Reserved]
(e) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any taxes as to which it has been indemnified pursuant to this Section 7.6 (including by the payment of additional amounts pursuant to this Section 7.6), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 7.6 with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (e), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (e) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(f) Each party's obligations under this Section 7.6 shall survive any assignment of rights by, or the replacement of, a Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
SECTION 8 INCREASED COSTS.
8.1 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender;
(ii) impose on any Lender or the applicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or participation therein; or
(iii) subject any Recipient to any Taxes (other than (A) Excluded Taxes in clauses (b) through (d) of the definition of Excluded Taxes, (B) Indemnified Taxes, and (C) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then the Company will pay to such Lender or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Company will pay to such Lender, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 8.1 shall be delivered to the Company and
shall be conclusive absent manifest error. The Company shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof.
(d) Notwithstanding the foregoing, no Lender shall be entitled to seek compensation under this Section 8.1 based on the occurrence of a Change in Law arising solely from (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act or any requests, rules, guidelines or directives thereunder or issued in connection therewith or (y) Basel III or any requests, rules, guidelines or directives thereunder or issued in connection therewith, unless such Lender is generally seeking compensation from other borrowers in the U.S. leveraged loan market with respect to its similarly affected commitments, loans and/or participations under agreements with such borrowers having provisions similar to this Section 8.1.
(e) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 8.1 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Company shall not be required to compensate a Lender pursuant to this Section 8.1 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
8.2 [Reserved]
8.3 [Reserved]
8.4 [Reserved]
8.5 Discretion of Lenders as to Manner of Funding. Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit.
8.6 Mitigation of Circumstances; Replacement of Lenders.
(a) Each Lender shall promptly notify the Company of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, any obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1 (and, if any Lender has given notice of any such event described above and thereafter such event ceases to exist, such Lender shall promptly so notify the Company ). Without limiting the foregoing, each Lender will designate a different funding office if such designation will avoid (or reduce the cost to the Company of) any event described above and such designation will not, in such Lender’s sole judgment, be otherwise disadvantageous to such Lender.
(b) If the Company becomes obligated to pay additional amounts to any Lender pursuant to Section 7.6 or 8.1, or any Lender gives notice of the occurrence of
any circumstances described in Section 8.1, the Company may designate another bank which is reasonably acceptable to the Required Lenders in their reasonable discretion (such other bank being called a “Replacement Lender”) to purchase the Loans of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder provided (i) in the case of any assignment resulting from a claim for payment under Section 7.6 or 8.1, such assignment will result in a reduction in such payments, (ii) such assignment does not conflict with applicable law and (iii) in the case of any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each Lender directly affected thereby” (or any other class or group of Lenders other than the Required Lenders) with respect to which Required Lender consent (or the consent of Lenders holding loans or commitments of such class or lesser group representing more than 50% of the sum of the total loans and unused commitments of such class or lesser group at such time) has been obtained, as applicable, any Lender becoming a non-consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent. Upon such purchase and assumption (pursuant to an Assignment and Assumption), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to the Company hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder. Each Lender agrees that if it is replaced pursuant to this Section 8.6, it shall execute and deliver to the Company an Assignment and Assumption to evidence such sale and purchase and shall deliver to the Company any Note (if the assigning Lender’s Loans are evidenced by one or more Notes) subject to such Assignment and Assumption (provided that the failure of any Lender replaced pursuant to this Section 8.6 to execute an Assignment and Assumption or deliver any such Note shall not render such sale and purchase (or the corresponding assignment) invalid), such assignment shall be recorded in the Register and any such Note shall be deemed cancelled. In connection with any replacement under this Section 8.6, if the replaced Lender does not execute and deliver to the Company a duly executed Assignment and Assumption by the time all Obligations of the Company owing to such Lender have been paid in full to such replaced Lender (other than in respect of contingent indemnification claims as to which no claim has been asserted), then such replaced Lender shall be deemed to have executed and delivered such Assignment and Assumption.
8.7 Conclusiveness of Statements. Any Lender requesting compensation under Section 8.1 shall be required to deliver a certificate to the Company that (A) sets forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, the basis therefor and, in reasonable detail, the manner in which such amount or amounts were determined and (B) certifies that such Lender is generally charging the relevant amounts to similarly situated borrowers, which certificate shall be conclusive absent manifest error.
SECTION 9 REPRESENTATIONS AND WARRANTIES.
To induce the Lenders to enter into this Agreement and to induce the Lenders to make Loans hereunder, the Company represents and warrants to the Lenders that:
9.1 Organization. (a) Each of the Company and its Subsidiaries is validly existing and, to the extent such concept is applicable in the relevant jurisdiction, in good standing under the Laws of its jurisdiction of organization; and (b) each of the Company and its Subsidiaries is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify would not have a Material Adverse Effect.
9.2 Authorization; No Conflict. (a) The execution, delivery and performance by the Company of each Loan Document has been duly authorized by all necessary action on the part of the Company and each such Loan Document has been duly executed and delivered by the Company and (b) the execution, delivery and performance by the Company of each Loan Document, and the borrowings by the Company hereunder, do not (i) require any consent or approval of, filing with or notice to, any Governmental Authority or any other Person (other than any consent or approval which has been obtained or filing or notice which has been made, and, in each case, which is in full force and effect), (ii) conflict with (A) any provision of Law, (B) the charter, by-laws or other organizational documents of the Company or any Subsidiary or (C) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon the Company, any Subsidiary or any of their respective properties, except with respect to clauses (A) or (C) to the extent such conflict would not have a Material Adverse Effect or (iii) require, or result in, the creation or imposition of any Lien on any asset of the Company.
9.3 Validity and Binding Nature. Each Loan Document is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency and similar Laws affecting the enforceability of creditors’ rights generally and to general principles of equity.
9.4 Financial Condition. The consolidated balance sheet and consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows (i) as of and for the Fiscal Year ended December 31, 2022, audited by and accompanied by an opinion of Deloitte & Touche LLP and (ii) as of and for the Fiscal Quarter and the portion of the Fiscal Year ended March 31, 2023 (and comparable periods for the prior Fiscal Year) present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its Subsidiaries on a consolidated basis as of such dates and for such periods in all material respects accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.
9.5 No Material Adverse Change. Since June 30, 2023, there has been no event or condition that has had either individually or in the aggregate, a Material Adverse Effect.
9.6 Litigation and Guarantee Obligations. No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary which would reasonably be expected to have a Material Adverse Effect. As of the Effective Date, none of the Company or any Subsidiary has any Guarantee Obligations that are not in the ordinary course of business and that are either disclosed in the Company’s filings or furnished documents with the Securities and Exchange Commission or not permitted by Section 11.1.
9.7 Ownership of Properties; Liens. Each of the Company and its Subsidiaries owns good and, in the case of real property, record title to all of the properties and assets, real and personal, tangible and intangible, of any nature whatsoever which are material to its business which it purports to own or which are reflected in its financial statements (except for personal property sold in the ordinary course of business after the date of such financial statements), free and clear of all Liens, charges and claims except as permitted by Section 11.2, in each case, except (i) for defects in title that do not materially interfere with their ability to conduct their business as currently conducted or to utilize such properties and assets for their intended purposes or (ii) where the failure to have such title would not reasonably be expected to have a Material Adverse Effect.
9.8 Equity Ownership. As of the Amendment No. 2 Effective Date, except for the Warrants, equity award under the Company’s 2021 omnibus incentive plan, as amended, and as otherwise disclosed in the company’s filings or furnished documents with the Securities and Exchange Commission, there are no pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any Equity Interests of the Company.
9.9 Pension Plans.
(a) The Unfunded Liability of all Pension Plans does not in the aggregate exceed 20% of the Total Plan Liability for all such Pension Plans. Each Pension Plan complies in all material respects with all applicable requirements of Law and regulations. No failure to make contributions under Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan has occurred with respect to any Pension Plan, sufficient to give rise to a Lien under Section 303(k) of ERISA, or otherwise to have a Material Adverse Effect. There are no pending or, to the knowledge of the Company, threatened, claims, actions, investigations or lawsuits against any Pension Plan, any fiduciary of any Pension Plan, or the Company or other any member of the Controlled Group with respect to a Pension Plan or a Multiemployer Pension Plan which could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any other member of the Controlled Group has engaged in any prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) in connection with any Pension Plan or Multiemployer Pension Plan which would subject that Person to
any material liability. Within the past five years, neither the Company nor any other member of the Controlled Group has engaged in a transaction which resulted in a Pension Plan with an Unfunded Liability being transferred out of the Controlled Group, which could reasonably be expected to have a Material Adverse Effect. No Termination Event has occurred or is reasonably expected to occur which could reasonably be expected to have a Material Adverse Effect.
(b) All contributions (if any) have been made to any Multiemployer Pension Plan that are required to be made by the Company or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable Law; neither the Company nor any other member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could result in a withdrawal or partial withdrawal from any such plan; and neither the Company nor any other member of the Controlled Group has received any notice that any Multiemployer Pension Plan is in endangered or critical status (within the meaning of Section 432 of the Code or Section 305 of ERISA), that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.
9.10 Investment Company Act. None of the Company or any Subsidiary is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company,” within the meaning of the Investment Company Act of 1940.
9.11 Regulation U, T, and X. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. None of the proceeds of any Loans will be used for any purpose which violates the provisions of Regulation U, Regulation T or Regulation X.
9.12 Taxes. Each of the Company and its Subsidiaries has timely filed all Tax returns and reports required by Law to have been filed by it and has paid all Taxes and governmental charges due and payable with respect to such returns and reports, except any such Taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books or where the failure to file such returns and reports or to pay such Taxes or charges could not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries have made adequate reserves on their books and records in accordance with GAAP for all Taxes that have accrued but which are not yet due and payable. None of the Company or any Subsidiary has participated in any transaction that relates to a year of the taxpayer (which is still open under the applicable statute of limitations) which is a “listed transaction” within the meaning of Section
6707A(c)(2) of the Code and Treasury Regulation Section 1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).
9.13 Solvency, etc. On the Effective Date, immediately after giving effect to the borrowing if any made on the Effective Date and the use of the proceeds thereof, the Company and its Subsidiaries on a consolidated basis, are Solvent.
