Exhibit 10

CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED

WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

EXECUTION COPY

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

This AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of June 3, 2014, is by and among CAPELLA HEALTHCARE, INC. (the “Company” and a
“Borrower”), THE BORROWING SUBSIDIARIES SIGNATORY HERETO (each a “Borrower” and
together with the Company, “Borrowers”), THE GUARANTYING SUBSIDIARIES SIGNATORY
HERETO (collectively, “Subsidiary Guarantors”), THE LENDERS PARTY TO THIS
AMENDMENT, and BANK OF AMERICA, N.A., as agent for the Lenders (“Agent”).
Capitalized terms used herein but not otherwise defined herein shall have the
meanings given to such terms in the Loan Agreement (as hereinafter defined).

RECITALS:

A. The Borrowers, the Subsidiary Guarantors, the Lenders and the Agent are
parties to that certain Loan and Security Agreement dated as of June 28, 2010
(as its terms have been previously amended, modified, waived or supplemented,
the “Loan Agreement”).

B. The Borrowers and the Subsidiary Guarantors have requested that the Lenders
amend certain provisions of the Loan Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:

ARTICLE I

SECTION 1.01 Amendment. Subject to the covenants, terms and conditions set forth
herein and in reliance upon the representations and warranties set forth herein,
the Loan Agreement is hereby amended such that, after giving effect to all such
amendments (and with effect as of the date hereof), it shall read in its
entirety as attached hereto as Exhibit A.

SECTION 1.02 Effectiveness. This Amendment shall not be binding upon Agent or
any Lender until each of the following conditions precedent has been satisfied
in form and substance satisfactory to Agent and Lenders (such date, the
“Amendment No. 3 Effective Date”):

(a) The representations and warranties contained herein and in the Loan
Agreement shall be true and correct in all material respects as of the Amendment
No.3 Effective Date as if made on the Amendment No.3 Effective Date, except for
those representations and warranties that are limited by their terms to a
specific date (such representations and warranties being true and correct in all
material respects as of the specified date relative thereto);

--------------------------------------------------------------------------------

(b) No Default or Event of Default shall have occurred and be continuing;

(c) Availability shall not be less than $30,000,000 on the Amendment No. 3
Effective Date after (i) giving effect to all Loans made or Letters of Credit
issued on the Amendment No. 3 Effective Date and (ii) giving pro forma affect to
the exercise of the Master Lease Purchase Option as if occurring on the
Amendment No. 3 Effective Date;

(d) The Credit Parties shall have delivered to Agent an executed counterpart of
this Amendment;

(e) The Borrowers shall have duly executed and delivered to Agent an Amended and
Restated Note in favor of each Lender requesting one (and whose Commitment has
increased);

(f) The Company shall have duly executed and delivered to Agent a completed
Borrowing Base Certificate;

(g) The Company shall have delivered to Agent a certificate from a duly
authorized senior officer of Company certifying as to the fulfillment of the
condition in clause (c) above, including a calculation thereof, and that, after
giving effect to this Amendment, (x) the Credit Parties, taken as a whole, are
Solvent; (y) no Default or Event of Default exists; and (z) the representations
and warranties set forth in Section 9 of the Loan Agreement and in each other
Loan Document, are true and correct in all material respects on and as of the
Amendment No. 3 Effective Date with the same effect as if made on and as of the
Amendment No. 3 Effective Date, except to the extent such representations and
warranties expressly relate solely to an earlier date;

(h) The Credit Parties shall have delivered to Agent such other documents and
certificates as Agent or its counsel may reasonably request relating to the
organization, existence and good standing of Borrowers, the authorization of
this Amendment and any other legal matters relating to any Borrower or the
transactions contemplated hereby.

(i) Borrowers shall have paid (i) to Agent the fees owing to Agent described in
the Agent Fee Letter and all costs and expenses described in Section 2.04 hereof
and (ii) to the Lead Arrangers the fees owing to each such Lead Arranger
described in the Lead Arrangers Fee Letter.

SECTION 1.03 Post-Closing.

(a) Legal Opinion. No Later than 15 days after the date hereof (or such later
date as the Arrangers may agree), the Borrowers shall deliver to Agent a written
opinion of Waller Lansden Dortch & Davis, PLLC, as counsel to the Credit
Parties, in form and substance reasonably satisfactory to the Arrangers. As used
herein the term “Arrangers” shall mean Bank of America, N.A., Citigroup Global
Markets Inc. and GE Capital Markets, Inc. or any of their respective affiliates.

(b) Termination of Lien. No Later than 30 days after the date hereof (or such
later date as the Agent may agree), the Borrowers shall cause the Lien granted
by Muskogee Medical and Surgical Associates, LLC in favor of ASD Specialty
Healthcare Inc. and described on Schedule 10.2.2 to the Loan Agreement to be
(i) terminated or (ii) amended to cover only inventory assets purchased from ASD
Specialty Healthcare Inc., but to exclude proceeds thereof.

 

2

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ARTICLE II

SECTION 2.01 Ratification and Confirmation of Loan Documents. Each of the
undersigned Credit Parties hereby consents, acknowledges and agrees to the
amendments set forth herein and hereby confirms and ratifies in all respects the
Loans Documents and its obligations under each Loan Document to which it is a
party and the continuation and extension of the liens granted under the Loan
Agreement and the other Loan Documents to secure the Obligations.

SECTION 2.02 Representations and Warranties. Each Credit Party hereby represents
and warrants to each Lender and the Agent, on the Amendment No. 3 Effective
Date, that after giving effect to this Amendment, the representations and
warranties set forth in Section 9 of the Loan Agreement and in each other Loan
Document, are true and correct in all material respects (except, if such
representation or warranty is qualified by materiality, material adverse effect
or a similar concept applies, such representation or warranty is true and
correct in all respects) on and as of the Amendment No. 3 Effective Date with
the same effect as if made on and as of the Amendment No. 3 Effective Date,
except to the extent such representations and warranties expressly relate solely
to an earlier date. No Default or Event of Default has occurred and is
continuing.

SECTION 2.03 Instrument Pursuant to Loan Agreement. This Amendment is a Loan
Document executed pursuant to the Loan Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions of the Loan Agreement.

SECTION 2.04 Fees and Expenses. Borrowers shall pay on demand all reasonable
costs and expenses of Agent in connection with the preparation, reproduction,
execution, and delivery of this Amendment and any other documents prepared in
connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for Agent.

SECTION 2.05 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by facsimile or electronic
transmission (including .pdf file) shall be effective as delivery of a manually
executed counterpart hereof.

SECTION 2.06 Confirmation. Except as expressly amended by the terms hereof, all
of the terms of the Loan Agreement and the other Loan Documents shall continue
in full force and effect and are hereby confirmed in all respects.

 

3

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SECTION 2.07 Entire Agreement. This Amendment, together with all the Loan
Documents (collectively, the “Relevant Documents”), sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relating to such subject matter. No promise, condition, representation
or warranty, express or implied, not set forth in the Relevant Documents shall
bind any party hereto, and no such party has relied on any such promise,
condition, representation or warranty. Each of the parties hereto acknowledges
that, except as otherwise expressly stated in the Relevant Documents, no
representations, warranties or commitments, express or implied, have been made
by any party to the other. None of the terms or conditions of this Amendment may
be changed, modified, waived or canceled orally or otherwise except in a writing
signed by Agent for such purpose.

SECTION 2.08 Enforceability. Should any one or more of the provisions of this
Amendment be determined to be illegal or unenforceable as to one or more of the
parties hereto, all other provisions nevertheless shall remain effective and
binding on the parties hereto.

SECTION 2.09 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of each Borrower, each the Subsidiary Guarantor, each
Agent, each Lender and their respective successors and assigns (subject to
Section 13 of the Loan Agreement).

SECTION 2.10 Governing Law; Waiver of Jury Trial. This Amendment shall be
governed by and construed in accordance with the laws of the State of New York,
and shall be further subject to the provisions of Sections 14.15 and 14.16 of
the Loan Agreement.

[Signature pages follow]

 

4

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Amendment to be duly executed and delivered as of the date first above written.

 

BORROWERS:                               
                                                       CAPELLA HEALTHCARE, INC.,
a Delaware corporation By:   /s/ Denise W. Warren  

 

  Name: Denise W. Warren  

Title:  Executive Vice President, Chief Financial Officer and Treasurer

 

CAPELLA HOLDINGS OF OKLAHOMA, LLC CAPITAL MEDICAL CENTER HOLDINGS, LLC CAPITAL
MEDICAL CENTER PARTNER, LLC CMCH HOLDINGS, LLC COLUMBIA OLYMPIA MANAGEMENT, INC.
FARMINGTON CLINIC COMPANY, LLC FARMINGTON HEART & VASCULAR CENTER, LLC
FARMINGTON HOSPITAL CORPORATION FARMINGTON MISSOURI HOSPITAL COMPANY, LLC LAWTON
HOLDINGS, LLC LAWTON SURGERY INVESTMENT COMPANY, LLC MUSKOGEE HOLDINGS, LLC
MUSKOGEE MEDICAL AND SURGICAL ASSOCIATES, LLC MUSKOGEE PHYSICIAN GROUP, LLC
MUSKOGEE REGIONAL MEDICAL CENTER, LLC

NATIONAL PARK CARDIOLOGY SERVICES, LLC

NATIONAL PARK FAMILY CARE, LLC

NATIONAL PARK PHYSICIAN SERVICES, LLC NPMC HOLDINGS, LLC NPMC, LLC OREGON
HEALTHCORP, LLC RUSSELLVILLE HOLDINGS, LLC

 

By:   /s/ Denise W. Warren                                
                                         

 

  Name: Denise W. Warren   Title:   Vice President and Treasurer

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

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SOUTHWESTERN MEDICAL CENTER, LLC SOUTHWESTERN NEUROSURGERY PHYSICIANS, LLC
SOUTHWESTERN PHYSICIAN SERVICES, LLC SOUTHWESTERN RADIOLOGY AFFILIATES, LLC
SOUTHWESTERN SURGICAL AFFILIATES LLC SPARTA HOSPITAL CORPORATION ST. MARY’S
HOLDINGS, LLC ST. MARY’S PHYSICIAN SERVICES, LLC ST. MARY’S REAL PROPERTY, LLC
WILLAMETTE VALLEY CLINICS, LLC WILLAMETTE VALLEY HEALTH SOLUTIONS, LLC
WILLAMETTE VALLEY MEDICAL
CENTER, LLC WPC HOLDCO, LLC

 

By:    /s/ Denise W. Warren                                
                                 

 

  Name: Denise W. Warren   Title:   Vice President and Treasurer

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

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AGENT AND LENDERS:

BANK OF AMERICA, N.A.,

as Agent and Lender

By:   /s/ Seth Benefield  

 

Name:   Seth Benefield Title:   Senior Vice President

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

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CITIBANK, N.A.,

as a Lender

By:

 

/s/ Justin McMahan

 

 

Name:

 

Justin McMahan

Title:

 

Vice President

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

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GENERAL ELECTRIC CAPITAL CORPORATION,

as a Lender

By:   /s/ Jason Dufour  

 

Name:   Jason Dufour Title:   Duly Authorized Signatory

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

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GRANTORS: Each of the undersigned Grantors hereby acknowledges this Amendment
and ratifies and confirms the Security Agreement is in full force and effect
after giving effect to this Amendment. SAINT THOMAS/CAPELLA, LLC By:  
Capella Healthcare, Inc., its managing member By:   /s/ Denise W. Warren  

 

Name:   Denise W. Warren Title:   Executive Vice President, Chief Financial
Officer and Treasurer CAPITAL MEDICAL CENTER PHYSICIANS, LLC CAPITAL MEDICAL
CENTER SPECIALTY PHYSICIANS, LLC NATIONAL PARK REAL PROPERTY, LLC RIVER PARK
HOSPITAL, LLC RIVER PARK HOSPITALISTS, LLC RIVER PARK PHYSICIAN GROUP, LLC
STONES RIVER CLINIC SERVICES, LLC WHITE COUNTY PHYSICIAN SERVICES, LLC WHITE
COUNTY PRIMARY CARE, LLC By:   /s/ Denise W. Warren  

 

Name:   Denise W. Warren Title:   Vice President and Treasurer CANNON COUNTY
HOSPITAL, LLC WHITE COUNTY COMMUNITY HOSPITAL, LLC By:  
Sparta Hospital Corporation, their managing member By:   /s/ Denise W. Warren  

 

Name:   Denise W. Warren Title:   Vice President and Treasurer HOT SPRINGS
NATIONAL PARK HOSPITAL HOLDINGS, LLC By:   NPMC Holdings, LLC, its managing
member By:   /s/ Denise W. Warren  

 

Name:   Denise W. Warren Title:   Vice President and Treasurer

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

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COLUMBIA CAPITAL MEDICAL CENTER
LIMITED PARTNERSHIP By: Columbia Olympia Management, Inc., Capital Medical
Center Partner, LLC, and WPC Holdco, LLC, its general partners By:   /s/ Denise
W. Warren  

 

Name:   Denise W. Warren Title:   Vice President and Treasurer

 

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

Signature Page

--------------------------------------------------------------------------------

EXHIBIT A

to

Amendment No. 3 to Loan and Security Agreement

LOAN AND SECURITY AGREEMENT

See attached.

--------------------------------------------------------------------------------

EXECUTION COPY

 

 

 

$100,000,000

LOAN AND SECURITY AGREEMENT

Dated as of June 28, 2010

By and Among

CAPELLA HEALTHCARE, INC.,

and

CERTAIN BORROWING SUBSIDIARIES,

as Borrowers,

CERTAIN GUARANTYING SUBSIDIARIES,

as Guarantors,

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders,

BANK OF AMERICA, N.A.,

as Agent and Collateral Agent,

CITIBANK, N.A.,

as Syndication Agent,

and

GENERAL ELECTRIC CAPITAL CORPORATION

as Documentation Agent,

MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED

CITIGROUP GLOBAL MARKETS INC.

and

GE CAPITAL MARKETS, INC.

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

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TABLE OF CONTENTS

 

         Page  

SECTION 1.

 

DEFINITIONS; RULES OF CONSTRUCTION

     1   

1.1.

 

Definitions

     1   

1.2.

 

Accounting Terms

     44   

1.3.

 

Uniform Commercial Code

     45   

1.4.

 

Certain Matters of Construction

     45   

SECTION 2.

 

CREDIT FACILITIES

     45   

2.1.

 

Revolver Commitment

     45   

2.2.

 

[Reserved]

     47   

2.3.

 

Letter of Credit Facility

     47   

SECTION 3.

 

INTEREST, FEES AND CHARGES

     51   

3.1.

 

Interest

     51   

3.2.

 

Fees

     52   

3.3.

 

Computation of Interest, Fees, Yield Protection

     53   

3.4.

 

Reimbursement Obligations

     53   

3.5.

 

Illegality

     54   

3.6.

 

Inability to Determine Rates

     54   

3.7.

 

Increased Costs; Capital Adequacy

     54   

3.8.

 

Mitigation

     56   

3.9.

 

Funding Losses

     56   

3.10.

 

Maximum Interest

     56   

SECTION 4.

 

LOAN ADMINISTRATION

     56   

4.1.

 

Manner of Borrowing and Funding Revolver Loans

     56   

4.2.

 

Defaulting Lender

     58   

4.3.

 

Number and Amount of LIBOR Loans; Determination of Rate

     59   

4.4.

 

Borrower Agent

     59   

4.5.

 

One Obligation

     59   

4.6.

 

Effect of Termination

     59   

SECTION 5.

 

PAYMENTS

     60   

5.1.

 

General Payment Provisions

     60   

5.2.

 

Repayment of Revolver Loans

     60   

5.3.

 

[Reserved]

     60   

5.4.

 

Payment of Other Obligations

     60   

 

-i-

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5.5.

 

Marshaling; Payments Set Aside

     60   

5.6.

 

Post-Default Allocation of Payments

     60   

5.7.

 

Application of Payments

     61   

5.8.

 

Loan Account; Account Stated

     62   

5.9.

 

Taxes

     62   

5.10.

 

Lender Tax Information

     63   

5.11.

 

Nature and Extent of Each Borrower’s Liability

     64   

SECTION 6.

 

CONDITIONS PRECEDENT

     66   

6.1.

 

Conditions Precedent to Initial Loans

     66   

6.2.

 

Conditions Precedent to All Credit Extensions

     67   

SECTION 7.

 

COLLATERAL

     68   

7.1.

 

Grant of Security Interest

     68   

7.2.

 

Lien on Deposit Accounts; Cash Collateral

     69   

7.3.

 

Other Collateral; New Subsidiaries

     69   

7.4.

 

No Assumption of Liability

     70   

7.5.

 

Further Assurances

     70   

SECTION 8.

 

COLLATERAL ADMINISTRATION

     70   

8.1.

 

Borrowing Base Certificates

     70   

8.2.

 

Administration of Accounts

     71   

8.3.

 

Administration of Inventory

     71   

8.4.

 

Maintenance of Properties

     71   

8.5.

 

Cash Management System

     72   

8.6.

 

General Provisions

     74   

8.7.

 

Power of Attorney

     75   

SECTION 9.

 

REPRESENTATIONS AND WARRANTIES

     76   

9.1.

 

General Representations and Warranties

     76   

9.2.

 

Complete Disclosure

     80   

9.3.

 

Healthcare Related Representations and Warranties

     81   

SECTION 10.

 

COVENANTS AND CONTINUING AGREEMENTS

     83   

10.1.

 

Affirmative Covenants

     83   

10.2.

 

Negative Covenants

     87   

10.3.

 

Financial Covenants

     94   

SECTION 11.

 

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

     94   

11.1.

 

Events of Default

     94   

 

-ii-

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11.2.

 

Remedies upon Default

     95   

11.3.

 

Setoff

     96   

11.4.

 

Remedies Cumulative; No Waiver

     97   

SECTION 12.

 

AGENT

     97   

12.1.

 

Appointment, Authority and Duties of Agent

     97   

12.2.

 

Agreements Regarding Collateral and Field Examination Reports

     98   

12.3.

 

Reliance By Agent

     99   

12.4.

 

Action Upon Default

     99   

12.5.

 

Ratable Sharing

     99   

12.6.

 

Indemnification of Agent Indemnitees

     100   

12.7.

 

Limitation on Responsibilities of Agent

     100   

12.8.

 

Successor Agent and Co-Agents

     100   

12.9.

 

Due Diligence and Non-Reliance

     101   

12.10.

 

Replacement of Certain Lenders

     101   

12.11.

 

Remittance of Payments and Collections

     101   

12.12.

 

Agent in its Individual Capacity

     102   

12.13.

 

Agent Titles

     102   

12.14.

 

No Third Party Beneficiaries

     102   

SECTION 13.

 

BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

     102   

13.1.

 

Successors and Assigns

     102   

13.2.

 

Participations

     103   

13.3.

 

Assignments

     103   

SECTION 14.

 

MISCELLANEOUS

     104   

14.1.

 

Consents, Amendments and Waivers

     104   

14.2.

 

Indemnity

     105   

14.3.

 

Notices and Communications

     105   

14.4.

 

Performance of Credit Parties’ Obligations

     106   

14.5.

 

Credit Inquiries

     106   

14.6.

 

Severability

     106   

14.7.

 

Cumulative Effect; Conflict of Terms

     106   

14.8.

 

Counterparts

     107   

14.9.

 

Entire Agreement

     107   

14.10.

 

Relationship with Lenders

     107   

14.11.

 

No Advisory or Fiduciary Responsibility

     107   

 

-iii-

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14.12.

 

Confidentiality

     107   

14.13.

 

Certifications Regarding Indentures

     108   

14.14.

 

GOVERNING LAW

     108   

14.15.

 

Consent to Forum

     108   

14.16.

 

Waivers by Credit Parties

     108   

14.17.

 

Patriot Act Notice

     109   

SECTION 15.

 

GUARANTY OF OBLIGATIONS

     109   

15.1.

 

Guaranty; Limitation of Liability

     109   

15.2.

 

Guaranty Absolute

     110   

15.3.

 

Waivers and Acknowledgments

     111   

15.4.

 

Subrogation

     112   

LIST OF EXHIBITS AND SCHEDULES

 

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

 

Schedule 1.1    Commitments of Lenders Schedule 1.2    Immaterial Subsidiaries
Schedule 8.5.1    Deposit Accounts Schedule 8.5.2    Cash Management System
Schedule 8.5.5    Credit Card Arrangements Schedule 8.6.1    Business Locations
Schedule 9.1.4    Names and Capital Structure Schedule 9.1.11   

Patents, Trademarks, Copyrights and Licenses

Schedule 9.1.14   

Environmental Matters

Schedule 9.1.15   

Restrictive Agreements

Schedule 9.1.16   

Litigation

Schedule 9.1.18   

Pension Plans

Schedule 9.1.20   

Labor Contracts

Schedule 9.3    Healthcare-Related Matters Schedule 10.2.1   

Existing Debt

Schedule 10.2.2   

Existing Liens

Schedule 10.2.17   

Existing Affiliate Transactions

 

-iv-

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LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is dated as of June 28, 2010, among CAPELLA
HEALTHCARE, INC., a Delaware corporation (the “Company” and a “Borrower”),
CERTAIN BORROWING SUBSIDIARIES SIGNATORY HERETO (each a “Borrower” and together
with the Company, collectively, “Borrowers”), CERTAIN GUARANTYING SUBSIDIARIES
SIGNATORY HERETO (each a “Subsidiary Guarantor” and collectively, “Subsidiary
Guarantors”), THE FINANCIAL INSTITUTIONS PARTY TO THIS AGREEMENT FROM TIME TO
TIME as lenders (collectively, “Lenders”), and BANK OF AMERICA, N.A., a national
banking association, as agent for the Lenders (“Agent”).

