Exhibit 10.1

EXECUTION VERSION

 

 

THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER WITH RESPECT TO ANY
SECURITIES OR A SOLICITATION OF VOTES WITH RESPECT TO A CHAPTER 11 PLAN OF
REORGANIZATION. ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE
SECURITIES LAWS AND/OR, AS APPLICABLE, PROVISIONS OF THE BANKRUPTCY CODE.

 

 

RESTRUCTURING SUPPORT AGREEMENT

by and among

QUORUM HEALTH CORPORATION,

EACH OF ITS SUBSIDIARIES PARTY HERETO

and

EACH CONSENTING STAKEHOLDER PARTY HERETO

dated as of April 6, 2020

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RESTRUCTURING SUPPORT AGREEMENT

 

PREAMBLE

     1  

RECITALS

     1  

1.

  DEFINITIONS; INTERPRETATION      2  

2.

  EFFECTIVENESS; ENTIRE AGREEMENT.      10  

3.

  DEFINITIVE RESTRUCTURING DOCUMENTS.      11  

4.

  MATERIAL COVENANTS OF ALL PARTIES      11  

5.

  ADDITIONAL COVENANTS OF THE CONSENTING STAKEHOLDERS      13  

6.

  EQUITY COMMITMENT.      13  

7.

  MILESTONES.      14  

8.

  ADDITIONAL COVENANTS OF THE DEBTORS      14  

9.

  NO WAIVER OF PARTICIPATION AND PRESERVATION OF RIGHTS      17  

10.

  MUTUAL REPRESENTATIONS AND WARRANTIES OF ALL PARTIES      17  

11.

  ADDITIONAL REPRESENTATIONS AND WARRANTIES BY THE CONSENTING STAKEHOLDERS     
18  

12.

  ADDITIONAL REPRESENTATIONS AND WARRANTIES BY THE DEBTORS      19  

13.

  TRANSFER RESTRICTIONS      20  

14.

  TERMINATION OF OBLIGATIONS      21  

15.

  SPECIFIC PERFORMANCE      26  

16.

  COUNTERPARTS      27  

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17.

  NO SOLICITATION AND ACKNOWLEDGEMENTS      27  

18.

  TIME IS OF THE ESSENCE      27  

19.

  GOVERNING LAW; CONSENT TO JURISDICTION      27  

20.

  INDEPENDENT ANALYSIS      28  

21.

  THIRD-PARTY BENEFICIARIES      28  

22.

  NOTICES      28  

23.

  SEVERABILITY      29  

24.

  MUTUAL DRAFTING      29  

25.

  HEADINGS      30  

26.

  WAIVERS AND AMENDMENTS      30  

27.

  QHC LITIGATION TRUST AGREEMENT.      31  

28.

  SEVERAL, NOT JOINT, CLAIMS      31  

29.

  INDEPENDENT NATURE OF CONSENTING STAKEHOLDERS’ OBLIGATIONS AND RIGHTS.      31
 

30.

  AUTOMATIC STAY      32  

31.

  SETTLEMENT DISCUSSIONS      32  

32.

  CONSIDERATION      32  

33.

  CONFIDENTIALITY AND PUBLICITY      32  

34.

  SURVIVAL      33  

 

 

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PREAMBLE

This Restructuring Support Agreement (together with all annexes, exhibits and
schedules attached hereto or thereto, in each case, as may be amended, modified
or supplemented from time to time only in accordance with Section 26 hereof,
this “Agreement”), dated as of April 6, 2020 (the “Execution Date”), is entered
into by and among the following parties:1

 

  (i)

Quorum Health Corporation, a Delaware corporation (“Quorum”);

 

  (ii)

each of the undersigned subsidiaries of Quorum (together with Quorum, the
“Debtors”);

 

  (iii)

severally and not jointly, each Noteholder, or investment advisor or manager
thereof, listed on Schedule 1 and party hereto (together with their respective
successors and permitted assigns and any subsequent Noteholder that becomes
party to this Agreement in accordance with the terms hereof, collectively, the
“Consenting Noteholders” and each, a “Consenting Noteholder”); and

 

  (iv)

severally and not jointly, each First Lien Lender, or investment advisor or
manager thereof, listed on Schedule 1 and party hereto (together with their
respective successors and permitted assigns and any subsequent First Lien Lender
that becomes party to this Agreement in accordance with the terms hereof,
collectively, the “Consenting First Lien Lenders” and each, a “Consenting First
Lien Lender”; the Consenting First Lien Lenders, together with the Consenting
Noteholders, collectively, the “Consenting Stakeholders” and each, a “Consenting
Stakeholder”).

Each Debtor and each Consenting Stakeholder is referred to herein individually
as a “Party”, and collectively as the “Parties”.

RECITALS

WHEREAS, Quorum and its subsidiaries are in the business of providing hospital
and outpatient healthcare services in markets across the United States;

WHEREAS, the Parties have negotiated in good faith and at arms’ length a
transaction that will effectuate a financial restructuring (the “Restructuring”)
of the Debtors’ capital structure and financial obligations, on the terms and
conditions set forth in the Definitive Restructuring Documents;

 

1 

Capitalized terms used but not defined in the preamble and recitals to this
Agreement have the meaning ascribed to them in Section 1 of this Agreement.

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WHEREAS, to effectuate the Restructuring, the Debtors propose to commence
voluntary cases (collectively, the “Chapter 11 Cases”) under Chapter 11 of the
United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”),
in the United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court”), on a consensual basis pursuant to a joint prepackaged
Chapter 11 plan of reorganization and related plan supplement, the terms and
conditions of which are reflected in the Definitive Restructuring Documents,
and, if not specified therein, in a manner reasonably satisfactory to the
Debtors and the Required Consenting Stakeholders (as defined below); and

WHEREAS, the Parties desire to express to each other their mutual support and
commitment in respect of the Restructuring, including with respect to the
consummation of the Plan on the terms and conditions contained in the Definitive
Restructuring Documents.

AGREEMENT

NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each Party, intending to be legally bound hereby,
agrees as follows:

 

  1.

Definitions; Interpretation.

The general terms and conditions of the Restructuring are set forth in this
Agreement. In the event the terms and conditions set forth in any Definitive
Restructuring Document are inconsistent with this Agreement, the terms and
conditions set forth in such other Definitive Restructuring Document shall
govern. Each of the schedules and exhibits attached hereto is expressly
incorporated herein and made a part of this Agreement.

In this Agreement, unless the context otherwise requires:

 

  (a)

words importing the singular also include the plural, and references to one
gender include all genders;

 

  (b)

the words “hereof,” “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement;

 

  (c)

the words “include,” “includes,” and “including” shall be deemed to be followed
by the phrase “without limitation;” the word “or” is not exclusive; and

 

  (d)

the phrase “counsel to the Consenting Stakeholders” refers to each counsel
listed in Section 22 hereof other than counsel to the Debtors.

The following terms shall have the following meanings:

“Agreement” has the meaning set forth in the preamble hereto.

“Agreement Effective Date” has the meaning set forth in Section 2 hereof.

 

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“Alternative Transaction” means (i) any alternative refinancing,
recapitalization, share exchange, rights offering, equity investment or other
transaction other than the Restructuring or any purchase, sale, or other
disposition of all or a portion of the Debtors’ business or assets (including
interests in any Debtor or its subsidiaries), except for the sale of assets in
the ordinary course of business or in connection with a Specified Asset Sale,
(ii) any merger, acquisition, consolidation, or similar business combination
transaction involving a Debtor (excluding any intercompany transactions and any
Specified Asset Sale) or (iii) any other reorganization, restructuring or other
transaction the purpose or effect of which would be reasonably expected to, or
which would, prevent or render impractical, or otherwise frustrate or impede in
any material respect, the Restructuring, or is otherwise inconsistent with the
Definitive Restructuring Documents.

“Antitrust Laws” means the Sherman Act, as amended, the Clayton Act, as amended,
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the
Federal Trade Commission Act, as amended and all other laws (statutory or
common), statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any U.S. or non-U.S. federal, state, municipal, local,
judicial, administrative, legislative or regulatory agency, department,
commission, court, or tribunal of competent jurisdiction (including any branch,
department or official thereof), that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition through merger or acquisition.

“Bankruptcy Code” has the meaning set forth in the recitals hereto.

“Bankruptcy Court” has the meaning set forth in the recitals hereto.

“Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure, promulgated
under 28 U.S.C. § 2075, the Local Rules of Bankruptcy Practice and Procedure of
the United States Bankruptcy Court for the District of Delaware, the Local Rules
of Civil Practice and Procedure of the United States District Court for the
District of Delaware, and general orders and chambers procedures of the
Bankruptcy Court, each as applicable to the Chapter 11 Cases and as amended from
time to time.

“Board” means the Board of Directors of Quorum.

“Business Day” means any day, other than a Saturday, Sunday or “legal holiday”
(as defined in Bankruptcy Rule 9006(a)).

“Cash Collateral” has the meaning set forth in Section 363(a) of the Bankruptcy
Code.

“Chapter 11 Cases” has the meaning set forth in the recitals hereto.

“Claim” means any claim (as defined in section 101(5) of the Bankruptcy Code)
against any Debtor.

“Confirmation Order” means the order confirming the Plan, as entered by the
Bankruptcy Court, which shall be in form and substance reasonably satisfactory
to the Debtors and the Required Consenting Stakeholders

 

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“Consenting First Lien Lender” has the meaning set forth in the preamble hereto.

“Consenting Noteholder” has the meaning set forth in the preamble hereto.

“Consenting Stakeholder” has the meaning set forth in the preamble hereto.

“Corporate Governance Term Sheet” means the corporate governance term sheet with
respect to Reorganized Quorum, as may be amended, modified or supplemented from
time to time only in accordance with Section 26 of this Agreement.

“Covered Claims” means, individually or in the aggregate, the First Lien Loan
Claims and the Senior Notes Claims.

“Debtors” has the meaning set forth in the preamble hereto.

“Definitive Restructuring Documents” means the documents described in
Section 3(a) hereof.

“DIP Credit Agreement” means a debtor-in-possession credit agreement (as
amended, restated, supplemented or otherwise modified in accordance with its
terms), by and among Quorum, as borrower, each of the guarantors named therein
and the lenders from time to time party thereto, consistent in all respects with
the terms set forth in DIP Facility Term Sheet and otherwise reasonably
acceptable to the Debtors and the DIP Lenders.

“DIP Documents” means, collectively, the DIP Credit Agreement and any and all
other agreements, documents, and instruments delivered or entered into in
connection therewith, including any guarantee agreements, pledge and collateral
agreements, intercreditor agreements, and other security documents.

“DIP Facility” means the debtor-in-possession facility to be provided to Quorum
in accordance with the terms, and subject in all respects to the conditions, set
forth in the DIP Credit Agreement and the DIP Orders.

“DIP Facility Term Sheet” means the term sheet attached hereto as Exhibit C, as
such term sheet may be amended, modified or supplemented only in accordance with
Section 26 hereof.

“DIP Lenders” means, collectively, the Equity Commitment Parties as of the
Execution Date.

“DIP Motion” means the motion to be filed by the Debtors in the Chapter 11 Cases
seeking entry of the DIP Orders.

“DIP Orders” means collectively, the Interim DIP Order and the Final DIP Order.

“Disclosure Statement” means a disclosure statement containing “adequate
information” (as that term is defined in section 1125(a)(1) of the Bankruptcy
Code) with respect to the Plan and the transactions contemplated thereby, and
which otherwise is in form and substance reasonably satisfactory to the Debtors
and the Required Consenting Stakeholders.

 

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“Entity” has the meaning set forth in Section 101(15) of the Bankruptcy Code.

“Equity Commitment” has the meaning set forth in the Equity Investment
Commitment Agreement.

“Equity Commitment Amount” has the meaning set forth in the Equity Investment
Commitment Agreement.

“Equity Commitment Parties” has the meaning set forth in the Equity Investment
Commitment Agreement.

“Equity Commitment Premium” has the meaning set forth in the Equity Investment
Commitment Agreement.

“Equity Investment Commitment Agreement” means the duly executed and delivered
equity commitment agreement, dated as of the Execution Date, by and among the
Equity Commitment Parties and Quorum, including all annexes, exhibits and
schedules attached thereto, as such agreement may be amended, modified or
supplemented from time to time only in accordance with Section 26 of this
Agreement.

“Execution Date” has the meaning set forth in the preamble hereto.

“Exit ABL Credit Agreement” means a credit agreement for a senior secured
asset-based revolving credit facility, by and among Reorganized Quorum, the
guarantors named therein, and the lenders and agents party thereto, which
agreement shall (i) become effective on the Plan Effective Date and (ii) be on
reasonable, customary and market terms and conditions that are reasonably
satisfactory to (a) the Debtors, (b) the Required Equity Commitment Parties in
consultation with the Required Consenting Noteholders, and (c) the Required
Consenting First Lien Lenders solely with respect to any term or provision of
the Exit ABL Credit Agreement that materially and adversely affects the rights
of the First Lien Lenders.

“Exit Facility” means the credit facility provided for under the Exit Facility
Credit Agreement.

“Exit Facility Credit Agreement” means a credit agreement for the Exit Facility,
by and among Reorganized Quorum, the guarantors named therein, and the lenders
and agents party thereto, which agreement shall (i) become effective on the Plan
Effective Date and (ii) (x) be consistent with the terms and conditions set
forth in the Exit Facility Term Sheet and (y) otherwise be in form and substance
reasonably satisfactory to the Debtors, the Required Consenting First Lien
Lenders, and the Required Equity Commitment Parties in consultation with the
Required Consenting Noteholders.

 

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“Exit Facility Term Sheet” means the term sheet attached hereto as Exhibit D, as
such term sheet may be amended, modified or supplemented only in accordance with
Section 26 hereof.

“Final” means an order or judgment of the Bankruptcy Court, or other court of
competent jurisdiction with respect to the subject matter, which has not been
reversed, stayed, modified or amended, and as to which (i) the time to appeal,
petition for certiorari, or move for reargument or rehearing (other than a
request for rehearing under Federal Rule of Civil Procedure 60(b), which shall
not be considered for purposes of this definition) has expired and no appeal or
petition for certiorari has been timely taken, or (ii) any timely appeal that
has been taken or any petition for certiorari that has been or may be timely
filed has been resolved by the highest court to which the order or judgment was
appealed or from which certiorari was sought or has otherwise been dismissed
with prejudice.

“Final DIP Order” means a final order entered by the Bankruptcy Court approving
entrance into the DIP Facility and the use of Cash Collateral, and incorporating
the terms and conditions set forth in the DIP Credit Agreement and otherwise in
form and substance reasonably acceptable to the Debtors, the DIP Lenders, and
the Required Consenting Stakeholders.

“First Day Pleadings” means the “first day” motions or pleadings that the
Debtors determine are necessary or desirable to file in the Chapter 11 Cases,
each in form and substance reasonably satisfactory to the Debtors and the
Required Consenting Stakeholders.

“First Lien Lender” means any Holder of a Revolver Claim or a Term Loan Claim.

“First Lien Lender Group Advisors” means, collectively, Milbank LLP and Houlihan
Lokey, Inc.

“First Lien Agent” means Credit Suisse AG, as administrative agent for the
lenders under the Senior Secured Credit Agreement, or any successor agent
appointed in accordance with the terms of the Senior Secured Credit Agreement.

“First Lien Loan Claims” means, collectively, the Term Loan Claims and the
Revolver Claims.

“First Lien Loans” means, collectively, the Revolving Loans and the Term Loans.

“Governing Body” means the board of directors, board of managers, manager,
general partner, investment committee, special committee, or such similar
governing body of an Entity (including the Board).

“Holder” means any Entity that is the legal and/or beneficial owner of a Claim.

“Interim DIP Order” means an interim order entered by the Bankruptcy Court
approving entrance into the DIP Facility and the use of Cash Collateral, and
incorporating the terms and conditions set forth in the DIP Credit Agreement and
otherwise in form and substance reasonably acceptable to the Debtors, the DIP
Lenders, and the Required Consenting Stakeholders.

 

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“Interest” means any equity security (as defined in Section 101(16) of the
Bankruptcy Code) in any Debtor.

“Milestones” means, collectively, (i) the actions and events set forth in
Section 7 hereof and (ii) the corresponding deadlines for the performance or
occurrence of such actions or events, as set forth in Section 7 hereof.

“New Common Equity Raise” means Reorganized Quorum’s issuance of New Common
Stock in a direct capital raise pursuant to and in accordance with the Equity
Investment Commitment Agreement and the Plan.

“New Common Stock” means the common stock, limited liability company membership
units, or functional equivalent thereof of Reorganized Quorum.

“New Quorum Constituent Documents” means the certificate of incorporation and
the bylaws of Reorganized Quorum, each of which shall be consistent with the
Corporate Governance Term Sheet and otherwise in form and substance reasonably
satisfactory to the Debtors and satisfactory to (a) the Required Equity
Commitment Parties in consultation with the Required Consenting Noteholders and
(b) the Required Consenting First Lien Lenders solely with respect to any term
or provision of the New Quorum Constituent Documents that materially and
adversely affects the rights of the First Lien Lenders.

“New Shareholders Agreement” means the shareholders agreement, including all
annexes, exhibits, and schedules thereto, that will govern certain matters
related to the governance of Reorganized Quorum and the New Common Stock, which
agreement shall (i) become effective on the Plan Effective Date, (ii) be
consistent with the terms and conditions set forth in the Corporate Governance
Term Sheet, and (iii) otherwise be in form and substance reasonably satisfactory
to the Debtors and satisfactory to the Required Equity Commitment Parties in
consultation with the Required Consenting Noteholders.

“Noteholder” means any Holder of Senior Notes Claims.

“Noteholder Group” means the group or committee of Noteholders represented by
Kirkland & Ellis LLP.

“Noteholder Group Advisors” means, collectively, Kirkland & Ellis LLP, Latham &
Watkins LLP (with respect to certain regulatory matters), and Jefferies LLC.

“Party” or “Parties” has the meaning set forth in the preamble hereto.

“Permitted Transfer” has the meaning set forth in Section 13 hereof.

“Permitted Transferee” has the meaning set forth in Section 13 hereof.

“Petition Date” means the date on which the Debtors file voluntary petitions
commencing the Chapter 11 Cases.

 

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“Plan” means a joint prepackaged Chapter 11 plan of reorganization for the
Debtors, including all annexes, exhibits, schedules and supplements thereto,
(i) consistent with Exhibit A hereto and (ii) otherwise reasonably acceptable to
the Debtors and the Required Consenting Stakeholders, in each case as may be
amended, modified or supplemented from time to time only in accordance with
Section 26 of this Agreement.

“Plan Effective Date” means the date on which the Plan becomes effective in
accordance with its terms.

“QHC Litigation Trust” means a trust for the ratable benefit of Holders of
Senior Notes Claims, the terms and conditions of which shall be (i) consistent
with customary terms and conditions for litigation trusts in bankruptcy cases
similar to the Chapter 11 Cases; (ii) reasonably acceptable to the Debtors; and
(iii) acceptable to the Required Consenting Noteholders.