9.14 Environmental Matters. Each of the Company and its Subsidiaries complies is in compliance with all Environmental Laws, except such non‑compliance which could not (if enforced in accordance with applicable Law) reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect. Each of the Company and its Subsidiaries has obtained, and maintained in good standing, all licenses, permits, authorizations, registrations and other approvals required under any Environmental Law for their respective operations, and for their reasonably anticipated future operations, and each of the Company and its Subsidiaries is in compliance with all terms and conditions thereof, except where the failure to do so could not reasonably be expected to result in material liability to the Company or any Subsidiary, or, either individually or in the aggregate, in a Material Adverse Effect. None of the Company or its Subsidiaries and none of their respective properties or operations is subject to any written order from or agreement with any Governmental Authority, and none of the Company or any Subsidiary and none of their respective properties or operations is subject to any pending, or to the Company’s knowledge threatened litigation, arbitration, investigation or other proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Substance, except with respect to orders, agreements, litigation, arbitration, investigations or other proceedings that could not reasonably be expected to result in material liability to the Company or any Subsidiary, or, either individually or in the aggregate, in a Material Adverse Effect. There are no Hazardous Substances or other environmental conditions or circumstances existing with respect to any property currently owned, leased or operated by the Company or any Subsidiary or, to the Company’s knowledge, any other location (including any site at which the Company has disposed or arranged for the disposal of Hazardous Substances) or relating to any release or threatened release of any Hazardous Substance, which would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
9.15 Insurance. Each of the Company, its Subsidiaries and their respective properties are insured with financially sound and reputable insurance companies, in at least such amounts (after giving effect to self-insurance) which the Company (in the good faith judgment of the management of the Company) believes is reasonable and prudent in light of the size and nature of its business).
9.16 [Reserved].
9.17 Information. As of the Effective Date, all information heretofore or contemporaneously herewith furnished in writing by the Company or any Subsidiary to any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Company or any Lender pursuant hereto or in connection herewith (in each case,
other than projections, other forward-looking information and information of a general economic or general industry nature) when taken as a whole, did not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to all supplements and updates thereto from time to time prior to the Effective Date). All financial projections concerning the Company and its Subsidiaries heretofore or contemporaneously herewith furnished in writing by the Company or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby are, and all such financial projections hereafter furnished by or on behalf of the Company or any Lender pursuant hereto or in connection herewith will be, prepared in good faith based upon assumptions believed by the Company to be reasonable at the time furnished (it being recognized by the Lenders that (w) financial projections are as to future events and are not to be viewed as facts, (x) financial projections are subject to significant uncertainties and contingencies, many of which are beyond the Company or any Subsidiaries’ control, (y) no assurance can be given that any particular financial projections will be realized and (z) actual results during the period or periods covered by any such financial projections may differ significantly from the projected results and such differences may be material).
9.19 Intellectual Property. Each of the Company and its Subsidiaries owns and possesses or has a license or other right to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights, license and other intellectual property rights as are necessary for the conduct of the businesses of the Company and its Subsidiaries, and does not infringe upon any rights of any other Person which could reasonably be expected to have a Material Adverse Effect.
9.19 Labor Matters. Except as set forth in the Company’s filings or documents furnished with the Securities and Exchange Commission, none of the Company or any Subsidiary is subject to any labor or collective bargaining agreement. There are no existing or, to the Company’s knowledge, threatened strikes, lockouts or other labor disputes involving the Company or any Subsidiary that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Company and its Subsidiaries are not in violation of the Fair Labor Standards Act or any other applicable Law dealing with such matters except any violation which could not reasonably be expected to have a Material Adverse Effect.
9.20 No Default. No Event of Default or Unmatured Event of Default has occurred or is continuing.
9.21 Material Licenses. All Material Licenses have been obtained or exist for each of the Company and its Subsidiaries.
9.22 Compliance with Material Laws. To the Company’s knowledge, each of the Company and its Subsidiaries is in compliance with all Material Laws except to the
extent that any relevant violation would not reasonably be expected to have a Material Adverse Effect.
9.23 [Reserved]
9.24 [Reserved]
9.25 PATRIOT Act; OFAC; Sanctions and Anti-Corruption and Anti-Money Laundering Laws.
(a) PATRIOT Act. To the extent applicable, each of the Company and its Subsidiaries is in compliance in all material respects with the Patriot Act.
(b) Other Laws. The Company and its Subsidiaries are in compliance, in all material respects, with Anti-Corruption Laws, including, for the avoidance of doubt, the United States Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”) and the UK Bribery Act of 2010.
(c) Sanctions. The Company has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance by the Company and its Subsidiaries and their respective directors and officers, and to the knowledge of the Company, their respective employees with the FCPA and applicable Sanctions, and the Company and its Subsidiaries and, to the knowledge of the Company, their respective officers, employees and directors, are in compliance with the FCPA and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in the Company or any Subsidiary being designated as a Sanctioned Person. None of the Company or its Subsidiaries or, to the knowledge of Company or such Subsidiary, any of their respective directors, officers, employees is a Sanctioned Person.
(d) Use of Proceeds. No part of the proceeds of the Loans will be used by the Company or its Subsidiaries, directly or, to the knowledge of the Company, indirectly, (i) for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA, (ii) in violation of Sanctions or (iii) in violation of the FCPA or other applicable anti-terrorism Laws and anti-money laundering Laws, including, for the avoidance of doubt, the Patriot Act.
SECTION 10 AFFIRMATIVE COVENANTS.
From and after the Effective Date and until the Maturity Date and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full (other than contingent amounts not yet due), the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each Lender:
10.1.1 Annual Financial Statements. Within ninety days after the end of each Fiscal Year (or, such later date as may be permitted by the SEC for the filing of the Annual Report on Form 10-K by the Company with the SEC) a copy of the annual audit report of the Company and its Subsidiaries for such Fiscal Year, including therein consolidated balance sheets and statements of operations and cash flows of the Company and its Subsidiaries as at the end of such Fiscal Year, by independent auditors of recognized standing selected by the Company; provided that the Company shall be deemed to have delivered and certified the information required in this Section 10.1.1 to the extent, and on the date, that such information is posted at the Company’s website on the internet at www.investors.brighthealthgroup.com, at www.sec.gov, or at such other website identified by the Company, in all cases so long as such website is accessible by the Lenders without charge.
10.1.2 Quarterly Financial Statements. Promptly when available and in any event within forty-five days after the end of each Fiscal Quarter (or such later date as may be permitted by the SEC for the filing of the Form 10-Q by the Company with the SEC) (other than the fourth Fiscal Quarter of each Fiscal Year), consolidated balance sheets of the Company and its Subsidiaries as of the end of such Fiscal Quarter, together with consolidated statements of income and consolidated statements of cash flows for such Fiscal Quarter and for the period beginning with the first day of such Fiscal Year and ending on the last day of such Fiscal Quarter; provided that the Company shall be deemed to have delivered and certified the information required in this Section 10.1.2 to the extent, and on the date, that such information is posted at the Company’s website on the internet at www.investors.brighthealthgroup.com, at www.sec.gov, or at such other website identified by the Company, in all cases so long as such website is accessible by the Lenders without charge.
10.1.3 Compliance Certificates. No later than 5 Business Days after the date that each annual audit report is required to be furnished pursuant to Section 10.1.1 and each set of quarterly statements is required to be furnished pursuant to Section 10.1.2, a duly completed compliance certificate in the form of Exhibit F, with appropriate insertions, dated the date of such annual report or such quarterly statements and signed by a Responsible Officer of the Company, containing (i) in respect of Section 10.1.2, a certification of such Responsible Officer that the financial statements accompanying such compliance certificate have been prepared in all material respects in accordance with GAAP applied consistently throughout the periods covered thereby and with prior periods (except as otherwise expressly indicated therein, including the notes thereto) and (ii) to the effect that such officer has not become aware of any Event of Default or Unmatured Event of Default as of the last day of the Fiscal Quarter or the Fiscal Year has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it.
10.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of the Company or any Subsidiary filed with the SEC; copies of all registration statements of the Company or any Subsidiary filed with the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to public security holders generally;
provided that the Company shall be deemed to have delivered and certified the information required in this Section 10.1.4 to the extent, and on the date, that such information is posted at the Company’s website on the internet at www.investors.brighthealthgroup.com, at www.sec.gov, or at such other website identified by the Company, in all cases so long as such website is accessible by the Lenders without charge.
10.1.5 Notice of Default and Litigation Matters. Promptly after a Responsible Officer of the Company obtains actual knowledge of any of the following, written notice describing the same and the steps being taken by the Company or the Subsidiary affected thereby with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of Default;
(b) any litigation, arbitration, investigation or proceeding not previously disclosed by the Company to the Lenders which has been instituted or, to the knowledge of the Company, is threatened against the Company or any of its Subsidiaries or to which any of the properties of any thereof is subject which could reasonably be expected to result in a Material Adverse Effect;
(c) the receipt of any written notice from any Governmental Authority (i) of the expiration without renewal, revocation or suspension of, or the institution of any proceedings to revoke or suspend, any Material License now or hereafter held by the Company or any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect or (ii) of the institution of any disciplinary proceedings against or in respect of the Company or any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for a for-cause audit by the U.S. Department of Health and Human Services which could reasonably be expected to have a Material Adverse Effect;
(d) any violation by any Insurance Subsidiary of the minimum statutory net worth requirements imposed by any Governmental Authority to which such Insurance Subsidiary is subject which could reasonably be expected to result in a Material Adverse Effect; and
(e) any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim or (ii) the effectiveness of any federal statute) which could reasonably be expected to result in a Material Adverse Effect.
10.1.6 Budgets. Within 90 days after the end of each Fiscal Year, commencing with a budget for the Fiscal Year ending December 31, 2024, a budget for such Fiscal Year for the Company and its Subsidiaries as customarily prepared by management of the Company for its internal use (including, in any event, a projected consolidated statement of operations and a statement of projected cash flow of the
Company and its Subsidiaries for the current Fiscal Year but not a projected consolidated balance sheet).
10.1.7 [Reserved].
10.1.8 Other Information. With reasonable promptness, but subject to the limitations set forth in the last sentence of Section 10.2 and Section 15.8, such other information (financial or otherwise) as any Lender may reasonably request in writing from time to time.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each Subsidiary to permit, any Lender or any representative thereof, after reasonable notice and at reasonable times during normal business hours, to inspect the properties and operations of the Company and its Subsidiaries; and permit, and cause each Subsidiary to permit, at any reasonable times during normal business hours and with reasonable notice, any Lender or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors (and the Company hereby authorizes such independent auditors to discuss such financial matters with any Lender or any representative thereof) (provided that the Company (or any of its subsidiaries) may, if it so chooses, be present at or participate in any such discussion), and to examine (and, at the expense of the Company and its Subsidiaries, photocopy extracts from) any of its books or other records; and permit, and cause each Subsidiary to permit, any Lender and its representatives to inspect, at any reasonable times during normal business hours and with reasonable notice the tangible assets of the Company and its Subsidiaries, to perform appraisals, and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to the Company and its Subsidiaries; provided that (x) except during the continuance of an Event of Default, any Lender shall not exercise such rights more often than one time during any calendar year and (y) only the Required Lenders on behalf of the Lenders may exercise the rights of the the Lenders under this Section 10.2. All such inspections or audits by the Lenders shall be at the Company’s expense; provided that so long as no Event of Default exists, the Company shall not be required to reimburse the Lenders for inspections or audits more frequently than once each Fiscal Year. Notwithstanding anything to the contrary in this Section 10.2, none of the Company or its Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (a) constitutes non-financial trade secrets or non-financial proprietary information, (b) in respect of which disclosure to any Lender (or their respective representatives or contractors) is prohibited by law or any binding agreement or (c) is subject to attorney-client or similar privilege or constitutes attorney work product.