R E C I T A L S:

Borrowers and Guarantors have requested that Lenders provide a credit facility
to Borrowers to finance their mutual and collective business enterprise. Lenders
are willing to provide the credit facility on the terms and conditions set forth
in this Agreement.

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

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

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

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

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

Affiliate: with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

--------------------------------------------------------------------------------

Agent Fee Letter: the Agent Fee Letter, dated as of June 3, 2014, between the
Company and Agent.

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

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

Allocable Amount: as defined in Section 5.11.3.

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

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

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

 

Level

  

Fixed Charge Coverage Ratio

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

I

   > 1.75 to 1:00      1.50 %      0.50 % 

II

   ³ 1.25 to 1:00 but £ 1.75 to 1.00      1.75 %      0.75 % 

III

   < 1.25 to 1:00      2.00 %      1.00 % 

Until June 30, 2014, margins shall be determined as if Level II were applicable.
Thereafter, the margins shall be subject to increase or decrease every three
months after receipt by Agent pursuant to Section 10.1.2 of the financial
statements and corresponding Compliance Certificate for the most recently ended
Fiscal Quarter, which change shall be effective on the first day of the calendar
month following receipt. If, by the first day of a month, any financial
statements and Compliance Certificate due in the preceding month have not been
received, then, at the option of Agent or Required Lenders, the margins shall be
determined as if Level III were applicable, from such day until the first day of
the calendar month following actual receipt.

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

 

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

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

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

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

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

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

Average Facility Usage: as defined in Section 3.2.1.

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

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

Bank Product: any of the following products, services or facilities extended to
any Credit Party or Subsidiary by a Lender or any of its Affiliates: (a) Cash
Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; and (d) other banking products or
services as may be requested by any Credit Party or Subsidiary, other than
Letters of Credit; provided, however, that for any of the foregoing to be
included as an “Obligation” for purposes of a distribution under Section 5.6.1,
the Borrower Agent and applicable Secured Party (other than Agent or an
Affiliate of Agent) must have previously provided written notice to Agent of
(a) the existence of such Bank Product, (b) the maximum dollar amount of
obligations arising thereunder to be included as a Bank Product Reserve (“Bank
Product Amount”), and (c) the methodology to be used by such parties in
determining the Bank Product Debt owing from time to time. The Bank Product
Amount may be changed from time to time based upon written notice to Agent by
the Secured Party. No Bank Product Amount may be established or increased at any
time that a Default or Event of Default exists, or if a reserve in such amount
would cause the aggregate Revolver Loans to exceed the Borrowing Base.

 

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Bank Product Amount: as defined in the definition of Bank Product.

Bank Product Debt: Debt and other obligations of a Credit Party relating to Bank
Products; provided that Bank Product Debt of a Credit Party shall not include
its Excluded Swap Obligations.

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

Bankruptcy Code: Title 11 of the United States Code.

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

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

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

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

Blocked Account Agreement: as defined in Section 8.5.2.

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

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

Borrower Agent: as defined in Section 4.4.

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

 

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

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

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

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

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

 

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

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

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

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

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

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

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

Cash Management System: as defined in Section 8.5.2.

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

 

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

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

Change in Law: the occurrence, after the date hereof, of (a) the adoption 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 or
application thereof by any Governmental Authority; or (c) the making or issuance
of any request, guideline or directive (whether or not having the force of law)
by any Governmental Authority.

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

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

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

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

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

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

(f) a change of control occurs under the Senior Notes Indenture.

 

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

Closing Date: as defined in Section 6.1.

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

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

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

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

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

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

Company Subordination Agreement: the Subordination and Intercreditor Agreement
dated as of the date hereof executed and delivered by the Company (and
acknowledged by the Existing Permitted Joint Ventures) in favor of the Agent and
the Secured Parties with respect to the Company Subordinated Debt and Liens
securing such Debt.

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

 

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

Concentration Account: as defined in Section 8.5.2.

Concentration Account Agreement: as defined in Section 8.5.2.

Confidential Healthcare Information: as defined in Section 10.1.1.

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

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

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

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

 

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

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

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

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

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

Debt: as applied to any Person, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (d) all obligations of such Person in respect
of the deferred purchase price of property or services, (e) all Debt of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on Property owned or
acquired by such Person, whether or not the Debt secured thereby has been
assumed (provided that in the event such debt is limited in recourse solely to
the property subject to such Lien, for purposes of this Agreement the amount of
such debt shall not exceed the book value of the property subject to such Lien),
(f) all Contingent Obligations of such Person of Debt of others, (g) all
obligations under any Capital Leases of such Person, (h) all obligations,
contingent or otherwise, of such Person as an account party or guarantor in
respect of letters of credit or in respect of letters of guaranty issued by a

 

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bank or any other financial institution (excluding undrawn letters of credit
maintained exclusively to support workers compensation obligations), (i) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances or any Hedging Agreement, and (j) all obligations of such Person
with respect to the redemption, repayment or other repurchase of any
Disqualified Equity Interest; provided that, notwithstanding any clause of this
definition above, “Debt” shall not include (i) trade payables and expenses owing
in the Ordinary Course of Business, and (ii) agreements providing for
indemnification, purchase price adjustments or similar obligations incurred or
assumed in connection with the acquisition or disposition of assets or capital
stock. The Debt of any Person shall include the Debt of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Debt provide that such Person is not liable therefor.

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

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

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

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

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

Disqualified Equity Interest: Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is 180 days after the Commitment Termination Date, (b) is convertible
into or exchangeable for debt securities, (c) contains any repurchase obligation
that may come into effect prior to the Full Payment of the Obligations,
(d) requires cash dividend payments (other than taxes) prior to the date that is
180 days after the Commitment Termination Date, (e) provides the holders of such
Equity Interest thereof with any rights to receive any

 

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cash upon the occurrence of a change of control or sale of assets prior to the
date that is 180 days after the date of Fully Payment of the Obligations;
provided, however, that (i) with respect to any Equity Interests issued to any
employee or to any plan for the benefit of employees of the Parent or its
Subsidiaries or by any such plan to such employees, such Equity Interest shall
not constitute Disqualified Equity Interests solely because it may be required
to be repurchased by the Parent or one of its Subsidiaries in order to satisfy
applicable statutory or regulatory obligations or as a result of such employee’s
termination, resignation, death or disability and (ii) any class of Equity
Interest of such Person that by its terms authorizes such Person to satisfy its
obligations thereunder by delivery of an Equity Interest that is not a
Disqualified Equity Interest, such Equity Interests shall not be deemed to be
Disqualified Equity Interests. Notwithstanding the preceding sentence, any
Equity Interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require a Loan Party to repurchase such Equity
Interest upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock

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

Dollars: lawful money of the United States.

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

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

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

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

(a) Consolidated Net Income for such period plus

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

(i) Consolidated Interest Charges;

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

(iii) the amount of depreciation and amortization expense;

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

 

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

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

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

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

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

minus

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

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

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

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

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

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

 

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

Eligible Credit Card Accounts: as of any date of determination, Accounts due to
a Credit Party (other than a Guarantor) from major credit card and debit card
processors (including, but not limited to, VISA, Mastercard, American Express,
Diners Club, DiscoverCard, Interlink, NYCE and other recognized payment
processing services reasonably acceptable to Agent) that arise in the Ordinary
Course of Business and which have been earned by performance and that are not
excluded as ineligible by virtue of one or more of the criteria set forth below.
None of the following shall be deemed to be Eligible Credit Card Accounts:

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

ERISA: the Employee Retirement Income Security Act of 1974.

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

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) the
withdrawal of any Credit Party or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which such entity was a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by any Credit Party or ERISA Affiliate from
a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Pension Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) the institution by the PBGC of proceedings to
terminate a Pension Plan; (f) any Credit Party or ERISA Affiliate fails to meet
any funding obligations with respect to any Pension Plan or Multiemployer Plan,
or requests a minimum funding waiver; (g) any event or condition which
constitutes grounds under Section

 

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4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (h) the determination that any Pension Plan is
considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of
ERISA; or (i) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
any Credit Party or ERISA Affiliate.

Event of Default: as defined in Section 11.

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

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

Excluded Facility Deposit Account: the Recourse Account and each Deposit Account
maintained in the Ordinary Course of Business of the Borrowers containing not
more than $7,000,000 in the aggregate at any time for all such Deposit Accounts
and subject to the sweep requirements of Section 8.5.2(g).

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

Excluded Tax: with respect to Agent, any Lender, Issuing Bank or any other
recipient of a payment to be made by or on account of any Obligation, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located; (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which a Borrower is located; (c) any backup withholding
tax required by the Code to be withheld from amounts payable to a Lender that
has failed to comply with Section 5.10; and (d) in the case of a Foreign Lender,
any United States withholding tax that is (a) required to be imposed on amounts
payable

 

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to such Foreign Lender pursuant to laws in force at the time such Foreign Lender
becomes a party hereto (or designates a new Lending Office), or (b) attributable
to such Foreign Lender’s failure or inability (other than as a result of a
Change in Law) to comply with Section 5.10, except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from Borrowers with respect to such withholding tax pursuant to Section
5.9.

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

Existing Letters of Credit: that certain Letter of Credit issued February 29,
2007 with a face value of $725,000 (L/C Reference Number 61661166) and that
certain Letter of Credit issued November 30, 2005 with a face value of
$4,045,000 (L/C Reference Number 61646291), each issued by Citibank, N.A.

Extraordinary Expenses: all costs, expenses or advances that Agent may incur in
connection with the Loan Documents and the transactions contemplated thereby
during a Default or Event of Default, or during the pendency of an Insolvency
Proceeding of a Credit Party, including those relating to (a) any audit,
inspection, repossession, storage, appraisal, insurance, preparation or
advertising for sale, sale, collection, or other preservation of or realization
upon any Collateral; (b) any action, arbitration or other proceeding (whether
instituted by or against Agent, any Lender, any Credit Party, any representative
of creditors of a Credit Party or any other Person) in any way relating to any
Collateral (including the validity, perfection, priority or avoidability of
Agent’s Liens with respect to any Collateral), Loan Documents, Letters of Credit
or Obligations, including any lender liability or other Claims (excluding any
Claim that is determined in a final, nonappealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of Agent); (c) the exercise, protection or enforcement of any rights
or remedies of Agent in, or the monitoring of, any Insolvency Proceeding;
(d) settlement or satisfaction of any taxes, charges or Liens with respect to
any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of
any modification, waiver, workout, restructuring or forbearance with respect to
any Loan Documents or Obligations; and (g) Protective Advances. Such costs,
expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, legal fees
(subject to the limitations set forth in clause (ii) of the definition of
“Claims” herein), appraisal fees, brokers’ fees and commissions, auctioneers’
fees and commissions, accountants’ fees, wages and salaries or fees paid to
independent contractors in liquidating any Collateral, and travel expenses.

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

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

 

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

Fee Letters: collectively, the Agent Fee Letter and the Lead Arrangers Fee
Letter.

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

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

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

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

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

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

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

 

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extent that on the date the Cure Amount is received by Agent, the Availability
on such date is less than the Availability on the Fixed Charge Trigger Date (as
a result of deemed Borrowings, interest or other amounts becoming due, changes
in the Borrowing Base, or otherwise), the Cure Amount shall be in an amount
sufficient to increase Availability as of the date the Cure Amount is received
by Agent to an amount greater than the Fixed Charge Trigger Threshold as of such
date.

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

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

FLSA: the Fair Labor Standards Act of 1938.

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

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

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

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

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

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

 

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

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

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

Government Receivables Bank: as defined in Section 8.5.2.

Government Receivables Deposit Account: as defined in Section 8.5.2.

Government Receivables Deposit Account Agreement: as defined in Section 8.5.2.

Guarantor Payment: as defined in Section 5.11.3.

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

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

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

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

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

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

Immaterial Subsidiary: each Subsidiary of the Company that has been designated
by the Borrower Agent in writing to the Agent as a “Designated Immaterial
Subsidiary” for purposes of this Agreement and the other Loan Documents,
provided that at no time shall (a) the total assets of all Immaterial
Subsidiaries as of the end of the most recent Fiscal Quarter for which Financial
Statements

 

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have been delivered hereunder, equal or exceed three percent (3.0%) of the
consolidated total assets of the Company and its Subsidiaries, or (b) any
Immaterial Subsidiary own any assets included in the Borrowing Base, or (c) the
gross revenues of all Immaterial Subsidiaries (including any Immaterial
Subsidiaries dissolved, liquidated or otherwise disposed of during any
Measurement Period) for any Measurement Period equal or exceed three percent
(3.0%) of the consolidated gross revenues of the Company and its Subsidiaries
for such Measurement Period, in each case as determined in accordance with GAAP.
As of the Closing Date, the Subsidiaries specified on Schedule 1.2 hereto are
the only Subsidiaries designated by the Borrower Agent as Immaterial
Subsidiaries for purposes of this Agreement and the other Loan Documents.

Indemnified Taxes: Taxes other than Excluded Taxes.

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

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

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

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

Interest Period: as defined in Section 3.1.3.

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

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

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

 

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

IRS: the United States Internal Revenue Service.

Issuing Bank: (i) Bank of America or an Affiliate of Bank of America and
(ii) with respect to the Existing Letters of Credit, Citibank, N.A.

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

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

Joint Venture Notes: (i) that certain Amended and Restated Demand Promissory
Note dated October 1, 2008 from Columbia Capital Medical Center Limited
Partnership in favor of the Company in the stated principal amount of
$10,000,000, (ii) that certain Amended and Restated Promissory Note dated
October 1, 2008 from Columbia Capital Medical Center Limited Partnership in
favor of the Company in the stated principal amount of $42,131,605, (iii) that
certain Demand Promissory Note dated August 31, 2009 from White County Community
Hospital, LLC in favor of the Company in the stated principal amount of
$10,000,000, and (iv) that certain Promissory Note dated August 31, 2008 from
White County Community Hospital, LLC in favor of the Company in the stated
principal amount of $4,480,000.

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

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

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

 

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

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

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

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

Lead Arrangers Fee Letter: the Lead Arrangers Fee Letter, dated as of June 3,
2014, among the Company, Agent, Citigroup Global Markets Inc., as joint lead
arranger and joint bookrunner, and GE Capital Markets, Inc., as joint lead
arranger and joint bookrunner.

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

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

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

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

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

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

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

 

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

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

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

Lien: any Person’s interest in Property securing an obligation owed to, or a
claim by, such Person, whether such interest is based on common law, statute or
contract, including liens, security interests, pledges, hypothecations,
statutory trusts, reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Property.

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

Loan: a Revolver Loan.

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

Operating Agreement: (a) Amended and Restated Operating Agreement of White
County Community Hospital, LLC dated as of June 30, 2011, among Sparta Hospital
Corporation and the other members party thereto from time to time; as amended by
Amendment No. 1 effective June 30, 2011 and in effect on the date hereof,
(b) Fourth Amended and Restated Agreement of Limited Partnership of Columbia
Capital Medical Center Limited Partnership dated as of January 12, 2007, among
Columbia Olympia Management, Inc., Capital Medical Center Partner, LLC, WPC
Holdco, LLC, Capital Medical Center Holdings, LLC and the other limited partners
party thereto from time to time, as in effect on the

 

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date hereof; (c) Amended and Restated Limited Liability Company Agreement of Hot
Springs National Park Hospital Holdings, LLC dated as of May 1, 2006, among NPMC
Holdings, LLC (f/k/a Tennyson Holdings, Inc.) and the other members party
thereto from time to time, as in effect on the date hereof; (d) Amended and
Restated Operating Agreement of River Park Hospital, LLC dated as of May 1,
2012, among Saint Thomas/Capella, LLC and the other members party thereto from
time to time, as in effect on the date hereof; (e) Amended and Restated
Operating Agreement of Cannon County Hospital, LLC dated as of June 30, 2011,
among Sparta Hospital Corporation and the other members party thereto from time
to time, as amended by Amendment No. 1 effective June 20, 2011 and in effect on
the date hereof; (f) Limited Liability Company Agreement of River Park Physician
Group, LLC dated as of April 21, 2008, by River Park Hospital, Inc., as in
effect on the date hereof; (g) Limited Liability Company Agreement of Saint
Thomas/Capella, LLC of Saint Thomas/Capella, LLC dated as of May 1, 2012, among
Capella Healthcare, Inc., Sparta Hospital Corporation, and Saint Thomas Health,
as in effect on the date hereof; (h) Operating Agreement of Stones River Clinic
Services, LLC dated as of February 2012, by Cannon County Hospital, LLC, as in
effect on the date hereof; (i) Operating Agreement of White County Primary Care,
LLC dated as of February 2012, by White County Physician Services, LLC, as in
effect on the date hereof; and (j) each operating agreement, limited liability
agreement, partnership agreement or bylaws of any Permitted Joint Venture
Subsidiary, as in effect on the effective date thereof or otherwise amended,
restated, supplemented or modified as permitted by the terms hereof.

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

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

OSHA: the Occupational Safety and Hazard Act of 1970.

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

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

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

Participant: as defined in Section 13.2.

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

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

PBGC: the Pension Benefit Guaranty Corporation.

Pension Act: the Pension Protection Act of 2006.

 

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

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

Permitted Acquisitions: each Acquisition with respect to which:

(a) the Credit Parties and their Subsidiaries and any such newly created or
acquired Subsidiary shall comply with the requirements of Section 7.3.3;

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

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

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

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

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

Permitted Asset Disposition: an Asset Disposition that is

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

 

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

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

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

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

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

(g) an Upstream Payment;

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

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

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

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

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

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

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

 

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

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

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

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

(s) as long as no Default or Event of Default exists or would arise therefrom,
other dispositions of assets (other than Accounts and Inventory) by the Credit
Parties for not less than the fair market value thereof; provided that the
aggregate consideration for all assets disposed of in reliance upon this clause
(s) shall not exceed $30,000,000 in any Fiscal Year and at least 50% of such
aggregate consideration shall be payable in cash); provided, that no such
disposition shall be made to a Subsidiary that is not a Credit Party or to a
Permitted Minority Joint Venture unless such disposition shall constitute a
Permitted Non-Credit Party Transaction.

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

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

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

 

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Permitted Distributions: Distributions consisting of the following:

(a) Upstream Payments;

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

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

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

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

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

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

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

 

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

Permitted Investment: an Investment consisting of any the following:

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

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

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

(d) Investments (i) of any Credit Party in any other Credit Party (provided that
if such Investment is made by a Borrower or Guarantor in any Permitted Joint
Venture Subsidiary to repurchase Equity Interests from a Qualified Investor,
such Investment is subject to clause (q) or (r) below and, if made in the form
of a secured loan, such Investment shall be or become subject to the Company
Subordination Agreement or other subordination and intercreditor agreement
substantially similar thereto and reasonably acceptable to the Agent ),
(ii) among Subsidiaries that are not Credit Parties and (iii) of any Subsidiary
that is not a Credit Party in any Credit Party;

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

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

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

(h) guaranties constituting Permitted Debt;

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

(j) deposits with financial institutions permitted hereunder;

 

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

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

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

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

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

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

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

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

Permitted Joint Venture Subsidiary: (a) an Existing Joint Venture Subsidiary,
(b) a Subsidiary that is a Borrower or Guarantor that sells, transfers or
issues, in the aggregate, a portion of its Equity Interests to Qualifying
Investors in connection with the conduct of the Permitted Business (and not
merely to raise capital), (c) a newly formed Subsidiary organized in connection
with the conduct of the Permitted Business of the Credit Parties, a portion of
the Equity Interests of which is (or, once

 

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capitalization is complete, will be) owned by Qualifying Investors, (d) a Person
owned by Qualifying Investors in which a Credit Party acquires Equity Interests
or (e) a Subsidiary of any Person described in the foregoing clauses (a) – (d);
provided, that, in each case, the business is of a type that is in compliance
with Section 10.2.16, and complies with 42 U.S.C. §1395nn, as amended (if
applicable), and other Applicable Laws relating to physician referrals;
provided, further that, in each case, other than with respect to any Existing
Joint Venture Subsidiary:

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

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

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

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

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

(f) any indebtedness owing, and liens or security interests granted, to other
Credit Parties by such Permitted Joint Venture Subsidiary shall become and be
subject to the terms of the Company Subordination Agreement;

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

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

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

 

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(j) such Permitted Joint Venture Subsidiary shall duly execute and deliver to
Agent such security agreements joinder agreements, amendments or supplements to
the Loan Documents as are reasonably requested by the Agent, Deposit Account
Control Agreements as described in Section 8.5, to cause or authorize the filing
of appropriate UCC financing statements, and take any other action as may be
necessary to vest in Agent valid and subsisting Liens on the properties
purported to be subject thereto and deliver a legal opinion with respect thereto
in form and substance reasonably satisfactory to Agent. Upon the satisfaction of
the conditions contained in this definition, a Borrower or Guarantor that
thereupon becomes a Permitted Joint Venture Subsidiary shall no longer be a
Borrower or Guarantor under this Agreement.

Permitted Lien: as defined in Section 10.2.2.

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

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

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

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

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

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

 

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

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

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

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

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

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

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

Protective Advances: as defined in Section 2.1.6.

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

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

 

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

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

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

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

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

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

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

Reimbursement Date: as defined in Section 2.3.2.

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

 

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Report: as defined in Section 12.2.3.