“QHC Litigation Trust Agreement” means a trust agreement providing for the QHC
Litigation Trust, which agreement shall be (i) consistent with the QHC
Litigation Trust Term Sheet; and (ii) entered into and filed with the Bankruptcy
Court prior to the confirmation hearing on the Plan, and approved by the
Bankruptcy Court as part of the Confirmation Order; provided, that the Debtors
and Reorganized Quorum shall not be responsible for any costs of the QHC
Litigation Trust.

“QHC Litigation Trust Term Sheet” means the term sheet attached as Exhibit E
hereto, as may be amended, modified or supplemented from time to time only in
accordance with Section 26 of this Agreement.

“Qualified Marketmaker” means an entity that (i) holds itself out to the public
or the applicable private markets as standing ready in the ordinary course of
business to purchase from customers and sell to customers claims of the Debtors
(or enter with customers into long and short positions in claims against the
Debtors), in its capacity as a dealer or marketmaker in claims against the
Debtors, and (ii) is, in fact, regularly in the business of making a market in
claims against issuers or borrowers (including debt securities or other debt).

“Quorum Common Stock” means “equity securities” as such term is defined in
Section 101(16) of the Bankruptcy Code, including any issued or unissued shares
of common stock, preferred stock, or other instruments, including restricted
stock units, evidencing an ownership interest in Quorum, whether or not
transferable, and any options, warrants or rights, contractual or otherwise, to
acquire any such interests in Quorum.

“Reorganized Debtors” has the meaning ascribed to such term in Exhibit A hereto,
as may be amended, modified or supplemented from time to time only in accordance
with Section 26 of this Agreement.

“Reorganized Quorum” means, collectively, Quorum as reorganized pursuant to the
Restructuring, including any new holding company created prior to the Plan
Effective Date that may be the ultimate parent of Reorganized Quorum, and any
successor(s) thereto.

“Required Consenting First Lien Lenders” means, as of any date of determination,
Consenting First Lien Lenders who collectively hold at least 50.01% of the
aggregate outstanding principal amount of the First Lien Loans held by all
Consenting First Lien Lenders at such time; provided that for purposes of this
definition, the term “Consenting First Lien Lenders” excludes any First Lien
Lender that, on the relevant date of determination, is in breach of any of its
material obligations hereunder.

 

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“Required Consenting Noteholders” means, as of any date of determination,
Consenting Noteholders who collectively hold at least 50.01% of the aggregate
outstanding principal amount of the Senior Notes held by all Consenting
Noteholders at such time; provided that for purposes of this definition, the
term “Consenting Noteholders” excludes any Noteholder that, on the relevant date
of determination, is in breach of any of its material obligations hereunder.

“Required Consenting Stakeholders” means, collectively, the Required Consenting
First Lien Lenders and the Required Consenting Noteholders.

“Required Equity Commitment Parties” has the meaning set forth in the Equity
Investment Commitment Agreement.

“Required Regulatory Approvals” means the approvals and filings set forth on
Schedule 4.07 of the Company Disclosure Schedule to the Equity Investment
Commitment Agreement.

“Restructuring” has the meaning set forth in the recitals hereto.

“Revolver Claim” means any Claim derived from or based on a Revolving Loan.

“Revolving Loans” means the revolving loans outstanding under the Senior Secured
Credit Agreement.

“SEC” means the United States Securities and Exchange Commission.

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

“Securities Act Rules” means Rule 501(a)(1), (2), (3), and (7) of the Securities
Act.

“Senior Notes” means the $400,000,000 aggregate outstanding principal amount of
11.625% Senior Notes due 2023 issued by Quorum pursuant to the Senior Notes
Indenture.

“Senior Notes Claim” means any claim derived from or based on a Senior Note.

“Senior Notes Indenture” means that certain indenture, dated as of April 22,
2016, by and among Quorum, the guarantors named therein and Wilmington Savings
Fund Society, FSB (as successor to Regions Bank), as trustee, as amended,
restated, supplemented or otherwise modified from time to time.

“Senior Secured Credit Agreement” means that certain credit agreement, dated as
of April 29, 2016, by and among Quorum, as borrower, each of the guarantors
named therein, the lenders from time to time party thereto and the First Lien
Agent, as amended, restated, supplemented or otherwise modified from time to
time.

 

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“Solicitation” means the solicitation of votes on the Plan.

“Solicitation Commencement Date” means the date that the Debtors commence
solicitation of votes to accept or reject the Plan.

“Solicitation Materials” means the Disclosure Statement, the Plan, the letters
of transmittal and the ballots and other documents required to solicit votes to
accept or reject the Plan from Holders of First Lien Loan Claims and Holders of
Senior Notes Claims, each in form and substance reasonably satisfactory to the
Debtors and the Required Consenting Stakeholders.

“Specified Asset Sales” means those sales of certain assets and/or subsidiaries
disclosed to counsel to the Consenting Stakeholders, with respect to which the
Debtors may execute definitive transaction documents with respect thereto only
after receipt by Quorum of written consent from the Required Consenting
Stakeholders.

“Specified Defaults” means, with respect to the Senior Secured Credit Agreement,
(a) the failure of Quorum to (i) deliver the audited financial statements for
the fiscal year ending December 31, 2019 required to be delivered pursuant to
Section 5.04(a) of the Senior Secured Credit Agreement, (ii) deliver any other
information, certificate or report required to be delivered under the Loan
Documents (as defined in the Senior Secured Credit Agreement) concurrently with
or following the delivery thereof and (iii) comply with the maximum permitted
Secured Net Leverage Ratio (as defined in the Senior Secured Credit Agreement)
as of December 31, 2019 and (b) any Default or Event of Default (each as defined
in the Senior Secured Credit Agreement) arising as a result of any default or
event of default existing on the Agreement Execution Date under that certain ABL
Credit Agreement dated as of April 29, 2016 by and among Quorum, the lenders
party thereto, and UBS AG, Stamford Branch, as the administrative agent and
collateral agent.

“Superior Alternative Transaction” has the meaning set forth in Section 8
hereof.

“Term Loans” means the term loans outstanding under the Senior Secured Credit
Agreement.

“Term Loan Claim” means any Claim derived from or based on a Term Loan.

“Transfer” has the meaning set forth in Section 13 hereof.

“Transfer Agreement” has the meaning set forth in Section 13 hereof.

 

  2.

Effectiveness; Entire Agreement.

(a) This Agreement shall become effective and binding upon each of the Parties
on the first date upon which (i) this Agreement has been executed and delivered
by (x) Quorum, (y) Consenting Noteholders who collectively constitute more than
50% in number of the Noteholders and hold at least 66 2/3% of the aggregate
outstanding principal amount of the Senior Notes; and (z) Consenting First Lien
Lenders who collectively constitute more than 50% in number of the First Lien
Lenders and hold at least 66 2/3% of the aggregate outstanding principal amount
of the First Lien Loans; and (ii) the Equity Investment Commitment Agreement has
been executed and delivered by the parties thereto (such date, the “Agreement
Effective Date”).

 

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(b) With the exception of non-disclosure and confidentiality agreements among
the Parties, this Agreement and the other Definitive Restructuring Documents
executed and delivered on the Execution Date or hereafter collectively
constitute the entire agreement of the Parties as of the Execution Date with
respect to the subject matter hereof and thereof and supersedes all prior
negotiations and documents reflecting such prior negotiations between and among
the Parties (and their respective advisors) with respect to the Restructuring.

 

  3.

Definitive Restructuring Documents.

(a) The Definitive Restructuring Documents governing the Restructuring shall
include the following: (i) the Plan; (ii) the Confirmation Order; (iii) the
Disclosure Statement; (iv) the order of the Bankruptcy Court approving the
Disclosure Statement and the other Solicitation Materials; (v) the First Day
Pleadings and all orders sought pursuant thereto; (vi) the DIP Orders, the DIP
Credit Agreement, and the other DIP Documents, and related documentation;
(vii) the Equity Investment Commitment Agreement; (viii) the Exit ABL Credit
Agreement; (ix) the Exit Facility Credit Agreement; (x) the New Quorum
Constituent Documents; (x) the QHC Litigation Trust Agreement; and (xi) the New
Shareholders Agreement.

(b) The Definitive Restructuring Documents not executed or in a form attached to
this Agreement as of the Execution Date remain subject to negotiation and
completion. Upon completion, the Definitive Restructuring Documents and every
other document, deed, agreement, filing, notification, letter, or instrument
related to the Restructuring shall contain terms, conditions, representations,
warranties, and covenants (i) consistent with the terms of this Agreement, as
they may be modified, amended, or supplemented in accordance with Section 26
hereof and (ii) satisfactory to the applicable Parties to the standard set forth
in Section 1 of this Agreement, as applicable.

 

  4.

Material Covenants of All Parties.

For so long as this Agreement has not been validly terminated, each Party
severally and not jointly agrees (in the case of any Consenting Stakeholder,
solely on behalf of itself, and not on behalf of any other Consenting
Stakeholder, and so long as it remains the legal owner or beneficial owner of,
or investment advisor or manager with respect to, any Covered Claims, provided
that any Transfer of Covered Claims is made in accordance with Section 13
herein), that it shall:

(a) support and cooperate with each other Party in good faith and coordinate its
activity in connection with, and otherwise use its commercially reasonable
efforts to consummate, the Restructuring as soon as reasonably practicable;

(b) use its commercially reasonable efforts and work in good faith to
(i) negotiate and complete the Definitive Restructuring Documents that remain
subject to negotiation and completion, and (ii) duly execute and deliver (to the
extent it is a party thereto) the Definitive Restructuring Documents and
otherwise support and seek to effect the actions and transactions contemplated
thereby, in each case as soon as reasonably practicable;

 

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(c) use its commercially reasonable efforts and work in good faith to negotiate
and complete such other related documents as may be required to implement the
Restructuring and obtain entry of the Confirmation Order, in each case as soon
as reasonably practicable;

(d) support and use its commercially reasonable efforts to (i) consummate the
Restructuring and all transactions contemplated by the Definitive Restructuring
Documents to which it is a party as soon as reasonably practicable, (ii) take
any and all reasonably necessary actions in furtherance of the Restructuring and
the transactions contemplated by the Definitive Restructuring Documents, and
(iii) if applicable, submit all required notifications, applications, and
filings for and obtain (in each case, solely as it relates to such Party) any
and all required regulatory and/or third-party approvals necessary to consummate
the Restructuring, including the Required Regulatory Approvals and any approvals
required under Antitrust Laws;

(e) not take any action that is inconsistent in any material respect with, or is
intended to frustrate, delay or impede in any material respect the timely
approval and entry of the Confirmation Order and consummation of the
transactions contemplated by the Definitive Restructuring Documents;

(f) (i) work in good faith to prepare agreed-upon forms of the DIP Orders,
(ii) obtain entry of, and support and not object to such entry of, the DIP
Orders, and (iii) not propose, seek approval for, or support any use of
debtor-in-possession financing that is not consistent with the DIP Credit
Agreement and each of the DIP Orders; and

(g) not challenge the validity, enforceability or priority of the Term Loans,
the Revolving Loans, or the Senior Notes or any Term Loan Claim, Revolver Claim,
or Senior Notes Claim in any way.

For so long as this Agreement has not been validly terminated, each Party
severally and not jointly agrees (in the case of any Consenting Stakeholder,
solely on behalf of itself, and not on behalf of any other Consenting
Stakeholder, and so long as it remains the legal owner or beneficial owner of,
or investment advisor or manager with respect to, any Covered Claims, provided
that any Transfer of Covered Claims is made in accordance with Section 13
herein), that (a) no Equity Commitment Party may increase its Equity Commitment
Amount other than in accordance with section 2.06 of the Equity Investment
Commitment Agreement if such increase would cause the aggregate Equity
Commitment Amount of all Equity Commitment Parties (excluding any Defaulting
Equity Commitment Party (as defined in the Equity Investment Commitment
Agreement)) to exceed $200 million; and (b) no other consent or approval right
shall exist with respect to any such increase; provided, however,
that (x) nothing in this paragraph shall displace, limit, or otherwise affect
the terms and conditions set forth in section 10.07(a) of the Equity Investment
Commitment Agreement; and (y) notwithstanding anything to the contrary in this
Agreement, no Equity Commitment Party’s Equity Commitment Amount may be
increased without such Equity Commitment Party’s prior written consent.

 

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  5.

Additional Covenants of the Consenting Stakeholders.

For so long as this Agreement has not been validly terminated, each Consenting
Stakeholder (solely on behalf of itself, and not on behalf of any other
Consenting Stakeholder) shall, so long as it remains the legal owner or
beneficial owner of, or investment advisor or manager with respect to, any
Covered Claims (provided that any Transfer of Covered Claims is made in
accordance with Section 13 herein) or any Quorum Common Stock:

(a) not, directly or indirectly, (i) object to, delay, impede, or take any other
action to interfere with the acceptance, implementation, confirmation or
consummation of the Restructuring and the Plan, (ii) seek, solicit, support,
encourage, or vote any Claims for, or consent to, any restructuring or
reorganization for any Debtor that is inconsistent with the Definitive
Restructuring Documents in any respect, (iii) commence or support any action to
appoint a trustee, conservator, receiver, or examiner for the Debtors, or to
dismiss the Chapter 11 Cases, or to convert the Chapter 11 Cases to cases under
Chapter 7 of the Bankruptcy Code, (iv) commence or support any action or
proceeding to shorten or terminate the period during which only the Debtors may
propose and/or seek confirmation of any plan of reorganization, or (v) otherwise
support any plan, sale process or other transaction that is inconsistent with
the Definitive Restructuring Documents;

(b) (i) not object to or oppose the approval by the Bankruptcy Court of any
Definitive Restructuring Documents, (ii) neither join in nor support any
objection by any Entity to approval by the Bankruptcy Court of any Definitive
Restructuring Document, and (iii) not otherwise commence, join or support any
proceeding to oppose or alter any of the terms of the Definitive Restructuring
Documents or any other document filed by Debtors (that is consistent with the
Definitive Restructuring Documents and otherwise in form and substance
reasonably satisfactory to the Debtors and the Required Consenting
Stakeholders), or any of the transactions contemplated thereby, in connection
with the confirmation and consummation of the Plan;

(c) vote each of its Covered Claims to accept the Plan by delivering its duly
executed and completed ballot(s) accepting the Plan on a timely basis following
the commencement of the Solicitation and its actual receipt of the Disclosure
Statement and other related Solicitation Materials;

(d) if a Consenting Noteholder, assign its Contributed Claims (as defined in
Exhibit A hereto) to the QHC Litigation Trust;

(e) not change, amend, revoke or withdraw (or cause to be changed, amended,
revoked or withdrawn) such vote; provided, however, that the votes of the
Consenting Stakeholders in respect of the Plan shall be immediately and
automatically without further action of any Consenting Stakeholder be revoked
and deemed null and void ab initio upon termination of this Agreement prior to
the Plan Effective Date in accordance with the terms hereof.

 

  6.

Equity Commitment.

Upon the terms and subject to the conditions of this Agreement and the Equity
Investment Commitment Agreement, including the entry of the Confirmation Order
and order approving the Disclosure Statement (a) Quorum shall conduct the New
Common Equity Raise, (b) each Equity Commitment Party shall provide its
respective Equity Commitment, and (c) Quorum shall pay each Equity Commitment
Party its respective portion of the Equity Commitment Premium.

 

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Notwithstanding anything to the contrary herein, if there exists any
inconsistency between this Section 6 and the Equity Investment Commitment
Agreement, the terms of the Equity Investment Commitment Agreement shall
supersede the terms of this Section 6.

 

  7.

Milestones.

The following Milestones shall apply to this Agreement unless extended or waived
in writing by the Debtors and the Required Consenting Stakeholders.

(a) no later than April 6, 2020, the Solicitation Commencement Date shall
have occurred;

(b) no later than April 7, 2020, the Debtors shall commence the Chapter 11
Cases;

(c) on the Petition Date, the Debtors shall file with the Bankruptcy Court
(i) the Plan; (ii) the Disclosure Statement; and (iii) the DIP Motion;

(d) no later than 3 Business Days after the Petition Date, the Bankruptcy Court
shall have entered the Interim DIP Order;

(e) no later than 35 calendar days after the Petition Date, the Bankruptcy Court
shall have entered the Final DIP Order;

(f) no later than 60 calendar days after the Petition Date, the Bankruptcy Court
shall have approved the Disclosure Statement and entered the Confirmation Order;
and

(g) no later than 75 calendar days after the Petition Date, the Plan Effective
Date shall have occurred; provided, that if any Required Regulatory Approval has
not been obtained or if the condition set forth in Section 7.01(f) of the Equity
Investment Commitment Agreement has not been satisfied (or waived in accordance
with its terms) on or prior to such 75th calendar date but all other conditions
to the Plan Effective Date have been satisfied (other than those that by their
nature are to be satisfied on the Plan Effective Date), such Milestone shall be
extended automatically to 95 calendar days after the Petition Date.

The date of each Milestone shall be calculated in accordance with Rule 9006 of
the Federal Rules of Bankruptcy Procedure.

 

  8.

Additional Covenants of the Debtors.

(a) For so long as this Agreement has not been validly terminated, each Debtor
(solely on behalf of itself and not on behalf of any other Debtor) shall:

(i) use its commercially reasonable efforts and work in good faith to (A)
negotiate the remaining Definitive Restructuring Documents and (B) obtain
(1) approval by the Bankruptcy Court of the Solicitation Materials and (2) entry
of the Confirmation Order by the Bankruptcy Court in accordance with the
Bankruptcy Code and the Bankruptcy Rules and the Milestones;

 

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(ii) (A) provide counsel for the Consenting Stakeholders a reasonable
opportunity (which shall be no less than two Business Days) to review draft
copies of all pleadings, motions, declarations, supporting exhibits, and
proposed orders (including, without limitation, all First Day Pleadings and
“second day” pleadings) and any other documents that the Debtors intend to file
in the Chapter 11 Cases, and (B) consult in good faith with counsel to the
Consenting Stakeholders regarding the form and substance of any document
referred to in the immediately preceding clause (A) before filing such document
in the Chapter 11 Cases, in each case (other than with respect to First Day
Pleadings and “second day” pleadings), except in the case of exigent
circumstances where doing so is not practicable;

(iii) not take any action that is contrary to or inconsistent with any
Definitive Restructuring Document, or that would be reasonably expected to
materially delay consummation of the Restructuring or the transactions
contemplated by the Definitive Restructuring Documents;

(iv) not, directly or indirectly (including through its representatives and
advisors), seek, solicit, encourage or, other than as expressly permitted in
Section 8(b) or 8(c) hereof, negotiate or engage in, any discussions or other
communications relating to, or enter into any agreements or arrangements
relating to, any alternative plan or transaction to the Plan;

(v) (A) pay in cash all reasonable and documented fees and expenses of the
Noteholder Group Advisors promptly following receipt of an invoice therefor,
(i) on the Business Day immediately preceding the Petition Date and (ii) subject
to any required approvals of the Bankruptcy Court, from time to time thereafter
and (B) pay in cash all reasonable and documented fees and expenses of Simpson
Thacher & Bartlett LLP and Stroock & Stroock & Levan LLP (in their capacity as
legal counsel to certain Noteholder Group members) on the Plan Effective Date
(or, if this Agreement is terminated, promptly following such termination), in
each case of the foregoing clauses (A) and (B) regardless of whether the
Restructuring is or has been consummated;

(vi) pay in cash all reasonable and documented fees and expenses of the First
Lien Lender Group Advisors promptly following receipt of an invoice therefor,
(i) on the Business Day immediately preceding the Petition Date and (ii) subject
to any required approvals of the Bankruptcy Court, from time to time thereafter,
regardless of whether the Restructuring is or has been consummated;

(vii) if the Debtors know of a breach by any Debtor of any of the obligations,
representations, warranties, or covenants of the Debtors set forth in this
Agreement, the Equity Investment Commitment Agreement, or the Plan, furnish
prompt written notice (and in any event within three (3) Business Days of
obtaining actual knowledge) to counsel to the Consenting Stakeholders and use
commercially reasonable efforts to take all remedial action reasonably necessary
as soon as reasonably practicable to cure such breach by any such Debtor;

 

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(viii) operate their businesses in the ordinary course in a manner consistent
with past practice in all material respects (other than any changes in
operations (A) resulting from or relating to the Plan or the proposed or actual
filing of the Chapter 11 Cases, (B) imposed by the Bankruptcy Court or
(C) related to the Specified Asset Sales);

(ix) to the extent any legal or structural impediments arise that would prevent,
hinder, or delay the consummation of the transactions contemplated by the
Definitive Restructuring Documents, negotiate in good faith appropriate
additional or alternative provisions to address any such impediments; provided
that such alternative does not alter, in any material respect, the substance and
economics of the Restructuring or the transactions contemplated by the
Definitive Restructuring Documents;

(x) not redeem, purchase, or acquire or offer to acquire any equity interests of
Quorum, or pay any dividend or make any distribution on account thereof; and

(xi) not acquire or divest (by merger, exchange, consolidation, acquisition of
stock or assets, or otherwise), or file any motion or application seeking
authority to acquire or divest, (A) any corporation, partnership, limited
liability company, joint venture, or other business organization or division or
(B) the Debtors’ assets, other than (1) related to the Specified Asset Sales, or
(2) in the ordinary course of business, as contemplated by the Definitive
Restructuring Documents or with the advance written consent of the Required
Consenting Stakeholders.