10.3 Maintenance of Property; Insurance.
(a) Keep, and cause each Subsidiary to keep, all property useful and necessary in the business of the Company and its Subsidiaries in good working order and condition, ordinary wear and tear excepted, except as expressly permitted by this Agreement or where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
(b) Maintain, and cause each Subsidiary to maintain, with responsible insurance companies, such insurance coverage as may be required by any Law or court decree or order applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply, and cause each Subsidiary to comply with all applicable Laws (including Environmental Laws) except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, comply, and cause each Subsidiary to comply, with all applicable Bank Secrecy Act and anti-money laundering Laws in all material respects, (c) maintain in effect and enforce policies and procedures reasonably designed to ensure compliance by the Company and its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions and (d) pay, and cause each Subsidiary to pay, prior to delinquency, all Taxes and other governmental charges against it, as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall not require the Company or any Subsidiary to pay any such Tax or charge (i) so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP or (ii) where the failure to pay such Tax or charge could not reasonably be expected to have a Material Adverse Effect.
10.5 Maintenance of Existence; Material Licenses. Maintain and preserve, and (subject to Section 11.4) cause each Subsidiary to maintain and preserve, (a) to the extent such concept is applicable in the relevant jurisdiction, (i) its existence except, other than with respect to the preservation of the existence of the Company, to the extent that the failure to do so would not reasonably be expected to result in a Material Adverse Effect and (ii) good standing in the jurisdiction of its organization, and its qualification to do business and good standing in each jurisdiction where the ownership, lease or operation of its properties or conduct of its business requires such qualification (other than such jurisdictions in which the failure to be qualified or in good standing, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect) and (b) all Material Licenses of each of the Company and its Subsidiaries.
10.6 Use of Proceeds. Use the proceeds of the Loans to (a) finance ongoing working capital requirements and for other general corporate purposes of the Company and its Subsidiaries and (b) pay the Transaction Costs; and not use or permit any proceeds of any Loan to be used (i) for the purpose, whether immediate, incidental or ultimate, of “purchasing or carrying” any Margin Stock or (ii)(A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the FCPA, (B) for the purpose of
funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country in violation of Sanctions or (C) in any other manner that would result in the violation of any Sanctions applicable to any party hereto.
10.7 Employee Benefit Plans.
(a) Maintain, and cause each other member of the Controlled Group to maintain, each Pension Plan in substantial compliance with all applicable requirements of Law and regulations, unless the actions or events individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
(b) Make, and cause each other member of the Controlled Group to make, on a timely basis, all required contributions to any Pension Plan or Multiemployer Pension Plan unless the actions or events individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
(c) Not, and not permit any other member of the Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take any other action with respect to any Pension Plan that would reasonably be expected to entitle the PBGC to terminate, impose liability in respect of, or cause a trustee to be appointed to administer, any Pension Plan, unless the actions or events described in clauses (i), (ii) and (iii) individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
10.8 Environmental Matters. If any release or threatened release of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of the Company or any Subsidiary for which the Company could be held liable pursuant to applicable Environmental Law, the Company shall, or shall cause the applicable Subsidiary or shall make commercially reasonable efforts to cause the other responsible party to, undertake the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets except to the extent such non-compliance would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company shall, and shall cause each Subsidiary or shall make commercially reasonable efforts to cause the other responsible party to, comply with any all requirements of any Governmental Authority relating to the performance of activities in response to the release or threatened release of a Hazardous Substance except to the extent such non-compliance would not reasonably be expected to have a Material Adverse Effect.
SECTION 11 NEGATIVE COVENANTS.
From and after the Effective Date and until the Maturity Date and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full (other than
contingent amounts not yet due), the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:
11.1 Debt. Not, and not permit any Subsidiary to, create, incur, assume or suffer to exist any Debt, except:
(a) Obligations under this Agreement and the other Loan Documents;
(b) (i) Debt (which may be senior secured) (including the Hercules Debt) in an aggregate principal amount outstanding not to exceed $350,000,000150,000,000, subject to the MFN Provision and the Upside Cap, and (ii) Debt of the Company and/or any Subsidiary, in the case of this clause (ii) existing, or pursuant to commitments existing, on the Effective Date;
(c) [reserved].
(d) Hedging Obligations incurred so long as of the time of incurrence they were entered into for bona fide hedging purposes and not for speculation and Debt incurred in the ordinary course of business in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;
(e) Debt (including with respect to Financing Lease Obligations and purchase money Debt) of the Company and/or any Subsidiary Incurred to finance the acquisition, construction, lease, expansion, development, installation, repair, replacement, relocation, renewal, maintenance, upgrade or improvement of property (real or personal), equipment or any other asset (whether through the direct purchase of property, equipment or other assets or any Person owning such property, equipment or other assets); provided that, at the time of incurrence thereof and after giving pro forma effect thereto and the use of the proceeds thereof, the aggregate principal amount of such Debt then outstanding pursuant to this clause (e) (when aggregated with the aggregate principal amount of Refinancing Debt Incurred pursuant to Section 11.1(n) in respect of such Debt then outstanding) shall not, except as contemplated by Section 11.1(n), exceed an amount equal to the greater of (x) $25,000,000 and (y) 1.50% of Consolidated Total Assets at the time of incurrence;
(f) Guarantee Obligations arising with respect to customary indemnification obligations in favor of sellers, adjustment of purchase price or similar obligations or from guaranties or letters of credit, surety bonds, performance bonds or similar obligations securing the performance of the Company or any Subsidiary pursuant to such agreements, in each case in connection with Acquisitions permitted under Section 11.4 and purchasers in connection with dispositions permitted under Section 11.4;
(g) Guarantee Obligations arising with respect to guaranties (which may include payment obligations) provided by the Company or any Subsidiary on behalf of the Company or any Subsidiary in the ordinary course of business;
(h) (i) Debt of the Company to any Subsidiary and (ii) Debt of any Subsidiary to the Company or any other Subsidiary;
(i) Debt of the Company or any Subsidiary (excluding Guarantee Obligations) in an aggregate amount at any one time outstanding not to exceed $75,000,000; provided that, (i) the aggregate outstanding principal amount of any such Debt incurred pursuant to this Section 11.1(i) that is pari passu with the Loans shall not exceed $37,500,000 and (ii) each of the MFN Provision and the Upside Cap shall apply to any such pari passu Indebtedness incurred pursuant to this Section 11.1(i);
(j) assumed Debt of any Person that becomes a Subsidiary after the Effective Date; provided that (i) such Debt exists at the time such Person becomes a Subsidiary and is not created in contemplation or in connection with such Person becoming a Subsidiary, (ii) neither the Company nor any Subsidiary that was not an obligor with respect to such Debt prior to such Person becoming a Subsidiary shall become an obligor for such Debt; and (iii) such Debt shall not be secured by a Lien on any property of the Company or any Subsidiary that did not secure such Debt prior to such Person becoming a Subsidiary (except for proceeds and the products thereof and, in the case of multiple financings of equipment provided by any lender, other equipment financed by such lender); provided, further, that, the aggregate principal amount of Debt that is incurred in reliance of this clause (j) shall not exceed the greater of (x) $50,000,000 and (y) 3.0% of Consolidated Total Assets at any time outstanding;
(k) Debt of the Company or any Subsidiary (i) incurred to secure or support tenders, statutory obligations, bids, leases, governmental contracts, trade contracts, risk sharing agreements, surety, stay, customs, appeal, performance or return of money bonds or other similar obligations incurred in the ordinary course of business and (ii) in respect of letters of credit, surety bonds, performance bonds or similar instruments to support any of the foregoing items;
(l) Debt of the Company or any Subsidiary (other than any letter of credit, but including obligations in respect of bank guaranties, surety bonds, performance bonds or similar instruments with respect to such Debt) incurred by the Company or such Subsidiary, as applicable, in respect of workers compensation claims, unemployment insurance (including premiums related thereto), other types of social security, pension obligations, vacation pay, health, disability or other employee benefits;
(m) Debt representing the deferred purchase price of property (including intellectual property) or services, including earn-out obligations, purchase price adjustments, escrow arrangements or other arrangements representing deferred payments incurred in connection with any Acquisition permitted or consented to hereunder;
(n) the Incurrence or issuance by the Company or any Subsidiary of Debt which serves to extend, replace, refund, renew, defease or refinance any Debt incurred as permitted under clauses (b), (e), (i), and (j) of this Section 11.1 or any Debt issued to so extend, replace, refund, renew, defease or refinance such Debt (“Refinancing
Debt”); provided, however, that, (i) other than in the case of Debt Incurred under clause (e), the final maturity date of such Refinancing Debt shall be no earlier than the earlier of the maturity date of the Debt being refinanced and ninety days after the Maturity Date then in effect, (ii) the weighted average life to maturity of such Refinancing Debt shall not be shorter than the weighted average life to maturity of the Debt being extended, replaced, refunded, renewed, defeased or refinanced, (iii) to the extent such Refinancing Debt extends, replaces, refunds, renews, defeases or refinances Debt subordinated to the Obligations, such Refinancing Debt is subordinated to the Obligations at least to the same extent (as determined in good faith by the board of directors of the Company) as the Debt being extended, replaced, refunded, renewed, defeased or refinanced, (iv) such Refinancing Debt shall be in an amount not greater than the amount of the Debt being extended, replaced, refunded, renewed, defeased or refinanced plus an additional amount incurred to pay reasonable premiums (including tender premiums) outstanding and unpaid interest and reasonable fees and expenses incurred in connection therewith and (v) the MFN Provision and Upside Cap shall apply to each such incurrence of Refinancing Debt that constitutes Funded Debt; provided, further, however, that to the extent that any Debt incurred under clauses (e), (i) or (j) is refinanced pursuant to this clause (n), including any additional amounts described in clause (iv) above, then the aggregate outstanding principal amount of such Refinancing Debt shall be deemed to utilize the related basket under the applicable clause on a dollar-for-dollar basis (it being understood that an Unmatured Event of Default or Event of Default shall be deemed not to have occurred solely to the extent that the incurrence of such Refinancing Debt would cause the permitted amount under such clause to be exceeded and such excess shall be permitted hereunder);
(o) [reserved];
(p) letters of credit in an aggregate amount outstanding not to exceed $25,000,000 issued for the account of Centrum Medical Holdings LLC or any of its subsidiaries or Premier Medical Associates of Florida, LLC or any of its subsidiaries supporting risk-sharing obligations to commercial or governmental partners or counterparties of the consumer care business; and
(q) Subordinated Debt in an aggregate principal amount of Loans outstanding not to exceed $10,000,000 plus the amount of any interest and fees payable in kind and added to the principal amount of such Debt or any Loan (including any PIK Interest and PIK Fees); provided that (i) Sections 2.1.2(f) and 2.1.2(g) shall apply to such Debt as if such Debt were Incremental Loans, (ii) the terms of any such Debt, including the subordination terms (other than the All-In Yield, including the interest rate and any fees, applicable thereto) shall be substantially the same as those of the Loans and (iii) the Upside Cap shall apply to such Subordinated Debt.