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

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

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

Required Lenders: Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 50% of the aggregate Revolver Commitments; and (b) if
the Revolver Commitments have terminated, Loans in excess of 50% of all
outstanding Loans; provided, however, that, if there are more than two Lenders,
the Required Lenders shall include at least two Lenders who are not Affiliates.

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

Reserves: the Availability Reserves and Borrowing Base Reserves.

Restricted Collateral: all assets of the Credit Parties that would otherwise be
included as Collateral but for the express terms of (a) any permit, lease,
license, contract or other agreement or instrument constituting or applicable to
such asset or (b) Applicable Law (other than to the extent that any such term
would be rendered ineffective pursuant to Sections 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 or principles of equity) that, in each
case, prohibits the grant to any Credit Party of a security interest in and to
such asset; provided, however, that such assets shall constitute “Restricted
Collateral” only to the extent and for so long as such permit, lease, license,
contract or other agreement or Applicable Law validly prohibits the creation of
a Lien on such property in favor of the Credit Parties and, upon the termination
of such prohibition (by written consent or in any other manner), such property
shall cease to constitute “Restricted Collateral”.

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

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

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

 

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

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

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

Revolver Termination Date: the earlier to occur of (i) June 3, 2019 or
(ii) April 1, 2017, if, as of such date, the Senior Notes have not been repaid
in full or refinanced on terms reasonably satisfactory to Agent (including a
maturity date no earlier than December 3, 2019).

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

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

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

Secured Parties: Agent, Issuing Bank, Lenders and providers of Bank Products.

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

TRICARE Account: means an Account payable pursuant to TRICARE.

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

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

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

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

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

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

 

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

1.4. Certain Matters of Construction. The terms “hereto,” “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, “from” means “from and including,”
and “to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document,
instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section means, unless the context otherwise requires, a section of this
Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person include successors and assigns; (f) time of day
means time of day at Agent’s notice address under Section 14.3.1; or
(g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute
discretion of such Person (unless otherwise qualified). All calculations of
Value, fundings of Loans, issuances of Letters of Credit and payments of
Obligations shall be in Dollars and, unless the context otherwise requires, all
determinations (including calculations of Borrowing Base and financial
covenants) made from time to time under the Loan Documents shall be made in
light of the circumstances existing at such time. Borrowing Base calculations
shall be consistent with historical methods of valuation and calculation, and
otherwise satisfactory to Agent in its Credit Judgment (and not necessarily
calculated in accordance with GAAP). No provision of any Loan Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision. Whenever the phrase “to the Credit Parties’
knowledge”, “to the Borrowers’ knowledge”, to the Credit Parties’ knowledge” or
words of similar import are used in any Loan Documents, it means actual
knowledge of a Senior Officer, or knowledge that a Senior Officer would have
obtained if he or she had engaged in good faith and diligent performance of his
or her duties.

SECTION 2. CREDIT FACILITIES

2.1. Revolver Commitment.

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

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

 

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

2.1.4. Voluntary Reduction or Termination of Revolver Commitments.

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

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

2.1.5. [Reserved].

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

2.1.7. Increase in Revolver Commitments.

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

 

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

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

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

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, Borrower Agent shall deliver to Agent a certificate dated as of the
Revolver Commitments Increase Effective Date signed by a Senior Officer of the
Borrower Agent (i) certifying and attaching the resolutions (or, if applicable,
consent or ratification) adopted by each Credit Party approving or consenting to
such increase, and (ii) certifying that, before and after giving effect to such
increase, (A) the representations and warranties contained in Article IX and the
other Loan Documents are true and correct on and as of the Revolver Commitments
Increase Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this
Section 2.1.7, the representations and warranties contained in Section 9.1.7
shall be deemed to refer to the most recent statements furnished pursuant to
Section 10.1.2, and (B) no Default or Event of Default exists. Borrowers shall
prepay any Revolver Loans outstanding on the Revolver Commitments Increase
Effective Date (and pay any additional amounts required pursuant to Section 3.9)
to the extent necessary to keep the outstanding Revolver Loans ratable with any
revised Pro Rata shares arising from any nonratable increase in the Revolver
Commitments under this Section.

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

2.2. [Reserved].

2.3. Letter of Credit Facility.

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

 

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(a) Each Borrower acknowledges that Issuing Bank’s willingness to issue any
Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application
with respect to the requested Letter of Credit, as well as such other
instruments and agreements as Issuing Bank may customarily require for issuance
of a letter of credit of similar type and amount. Issuing Bank shall have no
obligation to issue any Letter of Credit unless (i) Issuing Bank receives a LC
Request and LC Application at least two Business Days prior to the requested
date of issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting
Lender exists, such Lender or Borrowers have entered into arrangements,
including the delivery of Cash Collateral, satisfactory to Agent and Issuing
Bank (in their sole discretion) to eliminate Issuing Bank’s actual or potential
Fronting Exposure (after giving effect to Section 4.2.2 with respect to any
Defaulting Lender) arising from either the Letter of Credit then proposed to be
issued or that Letter of Credit and all other LC Obligations as to which Issuing
Bank has actual or potential Fronting Exposure, as it may elect in its sole
discretion. If Issuing Bank receives written notice from the Agent or a Lender
at least three Business Days before issuance of a Letter of Credit that any LC
Condition has not been satisfied, Issuing Bank shall have no obligation to issue
the requested Letter of Credit (or any other) until such notice is withdrawn in
writing by the Agent or until Required Lenders have waived such condition in
accordance with this Agreement. Prior to receipt of any such notice, Issuing
Bank shall not be deemed to have knowledge of any failure of LC Conditions. As
of the Closing Date, (i) all Existing Letters of Credit shall be automatically
and without further action by the parties thereto converted to Letters of Credit
and shall be deemed to have been issued pursuant hereto, and from and after the
Closing Date shall be subject to and governed by the terms and conditions
hereof, and for this purpose the fees specified in Section 3.2.2 shall be
payable as if the Existing Letters of Credit had been issued on the Closing
Date, (ii) Citibank, N.A. shall be deemed to be an “Issuing Bank” hereunder
solely for the purpose of maintaining the Existing Letters of Credit, (iii) the
face amount of the Existing Letters of Credit shall be included in the
calculation of LC Obligations and (iv) all liabilities of the Borrowers with
respect to the Existing Letters of Credit shall constitute Obligations;
provided, however, that Citibank, N.A. shall have no obligation to issue any
replacement Letters of Credit upon the expiration of the Existing Letters of
Credit pursuant to the terms thereof.

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

(c) If the Borrower Agent so requests in any applicable LC Application, Issuing
Bank may, in its discretion (not to be unreasonably withheld), agree to issue a
Letter of Credit that has automatic extension provisions (each, an
“Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter
of Credit must permit Issuing Bank to prevent any such extension at least once
in each twelve-month period (commencing with the date of issuance of such Letter
of Credit) by giving prior notice to the beneficiary thereof not later than a
day (the “Non-Extension Notice Date”) in each such twelve-month period to be
agreed upon at the time such Letter of Credit is issued. Borrower Agent shall
not be required to make a specific request to Issuing Bank for any such
extension but, if requested by Issuing Bank prior to any renewal date, Borrower
Agent shall confirm in writing whether it requests that such Letter of Credit be
allowed to automatically renew. Once an Auto-Extension Letter of Credit has been
issued, Lenders shall be deemed to have authorized (but may not require) Issuing
Bank to permit the extension of such Letter of Credit; provided, however, that
Issuing Bank shall not permit any such extension if (A) Issuing Bank has
determined that it would not be permitted, or would have no obligation,

 

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at such time to issue a Letter of Credit (as extended) under the terms hereof
(by reason of the provisions of clauses (i), (ii) or (iii) of Section 2.3.1(a)
or otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is seven Business Days before the
Non-Extension Notice Date (1) from Agent that the Required Lenders have elected
not to permit such extension or (2) from Agent, any Lender or Borrower Agent
that one or more of the applicable LC Conditions is not then satisfied, and in
each such case directing Issuing Bank not to permit such extension.

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

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

2.3.2. Reimbursement; Participations.

(a) If Issuing Bank honors any request for payment under a Letter of Credit,
Borrowers shall pay to Issuing Bank, (i) on the same day (“Reimbursement Date”),
if Issuing Bank has given Borrower Agent not less than one (1) Business Day’s
prior notice of such payment under a Letter of Credit, otherwise (ii) one
(1) Business Day after Issuing Bank gives notice to Borrower Agent of the amount
paid by Issuing Bank under such Letter of Credit; together with interest at the
interest rate for Base Rate Revolver Loans from the Reimbursement Date until
payment by Borrowers. The obligation of Borrowers to reimburse Issuing Bank for
any payment made under a Letter of Credit shall be absolute, unconditional,
irrevocable, and joint and several, and shall be paid without regard to any lack
of validity or enforceability of any Letter of Credit or the existence of any
claim, setoff, defense or other right that Borrowers may have at any time
against the beneficiary. Unless the Borrower Agent shall have notified the Agent
and Issuing Bank prior to 2:00 p.m. (New York City time) on the Reimbursement
Date that Borrower Agent intends to reimburse the Issuing Bank with funds other
than the proceeds of Loans, then whether or not Borrower Agent submits a Notice
of Borrowing, Borrowers shall be deemed to have

 

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requested a Borrowing of Base Rate Revolver Loans in an amount necessary to pay
all amounts due Issuing Bank on any date that payment is due from the Credit
Parties (as set forth in the first sentence of this clause (a)) and each Lender
agrees to fund its Pro Rata share of such Borrowing whether or not the
Commitments have terminated, the aggregate Revolver Loans exceed the Borrowing
Base before or after such Borrowing, or the conditions in Section 6 are
satisfied.

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

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

(d) No Issuing Bank Indemnitee shall be liable to any Credit Party, any Lender
or other Person for any action taken or omitted to be taken in connection with
any LC Documents except as a result of its gross negligence or willful
misconduct. Issuing Bank shall not have any liability to any Lender if Issuing
Bank refrains from any action under any Letter of Credit or LC Documents until
it receives written instructions from Required Lenders.

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

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

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

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

SECTION 3. INTEREST, FEES AND CHARGES

3.1. Interest.

3.1.1. Rates and Payment of Interest.

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

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

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

 

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3.1.2. Application of LIBOR to Outstanding Loans.

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

(b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans,
Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later
than 11:00 a.m. at least three Business Days before the requested conversion or
continuation date. Promptly after receiving any such notice, Agent shall notify
each Lender thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be one month if not
specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected to convert such
Loans into Base Rate Loans.

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

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

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

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

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

3.2. Fees.

3.2.1. Unused Line Fee. Borrowers shall pay to Agent, for the Pro Rata benefit
of Lenders (other than a Defaulting Lender for any period during which it is a
Defaulting Lender), a fee calculated as follows (the “Unused Fee”): (a) if
Average Facility Usage (defined below) for the most recently ended calendar
month is greater than or equal to 50% of the aggregate Commitments for such
calendar month, the Unused Fee shall be 0.25% per annum times the amount by
which (i) the Commitments during such month exceed (ii) the Average Facility
Usage for such month and (b) if Average Facility Usage for the most recently
ended calendar month is less than 50% of the aggregate Commitments for such
calendar month, the Unused Fee shall be 0.375% per annum times the amount by

 

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which (i) the Commitments during such month exceed (ii) the Average Facility
Usage for such month. Such fee shall be payable quarterly in arrears, on the
first day of each fiscal quarter and on the Revolver Termination Date. “Average
Facility Usage” means the average daily balance of Revolver Loans (other than
Swingline Loans or Protective Advances) and undrawn amount of Letters of Credit
during any calendar month.

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

3.2.3. Fee Letters. Borrowers shall pay the fees described in, and pursuant to
the terms of, the Fee Letters.

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

3.4. Reimbursement Obligations. Borrowers shall reimburse Agent for all
Extraordinary Expenses. Borrowers shall also reimburse Agent for all legal,
accounting, appraisal, consulting, and other fees, costs and expenses reasonably
incurred by it in connection with (a) negotiation and preparation of any Loan
Documents, including any amendment or other modification thereof;
(b) administration of and actions relating to any Collateral, Loan Documents and
transactions contemplated thereby, including any actions taken to perfect or
maintain priority of Agent’s Liens on any Collateral, to maintain any insurance
required hereunder or to verify Collateral; and (c) subject to the limits of
Section 10.1.1(b), each inspection, audit or appraisal with respect to any
Credit Party or Collateral, whether prepared by Agent’s personnel or a third
party; provided, however, that (i) prior to any Event of Default, Borrowers’
obligations to reimburse Agent for the fees and expenses of counsel shall be
limited to one counsel selected by Agent and to the extent necessary, one
special or local counsel in each appropriate jurisdiction unless, in the
reasonable opinion of Agent, representation of all such Indemnitees would be
inappropriate due to the existence of an actual or potential conflict of
interest and (ii) during any Event of Default, Borrowers’ obligations to
reimburse Agent for the fees and expenses of counsel shall be limited to one
counsel for Agent and one counsel for Lenders and to the extent necessary, one
special or local counsel in each appropriate jurisdiction unless, in the
reasonable opinion of any Lender, representation of all such

 

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Indemnitees would be inappropriate due to the existence of an actual or
potential conflict of interest. If, for any reason (including inaccurate
reporting on financial statements or a Compliance Certificate), it is determined
that a higher Applicable Margin should have applied to a period than was
actually applied, then the proper margin shall be applied retroactively and
Borrowers shall immediately pay to Agent, for the Pro Rata benefit of Lenders,
an amount equal to the difference between the amount of interest and fees that
would have accrued using the proper margin and the amount actually paid. All
amounts payable by Borrowers under this Section shall be due on demand.

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

3.6. Inability to Determine Rates. If Required Lenders notify Agent for any
reason in connection with a request for a Borrowing of, or conversion to or
continuation of, a LIBOR Loan that (a) Dollar deposits are not being offered to
banks in the London interbank Eurodollar market for the applicable amount and
Interest Period of such Loan, (b) adequate and reasonable means do not exist for
determining LIBOR for the requested Interest Period, or (c) LIBOR for the
requested Interest Period does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, then Agent will promptly so notify Borrower
Agent and each Lender. Thereafter, (x) the obligation of Lenders to make or
maintain LIBOR Loans shall be suspended and (y) in the event of a determination
described in the preceding sentence with respect to the LIBOR component of the
Base Rate, the utilization of the LIBOR component in determining the Base Rate
shall be suspended, in each case until Agent (upon instruction by Required
Lenders) revokes such notice. Upon receipt of such notice, Borrower Agent may
revoke any pending request for a Borrowing of, conversion to or continuation of
a LIBOR Loan or, failing that, will be deemed to have submitted a request for a
Base Rate Loan.

3.7. Increased Costs; Capital Adequacy.

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

 

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

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

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

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

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

3.7.3. Compensation. Failure or delay on the part of any Lender or Issuing Bank
to demand compensation pursuant to this Section 3.7 shall not constitute a
waiver of its right to demand such compensation, but Borrowers shall not be
required to compensate a Lender or Issuing Bank for any increased costs incurred
or reductions suffered more than six months prior to the date that the Lender or
Issuing Bank notifies Borrower Agent of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or Issuing Bank’s intention
to claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the six-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

LIBOR Loan Reserves. If any Lender is required to maintain reserves with respect
to liabilities or assets consisting of or including Eurocurrency funds or
deposits, Borrowers shall pay additional interest to such Lender on each LIBOR
Loan equal to the costs of such reserves allocated to the Loan by the Lender (as
determined by it in good faith, which

 

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determination shall be conclusive absent manifest error). The additional
interest shall be due and payable on each interest payment date for the Loan;
provided, however, that if the Lender notifies Borrowers (with a copy to Agent)
of the additional interest less than 10 days prior to the interest payment date,
then such interest shall be payable ten (10) days after Borrowers’ receipt of
the notice.

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

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

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

SECTION 4. LOAN ADMINISTRATION

4.1. Manner of Borrowing and Funding Revolver Loans.

4.1.1. Notice of Borrowing.

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

 

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

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

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

4.1.3. Swingline Loans; Settlement.

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

(b) To facilitate administration of the Revolver Loans, Lenders and Agent agree
(which agreement is solely among them, and not for the benefit of or enforceable
by any Borrower) that settlement among them with respect to Swingline Loans and
other Revolver Loans may take place on a date determined from time to time by
Agent, which shall occur at least once each week. On each settlement date,
settlement shall be made with each Lender in accordance with the Settlement
Report

 

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

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

4.2. Defaulting Lender.

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

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

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

 

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

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

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

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

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

 

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SECTION 5. PAYMENTS

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

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

5.3. [Reserved].

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

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

5.6. Post-Default Allocation of Payments.

5.6.1. Allocation. Notwithstanding anything herein to the contrary, during the
continuation of an Event of Default, monies to be applied to the Obligations,
whether arising from payments by Credit Parties, realization on Collateral,
setoff or otherwise, shall, subject to the provisions of Sections 2.3.3 and 4.2,
be allocated as follows:

 

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

(b) second, to all amounts owing to Agent on Swingline Loans and Obligations
arising from Cash Management Services;

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

(d) fourth, to all Obligations constituting fees (excluding amounts relating to
Bank Products);

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

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

(g) seventh, to all other Obligations, other than Bank Product Debt; and

(h) last, to Bank Product Debt.

Subject to Section 2.3.3, amounts shall be applied to each category of
Obligations set forth above until Full Payment thereof and then to the next
category. If amounts are insufficient to satisfy a category, they shall be
applied on a pro rata basis among the Obligations in the category. Monies and
proceeds obtained from a Credit Party shall not be applied to its Excluded Swap
Obligations, but appropriate adjustments shall be made with respect to amounts
obtained from other Credit Parties to preserve the allocations in any applicable
category. Amounts distributed with respect to any Bank Product Debt shall be the
lesser of the applicable Bank Product Amount last reported to Agent or the
actual Bank Product Debt as calculated by the methodology reported to Agent for
determining the amount due. Agent shall have no obligation to calculate the
amount to be distributed with respect to any Bank Product Debt, but may rely
upon written notice of the amount (setting forth a reasonably detailed
calculation) from the Secured Party. In the absence of such notice, Agent may
assume the amount to be distributed is the Bank Product Amount last reported to
it. The allocations set forth in this Section are solely to determine the rights
and priorities of Agent and Lenders as among themselves, and may be changed by
agreement among them without the consent of any Credit Party. This Section is
not for the benefit of or enforceable by any Credit Party.

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

5.7. Application of Payments. During any Dominion Trigger Period, (a) if the
Concentration Account is maintained at Bank of America, the ledger balance in
the Concentration Account as of the end of a Business Day shall be transferred
to Agent’s account and applied to the Obligations at the beginning of the next
Business Day and (b) if the Concentration Account is not maintained at Bank of
America, payments shall be applied to the Obligations on the Business Day of
receipt of good funds by Agent in the account designated by Agent for such
purposes; provided that if any such payment is received after 2:00 p.m., it may
be deemed received on the next Business Day. If, as a result of such
application, a credit balance exists, the balance shall not accrue interest in
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Borrowers and shall be made available to Borrowers as long as no Default or
Event of Default exists. During an Event of Default, each Borrower irrevocably
waives the right to direct the application of any payments or Collateral
proceeds, and agrees that Agent shall have the continuing, exclusive right to
apply and reapply same against the Obligations, in such manner as Agent deems
advisable.

5.8. Loan Account; Account Stated.

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

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

5.9. Taxes.

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

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

 

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5.9.3. Treatment of Certain Refunds. Unless required by Applicable Law, at no
time shall Agent have any obligation to file for or otherwise pursue on behalf
of any Lender or Issuing Bank, or have any obligation to pay to any Lender or
Issuing Bank, any refund of Taxes withheld or deducted from funds paid for the
account of such Lender or Issuing Bank, as the case may be. If Agent, any Lender
or Issuing Bank determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrowers or with respect to which the Borrowers have paid additional amounts
pursuant to Section 5.9, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section 5.9 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by
such Agent, Lender or Issuing Bank, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided that the Borrowers, upon request of the
Lender, agree to repay the amount paid over to the Borrowers (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Agent, Lender or Issuing Bank in the event such Agent, Lender
or Issuing Bank is required to repay such refund to such Governmental Authority.
This paragraph shall not be construed to require Agent, any Lender or any
Issuing Bank to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrowers or any other
Person.

5.10. Lender Tax Information.

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

5.10.2. Documentation. If a Borrower is resident for tax purposes in the United
States, any Lender that is a “United States person” within the meaning of
section 7701(a)(30) of the Code shall deliver to Agent and Borrower Agent IRS
Form W-9 or such other documentation or information prescribed by Applicable Law
or reasonably requested by Agent or Borrower Agent to determine whether such
Lender is subject to backup withholding or information reporting requirements.
If any Foreign Lender is entitled to any exemption from or reduction of
withholding tax for payments with respect to the Obligations, it shall deliver
to Agent and Borrower Agent, on or prior to the date on which it becomes a
Lender hereunder (and from time to time thereafter upon request by Agent or
Borrower Agent, but only if such Foreign Lender is legally entitled to do so),
(a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to
which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and
all required supporting documentation; (d) in the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under section
881(c) of the Code, IRS Form W-8BEN and a certificate showing such Foreign
Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (ii) a “10 percent shareholder” of any Credit Party within the meaning of
section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation”
described in section 881(c)(3)(C) of the Code; or (e) any other form prescribed
by Applicable Law as a basis for claiming exemption from or a reduction in
withholding tax, together with such supplementary documentation necessary to
allow Agent and Borrowers to determine the withholding or deduction required to
be made.