(b) Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement shall require a Debtor or the Governing Body of a Debtor to take any
action or to refrain from taking any action with respect to the Restructuring to
the extent such Debtor or Governing Body determines, after consultation with
counsel, that taking or failing to take such action would violate applicable law
or breach its or their fiduciary obligations under applicable law. The Debtors
shall give prompt written notice to the Consenting Stakeholders of any
determination made in accordance with this Section 8(b). This Section 8(b) shall
not impede any Party’s right to terminate this Agreement pursuant to Section 14
hereof.

(c) Notwithstanding anything to the contrary in this Agreement, but subject to
the terms of Section 8(b), the Debtors may (i) receive, respond to, and
consider—but not solicit—proposals, offers, indications of interest or inquiries
for one or more Alternative Transactions from other parties and, (ii) to the
extent the Board determines that such Alternative Transaction could reasonably
be expected to provide a higher or better recovery to Holders of Claims or
Interests in the Debtors as compared to the recovery such Holders would receive
pursuant to the transactions contemplated herein (such Alternative Transaction,
a “Superior Alternative Transaction”), negotiate, pursue, provide due diligence
in connection with, discuss, and/or analyze such unsolicited Superior
Alternative Transaction without breaching or terminating this Agreement;
provided that the Debtors shall promptly and, in any event, within two Business
Days (i) notify counsel to the Consenting Stakeholders upon (x) receipt of any
offer or proposal (written or oral) for a Superior Alternative Transaction which
the Debtors are considering and (y) electing to enter into a Superior
Alternative Transaction, (ii) provide counsel to the Consenting Stakeholders
with all offers or proposals received from third parties in connection with a
Superior Alternative

 

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Transaction, and (iii) respond promptly to reasonable information requests and
questions from counsel to the Consenting Stakeholders relating to any such offer
or proposal. If any Debtor notifies counsel to the Consenting Stakeholders, or
announces publicly, that any Debtor has entered, or intends to enter, into
definitive documentation with respect to a Superior Alternative Transaction,
then all obligations of each Consenting Stakeholder under this Agreement shall
immediately terminate.

(d) As of the Petition Date, Mr. Paul Rundell shall be appointed Chief
Restructuring Officer of Quorum, with requisite authority to monitor the
operations and finances of the Debtors in compliance with the provisions of the
DIP Credit Agreement, including the budget and cash flow forecast thereunder.

 

  9.

No Waiver of Participation and Preservation of Rights.

For the avoidance of doubt, nothing in this Agreement shall limit any rights of
any Party, subject to applicable law and the agreements contained in any
Definitive Restructuring Document, to (a) initiate, prosecute, appear, or
participate as a party in interest in any contested matter or adversary
proceeding to be adjudicated in the Chapter 11 Cases so long as such initiation,
prosecution, appearance or participation and the positions advocated in
connection therewith are not inconsistent with the Definitive Restructuring
Documents, (b) object to any motion to approve or confirm, as applicable, any
other plan of reorganization, sale transaction, or any motions related thereto
filed in the Chapter 11 Cases, to the extent that the terms of any such motions,
plans or transactions are inconsistent with any Definitive Restructuring
Document, (c) appear as a party in interest in the Chapter 11 Cases for the
purpose of contesting whether any matter or fact is or results in a breach of,
or is inconsistent in any material respect with, any Definitive Restructuring
Document, and (d) file a proof of claim, if required.

Except as provided in any Definitive Restructuring Document, nothing herein or
therein is intended to, does or shall be deemed in any manner to, waive, limit,
impair or restrict the ability of any Party to protect and preserve its rights,
remedies and interests, including Claims against any of the Debtors, or liens or
security interests it may have in any assets of any of the Debtors. Without
limiting the foregoing in any way, if this Agreement is terminated in accordance
with its terms for any reason, each Party fully reserves any and all of its
respective rights, remedies and interests.

 

  10.

Mutual Representations and Warranties of All Parties.

Each Party (in the case of a Consenting Stakeholder, solely on behalf of itself,
and not on behalf of any other Consenting Stakeholder) represents and warrants
to each of the other Parties that, as of the date hereof:

(a) it has all requisite power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby, and perform its obligations
hereunder;

(b) the execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary action on its
part; and

(c) this Agreement constitutes the legally valid and binding obligation of such
Party, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or limiting creditors’ rights
generally or by equitable principles relating to enforceability.

 

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  11.

Additional Representations and Warranties by the Consenting Stakeholders.

Each Consenting Stakeholder (solely on its own behalf and not on behalf of any
other Consenting Stakeholder) represents and warrants to the Debtors, as of the
date hereof, that:

(a) Holdings by the Consenting Stakeholders. Such Consenting Stakeholder
(i) either (A) is the sole beneficial owner of the full amount of Covered Claims
listed on Schedule 1 hereto opposite the name of such Consenting Stakeholder or
(B) has sole investment or voting discretion with respect to the full amount of
such Covered Claims and has the power and authority to bind the beneficial
owners of such Covered Claims to the terms of this Agreement, (ii) has full
power and authority to act on behalf of, vote, and consent to matters concerning
such Covered Claims and to dispose of, exchange, assign, and transfer such
Covered Claims, including the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and (iii) does not directly
or indirectly own any Covered Claims other than as set forth on
Schedule 1 hereto;

(b) No Transfers. Such Consenting Stakeholder has made no Transfer of the
Covered Claims held by such Consenting Stakeholder set forth on Schedule 1
hereto;

(c) Sufficiency of Information Received. Such Consenting Stakeholder has
reviewed, or has had the opportunity to review, with the assistance of
professional and legal advisors of its choosing, all information it deems
necessary and appropriate for such Consenting Stakeholder to evaluate the
financial and other risks inherent in the Restructuring and accept the terms of
the Plan as set forth in Exhibit A hereto;

(d) Knowledge and Experience. Such Consenting Stakeholder has such knowledge and
experience in financial and business matters of this type that it is capable of
evaluating the merits and risks of entering into this Agreement and of making an
informed investment decision, and has conducted an independent review and
analysis of the business and affairs of the Debtors that it considers sufficient
and reasonable for purposes of entering into this Agreement;

(e) No Conflicts (Contracts). The execution, delivery and performance by such
Consenting Stakeholder of this Agreement and the transactions contemplated by
the Definitive Restructuring Documents does not and shall not conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under, any contractual obligation to which such Consenting Stakeholder
is a party, except as would not have a material adverse effect on or materially
delay consummation of the Restructuring;

(f) Governmental Approvals. The execution, delivery and performance by such
Consenting Stakeholder of this Agreement does not and shall not require any
registration or filing with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or governmental authority or
regulatory body, except as may be required for approval of the transactions
contemplated by the Definitive Restructuring Documents pursuant to the Required
Regulatory Approvals and applicable Antitrust Laws, and except as would not
otherwise have a material adverse effect on the Restructuring;

 

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(g) No Conflicts (Laws and Organizational Documents). The execution, delivery,
and performance of this Agreement does not (i) violate any provision of any law,
rule, or regulation applicable to such Consenting Stakeholder or (ii) violate
such Consenting Stakeholder’s certificate of incorporation, limited liability
company agreement, bylaws, or other organizational documents; and

(h) Certain Securities Act Matters. (i) Such Consenting Stakeholder is either
(A) a qualified institutional buyer as defined in Rule 144A of the Securities
Act, (B) not a U.S. person (as defined in Regulation S of the Securities Act),
or (C) an institutional accredited investor (as defined in the Securities Act
Rules); and (ii) any securities acquired by the Consenting Stakeholder in
connection with the Restructuring will have been acquired for investment and not
with a view to distribution or resale in violation of the Securities Act.

 

  12.

Additional Representations and Warranties by the Debtors.

Each Debtor (solely on its own behalf and not on behalf of any other Debtor)
represents and warrants to the Consenting Stakeholders party hereto on the date
hereof to its knowledge, as of the date hereof, that:

(a) No Conflicts (Contracts). The execution, delivery and performance by such
Debtor of this Agreement and the transactions contemplated by the Definitive
Restructuring Documents, including the contemplated New Quorum Constituent
Documents, does not and shall not conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, any
contractual obligation to which such Debtor is a party, except (i) as a direct
result of the filing of the Chapter 11 Cases, (ii) to the extent the applicable
Debtor has obtained a waiver or forbearance of any such default which such
waiver remains in effect, and/or (iii) to the extent any such breach or default
would not be expected to have a material adverse effect on the Debtors’ business
or materially delay consummation of the Restructuring;

(b) Governmental Approvals. Subject to the accuracy of Section 11(f), the
execution, delivery and performance by such Debtor of this Agreement does not
and shall not require any registration or filing with, consent or approval of,
or notice to, or other action to, with or by, any federal, state or governmental
authority or regulatory body, except as may be necessary or required for
(i) approval by the Bankruptcy Court of such Debtor’s authority to implement
this Agreement and the Restructuring, (ii) filings pursuant to the Securities
Exchange Act of 1934, as amended, (iii) filings pursuant to applicable state
securities or “blue sky” laws, and (iv) approval of the transactions
contemplated by the Definitive Restructuring Documents pursuant to the Required
Regulatory Approvals and applicable Antitrust Laws, and except as would not
otherwise have a material adverse effect on the consummation of the
Restructuring;

(c) No Conflicts (Laws and Organizational Documents). The execution, delivery,
and performance of this Agreement does not (i) violate any provision of any law,
rule, or regulation applicable to such Debtor or (ii) violate such Debtor’s
certificate of incorporation, limited liability company agreement, bylaws, or
other organizational documents; and

 

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(d) No Defaults. No Default or Event of Default (as such terms are defined in
each of the Senior Secured Credit Agreement or the Senior Notes Indenture, as
applicable) has occurred and is continuing under the Senior Notes Indenture or
the Senior Secured Credit Agreement, other than the Specified Defaults.

 

  13.

Transfer Restrictions.

(a) So long as this Agreement has not been terminated in accordance with its
terms, no Consenting Stakeholder shall (i) sell, use, pledge, assign, transfer,
permit the participation in, or otherwise dispose of any ownership (including
any beneficial ownership2) in its Covered Claims, in whole or in part (other
than pledges, transfers or security interests that such Consenting Stakeholder
may have created (A) in favor of a prime broker under and in accordance with its
prime brokerage agreement with such prime broker or (B) in favor of a financing
counterparty in accordance with any ordinary course financing arrangements, in
each case which will be released in connection with the consummation of the
transactions contemplated by the Definitive Restructuring Documents) or
(ii) grant any proxies or deposit any of such Consenting Stakeholder’s Covered
Claims into a voting trust, or enter into a voting agreement with respect to any
such Covered Claim (collectively, the actions described in clauses (i) and (ii),
a “Transfer”), unless such Transfer satisfies the following requirement (a
transfer that satisfies such requirement, a “Permitted Transfer” and the
transferee of a Permitted Transfer, a “Permitted Transferee”): the intended
transferee is a Consenting Stakeholder or, if not a Consenting Stakeholder,
executes and delivers to Quorum and counsel to the Consenting
Stakeholders an executed transfer agreement in the form attached hereto as
Exhibit B (a “Transfer Agreement”) before such Transfer is effective (it being
understood that no such Transfer shall be effective, including without
limitation for purposes of calculating Required Consenting Stakeholders, until
notification of such Transfer and a copy of the executed Transfer Agreement is
received by Quorum and counsel to Consenting Stakeholders).

(b) Any Consenting Stakeholder may Transfer, and execution of a Transfer
Agreement shall not be required for Transfer of, Covered Claims to any other
Consenting Stakeholder. A Qualified Marketmaker that acquires any Covered Claims
solely for the purpose of acting as a Qualified Marketmaker for such Covered
Claims shall not be required to execute and deliver a Transfer Agreement or
otherwise agree to be bound by the terms and conditions set forth in this
Agreement if such Qualified Marketmaker promptly, and in any event within one
Business Day, transfers such Claims (by purchase, sale, assignment,
participation, or otherwise) to a Consenting Stakeholder or Permitted Transferee
pursuant to a Permitted Transfer.

(c) This Agreement shall in no way be construed to preclude a Consenting
Stakeholder from acquiring additional Covered Claims or any other Claim against
or equity Interest in Quorum; provided that (i) if any Consenting Stakeholder
acquires additional Covered Claims after the date hereof, such Consenting
Stakeholder shall make commercially reasonable efforts to notify Quorum and
counsel to the Consenting Stakeholders, in each case on a confidential basis,
within a reasonable period of time following such acquisition, which notice
shall be deemed

 

2 

As used herein, the term “beneficial ownership” means the direct or indirect
economic ownership of, and/or the power, whether by contract or otherwise, to
direct the exercise of the voting rights and the disposition of, the Covered
Claims or the right to acquire such claims.

 

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to be provided upon the filing of any statement with the Bankruptcy Court
required by Rule 2019 of the Federal Rules of Bankruptcy Procedure including
revised holdings information for such Consenting Stakeholder of such
acquisition, including the amount of such acquisition and (ii) such Consenting
Stakeholder hereby acknowledges and agrees that such Covered Claim shall
automatically and immediately upon acquisition by a Consenting Stakeholder be
subject to the terms of this Agreement (regardless of when or whether notice of
such acquisition is given in accordance herewith).

(d) Any Transfer made in violation of this provision shall be void ab initio.
Any Consenting Stakeholder that effectuates a Permitted Transfer to a Permitted
Transferee shall have no liability under this Agreement arising from or related
to the failure of the Permitted Transferee to comply with the terms of this
Agreement.

 

  14.

Termination of Obligations.

(a) This Agreement shall terminate and all of the obligations of the Parties
shall be of no further force or effect upon the occurrence of any of the
following events: (i) the Plan Effective Date, (ii) the Confirmation Order is
reversed or vacated, (iii) any court of competent jurisdiction has entered a
Final order declaring this Agreement to be unenforceable, (iv) the Debtors and
the Required Consenting Stakeholders mutually agree to such termination in
writing, or (v) this Agreement is terminated pursuant to paragraph (b), (c), or
(e) of this Section 14.

(b) Quorum may, in its discretion, terminate this Agreement by written notice to
the other Parties, upon the occurrence of any of the following events:

(i) within three (3) Business Days after the giving of written notice by Quorum
to the Consenting Stakeholders of a determination by the Board, in good faith
and after consulting with counsel, that proceeding with the Restructuring and
pursuit of confirmation and consummation of the Plan would breach the Board’s
fiduciary obligations;

(ii) a breach by one or more Consenting Noteholders, holding Senior Notes in an
aggregate amount such that non-breaching Consenting Noteholders collectively
constitute 50% or fewer in number of the Noteholders or hold less than 66 2/3%
of the aggregate outstanding principal amount of the Senior Notes, of its or
their material obligations, representations or warranties hereunder, which
breach is not cured within ten (10) days after the giving of written notice by
Quorum of such breach to such Consenting Noteholder(s) and counsel to the
Consenting Noteholders;

(iii) a breach by one or more Consenting First Lien Lenders, holding First Lien
Loans in an aggregate amount such that non-breaching Consenting First Lien
Lenders collectively constitute 50% or fewer in number of the First Lien Lenders
or hold less than 66 2/3% of the aggregate outstanding principal amount of the
First Lien Loans, of its or their material obligations, representations or
warranties hereunder, which breach is not cured within ten (10) days after the
giving of written notice by Quorum of such breach to such Consenting First Lien
Lender(s) or counsel to the Consenting First Lien Lenders;

(iv) the Equity Investment Commitment Agreement has been validly terminated, or
purported to be terminated by any party thereto other than Quorum; or

 

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(v) the (i) Consenting Noteholders no longer collectively constitute more than
50% in number of the Noteholders or no longer hold at least 66 2/3% of the
aggregate outstanding principal amount of the Senior Notes or (ii) Consenting
First Lien Lenders no longer collectively constitute more than 50% in number of
the First Lien Lenders or no longer hold at least 66 2/3% of the aggregate
outstanding principal amount of the First Lien Loans;

provided that, upon a termination of this Agreement by Quorum pursuant to this
Section 14(b), (x) all obligations of the Consenting Stakeholders hereunder
shall immediately terminate without further action or notice by such Consenting
Stakeholders, and (y) Quorum (and its directors, officers, employees, advisors,
subsidiaries, and representatives) shall not have or incur any liability under
this Agreement or otherwise on account of such termination.