11.2 Liens. Not, and not permit any Subsidiary to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for Taxes, payments in lieu of Taxes, assessments, special assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i) Liens of landlords, carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by Law and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue by more than thirty days or being contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves;
(c) (i) Liens securing any Debt permitted under Section 11.1(b)(i) and (ii) Liens existing on the Effective Date or pursuant to agreements in existence on the Effective Date and any replacement, extension or renewal thereof upon or in the same property subject thereto arising out of the extension, renewal or replacement of the Debt secured thereby (without increase in the amount thereof (other than on account of any accrued but unpaid interest, fees and premium payable by the terms of such Debt thereon));
(d) (i) Liens that constitute purchase money security interests on any property (including mortgage liens on real property) securing debt incurred for the purpose of financing all or any part of the cost of acquiring such property; provided that any such Lien attaches to such property within ninety days of the acquisition thereof and attaches solely to the property so acquired and any improvements thereon or proceeds from the disposition thereof and customary security deposits, related contract rights and payment intangibles and other assets related thereto, and the replacement, extension or renewal of any Lien permitted by this clause (i) upon or in the same property subject thereto arising out of the extension, renewal or replacement of the Debt secured thereby (without increase in the amount thereof (other than on account of any accrued but unpaid interest, fees and premium payable by the terms of such Debt thereon)); and (ii) subject to the limitations set forth in Section 11.1(e), Liens arising in connection with Financing Lease Obligations (and attaching only to the property subject to such Financing Lease Obligations and any improvements thereon or proceeds from the disposition thereof);
(e) attachments, appeal bonds, judgments and other similar Liens; provided the execution or other enforcement of such Liens incurred pursuant to this clause (e) are effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;
(f) zoning, entitlements and other land uses and environmental restrictions or regulations imposed by a Governmental Authority, easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens or
encumbrances not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary, taken as a whole;
(g) [reserved];
(h) Liens securing any Debt permitted by Section 11.1(d) or 11.1(k);
(i) Liens securing Debt permitted pursuant to Section 11.1(j) on the relevant acquired assets or on the Equity Interests and assets of the relevant newly acquired Subsidiary or Liens otherwise existing on property at the time of its acquisition or existing on the property or Equity Interests or other assets of any Person at the time such Person becomes a Subsidiary; provided that no such Lien (A) extends to or covers any other assets (other than (w) the proceeds or products thereof, accessions or additions thereto and improvements thereon, (x) with respect to such Person, any replacements of such property or assets and additions and accessions thereto, or proceeds and products thereof, (y) after-acquired property to the extent such Debt requires or includes, pursuant to its terms at the time assumed, a pledge of after-acquired property of such Person, and the proceeds and the products thereof and customary security deposits in respect thereof and (z) in the case of multiple financings of equipment provided by any lender or its affiliates, other equipment financed by such lender or its affiliates, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) or (B) was created in contemplation of the applicable acquisition of the Person, assets or Equity Interests;
(j) Liens in connection with the sale or transfer of any assets in a transaction permitted hereunder, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof;
(k) Liens securing, in the case of any joint venture, any put and call arrangements related to its Equity Interests set forth in its organizational documents or any related joint venture or similar agreement;
(l) any interest or title of a lessor or lessee under any lease or sublease entered into by the Company or any Subsidiary in the ordinary course of its business and other statutory and common law landlords’ Liens under leases;
(m) any interest or title of a licensor under any license or sublicense entered into by the Company or any Subsidiary as a licensee or sublicensee (A) existing on the Effective Date or (B) in the ordinary course of its business;
(n) any interest or title of a licensor or lessor under any licenses, sublicenses, leases or subleases granted to other Persons permitted hereunder;
(o) Liens evidenced by the filing of precautionary UCC financing statements (or any similar precautionary filings) relating solely to operating leases of personal property entered into in the ordinary course of business;
(p) Liens on earnest money deposits of cash or Permitted Investments, escrow arrangements or similar arrangements made by the Company or any Subsidiary in connection with any letter of intent or purchase agreement for an Acquisition permitted by Section 11.4 or other Investment permitted pursuant to Section 11.9;
(q) Liens arising from the assignment of monies due and to become due under contracts between the Company or any Subsidiary and the United States of America, any state, commonwealth, territory or possession thereof or any Governmental Authority of any thereof; or Liens in favor of the United States of America, any state, commonwealth, territory or possession thereof or any Governmental Authority of any thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute, or pursuant to the provisions of any contract not directly or indirectly in connection with securing Debt;
(r) any deposit or pledge as security for the performance of any statutory obligations, bid, tender, contract, lease, government contract, performance bond or undertaking not made directly or indirectly in connection with the securing of Debt; any deposit or pledge with any governmental agency required or permitted to qualify the Company or any Subsidiary to conduct business or to maintain self-insurance, or to obtain any stay or discharge in any legal or administrative proceedings;
(s) other Liens securing obligations in an aggregate principal amount not to exceed an amount equal to the greater of (x) $25,000,000 and (y) 1.50% of Consolidated Total Assets at the time of incurrence minus (B) the aggregate amount of outstanding Liens incurred pursuant to Section 11.2 (d) above;
(t) Liens in support of obligations to Insurance Subsidiaries; and
(u) Liens on assets of Centrum Medical Holdings LLC or any of its subsidiaries or Premier Medical Associates of Florida, LLC or any of its subsidiaries securing Debt permitted by Section 11.1(p).
11.3 Restricted Payments. Not, and not permit any Subsidiary to, (a) make any distribution to any holders of its Equity Interests (except for dividends or distributions from a Subsidiary to a Wholly-Owned Subsidiary or to the Company and dividends or distributions from a Subsidiary ratably to any non-Wholly-Owned Subsidiary), (b) purchase or redeem any of its Equity Interests, (c) pay any management fees or similar fees to any of its equityholders, (d) make any redemption, prepayment, defeasance, repurchase or any other payment in respect of any Subordinated Debt more than one year prior to the scheduled maturity date thereof, unless such redemption, prepayment, defeasance, repurchase or other payment is made on a pro rata basis with the Obligations, or (e) set aside funds for any of the foregoing (items (a) through (e) above, collectively, “Restricted Payments”). Notwithstanding the foregoing, (i) the Company may make a distribution to holders of its Equity Interests in the form of stock or other Equity Interests of the Company and may issue or grant Equity Kickers not otherwise prohibited under this Agreement, (ii) the Company may pay cash dividends in lieu of fractional shares in association with a stock dividend or exercise of warrants, options or other securities
exchangeable into Equity Interests of the Company, (iii) so long as no Event of Default has occurred and is continuing or could reasonably be expected to occur as a result thereof, the Company may make any Restricted Payments not otherwise permitted hereby in an aggregate amount not to exceed $5,000,000, (iv) the Company may make other Restricted Payments to repurchase Equity Interests of the Company upon the exercise of stock options if such Equity Interests represent a portion of the exercise price of such options, so long as substantially concurrently with such Restricted Payment, the Company applies the proceeds of such Restricted Payment to repurchase such Equity Interests, (v) so long as no Event of Default has occurred and is continuing or could reasonably be expected to occur as a result thereof, the Company may make any payment on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Company or any option, warrant or other right to acquire any such Equity Interests in an aggregate amount not to exceed $10,000,000 in any Fiscal Year, which, if not used in such Fiscal Year, may be carried forward to succeeding Fiscal Years, (vi) the Company may make payments of regularly scheduled interest as and when due in respect of any Subordinated Debt, (vii) the Company may (or may make Restricted Payments to allow any Parent Entity to) (x) pay cash in lieu of the issuance of fractional shares in connection with any Restricted Payment (including in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests), share split, reverse share split or combination thereof or any Acquisition or other Investment and (y) honor any conversion request by a holder of convertible Debt and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Debt in accordance with its terms, (viii) the Company may make any Restricted Payment to the extent the Company is filing an income tax return as a member of a consolidated, combined, unitary or aggregate group with a Parent Entity, the proceeds of which shall be used to pay (or to make Restricted Payments to allow any Parent Entity of the Company to pay) any tax liability in respect of income attributable to the Company and its Subsidiaries, but not in excess of the tax liability that the Company would incur if it filed tax returns as the parent of a consolidated, combined, unitary or aggregate group for itself and its Subsidiaries (and net of any payment already made and to be made by the Company or its Subsidiaries to a taxing authority to satisfy such tax liability) and (ix) the Company may make any Restricted Payment the proceeds of which shall be used to pay (or to make Restricted Payments to allow any Parent Entity of the Company to pay) franchise, excise and similar taxes and other fees, taxes and expenses, in each case, required to maintain its (or any of its Parent Entities’) corporate or other legal existence.