5.10.3. Lender Obligations. Each Lender and Issuing Bank shall promptly notify
Borrowers and Agent of any change in circumstances that would change any claimed
Tax exemption or reduction. Each Lender and Issuing Bank shall indemnify, hold
harmless and reimburse (within 10 days after demand therefor) Borrowers and
Agent for any Taxes, losses, claims, liabilities, penalties, interest

 

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and expenses (including reasonable attorneys’ fees) incurred by or asserted
against a Borrower or Agent by any Governmental Authority due to such Lender’s
or Issuing Bank’s failure to deliver, or inaccuracy or deficiency in, any
documentation required to be delivered by it pursuant to this Section. Each
Lender and Issuing Bank authorizes Agent to set off any amounts due to Agent
under this Section against any amounts payable to such Lender or Issuing Bank
under any Loan Document.

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

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

5.11.2. Waivers.

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

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

 

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

5.11.3. Extent of Liability; Contribution.

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

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

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

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

 

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

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

SECTION 6. CONDITIONS PRECEDENT

6.1. Conditions Precedent to Initial Loans. In addition to the conditions set
forth in Section 6.2, there shall be no obligation or requirement to fund the
initial request for a Loan, initial issuance of any Letter of Credit, or
otherwise extend initial credit to any Credit Party hereunder, until the date
(“Closing Date”) that each of the following conditions has been satisfied or
waived:

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

(b) Agent shall have received, in proper form for filing or recording, all
filings or recordations necessary to perfect its Liens in the Collateral, as
well as UCC and Lien searches and other evidence satisfactory to Agent that such
Liens are the only Liens upon the Collateral, except Permitted Liens.

(c) Agent shall have received duly executed agreements establishing each
Government Receivables Deposit Account, Private Deposit Account, Concentration
Account and related lockbox, in form and substance, and with financial
institutions, satisfactory to Agent.

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

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

 

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(f) Agent shall have received a written opinion of Waller Lansden Dortch &
Davis, PLLC, as counsel to the Credit Parties, in form and substance reasonably
satisfactory to the Agent.

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

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

(i) Agent shall have completed its business, financial and legal due diligence
of Credit Parties, including a roll-forward of its previous field examination,
with results satisfactory to Agent. No event or condition shall have occurred
since December 31, 2013 that has had or could reasonably be expected to have a
Material Adverse Effect.

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

(k) Agent shall have received a Borrowing Base Certificate prepared as of
May 31, 2014. Upon giving effect to the initial funding of Loans and issuance of
Letters of Credit, and the payment by Borrowers of all fees and expenses
incurred in connection herewith as well as any payables stretched beyond their
customary payment practices, Availability shall be at least $50,000,000.

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

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

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

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

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

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

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

 

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

SECTION 7. COLLATERAL

7.1. Grant of Security Interest. As collateral security for the payment and
performance in full of all the Obligations, each Credit Party hereby (a) grants
to the Agent for its benefit and for the benefit of the Secured Parties a lien
on and security interest in and to, and (b) pledges, mortgages and hypothecates
to the Agent for its benefit and the benefit of the Secured Parties, in each
case, all of the right, title and interest of such Credit Party in, to and under
all of the following personal property and interests in property, wherever
located, and whether now existing or hereafter arising or acquired from time to
time (collectively, the “Collateral”):

 

  (i) all Accounts;

 

  (ii) all Inventory;

 

  (iii) all Deposit Accounts, all Securities Accounts, all cash and Cash
Equivalents and all Investment Property (other than Equity Interests in a Credit
Party, Subsidiary or Permitted Minority Joint Venture);

 

  (iv) all Chattel Paper, Instruments and Letter-of-Credit Rights arising from
the sale of or providing of Inventory or services;

 

  (v) all General Intangibles, Documents and Supporting Obligations evidencing,
governing, securing, arising from or related to any of the assets described in
clauses (i)-(iv);

 

  (vi) all books and records relating to any of the foregoing clauses
(i) through (v);

 

  (vii) all Commercial Tort Claims arising from or with respect to any of the
assets described in clause (i) - (vi); and

 

  (viii) to the extent not covered by clauses (i) through (vii) of this
sentence, all Proceeds and products of each of the foregoing and all accessions
to, substitutions and replacements for, and rents, profits and products of, each
of the foregoing, any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to such Credit Party from time to time with respect to any of
the foregoing.

Notwithstanding anything to the contrary contained in clauses (i) through
(viii) above, the security interest created by this Agreement shall not extend
to, and the term “Collateral” shall not include, any Restricted Collateral;
provided that, all Accounts arising from and all Proceeds, substitutions or
replacements of any Restricted Collateral shall constitute Collateral hereunder.

 

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7.2. Lien on Deposit Accounts; Cash Collateral.

7.2.1. Deposit Accounts. To further secure the prompt payment and performance of
all Obligations, each Credit Party hereby grants to Agent, for the benefit of
Secured Parties, a continuing security interest in and Lien upon all amounts
credited to any Deposit Account of such Credit Party, including any sums in any
blocked or lockbox accounts or in any accounts into which such sums are swept.
Each Credit Party hereby authorizes and directs each bank or other depository to
deliver to Agent, upon request made in accordance with this Agreement and
Applicable Law and any applicable Deposit Account Control Agreement, all
balances in any Deposit Account maintained by such Credit Party, without inquiry
into the authority or right of Agent to make such request.

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

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

7.3. Other Collateral; New Subsidiaries.

7.3.1. Commercial Tort Claims. Credit Parties shall promptly notify Agent in
writing if any Credit Party has filed any Commercial Tort Claim with respect to
the Collateral against any third party with a value in excess of $5,000,000,
shall promptly amend Schedule 9.1.16 to include such claim, and shall take such
actions as Agent deems appropriate to subject such claim to a duly perfected,
Lien in favor of Agent (for the benefit of Secured Parties) subject to Permitted
Liens.

7.3.2. Certain After-Acquired Collateral. Borrower Agent shall promptly notify
Agent in writing if, after the Closing Date, any Credit Party obtains any
interest in Collateral consisting of (a) Chattel Paper, Documents, Instruments
or Letter-of-Credit Rights in an amount in excess of $1,000,000 individually or
$5,000,000 in the aggregate or (b) Deposit Accounts or Securities Accounts
(other than Excluded Deposit Accounts) and, in each case, upon Agent’s request,
Borrower Agent shall promptly take such actions as Agent deems appropriate to
effect Agent’s duly perfected Lien upon such Collateral, including obtaining any
appropriate possession or control or using commercially reasonable efforts to
obtain any Lien Waiver. If any Collateral is in the possession of a third party,
at Agent’s request, each Credit Party shall use commercially reasonable efforts
to obtain an acknowledgment that such third party holds the Collateral for the
benefit of Agent.

 

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7.3.3. New Subsidiaries. Upon the formation or acquisition of any new direct or
indirect Domestic Subsidiary (other than an Immaterial Subsidiary) by any Credit
Party, then the Borrower Agent shall, at the Credit Parties’ expense, within 60
days after such formation or acquisition (or such later date as the Agent may
specify in its sole discretion), (a)(i) cause it to become a Borrower under this
agreement if it is a wholly-owned Domestic Subsidiary of the Company, or (ii) if
none of the assets of such subsidiary are to be included in the Borrowing Base
or the Agent otherwise consents (or requests) in writing, cause it to become a
Guarantor and guaranty the Obligations in a manner reasonably satisfactory to
Agent, or (iii) if it is a Permitted Joint Venture Subsidiary, cause such
Subsidiary to grant Liens on Collateral owned or held by such Subsidiary
pursuant to the Joint Venture Subsidiary Security Documents, and (b) cause such
Subsidiary to duly execute and deliver to Agent such joinder agreements,
amendments or supplements to the Loan Documents as are reasonably requested by
the Agent, (if required under Section 8.5) control agreements and a legal
opinion in form and substance reasonably satisfactory to Agent, to cause or
authorize the filing of appropriate UCC financing statements, and to take any
other action as may be necessary to vest in Agent valid and subsisting Liens on
the properties purported to be subject thereto; provided, that a Permitted Joint
Venture Subsidiary shall execute and deliver such additional agreements,
instruments and documents (and satisfy any additional requirements) as set forth
in the definition thereof.

7.3.4. New Deposit Accounts and Securities Accounts. Concurrently with or prior
to the opening of a Deposit Account, Securities Account or commodity account by
any Credit Party, other than any Excluded Deposit Account, such Credit Party
shall deliver to Agent a Deposit Account Control Agreement (which with respect
to a Government Receivables Deposit Account will be a Government Receivables
Deposit Account Agreement as defined in Section 8.5.2(b) hereof) covering such
Deposit Account (as required hereunder with respect to the proceeds of Accounts
to be deposited in such Deposit Account) and/or a control agreement covering
such Securities Account or commodity account, in form and substance reasonably
satisfactory to Agent, duly executed by such Credit Party, Agent and the
applicable bank, securities intermediary or commodity intermediary, as the case
may be.

7.4. No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject Agent or any Lender to, or in any
way modify, any obligation or liability of Credit Parties relating to any
Collateral. In no event shall the grant of any Lien under any Loan Document
secure an Excluded Swap Obligation of the granting Credit Party.

7.5. Further Assurances. Promptly upon request, Credit Parties shall deliver
such instruments, assignments, or other documents or agreements, and shall take
such actions, as Agent deems appropriate under Applicable Law to evidence or
perfect its Lien on any Collateral, or otherwise to give effect to the intent of
this Agreement. Each Credit Party authorizes Agent to file any financing
statement that indicates the Collateral in a manner consistent with this Section
and ratifies any such filings made by Agent to effect or perfect its Lien on any
Collateral.

SECTION 8. COLLATERAL ADMINISTRATION

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

 

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8.2. Administration of Accounts.

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

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

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

8.2.4. [Reserved].

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

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

 

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8.5. Cash Management System.

8.5.1. Schedule of Deposit Accounts. Schedule 8.5.1 (as may be updated on a
Fiscal Quarter basis) sets forth all Deposit Accounts maintained by the Credit
Parties. Except as set forth below pursuant to the Cash Management System and
with respect to the Recourse Account, each Credit Party shall be the sole
account holder of each Deposit Account and shall not allow any other Person to
have control over a Deposit Account or any Property deposited therein.

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

(a) Except in connection with Excluded Deposit Accounts or as set forth on
Schedule 8.5.2, on or prior to the Closing Date (or such later date not to
exceed 180 days after the Closing Date as the Agent may, in its sole reasonable
discretion, consent to in writing), each Credit Party will (i) take all actions
necessary to provide that all Account Debtors in respect of Government Accounts
forward payment directly to an account of such Credit Party designated as a
Government Receivables Deposit Account on Schedule 8.5.2 (such schedule to be
delivered to the Agent on or before the Closing Date (or such later date not to
exceed 180 days after the Closing Date as the Agent may, in its sole reasonable
discretion, consent to in writing)) (each a “Government Receivables Deposit
Account”) and (ii) take all actions necessary to provide that all Account
Debtors in respect of all Private Accounts forward payment directly to an
account of such Credit Party designated as a Private Deposit Account on Schedule
8.5.2. On or prior to the Closing Date (or such later date as the Agent may, in
its sole reasonable discretion, consent to in writing), the Borrower Agent shall
have established a concentration account in its name (the “Concentration
Account”) with a bank reasonably acceptable to the Agent.

(b) Except in connection with Excluded Deposit Accounts or as set forth on
Schedule 8.5.2, on or prior to the Closing Date (or such later date not to
exceed 180 days after the Closing Date as the Agent may, in its sole discretion,
consent to in writing), (i) each Credit Party that owns or originates Government
Accounts shall deliver to the Agent for each Government Receivables Deposit
Account established or maintained by such Credit Party, a tri-party deposit
account agreement between the Agent, the bank at which such Government
Receivables Deposit Account (each a “Government Receivables Bank”) is maintained
and such Credit Party, in form and substance reasonably satisfactory to the
Agent (each a “Government Receivables Deposit Account Agreement”), (ii) each
Credit Party that owns or originates Private Accounts shall deliver to the Agent
for each Private Deposit Account (other than Excluded Deposit Accounts)
established or maintained by such Credit Party, a tri-party blocked account
control agreement or lockbox account agreement between the Agent, the bank at
which each such Private Deposit Account is maintained and the relevant Credit
Parties, in form and substance reasonably satisfactory to the Agent (each a
“Private Deposit Account Agreement”) and (iii) the Borrower Agent shall deliver
to the Agent for the Concentration Account, a tri-party blocked account control
agreement or lockbox account agreement between the Agent, the bank at which the
Concentration Account is maintained and the Borrower Agent, in form a substance
reasonably satisfactory to the Agent (the “Concentration Account Agreement” and,
together with any Government Receivables Deposit Account Agreement and any
Private Deposit Account Agreement, each a “Blocked Account Agreement”). Each
such Government Receivables Deposit Account Agreement and Private Deposit
Account Agreement shall provide, among other things, that the bank at which any
such Blocked Account is maintained, agrees to forward on a daily basis all
available amounts in each such account to the Concentration Account (provided,
that Government Receivables Deposit Account Agreements shall also provide that
such direction to make daily transfers to the Concentration Account may be
revoked by the applicable Credit Party. Any such revocation shall constitute an
immediate Event of Default hereunder.). In addition, the Concentration Account
Agreement shall provide, among other things, that during the continuation of a
Dominion Trigger Period, the bank at which such Concentration Account is
maintained shall, upon receipt of notice by the Agent (given in its discretion
or at the direction of Required Lenders), make daily sweeps from the
Concentration Account into the Agent’s account for application to the
Obligations.

 

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

(d) So long as no Default or Event of Default has occurred and is continuing,
the Credit Parties may amend Schedules 8.5.1 and 8.5.2 to add or replace a
depository bank or any Blocked Account; provided that (i) the Agent shall have
consented in writing in advance to the opening of such new or replacement
Blocked Account with the relevant bank (which consent shall not be unreasonably
withheld or delayed) and (ii) prior to the time of the opening of such account,
the applicable Credit Party and such bank shall have executed and delivered to
the Agent a Blocked Account Agreement in form and substance reasonably
satisfactory to the Agent in its sole discretion. Each Credit Party shall cease
using any Blocked Account to hold proceeds of Collateral promptly and in any
event within 30 days (or such later date as the Agent may, in its sole
reasonable discretion, consent to in writing) following notice from the Agent to
the Borrower Agent that (A) the creditworthiness of the bank holding such
Blocked Account is no longer acceptable in the Agent’s Credit Judgment, or
(B) the operating performance, funds transfer or availability procedures or
performance with respect to accounts or lockboxes of the bank holding such
Blocked Account or Agent’s liability under any Blocked Account Agreement with
such bank is no longer acceptable in the Agent’s Credit Judgment.

(e) The Blocked Accounts shall be Collateral accounts, with all cash, checks and
other similar items of payment in such accounts securing payment of the Loans
and all other Obligations, and in which the applicable Credit Party shall have
granted a Lien to the Agent, for the benefit of the Secured Parties, pursuant to
this Agreement. Each Credit Party shall use commercially reasonable efforts to
ensure that all cash, checks and other similar items of payment in the Blocked
Accounts are solely in respect of Collateral.

(f) All collections of Accounts and all proceeds of the sale or other
disposition of any Collateral, other than collections and proceeds that are held
in Excluded Deposit Accounts in accordance with the terms hereof, shall be
deposited directly into a Private Deposit Account or the Concentration Account
(or if collections or proceeds of Government Accounts, into a Government
Receivables Deposit Account). In the event that, notwithstanding the provisions
of this Section 8.5.2(f), any Credit Party receives or otherwise has dominion
and control of any proceeds or collections of Accounts or proceeds of Collateral
outside of the Blocked Accounts, such proceeds and collections shall be held in
trust by such Credit Party for the Agent and shall, not later than five
(5) Business Days after receipt thereof, be deposited into a Private Deposit
Account or the Concentration Account (or if collections or proceeds of
Government Accounts, into a Government Receivables Deposit Account) or dealt
with in such other fashion as such Credit Party may be instructed by the Agent.

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

 

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

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

8.5.5. Credit Card Charges.

(a) Annexed hereto as Schedule 8.5.5 (such Schedule to be delivered to the Agent
on or before the 60th calendar day after the Closing Date (or such later date as
the Agent may, in its sole reasonable discretion, consent to in writing)) is a
list as of the date such Schedule is delivered, of all arrangements to which any
Credit Party is a party with respect to the payment to such Credit Party of the
proceeds of all credit card charges for services by such Credit Party.

(b) Each Credit Party shall ensure that its credit card clearinghouses and
processors (including those listed on Schedule 8.5.5) are at all times
instructed in writing to deposit all proceeds of credit card charges due to such
Credit Party directly to a Private Deposit Account or the Concentration Account.

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

8.6. General Provisions.

8.6.1. Location of Collateral. All tangible items of Collateral, other than
Inventory in transit, shall at all times be kept by Credit Parties at the
business locations set forth in Schedule 8.6.1, except that Credit Parties may
(a) make sales or other dispositions of Collateral in accordance with
Section 10.2.6; (b) move Collateral among Credit Parties in the Ordinary Course
of Business; and (c) move Collateral to another owned or leased location in the
United States, upon two (2) days prior written notice to Agent.

8.6.2. Insurance of Collateral; Condemnation Proceeds. Each Credit Party shall
maintain insurance or self-insurance with respect to its Property, covering
casualty, hazard, theft, malicious mischief, flood, and other risks, in amounts,
with endorsements and with insurers (with a Best Rating of at least A7, unless
otherwise approved by Agent) satisfactory to Agent. All proceeds under each
policy covering Inventory shall be payable to Agent. From time to time upon
request, Credit Parties shall deliver to Agent the originals or certified copies
of its insurance policies. Unless Agent shall agree otherwise, each policy
covering Inventory shall include satisfactory endorsements (a) showing Agent as
lenders’ loss payee; (b) requiring 30 days or such shorter period as Agent may
allow prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever; and (c) specifying that the interest of Agent shall
not be impaired or invalidated by any act or neglect of any Credit Party or the

 

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owner of the Property, nor by the occupation of the premises for purposes more
hazardous than are permitted by the policy. If any Credit Party fails to provide
and pay for any insurance required hereunder, Agent may, at its option, but
shall not be required to, procure the insurance and charge Credit Parties
therefor. Each Credit Party agrees to deliver to Agent, promptly as rendered,
copies of all reports made to insurance companies relating to Inventory. While
no Event of Default exists, Credit Parties may settle, adjust or compromise any
insurance or condemnation claim, and retain the proceeds thereof unless a
Dominion Trigger Period is then in effect. If an Event of Default exists, only
Agent shall be authorized to settle, adjust and compromise such claims relating
to Inventory and proceeds thereof shall be applied to the Obligations if a
Dominion Trigger Period is then in effect.

8.6.3. Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Borrowers. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for reasonable care in its custody while Collateral is in
Agent’s actual possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at Borrowers’ sole risk.

8.6.4. Defense of Title to Collateral. Each Credit Party shall at all times use
commercially reasonable efforts to defend its title to Collateral and Agent’s
Liens therein against all Persons, claims and demands whatsoever, except
Permitted Liens.

8.7. Power of Attorney. Each Credit Party hereby irrevocably constitutes and
appoints Agent (and all Persons designated by Agent) as such Credit Party’s true
and lawful attorney (and agent-in-fact) for the purposes provided in this
Section. Agent, or Agent’s designee, may, without notice and in either its or a
Credit Party’s name, but at the cost and expense of Credit Parties:

(a) Endorse a Credit Party’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b) During an Event of Default, (i) notify any Account Debtors (other than
Account Debtors in respect of Government Accounts unless pursuant to court
order) of the assignment of their Accounts, demand and enforce payment of
Accounts by legal proceedings or otherwise, and generally exercise any rights
and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise,
discharge or release any Accounts or other Collateral, or any legal proceedings
brought to collect Accounts or Collateral; (iii) sell or assign any Accounts and
other Collateral upon such terms, for such amounts and at such times as Agent
deems advisable; (iv) collect, liquidate and receive balances in Deposit
Accounts or Securities Accounts, and take control, in any manner, of proceeds of
Collateral; (v) prepare, file and sign a Credit Party’s name to a proof of claim
or other document in a bankruptcy of an Account Debtor, or to any notice,
assignment or satisfaction of Lien or similar document; (vi) receive, open and
dispose of mail addressed to a Credit Party, and notify postal authorities to
deliver any such mail to an address designated by Agent; (vii) endorse any
Chattel Paper, Document, Instrument, bill of lading, or other document or
agreement relating to any Accounts, Inventory or other Collateral; (viii) use a
Credit Party’s stationery and sign its name to verifications of Accounts and
notices to Account Debtors; (ix) use information contained in any data
processing, electronic or information systems relating to Collateral; (x) make
and adjust claims under insurance policies; (xi) take any action as may be
necessary or appropriate to obtain payment under any letter of credit, banker’s
acceptance or other instrument relating to Collateral for which a Credit Party
is a beneficiary; and (xii) take all other actions as Agent deems appropriate to
fulfill any Credit Party’s obligations under the Loan Documents.

 

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SECTION 9. REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

9.1.5. Title to Properties; Priority of Liens. Except as could not reasonably be
expected to have a Material Adverse Effect, each Credit Party and Subsidiary has
good and marketable title to (or valid leasehold interests in) all of its Real
Estate, and good title to all of its personal Property, including all Property
reflected in any financial statements delivered to Agent or Lenders, in each
case free of Liens except Permitted Liens. Each Credit Party and Subsidiary has
paid and discharged all lawful claims that, if unpaid, could become a Lien on
its Properties, other than Permitted Liens. All Liens of Agent in the Collateral
are duly perfected, first priority Liens, subject only to Permitted Liens.