(c) This Agreement may be terminated by the Required Consenting Noteholders upon
the occurrence of any of the following events (it being understood that the
following termination events are intended solely for the benefit of the
Consenting Noteholders):

(i) any Debtor files any plan of reorganization (or disclosure statement related
thereto) in the Chapter 11 Cases other than the Plan without the prior written
consent of the Required Consenting Noteholders;

(ii) after filing of the Plan with the Bankruptcy Court, (A) any amendment or
modification to any Definitive Restructuring Document is made by the Debtors or
(B) any pleading that seeks Bankruptcy Court approval to amend or modify any
Definitive Restructuring Document is filed by the Debtors, and such amendment,
modification or filing is (1) inconsistent in any material respect with any
Definitive Restructuring Document and (2) not in form and substance satisfactory
to the Required Consenting Noteholders;

(iii) the Bankruptcy Court grants relief that is inconsistent in any material
respect with any Definitive Restructuring Document in a manner that directly and
adversely impacts the treatment of the Senior Notes Claims or the transactions
contemplated by the Definitive Restructuring Documents without the consent of
the Required Consenting Noteholders;

(iv) a breach by any Debtor of (A) its obligations hereunder in any material
respect or (B) any of its representations or warranties hereunder that would
have a material adverse impact on the Debtors or their ability to consummate the
Plan or the transactions contemplated by the Definitive Restructuring Documents,
which breach, in the case of each of clause (A) and clause (B), is not cured
within five (5) Business Days after the giving of written notice by counsel for
the Consenting Noteholders to the Debtors and counsel to the Consenting First
Lien Lenders;

(v) a breach by one or more Consenting First Lien Lenders holding First Lien
Loans in an aggregate amount such that non-breaching Consenting First Lien
Lenders constitute 50% or fewer in number of the First Lien Lenders or hold less
than 66 2/3% of the aggregate outstanding principal amount of the First Lien
Loans, of (A) its or their obligations

 

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hereunder in any material respect or (B) any of its or their representations or
warranties hereunder, in each case that would be reasonably likely to have a
material adverse impact on the Debtors or their ability to consummate the Plan
or the transactions contemplated by the Definitive Restructuring Documents,
which breach is not cured within five (5) Business Days after the giving of
written notice by counsel for the Consenting Noteholders to the Debtors and
counsel to such breaching Consenting First Lien Lender;

(vi) any Milestone set forth in Section 7 hereof has not been satisfied, unless
extended in accordance with the terms of this Agreement;

(vii) the Equity Investment Commitment Agreement is validly terminated;

(viii) if any Debtor’s use of the DIP Facility is terminated and remains
terminated for five (5) Business Days;

(ix) (A) a trustee, receiver, or examiner with expanded powers beyond those set
forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code is appointed in one
or more of the Chapter 11 Cases, (B) the filing by any Debtor of a motion or
other request for relief seeking to dismiss any of the Chapter 11 Cases or
convert any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy
Code, or (C) entry of an order by the Bankruptcy Court dismissing any of the
Chapter 11 Cases or converting any of the Chapter 11 Cases to a case under
Chapter 7 of the Bankruptcy Code;

(x) any Debtor challenges the principal amount, priority, and/or validity of the
Senior Notes Claims;

(xi) the Bankruptcy Court enters an order in the Chapter 11 Cases terminating
any of the Debtors’ exclusive right to file a plan or plans of reorganization
pursuant to Section 1121 of the Bankruptcy Code;

(xii) any Debtor sells, or files any motion or application seeking authority to
sell, a material portion of the Debtors’ assets as a whole, without the prior
written consent of the Required Consenting Noteholders;

(xiii) the Required Consenting First Lien Lenders terminate this Agreement
pursuant to Section 14(d) hereof;

(xiv) Quorum (A) files a motion or pleading with the Bankruptcy Court seeking
authority to terminate this Agreement or (B) provides notice to counsel to the
Consenting Stakeholders of its intent to enter into or otherwise publicly
announces its entry into or intent to pursue an Alternative Transaction;

(xv) the Debtors fail to make a payment required under Section 8(a)(v) hereof,
including, for the avoidance of doubt, on the Plan Effective Date; or

(xvi) there occurs any uncured Event of Default (as defined in the Senior Notes
Indenture) prior to the Petition Date.

 

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(d) This Agreement may be terminated by the Required Consenting First Lien
Lenders, solely as to each Consenting First Lien Lender supporting such
termination, upon the occurrence of any of the following events (it being
understood that the following termination events are intended solely for the
benefit of the Consenting First Lien Lenders):

(i) any Debtor files any plan of reorganization (or disclosure statement related
thereto) in the Chapter 11 Cases other than the Plan without the prior written
consent of the Required Consenting First Lien Lenders;

(ii) the Bankruptcy Court grants relief that is inconsistent in any material
respect with any Definitive Restructuring Document in a manner that directly and
adversely impacts the treatment of the First Lien Loan Claims without the prior
written consent of the Required Consenting First Lien Lenders;

(iii) a breach by any Debtor of its obligations hereunder in any material
respect, which breach is not cured within five (5) Business Days after the
giving of written notice by counsel for the Consenting First Lien Lenders to the
Debtors and counsel to the Consenting Noteholders;

(iv) a breach by one or more Consenting Noteholders holding Senior Notes in an
aggregate amount such that non-breaching Consenting Noteholders constitute 50%
or fewer in number of the Noteholders or hold less than 66 2/3% of the aggregate
outstanding principal amount of the Senior Notes, of (A) its or their
obligations hereunder in any material respect or (B) any of its or their
representations or warranties hereunder, in each case that would be reasonably
likely to have a material adverse impact on the Debtors or their ability to
consummate the Plan or the transactions contemplated by the Definitive
Restructuring Documents, which breach is not cured within five (5) Business Days
after the giving of written notice by counsel for the Consenting First Lien
Lenders to the Debtors and counsel to such breaching Consenting Noteholders;

(v) any Milestone set forth in Section 7 hereof has not been satisfied, unless
extended in accordance with the terms of this Agreement;

(vi) the Equity Investment Commitment Agreement is validly terminated;

(vii) the Equity Commitment Parties fail to fully execute the Equity Investment
Commitment Agreement;

(viii) the Equity Commitment Aggregate Amount (as defined in the Equity
Investment Commitment Agreement) is less than $200 million;

(ix) the First Lien Term Claims Paydown Amount (as defined in Exhibit A hereto)
is less than $50 million;

 

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(x) if any Debtor’s use of the DIP Facility is terminated and remains terminated
for five (5) Business Days;

(xi) if the DIP Lenders fail to fully execute (or provide notice that they will
fail to fully execute) the DIP Credit Agreement in a manner consistent in all
material respects with the terms set forth in the DIP Facility Term Sheet;

(xii) (A) a trustee, receiver, or examiner with expanded powers beyond those set
forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code is appointed in one
or more of the Chapter 11 Cases, (B) the filing by any Debtor of a motion or
other request for relief seeking to dismiss any of the Chapter 11 Cases or
convert any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy
Code, or (C) entry of an order by the Bankruptcy Court dismissing any of the
Chapter 11 Cases or converting any of the Chapter 11 Cases to a case under
Chapter 7 of the Bankruptcy Code;

(xiii) any Debtor challenges the principal amount, priority, and/or validity of
the First Lien Loan Claims and/or the liens in respect thereof;

(xiv) any Debtor grants a lien on the Collateral (as defined in the Senior
Secured Credit Agreement) that is senior to the valid and perfected liens on
such Collateral securing the First Lien Loan Claims under the Senior Secured
Credit Agreement, except (i) in respect of adequate protection to the extent
contemplated by the DIP Orders, (ii) the Carve Out (as defined in the Interim
DIP Order) and (iii) to the extent such Debtor may grant such lien under section
6.02 of the Senior Secured Credit Agreement;

(xv) the Required Consenting Noteholders terminate this Agreement pursuant to
Section 14(c) hereof;

(xvi) the Bankruptcy Court enters an order in the Chapter 11 Cases terminating
any of the Debtors’ exclusive right to file a plan or plans of reorganization
pursuant to Section 1121 of the Bankruptcy Code;

(xvii) any Debtor sells or files any motion or application seeking authority to
sell a material portion of the Debtors’ assets as a whole, without the prior
written consent of the Required Consenting First Lien Lenders (other than the
Specified Asset Sales);

(xviii) Quorum (A) files a motion or pleading with the Bankruptcy Court seeking
authority to terminate this Agreement or (B) provides notice to counsel to the
Consenting Stakeholders of its entry into or otherwise publicly announces its
entry into or intent to pursue an Alternative Transaction;

(xix) there occurs any uncured Event of Default (as defined in the Senior
Secured Credit Agreement) prior to the Petition Date; or

(xx) the Consenting First Lien Lenders under the Senior Secured Credit Agreement
do not receive payment on April 30, 2020 of all accrued but unpaid interest (at
the non-default contract rate) as of such date.

 

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(e) The Debtors or the Required Consenting Stakeholders (by written notice
executed by counsel for the Consenting Noteholders and counsel for the
Consenting First Lien Lenders at the direction of the Required Consenting
Stakeholders) may terminate this Agreement by written notice to the Parties in
the event that the Bankruptcy Court or other governmental authority shall have
issued any order, injunction or other decree or take any other action, which
restrains, enjoins or otherwise prohibits the implementation of the
Restructuring or the Definitive Restructuring Documents substantially on the
terms and conditions set forth in this Agreement; provided, however, that the
Debtors shall have ten (10) days after notice to the Debtors of such ruling or
order to obtain relief that would allow consummation of the Restructuring and
the Definitive Restructuring Documents, as applicable, in a manner that (i) does
not prevent or diminish in a material way compliance with the terms of the
Definitive Restructuring Documents and (ii) is acceptable to the Required
Consenting First Lien Lenders in their reasonable discretion and the Required
Consenting Noteholders in their sole discretion.

(f) This Agreement shall terminate solely as to any Consenting Stakeholder on
the date on which such Consenting Stakeholder has transferred all (but not less
than all) of its Covered Claims in accordance with and subject to Section 13 of
this Agreement.

(g) No Party may seek to terminate or terminate this Agreement based upon any
default, failure of a condition, or right of termination in this Agreement
arising (directly or indirectly) out of its own actions or omissions.

(h) If this Agreement is terminated as to any Party pursuant to this Section 14,
this Agreement shall forthwith become void and of no further force or effect
with respect to such Party, such Party shall be released from its commitments,
undertakings and agreements under or related to this Agreement, and there shall
be no liability or obligation on the part of such Party; provided that (i) such
Party shall have all rights and remedies available to it under applicable law
(for all matters unrelated to this Agreement); (ii) any and all consents and
ballots tendered by such Party prior to such termination shall be deemed, for
all purposes, automatically to be null and void ab initio, shall not be
considered or otherwise used in any manner by the Parties in connection with the
Plan and this Agreement or otherwise and such consents or ballots may be changed
or resubmitted regardless of whether the applicable voting deadline has passed
(without the need to seek a court order or consent from the Debtors allowing
such change or resubmission); (iii) in no event shall any such termination
relieve such Party from liability for its breach or non-performance of its
obligations hereunder prior to the date of such termination (including any
reimbursement obligations incurred prior to the date of such termination); and
(iv) in no event shall any such termination relieve such Party from its
obligations under this Agreement which expressly survive any such termination
pursuant to Section 34 hereof.

 

  15.

Specific Performance.

The Parties agree that money damages would be an insufficient remedy for any
breach of this Agreement by any Party and each non-breaching Party shall be
entitled to specific performance and injunctive or other equitable relief,
including attorneys’ fees and costs, as a remedy of any such breach, including
an order of the Bankruptcy Court or other court of competent jurisdiction
requiring any Party to comply promptly with any of its obligations hereunder,
and each

 

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Party agrees to waive any requirement for the securing or posting of a bond in
connection with such remedy, as the sole remedy to which such non-breaching
Party will be entitled, at law or in equity. The Parties agree that such relief
will be their only remedy against the applicable other Party with respect to any
such breach, and that in no event will any Party be liable for monetary damages
(including consequential, special, indirect or punitive damages or damages for
lost profits) other than attorneys’ fees and costs.

 

  16.

Counterparts.

This Agreement and any amendments, waivers, consents, or supplements hereto or
in connection herewith may be executed in multiple counterparts and delivered by
electronic mail (in “.pdf” or “.tif” format), facsimile or otherwise, each of
which shall be deemed to be an original for the purposes of this Agreement and
all of which taken together shall constitute one and the same Agreement.

 

  17.

No Solicitation and Acknowledgements.

Notwithstanding anything to the contrary in this Agreement, each Party
acknowledges that (a) no securities of Quorum are being offered or sold hereby
and this Agreement neither constitutes an offer to sell nor a solicitation of an
offer to buy any securities of Quorum and (b) this Agreement is not, and shall
not be deemed to be, a solicitation of a vote for the acceptance of the Plan
pursuant to Section 1125 of the Bankruptcy Code. The acceptance of votes from
holders of Claims and Interests, as applicable, will not be solicited until such
holders have received the Disclosure Statement and related Solicitation
Materials that meet the requirements of the Bankruptcy Code, including
Bankruptcy Code Sections 1125 and 1126.

 

  18.

Time is of the Essence.

The Parties acknowledge and agree that time is of the essence, and that they
must each use commercially reasonable efforts to effectuate and consummate the
Restructuring as soon as reasonably practicable.

 

  19.

Governing Law; Consent to Jurisdiction.

(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW
PROVISION WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION.

(b) By its execution and delivery of this Agreement, each Party hereby
irrevocably and unconditionally agrees for itself that any legal action, suit or
proceeding against it with respect to any matter under or arising out of or in
connection with this Agreement or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding, may be brought solely in either
a state or federal court of competent jurisdiction in the County of New York in
the State of New York. By execution and delivery of this Agreement, each of the
parties hereto hereby irrevocably accepts and submits itself to the nonexclusive
jurisdiction of each such court, generally and unconditionally, with respect to
any such action, suit or proceeding.

 

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Notwithstanding the foregoing, upon the commencement of the Chapter 11 Cases,
each Party hereto hereby agrees that, if the petitions have been filed and the
Chapter 11 Cases are pending, the Bankruptcy Court shall have exclusive
jurisdiction of all matters arising out of or in connection with this Agreement.
The Parties to this Agreement expressly consent to entry of final orders by the
Bankruptcy Court arising out of or relating to this Agreement, including but not
limited to orders interpreting and enforcing this Agreement.

 

  20.

Independent Analysis.

Each Party hereby confirms that it has made its own decision to execute this
Agreement based upon its own independent assessment of documents and information
available to it, as it has deemed appropriate. Each Party has had the ability
to, and has, consulted with counsel in connection with its consideration of this
Agreement. Each Party agrees that it has not entered into this Agreement based
upon any representations or warranties that are not included herein.

 

  21.

Third-Party Beneficiaries.

Unless expressly stated herein, this Agreement shall be solely for the benefit
of the Parties hereto and no other Entity shall be a third-party beneficiary
hereof.

 

  22.

Notices.

Any notice, request, instruction or other document to be given hereunder by any
Party to the others shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, by email or overnight courier.

(a) If to a Consenting Noteholder, to:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention:    Nicole Greenblatt, P.C.

                      nicole.greenblatt@kirkland.com

                    Steven N. Serajeddini, P.C.

                     steven.serajeddini@kirkland.com

(b) If to a Consenting First Lien Lender, to:

Milbank LLP

55 Hudson Yards

New York, NY 10001

Attention:    Dennis F. Dunne

                    ddunne@milbank.com

                    Tyson Lomazow

                      tlomazow@milbank.com

 

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(c) If to Debtors, to:

Hal McCard

Senior Vice President, General Counsel, and Secretary

Quorum Health Corporation

1573 Mallory Lane Suite 100

Brentwood, TN 37027

hal_mccard@quorumhealth.com

With a courtesy copy (that does not constitute notice) to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention:    Josh Feltman

                    jafeltman@wlrk.com

and to:

McDermott Will & Emery LLP

444 West Lake Street, Suite 4000

Chicago, IL 60606

Attention:    Felicia Gerber Perlman

                    fperlman@mwe.com

                    Bradley Thomas Giordano

                    bgiordano@mwe.com

 

  23.

Severability.

Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision survives to the extent it is not
so declared, and all of the other provisions of this Agreement remain in full
force and effect only if, after excluding the portion deemed to be
unenforceable, the remaining terms provide for the consummation of the
transactions contemplated hereby in substantially the same manner as originally
set forth at the later of the date this Agreement was executed or last amended.

 

  24.

Mutual Drafting.

This Agreement is the result of the Parties’ joint efforts, and each of them and
their respective counsel have reviewed this Agreement and each provision hereof
has been subject to the mutual consultation, negotiation, and agreement of the
Parties, and the language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and therefore
there shall be no construction against any Party based on any presumption of
that Party’s involvement in the drafting thereof.

 

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  25.

Headings.

The headings used in this Agreement are for convenience of reference only and do
not constitute a part of this Agreement and shall not be deemed to limit,
characterize, or in any way affect any provision of this Agreement, and all
provisions of this Agreement shall be enforced and construed as if no headings
had been used in this Agreement.

 

  26.

Waivers and Amendments.

Notwithstanding anything to the contrary contained herein, this Agreement may
not be changed, modified, amended, or supplemented in any manner, nor shall any
provision or requirement hereof be waived, except in accordance with this
Section 26.

(a) This Agreement may be modified, amended, or supplemented, or a condition or
requirement of this Agreement may be waived, with the prior written consent of
(i) each Debtor; and (ii) except as provided in Section 26(b) hereof, the
Required Consenting Stakeholders.

(b) Any modification, amendment, supplement, waiver, or change described in this
Section 26(b) requires the written consent specified in this Section 26(b).

(i) Any modification, amendment, supplement, waiver, or change with respect to
the following provisions of this Agreement requires the prior written consent of
each Consenting Noteholder and each Consenting First Lien Lender: (A) the
definition of “Required Consenting Stakeholders” herein; and (B) this
Section 26.

(ii) Any modification, amendment, supplement, waiver, or change with respect to
any of the following requires the prior written consent of each Consenting
Noteholder: (A) the definition of “Consenting Noteholders” or “Required
Consenting Noteholders” herein; (B) the definition of “Noteholder Group” or
“Noteholder Group Advisors” herein; (C) the definition of “QHC Litigation Trust
Agreement” herein; (D) with respect to each capitalized term in Section 3(a) of
this Agreement, the definitions of each such term set forth herein; (E) the DIP
Facility Term Sheet; and (F) the QHC Litigation Trust Term Sheet.

(iii) Any modification, amendment, supplement, waiver, or change with respect to
the following provisions of this Agreement requires the prior written consent of
each Consenting First Lien Lender: (A) the definition of “Consenting First Lien
Lenders” herein and (B) the definition of “Required Consenting First Lien
Lenders” herein.

(iv) Any modification, amendment, supplement, or waiver that has a material,
disproportionate, and adverse effect on any Claim or Interest held by a
particular Consenting Stakeholder requires the written consent of each such
affected Consenting Stakeholder.

 

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(c) Any proposed modification, amendment, supplement, or waiver that does not
comply with this Section 26 shall be ineffective and void ab initio.

(d) The waiver by any Party of a breach of any provision of this Agreement shall
not operate or be construed as a further or continuing waiver of such breach or
as a waiver of any other or subsequent breach. No failure on the part of any
Party to exercise, and no delay in exercising, any right, power, or remedy under
this Agreement shall operate as a waiver of any such right, power, or remedy or
any provision of this Agreement, nor shall any single or partial exercise of
such right, power, or remedy by such Party preclude any other or further
exercise of such right, power, or remedy or the exercise of any other right,
power, or remedy. All remedies under this Agreement are cumulative and are not
exclusive of any other remedies.

(e) A Party shall be deemed to have given the written consent required by this
Section 26 if counsel to such Party conveys such consent in writing (including
by electronic mail) to counsel to the Party receiving such consent.

 

  27.