11.4 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary to,
(a) be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any Equity Interests of any class of, or any partnership or joint venture interest in, any other Person, except for Investments otherwise permitted by Section 11.9,
(b) sell, transfer, convey or lease all or substantially all of its assets (including the sale of all or substantially all of the Equity Interests of any Subsidiary) except (i) for sales of inventory and obsolete equipment in the ordinary course of
business or (ii) so long as no Unmatured Event of Default or Event of Default has occurred and is continuing or
(c) sell or assign with or without recourse any receivables;
except that the restrictions set forth in clauses (a)-(c) above shall not apply to
(i) any merger, consolidation, sale, transfer, conveyance, lease or assignment of or by any Subsidiary into the Company (provided that the Company shall be the continuing or surviving entity) or any other Subsidiary;
(ii) any such purchase or other acquisition by the Company or any Subsidiary of the assets or Equity Interests of any Subsidiary;
(iii) any Subsidiary may liquidate, dissolve or wind-up if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materially disadvantageous to the Lenders;
(iv) the discount or sale, in each case without recourse and in the ordinary course of business, of past due receivables arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables),
(v) Investments made in accordance with Section 11.9,
(vi) Liens incurred in compliance with Section 11.2,
(vii) any Acquisition (a) existing on, or contractually committed to or contemplated as of, the Effective Date and (b) any modification, replacement, renewal or extension of any Investment described in clause (a) above so long as no such modification, replacement, renewal or extension increases the amount of such Investment except by the terms thereof in effect on the Effective Date (including as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities) or as otherwise permitted by this Section 11.4,
(viii) any Acquisition by the Company, any Subsidiary or any Insurance Subsidiary where:
(A) the Acquisition is of a Person in a line of business which is similar or complementary to the lines of business of the Company and its Subsidiaries as of the Effective Date;
(B) immediately after giving effect to such Acquisition, no Event of Default shall exist or would result of such Acquisition; and
(C) in the case of the Acquisition of any Person, to the extent that an Acquisition which is structured as a merger involving the Company, the Company is the surviving Person, and
(ix) any sale, transfer or disposition of the Equity Interests or assets of Central Health Plan of California, Inc. and Universal Care, Inc. (d/b/a Brand New Day).
All sales, transfers or dispositions made by the Company or any Subsidiary pursuant to this Section 11.4 (other than those permitted by clause (ii) or (iii)) shall be made for fair value and for at least 75% cash consideration, and
11.5 Modification of Organizational Documents. Not permit the charter, by-laws or other organizational documents of the Company or any of its Subsidiaries to be amended or modified in any way unless in all cases, such amendment or modification is not reasonably likely to have a Material Adverse Effect.
11.6 Transactions with Affiliates. Not, and not permit any Subsidiary to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of its Affiliates involving aggregate payments, for any such transaction or series of related transactions, in excess of $5,000,000; provided, however, that (a) the Company and its Subsidiaries may engage in such transactions pursuant to the reasonable requirements of its business on terms and conditions which are not materially less favorable to such Affiliates than are obtainable in an arm’s length transaction involving a Person which is not one of its Affiliates, (b) the Company and its Subsidiaries may declare or make Restricted Payments permitted by Section 11.3 and may incur or establish Debt permitted by Section 11.1, (c) the Company and its Subsidiaries may enter into transactions between or among the Company and the Subsidiaries, (d) to the extent that any physician owned practices with which the Company or its Subsidiary has a management agreement are deemed to be an Affiliate of the Company, the Company and its Subsidiaries may enter into transactions with such entities, (e) the Company and its Subsidiaries may make payments of reasonable fees to directors of the Company or any Subsidiary who are not employees of the Company or any Subsidiary, and provide compensation, employee benefit arrangements and indemnities for the benefit of, directors, officers or employees of the Company or any Subsidiary in the ordinary course of business, (f) the Company and its Subsidiaries may adopt, enter into, maintain and perform their obligations under customary employment, compensation, severance or indemnification plans and arrangements for current or former directors, officers, employees and consultants of the Company and its Subsidiaries entered into in the ordinary course of business and (g) the Company may grant stock options or similar rights to directors, officers, employees and consultants if approved by the Company.
11.7 Inconsistent Agreements. Not, and not permit any Subsidiary that is an obligor in respect of any Senior Debt to, enter into any agreement containing any provision which would (a) be violated or breached by any borrowing by the Company hereunder or by the performance by the Company of any of its Obligations hereunder or under any other Loan Document, (b) [reserved] or (c) create or permit to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make other distributions to the Company or any other Subsidiary, or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or advances to any Subsidiarythat is an obligor in respect of any Senior Debt or (iii) transfer any of its assets or properties to any Subsidiary, other than: (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder, (B) restrictions or conditions imposed by the Hercules Credit Agreement, the definitive documentation relating to any other Senior Debt or any Senior Funded Debt and any agreement relating to purchase money Debt, Financing Lease Obligations and other secured Debt permitted by this Agreement, (C) customary provisions in leases and other contracts restricting the assignment thereof, (D) restrictions and conditions imposed by Law, (E) restrictions and conditions binding on any person in existence at the time such person first became a Subsidiary, so long as such restrictions or conditions were not entered into in contemplation of such person becoming a Subsidiary, (F) solely in the case of clauses (b) and (c)(iii), restrictions and conditions imposed by any other Debt Incurred in reliance on Sections 11.1(c), (G) [reserved], (H) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements (other than in respect of any Wholly-Owned Subsidiary) entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person, (I) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, (J) restrictions and conditions imposed by this Agreement or any other Loan Document, (K) [reserved] and (L) restrictions and conditions imposed by any amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of any contract, instrument or obligation referred to in clauses (A) through (K) above; provided that such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Company, not materially more restrictive with respect to such restrictions taken as a whole than those in existence prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
11.8 Business Activities. Not, and not permit any Subsidiary to, engage in any line of business other than (a) reasonably similar to the businesses engaged in on the Effective Date, (b) the health insurance and health care business and (c) similar, incidental, complementary, ancillary, supportive, synergetic or reasonably related businesses or reasonable extensions of the businesses (and non-core incidental businesses acquired in connection with any Acquisition or Investment or other immaterial businesses) conducted or proposed to be conducted by the Company and its Subsidiaries on the Effective Date.
11.9 Investments. Not, and not permit any Subsidiary to, make or permit to exist any Investment in any other Person, except the following:
(a) Investments by (i) the Company in any Subsidiary or any Insurance Subsidiary and (ii) any Subsidiary in the Company, any other Subsidiary of any Insurance Subsidiary;
(b) Investments in Permitted Investments;
(c) Investments to consummate Acquisitions permitted by Section 11.4;
(d) any additional Investments, as valued at the fair market value of such Investment at the time each such Investment is made; provided that the amount of such Investment (as so valued) shall not cause the aggregate amount of all such Investments made pursuant to this Section 11.9(d) measured at the time such Investment is made, to exceed, after giving pro forma effect to such Investment, the greater of (x) $50,000,000 and (y) 3.00% of Consolidated Total Assets for the Computation Period most recently ended on or prior the date such Investment;
(e) Guarantee Obligations constituting Debt permitted by Section 11.1;
(f) 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;
(g) Investments made as a result of the receipt of non-cash consideration from a disposition of any asset permitted hereunder;
(h) Investments in the form of Hedging Obligations permitted by Section 11.1;
(i) payroll, travel and similar advances to directors, officers and employees of the Company or its Subsidiaries that are made in the ordinary course of business in an aggregate amount at any one time outstanding not to exceed $5,000,000;
(j) Investments to the extent the consideration paid therefor consists of Equity Interests of the Company (other than Disqualified Equity Interests); and
(k) Investments held by a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with or into the Company or a Subsidiary after the Effective Date, 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;
(l) Investments consisting of Guarantee Obligations of the Company or any Subsidiary in respect of Non-Financing Lease Obligations of the Company or any subsidiary (other than obligations with respect to Financing Lease Obligations) or of
other obligations not constituting Debt, in each case entered into in the ordinary course of business;
(m) Investments (i) existing on, or contractually committed to or contemplated as of, the Effective Date and (ii) any modification, replacement, renewal or extension of any Investment described in clause (i) above so long as no such modification, replacement, renewal or extension increases the amount of such Investment except by the terms thereof in effect on the Effective Date (including as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities) or as otherwise permitted by this Section 11.9; and
(n) Investments consisting of Restricted Payments permitted by Section 11.3.
11.10 Anti-Layering
Notwithstanding anything herein or in any other Loan Document to the contrary, the Company shall not incur Funded Debt which is junior to any other Funded Debt incurred pursuant to Section 11.1(b)(i) (the foregoing, “Senior Funded Debt”) in any respect (including in payment priority, secured by a Lien on assets that is junior in priority to any Lien on such assets securing such Senior Funded Debt, or by nature of being unsecured) and senior to the Loans in any respect (including in payment priority, as a result of being guaranteed by any Subsidiaries of the Company, by being secured by a Lien on any assets of the Company or any of its Subsidiaries or by being unsecured Debt that is not subordinated to the outstanding Senior Funded Debt), other than any Senior Debt and any Debt incurred pursuant to Sections 11.1(b), (d), (e), (f), (g), (h), (k) or (l).
11.11 Fiscal Year. Not change its Fiscal Year.
SECTION 12 CONDITIONS OF LENDING, ETC.
12.1 Effective Date. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 15.1):
(a) the Required Lenders shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Required Lenders (which may include facsimile transmission or other electronic imaging of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b) the Required Lenders shall have received a customary written opinion (addressed to the Lenders) of Simpson, Thacher & Bartlett LLP, special New York counsel for the Company and its Subsidiaries, (A) dated as of the Effective Date and (B) in form and substance reasonably satisfactory to the Required Lenders. The Company hereby requests such counsel to deliver such opinions.
(c) the Required Lenders shall have received such documents and certificates as the Required Lenders or its counsel may reasonably request relating to the organization, existence and good standing of the Company, the authorization of the Transactions and any other legal matters relating to the Company, the Loan Documents or the Transactions, all in form and substance reasonably satisfactory to the Required Lenders and its counsel.
(d) the Required Lenders shall have received a certificate, dated the Effective Date and signed by a Responsible Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 12.2.1.
(e) [reserved)].
(f) the Required Lenders shall have received the executed amendment to the Waiver, in form and substance reasonably satisfactory to the Required Lenders.
(g) the Required Lenders shall have received a certificate from a Responsible Officer of the Company, certifying as to the Solvency of the Company and its Subsidiaries, on a consolidated basis, after giving effect to the Transactions as of the Effective Date.
(h) (i) Each Lender shall have received at least three Business Days prior to the Effective Date, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act, that has been requested at least five Business Days prior to the Effective Date, and (ii) to the extent that the Company qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five days prior to the Effective Date, any Lender that has requested, in a written notice to the Company at least five Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Company shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
(i) NEA 18 Venture Growth Equity, L.P. shall have received an executed copy of that certain Warrantholders’ Agreement, dated as of the date hereof, by and among the Company and the other parties thereto (the “2023 Warrantholders’ Agreement”).
The Required Lenders shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding.
12.2 Conditions. The obligation of each Lender to make each Loan after the Effective Date is subject to the following further conditions precedent that:
12.2.1 Compliance with Warranties, No Default, etc. Both before and after giving effect to any borrowing, the following statements shall be true and correct:
(a) the representations and warranties of the Company set forth in this Agreement (other than Section 9.5) and the other Loan Documents shall be true and correct in all material respects with the same effect as if then made (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); provided that to the extent any such representation or warranty is already qualified by materiality or material adverse effect, such representation or warranty shall be true and correct in all respects; and
(b) no Event of Default or Unmatured Event of Default shall have then occurred and be continuing.