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

 

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

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

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

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

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

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

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

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

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

 

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

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

9.1.11. Intellectual Property. Each Credit Party and Subsidiary owns or has the
lawful right to use all Intellectual Property necessary for the conduct of its
business, without conflict with any rights of others. There is no pending or, to
any Credit Party’s knowledge, threatened Intellectual Property Claim with
respect to any Credit Party, any Subsidiary or any of their Property (including
any Intellectual Property). Except as disclosed on Schedule 9.1.11, or as
disclosed in writing to the Agent from time to time by the Borrower Agent, no
Credit Party or Subsidiary pays or owes any material Royalty or other material
compensation to any Person with respect to any Intellectual Property that
relates to the Collateral. All material Intellectual Property owned, used or
licensed by, or otherwise subject to any interests of, any Credit Party as of
the Closing Date is shown on Schedule 9.1.11.

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

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

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

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

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

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

9.1.18. ERISA. Except as disclosed on Schedule 9.1.18:

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

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

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

(d) With respect to any Foreign Plan, (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance, or
the book reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations with respect to all current and former participants in such

 

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Foreign Plan according to the actuarial assumptions and valuations most recently
used to account for such obligations in accordance with applicable generally
accepted accounting principles; and (iii) it has been registered as required and
has been maintained in good standing with applicable regulatory authorities.

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

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

9.1.20. Labor Relations. At the Closing Date, except as described on Schedule
9.1.20, no Credit Party or Subsidiary is party to or bound by any collective
bargaining agreement or other labor agreement. To any Credit Party’s knowledge,
there are no material grievances, disputes or controversies with any union or
other organization of any Credit Party’s or Subsidiary’s employees, or any
asserted or threatened strikes, work stoppages or demands for collective
bargaining except as could not reasonably be expected to have a Material Adverse
Effect.

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

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

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

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

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

 

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9.3. Healthcare Related Representations and Warranties.

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

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

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

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

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

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

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

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

 

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

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

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

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

 

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

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

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

10.1.1. Inspections.

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

(b) Reimburse Agent for all reasonable and documented out-of-pocket charges,
costs and expenses of Agent in connection with Field Exams, provided that the
Credit Parties shall only be obligated to reimburse Agent for such charges,
costs and expenses for (i) one field examination in any calendar year during
which no Reporting Trigger Period has occurred and (A) no Loans have been
outstanding for more than 30 days during such calendar year, (B) on any day
during such calendar year, no Loans have been outstanding in an amount greater
than 15% of the Borrowing Base on such day; and (C) on any day during such
calendar year, no Loans and Letters of Credit have been outstanding in an
aggregate amount greater than 25% of the Borrowing Base on such day; (ii) two
field exams in any calendar year in which no Reporting Trigger Period has
occurred during such year but (A) Loans have

 

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been outstanding on more than 30 days during such calendar year, (B) on any day
during such calendar year, Loans have been outstanding in an amount greater than
15% of the Borrowing Base on such day; or (C) on any day during such calendar
year, Loans and Letters of Credit have been outstanding in an aggregate amount
greater than 25% of the Borrowing Base on such day; and (iii) three field exams
in any calendar year if a Reporting Trigger Period has occurred during such
year; provided, however, that (y) if a Field Exam is initiated during a Default
or Event of Default, all charges, costs and expenses therefor shall be
reimbursed by Credit Parties without regard to such limits and such Field Exam
shall not count towards such limits and (z) the Agent may undertake one
additional Field Exam during each calendar year at the Lenders’ expense.

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

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

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

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

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

 

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

(d) concurrently with delivery of financial statements under clause (a) above,
copies of all management letters and other material reports submitted to Credit
Parties by their accountants in connection with such financial statements;

(e) not later than 45 days after the beginning of each Fiscal Year, projections
of Company’s consolidated balance sheets, results of operations, cash flow and
Availability for such Fiscal Year, quarter by quarter and for the next three
Fiscal Years, year by year;

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

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

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

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

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

 

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10.1.3. Notices. Notify Agent and Lenders in writing, promptly after a Credit
Party’s obtaining knowledge thereof, of any of the following that affects a
Credit Party: (a) the assertion of any material claim by a Third Party Payor or
the threat or commencement of any proceeding or investigation, whether or not
covered by insurance, if an adverse determination could reasonably be expected
have a Material Adverse Effect, but including any litigation or other
proceedings being threatened or instituted (i) against any Credit Party, any
Subsidiary or any Contract Provider that could reasonably be expected to result
in the suspension, revocation or termination of a Medicaid Provider Agreement,
Medicaid Certification, Medicare Provider Agreement or Medicare Certification,
or (ii) against any Credit Party, any Subsidiary or any Contract Provider, that
could reasonably be expected to result in the suspension or exclusion of such
Credit Party from participation in a Federal health care program; (b) any
pending or threatened labor dispute, strike or walkout, or the expiration of any
labor contract in each case to the extent it could reasonably be expected have a
Material Adverse Effect; (c) any default under or termination of a Material
Contract; (d) the existence of any Default or Event of Default; (e) any judgment
in an amount exceeding $5,000,000; (f) the assertion of any Intellectual
Property Claim, if an adverse resolution of such claim could have a Material
Adverse Effect; (g) any violation or asserted violation of any Applicable Law
(including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse
resolution in each case to the extent it could have a Material Adverse Effect;
(h) any Environmental Release by a Credit Party or on any Property owned, leased
or occupied by a Credit Party; or receipt of any Environmental Notice; (i) the
occurrence of any ERISA Event; (j) the discharge of or any withdrawal or
resignation by Credit Parties’ independent accountants; or (k) any opening of a
new hospital, medical or healthcare related facility, office or place of
business where any material amount of Collateral will be held, at least 30 days
prior or such shorter period as Agent may allow to such opening.

10.1.4. [Reserved].

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

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

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

 

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

10.1.9. Future Subsidiaries. Promptly notify Agent upon any Person becoming a
Subsidiary (other than an Immaterial Subsidiary), comply with the requirements
of Section 7.3.3 hereof and execute and deliver all documents and agreements
reasonably requested by the Agent as are necessary to evidence and perfect the
Agent’s Lien as required by this Agreement.

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

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

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

(a) the Obligations;

(b) Debt evidenced by the Senior Notes;

(c) Permitted Purchase Money Debt;

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

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

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

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

 

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

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

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

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

(l) Permitted Contingent Obligations;

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

(n) Refinancing Debt;

(o) Debt of the Credit Parties in an aggregate outstanding amount of up to
$25,000,000 consisting of Debt (i) incurred in the Ordinary Course of Business
in connection with the financing of insurance premiums; (ii) incurred for the
construction or acquisition or improvement of, or to finance or to refinance,
any Real Estate owned by any Credit Party and (iii) owing to any landlord in
connection with the financing with such landlord of leasehold improvements;

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

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

(r) guarantees by any Credit Party of (i) any Debt of any other Credit Party
permitted hereunder and (ii) so long as no Default or Event of Default has
occurred and is continuing or would arise therefrom, any Debt of Subsidiaries
that are not Credit Parties to the extent constituting Permitted Non-Credit
Party Transactions;

 

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

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

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

(v) Debt under the Master Lease Agreement and under the Promissory Note (as
defined in the Master Lease Agreement).

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

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

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

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

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

(e) Liens incurred or deposits made in the Ordinary Course of Business in
connection with workers compensation, unemployment or other insurance
obligations, or to secure the performance of tenders, bids, leases, contracts
(except those relating to Borrowed Money), statutory obligations and other
similar obligations, or arising as a result of progress payments under
government contracts;

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

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

(h) Liens arising by virtue of a judgment or judicial order against any Credit
Party or Subsidiary (including with respect to any appeal bonds), or any
Property of a Credit Party or Subsidiary, as long as such Liens are (i) in
existence for less than 20 consecutive days or being Properly Contested, and
(ii) at all times junior to Agent’s Liens;

(i) easements, rights-of-way, restrictions (including municipal and zoning
ordinances, building and other land use laws and regulations imposed by any
governmental authority which are not violated in any material respect by
existing improvements, structures, facilities or buildings

 

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or the present use of any real property), covenants or other agreements of
record, conditions, licenses, encroachments, protrusions and other similar
charges or encumbrances on Real Estate and other minor defects or irregularity
in title, that do not secure any monetary obligation and do not materially
interfere with the Ordinary Course of Business;

(j) normal and customary Liens and rights of setoff upon deposits in favor of
depository institutions, and Liens of a collecting bank on Payment Items in the
course of collection;

(k) existing Liens shown on Schedule 10.2.2;

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

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

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

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

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

(q) Liens on property of a Person existing at the time such Person becomes a
Subsidiary or at the time is merged into or consolidated with any Borrower or
any Subsidiary Guarantor in a Permitted Acquisition; provided such Liens were
not created in contemplation of such merger, consolidation or investment and do
not extend to (i) Accounts or Inventory or (ii) any other assets other than
those of the Person merged into or consolidated with such Borrower or such
Subsidiary Guarantor or acquired by such Borrower or such Subsidiary Guarantor;

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

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

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

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

 

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(v) Liens created by the Master Lease Agreement as in effect on June 29, 2012.

10.2.3. [Reserved].

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

10.2.5. Restricted Investments. Make any Restricted Investment.

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

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

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

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

(b) through the incurrence of Refinancing Debt;

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

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

 

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

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

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

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

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

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

 

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

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

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

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

10.2.19. Amendments to Senior Note Indenture. Amend, supplement or otherwise
modify the Senior Note Indenture, if such modification (a) increases the
principal balance of the Debt thereunder, or increases any required payment of
principal or interest; (b) accelerates the date on which any installment of
principal or any interest is due, or adds any additional redemption, put or
prepayment provisions; (c) shortens the final maturity date or otherwise
accelerates amortization; (d) increases the interest rate; (e) increases or adds
any fees or charges; (f) modifies any covenant in a manner or adds any
representation, covenant or default that is more onerous or restrictive in any
material respect for any Credit Party or Subsidiary, or that is otherwise
materially adverse to any Credit Party, any Subsidiary or Lenders; or
(g) results in the Obligations not constituting a “Credit Facility” under the
Senior Note Indenture.

10.2.20. Amendments to Intercompany Debt Due from Joint Venture Subsidiaries and
the Company. Amend, waive, supplement or otherwise modify the agreements
relating to the Company Subordinated Debt or the Liens and security interests
securing such Debt, or waive, release, forgive or convert to equity such Debt,
or terminate, release, let expire, waive or modify the liens or collateral
securing such Debt, except as permitted under the Company Subordination
Agreement.

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

 

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

SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

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

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

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

(c) A Credit Party breaches or fails to perform any covenant contained in
(i) Section 7.3, 7.5, 8.5.2, 8.5.4, 8.5.5, 8.6.2, 10.2 or 10.3 or
(ii) Section 8.1, 10.1.1, 10.1.2 and such failure under this clause (ii) shall
continue unremedied for more than three (3) Business Days;

(d) A Credit Party breaches or fails to perform any other covenant contained in
any Loan Documents, and such breach or failure is not cured within 30 days after
a Senior Officer of Borrower Agent has knowledge thereof or receives notice
thereof from Agent, whichever is sooner; provided, however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is a
willful breach by a Credit Party;

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

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

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

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

 

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

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

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

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

(m) A Change of Control occurs.

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

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

 

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

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

(d) exercise any other rights or remedies afforded under any agreement, by law,
at equity or otherwise, including the rights and remedies of a secured party
under the UCC. Such rights and remedies include the rights to (i) take
possession of any Collateral; (ii) require Credit Parties to assemble
Collateral, at Credit Parties’ expense, and make it available to Agent at a
place designated by Agent; (iii) enter any premises where Collateral is located
and store Collateral on such premises until sold (and if the premises are owned
or leased by a Credit Party, Credit Parties agree not to charge for such
storage); and (iv) sell or otherwise dispose of any Collateral in its then
condition, or after any further manufacturing or processing thereof, at public
or private sale, with such notice as may be required by Applicable Law, in lots
or in bulk, at such locations, all as Agent, in its discretion, deems advisable.
Each Credit Party agrees that 10 days notice of any proposed sale or other
disposition of Collateral by Agent shall be reasonable. Agent shall have the
right to conduct such sales on any Credit Party’s premises, without charge, and
such sales may be adjourned from time to time in accordance with Applicable Law.
Agent shall have the right to sell, lease or otherwise dispose of any Collateral
for cash, credit or any combination thereof, and Agent may purchase any
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of the purchase price, may set off the amount of such price
against the Obligations; and

(e) obtain a court order from any court of competent jurisdiction ordering the
assignment of Government Accounts directly to Agent, and in accordance with 42
C.F.R. §424.73(b)(2) and 42 C.F.R. §424.90, file a certified copy of the court
order and of the executed assignment (if necessary) with the contractor
responsible for processing the claim. Such assignment shall apply to all
Government Accounts payable to any Credit Party at any time. In the event Agent
chooses to exercise the remedy described in this Section 11.2(e), each Credit
Party hereby expressly authorizes Agent to obtain a court order from any court
of competent jurisdiction ordering the assignment of Government Accounts
directly to Agent, and further expressly waives any right to contest or
challenge the validity of such court order for any reason whatsoever. Each
Credit Party agrees to execute any documents and provide any information
necessary for Agent to obtain such court order and assignment of Government
Accounts (if necessary).

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

 

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Lender shall provide promptly to Agent a statement describing in reasonable
detail the Obligations owing to such Defaulting Lender as to which it exercised
such right of setoff. The rights of Agent, Issuing Bank, each Lender and each
such Affiliate under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Person may have.

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

11.4. Remedies Cumulative; No Waiver.

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

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

SECTION 12. AGENT

12.1. Appointment, Authority and Duties of Agent.

12.1.1. Appointment and Authority. Each Lender appoints and designates Bank of
America as Agent hereunder. Agent may, and each Lender authorizes Agent to,
enter into all Loan Documents to which Agent is intended to be a party and
accept all Security Documents, for Agent’s benefit and the benefit of Lenders.
Each Lender agrees that any action taken by Agent or Required Lenders in
accordance with the provisions of the Loan Documents, and the exercise by Agent
or Required Lenders of any rights or remedies set forth therein, together with
all other powers reasonably incidental thereto, shall be authorized by and
binding upon all Lenders. Without limiting the generality of the foregoing,
Agent shall have the sole and exclusive authority to (a) act as the disbursing
and collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent
each Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document from any Credit Party or other Person;
(c) act as collateral agent for Secured Parties for purposes of perfecting and
administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take
any Enforcement Action or otherwise exercise any rights or remedies with respect
to any Collateral under the Loan Documents, Applicable Law or otherwise. The
duties of Agent shall be ministerial and administrative in nature, and Agent
shall not have a fiduciary relationship with any Lender, Secured Party,
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transaction relating thereto. Agent alone shall be authorized to determine
whether any Accounts constitute Eligible Accounts or whether to impose or
release any reserve, and to exercise its Credit Judgment in connection
therewith, which determinations and judgments, if exercised in good faith, shall
exonerate Agent from liability to any Lender or other Person for any error in
judgment.

12.1.2. Duties. Agent shall not have any duties except those expressly set forth
in the Loan Documents. The conferral upon Agent of any right shall not imply a
duty on Agent’s part to exercise such right, unless instructed to do so by
Required Lenders in accordance with this Agreement.

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

12.1.4. Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joinder
of any other party, unless required by Applicable Law. Agent may request
instructions from Required Lenders with respect to any act (including the
failure to act) in connection with any Loan Documents, and may seek assurances
to its satisfaction from Lenders of their indemnification obligations under
Section 12.6 against all Claims that could be incurred by Agent in connection
with any act. Agent shall be entitled to refrain from any act until it has
received such instructions or assurances, and Agent shall not incur liability to
any Person by reason of so refraining. Instructions of Required Lenders shall be
binding upon all Lenders, and no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
in accordance with the instructions of Required Lenders. Notwithstanding the
foregoing, instructions by and consent of all Lenders shall be required in the
circumstances described in Section 14.1.1, and in no event shall Required
Lenders, without the prior written consent of each Lender, direct Agent to
accelerate and demand payment of Loans held by one Lender without accelerating
and demanding payment of all other Loans, nor to terminate the Commitments of
one Lender without terminating the Commitments of all Lenders. In no event shall
Agent be required to take any action that, in its opinion, is contrary to
Applicable Law or any Loan Documents or could subject any Agent Indemnitee to
personal liability.

12.2. Agreements Regarding Collateral and Field Examination Reports.

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

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

 

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12.2.3. Reports. Agent shall promptly forward to each Lender, when complete,
copies of any field audit, examination or appraisal report prepared by or for
Agent with respect to any Credit Party or Collateral (“Report”). Each Lender
agrees (a) that neither Bank of America nor Agent makes any representation or
warranty as to the accuracy or completeness of any Report, and shall not be
liable for any information contained in or omitted from any Report; (b) that the
Reports are not intended to be comprehensive audits or examinations, and that
Agent or any other Person performing any audit or examination will inspect only
specific information regarding Obligations or the Collateral and will rely
significantly upon Credit Parties’ books and records as well as upon
representations of Credit Parties’ officers and employees; and (c) to keep all
Reports confidential and strictly for such Lender’s internal use, and not to
distribute any Report (or the contents thereof) to any Person (except to such
Lender’s Participants, attorneys and accountants) or use any Report in any
manner other than administration of the Loans and other Obligations. Each Lender
agrees to indemnify and hold harmless Agent and any other Person preparing a
Report from any action such Lender may take as a result of or any conclusion it
may draw from any Report, as well as from any Claims arising as a direct or
indirect result of Agent furnishing a Report to such Lender.

12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person, and upon the advice and statements of Agent Professionals.

12.4. Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default unless it has received written notice from a Lender
or Borrower Agent specifying the occurrence and nature thereof. If any Lender
acquires knowledge of a Default or Event of Default, it shall promptly notify
Agent and the other Lenders thereof in writing. Each Lender agrees that, except
as otherwise provided in any Loan Documents or with the written consent of Agent
and Required Lenders, it will not take any Enforcement Action, accelerate
Obligations under any Loan Documents, or exercise any right that it might
otherwise have under Applicable Law to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral. Notwithstanding the
foregoing, however, a Lender may take action to preserve or enforce its rights
against a Credit Party where a deadline or limitation period is applicable that
would, absent such action, bar enforcement of Obligations held by such Lender,
including the filing of proofs of claim in an Insolvency Proceeding.

12.5. Ratable Sharing. If any Lender shall obtain any payment or reduction of
any Obligation, whether through set-off or otherwise, in excess of its share of
such Obligation, determined on a Pro Rata basis or in accordance with
Section 5.6.1, as applicable, such Lender shall forthwith purchase from Agent,
Issuing Bank and the other Lenders such participations in the affected
Obligation as are necessary to cause the purchasing Lender to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.6.1, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. No Lender shall
set off against any Blocked Account without the prior consent of Agent. The Pro
Rata sharing provisions of this Section shall not be construed to apply to
(a) any payment made by or on behalf of Borrowers pursuant to and in accordance
with the express terms of this Agreement (including the application of funds
arising from the existence of a Defaulting Lender), (b) the application of Cash
Collateral provided for in Section 2.3.3, (c) any payment obtained by a Lender
as consideration for the assignment of or sale of a participation in any of its
Revolver Loans or subparticipations in LC Obligations or Swingline Loans to any
assignee or participant or (d) any payment made in respect of, and to any Lender
participating in, any additional loan facility arising under any amendment of
this Agreement.

 

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

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

12.8. Successor Agent and Co-Agents.

12.8.1. Resignation; Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, Agent may resign at any time by giving
at least 30 days written notice thereof to Lenders and Borrower Agent. Upon
receipt of such notice, Required Lenders shall have the right to appoint a
successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or
(b) a commercial bank that is organized under the laws of the United States or
any state or district thereof, has a combined capital surplus of at least
$200,000,000 and (provided no Default or Event of Default exists) is reasonably
acceptable to Borrowers. If no successor agent is appointed prior to the
effective date of the resignation of Agent, then Agent may appoint a successor
agent from among Lenders. Upon acceptance by a successor Agent of an appointment
to serve as Agent hereunder, such successor Agent shall thereupon succeed to and
become vested with all the powers and duties of the retiring Agent without
further act, and the retiring Agent shall be discharged from its duties and
obligations hereunder but shall continue to have the benefits of the
indemnification set forth in Sections 12.6 and 14.2. Notwithstanding any Agent’s
resignation, the provisions of this Section 12 shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while
Agent. Any successor to Bank of America by merger or acquisition of stock or
this loan shall continue to be Agent hereunder without further act on the part
of the parties hereto, unless such successor resigns as provided above.

 

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12.8.2. Separate Collateral Agent. It is the intent of the parties that there
shall be no violation of any Applicable Law denying or restricting the right of
financial institutions to transact business in any jurisdiction. If Agent
believes that it may be limited in the exercise of any rights or remedies under
the Loan Documents due to any Applicable Law, Agent may appoint an additional
Person who is not so limited, as a separate collateral agent or co-collateral
agent. If Agent so appoints a collateral agent or co-collateral agent, each
right and remedy intended to be available to Agent under the Loan Documents
shall also be vested in such separate agent. Every covenant and obligation
necessary to the exercise thereof by such agent shall run to and be enforceable
by it as well as Agent. Lenders shall execute and deliver such documents as
Agent deems appropriate to vest any rights or remedies in such agent. If any
collateral agent or co-collateral agent shall die or dissolve, become incapable
of acting, resign or be removed, then all the rights and remedies of such agent,
to the extent permitted by Applicable Law, shall vest in and be exercised by
Agent until appointment of a new agent.