[Reserved].

 

  28.

Several, Not Joint, Claims.

The agreements, representations, warranties, and obligations of the Parties
under this Agreement are, in all respects, several and not joint.

 

  29.

Independent Nature of Consenting Stakeholders’ Obligations and Rights.

The obligations of each Consenting Stakeholder under this Agreement, the Equity
Investment Commitment Agreement and the transactions contemplated herein and
therein are several and not joint with the obligations of any other Consenting
Stakeholder, and no Consenting Stakeholder shall be responsible in any way for
the performance of the obligations of any other Consenting Stakeholder under
this Agreement, the Equity Investment Commitment Agreement, or the transactions
contemplated herein or therein. Nothing contained herein or in any other
agreement referred to in this Agreement, and no action taken by any Consenting
Stakeholder pursuant hereto or thereto, shall be deemed to constitute the
Consenting Stakeholders as, and the Debtors acknowledges that the Consenting
Stakeholders do not so constitute, a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Consenting
Stakeholders are in any way acting in concert or as a group, including, without
limitation, with respect to any agreement, arrangement, or understanding with
respect to acting together for the purpose of acquiring, holding, voting, or
disposing of any equity securities of Quorum or with respect to acting as a
“group” within the meaning of Rule 13d-5 under the Securities Exchange Act of
1934, as amended, and the Debtors will not assert any such claim with respect to
such obligations or the transactions contemplated by this Agreement or the
Equity Investment Commitment Agreement, and the Debtors acknowledge that the
Consenting Stakeholders are not acting in concert or as a group with respect to
such obligations or the transactions contemplated by this Agreement or the
Equity Investment Commitment Agreement. The Debtors acknowledge and each
Consenting Stakeholder confirms that it has independently participated in the
negotiation of the transactions contemplated herein and by the Equity Investment
Commitment Agreement. Each Consenting

 

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Stakeholder shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement and the
Equity Investment Commitment Agreement and it shall not be necessary for any
other Consenting Stakeholder to be joined as an additional party in any
proceeding for such purpose. The use of a single agreement to effectuate the
transactions contemplated herein was solely in the control of the Debtors, not
the action or decision of any Consenting Stakeholder, and was done solely for
the convenience of the Debtors and not because it was required or requested to
do so by any Consenting Stakeholder.

 

  30.

Automatic Stay.

The Parties hereby acknowledge and agree and shall not dispute that after the
commencement of the Chapter 11 Cases, any Party is authorized to terminate, and
to take any action necessary to effectuate the termination of, this Agreement
pursuant to terms hereof, notwithstanding Section 362 of the Bankruptcy Code or
any other applicable law; provided, that nothing herein shall prejudice any
Party’s rights to argue that the giving of notice of termination was not
otherwise proper under the terms of this Agreement. No cure period contained in
this Agreement shall be extended pursuant to Sections 108 or 365 of the
Bankruptcy Code or any other applicable law without the prior written consent of
each of the Consenting Stakeholders, and the Debtors hereby waive, to the
greatest extent possible, the applicability of the automatic stay to such steps
necessary to effectuate the termination of this Agreement. The Parties expressly
stipulate and consent hereunder to the prospective modification of the automatic
stay provisions of the Bankruptcy Code for purposes of exercising termination
rights under this Agreement, to the extent the Bankruptcy Court determines in a
Final order such relief is applicable.

 

  31.

Settlement Discussions.

This Agreement is part of a proposed settlement of matters that could otherwise
be the subject of litigation among the Parties. Nothing herein shall be deemed
an admission of any kind. Pursuant to Federal Rule of Evidence 408 and any
applicable state rules of evidence, this Agreement and all negotiations relating
thereto shall not be admissible into evidence in any proceeding other than a
proceeding related to the terms of this Agreement.

 

  32.

Consideration.

The Parties hereby acknowledge that no consideration, other than that
specifically described herein or in the other Definitive Restructuring
Documents, shall be due or paid to any Party for its agreement to vote to accept
the Plan in accordance with the terms and conditions of this Agreement, other
than the Debtors’ representations, warranties and agreement to use its
commercially reasonable efforts to seek to confirm and consummate the Plan.

 

  33.

Confidentiality and Publicity.

(a) Other than as may be required by applicable law and regulation or by any
governmental or regulatory authority, no Party shall issue any press release,
make any filing with the SEC (other than required under applicable securities
law and regulation as reasonably determined in good faith by outside counsel to
the Debtors) or make any other public

 

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announcement regarding this Agreement without the consent of the Debtors and the
Required Consenting Stakeholders, which consent shall not be unreasonably
delayed, conditioned, or withheld, and each Party shall coordinate with the
other Parties regarding any public statements made, including any communications
with the press, public filings or filings with the SEC, with respect to this
Agreement; for the avoidance of doubt, each Party shall have the right, without
any obligation to any other Party, to decline to comment to the press with
respect to this Agreement.

(b) Under no circumstances may any Party make any public disclosure of any kind
that would disclose the particular holdings of Covered Claims of any Consenting
Stakeholder without the prior written consent of such Consenting Stakeholder;
provided that (x) the Debtors may disclose the aggregate holdings of the
Consenting Noteholders and the Consenting First Lien Lenders, but not individual
holdings of any individual Consenting Stakeholder (which shall be treated as
“advisors’ eyes only”), in any filing with the SEC in respect of this Agreement
and (y) the Debtors may disclose such amounts without consent to the extent
that, upon the advice of counsel, it is required to do so by any governmental or
regulatory authority or court of competent jurisdiction (including the
Bankruptcy Court), or by applicable law, in which case the Debtors, prior to
making such disclosure, shall allow the Consenting Stakeholders to whom such
disclosure relates reasonable time at its own cost to seek a protective order
with respect to such disclosures. The Debtors shall not use the name of any
Consenting Stakeholder in any press release without such Party’s prior written
consent.

(c) The Debtors will submit to counsel to the Consenting Noteholders all press
releases and material public filings relating to this Agreement or the
Restructuring and provide counsel to the Consenting Noteholders a reasonable
opportunity to review and comment on such press releases and public filings;
provided that Quorum shall be under no obligation to consult with, or obtain the
prior approval of, any other Party as it relates to communications with vendors,
customers, and other third parties regarding the general nature of the
Restructuring.

 

  34.

Survival.

(a) Notwithstanding a Permitted Transfer of Covered Claims in accordance with
Section 13, the agreements and obligations of the Parties in this Section 34 and
Sections 2(b), 8(a)(v), 8(a)(vi), 9, 10, 11, 12, 14(h), 15, 16, 17, 19, 20, 21,
22, 23, 24, 25, 26, 27, 28, 31 and 33(b) hereof shall survive such Permitted
Transfer and shall continue in full force and effect for the benefit of the
Parties in accordance with the terms hereof.

(b) Notwithstanding the termination of this Agreement in accordance with its
terms, the agreements and obligations of the Parties in this Section 34 and
Sections 2(b), 8(a)(v), 8(a)(vi), 9, 10, 11, 12, 14(h), 15, 16, 17, 19, 20, 21,
22, 23, 24, 25, 26, 27, 28, 31 and 33(b) hereof shall survive such termination
and shall continue in full force and effect for the benefit of the Parties in
accordance with the terms hereof.

[Signature Pages Follow]

 

-33-

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

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
above written.

 

QUORUM HEALTH CORPORATION

By:

 

/s/ Alfred Lumsdaine

Name:

 

Alfred Lumsdaine

Title:

  Executive Vice President and Chief Financial Officer

[Signature Page – Restructuring Support Agreement]

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By:

 

/s/ Martin D. Smith

Name:

 

Martin D. Smith

Title:

 

Executive Vice President

 

Acting on behalf of each of the

subsidiaries set forth below

 

Ambulance Services of Forrest City, LLC

Ambulance Services of McKenzie, Inc.

Ambulance Services of Tooele, LLC

Anna Clinic Corp.

Anna Hospital Corporation

Augusta Hospital, LLC

Augusta Physician Services, LLC

Barrow Health Ventures, Inc.

Barstow Healthcare Management, Inc.

Big Bend Hospital Corporation

Big Spring Hospital Corporation

Blue Island Clinic Company, LLC

Blue Island HBP Medical Group, LLC

Blue Island Hospital Company, LLC

Blue Island Illinois Holdings, LLC

Blue Ridge Georgia Holdings, LLC

Blue Ridge Georgia Hospital Company, LLC

Central Alabama Physician Services, Inc.

CHS Utah Holdings, LLC

Clinton Hospital Corporation

Crossroads Physician Corp.

CSRA Holdings, LLC

Deming Clinic Corporation

Deming Hospital Corporation

Deming Nursing Home Company, LLC

DHSC, LLC

Doctors Hospital Physician Services, LLC

Edwardsville Ambulatory Surgery Center, L.L.C.

Evanston Clinic Corp

Evanston Hospital Corporation

Fannin Regional Orthopaedic Center, Inc.

Forrest City Arkansas Hospital Company, LLC

Forrest City Clinic Company, LLC

Forrest City Holdings, LLC

Fort Payne Clinic Corp.

Fort Payne HBP, LLC

Fort Payne Hospital Corporation

Fort Payne RHC Corp.

Galesburg Hospital Corporation

Galesburg Professional Services, LLC

Georgia HMA Physician Management, LLC

Granite City ASC Investment Company, LLC

Granite City Clinic Corp.

Granite City HBP Corp.

Granite City Hospital Corporation

 

[Signature Page – Restructuring Support Agreement]

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Granite City Illinois Hospital Company, LLC

Granite City Orthopedic Physicians Company, LLC

Granite City Physicians Corp.

Greenville Clinic Corp.

Greenville Hospital Corporation

Hamlet H.M.A., LLC

Hamlet HMA Physician Management, LLC

Hamlet HMA PPM, LLC

Haven Clinton Medical Associates, LLC

Heartland Rural Healthcare, LLC

Hidden Valley Medical Center, Inc.

Hospital of Barstow, Inc.

Hospital of Louisa, Inc.

In-Home Medical Equipment Supplies and Services, Inc.

Jackson Hospital Corporation

Jackson Physician Corp.

Kentucky River HBP, LLC

Kentucky River Physician Corporation

King City Physician Company, LLC

Knox Clinic Corp.

Lindenhurst Illinois Hospital Company, LLC

Lindenhurst Surgery Center, LLC

Lock Haven Clinic Company, LLC

Marion Hospital Corporation

Massillon Community Health System LLC

Massillon Health System LLC

Massillon Holdings, LLC

Massillon Physician Services, LLC

McKenzie Clinic Corp.

McKenzie Physician Services, LLC

McKenzie Tennessee Hospital Company, LLC

McKenzie-Willamette Regional Medical Center Associates, LLC

Memorial Management, Inc.

Mesquite Clinic Management Company, LLC

MMC of Nevada, LLC

Monroe County Surgical Center, LLC

Monroe Diagnostic Testing Centers, LLC

Monroe HMA Physician Management, LLC

Monroe HMA, LLC

MWMC Holdings, LLC

National Healthcare of Mt. Vernon, Inc.

National Imaging Of Carterville, LLC

National Imaging Of Mount Vernon, LLC

OHANI, LLC

Our Healthy Circle

Paintsville HMA Physician Management, LLC

Paintsville Hospital Company, LLC

Phillips Clinic Company, LLC

Phillips Hospital Company, LLC

QHC ARM Shared Services, LLC

QHC Blue Island Urgent Care Holdings, LLC

 

[Signature Page – Restructuring Support Agreement]

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

QHC California Holdings, LLC

QHC HIM Shared Services, LLC

QHCCS, LLC

QHG of Massillon, INC.

QHR Development, LLC

QHR Healthcare Affiliates, LLC

QHR Intensive Resources, LLC

QHR International, LLC

Quorum Health Corporation

Quorum Health Corporation Political Action Committee

Quorum Health Foundation, Inc.

Quorum Health Investment Company, LLC

Quorum Health Resources, LLC

Quorum Purchasing Advantage, LLC

Quorum Solutions, LLC

Red Bud Clinic Corp.

Red Bud Hospital Corporation

Red Bud Illinois Hospital Company, LLC

Red Bud Physician Group, LLC

Red Bud Regional Clinic Company, LLC

River To River Heart Group, LLC

San Miguel Clinic Corp.

San Miguel Hospital Corporation

Southern Illinois Medical Care Associates, LLC

Springfield Oregon Holdings, LLC

Summit Emergency Medicine, LLC

Sunbury Clinic Company, LLC

Sunbury Hospital Company, LLC

Three Rivers Medical Clinics, Inc.

Tooele Clinic Corp.

Tooele Hospital Corporation

Triad Of Oregon, LLC

Waukegan Clinic Corp.

Waukegan Hospital Corporation

Waukegan Illinois Hospital Company, LLC

Williamston Clinic Corp.

Williamston HBP Services, LLC

Williamston Hospital Corporation

Winder HMA, LLC

 

[Signature Page – Restructuring Support Agreement]

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GOLDENTREE ASSET MANAGEMENT LP,
on behalf of certain funds and accounts for which it serves as investment
advisor By:  

/s/ Sasha Linney

Name:   Sasha Linney Title:   Associate General Counsel

 

[Signature Page – Restructuring Support Agreement]

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

KKR - NYC CREDIT B L.P. By:  

/s/ Jeffrey M. Smith

Name:   Jeffrey M. Smith Title:   Authorized Signatory KKR-JESSELTON HIF CREDIT
PARTNERS SUB L.P. By:  

/s/ Jeffrey M. Smith

Name:   Jeffrey M. Smith Title:   Authorized Signatory KKR-MILTON II INDIA
INVESTORS LTD. By:  

/s/ Jeffrey M. Smith

Name:   Jeffrey M. Smith Title:   Authorized Signatory PRESIDIO INVESTORS
LIMITED By:  

/s/ Jeffrey M. Smith

Name:   Jeffrey M. Smith Title:   Authorized Signatory SPRUCE INVESTORS II
LIMITED PARTNERSHIP By:  

/s/ Jeffrey M. Smith

Name:   Jeffrey M. Smith Title:   Authorized Signatory

 

 

[Signature Page – Restructuring Support Agreement]

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

OHA BCSS SSD II, L.P. By:   OHA BCSS SSD GenPar II, LLC, its general partner By:
  OHA Global PE GenPar, LLC, its managing partner By:   OHA Global PE MGP, LLC,
its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

OHA MPS SSD II, L.P.

By:   OHA MPS SD GenPar II, LLC, its general partner By:   OHA Global PE GenPar,
LLC, its managing partner By:   OHA Global PE MGP, LLC, its managing member By:
 

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory THE COCA-COLA COMPANY
MASTER RETIREMENT TRUST By:   Oak Hill Advisors, L.P., as Investment Manager By:
  Oak Hill Advisors GenPar, L.P., its general partner By:   Oak Hill Advisors
MGP, Inc., its managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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

OHA DIVERSIFIED CREDIT STRATEGIES FUND MASTER, L.P. By:   OHA Diversified Credit
Strategies GenPar, LLC, its general partner By:   OHA Global GenPar, LLC, its
managing member By:   OHA Global MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA DIVERSIFIED CREDIT
STRATEGIES FUND (PARALLEL), L.P. By:   OHA Diversified Credit Strategies GenPar,
LLC, its general partner By:   OHA Global GenPar, LLC, its managing member By:  
OHA Global MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA ENHANCED CREDIT
STRATEGIES MASTER FUND, L.P. By:   OHA Enhanced Credit Strategies GenPar, LLC,
its general partner By:   OHA Global GenPar, LLC, its managing member By:   OHA
Global MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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

FUTURE FUND BOARD OF GUARDIANS By:   Oak Hill Advisors, L.P., as Investment
Manager By:   Oak Hill Advisors GenPar, L.P., its general partner By:   Oak Hill
Advisors MGP, Inc., its managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory INDIANA PUBLIC RETIREMENT
SYSTEM By:   Oak Hill Advisors, L.P., as Investment Manager By:   Oak Hill
Advisors GenPar, L.P., its general partner By:   Oak Hill Advisors MGP, Inc.,
its managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory LERNER ENTERPRISES, LLC
By:   Oak Hill Advisors, L.P., as Investment Manager By:   Oak Hill Advisors
GenPar, L.P., its general partner By:   Oak Hill Advisors MGP, Inc., its
managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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

NORTHWELL HEALTH, INC. By:   Oak Hill Advisors, L.P., as Investment Manager By:
  Oak Hill Advisors GenPar, L.P., its general partner By:   Oak Hill Advisors
MGP, Inc., its managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OCA OHA CREDIT FUND LLC,
an individual series of OCA Investment Partners LLC By:   Oak Hill Advisors,
L.P., as Investment Manager By:   Oak Hill Advisors GenPar, L.P., its general
partner By:   Oak Hill Advisors MGP, Inc., its managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CENTRE STREET
PARTNERSHIP, L.P. By:   OHA Centre Street GenPar, LLC, its general partner By:  
OHA Centre Street MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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

OHA MD OPPORTUNISTIC CREDIT MASTER FUND, L.P. By:   OHA MD Opportunistic Credit
GenPar, LLC, its general partner By:   OHA Global GenPar, LLC, its managing
member By:   OHA Global MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHAT CREDIT FUND, L.P.
By:   OHAT Credit GenPar, LLC, its general partner By:   OHA Global GenPar, LLC,
its managing member By:   OHA Global MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA DELAWARE CUSTOMIZED
CREDIT FUND HOLDINGS, L.P. By:   OHA Delaware Customized Credit Fund GenPar,
LLC, its general partner By:   OHA Global GenPar, LLC, its managing member By:  
OHA Global MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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ILLINOIS STATE BOARD OF INVESTMENT By:   Oak Hill Advisors, L.P., as Investment
Manager By:   Oak Hill Advisors GenPar, L.P., its general partner By:   Oak Hill
Advisors MGP, Inc., its managing general partner By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA STRATEGIC CREDIT
MASTER FUND II, L.P. By:   OHA Strategic Credit II GenPar, LLC, its general
partner By:   OHA Global PE GenPar, LLC, its managing member By:   OHA Global PE
MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA STRUCTURED PRODUCTS
MASTER FUND D, L.P. By:   OHA Structured Products D GenPar, LLC, its general
partner By:   OHA Global PE GenPar, LLC, its managing member By:   OHA Global PE
MGP, LLC, its managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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MASTER SIF SICAV-SIF By:   OHA (UK) LLP, as Investment Manager By:  

/s/ Colin J. Blackmore

Name:   Colin J. Blackmore Title:   Authorized Signatory OHA CREDIT FUNDING 1,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT FUNDING 2,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT PARTNERS IX,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT PARTNERS VII,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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OHA CREDIT PARTNERS XI, LTD. By:   Oak Hill Advisors, L.P., as portfolio manager
By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT PARTNERS XII,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT PARTNERS XIII,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT PARTNERS XIV,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA CREDIT PARTNERS X-R,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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OHA CREDIT PARTNERS XV, LTD. By:   Oak Hill Advisors, L.P., as portfolio manager
By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA FINLANDIA CREDIT
FUND, L.P. By:   OHA Finlandia Credit Fund GenPar, LLC, its general partner By:
  OHA Global GenPar, LLC, its managing member By:   OHA Global MGP, LLC, its
managing member By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA LOAN FUNDING 2013-1,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA LOAN FUNDING 2013-2,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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OHA LOAN FUNDING 2015-1, LTD. By:   Oak Hill Advisors, L.P., as portfolio
manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory OHA LOAN FUNDING 2016-1,
LTD. By:   Oak Hill Advisors, L.P., as portfolio manager By:  