12.2.2 Borrowing Notice. The Company shall have delivered to the Required Lenders the notice required by Section 2.2.1.
12.2.3 Warrants.
(a) Solely with respect to Borrowings occurring after the date that is 30 days after the Effective Date, the Company shall have concurrently complied with all of its obligations under the 2023 Warrantholders’ Agreement to issue 2023 Warrants (the “2023 Warrants”) to the Lenders (or other persons party to the 2023 Warrantholders’ Agreement) in connection with the making of such Loans.
(b) The Company shall have concurrently complied with all of its obligations under the 2024 Warrantholders’ Agreement to issue 2024 Warrants (the “2024 Warrants” and, together with the 2023 Warrants, the “Warrants”) to the Lenders (or other persons party to the 2024 Warrantholders’ Agreement) in connection with the making of such Loans.
12.2.4 Expenses. Solely with respect to the first Borrowing to occur after the Effective Date, the Required Lenders shall have received, or substantially simultaneously with the funding of such Borrowing will receive, all fees and other amounts due and payable on or prior to the Effective Date, including to the extent invoiced on or prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses (including fees, charges and disbursements of counsel) to the extent required to be reimbursed or paid by the Company hereunder, which in the case of legal fees shall be limited to the reasonable and documented fees, charges and disbursements of one firm or counsel in connection to the entry of this Agreement in an aggregate amount not to exceed $100,000.
SECTION 13 EVENTS OF DEFAULT AND THEIR EFFECT.
13.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement:
(a) Non-Payment of the Loans, etc. Default in the payment when due of the principal of any Loan; or default, and continuance thereof for five days, in the
payment when due of any interest, fee, reimbursement obligation with respect to any other amount payable by the Company hereunder or under any other Loan Document.
(b) Default under Other Debt. (i) Failure by the Company or any of its Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Debt (other than Debt referred to in clause (a) above) with an aggregate outstanding principal amount exceeding $50,000,000, in each case beyond the grace period, if any, provided therefor; or (ii) failure by the Company or any of its Subsidiaries to comply with any other term of one or more items of Debt (other than, for the avoidance of doubt, (x) with respect to Debt consisting of Hedging Obligations, termination events or equivalent events pursuant to the terms of the relevant Hedging Agreement and (y) secured Debt that becomes due solely as a result of the sale, transfer or other sale of the property or assets securing such Debt if the sale, transfer or other sale is not prohibited hereunder) with an aggregate outstanding principal amount exceeding $50,000,000, in each case beyond the grace period, if any, provided therefor, if the effect of such failure is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, such Debt to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; provided that, with respect to the occurrence of any such failure, default or event or other condition under the Hercules Credit Documents or the definitive documentation in respect of any other Senior Funded Debt, such failure, default or event or other condition shall only constitute a Default or an Event of Default under this Agreement if (x) such failure or default described in clause (i) is the result of a failure or default in payment of principal on the final maturity date or (y) such failure, default or event or other condition has resulted in the principal amount of the Hercules Credit Documents or such other Senior Funded Debt having been declared due and payable prior to the stated maturity thereof in accordance with the terms of the Hercules Credit Documents or the definitive documentation in respect of such other Senior Funded Debt.
(c) Bankruptcy, Insolvency, etc. The Company or any of its Significant Subsidiaries applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for the Company or any of its Significant Subsidiaries or any property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for the Company or any of its Significant Subsidiaries or for a substantial part of the property of any thereof and is not discharged within 90 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency Law, or any dissolution or liquidation proceeding, is commenced in respect of the Company or any of its Significant Subsidiaries, and if such case or proceeding is not commenced by the Company or any of its Significant Subsidiaries, it is consented to or acquiesced in by the Company or such Subsidiary or remains for 90 days undismissed; or the Company or any of its Significant Subsidiaries takes any action to authorize, or in furtherance of, any of the foregoing.
(d) Non-Compliance with Loan Documents. (i) Failure of the Company to perform or comply with any term or condition contained in Section
10.1.5(a), Section 10.5(a) (solely with respect to the Company and solely with respect to its existence) or Section 11 or (ii) the Company shall default in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other section of this Section 13, and such default shall not have been remedied or waived within thirty days after the earlier of (A) receipt by the Company of written notice from the Required Lenders of such default and (B) a Responsible Officer of the Company having obtained knowledge of such default.
(e) Representations; Warranties. Any representation or warranty made by the Company herein or any other Loan Document or any certificate required to be delivered pursuant hereto or thereto is untrue in any material respect when made or deemed made.
(f) Judgments. Any one or more final money judgments or orders is entered against the Company or any of its Subsidiaries or any attachment or other levy is made against the property of the Company or any of its Subsidiaries in an amount greater than $50,000,000 (to the extent not paid or adequately covered by self-insurance (if applicable) or by insurance as to which the relevant third party insurance company has been notified and not denied coverage or otherwise indemnified by a creditworthy indemnitor), which judgment remains unpaid, undischarged, unvacated, unbonded or unstayed pending the appeal for a period of 60 days.
(g) Warrants. A breach by the Company of the Company’s obligations under section 5.2 of the 2024 Warrantholders’ Agreement.
(h) Change of Control. A Change of Control shall occur.
13.2 Effect of Event of Default.
If any Event of Default described in Section 13.1(c) shall occur in respect of the Company, the Commitments shall immediately terminate and the Loans and all other Obligations hereunder shall become immediately due and payable, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, the Required Lenders may (and, upon the written request of the Required Lenders shall) declare the Commitments to be terminated in whole or in part and/or declare all or any part of the Loans and all other Obligations hereunder to be due and payable, whereupon the Commitments shall immediately terminate (or be reduced, as applicable) and/or the Loans and other Obligations hereunder shall become immediately due and payable (in whole or in part, as applicable), all without presentment, demand, protest or notice of any kind. The Required Lenders shall promptly advise the Company of any such declaration, but failure to do so shall not impair the effect of such declaration.
SECTION 14 ACKNOWLEDGEMENT OF LENDERS; CERTAIN TAX MATTERS.
14.1 [Reserved].
14.2 [Reserved]
14.3 [Reserved].
14.4 [Reserved].
14.5 [Reserved].
14.6 Acknowledgments of Lenders.
(a) Each Lender represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and that it has, independently and without reliance upon any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender also acknowledges that it will, independently and without reliance upon any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Company and its Affiliates) 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, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Required Lenders on the Effective Date.
14.7 [Reserved]
14.8 [Reserved]
14.9 [Reserved].
14.10 Certain Tax Matters. For U.S. federal income and applicable state and local tax purposes, (x) the Loans (which shall all be treated as debt for U.S. federal income tax purposes), together with the Warrants, shall be treated as an investment unit, and a portion of the price paid for the investment unit shall, for U.S. federal income tax purposes, be allocated to the purchase of the Warrants and thereby result in a corresponding reduction in the “issue price” of the Loans (it being understood that, such portion of the price allocable to the Warrants with respect to a draw of the Loans shall be determined by the Borrower and the Lenders jointly in good faith in a reasonable manner), (y) the Loans shall be treated as not governed by Treasury Regulation Section 1.1275-4, and (z) the Warrants are intended to be treated as equity of the Company. Except as otherwise required by a “determination” under Section 1313 of the Code or
change in applicable law, parties hereto agree to file tax returns consistent with the allocation and treatment set forth in this Section 14.10.
SECTION 15 GENERAL.
15.1 Waiver; Amendments. No delay on the part of any Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. Except as otherwise set forth in this Agreement or any other Loan Document (including on Annex A), no amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Company and by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, in no case shall an amendment, modification, waiver or consent (a) extend or increase the Commitment of any Lender without the written consent of such Lender, (b) extend the date scheduled for payment of any principal (excluding mandatory prepayments) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected thereby, (c) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby, (d) change the requisite percentage of Lenders in the definition of Required Lenders or any provision of this Section 15.1, or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case, the written consent of all Lenders; or (e) change Section 7.2 or Section 7.5 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby.
15.1.1 Extension Offers.
(a) The Company may on one or more occasions after the Effective Date, by written notice to the Required Lenders, make one or more offers (each, an “Extension Offer”) to all the Lenders of one or more classes (each class subject to such an Extension Offer, an “Extension Request Class”) to enter into one or more Extension Permitted Amendments pursuant to procedures reasonably acceptable to the Company and to the Required Lenders. Such notice shall set forth (i) the terms and conditions of the requested Extension Permitted Amendment(s) and (ii) the date on which such Extension Permitted Amendment(s) are requested to become effective (which shall not be less than five Business Days nor more than 30 Business Days after the date of such notice, unless otherwise agreed to by the Required Lenders). Extension Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Extension Request Class that accept the applicable Extension Offer (such Lenders, the “Extending Lenders”) and, in the case of any Extending Lender, only with respect to such Lender’s Loans and Commitments of such Extension Request Class as to which such Lender’s acceptance has been made. The Company shall have the right to withdraw any Extension Offer upon written notice to the Required Lenders in the event that the aggregate amount of Loans and Commitments of the Extending Lenders is less
than the aggregate amount specified by the Company in the Extension Offer to be extended.
(b) An Extension Permitted Amendment shall be effected pursuant to an Extension Agreement executed and delivered by the Company, each applicable Extending Lender and the Required Lenders; provided that no Extension Permitted Amendment shall become effective unless (i) no Unmatured Event of 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 the Company 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, and (iii) the Company shall have delivered to the Required Lenders such customary legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other customary documents as shall reasonably be requested by the Required Lenders in connection therewith. The Company shall promptly notify each Lender as to the effectiveness of each Extension Agreement. Each Extension Agreement may, without the consent of any Lender other than the applicable Extending Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Required Lenders, to give effect to the provisions of this Section 15.1.1, including any amendments necessary to treat the applicable Loans and/or Commitments of the accepting Lenders as a new “class” of loans and/ commitments hereunder.
15.2 Notices.
15.2.1 Notices Generally. Except as otherwise provided in Sections 2.2.1, all notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at (i) in the case of the Company, its address shown on Annex B or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose or (ii) in the case of any Lender, its address specified in an administrative questionnaire in the form supplied by the Company. Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.
15.2.2 Electronic Communications.
(a) Notices and other communications to the Company and the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites, including the Approved Electronic Platform) pursuant to procedures reasonably acceptable to the Company; provided that the foregoing shall not apply to notices pursuant to Section 2.2.1 or 4.4(c) unless otherwise
agreed by the applicable Lender. The Lenders or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. The Company understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution.