12.9. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Credit Party and its own
decision to enter into this Agreement and to fund Loans and participate in LC
Obligations hereunder. Each Lender has made such inquiries concerning the Loan
Documents, the Collateral and each Credit Party as such Lender feels necessary.
Each Lender further acknowledges and agrees that the other Lenders and Agent
have made no representations or warranties concerning any Credit Party, any
Collateral or the legality, validity, sufficiency or enforceability of any Loan
Documents or Obligations. Each Lender will, independently and without reliance
upon the other Lenders or Agent, and based upon such financial statements,
documents and information as it deems appropriate at the time, continue to make
and rely upon its own credit decisions in making Loans and participating in LC
Obligations, and in taking or refraining from any action under any Loan
Documents. Except for notices, reports and other information expressly requested
by a Lender, Agent shall have no duty or responsibility to provide any Lender
with any notices, reports or certificates furnished to Agent by any Credit Party
or any credit or other information concerning the affairs, financial condition,
business or Properties of any Credit Party (or any of its Affiliates) which may
come into possession of Agent or any of Agent’s Affiliates.

12.10. Replacement of Certain Lenders. If a Lender (other than the Agent) (a) is
a Defaulting Lender, (b) requests reimbursement pursuant to Section 3.5, 3.7 or
5.9, or (c) fails to give its consent to any amendment, waiver or action for
which consent of all Lenders was required and Required Lenders consented, then,
in addition to any other rights and remedies that any Person may have, Borrower
or Agent may, and upon request of the Required Lenders, Agent shall by notice to
such Lender within 120 days after such event, require such Lender to assign all
of its rights and obligations under the Loan Documents to Eligible Assignee(s)
or one or more other assignees reasonably acceptable to Agent, pursuant to
appropriate Assignment and Acceptance(s) and within 20 days after Borrower or
Agent’s notice. Agent is irrevocably appointed as attorney-in-fact to execute
any such Assignment and Acceptance if the Lender fails to execute same. Such
Lender shall be entitled to receive, in cash, concurrently with such assignment,
all amounts owed to it under the Loan Documents, including all principal,
interest and fees through the date of assignment (but excluding any prepayment
charge).

12.11. Remittance of Payments and Collections.

12.11.1. Remittances Generally. All payments by any Lender to Agent shall be
made by the time and on the day set forth in this Agreement, in immediately
available funds. If no time for payment is specified or if payment is due on
demand by Agent and request for payment is made by Agent by 11:00 a.m. on a
Business Day, payment shall be made by Lender not later than 2:00 p.m. on such
day, and if request is made after 11:00 a.m., then payment shall be made by
11:00 a.m. on the next Business Day. Payment by Agent to any Lender shall be
made by wire transfer, in the type of funds received by Agent. Any such payment
shall be subject to Agent’s right of offset for any amounts due from such Lender
under the Loan Documents.

 

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12.11.2. Failure to Pay. If any Lender fails to pay any amount when due by it to
Agent pursuant to the terms hereof, such amount shall bear interest from the due
date until paid at the rate determined by Agent as customary in the banking
industry for interbank compensation. In no event shall Borrowers be entitled to
receive credit for any interest paid by a Lender to Agent, nor shall any
Defaulting Lender be entitled to interest on any amounts held by Agent pursuant
to Section 4.2.

12.11.3. Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from a Credit Party
and such related payment is not received, then Agent may recover such amount
from each Lender that received it. If Agent determines at any time that an
amount received under any Loan Document must be returned to a Credit Party or
paid to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. If any amounts received and applied by
Agent to any Obligations are later required to be returned by Agent pursuant to
Applicable Law, each Lender shall pay to Agent, on demand, such Lender’s Pro
Rata share of the amounts required to be returned.

12.12. Agent in its Individual Capacity. As a Lender, Bank of America shall have
the same rights and remedies under the other Loan Documents as any other Lender,
and the terms “Lenders,” “Required Lenders” or any similar term shall include
Bank of America in its capacity as a Lender. Each of Bank of America and its
Affiliates may accept deposits from, maintain deposits or credit balances for,
invest in, lend money to, provide Bank Products to, act as trustee under
indentures of, serve as financial or other advisor to, and generally engage in
any kind of business with, Credit Parties and their Affiliates, as if Bank of
America were any other bank, without any duty to account therefor (including any
fees or other consideration received in connection therewith) to the other
Lenders. In their individual capacity, Bank of America and its Affiliates may
receive information regarding Credit Parties, their Affiliates and their Account
Debtors (including information subject to confidentiality obligations), and each
Lender agrees that Bank of America and its Affiliates shall be under no
obligation to provide such information to Lenders, if acquired in such
individual capacity and not as Agent hereunder.

12.13. Agent Titles. Each Lender, other than Bank of America, that is designated
(on the cover page of this Agreement or otherwise) by Bank of America as an
“Agent” or “Arranger” of any type shall not have any right, power,
responsibility or duty under any Loan Documents other than those applicable to
all Lenders, and shall in no event be deemed to have any fiduciary relationship
with any other Lender.

12.14. No Third Party Beneficiaries. This Section 12 is an agreement solely
among Lenders and Agent, and shall survive Full Payment of the Obligations. This
Section 12 does not confer any rights or benefits upon Credit Parties or any
other Person. As between Credit Parties and Agent, any action that Agent may
take under any Loan Documents or with respect to any Obligations shall be
conclusively presumed to have been authorized and directed by Lenders.

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

13.1. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Credit Parties, Agent, Lenders, and their respective successors
and assigns, except that (a) no Credit Party shall have the right to assign its
rights or delegate its obligations under any Loan Documents; and (b) any
assignment by a Lender must be made in compliance with Section 13.3. Agent may
treat the Person which made any Loan as the owner thereof for all purposes until
such Person makes an assignment in accordance with Section 13.3. Any
authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

 

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13.2. Participations.

13.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary course
of its business and in accordance with Applicable Law, at any time sell to a
financial institution (other than a Defaulting Lender) (“Participant”) a
participating interest in the rights and obligations of such Lender under any
Loan Documents. Despite any sale by a Lender of participating interests to a
Participant, such Lender’s obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for performance of such obligations, such Lender shall remain the holder
of its Loans and Commitments for all purposes, all amounts payable by Borrowers
shall be determined as if such Lender had not sold such participating interests,
and Borrowers and Agent shall continue to deal solely and directly with such
Lender in connection with the Loan Documents. Each Lender shall be solely
responsible for notifying its Participants of any matters under the Loan
Documents, and Agent and the other Lenders shall not have any obligation or
liability to any such Participant. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 5.9 unless
Borrowers agree otherwise in writing.

13.2.2. Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Commitment Termination Date or any date fixed for any regularly scheduled
payment of principal, interest or fees on such Loan or Commitment, or releases
all or substantially all of the value of the Guarantees or the Collateral.

13.2.3. Benefit of Set-Off. Credit Parties agree that each Participant shall
have a right of set-off in respect of its participating interest to the same
extent as if such interest were owing directly to a Lender, and each Lender
shall also retain the right of set-off with respect to any participating
interests sold by it. By exercising any right of set-off, a Participant agrees
to share with Lenders all amounts received through its set-off, in accordance
with Section 12.5 as if such Participant were a Lender.

13.3. Assignments.

13.3.1. Permitted Assignments. A Lender may assign to an Eligible Assignee any
of its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $5,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$1,000,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the
Commitments retained by the transferor Lender is at least $5,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Loan Documents to (i) any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any
Loans; provided, however, that any payment by Credit Parties to the assigning
Lender in respect of any Obligations assigned as described in this sentence
shall satisfy Credit Parties’ obligations hereunder to the extent of such
payment, and no such assignment shall release the assigning Lender from its
obligations hereunder.

 

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13.3.2. Effect; Effective Date. Upon delivery to Agent of an assignment notice
in the form of Exhibit D and a processing fee (payable by the assignor or
assignee) of $3,500 (unless otherwise agreed by Agent in its discretion), the
assignment shall become effective as specified in the notice, if it complies
with this Section 13.3. From such effective date, the Eligible Assignee shall
for all purposes be a Lender under the Loan Documents, and shall have all rights
and obligations of a Lender thereunder. Upon consummation of an assignment, the
transferor Lender, Agent and Borrowers shall make appropriate arrangements for
issuance of replacement and/or new Notes, as applicable. The transferee Lender
shall comply with Section 5.10 and deliver, upon request, an administrative
questionnaire satisfactory to Agent. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to Agent in an aggregate amount sufficient, upon distribution thereof as
appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of Borrowers and Agent, the applicable Pro Rata share
of Loans previously requested but not funded by the Defaulting Lender, to each
of which the applicable assignee and assignor hereby irrevocably consent), to
(a) pay and satisfy in full all payment liabilities then owed by such Defaulting
Lender to Agent or any Lender hereunder (and interest accrued thereon) and
(b) acquire (and fund as appropriate) its full Pro Rata share of all Loans and
participations in Letters of Credit and Swingline Loans. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under Applicable Law without
compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this
Agreement until such compliance occurs.

SECTION 14. MISCELLANEOUS

14.1. Consents, Amendments and Waivers.

14.1.1. Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Required Lenders (or
Agent with the consent of Required Lenders) and each Credit Party party to such
Loan Document; provided, however, that

(a) without the prior written consent of Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of Agent;

(b) without the prior written consent of Issuing Bank, no modification shall be
effective with respect to any LC Obligations or Section 2.3;

(c) without the prior written consent of each affected Lender, no modification
shall be effective that would (i) increase or extend the Commitment of such
Lender; or (ii) reduce the amount of, or waive or delay payment of, any
principal, interest or fees payable to such Lender (provided, however, that any
reduction or waiver of principal, interest or fees that by its terms affects a
Defaulting Lender more adversely than other affected Lenders shall require the
consent of such Defaulting Lender); and

 

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(d) without the prior written consent of all Lenders (except a Defaulting Lender
as provided in Section 4.2), no modification shall be effective that would
(i) alter Section 5.6, 7.1 (except to add Collateral) or 14.1.1; (ii) amend the
definitions of Pro Rata or Required Lenders; (iii) modify (A) the definition of
Borrowing Base (and the defined terms used in such definition) or any component
(other than Reserves) of the Borrowing Base, including eligibility criteria and
advance rates, in any manner that would increase availability thereunder or
(B) the discretion of the Agent to change, establish or eliminate any Reserves;
(iv) release all or substantially all Collateral; or (v) release any material
Credit Party from liability for any material Obligations or release any material
portion of the value of the Guaranties of the Obligations except as contemplated
by the Loan Documents.

14.1.2. Limitations. The agreement of Credit Parties shall not be necessary to
the effectiveness of any modification of a Loan Document that deals solely with
the rights and duties of Lenders, Agent and/or Issuing Bank as among themselves.
Only the consent of the parties to the applicable Fee Letter or any agreement
relating to a Bank Product shall be required for any modification of such
agreement, and any non-Lender that is party to a Bank Product agreement shall
have no right to participate in any manner in modification of any other Loan
Document. Any waiver or consent granted by Agent or Lenders hereunder shall be
effective only if in writing and only for the matter specified.

14.1.3. Payment for Consents. No Credit Party will, directly or indirectly, pay
any remuneration or other thing of value, whether by way of additional interest,
fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.2. Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS (AS DEFINED HEREIN) THAT MAY BE INCURRED BY OR ASSERTED
AGAINST ANY INDEMNITEE, INCLUDING CLAIMS (AS DEFINED HEREIN) ARISING FROM THE
NEGLIGENCE (AS OPPOSED TO THE GROSS NEGLIGENCE) OF AN INDEMNITEE, WHETHER ANY
SUCH CLAIM IS ASSERTED BY A CREDIT PARTY, A HOLDER OF EQUITY INTERESTS, OR
CREDITOR(S), OF A CREDIT PARTY, AN INDEMNITEE OR ANY THIRD PARTY. In no event
shall any party to a Loan Document have any obligation thereunder to indemnify
or hold harmless an Indemnitee with respect to a Claim that is determined in a
final, non-appealable judgment by a court of competent jurisdiction to result
from the gross negligence or willful misconduct of such Indemnitee.

14.3. Notices and Communications.

14.3.1. Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and, if to a Credit
Party, shall be given at Borrower Agent’s address shown on the signature pages
hereof, and, if to any other Person, at such Person’s address shown on the
signature pages hereof (or, in the case of a Person who becomes a Lender after
the Closing Date, at the address shown on its Assignment and Acceptance), or at
such other address as a party may hereafter specify by notice in accordance with
this Section 14.3. Each such notice or other communication shall be effective
only (a) if given by facsimile transmission, when transmitted to the applicable
facsimile number, if confirmation of receipt is received; (b) if given by mail,
three Business Days after deposit in the U.S. mail, with first-class postage
pre-paid, addressed to the applicable address; or (c) if given by personal
delivery, when duly delivered to the notice address with receipt acknowledged.
Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4,
2.3, 3.1.2 or 4.1.1 shall be effective until actually received by the individual
to whose attention at Agent such notice is required to be sent. Any written
notice or other communication that is not sent in conformity with the foregoing
provisions shall nevertheless be effective on the date actually received by the
noticed party. Any notice received by Borrower Agent shall be deemed received by
all Credit Parties.

 

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14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan Documents for
execution, and matters permitted under Section 4.1.4. Agent and Lenders make no
assurances as to the privacy and security of electronic communications.
Electronic and voice mail may not be used as effective notice under the Loan
Documents.

14.3.3. Non-Conforming Communications. Agent and Lenders may rely upon any
notices purportedly given by or on behalf of any Credit Party even if such
notices were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Credit Party shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
telephonic communication purportedly given by or on behalf of a Credit Party.

14.4. Performance of Credit Parties’ Obligations. Agent may, in its discretion
at any time and from time to time, at Credit Parties’ expense, pay any amount or
do any act required of a Credit Party under any Loan Documents or otherwise
lawfully requested by Agent to (a) enforce any Loan Documents or collect any
Obligations; (b) protect, insure, maintain or realize upon any Collateral; or
(c) defend or maintain the validity or priority of Agent’s Liens in any
Collateral, including any payment of a judgment, insurance premium, warehouse
charge, finishing or processing charge, or landlord claim, or any discharge of a
Lien. All payments, costs and expenses (including Extraordinary Expenses) of
Agent under this Section shall be reimbursed to Agent by Credit Parties, on
demand, with interest from the date incurred to the date of payment thereof at
the Default Rate applicable to Base Rate Revolver Loans. Any payment made or
action taken by Agent under this Section shall be without prejudice to any right
to assert an Event of Default or to exercise any other rights or remedies under
the Loan Documents.

14.5. Credit Inquiries. Each Credit Party hereby authorizes Agent and Lenders
(but they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Credit Party or Subsidiary.

14.6. Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect. Without limiting the foregoing
provisions of this Section 14.6, if and to the extent that the enforceability of
any provisions in this Agreement relating to Defaulting Lenders shall be limited
by the Bankruptcy Code or any other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency reorganization or similar debtor relief laws, as
determined in good faith by Agent or Issuing Bank, as applicable, then such
provisions shall be deemed to be in effect only to the extent not so limited.

14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations, tests or measurements to regulate similar matters, and they agree
that these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision
herein shall govern and control.

 

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14.8. Counterparts. Any Loan Document may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when Agent
has received counterparts bearing the signatures of all parties hereto. Delivery
of a signature page of any Loan Document by telecopy or other electronic means
shall be effective as delivery of a manually executed counterpart of such
agreement.

14.9. Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents constitute the entire contract among the parties relating to the
subject matter hereof, and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.

14.10. Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent or Lenders pursuant to the Loan
Documents shall be deemed to constitute Agent and Lenders to be a partnership,
association, joint venture or any other kind of entity, nor to constitute
control of any Credit Party.

14.11. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated by any Loan Document, Credit Parties
acknowledge and agree that (a)(i) this credit facility and any related arranging
or other services by Agent, any Lender, any of their Affiliates or any arranger
are arm’s-length commercial transactions between Credit Parties and such Person;
(ii) Credit Parties have consulted their own legal, accounting, regulatory and
tax advisors to the extent they have deemed appropriate; and (iii) Credit
Parties are capable of evaluating and understanding, and do understand and
accept, the terms, risks and conditions of the transactions contemplated by the
Loan Documents; (b) each of Agent, Lenders, their Affiliates and any arranger is
and has been acting solely as a principal in connection with this credit
facility, is not the financial advisor, agent or fiduciary for Credit Parties,
any of their Affiliates or any other Person, and has no obligation with respect
to the transactions contemplated by the Loan Documents except as expressly set
forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be
engaged in a broad range of transactions that involve interests that differ from
those of Credit Parties and their Affiliates, and have no obligation to disclose
any of such interests to Credit Parties or their Affiliates. To the fullest
extent permitted by Applicable Law, each Credit Party hereby waives and releases
any claims that it may have against Agent, Lenders, their Affiliates and any
arranger with respect to any breach or alleged breach of agency or fiduciary
duty in connection with any aspect of any transaction contemplated by a Loan
Document.

14.12. Confidentiality. Each of Agent, Lenders and Issuing Bank agrees to
maintain the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested
by any governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding, or other exercise of rights or
remedies, relating to any Loan Documents or Obligations; (f) subject to an
agreement containing provisions substantially the same as this Section, to any
Transferee or any actual or prospective party (or its advisors) to any Bank
Product; (g) with the consent of Borrower Agent; or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) is available to Agent, any Lender, Issuing Bank or any of
their Affiliates on a nonconfidential basis from a source other than Credit
Parties. Notwithstanding the foregoing, Agent and Lenders may publish or
disseminate general information describing this credit facility, including the

 

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names and addresses of Credit Parties and a general description of Credit
Parties’ businesses, and may use Credit Parties’ logos, trademarks or product
photographs in advertising materials. As used herein, “Information” means all
information received from a Credit Party or Subsidiary relating to it or its
business that is identified as confidential when delivered. Any Person required
to maintain the confidentiality of Information pursuant to this Section shall be
deemed to have complied if it exercises the same degree of care that it accords
its own confidential information. Each of Agent, Lenders and Issuing Bank
acknowledges that (i) Information may include material non-public information
concerning a Credit Party or Subsidiary; (ii) it has developed compliance
procedures regarding the use of material non-public information; and (iii) it
will handle such material non-public information in accordance with Applicable
Law, including federal and state securities laws.

14.13. Certifications Regarding Indentures. Credit Parties certify to Agent and
Lenders that neither the execution or performance of the Loan Documents nor the
incurrence of any Obligations by Credit Parties violates the Senior Note
Indenture, including Section 4.09 thereof. Credit Parties further certify that
the Commitments and Obligations constitute “Permitted Debt” under the Senior
Note Indenture. Agent may condition Borrowings, Letters of Credit and other
credit accommodations under the Loan Documents from time to time upon Agent’s
receipt of evidence that the Commitments and Obligations continue to constitute
“Permitted Debt” at such time.

14.14. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
FEDERAL LAWS RELATING TO NATIONAL BANKS).

14.15. Consent to Forum.

14.15.1. Forum. EACH CREDIT PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK, IN
ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES
THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH
CREDIT PARTY IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY
HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR
INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1. Nothing herein shall limit
the right of Agent or any Lender to bring proceedings against any Credit Party
in any other court, nor limit the right of any party to serve process in any
other manner permitted by Applicable Law. Nothing in this Agreement shall be
deemed to preclude enforcement by Agent of any judgment or order obtained in any
forum or jurisdiction.

14.16. Waivers by Credit Parties. To the fullest extent permitted by Applicable
Law, each Credit Party waives (a) the right to trial by jury (which Agent and
each Lender hereby also waives) in any proceeding or dispute of any kind
relating in any way to any Loan Documents, Obligations or Collateral;
(b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any
commercial paper, accounts, documents, instruments, chattel paper and guaranties
at any time held by Agent on which a Credit Party may in any way be liable, and
hereby ratifies anything Agent may do in this regard; (c) notice prior to taking
possession or control of any Collateral; (d) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies;
(e) the benefit of all valuation, appraisement and exemption laws; (f) any claim
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theory of liability, for special, indirect, consequential, exemplary or punitive
damages (as opposed to direct or actual damages) in any way relating to any
Enforcement Action, Obligations, Loan Documents or transactions relating
thereto; and (g) notice of acceptance hereof. Each Credit Party acknowledges
that the foregoing waivers are a material inducement to Agent and Lenders
entering into this Agreement and that Agent and Lenders are relying upon the
foregoing in their dealings with Credit Parties. Each Credit Party has reviewed
the foregoing waivers with its legal counsel and has knowingly and voluntarily
waived its jury trial and other rights following consultation with legal
counsel. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.

14.17. Patriot Act Notice. Agent and Lenders hereby notify Credit Parties that
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Credit Party,
including its legal name, address, tax ID number and other information that will
allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent
and Lenders will also require information regarding each personal guarantor, if
any, and may require information regarding Credit Parties’ management and
owners, such as legal name, address, social security number and date of birth.