/s/ Gregory S. Rubin

Name:   Gregory S. Rubin Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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

YORK CAPITAL MANAGEMENT GLOBAL ADVISORS, LLC,

on behalf of certain funds and/or accounts managed or advised by it or its
affiliates

By:  

/s/ Richard P. Swanson

Name:   Richard P. Swanson Title:   Chief Legal Officer

 

[Signature Page – Restructuring Support Agreement]

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MIDTOWN ACQUISITIONS L.P. By:   Midtown Acquisitions GP LLC,
its General Partner By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Manager M.H. DAVIDSON & CO. By:   Davidson
Kempner Capital Management LP,
its Investment Advisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member
DAVIDSON KEMPNER PARTNERS By:   Davidson Kempner Capital Management LP,
its Investment Advisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member
DAVIDSON KEMPNER INSTITUTIONAL PARTNERS, L.P. By:   Davidson Kempner Capital
Management LP,
its Investment Advisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member

 

[Signature Page – Restructuring Support Agreement]

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

DAVIDSON KEMPNER INTERNATIONAL, LTD. By:   Davidson Kempner Capital Management
LP, its Investment Advisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member
DAVIDSON KEMPNER DISTRESSED OPPORTUNITIES FUND LP By:   Davidson Kempner Capital
Management LP, its Subadvisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member
DAVIDSON KEMPNER DISTRESSED OPPORTUNITIES INTERNATIONAL LTD. By:   Davidson
Kempner Capital Management LP, its Subadvisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member DKLDO
IV TRADING SUBSIDIARY LP By:   Davidson Kempner Capital Management LP, its
Subadvisor By:  

/s/ Gabriel T. Schwartz

Name:   Gabriel T. Schwartz Title:   Co-Deputy Executive Managing Member

 

[Signature Page – Restructuring Support Agreement]

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SPECIAL SITUATIONS INVESTING GROUP, INC. By:  

/s/ C. Cleaver Sower

Name:   C. Cleaver Sower Title:   Authorized Signatory GOLDMAN SACHS & CO. LLC
By:  

/s/ C. Cleaver Sower

Name:   C. Cleaver Sower Title:   Authorized Signatory

 

[Signature Page – Restructuring Support Agreement]

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SCHEDULE 1

HOLDINGS OF CONSENTING STAKEHOLDERS

[Confidential – redacted]

 

Consenting

Stakeholder

 

Principal Amount of

Term Loans

 

Principal Amount of

Revolving Loans

  

Principal Amount of

Senior Notes

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

EXHIBIT A

Joint Plan of Reorganization

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

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

 

In re:

 

QUORUM HEALTH CORPORATION, et al.,1

 

                                                             Debtors.

 

  

)

)

)

)

)

)

)

)

  

 

Chapter 11

 

Case No. 20-[_______] (___)

 

(Joint Administration Requested)

DEBTORS’ JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION

 

 

 

THIS CHAPTER 11 PLAN IS BEING SOLICITED FOR ACCEPTANCE OR REJECTION IN
ACCORDANCE WITH BANKRUPTCY CODE SECTION 1125 AND WITHIN THE MEANING OF
BANKRUPTCY CODE SECTION 1126. THIS CHAPTER 11 PLAN WILL BE SUBMITTED TO THE
BANKRUPTCY COURT FOR APPROVAL FOLLOWING SOLICITATION AND THE DEBTORS’ FILING FOR
CHAPTER 11 BANKRUPTCY.

 

Felicia Gerber Perlman (pro hac vice admission pending)    David R. Hurst (I.D.
No. 3743) Bradley Thomas Giordano (pro hac vice admission pending)    MCDERMOTT
WILL & EMERY LLP Megan M. Preusker (pro hac vice admission pending)    The
Nemours Building MCDERMOTT WILL & EMERY LLP    1007 North Orange Street, 4th
Floor 444 West Lake Street    Wilmington, Delaware 19801 Chicago, Illinois
60606-0029    Telephone: (302) 485-3900 Telephone:    (312) 372-2000   
Facsimile: (302) 351-8711 Facsimile:    (312) 984-7700   

Proposed Counsel to the Debtors and

Debtors in Possession

   Dated: April 6, 2020   

 

1 

The last four digits of Quorum Health Corporation’s tax identification number
are 5208. Due to the large number of Debtors in these chapter 11 cases, for
which the Debtors have requested joint administration, a complete list of the
Debtors and the last four digits of their federal tax identification numbers is
not provided herein. A complete list of such information may be obtained on the
website of the Debtors’ proposed claims and noticing agent at
https://dm.epiq11.com/Quorum. The location of Quorum Health Corporation’s
corporate headquarters and the Debtors’ service address is 1573 Mallory Lane,
Brentwood, Tennessee 37027.

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

TABLE OF CONTENTS

 

     Page  

INTRODUCTION

     1  

ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME,
GOVERNING LAW, AND OTHER REFERENCES

     1  

A.

  Defined Terms      1  

B.

  Rules of Interpretation      17  

C.

  Computation of Time      17  

D.

  Governing Law      18  

E.

  Reference to Monetary Figures      18  

F.

  Reference to the Debtors or the Reorganized Debtors      18  

G.

  Restructuring Support Agreement Party Consent Rights and Controlling Documents
     18  

ARTICLE II. ADMINISTRATIVE AND PRIORITY CLAIMS

     18  

A.

  DIP Claims      19  

B.

  Administrative Claims      19  

C.

  Professional Fee Claims      20  

D.

  Priority Tax Claims      21  

ARTICLE III. CLASSIFICATION, TREATMENT, AND VOTING OF CLAIMS AND INTERESTS

     21  

A.

  Classification of Claims and Interests      21  

B.

  Treatment of Classes of Claims and Interests      22  

C.

  Special Provision Governing Unimpaired Claims      27  

D.

  Elimination of Vacant Classes      27  

E.

  Voting Classes; Presumed Acceptance by Non-Voting Classes      27  

F.

  Subordinated Claims      27  

G.

  Intercompany Interests      28  

H.

  Controversy Concerning Impairment      28  

I.

  Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code      28  

ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN

     28  

A.

  General Settlement of Claims and Interests      28  

B.

  Restructuring Transactions      29  

C.

  Sources of Consideration for Plan Distributions      29  

D.

  New Shareholders Agreement      31  

E.

  Exemption from Registration Requirements      31  

F.

  Exit ABL Facility & Exit Facility      32  

G.

  Corporate Existence      32  

H.

  Corporate Action      33  

I.

  Vesting of Assets in the Reorganized Debtors      33  

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

J.

  Cancellation of Facilities, Notes, Instruments, Certificates, and Other
Documents      33  

K.

  Effectuating Documents; Further Transactions      35  

L.

  Exemptions from Certain Taxes and Fees      35  

M.

  New Quorum Constituent Documents      35  

N.

  Directors and Officers      36  

O.

  MIP      36  

P.

  Galesburg      36  

Q.

  Preservation of Causes of Action      37  

ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

     37  

A.

  Assumption of Executory Contracts and Unexpired Leases      37  

B.

  Claims Based on Rejection of Executory Contracts or Unexpired Leases      38  

C.

  Cure of Defaults and Objections to Cure and Assumption      39  

D.

  Insurance Policies      39  

E.

  Indemnification Provisions      40  

F.

  Director, Officer, Manager, and Employee Liability Insurance      40  

G.

  Employee and Retiree Benefits      41  

H.

  Modifications, Amendments, Supplements, Restatements, or Other Agreements     
41  

I.

  Reservation of Rights      41  

J.

  Nonoccurrence of Effective Date      42  

K.

  Contracts and Leases Entered Into After the Petition Date      42  

ARTICLE VI. PROVISIONS GOVERNING DISTRIBUTIONS

     42  

A.

  Timing and Calculation of Amounts to Be Distributed      42  

B.

  Distributions on Account of Obligations of Multiple Debtors      42  

C.

  Distribution Agent      43  

D.

  Rights and Powers of Distribution Agent      43  

E.

  Delivery of Distributions      43  

F.

  Manner of Payment      44  

G.

  Compliance Matters      44  

H.

  No Postpetition or Default Interest on Claims      45  

I.

  Allocation Between Principal and Accrued Interest      45  

J.

  Setoffs and Recoupment      45  

K.

  Claims Paid or Payable by Third Parties      46  

ARTICLE VII. PROCEDURES FOR RESOLVING DISPUTED CLAIMS AND INTERESTS

     46  

A.

  Disputed Claims Process      46  

B.

  Claims Administration Responsibilities.      47  

C.

  Estimation of Claims and Interests      47  

D.

  Adjustment to Claims Without Objection      48  

E.

  No Distributions Pending Allowance      48  

F.

  Distributions After Allowance      48  

G.

  No Interest      48  

 

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ARTICLE VIII. SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS

     48  

A.

  Compromise and Settlement of Claims, Interests, and Controversies      48  

B.

  Discharge of Claims      49  

C.

  Release of Liens      49  

D.

  Debtor Release      50  

E.

  Third-Party Release      50  

F.

  Exculpation      51  

G.

  Injunction      52  

H.

  Protection Against Discriminatory Treatment      53  

I.

  Recoupment      53  

J.

  Reimbursement or Contribution      53  

K.

  Term of Injunctions or Stays      53  

L.

  Document Retention      53  

ARTICLE IX. CONDITIONS TO CONFIRMATION OF THE PLAN AND THE EFFECTIVE DATE

     54  

A.

  Conditions Precedent to Confirmation      54  

B.

  Conditions Precedent to the Effective Date      54  

C.

  Waiver of Conditions to Confirmation or the Effective Date      55  

D.

  Substantial Consummation      55  

E.

  Effect of Non-Occurrence of Conditions to Consummation      55  

ARTICLE X. MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN

     55  

A.

  Modification of Plan      55  

B.

  Effect of Confirmation on Modifications      55  

C.

  Revocation or Withdrawal of Plan      56  

ARTICLE XI. RETENTION OF JURISDICTION

     56  

ARTICLE XII. MISCELLANEOUS PROVISIONS

     59  

A.

  Immediate Binding Effect      59  

B.

  Additional Documents      59  

C.

  Statutory Fees      59  

D.

  Payment of Certain Fees and Expenses      59  

E.

  Reservation of Rights      60  

F.

  Successors and Assigns      60  

G.

  Service of Documents      60  

H.

  Entire Agreement      61  

I.

  Plan Supplement Exhibits      61  

J.

  Non-Severability      62  

K.

  Votes Solicited in Good Faith      62  

L.

  Waiver or Estoppel      62  

M.

  Closing of Chapter 11 Cases      62  

 

 

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INTRODUCTION

Quorum Health Corporation (“Quorum”) and its debtor affiliates, as debtors and
debtors-in-possession in the above-captioned cases (collectively, the “Debtors”)
propose this joint plan of reorganization (the “Plan”) for the resolution of the
outstanding Claims against and Interests in the Debtors pursuant to chapter 11
of the Bankruptcy Code. Capitalized terms used in the Plan and not otherwise
defined shall have the meanings set forth in Article I.A of the Plan. Although
proposed jointly for administrative purposes, the Plan constitutes a separate
Plan for each Debtor for the resolution of outstanding Claims and Interests
pursuant to the Bankruptcy Code. Each Debtor is a proponent of the Plan within
the meaning of section 1129 of the Bankruptcy Code. The classifications of
Claims and Interests set forth in Article III of the Plan shall be deemed to
apply separately with respect to each Plan proposed by each Debtor, as
applicable. The Plan does not contemplate substantive consolidation of any of
the Debtors. Reference is made to the Disclosure Statement for a discussion of
the Debtors’ history, business, properties and operations, projections, risk
factors, a summary and analysis of this Plan, and certain related matters.

ALL HOLDERS OF CLAIMS AND INTERESTS ARE ENCOURAGED TO READ THE PLAN AND THE
DISCLOSURE STATEMENT IN THEIR ENTIRETY, PARTICULARLY HOLDERS OF CLAIMS AND
INTERESTS ENTITLED TO VOTE TO ACCEPT OR TO REJECT THE PLAN.

ARTICLE I.

DEFINED TERMS, RULES OF INTERPRETATION,

COMPUTATION OF TIME, GOVERNING LAW, AND OTHER REFERENCES

 

A.

Defined Terms

1. “ABL Claim” means all Claims against any Debtor arising under, derived from,
or based upon the ABL Credit Facility.

2. “ABL Credit Agreement” means that certain ABL Credit Agreement dated as of
April 29, 2016 (as may be modified, amended, or supplemented) among Quorum, the
guarantors and other parties thereto, the ABL Lenders and UBS AG, Stamford
Branch, as administrative agent and collateral agent.

3. “ABL Credit Facility” means that certain $125 million senior secured
asset-based revolving credit facility provided under the ABL Credit Agreement
between certain of the Debtors as obligors or guarantors and the ABL Lenders.

4. “ABL Facility Agent” means UBS AG, Stamford Branch acting through such of its
affiliates or branches as it may designate, in its capacity as administrative
agent, collateral agent, and swingline lender under the ABL Credit Agreement, or
any successor administrative agent as permitted by the terms set forth in the
ABL Credit Agreement.

5. “ABL Lenders” means, collectively, the banks, financial institutions, and
other lenders party to the ABL Credit Facility from time to time, in their
respective capacities thereunder, including as swingline lender, and issuing
banks, as applicable.

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6. “ABL Representatives” means Winston & Strawn LLP, FTI Consulting, Inc., and
any local counsel to the ABL Facility Agent.

7. “Administrative Claim” means a Claim for costs and expenses of administration
of the Chapter 11 Cases pursuant to sections 503(b), 507(a)(2), 507(b), or
1114(e)(2) of the Bankruptcy Code, including: (a) the actual and necessary costs
and expenses incurred on or after the Petition Date until and including the
Effective Date of preserving the Estates and operating the Debtors’ businesses;
and (b) Allowed Professional Fee Claims.

8. “Affiliate” has the meaning set forth in section 101(2) of the Bankruptcy
Code as if such Entity were a debtor in a case under the Bankruptcy Code.

9. “Agreement Effective Date” means the date on which the conditions set forth
in Section 2 of the Restructuring Support Agreement have been satisfied or
waived by the appropriate party or parties in accordance with the Restructuring
Support Agreement.

10. “Allowed” means with respect to any Claim or Interest, except as otherwise
provided in the Plan: (a) a Claim that either (i) is not Disputed or (ii) has
been allowed by a Final Order; (b) a Claim that is allowed, compromised,
settled, or otherwise resolved (i) pursuant to the terms of the Plan, (ii) in
any stipulation that is approved by the Bankruptcy Court by a Final Order, or
(iii) pursuant to any contract, instrument, indenture, or other agreement
entered into or assumed in connection herewith; (c) a Claim relating to a
rejected Executory Contract or Unexpired Lease that either (i) is not a Disputed
Claim or (ii) has been allowed by a Final Order; or (d) a Claim or Interest as
to which a Proof of Claim or Proof of Interest, as applicable, has been timely
filed and as to which no objection has been filed.

11. “Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C.
§§ 101–1532, as now in effect or hereafter amended, and the rules and
regulations promulgated thereunder.

12. “Bankruptcy Court” means the United States Bankruptcy Court for the District
of Delaware or such other court having jurisdiction over the Chapter 11 Cases,
including, to the extent of the withdrawal of the reference under 28 U.S.C. §
157, the United States District Court for the District of Delaware.

13. “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under section 2075 of title 28 of
the United States Code, 28 U.S.C. § 2075, as applicable to the Chapter 11 Cases
and the general, local, and chambers rules of the Bankruptcy Court, as now in
effect or hereafter amended.

14. “Business Day” means any day, other than a Saturday, Sunday, or a legal
holiday, as defined in Bankruptcy Rule 9006(a).

15. “Cash” or “$” means the legal tender of the United States of America or the
equivalent thereof, including bank deposits, checks, and cash equivalents, as
applicable.

16. “Causes of Action” means any claims, interests, damages, remedies, causes of
action, demands, rights, actions, suits, obligations, liabilities, accounts,
defenses, offsets, powers, privileges, licenses, Liens, indemnities, guaranties,
and franchises of any kind or character

 

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whatsoever, whether known or unknown, foreseen or unforeseen, existing or
hereinafter arising, contingent or non-contingent, liquidated or unliquidated,
secured or unsecured, assertable, directly or derivatively, matured or
unmatured, suspected or unsuspected, in contract, tort, law, equity, or
otherwise. Causes of Action also include: (a) all rights of setoff,
counterclaim, or recoupment and claims under contracts or for breaches of duties
imposed by law; (b) the right to object to or otherwise contest Claims or
Interests; (c) claims pursuant to sections 362, 510, 542, 543, 544 through 550,
or 553 of the Bankruptcy Code; (d) such claims and defenses as fraud, mistake,
duress, and usury, and any other defenses set forth in section 558 of the
Bankruptcy Code; and (e) any state or foreign law fraudulent transfer or similar
claim.

17. “Chapter 11 Cases” means the procedurally consolidated cases filed or to be
filed (as applicable) by the Debtors in the Bankruptcy Court under chapter 11 of
the Bankruptcy Code.

18. “Claim” means any claim, as defined in section 101(5) of the Bankruptcy
Code, against any of the Debtors, whether or not assessed or Allowed.

19. “Claims Register” means the official register of Claims against and
Interests in the Debtors maintained by the Solicitation Agent.

20. “Class” means a category of Holders of Claims or Interests under section
1122(a) of the Bankruptcy Code.

21. “Confirmation” means entry of the Confirmation Order by the Bankruptcy Court
on the docket of the Chapter 11 Cases.

22. “Confirmation Date” means the date on which the Bankruptcy Court enters the
Confirmation Order on the docket of the Chapter 11 Cases within the meaning of
Bankruptcy Rules 5003 and 9021.

23. “Confirmation Hearing” means the hearing held by the Bankruptcy Court
pursuant to Bankruptcy Rule 3020(b)(2) and section 1128 of the Bankruptcy Code,
including any adjournments thereof, at which the Bankruptcy Court will consider
confirmation of the Plan and approval of the Disclosure Statement.

24. “Confirmation Objection Deadline” means the deadline by which objections to
confirmation of the Plan must be received by the Debtors.

25. “Confirmation Order” means the order of the Bankruptcy Court confirming the
Plan under section 1129 of the Bankruptcy Code and approving the Disclosure
Statement.

26. “Consenting First Lien Lenders” has the meaning ascribed to such term in the
Restructuring Support Agreement.

27. “Consenting Noteholders” has the meaning ascribed to such term in the
Restructuring Support Agreement.

28. “Consenting Stakeholders” has the meaning ascribed to such term in the
Restructuring Support Agreement.

 

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29. “Consummation” means the occurrence of the Effective Date.

30. “Contributed Claims” means any prepetition Cause of Action relating to the
Senior Notes held by any of the Contributing Claimants arising under or based on
state, federal, or common law, including but not limited to fraudulent transfer,
fraudulent conveyance, voidable transaction law, any statute limiting or
prohibiting transfers to shareholders, and alter ego.