(b) Unless the Company otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
15.3 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that (a) if the Company notifies Required Lenders that the Company requests an amendment to any provision (including any definition) hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then (i) such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith and (ii) if requested by the Required Lenders, the Company shall provide to the the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of any ratio or requirement made hereunder before and after giving effect to such change in GAAP and (b) notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, (A) without giving effect to any election under Accounting Standards Codification 825, The Fair Value Option for Financial Assets and Financial Liabilities (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Debt of the Company or any Subsidiary at “fair value”, as defined therein and (B) without giving effect to any treatment of Debt under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, or Accounting Standards Codification 2015-03, Interest (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Debt in a
reduced or bifurcated manner as described therein, and such Debt shall at all times be valued at the full stated principal amount thereof.
15.4 Costs and Expenses.
15.4.1 The Company shall pay (i) all reasonable and documented out of pocket expenses (without duplication) incurred by the Lenders, which in the case of legal fees shall be limited to the reasonable and documented fees, charges and disbursements of one firm or counsel in connection with the structuring, arrangement and syndication of the credit facilities provided for herein, as well as the preparation, negotiation, execution, delivery and administration of this Agreement, the other Loan Documents or any waiver, amendments or modifications of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses incurred by any Lender, which in the case of legal fees shall be limited to the reasonable and documented or invoiced out-of-pocket fees, expenses, disbursements and other charges of a single firm of counsel for the Lenders, taken as a whole and, to the extent necessary, a single firm of local counsel in each appropriate local jurisdiction (which may include a single special counsel acting in multiple jurisdictions) (and, in the case of an actual or perceived conflict of interest where the Lenders affected by such conflict notifies the Company of any existence of such conflict and in connection with the investigating, responding to or defending any of the foregoing has retained its own counsel, of one other firm of counsel for such affected Person in each appropriate jurisdiction)), in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section 15.4.1, or in connection with the Loans made hereunder.
15.4.2 Lender Reimbursement. Each Lender severally agrees to pay any amount required to be paid by the Company under Section 15.4.1, 15.16 or 15.17 to each Related Party of any of the foregoing Persons (each, an “Agent-Related Person”) (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to their respective Pro Rata Share in effect on the date on which such payment is sought under this Section 15.4.2 (or, if such payment is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Pro Rata Share immediately prior to such date), from and against any and all Liabilities and related expenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent-Related Person in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent-Related Person under or in connection with any of the foregoing; provided that the unreimbursed expense or Liability or related expense, as the case may be, was incurred by or asserted against such Agent-Related Person in its capacity as such; provided further that no Lender shall be liable for the payment of any portion of such Liabilities, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from such Agent-Related Person’s gross negligence or willful
misconduct. The agreements in this Section 15.4.2 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
15.4.3 Payments. All amounts due under Section 15.4, 15.6 or 15.7 shall be payable within 30 days from the date such Lender (as the case may be) makes written demand therefor.
15.5 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Company without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 15.5. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section 15.5) and, to the extent expressly contemplated hereby, the Related Parties of the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (A) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, participations in the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:
(A) the Company; provided that no consent of the Company shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default under Section 13.1(a) or 13.1(c) in respect of the Company has occurred and is continuing, any other assignee; and
(B) the Required Lenders; provided that no consent of the Required Lenders shall be required for an assignment of any Commitment to an assignee that is a Lender (other than a Defaulting Lender) with a Commitment immediately prior to giving effect to such assignment.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Company) shall not be less than $5,000,000 unless each of the Company and
Required Lenders otherwise consent; provided that no such consent of the Company shall be required if an Event of Default has occurred and is continuing;
(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;
(C) the parties to each assignment shall execute and deliver to the Company (x) an Assignment and Assumption provided that assignments made pursuant to Section 8.6 shall not require the signature of the assigning Lender to become effective or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Company and the parties to the Assignment and Assumption are participants, together with a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Company); and
(D) the assignee, if it shall not be a Lender, shall deliver to the Company an Administrative Questionnaire in which the assignee designates one or more “credit contacts” to whom all syndicate-level information (which may contain material non-public information about the Company and its Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws.
For the purposes of this Section 15.5(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings:
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business 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.
“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or any Person as to which such Defaulting Lender is, directly or indirectly, a subsidiary, (c) a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof or (d) the Company or any of its Affiliates.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section 15.5, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the 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 7.6, 8.1, 8.3, 15.4 and 15.16). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 15.5 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section 15.5.
(iv) The Company, shall maintain at one of its offices a copy of each Assignment and Assumption 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 Company and the Lenders shall 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 Company, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and, if applicable, an assignee and the assignee’s completed administrative questionnaire or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 15.5 and any written consent to such assignment required by paragraph (b) of this Section 15.5, the Company shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.5, 7.1(b) or 15.4.2, the Company shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(c) Any Lender may, without the consent of, or notice to, the Company, sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Company and the other Lenders shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the third sentence of Section 15.1 that affects such Participant. The Company agrees that each Participant shall be entitled to the benefits of Sections 7.6, 8.1 and 8.3 (subject to the requirements and limitations therein, including the requirements under Section 7.6 (it being understood that the documentation required under Section 7.6 shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 8.6 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 7.6 or 8.1, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 8.6(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 7.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 7.5(a) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, 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 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 or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or Section 1.163-5(b) of the United States Proposed Treasury Regulations (or, in each case, any amended or successor version). 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.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section 15.5 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
15.6 Forum Selection and Consent to Jurisdiction.
(a) Each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against any Lender or any Related Party of any of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation 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 any Lender may otherwise have to bring any action, litigation or proceeding relating to this Agreement or any other Loan Document against the Company or any of its properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action, litigation 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 15.6. 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.
15.7 Governing Law. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the law of the State of New York.
15.8 Confidentiality. As required by federal law and the Lenders’ policies and practices, the Lenders may need to obtain, verify, and record certain customer identification information and documentation in connection with opening or maintaining accounts, or establishing or continuing to provide services. Each Lender agrees to maintain, using efforts such Lender applies to maintain the confidentiality of its own confidential information, as confidential all information provided to them by the Company, except that each Lender may disclose such information (a) to its Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Lender or such Affiliate on a “need to know” basis (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 or are subject to customary confidentiality obligations of professional practice or who agree in writing to be bound by the terms of this paragraph (or language substantially similar to this paragraph) (and to the extent a person’s compliance is within
the control of the Lenders, such Lenders will be responsible for such compliance)); (b) to any assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 15.8 (and any such assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory authority or examiner, or any insurance industry association, or as reasonably believed by such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of such Lender’s counsel, is required by Law; (e) in connection with the exercise of any remedy or the enforcement of any right under this Agreement or any other Loan Document in any litigation or arbitration action or proceeding relating thereto, to the extent such disclosure is reasonably necessary in connection with such litigation or arbitration action or proceeding (provided that the Company shall be given notice thereof and a reasonable opportunity to seek a protective court order with respect to such Information prior to such disclosure (it being understood that the refusal by a court to grant such a protective order shall not prevent the disclosure of such Information thereafter); (f) to any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender; (g) to any Affiliate of any Lender (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 or are subject to customary confidentiality obligations of professional practice or who agree in writing to be bound by the terms of this paragraph (or language substantially similar to this paragraph) (and to the extent a person’s compliance is within the control of the Lenders, such Lenders will be responsible for such compliance)); (h) on a confidential basis to (x) any rating agency in connection with rating the Company or its Subsidiaries or the facilities provided for in this Agreement or (y) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the facilities provided for in this Agreement; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 15.8, (y) becomes available to any Lender or any of their respective Affiliates on a non-confidential basis from a source that is not subject to these confidentiality provisions. Notwithstanding the foregoing, the Company consents to the publication by any Lender of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement, and the Required Lenders reserve the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements. For purposes of this Section 15.8, “Information” means all information received from the Company relating to the Company or any Subsidiary or their respective businesses, other than (i) any information that is available to any Lender on a nonconfidential basis prior to disclosure by the Company and (ii) information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Company after the date hereof, such information is clearly identified at the time of delivery as confidential.
15.9 Severability. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if
any provision of this Agreement shall be prohibited by or invalid under applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable Law.
15.10 Nature of Remedies. All Obligations of the Company and rights of the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable Law. No failure to exercise and no delay in exercising, on the part of the Required Lenders or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
15.11 Entire Agreement. This Agreement, together with the other Loan Documents and Annex A, embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof (except as relates to the fees described in Section 5.3 and any prior arrangements made with respect to the payment by the Company of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by the Lenders).
15.12 [Reserved]
15.13 Captions. Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
15.14 Customer Identification – Certain Notices. Each Lender, hereby notifies the Company that, pursuant to the requirements of the Patriot Act and the Beneficial Ownership Regulation, it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the
Company and other information that will allow such Lender, as applicable, to identify the Company in accordance with the Patriot Act and the Beneficial Ownership Regulation.
15.15 Indemnification by the Company. The Company shall indemnify each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all Liabilities and reasonable and documented or invoiced out-of-pocket fees and expenses of one firm of counsel for all Indemnitees, taken as a whole, selected by the Required Lenders (and, in the case of an actual or perceived conflict of interest where the Indemnitee affected by such conflict notifies the Company of any existence of such conflict and in connection with the investigating or defending any of the foregoing (including the reasonable fees) has retained its own counsel, of another firm of counsel for such affected Indemnitee), and to the extent required, one firm or local counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple
jurisdictions), incurred by or asserted against any Indemnitee arising out of any claim, actions, suits, inquiries, litigation, investigation or proceeding in connection with, or as a result of the Covered Matters; in each case, whether based on contract, tort or any other theory, and regardless of whether such matter is brought by a third party or by the Company or any Subsidiary or any of their respective Affiliates and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from (x) the gross negligence, willful misconduct or bad faith of such Indemnitee or any of its Related Parties, (y) a material breach of an obligation under the Loan Documents by such Indemnitee or any of its Related Parties or (z) any claim, action, suit, inquiry, litigation, investigation or proceeding that does not involve an act or omission of the Company or any of its Affiliates and that is brought by an Indemnitee against any other Indemnitee. This paragraph shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.
15.16 Limitations on Liability. No Lender or any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) shall have any Liabilities (whether direct or indirect and whether based on contract, tort or any other theory and whether or not related to third party claims, intraparty claims, or the indemnification rights set forth in Section 15.16) to the Company or its Subsidiaries and each Related Party of any of the foregoing for or in connection with any Covered Matter, except to the extent that such Liabilities are determined by a court of competent jurisdiction by final and nonappealable judgment to have primarily resulted from the gross negligence or willful misconduct of such Lender-Related Person. In addition to the foregoing, to the extent permitted by applicable law (i) the Company shall not assert, and the Company hereby waives, any claim against any Lender-Related Person for any Liabilities arising from the use by others of information or other materials obtained through telecommunications, electronic or other information transmission systems (including the Internet), and (ii) no party hereto shall assert, and each such party hereby waives, any Liabilities against any other party hereto, 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, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or the use of the proceeds thereof; provided that, nothing in this clause (ii) shall relieve the Company of any obligation it may have to indemnify an Indemnitee against special, indirect, consequential or punitive damages asserted against such Indemnitee by a third party.