SECTION 15. GUARANTY OF OBLIGATIONS

15.1. Guaranty; Limitation of Liability. In order to induce Agent and Lenders to
enter into this Agreement and to induce the Lenders to extend credit hereunder
and to induce the Lenders or their affiliates provide Bank Products, and in
recognition of the direct benefit received by the Guarantors from the extension
of such credit and provision of such Bank Products, each Guarantor hereby
absolutely, unconditionally and irrevocably guarantees (the undertaking by each
Guarantor under this Section 15 being, as amended from time to time, the
“Facility Guaranty”) the punctual payment when due, whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or
otherwise, of all Obligations of each other Credit Party now or hereafter
existing under or in respect of the Loan Documents (including, without
limitation, any extensions, modifications, substitutions, amendments or renewals
of any or all of the foregoing Obligations), whether direct or indirect,
absolute or contingent, and whether for principal, interest, premiums, fees,
indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the “Guaranteed Obligations”), and agrees to pay any and all
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by Agent or any other Secured Party in enforcing any rights
under this Facility Guaranty or any other Loan Document, subject to limitations
expressly set forth elsewhere herein. Without limiting the generality of the
foregoing, each Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Credit Party to any Secured Party under or in respect of the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of any Insolvency Proceeding involving such other Credit Party.

15.1.1. No Fraudulent Transfer. Each Guarantor, Agent and each other Secured
Party, hereby confirms that it is the intention of such Persons that this
Facility Guaranty and the obligations of each Guarantor hereunder not constitute
a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar foreign, federal or state law to the extent applicable to this Facility
Guaranty and the Obligations of each Guarantor hereunder. To effectuate the
foregoing intention, each Guarantor, Agent and each of the other Secured Parties
hereby irrevocably agree that such Guaranteed Obligations and other liabilities
shall be limited to the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of each Guarantor
that are relevant under the laws referred to in the first sentence hereof, and
after giving effect to any collections from, any rights to receive contributions
from, or payments made by or on behalf of, any of the other Credit Parties in
respect of the Obligations under any Loan Document, result in the Guaranteed
Obligations and all other liabilities of each Guarantor under this Facility
Guaranty not constituting a fraudulent transfer or conveyance.

 

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15.1.2. Contribution. Each Guarantor hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Facility Guaranty, any other Loan Document or any other
guaranty, each Guarantor will contribute, to the maximum extent permitted by
law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.

15.2. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any Applicable Law, now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Secured Party with
respect thereto. The obligations of each Guarantor under or in respect of this
Facility Guaranty are independent of the Guaranteed Obligations or any other
Obligations of any other Credit Party under or in respect of the Loan Documents,
and a separate action or actions may be brought and prosecuted against each
Guarantor to enforce this Facility Guaranty, irrespective of whether any action
is brought against any Borrower or any other Credit Party or whether any
Borrower or any other Credit Party is joined in any such action or actions. The
liability of each Guarantor under this Facility Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and each Guarantor hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to, any or all of the following:

(a) any lack of validity or enforceability of any Loan Document or any agreement
or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term
of, including any increase in the amount of, all or any of the Guaranteed
Obligations or any other Obligations of any other Credit Party under or in
respect of the Loan Documents, or any other amendment or waiver of or any
consent to departure from any Loan Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Credit Party or otherwise;

(c) any taking, exchange, release or non-perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of, or consent
to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

(d) any manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral or any other collateral for all or any of
the Guaranteed Obligations or any other Obligations of any Credit Party under
the Loan Documents or any other assets of any Credit Party; the failure of
Agent, any other Secured Party or any other person to exercise diligence or
reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of such Collateral, property or
security;

(e) the fact that any Collateral, security, security interest or lien
contemplated or intended to be given, created or granted as security for the
repayment of the Guaranteed Obligations shall not be properly perfected or
created, or shall prove to be unenforceable or subordinate to any other security
interest or lien, it being recognized and agreed by each Guarantor that such
Guarantor is not entering into this Facility Guaranty in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectibility
or value of any such Collateral;

(f) any change, restructuring or termination of the corporate structure or
existence of any Credit Party or any of its Subsidiaries;

 

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(g) any failure of any Secured Party to disclose to any Credit Party any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Credit Party now
or hereafter known to such Secured Party (each Guarantor waiving any duty on the
part of the Secured Parties to disclose such information);

(h) the failure of any other Person to execute or deliver any Loan Document or
any supplement thereto or any other guaranty or agreement or the release or
reduction of liability of any Guarantor or other guarantor or surety with
respect to the Guaranteed Obligations; or

(i) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Secured Party that might otherwise constitute a defense available to, or a
discharge of, any Credit Party or any other guarantor or surety, other than
payment in full of the Guaranteed Obligations (other than contingent
indemnification obligations).

15.2.2. Reinstatement. This Facility Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by Agent or
any Secured Party or any other Person upon the insolvency, bankruptcy or
reorganization of any Borrower or any other Credit Party or otherwise, all as
though such payment had not been made.

15.2.3. Guaranteed Obligations Due. Each Guarantor hereby further agrees that,
as between each Guarantor on the one hand, and Agent and the other Secured
Parties, on the other hand, (i) the Guaranteed Obligations of each Guarantor may
be declared to be forthwith due and payable as provided in Section 11.2 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Section 11.2) for purposes of Section 15.1,
notwithstanding any stay, injunction or other prohibition preventing such
declaration in respect of the Obligations of any of the Credit Parties
guaranteed hereunder (or preventing such Guaranteed Obligations from becoming
automatically due and payable) as against any other Person and (ii) in the event
of any declaration of acceleration of such Guaranteed Obligations (or such
Guaranteed Obligations being deemed to have become automatically due and
payable) as provided in Section 11.2, such Guaranteed Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by each Guarantor for all purposes of this Facility Guaranty.

15.3. Waivers and Acknowledgments. Each Guarantor hereby unconditionally and
irrevocably waives promptness, diligence, notice of acceptance, presentment,
demand for performance, notice of nonperformance, default, acceleration, protest
or dishonor and any other notice with respect to any of the Guaranteed
Obligations and this Facility Guaranty and any requirement that Agent or any
Secured Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.

15.3.1. Waiver of Right of Revocation. Each Guarantor hereby unconditionally and
irrevocably waives any right to revoke this Facility Guaranty and acknowledges
that this Facility Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

15.3.2. Waiver of Defenses. Each Guarantor hereby unconditionally and
irrevocably waives (i) any defense arising by reason of any claim or defense
based upon an election of remedies by Agent or any Secured Party that in any
manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of each Guarantor or other rights of each Guarantor to proceed against any of
the other Credit Parties, any other guarantor or any other Person or any
Collateral and (ii) any defense based on any right of set-off or counterclaim
against or in respect of the Obligations of each Guarantor hereunder.

 

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15.3.3. Waiver of Duty to Disclose. Each Guarantor hereby unconditionally and
irrevocably waives any duty on the part of Agent or any Secured Party to
disclose to each Guarantor any matter, fact or thing relating to the business,
financial condition, operations, or performance of any other Credit Party or any
of its Subsidiaries now or hereafter known by Agent or such Secured Party.

15.3.4. Knowing Waivers. Each Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in
Section 15.2 and this Section 15.3 are knowingly made in contemplation of such
benefits.

15.4. Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees
not to exercise any rights that it may now have or hereafter acquire against any
Borrower, any other Credit Party or any other insider guarantor that arise from
the existence, payment, performance or enforcement of each Guarantor’s
Obligations under or in respect of this Facility Guaranty or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of Agent or any Secured Party against any
Borrower, any other Credit Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Borrower, any other Credit Party or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until Full Payment of all of the Guaranteed Obligations (other than
contingent indemnification obligations) and all other amounts payable under this
Facility Guaranty shall have occurred, all Letters of Credit and all Bank
Product Debt shall have expired or been terminated or Cash Collateralized and
the Commitments shall have expired or been terminated. If any amount shall be
paid to each Guarantor in violation of the immediately preceding sentence at any
time prior to the Full Payment of the Guaranteed Obligations and all other
amounts payable under this Facility Guaranty, such amount shall be received and
held in trust for the benefit of the Secured Parties, shall be segregated from
other property and funds of each Guarantor and shall forthwith be paid or
delivered to Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Facility Guaranty, whether
matured or unmatured, in accordance with the terms of the Loan Documents, or to
be held as Collateral for any Guaranteed Obligations or other amounts payable
under this Facility Guaranty thereafter arising. If any Guarantor shall make
payment to any Secured Party of all or any part of the Guaranteed Obligations,
and Full Payment of the Guaranteed Obligations shall occur, then the Secured
Parties will, at such Guarantor’s request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Facility Guaranty.

15.4.1. Subordination. Each Guarantor hereby subordinates any and all debts,
liabilities and other obligations in the nature of borrowed money owed to each
Guarantor by each other Credit Party (as used in this Section 15, the
“Intercompany Obligations”) to the Guaranteed Obligations to the extent and in
the manner hereinafter set forth in this Section 15.4:

15.4.2. Prohibited Payments, Etc. Except (a) during the continuance of any Event
of Default under Sections 11.1(a) or (i) or (b) after notice from Agent or any
Lender of any other Event of Default under this Agreement, each Guarantor may
receive regularly scheduled payments from any other Credit Party on account of
the Intercompany Obligations. During the continuance of any Event of

 

-112-

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Default under Sections 11.1(a) or (i) or after notice from Agent or any Lender
of any other Event of Default under this Agreement, however, each Guarantor
shall not demand, accept or take any action to collect any payment on account of
the Intercompany Obligations unless the Required Lenders otherwise agree.

15.4.3. Prior Payment of Guaranteed Obligations. In any Insolvency Proceeding
relating to any other Credit Party, each Guarantor agrees that the Secured
Parties shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (other than contingent indemnification obligations, but including
all interest, expenses and fees (including legal fees) accruing after the
commencement of any Insolvency Proceeding, whether or not constituting an
allowed claim in such proceeding (as used in this Section 15, “Post Petition
Interest”)) before each Guarantor receives payment of any Intercompany
Obligations.

15.4.4. Turn-Over. After the occurrence and during the continuance of any Event
of Default (including the commencement and continuation of any Insolvency
Proceeding relating to any other Credit Party), each Guarantor shall, if Agent
so requests, collect, enforce and receive payments on account of the
Intercompany Obligations as trustee for the Secured Parties and deliver such
payments to Agent on account of the Guaranteed Obligations (including all Post
Petition Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the
liability of each Guarantor under the other provisions of this Facility
Guaranty.

15.4.5. Agent Authorization. After the occurrence and during the continuance of
any Event of Default (including the commencement and continuation of any
Insolvency Proceeding relating to any other Credit Party), Agent is authorized
and empowered (but without any obligation to so do), in its discretion, (i) in
the name of each Guarantor, to collect and enforce, and to submit claims in
respect of, Intercompany Obligations and to apply any amounts received thereon
to the Guaranteed Obligations (including any and all Post Petition Interest),
and (ii) to require each Guarantor (A) to collect and enforce, and to submit
claims in respect of, Intercompany Obligations and (B) to pay any amounts
received on such obligations to Agent for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

15.4.6. Continuing Guaranty; Assignments. This Facility Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the Full Payment of
the Guaranty Obligations, (b) be binding upon each Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Secured
Parties and their successors, transferees and assigns. Without limiting the
generality of clause (c) of the immediately preceding sentence, any Secured
Party may assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Commitments, the Loans owing to it and the Note or Notes held by
it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Secured Party herein or
otherwise, in each case as and to the extent provided in Section 13.3. No
Guarantor shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Secured Parties.

[Remainder of page intentionally left blank; signatures begin on following page]

 

-113-

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

BORROWERS: CAPELLA HEALTHCARE, INC., a Delaware corporation By:    

 

Name:   Denise W. Warren Title:   Executive Vice President, Chief Financial
Officer and Treasurer Address:     c/o Capella Healthcare, Inc.   501 Corporate
Centre Drive, Suite 200   Franklin, Tennessee 3067-2662   Attention: Denise W.
Warren CAPELLA HOLDINGS OF OKLAHOMA, LLC CAPITAL MEDICAL CENTER HOLDINGS, LLC
CAPITAL MEDICAL CENTER PARTNER, LLC CMCH HOLDINGS, LLC COLUMBIA OLYMPIA
MANAGEMENT, INC. FARMINGTON CLINIC COMPANY, LLC
FARMINGTON HEART & VASCULAR CENTER, LLC FARMINGTON HOSPITAL CORPORATION
FARMINGTON MISSOURI HOSPITAL COMPANY, LLC LAWTON HOLDINGS, LLC
LAWTON SURGERY INVESTMENT COMPANY, LLC MUSKOGEE HOLDINGS, LLC
MUSKOGEE MEDICAL AND SURGICAL ASSOCIATES, LLC MUSKOGEE PHYSICIAN GROUP, LLC
MUSKOGEE REGIONAL MEDICAL CENTER, LLC NATIONAL PARK CARDIOLOGY SERVICES, LLC
NATIONAL PARK FAMILY CARE, LLC NATIONAL PARK PHYSICIAN SERVICES, LLC NPMC
HOLDINGS, LLC NPMC, LLC OREGON HEALTHCORP, LLC RUSSELLVILLE HOLDINGS, LLC By:  
 

 

  Name: Denise W. Warren   Title: Vice President and Treasurer Address:     c/o
Capella Healthcare, Inc.   501 Corporate Centre Drive, Suite 200   Franklin,
Tennessee 3067-2662   Attention: Denise W. Warren

 

Signature Page to

Loan and Security Agreement

--------------------------------------------------------------------------------

SOUTHWESTERN MEDICAL CENTER, LLC SOUTHWESTERN NEUROSURGERY PHYSICIANS, LLC
SOUTHWESTERN PHYSICIAN SERVICES, LLC SOUTHWESTERN RADIOLOGY AFFILIATES, LLC
SOUTHWESTERN SURGICAL AFFILIATES LLC SPARTA HOSPITAL CORPORATION ST. MARY’S
HOLDINGS, LLC ST. MARY’S PHYSICIAN SERVICES, LLC ST. MARY’S REAL PROPERTY, LLC
WILLAMETTE VALLEY CLINICS, LLC WILLAMETTE VALLEY HEALTH SOLUTIONS, LLC
WILLAMETTE VALLEY MEDICAL CENTER, LLC WPC HOLDCO, LLC By:    

 

  Name: Denise W. Warren   Title: Vice President and Treasurer Address:     c/o
Capella Healthcare, Inc.   501 Corporate Centre Drive, Suite 200   Franklin,
Tennessee 3067-2662   Attention: Denise W. Warren

 

Signature Page to

Loan and Security Agreement

--------------------------------------------------------------------------------

AGENT AND LENDERS:

BANK OF AMERICA, N.A.,

as Agent and Lender

By:    

 

  Name: Seth Benefield   Title: Senior Vice President Address:      Bank of
America, N.A.   300 Galleria Parkway, Suite 800   Atlanta, Georgia 30339  
Facsimile: 404.607.3277

 

Signature Page to

Loan and Security Agreement

--------------------------------------------------------------------------------

CITIBANK, N.A., as Lender By:    

 

  Name: Brendan Mackay   Title: Vice President Address:      Citibank, N.A.  
388 Greenwich St, 19th floor   New York, New York 10013   Attention: Brendan
Mackay   Facsimile: 646.328.3110

 

Signature Page to

Loan and Security Agreement

--------------------------------------------------------------------------------

GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender By:    

 

  Name: Dennis Cloud   Title: Duly Authorized Signatory Address:      General
Electric Capital Corporation   500 West Monroe, Suite 1400   Chicago, Illinois
60614   Attention: Dennis Cloud   Facsimile: 866.388.3572

 

Signature Page to

Loan and Security Agreement

--------------------------------------------------------------------------------

Schedule 1.1

COMMITMENTS OF LENDERS

 

Lender

   Commitment  

Bank of America, N.A.

   $ 40,000,000.00   

Citibank, N.A.

   $ 30,000,000.00   

General Electric Capital Corporation

   $ 30,000,000.00      

 

 

 

Total

   $ 100,000,000.00      

 

 

 

--------------------------------------------------------------------------------

Schedule 1.2

IMMATERIAL SUBSIDIARIES

Capella Acquisition Subsidiary, LLC

Capital Medical Center Guild Community Fund

Columbia Medical Group - South Pittsburg, Inc.

Cullman County Medical Clinic, Inc.

Cullman Hospital Corporation

Cullman Surgery Venture Corp.

Grandview Holding Company, Inc.

Grandview Physician Group, LLC

Hartselle Physicians, Inc.

Mineral Area Pharmacy and Durable Medical Equipment, LLC

National Healthcare of Cullman, Inc.

National Healthcare of Decatur, Inc.

National Healthcare of Hartselle, Inc.

Parkway Medical Clinic, Inc.

Providence MRI Associates, LLC

Providence Radiologic Services, LLC

River Park Hospitalists, LLC

Sequatchie Valley Urology, LLC

SP Acquisition Corp.

Western Washington Healthcare, LLC

--------------------------------------------------------------------------------

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

Schedule 8.5.1

DEPOSIT ACCOUNTS

 

Subject Grantor Name /

Account Name

 

Bank/Securities

Intermediary Name and Address

 

Account Type

 

Account Number

Capella Healthcare, Inc.  

Bank of America

(“BofA”)

  Non-Medicare/Medicaid   [***]** Capella Healthcare, Inc.   BofA  
Non-Medicare/Medicaid   [***]** Capella Healthcare, Inc.   BofA  
Non-Medicare/Medicaid   [***]** Capella Healthcare, Inc.   BofA  
Non-Medicare/Medicaid   [***]** Capella Healthcare, Inc.   BofA   Lockbox
Non-Medicare/Medicaid   [***]** Capella Healthcare, Inc.   BofA  
Medicare/Medicaid   [***] Capella Healthcare, Inc.   BofA   Medicare/Medicaid  
[***] Capella Healthcare, Inc.   BofA   Managed Care   [***] Farmington Missouri
Hospital Company, LLC   BofA   Direct Deposit Account with Lockbox
(Non-Medicare/Medicaid)   [***]** Lawton Surgery Investment Company, LLC   BofA
  Direct Deposit Account   [***] Muskogee Regional Medical Center, LLC   BofA  
Non-Medicare/Medicaid   [***]** Russellville Holdings, LLC   BofA   Direct
Deposit Account with Lockbox (Non-Medicare/Medicaid)   [***]** Southwestern
Medical Center, LLC   BofA   All COID—Athena Deposits   [***]** Southwestern
Medical Center, LLC   BofA   Non-Medicare/Medicaid   [***]** Southwestern
Physician Services, LLC   BofA   Direct Deposit Account   [***] Sparta Hospital
Corporation   BofA   Direct Deposit Account with Lockbox Non-Medicare/Medicaid
and Medicare/Medicaid   [***]** Willamette Valley Medical Center, LLC   BofA  
Direct Deposit Account with Lockbox Non-Medicare/Medicaid   [***]** Muskogee
Medical and Surgical Associates LLC   US Bank   Lockbox (Medicare/Medicaid and
Non-Medicare/Medicaid)   [***]** Saint Mary’s Physician Services LLC   US Bank  
Non-Medicare/Medicaid   [***]** Southwestern Surgical Affiliates LLC   US Bank  
Non-Medicare/Medicaid   [***]**

--------------------------------------------------------------------------------

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

 

Subject Grantor Name /

Account Name

 

Bank/Securities

Intermediary Name and Address

 

Account Type

 

Account Number

Sparta Hospital Corporation   US Bank   Direct Deposit Account
Non-Medicare/Medicaid   [***]** Willamette Valley Clinics LLC   US Bank  
Lockbox (Both Medicare/Medicaid and Non-Medicare/Medicaid)   [***]** Farmington
Missouri Hospital Company, LLC   First State Community Bank   Direct Deposit
Account Non-Medicare/Medicaid   [***] Farmington Missouri Hospital Company, LLC
  KeyBank   Direct Deposit Account with Lockbox (Medicare/Medicaid and
Non-Medicare/Medicaid)   [***] Russellville Holdings, LLC   Simmons First Bank  
Direct Deposit Account Non-Medicare/Medicaid   [***] Russellville Holdings, LLC
  Simmons First Bank   Direct Deposit Account Non-Medicare/Medicaid   [***]
Russellville Holdings, LLC   Bank of the Ozarks   Direct Deposit Account with
Lockbox (Non-Medicare/Medicaid)   [***] Willamette Valley Clinics   Wells Fargo
  Direct Deposit Account Non-Medicare/Medicaid   [***] Willamette Valley Medical
Center, LLC   Wells Fargo   Non-Medicare/Medicaid   [***]

 

* Accounts subject to Control Agreement with Bank of America, N.A.

** Account is at clinic-level.

--------------------------------------------------------------------------------

Schedule 8.5.2

CASH MANAGEMENT SYSTEM

See Schedule 8.5.1.

--------------------------------------------------------------------------------

Schedule 8.5.5

CREDIT CARD ARRANGEMENTS

 

1. Credit card deposits are sent to the applicable Direct Deposit Account for
each facility held at Bank of America and listed on Schedule 8.5.1.

 

2. US Buyer Initiated Payments Services Agreement between American Express
Travel Related Services Company Incorporated and Capella Healthcare, Inc. dated
December 30, 2009.