31. “Contributing Claimants” means Senior Noteholders that elect to assign
Contributed Claims to the QHC Litigation Trust.

32. “Corporate Governance Term Sheet” means the corporate governance term sheet
with respect to Reorganized Quorum, as may be amended, modified or supplemented
only in accordance with section 26 of the Restructuring Support Agreement.

33. “Cure Claim” means a Claim (unless waived or modified by the applicable
counterparty) based upon a Debtor’s defaults under an Executory Contract or an
Unexpired Lease assumed by such Debtor under section 365 of the Bankruptcy Code,
other than a default that is not required to be cured pursuant to section
365(b)(2) of the Bankruptcy Code.

34. “D&O Liability Insurance Policies” means all insurance policies (including
any “tail policy”) maintained by the Debtors as of the Petition Date for
liabilities against any of the Debtors’ current or former directors, managers,
and officers, and all agreements, documents, or instruments relating thereto.

35. “Debtor Intercompany Claim” means any Claim held by a Debtor against another
Debtor.

36. “Debtor Release” means the release given on behalf of the Debtors and their
Estates to the Released Parties as set forth in Article VIII.D of the Plan.

37. “Definitive Restructuring Documents” means (a) the Plan and the Plan
Supplement (and all exhibits, ballots, solicitation procedures, and other
documents and instruments related thereto), including any “Definitive
Restructuring Documentation” as defined therein and not explicitly so defined
herein; (b) the Confirmation Order; (c) the Disclosure Statement; (d) the order
of the Bankruptcy Court approving the Disclosure Statement and the other
Solicitation Materials; (e) the first day pleadings and all orders sought
pursuant thereto; (f) the DIP Orders, the DIP Credit Agreement, and the other
DIP Documents, and related documentation; (g) the Equity Investment Commitment
Agreement; (h) the Exit ABL Credit Agreement; (i) Exit Facility Credit
Agreement; (j) the New Quorum Constituent Documents; (k) the New Shareholders
Agreement; and (l) the QHC Litigation Trust Agreement.

38. “DIP Agent” means an Entity in its capacity as administrative agent and
collateral agent under the DIP Facility or its successor thereunder.

39. “DIP Commitment Fee” has the meaning ascribed to such term in the DIP
Facility Term Sheet.

 

4

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40. “DIP Commitment Fee Claims” means any Claim derived from or based upon the
DIP Commitment Fee arising under the DIP Credit Agreement.

41. “DIP Credit Agreement” means that certain debtor-in-possession credit
agreement (as amended, restated, supplemented or otherwise modified in
accordance with its terms), by and among Quorum, as borrower, each of the
guarantors named therein and the lenders from time to time party thereto,
consistent in all respects with the terms set forth in DIP Facility Term Sheet
and otherwise reasonably acceptable to the Debtors and the DIP Lenders.

42. “DIP Claim” means any Claim arising under, derived from or based upon the
DIP Facility or DIP Orders, including the DIP Commitment Fee Claims, and the
guarantees in respect thereof under the DIP Documents, including Claims for all
principal amounts outstanding, interest, fees, expenses, costs, and other
charges arising under or related to the DIP Facility.

43. “DIP Facility” means that certain $100 million debtor-in-possession facility
to be provided to Quorum by the DIP Lenders on the terms of, and subject to the
conditions set forth in, the DIP Credit Agreement and the DIP Facility Term
Sheet.

44. “DIP Documents” means, collectively, the DIP Credit Agreement and any and
all other agreements, documents, and instruments delivered or entered into in
connection therewith, including any guarantee agreements, pledge and collateral
agreements, intercreditor agreements, and other security documents (including
any amendments, restatements, supplements, or modifications of any of the
foregoing) related to or executed in connection with the DIP Credit Agreement.

45. “DIP Facility Term Sheet” has the meaning ascribed to such term in the
Restructuring Support Agreement.

46. “DIP Lenders” means, collectively, the banks, financial institutions, and
other lenders party to the DIP Credit Agreement from time to time, each solely
in their capacity as such.

47. “DIP Orders” means, collectively, the Interim DIP Order and Final DIP Order
entered by the Bankruptcy Court authorizing the Debtors to enter into the DIP
Credit Agreement and access the DIP Facility.

48. “Disclosure Statement” means the disclosure statement containing “adequate
information” (as that term is defined in section 1125(a)(1) of the Bankruptcy
Code) with respect to the Plan and the transactions contemplated thereby, and
which otherwise is in form and substance reasonably satisfactory to the Debtors
and the Required Consenting Stakeholders.

49. “Disputed” means, with respect to any Claim or Interest, any Claim or
Interest, or any portion thereof, (a) to the extent neither Allowed nor
disallowed under the Plan or a Final Order nor deemed Allowed under sections
502, 503, or 1111 of the Bankruptcy Code, or (b) for which a Proof of Claim or
Proof of Interest or a motion for payment has been timely filed with the
Bankruptcy Court, to the extent the Debtors or any other party in interest has
interposed a timely objection or request for estimation in accordance with the
Plan, the Bankruptcy Code, or the Bankruptcy Rules, which objection or request
for estimation has not been withdrawn or determined by a Final Order; provided,
however, that in no event shall a Claim that is deemed Allowed pursuant to this
Plan be a Disputed Claim.

 

5

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50. “Distribution Agent” means, as applicable, the Reorganized Debtors or any
Entity the Reorganized Debtors select to make or to facilitate distributions in
accordance with the Plan.

51. “Distribution Record Date” means the date for determining which Holders of
Allowed Claims and Allowed Interests, other than with respect to the Senior
Notes, are eligible to receive distributions pursuant to the Plan, which date
shall be the Confirmation Date or such other date indicated in the Confirmation
Order.

52. “DTC” means The Depository Trust Company.

53. “Effective Date” means the date that is the first Business Day after the
Confirmation Date on which all conditions precedent to the occurrence of the
Effective Date set forth in Article IX.A of the Plan have been satisfied or
waived in accordance with Article IX.C of the Plan.

54. “Entity” has the meaning set forth in section 101(15) of the Bankruptcy
Code.

55. “Equity Commitment Party” means each party to the Equity Investment
Commitment Agreement other than Quorum, solely in their capacities as such.

56. “Equity Commitment” means the commitment of each Equity Commitment Party set
forth in section 2.01 of the Equity Investment Commitment Agreement.

57. “Equity Commitment Aggregate Amount” has the meaning ascribed to such term
in the Equity Investment Commitment Agreement.

58. “Equity Investment Commitment Agreement” means the duly executed and
delivered equity commitment agreement, of even date with the Restructuring
Support Agreement, by and among the Equity Commitment Parties and Quorum,
including all annexes, exhibits and schedules attached thereto, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the Restructuring Support Agreement.

59. “Equity Commitment Amount” has the meaning ascribed to such term in the
Equity Investment Commitment Agreement.

60. “Equity Investment Commitment Premium” means a commitment premium equal to
7.5% of the Equity Commitment Aggregate Amount, payable in New Common Stock or
in Cash if the New Common Equity Raise is not consummated, which commitment
premium shall be paid ratably to each Equity Commitment Party, or its affiliate
designee, as applicable, based upon its respective Equity Commitment.

61. “Equity Investment Premium Price Per Share” means $10.00.

62. “Equity Investment Price Per Share” means $7.50.

 

6

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63. “Estate” means the estate of any Debtor created under sections 301 and 541
of the Bankruptcy Code upon the commencement of the applicable Debtor’s Chapter
11 Case.

64. “Exculpated Party” means, collectively, and in each case in its capacity as
such: (a) each of the Debtors; (b) each of the Reorganized Debtors; (c) any
statutory committees appointed in the Chapter 11 Cases and each of their
respective members; (d) each current and former Affiliate of each Entity in
clause (a) through the following clause (e); and (e) each Related Party of each
Entity in clause (a) through this clause (e).

65. “Executory Contract” means a contract or lease to which one or more of the
Debtors is a party that is subject to assumption or rejection under section 365
of the Bankruptcy Code.

66. “Exit ABL Credit Agreement” means a credit agreement for a senior secured
asset-based revolving credit facility, by and among Reorganized Quorum, the
guarantors named therein, and the lenders and agents party thereto, which
agreement shall (a) become effective on the Effective Date and (b) be on
reasonable, customary and market terms and conditions that are reasonably
satisfactory to (i) the Debtors, (ii) the Required Equity Commitment Parties in
consultation with the Required Consenting Noteholders, and (iii) the Required
Consenting First Lien Lenders solely with respect to any term or provision of
the Exit ABL Credit Agreement that materially and adversely affects the rights
of the First Lien Lenders

67. “Exit ABL Facility” means the credit facility provided for under the Exit
ABL Credit Agreement.

68. “Exit Facility” means the credit facility provided for under the Exit
Facility Credit Agreement.

69. “Exit Facility Credit Agreement” means a credit agreement for the Exit
Facility, by and among Reorganized Quorum, the guarantors named therein, and the
lenders and agents party thereto, which agreement shall (i) become effective on
the Effective Date and (ii) (x) be consistent with the terms and conditions set
forth in the Exit Facility Term Sheet and (y) otherwise be in form and substance
reasonably satisfactory to (A) the Debtors, (B) the Required Consenting First
Lien Lenders, and (C) the Required Equity Commitment Parties in consultation
with the Required Consenting Noteholders.

70. “Exit Facility Term Sheet” means the term sheet attached to the
Restructuring Support Agreement as Exhibit D thereto, as such term sheet may be
amended, modified or supplemented only in accordance with Section 26 thereof.

71. “File,” “Filed,” or “Filing” means file, filed, or filing in the Chapter 11
Cases with the Bankruptcy Court or, with respect to the filing of a Proof of
Claim, the Solicitation Agent.

72. “Final DIP Order” means a final order entered by the Bankruptcy Court
approving entrance into the DIP Facility and the use of cash collateral, and
incorporating the terms and conditions set forth in the DIP Credit Agreement and
otherwise in form and substance reasonably acceptable to the Debtors, the DIP
Lenders, and the Required Consenting Stakeholders.

73. “Final Decree” means the decree contemplated under Bankruptcy Rule 3022.

 

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74. “Final Order” means, as applicable, an order or judgment of the Bankruptcy
Court or other court of competent jurisdiction with respect to the relevant
subject matter that has not been reversed, modified, or amended, is not subject
to any pending stay and as to which the time to appeal, move for reargument,
reconsideration, or rehearing, or seek certiorari has expired and no appeal,
motion for reargument, reconsideration, or rehearing or petition for certiorari
has been timely taken or filed, or as to which any appeal that has been taken,
motion for reargument, reconsideration, or rehearing that has been granted or
any petition for certiorari that has been or may be filed has been resolved by
the highest court to which the order or judgment could be appealed or from which
certiorari could be sought or the new trial, reargument, reconsideration, or
rehearing shall have been denied, resulted in no modification of such order, or
has otherwise been dismissed with prejudice; provided, however, that the
possibility that a motion under rule 60 of the Federal Rules of Civil Procedure
or any comparable Bankruptcy Rule may be filed relating to such order or
judgment shall not cause such order or judgment to not be a Final Order.

75. “First Lien Agent” means Credit Suisse AG, acting through such of its
affiliates or branches as it may designate, in its capacity as administrative
agent and collateral agent under the First Lien Credit Agreement, or any
successor administrative agent or collateral agent as permitted by the terms set
forth in the First Lien Credit Agreement.

76. “First Lien Agent Representatives” means Cravath, Swain & Moore LLP and any
local counsel to the First Lien Agent.

77. “First Lien Credit Agreement” means that certain Credit Agreement dated as
of April 29, 2016 among Quorum, the First Lien Lenders, Credit Suisse AG, Cayman
Islands Branch, as administrative agent and collateral agent for the First Lien
Lenders (as was and may be modified, amended, or supplemented).

78. “First Lien Credit Facilities” means the Revolving Credit Facility and the
Term Loan Facility.

79. “First Lien Lenders” means, collectively, the banks, financial institutions,
and other lenders party to the First Lien Credit Agreement from time to time,
each solely in their capacity as such.

80. “First Lien Lender Representatives” means Milbank LLP, Houlihan Lokey, Inc.,
and any local counsel to the First Lien Lenders.

81. “First Lien Loan Claims” means any Claim against a Debtor arising under,
derived from, secured by, based on, or related to the First Lien Credit
Agreement or any other agreement, instrument or document executed at any time in
connection therewith.

82. “First Lien Loan Claims Paydown Amount” means the sum of (i) the First Lien
Term Claims Paydown Amount; and (ii) the First Lien Revolver Claims Paydown
Amount.

83. “First Lien Obligations” means all of the Debtors’ obligations under the
First Lien Credit Agreement, in each case to the extent relating to certain
letters of credit, including, without limitation, all reimbursement obligations
for drawn and undrawn letters of credit issued under the First Lien Credit
Facilities, and all interest, fees, and expenses related thereto.

 

8

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84. “First Lien Revolver Claim” means any Claim against a Debtor arising under,
derived from, secured by, based on, or related to the Revolving Credit Facility
or any other agreement, instrument or document executed at any time in
connection therewith.

85. “First Lien Revolver Claims Paydown Amount” means cash proceeds from the New
Common Equity Raise equal to (A) the aggregate principal amount of First Lien
Revolver Claims outstanding on the Petition Date, multiplied by (B) a ratio
equal to (x) the First Lien Term Claims Paydown Amount divided by (y) the
aggregate principal amount of First Lien Term Claims outstanding on the Petition
Date.

86. “First Lien Term Claim” means any Claim against a Debtor arising under,
derived from, secured by, based on, or related to the Term Loan Facility or any
other agreement, instrument or document executed at any time in connection
therewith.

87. “First Lien Term Claims Paydown Amount” means cash proceeds from the New
Common Equity Raise equal to (i) $50 million; or (ii) such greater amount as
determined by the Required Equity Commitment Parties in their sole discretion
before Confirmation.

88. “Galesburg” means, collectively, (a) Knox Clinic Corp., an Illinois
corporation; (b) Galesburg Professional Services, LLC, a Delaware limited
liability company; (c) Galesburg Hospital Corporation, an Illinois corporation;
(d) In-Home Medical Equipment Supplies and Services, Inc., an Illinois
corporation; (e) Cottage Rehabilitation and Sports Medicine, LLC, an Illinois
limited liability company; (f) any and all assets of each Entity in clause
(a) through clause (f); and (g) any and all equity interests in such in each
Entity in clause (a) through clause (f).

89. “General Unsecured Claim” means any Claim that is not secured, an
Administrative Claim (including, for the avoidance of doubt, a Professional Fee
Claim), a DIP Claim, an Other Secured Claim, a Priority Tax Claim, an Other
Priority Claim, an ABL Claim, a First Lien Loan Claim, a Senior Notes Claim, a
Debtor Intercompany Claim, a Non-Debtor Intercompany Claim, or a Section 510(b)
Claim.

90. “Governing Body” means the board of directors, board of managers, manager,
general partner, investment committee, special committee, or such similar
governing body of an Entity.

91. “Governmental Unit” has the meaning set forth in section 101(27) of the
Bankruptcy Code.

92. “Guarantee and Collateral Agreement” means that certain guarantee and
collateral agreement, dated as of April 29, 2016, among Quorum, the subsidiaries
of Quorum from time to time party thereto and Credit Suisse AG, Cayman Islands
Branch, as collateral agent for the First Lien Lenders (as may be modified,
amended, or supplemented)

93. “Holder” means an Entity holding a Claim or an Interest, or, if applicable,
or the New Common Stock, as applicable.

94. “Impaired” means, with respect to any Class of Claims or Interests, a Claim
or an Interest that is not Unimpaired.

 

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95. “Indemnification Provisions” means each of the Debtors’ indemnification
provisions in place immediately prior to the Effective Date whether in the
Debtors’ bylaws, certificates of incorporation, other formation documents, board
resolutions, or contracts for the current and former directors, officers,
managers, employees, equityholders, attorneys, other professionals, and agents
and such current and former directors, officers, and managers’ respective
Affiliates.

96. “Indenture Trustee” means Wilmington Savings Fund Society, FSB, and any
successor thereto, as trustee under the Senior Notes.

97. “Intercompany Interest” means an Interest held by a Debtor or an Affiliate
of a Debtor.

98. “Interest” means any common stock, limited liability company interest,
equity security (as defined in section 101(16) of the Bankruptcy Code), equity,
ownership, profit interests, unit, or share in a Debtor, including all issued,
unissued, authorized, or outstanding shares of capital stock of the Debtors and
any other rights, options, warrants, stock appreciation rights, phantom stock
rights, restricted stock units, redemption rights, repurchase rights,
convertible, exercisable or exchangeable securities or other agreements,
arrangements or commitments of any character relating to, or whose value is
related to, any such interest or other ownership interest in any Debtor.

99. “Interim DIP Order” means the interim order entered by the Bankruptcy Court
approving entrance into the DIP Facility and the use of cash collateral, and
incorporating the terms and conditions set forth in the DIP Credit Agreement and
otherwise in form and substance reasonably acceptable to the Debtors, the DIP
Lenders, and the Required Consenting Stakeholders.

100. “Judicial Code” means title 28 of the United States Code, 28 U.S.C. §§
1–4001, as now in effect or hereafter amended, and the rules and regulations
promulgated thereunder.

101. “Lien” has the meaning set forth in section 101(37) of the Bankruptcy Code.

102. “MIP” means the post-Effective Date management incentive plan that shall be
implemented with respect to Reorganized Quorum (and/or its subsidiaries) on or
after the Effective Date, pursuant to which an amount of New Common Stock
(and/or other equity securities) to be determined by Reorganized Quorum shall be
reserved for grant to management, key employees, and directors of the
Reorganized Debtors, and the terms and conditions of which shall be as
determined by the Governing Body of the applicable Reorganized Debtor in such
Governing Body’s sole discretion.

103. “New Common Equity Raise” means a direct capital raise of the Equity
Commitment Aggregate Amount on the terms and conditions set forth in the Equity
Investment Commitment Agreement.

104. “New Common Stock” means the common stock, limited liability company
membership units, or functional equivalent thereof of Reorganized Quorum having
the terms set forth in the New Quorum Constituent Documents to be issued on the
Effective Date subject to the terms and conditions set forth herein and in the
New Shareholders Agreement.

 

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105. “New Quorum Constituent Documents” means the certificate of incorporation
and the bylaws of Reorganized Quorum, each of which shall be consistent with the
Corporate Governance Term Sheet and otherwise in form and substance reasonably
satisfactory to the Debtors and satisfactory to (a) the Required Equity
Commitment Parties in consultation with the Required Consenting Noteholders and
(b) the Required Consenting First Lien Lenders solely with respect to any term
or provision of the New Quorum Constituent Documents that materially and
adversely affects the rights of the First Lien Lenders.

106. “New Shareholders Agreement” means the shareholders agreement, including
all annexes, exhibits, and schedules thereto, that will govern certain matters
related to the governance of Reorganized Quorum and the New Common Stock, which
agreement shall (a) become effective on the Effective Date, (b) be consistent
with the terms and conditions set forth in the Corporate Governance Term Sheet,
and (c) otherwise be in form and substance reasonably satisfactory to the
Debtors and satisfactory to (i) the Required Equity Commitment Parties in
consultation with the Required Consenting Noteholders.