15.17 Posting of Communications.
(a) [Reserved]
(b) [Reserved].
(c) [Reserved].
(d) Each Lender agrees that written notice to it shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Company in writing (which could be in the form of electronic communication) from time to time of such Lender’s email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.
(e) [Reserved]
(f) Nothing herein shall prejudice the right of any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
15.18 Counterparts; Effectiveness; Electronic Execution. 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. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 15.2), certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Required Lenders to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it (it being understood that an electronic copy of a “wet ink” signature page transmitted by telecopy or emailed pdf. is acceptable to the Required Lenders); provided, further, without limiting the foregoing, (i) to the extent that the Required Lenders have agreed to accept any Electronic Signature, each of the applicable Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Company without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon the request of the Required Lenders, any Electronic Signature shall be promptly followed by a manually executed counterpart.
15.19 Acknowledgement Regarding Any Supported QFCs.
(a) To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States).
(b) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
15.20 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
15.21 Statutory Notice-Oral Commitments. Nothing contained in the following notice shall be deemed to limit or modify the terms of this Agreement and the other Loan Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT THE COMPANY AND THE LENDERS (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS THE COMPANY AND THE LENDERS REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
The Company acknowledges that there are no other agreements between the the Lenders and the Company, oral or written, concerning the subject matter of the Loan Documents, and that all prior agreements concerning the same subject matter, including any proposal or commitment letter, are merged into the Loan Documents and thereby extinguished.
15.22 Survival of Representation, Warranties and Agreements. All covenants, agreements, representations and warranties made by the Company in this Agreement and the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the other Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Lender or any Affiliate of any of the foregoing may have had notice or knowledge of any Unmatured Event of Default or incorrect representation or warranty at the time this Agreement or any other Loan Document is executed and delivered or any credit is extended hereunder, 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 is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 7.6, 8.1, 8.3, 14, 15.4 and 15.16 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment or prepayment of the Loans and the Commitments or the termination of this Agreement or any provision hereof.
15.23 Acknowledgement and Consent to Bail-In of Affected 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 Affected 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 the applicable 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 the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected 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 Affected 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 the applicable Resolution Authority.
15.24 No Fiduciary Relationship. The Company, 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 Company and its Subsidiaries, on the one hand, and the Lenders, 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 Lenders, and no such duty will be deemed to have arisen in connection with any such transactions or communications. The Lenders may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from, and may have economic interests that conflict with, those of the Company and its Subsidiaries, and the Lenders do not have any obligation to disclose any of such interests to the Company or any of its Subsidiaries.
SECTION 16 SUBORDINATION.
The Company agrees, and each Lender by entering into this Agreement agrees, that the Obligations are subordinated in right of payment, to the extent and in the manner provided in this Section 16, to the prior payment in full of all Senior Debt Regulated Subsidiary Obligations (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of and enforceable by the holders of Senior Debt Regulated Subsidiary Obligations.
16.1 Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshaling of the Company’s assets and liabilities:
(a) holders of Senior Debt Regulated Subsidiary Obligations shall receive payment in full in cash of such Senior Debt Regulated Subsidiary Obligations (including interest accrued or accruing after the commencement of any bankruptcy, insolvency, reorganization or similar case or proceeding at the rate specified in the applicable Senior Debt Regulated Subsidiary Obligations (including any default rate specified therein), whether or not allowed or allowable in such proceeding) before the Lenders will be entitled to receive any payment with respect to the Obligations; and
(b) until all Senior Debt Regulated Subsidiary Obligations (as provided in clause (a) above) is paid in full, any distribution to which Lenders would be entitled but for this Section 16 will be made to the holders of Senior Debt Regulated Subsidiary Obligations, as their interests may appear.
16.2 No Cash Payments in Respect of the Obligations; Certain Other Agreements
Without in any way limiting Section 16.1 or any other provision of this Section 16.
(a) Unless and until the Senior Debt Regulated Subsidiary Obligations shall have been paid in full in cash (or, in case of letters of credit or other contingent obligations (other than indemnity and similar obligations as to which no claim has been asserted), cash collateralized in full in a manner reasonably satisfactory to the holders thereof) (referred to herein as "Paid in Full"), no Lender or other holder of Obligations will take or receive from the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will make, give or permit, directly or indirectly, in any manner, any payment, distribution, prepayment or collateral security for, the whole or any part of the Obligations, whether for principal, interest, fees or otherwise.
(b) Unless and until the Senior Debt Regulated Subsidiary Obligations shall have been Paid in Full, no Lender or other holder of Obligations will take any enforcement action with respect to any default or Event of Default arising hereunder (including any acceleration of the Obligations), other than actions to preserve its rights under this Agreement.
(c) Until all of the Senior Debt Regulated Subsidiary Obligations have been Paid in Full, and notwithstanding anything to the contrary contained herein, no Lender or other holder of Obligations will permit any amendment, modification or supplement to this Agreement the effect of which is to (a) require that interest be or fees be payable hereunder in cash rather than in kind, (b) change to an earlier date the dates upon which payments of principal or interest on the Obligations are due, or (c) change or add any event of default or any covenant in a manner that would make the terms of this Agreement more restrictive on the Company and its Subsidiaries than the terms of the
definitive documentation in respect of such Senior Debt Regulated Subsidiary Obligations.
16.3 Acceleration of Loans.
If payment of the Lenders is accelerated because of an Event of Default, the Company will promptly notify the holders of Senior Debt Regulated Subsidiary Obligations of the acceleration.
16.4 When Distribution Must Be Paid Over.
In the event that any Lender receives any payment of any Obligations with respect to the Loans, or a payment of cash or property from the Company in exchange for a Loan, in each case, at a time when the payment is prohibited by any provision of this Section 16, such payment will be held by each Lender, in trust for the benefit of, and will be paid forthwith over and delivered, upon written request, to, (a) until the obligations in respect of any Senior Funded Debt have been Paid In Full, the lenders in respect of such Senior Funded Debt in accordance with the terms of the definitive documentation governing such Senior Funded Debt and (b) thereafter, to other holders of Senior Debt Regulated Subsidiary Obligations as their interests may appear or their representative, as their respective interests may appear, for application to the payment of all Senior Debt Regulated Subsidiary Obligations remaining unpaid to the extent necessary to cause such Senior Debt Regulated Subsidiary Obligations to be Paid In Full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt Regulated Subsidiary Obligations.
16.5 Notice by Company.
The Company will promptly notify the Required Lenders of any facts known to the Company that would cause a payment of any Obligations with respect to the Loans to violate this Section 16, but failure to give such notice will not affect the subordination of the Senior Debt Regulated Subsidiary Obligations as provided in this Article 16.
16.6 Subrogation.
After all Senior Debt Regulated Subsidiary Obligations is Paid In Full and until the Loans are Paid In Full, the Lenders will be subrogated (equally and ratably with all other Debt pari passu with the Loans) to the rights of holders of Senior Debt Regulated Subsidiary Obligations to receive distributions applicable to Senior Debt Regulated Subsidiary Obligations to the extent that distributions otherwise payable to the Lenders have been applied to the payment of Senior Debt Regulated Subsidiary Obligations. A distribution made under this Article 16 to holders of
Senior Debt Regulated Subsidiary Obligations that otherwise would have been made to any Lender is not, as between the Company and any Lender, a payment by the Company on the Loans.
6.7 Relative Rights.
This Article 16 defines the relative rights of the Lenders on the one hand and holders of Senior Debt Regulated Subsidiary Obligations on the other hand. Nothing in this Agreement will:
(a) impair, as between the Company and any Lender, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium on, if any, and interest, if any, on, the Loans in accordance with their terms;
(b) affect the relative rights of Lenders other than their rights in relation to holders of Senior Debt Regulated Subsidiary Obligations; or
(c) prevent the Required Lenders or any Lender from exercising its available remedies upon Unmatured Event of Default or Event of Default, subject to the rights of holders and owners of Senior Debt Regulated Subsidiary Obligations to receive distributions and payments otherwise payable to any Lender.
If the Company fails because of this Article 16 to pay principal of, premium on, if any, or interest, if any, on the due date, the failure is still an Unmatured Event of Default or Event of Default.
16.8 Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt Regulated Subsidiary Obligations to enforce the subordination of the Obligations may be impaired by any act or failure to act by the Company or any Lender or by the failure of the Company or any Lender to comply with this Agreement.
16.9 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior Debt Regulated Subsidiary Obligations, the distribution may be made and the notice given to their representative.
Upon any payment or distribution of assets of the Company referred to in this Article 16, the Required Lenders will be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such representative or of the liquidating trustee or agent or other Person making any distribution to the Required Lenders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt Regulated Subsidiary Obligations and other debt of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 16.
16.10 Authorization to Effect Subordination.
Each Lender, by its acceptance thereof, authorizes and directs the Required Lenders on such Lender’s behalf to take such action as may be necessary or appropriate
to effectuate the subordination as provided in this Section 16, and appoints the Required Lenders to act as such Lender’s attorney-in-fact for any and all such purposes.
16.11 Amendments; Third Party Beneficiaries.
(a) The subordination provisions contained herein (i) are for the benefit of the holders of the outstanding Senior Debt Regulated Subsidiary Obligations, and may not be rescinded, cancelled, amended or modified in any way without the prior written consent thereto of the authorized representative of the lenders in respect of such Senior Debt Regulated Subsidiary Obligations (or, if there is no such representative, the majority of the holders of such Senior Debt) (the “Senior Debt Regulated Subsidiary Obligations)(the "Regulated Subsidiary Obligations Representative”); (ii) shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of such Senior Debt Regulated Subsidiary Obligations is rescinded or must otherwise be returned by holders of Senior Debt Regulated Subsidiary Obligations or the applicable Senior Debt Regulated Subsidiary Obligations Representative upon the insolvency, bankruptcy or reorganization of the Company or any of its Subsidiaries or for any other reason whatsoever, all as though such payment had not been made; (iii)[reserved]; and (iv) shall be binding upon the Lenders and their successors and assigns, and inure to the benefit of and be enforceable by the applicable Senior Debt Regulated Subsidiary Obligations Representative and the other holders of such Senior Debt Regulated Subsidiary Obligations, and their respective successors and assigns.
(b) The holders of the Senior Debt Regulated Subsidiary Obligations are intended third party beneficiaries with respect to all rights and provisions in this Section 16, and the provisions of this paragraph may be enforced by the holders of the Senior Debt Regulated Subsidiary Obligations.
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