--------------------------------------------------------------------------------

Schedule 8.6.1

BUSINESS LOCATIONS

 

Credit Party

 

Location of Chief Executive Office

 

Location of Books and Records

Capella Holdings, Inc.  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

Two Corporate Centre

501 Corporate Centre Drive Suite 200

Franklin, TN 37067- 2662

Capella Healthcare, Inc.  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

Peak 10, 425 Duke Drive,

Franklin, TN 37067

(backup server location)

Capella Holdings of Oklahoma, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

300 Rockefeller Drive,

Muskogee, OK 74401

Capital Medical Center Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

Capital Medical Center Partner, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

Capital Medical Center Physicians, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

Cannon County Hospital, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

  N/A CMCH Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

Columbia Capital Medical Center Limited Partnership  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

Columbia Olympia Management, Inc.  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

--------------------------------------------------------------------------------

Credit Party

 

Location of Chief Executive Office

 

Location of Books and Records

Farmington Clinic Company, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1212 Weber Road

Farmington, MO 63640

Farmington Heart & Vascular Center, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1212 Weber Road

Farmington, MO 63640

Farmington Hospital Corporation  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1212 Weber Road

Farmington, MO 63640

Farmington Missouri Hospital Company, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1212 Weber Road

Farmington, MO 63640

Hot Springs National Park Hospital Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

Lawton Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

5602 S.W. Lee Boulevard

Lawton, OK 73505

Lawton Surgery Investment Company, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

  N/A Muskogee Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

300 Rockefeller Drive

Muskogee, OK 74401

Muskogee Medical and Surgical Associates, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

300 Rockefeller Drive

Muskogee, OK 74401

Muskogee Physician Group, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

300 Rockefeller Drive

Muskogee, OK 74401

Muskogee Regional Medical Center, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

300 Rockefeller Drive

Muskogee, OK 74401

--------------------------------------------------------------------------------

Credit Party

 

Location of Chief Executive Office

 

Location of Books and Records

National Park Cardiology Services, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

National Park Family Care, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

National Park Physician Services, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

National Park Real Property, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

NPMC, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

NPMC Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1910 Malvern Avenue

Hot Springs, AR 71901

Oregon Healthcorp, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

2700 SE Stratus Ave

McMinnville, OR 97128

River Park Hospital, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1559 Sparta Street

McMinnville, TN 37110

River Park Physician Group, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1559 Sparta Street

McMinnville, TN 37110

Russellville Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1808 West Main Street

Russellville, AR 72801

Saint Thomas/Capella, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

401 Sewell Road

Sparta, TN 38583

--------------------------------------------------------------------------------

Credit Party

 

Location of Chief Executive Office

 

Location of Books and Records

Southwestern Medical Center, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

5602 S.W. Lee Boulevard

Lawton, OK 73505

Southwestern Neurosurgery Physicians, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

5602 S.W. Lee Boulevard

Lawton, OK 73505

Southwestern Physician Services, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

5602 S.W. Lee Boulevard

Lawton, OK 73505

Southwestern Radiology Affiliates, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

5602 S.W. Lee Boulevard

Lawton, OK 73505

Southwestern Surgical Affiliates LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

5602 S.W. Lee Boulevard

Lawton, OK 73505

Sparta Hospital Corporation  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

  401 Sewell Road
Sparta, TN 38583 St. Mary’s Holdings, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

  1808 West Main Street
Russellville, AR 72801 St. Mary’s Physician Services, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

  1808 West Main Street
Russellville, AR 72801 St. Mary’s Real Property, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

1808 West Main Street

Russellville, AR 72801

Stones River Clinic Services, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

  N/A White County Community Hospital, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

401 Sewell Road

Sparta, TN 38583

--------------------------------------------------------------------------------

Credit Party

 

Location of Chief Executive Office

 

Location of Books and Records

White County Physician Services, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

401 Sewell Road

Sparta, TN 38583

White County Primary Care, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

401 Sewell Road

Sparta, TN 38583

Willamette Valley Clinics, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

2700 SE Stratus Ave

McMinnville, OR 97128

Willamette Valley Health Solutions, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

2700 SE Stratus Ave

McMinnville, OR 97128

Willamette Valley Medical Center, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

2700 SE Stratus Ave

McMinnville, OR 97128

WPC Holdco, LLC  

Two Corporate Centre

501 Corporate Centre Drive

Suite 200

Franklin, TN 37067- 2662

 

3900 Capital Mall Drive SW

Olympia, WA 98502

--------------------------------------------------------------------------------

Schedule 9.1.4

NAMES AND CAPITAL STRUCTURE

The legal names and jurisdictions of incorporation of each Credit Party and
Subsidiary are as follows:

 

Borrower

 

Jurisdiction of Organization & Type of Organization

Capella Healthcare, Inc.  

Delaware

Corporation

Capella Holdings of Oklahoma, LLC  

Delaware

Limited Liability Company

Capital Medical Center Holdings, LLC  

Delaware

Limited Liability Company

Capital Medical Center Partner, LLC  

Delaware

Limited Liability Company

CMCH Holdings, LLC  

Delaware

Limited Liability Company

Columbia Olympia Management, Inc.  

Delaware

Corporation

Farmington Clinic Company, LLC  

Missouri

Limited Liability Company

Farmington Hospital Corporation  

Missouri

Corporation

Farmington Heart & Vascular Center, LLC  

Delaware

Limited Liability Company

Farmington Missouri Hospital Company, LLC  

Missouri

Limited Liability Company

Lawton Holdings, LLC  

Delaware

Limited Liability Company

Lawton Surgery Investment Company, LLC  

Delaware

Limited Liability Company

Muskogee Holdings, LLC  

Delaware

Limited Liability Company

Muskogee Medical and Surgical Associates, LLC  

Delaware

Limited Liability Company

Muskogee Physician Group, LLC  

Delaware

Limited Liability Company

Muskogee Regional Medical Center, LLC  

Delaware

Limited Liability Company

National Park Cardiology Services, LLC  

Delaware

Limited Liability Company

National Park Family Care, LLC  

Delaware

Limited Liability Company

National Park Physician Services, LLC  

Delaware

Limited Liability Company

NPMC Holdings, LLC  

Delaware

Limited Liability Company

--------------------------------------------------------------------------------

Borrower

 

Jurisdiction of Organization & Type of Organization

NPMC, LLC  

Delaware

Limited Liability Company

Oregon Healthcorp, LLC  

Delaware

Limited Liability Company

Russellville Holdings, LLC  

Delaware

Limited Liability Company

Southwestern Medical Center, LLC  

Delaware

Limited Liability Company

Southwestern Neurosurgery Physicians, LLC  

Oklahoma

Limited Liability Company

Southwestern Physician Services, LLC  

Oklahoma

Limited Liability Company

Southwestern Radiology Affiliates, LLC  

Delaware

Limited Liability Company

Southwestern Surgical Affiliates LLC  

Delaware

Limited Liability Company

Sparta Hospital Corporation  

Tennessee

Corporation

St. Mary’s Holdings, LLC  

Delaware

Limited Liability Company

St. Mary’s Physician Services, LLC  

Delaware

Limited Liability Company

St. Mary’s Real Property, LLC  

Delaware

Limited Liability Company

Willamette Valley Clinics, LLC  

Delaware

Limited Liability Company

Willamette Valley Health Solutions, LLC  

Delaware

Limited Liability Company

Willamette Valley Medical Center, LLC  

Delaware

Limited Liability Company

WPC Holdco, LLC  

Delaware

Limited Liability Company

Credit Support Party

 

Jurisdiction of Organization & Type of Organization

Capital Medical Center Physicians, LLC  

Delaware

Limited Liability Company

Capital Medical Center Specialty Physicians, LLC  

Delaware

Limited Liability Company

Columbia Capital Medical Center Limited Partnership  

Washington

Limited Partnership

Cannon County Hospital, LLC  

Tennessee

Limited Liability Company

Hot Springs National Park Hospital Holdings, LLC  

Delaware

Limited Liability Company

National Park Real Property, LLC  

Delaware

Limited Liability Company

--------------------------------------------------------------------------------

River Park Hospital, LLC  

Tennessee

Limited Liability Company

River Park Physician Group, LLC  

Delaware

Limited Liability Company

Saint Thomas/Capella, LLC  

Delaware

Limited Liability Company

Stones River Clinic Services, LLC  

Tennessee

Limited Liability Company

White County Community Hospital, LLC  

Delaware

Limited Liability Company

White County Physician Services, LLC  

Tennessee

Limited Liability Company

White County Primary Care, LLC  

Tennessee

Limited Liability Company

Immaterial Subsidiary

 

Jurisdiction of Organization & Type of Organization

Capella Acquisition Subsidiary, LLC  

Delaware

Limited Liability Company

Capital Medical Center Guild Community Fund  

Washington

Not-for-profit Corporation

Columbia Medical Group - South Pittsburg, Inc.  

Tennessee

Limited Liability Company

Cullman County Medical Clinic, Inc.   Alabama
Corporation Cullman Hospital Corporation  

Alabama

Corporation

Cullman Surgery Venture Corp.  

Delaware

Corporation

Grandview Holding Company, Inc.  

Delaware

Corporation

Grandview Physician Group, LLC  

Tennessee

Limited Liability Company

Hartselle Physicians, Inc.  

Alabama

Corporation

Mineral Area Pharmacy and Durable Medical Equipment, LLC  

Missouri

Limited Liability Company

National Healthcare of Cullman, Inc.  

Delaware

Corporation

National Healthcare of Decatur, Inc.  

Delaware

Corporation

National Healthcare of Hartselle, Inc.  

Delaware

Corporation

Parkway Medical Clinic, Inc.  

Alabama

Corporation

Providence MRI Associates, LLC  

Oklahoma

Limited Liability Company

--------------------------------------------------------------------------------

Providence Radiologic Services, LLC  

Oklahoma

Limited Liability Company

River Park Hospitalists, LLC  

Tennessee

Limited Liability Company

Sequatchie Valley Urology, LLC  

Tennessee

Limited Liability Company

SP Acquisition Corp.  

Tennessee

Corporation

Western Washington Healthcare, LLC  

Washington

Limited Liability Company

The Authorized and issued Equity Interests, and the record holders of Equity
Interests of each Credit Party and Subsidiary are as follows:

 

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

  

% of Equity Interests held by
Owner

Capella Holdings, Inc.    Capella Healthcare, Inc.    100
Common    100% Saint Thomas/Capella, LLC    Cannon County Hospital, LLC    N/A
   64.5% NPMC Holdings, LLC    Capella Acquisition Subsidiary, LLC    N/A   
100% Muskogee Holdings, LLC    Capella Holdings of Oklahoma, LLC    N/A    100%
CMCH Holdings, LLC    Capital Medical Center Holdings, LLC    N/A    100%
Capital Medical Center Holdings, LLC    Capital Medical Center Partner, LLC   
N/A    100% Columbia Capital Medical Limited Partnership    Capital Medical
Center Physicians, LLC    N/A    99% Capital Medical Center Holdings, LLC      
   1% Columbia Capital Medical Limited Partnership    Capital Medical Center
Specialty Physicians, LLC    N/A    99% Capital Medical Center Holdings, LLC   
      1%

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

  

% of Equity Interests held by
Owner

Capella Healthcare, Inc.    CMCH Holdings, LLC    N/A    100% Capital Medical
Center Holdings    Columbia Capital Medical Center Limited Partnership    N/A   
39.7% Capital Medical Center Partner, LLC          48.55% Columbia Olympia
Management, Inc.          1.0% WPC Holdco, LLC          1.0% Capital Medical
Center Holdings, LLC    Columbia Olympia Management, Inc.    1000
Common    100% Capella Healthcare, Inc.    Cullman County Medical Clinic, Inc.
   1000
Common    100% Capella Healthcare, Inc.    Cullman Hospital Corporation    1
Common    100% Farmington Hospital Corporation    Farmington Clinic Company, LLC
   N/A    100% Farmington Hospital Corporation    Farmington Heart & Vascular
Center, LLC    N/A    100% Capella Healthcare, Inc.    Farmington Hospital
Corporation    1000
Common    100% Farmington Hospital Corporation    Farmington Missouri Hospital
Company, LLC    N/A    100% Capella Healthcare, Inc.    Grandview Holding
Company, Inc.    1,000
Common    100% Capella Healthcare, Inc.    Hartselle Physicians, Inc.    1000
Common    100%

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

  

% of Equity Interests held by
Owner

NPMC Holdings, LLC    Hot Springs National Park Hospital Holdings, LLC    N/A   
95.04% Capella Healthcare, Inc.    Lawton Holdings, LLC    N/A    100% Lawton
Holdings, LLC    Lawton Surgery Investment Company, LLC    N/A    100%
Farmington Hospital Corporation    Mineral Area Pharmacy and Durable Medical
Equipment, LLC    N/A    100% Capella Healthcare, Inc.    Muskogee Holdings, LLC
   N/A    100% Capella Holdings of Oklahoma, Inc.    Muskogee Medical and
Surgical Associates, LLC    N/A    100% Capella Holdings of Oklahoma, LLC   
Muskogee Physician Group, LLC    N/A    100% Capella Holdings of Oklahoma, LLC
   Muskogee Regional Medical Center, LLC    N/A    100% Capella Healthcare, Inc.
   National Healthcare of Decatur, Inc.    1,000
Common    100% Capella Healthcare, Inc.    National Healthcare of Hartselle,
Inc.    1,000
Common    100% NPMC Holdings, LLC    National Park Cardiology Services, LLC   
N/A    100% NPMC Holdings, LLC    National Park Family Care, LLC    N/A    100%

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

  

% of Equity Interests held by
Owner

NPMC Holdings, LLC    National Park Physician Services, LLC    N/A    100% Hot
Springs National Park Hospital Holdings, LLC    National Park Real Property, LLC
   N/A    100% Capella Healthcare, Inc.    NPMC Holdings, LLC    N/A    100%
NPMC Holdings, LLC    NPMC, LLC    N/A    100% Capella Healthcare, Inc.   
Oregon Healthcorp, LLC    N/A    100% Capella Healthcare, Inc.    Parkway
Medical Clinic, Inc.    1,000
Common    100% Capella Holdings of Oklahoma, LLC    Providence MRI Associates,
LLC    N/A    100% Capella Holdings of Oklahoma, LLC    Providence Radiologic
Services, L.C.    N/A    100% Saint Thomas/Capella, LLC    River Park Hospital,
LLC    N/A    100% Saint Thomas/Capella, LLC    River Park Hospitalists, LLC   
N/A    100% Saint Thomas/Capella, LLC    River Park Physician Group, LLC    N/A
   100% St. Mary’s Holdings, LLC    Russellville Holdings, LLC    N/A    100%
Capella Healthcare, Inc.    Saint Thomas/Capella, LLC    N/A    57.85% Sparta
Hospital Corporation          35.66%

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

  

% of Equity Interests held by
Owner

Lawton Holdings, LLC    Southwestern Medical Center, LLC    N/A    100% Lawton
Holdings, LLC    Southwestern Neurosurgery Physicians, LLC    N/A    100% Lawton
Holdings, LLC    Southwestern Physician Services, LLC    N/A    100% Lawton
Holdings, LLC    Southwestern Radiology Affiliates, LLC    N/A    100% Lawton
Holdings, LLC    Southwestern Surgical Affiliates LLC    N/A    100% Capella
Healthcare, Inc.    SP Acquisition Corp.    1,000
Common    100% Capella Healthcare, Inc.    Sparta Hospital Corporation    1,000
Common    100% Capella Healthcare, Inc.    St. Mary’s Holdings, LLC    N/A   
100% St. Mary’s Holdings, LLC    St. Mary’s Physician Services, LLC    N/A   
100% Russellville Holdings, LLC    St. Mary’s Real Property, LLC    N/A    100%
Cannon County Hospital, LLC    Stones River Clinic Services, LLC    N/A    100%
Columbia Olympia Management, Inc.    Western Washington Healthcare, LLC    N/A
   99% Columbia Capital Medical Center Limited Partnership       N/A    1% Saint
Thomas/Capella, LLC    White County Community Hospital, LLC    N/A    87.725%

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

  

% of Equity Interests held by
Owner

White County Community Hospital, LLC    White County Physician Services, LLC   
N/A    99%

Saint Thomas/Capella, LLC

         1% White County Physician Services, LLC    White County Primary Care,
LLC    N/A    100% Oregon Healthcorp, LLC    Willamette Valley Clinics, LLC   
N/A    100% Oregon Healthcorp, LLC    Willamette Health Solutions, LLC    N/A   
100% Oregon Healthcorp, LLC    Willamette Valley Medical Center, LLC    N/A   
100% Capital Medical Center Holdings, LLC    WPC Holdco, LLC    N/A    100%

All agreements binding on holders of Equity Interests of Credit Parties and
Subsidiaries with respect to such interests:

None.

In the five years preceding the Closing Date, no Credit Party or Subsidiary has
acquired any substantial assets from any other Person nor been the surviving
entity in a merger or combination, except:

None.

--------------------------------------------------------------------------------

Schedule 9.1.11

PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

 

1. PATENTS

None.

 

2. COPYRIGHTS

None.

 

3. TRADEMARKS

OKLAHOMA STATE REGISTRATIONS

OWNED BY MUSKOGEE REGIONAL MEDICAL CENTER, LLC

 

Trademark Name

   Application
Number    Registration
Number    Status    Goods Services

EXTRAORDINARY STAFF. EXTRAORDINARY CARE

   12102366    12102366    Registered

April 6, 2006

   Medical services (Class 44).

FEDERAL REGISTRATIONS OWNED

BY CAPELLA HEALTHCARE, INC.

 

Trademark Name

   Application
Number    Registration
Number    Status    Goods Services

CAPELLA HEALTHCARE

   78/656,426    3,179,810    Registered

December 5, 2006

   Healthcare services (Class 44).

--------------------------------------------------------------------------------

FEDERAL REGISTRATIONS OWNED

BY WILLAMETTE VALLEY MEDICAL CENTER, LLC

 

Trademark Name

   Application
Number    Registration
Number    Status    Goods Services

COMMUNITY RADIOLOGY CENTER

   77/152,805    3,314,963    Registered

October 16, 2007

   Hospitals (Class 44).

McMINNVILLE FIRST MED CLINIC

   77/154,170    3,400,934    Registered

March 25, 2008

   Hospitals (Class 44).

NORTHWEST PHYSICAL MEDICINE

   77/299,186    3,444,763    Registered

June 10, 2008

   Hospitals (Class 44).

WILLAMETTE VALLEY CANCER CENTER

   77/152,671    3,361,683    Registered

January 1, 2008

   Hospitals (Class 44).

WILLAMETTE VALLEY CANCER FOUNDATION

   77/152,723    3,314,962    Registered

October 16, 2007

   Charitable fund raising
(Class 36).

WILLAMETTE VALLEY MEDICAL CENTER

   77/152,663    3,361,682    Registered

January 1, 2008

   Hospitals (Class 44).

 

  4. LICENSES

Credit Parties and Subsidiaries’ licenses (other than routine business licenses,
authorizing them to transact business in local jurisdictions):

 

  1. Data Processing Management Services Agreement between HCA Information
Technology & Services, Inc. and Capella Healthcare, Inc.

 

  2. Information Technology Transition Services Agreement between Community
Health Systems Professional Services Corporation and Capella Healthcare, Inc.

 

  3. Microsoft Select Agreement for Capella Healthcare, Inc.

--------------------------------------------------------------------------------

Schedule 9.1.14

ENVIRONMENTAL MATTERS

None.

--------------------------------------------------------------------------------

Schedule 9.1.15

RESTRICTIVE AGREEMENTS

None.

--------------------------------------------------------------------------------

Schedule 9.1.16

LITIGATION

 

1. LITIGATION: None.

 

2. COMMERCIAL TORT CLAIMS: None.

--------------------------------------------------------------------------------

Schedule 9.1.18

PENSION PLANS

None.

--------------------------------------------------------------------------------

Schedule 9.1.20

LABOR CONTRACTS

 

Parties

  

Type of Agreement

   Term of
Agreement

Capital Medical Center and United Staff Nurses Union Local 141 UFCW

   Collective Bargaining Agreement    2013-2016

Capital Medical Center and United Service Works Union Local 21

   Collective Bargaining Agreement    2013-2015

--------------------------------------------------------------------------------

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

Schedule 9.3

HEALTHCARE-RELATED MATTERS

[***]

--------------------------------------------------------------------------------

Schedule 10.2.1

EXISTING DEBT

 

1. Indebtedness with respect to the Liens in favor of ASD Specialty Healthcare
described on Schedule 10.2.2 below

 

2. Guaranty by Muskogee Regional Medical Center, LLC of approximately $140,000
in loans provided to Muskogee Surgical Investors, LLC by HealthSouth Corporation

--------------------------------------------------------------------------------

Schedule 10.2.2

EXISTING LIENS

Liens evidenced by the filings listed below:

 

Debtor

  

Secured Party

  

Brief Description of Collateral

Muskogee Medical and Surgical Associates, LLC    ASD Specialty Healthcare Inc.
   Personal Property White County Community Hospital, LLC    ASD Specialty
Healthcare Inc.    Personal Property

--------------------------------------------------------------------------------

Schedule 10.2.17

EXISTING AFFILIATE TRANSACTIONS

 

1. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Daniel S. Slipkovich, dated as of May 4, 2005

 

2. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., Daniel S. Slipkovich, and GTCR Fund VIII, L.P.,
dated as of May 12, 2006

 

3. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and David Andrew Slusser, dated as of May 4, 2005

 

4. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., David Andrew Slusser, and GTCR Fund VIII, L.P.,
dated as of May 12, 2006

 

5. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Michael Wiechart, dated as of May 26, 2009

 

6. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., Michael Wiechart, and GTCR Fund VIII, L.P.,
dated as of August 24, 2011

 

7. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Denise Wilder Warren, dated as of October 17, 2005

 

8. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., Denise Wilder Warren, and GTCR Fund VIII, L.P.,
dated as of May 12, 2006

 

9. Professional Services Agreement, between GTCR Golder Rauner II, LLC and
Capella Healthcare, Inc., dated as of May 4, 2005

 

10. Amendment No. 1 to Professional Services Agreement, between GTCR Golder
Rauner II, LLC and Capella Healthcare, Inc., dated as of November 30, 2005

 

11. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Robert Wampler, dated as of January 2, 2007