107. “Non-Debtor Intercompany Claim” means any Claim held by a non-Debtor
Affiliate of the Debtors against a Debtor.

108. “Other Priority Claim” means any Claim other than an Administrative Claim
or a Priority Tax Claim entitled to priority in right of payment under section
507(a) of the Bankruptcy Code.

109. “Other Secured Claim” means any Secured Claim, other than an ABL Claim, a
DIP Claim, or a First Lien Loan Claim.

110. “Person” has the meaning set forth in section 101(41) of the Bankruptcy
Code.

111. “Petition Date” means the date on which each of the Debtors commence the
Chapter 11 Cases.

112. “Plan Supplement” means the compilation of documents and forms of
documents, agreements, schedules, and exhibits to the Plan to be filed by the
Debtors (as may be amended, supplemented, altered, or modified from time to time
on the terms set forth herein), and which includes: (a) the New Shareholders
Agreement; (b) the New Quorum Constituent Documents; (c) the Restructuring Steps
Memorandum; (d) the identity of the members of the Reorganized Quorum Board and
the officers of Reorganized Quorum; (e) the Rejected Executory Contract and
Unexpired Lease List, if any; (f) the Equity Investment Commitment Agreement;
(g) the MIP; (h) the Exit Facility Credit Agreement; (i) the Exit ABL Credit
Agreement; and (j) any other necessary documentation related to the
Restructuring Transactions.

113. “Priority Tax Claim” means any Claim of a Governmental Unit of the kind
specified in section 507(a)(8) of the Bankruptcy Code.

114. “Professional” means an Entity retained in the Chapter 11 Cases pursuant to
a Final Order in accordance with sections 327, 363, and 1103 of the Bankruptcy
Code and to be compensated for services rendered prior to or on the Effective
Date pursuant to sections 327, 328, 329, 330, 331, or 363 of the Bankruptcy
Code.

 

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115. “Professional Fee Claims” means all Claims for accrued, contingent, and/or
unpaid fees and expenses (including transaction and success fees) incurred by a
Professional in the Chapter 11 Cases on or after the Petition Date and through
and including the Confirmation Date that the Bankruptcy Court has not denied by
Final Order. To the extent that the Bankruptcy Court or any higher court of
competent jurisdiction denies or reduces by a Final Order any amount of a
Professional’s fees or expenses, then those reduced or denied amounts shall no
longer constitute Professional Fee Claims.

116. “Professional Fee Escrow Account” means an interest-bearing account funded
by the Debtors with Cash on or before the Effective Date in an amount equal to
the Professional Fee Escrow Amount, provided, however, that the Cash funds in
the Professional Fee Escrow Account shall be increased from Cash on hand at the
Reorganized Debtors to the extent applications are filed after the Effective
Date in excess of the amount of Cash funded into the escrow as of the Effective
Date.

117. “Professional Fee Escrow Amount” means the aggregate amount of Professional
Fee Claims and other unpaid fees and expenses Professionals estimate they have
incurred or will incur in rendering services to the Debtors prior to and as of
the Confirmation Date, which estimates Professionals shall deliver to the
Debtors as set forth in Article II.C of the Plan.

118. “Proof of Claim” means a proof of Claim filed against any of the Debtors in
the Chapter 11 Cases.

119. “Proof of Interest” means a proof of Interest filed again any of the
Debtors in the Chapter 11 Cases.

120. “QHC Litigation Trust” means a trust for the ratable benefit of Holders of
Senior Notes Claims, the terms and conditions of which shall be (a) consistent
with customary terms and conditions for litigation trusts in bankruptcy cases
similar to the Chapter 11 Cases; (b) reasonably acceptable to the Debtors; and
(c) acceptable to the Required Consenting Noteholders.

121. “QHC Litigation Trust Assets” means (a) any Cause of Action arising under
or based on sections 542, 543, 544 through 548, 550, or 553 of the Bankruptcy
Code, any state law fraudulent transfer, fraudulent conveyance, or voidable
transaction law, or any statute limiting or prohibiting transfers to
shareholders, (b) any Cause of Action relating to fraudulent transfer,
fraudulent conveyance, voidable transaction, illegal dividend, breach of
fiduciary duty, aiding and abetting breach of fiduciary duty, alter ego, or
unjust enrichment, and (c) the Contributed Claims; provided that QHC Litigation
Trust Assets shall not include any Cause of Action (i) that was subject to a
valid, non-avoidable prepetition security interest issued by the Debtors or
(ii) that is against any of (a) the Debtors’ current directors or officers as of
the Petition Date or (b) any prepetition lender to the Debtors, in each case
pursuant to this clause (ii) solely in their capacity as such, it being
understood that any such Cause of Action specified in this clause (ii) shall, as
applicable, be subject to Article VIII.D and Article VIII.E of the Plan.

122. “QHC Litigation Trust Agreement” means a trust agreement providing for the
QHC Litigation Trust, which agreement shall be (a) consistent with the term
sheet attached to the Restructuring Support Agreement as Exhibit E thereto and
(b) entered into by and filed with the Bankruptcy Court prior to the
confirmation hearing on the Plan, and approved by the Bankruptcy Court as part
of the Confirmation Order; provided, that the Debtors and Reorganized Quorum
shall not be responsible for any costs of the QHC Litigation Trust.

 

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123. “QHC Litigation Trust Beneficiary” means any Person that is the legal or
beneficial owner of QHC Litigation Trust Interests.

124. “QHC Litigation Trust Cause of Action” means a Cause of Action that is a
QHC Litigation Trust Asset.

125. “QHC Litigation Trust Interests” means all beneficial interests in the QHC
Litigation Trust, as provided for in the QHC Litigation Trust Agreement.

126. “Quorum” means Quorum Health Corporation.

127. “Quorum Interests” means the Interests in Quorum.

128. “Reinstate,” “Reinstated,” or “Reinstatement” means with respect to Claims
and Interests, that the Claim or Interest shall be rendered unimpaired in
accordance with section 1124 of the Bankruptcy Code.

129. “Rejected Executory Contract and Unexpired Lease List” means the list, as
determined by the Required Equity Commitment Parties in consultation with the
Required Consenting Noteholders and reasonably acceptable to the Debtors, of
Executory Contracts and Unexpired Leases that will be rejected by the
Reorganized Debtors pursuant to the Plan, which list, as may be amended from
time to time, shall be included in the Plan Supplement.

130. “Related Party” means, each of, and in each case in its capacity as such,
current and former directors, managers, officers, investment committee members,
special or other committee members, equity holders (regardless of whether such
interests are held directly or indirectly), affiliated investment funds or
investment vehicles, managed accounts or funds, predecessors, participants,
successors, assigns, subsidiaries, Affiliates, partners, limited partners,
general partners, principals, members, management companies, fund advisors or
managers, employees, agents, trustees, advisory board members, financial
advisors, attorneys (including any other attorneys or professionals retained by
any current or former director or manager in his or her capacity as director or
manager of an Entity), accountants, investment bankers, consultants,
representatives, and other professionals and advisors and any such Person’s or
Entity’s respective heirs, executors, estates, and nominees.

131. “Released Party” means collectively, and in each case in its capacity as
such: (a) each of the Debtors; (b) the Reorganized Debtors; (c) each of the
First Lien Lenders who vote in favor of the Plan; (d) each of the ABL Lenders;
(e) the First Lien Agent; (f) the ABL Facility Agent and arrangers under the ABL
Credit Facility; (g) the DIP Agent; (h) each of the DIP Lenders; (i) each of the
Equity Commitment Parties; (j) each Holder of a Senior Notes Claim who votes in
favor of the Plan; (k) the Indenture Trustee; (l) each Related Party of each
Entity in clause (a) through this clause (k); provided, however, that in each
case, an Entity shall not be a Released Party if it timely files with the
Bankruptcy Court on the docket of the Chapter 11 Cases an objection to the
releases contained in Article VIII.D of the Plan that is not resolved before
Confirmation; provided, further, that any such Entity shall be identified by
name as a non-Released Party in the Confirmation Order.

 

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132. “Releasing Parties” means collectively and in each case in their capacity
as such: (a) the Released Parties identified in subsection (a)–(l) and those
Released Parties identified in subsection (m) of the definition of “Released
Party” on behalf of whom the parties identified in subsections (a)–(l) of the
definition of “Released Party” have the authority, including under any agreement
or applicable non-bankruptcy law, to grant the Third-Party Release set forth in
Article VIII.E (b) the Holders of all Claims and Interests who vote to accept
the Plan; (c) the holders of all Claims or Interests that are Unimpaired under
the Plan; (d) the holders of all Claims or Interests whose vote to accept or
reject the Plan is solicited but who do not vote either to accept or to reject
the Plan; (e) the holders of all Claims or Interests who vote to reject the Plan
but do not opt out of granting the releases set forth herein; (f) the holders of
all Claims or Interests who are deemed to reject the Plan and who do not file a
timely objection to the releases provided for in Article VIII.E; (g) the holders
of all Claims and Interests who were given notice of the opportunity to opt out
of granting the releases set forth herein but did not opt out; and (h) each
Related Party of each Entity in clause (b) through clause (g).

133. “Reorganized Quorum” means collectively, Quorum as reorganized pursuant to
the Restructuring Transactions, including any new holding company created prior
to the Effective Date that may be the ultimate parent of Reorganized Quorum, and
any successor(s) thereto.

134. “Reorganized Quorum Board” means the board of directors (or other
applicable governing body) of Reorganized Quorum determined in accordance with
the Corporate Governance Term Sheet.

135. “Reorganized Debtor” means a Debtor, or any successor or assign thereto, by
merger, consolidation, reorganization, or otherwise, in the form of a
corporation, limited liability company, partnership, or other form, as the case
may be, on and after the Effective Date, including Reorganized Quorum.

136. “Required Consenting First Lien Lenders” means, as of any date of
determination, Consenting First Lien Lenders who collectively hold at least
50.01% of the aggregate outstanding principal amount of the First Lien
Obligations held by all Consenting First Lien Lenders at such time; provided,
however, that for purposes of this definition, the term “Consenting First Lien
Lenders” excludes any First Lien Lender that, on the relevant date of
determination, is in breach of any of its material obligations under the
Restructuring Support Agreement.

137. “Required Consenting Noteholders” means, as of any date of determination,
Consenting Noteholders who collectively hold at least 50.01% of the aggregate
outstanding principal amount of the Senior Notes held by all Consenting
Noteholders at such time; provided, however, that for purposes of this
definition, the term “Consenting Noteholders” excludes any Senior Noteholder
that, on the relevant date of determination, is in breach of any of its material
obligations under the Restructuring Support Agreement.

 

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138. “Required Consenting QHC Litigation Trust Beneficiaries” means, as of any
date of determination, QHC Litigation Trust Beneficiaries who collectively hold
at least 50.01% of the aggregate outstanding principal amount of the QHC
Litigation Trust Interests.

139. “Required Consenting Stakeholders” means, collectively, the Required
Consenting First Lien Lenders and the Required Consenting Noteholders.

140. “Required Equity Commitment Parties” has the meaning ascribed to such term
in the Equity Investment Commitment Agreement.

141. “Restructuring Expenses” means the reasonable and documented fees and
expenses accrued since the inception of their respective engagements related to
the Restructuring Transactions and not previously paid by, or on behalf of, the
Debtors, of (i) the ABL Representatives, (ii) the First Lien Agent
Representatives, and (iii) the Senior Notes Representatives; in each case, in
accordance with the engagement letters of such consultant or professional,
including, without limitation, any success fees contemplated therein, and in
each case, without further order of, or application to, the Bankruptcy Court by
such consultant or professionals.

142. “Restructuring Steps Memorandum” means the summary of transaction steps to
complete the restructuring contemplated by the Plan, which shall be included in
the Plan Supplement.

143. “Restructuring Support Agreement” means that certain Restructuring Support
Agreement, and all of the schedules, documents, and exhibits contained therein,
entered into on April 6, 2020 by and among the Debtors, the Consenting
Stakeholders, and any subsequent Entity that becomes a party thereto pursuant to
the terms thereof, attached as Exhibit C to the Disclosure Statement.

144. “Restructuring Transactions” means the transactions described in Article
IV.B of the Plan.

145. “Revolving Credit Facility” means that certain prepetition senior secured
revolving credit facility provided for under the First Lien Credit Agreement in
the original aggregate principal amount of $100 million.

146. “SEC” means the United States Securities and Exchange Commission.

147. “Secured Claim” means a Claim: (a) secured by a valid, perfected, and
enforceable Lien on collateral to the extent of the value of such collateral, as
determined in accordance with section 506(a) of the Bankruptcy Code or
(b) subject to a valid right of setoff pursuant to section 553 of the Bankruptcy
Code.

148. “Securities Act” means the Securities Act of 1933, 15 U.S.C. §§ 77a–77aa,
or any similar federal, state, or local law, as now in effect or hereafter
amended, and the rules and regulations promulgated thereunder.

149. “Security” has the meaning set forth in section 2(a)(1) of the Securities
Act.

 

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150. “Senior Noteholders” means, collectively, the Holders of the Senior Notes.

151. “Senior Notes” means the unsecured 11.625% Senior Notes due April 2023,
issued in the original principal amount of $400 million, pursuant to the Senior
Notes Indenture.

152. “Senior Notes Claim” means any Claim against the Debtors arising from or
based upon the Senior Notes or the Senior Notes Indenture.

153. “Senior Notes Indenture” means that certain indenture, dated as of
April 22, 2016, as amended, supplemented, or modified from time to time, for the
Senior Notes, among Quorum and the Indenture Trustee.

154. “Senior Notes Representatives” means Kirkland & Ellis LLP, Latham & Watkins
LLP, Simpson Thacher & Bartlett LLP, Stroock & Stroock & Lavan LLP, Jefferies
LLC, and one local counsel.

155. “Solicitation Agent” means Epiq Corporate Restructuring, LLC, the notice,
claims, and solicitation agent retained by the Debtors for the Chapter 11 Cases.

156. “Solicitation Materials” means all solicitation materials with respect to
the Plan, including the Disclosure Statement and related ballots.

157. “Stakeholder Approval Rights” means, collectively, the approval, consent,
and consultation rights set forth in the Restructuring Support Agreement, or, if
applicable, in a Definitive Restructuring Document, excluding any approval,
consent, or consultation right of any Debtor under the Restructuring Support
Agreement or a Definitive Restructuring Document.

158. “Taxes” means any and all U.S. federal, state or local, or foreign, income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever (including any assessment, duty, fee or
other charge in the nature of or in lieu of any such tax) and any interest,
penalty, or addition thereto, whether disputed or not, imposed on the Debtors
resulting from the Restructuring Transactions.

159. “Term Loan Facility” means that certain prepetition senior secured term
loan facility provided for under the First Lien Credit Agreement in the original
aggregate principal amount of $880 million between certain of the Debtors as
obligors or guarantors and the lenders thereto.

160. “Third-Party Release” means the release given by each of the Releasing
Parties to the Released Parties as set forth in Article VIII.E of the Plan.

161. “Unexpired Lease” means a lease of nonresidential real property to which
one or more of the Debtors is a party that is subject to assumption or rejection
under section 365 of the Bankruptcy Code.

 

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162. “Unimpaired” means a Class of Claims or Interests that is unimpaired within
the meaning of section 1124 of the Bankruptcy Code.

163. “U.S. Trustee” means the Office of the United States Trustee for the
District of Delaware.

 

B.

Rules of Interpretation

For purposes of the Plan, except as otherwise provided in this Plan: (1) in the
appropriate context, each term, whether stated in the singular or the plural,
shall include both the singular and the plural, and pronouns stated in the
masculine, feminine, or neuter gender shall include the masculine, feminine, and
the neuter gender; (2) unless otherwise specified, any reference in the Plan to
an existing document, schedule, or exhibit, shall mean such document, schedule,
or exhibit, as it may have been or may be amended, modified, or supplemented;
(3) unless otherwise specified, all references in the Plan to “Articles” and
“Sections” are references to Articles and Sections, respectively, hereof or
hereto; (4) the words “herein,” “hereof,” and “hereto” refer to the Plan in its
entirety rather than to any particular portion of the Plan; (5) any effectuating
provisions may be interpreted by the Debtors or the Reorganized Debtors in such
a manner that is consistent with the overall purpose and intent of the Plan all
without further notice to or action, order, or approval of the Bankruptcy Court
or any other Entity; (6) captions and headings to Articles and Sections are
inserted for convenience of reference only and are not intended to be a part of
or to affect the interpretation of the Plan; (7) unless otherwise specified in
the Plan, the rules of construction set forth in section 102 of the Bankruptcy
Code shall apply; (8) any term used in capitalized form in the Plan that is not
otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy
Rules shall have the meaning assigned to such term in the Bankruptcy Code or the
Bankruptcy Rules, as applicable; (9) references to docket numbers of documents
filed in the Chapter 11 Cases are references to the docket numbers under the
Bankruptcy Court’s CM/ECF system; (10) references to “Proofs of Claim,” “Holders
of Claims,” “Disputed Claims,” and the like shall include “Proofs of Interest,”
“Holders of Interests,” “Disputed Interests,” and the like as applicable;
(11) references to “shareholders,” “directors,” and/or “officers” shall also
include “members” and/or “managers,” as applicable, as such terms are defined
under the applicable state limited liability company laws; (12) the terms
“include” and “including,” and variations thereof, shall not be deemed to be
terms of limitation, and shall be deemed to be followed by the words “without
limitation”; and (13) except as otherwise provided in the Plan, any reference to
the Effective Date shall mean the Effective Date or as soon as reasonably
practicable thereafter; provided, however, that with respect to the Equity
Commitment Parties that have surrendered their Notes in advance of the Effective
Date, the New Common Stock distributed on account of such Notes shall be deemed
to have been delivered on the Effective Date.

 

C.

Computation of Time

Unless otherwise specifically stated in the Plan, the provisions of Bankruptcy
Rule 9006(a) shall apply in computing any period of time prescribed or allowed
in the Plan. If the date on which a transaction may occur pursuant to the Plan
shall occur on a day that is not a Business Day, then such transaction shall
instead occur on the next Business Day.

 

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D.

Governing Law

Unless a rule of law or procedure is supplied by federal law (including the
Bankruptcy Code and Bankruptcy Rules) or unless otherwise specifically stated,
the laws of the State of New York, without giving effect to the principles of
conflict of laws, shall govern the rights, obligations, construction, and
implementation of the Plan, any agreements, documents, instruments, or contracts
executed or entered into in connection with the Plan (except as otherwise set
forth in those agreements, in which case the governing law of such agreement
shall control); provided, however, that corporate governance matters relating to
the Debtors or the Reorganized Debtors, as applicable, shall be governed by the
laws of the state of incorporation or formation of the relevant Debtor or
Reorganized Debtor, as applicable.

 

E.

Reference to Monetary Figures

All references in the Plan to monetary figures refer to currency of the United
States of America, unless otherwise expressly provided herein.

 

F.

Reference to the Debtors or the Reorganized Debtors

Except as otherwise specifically provided in the Plan to the contrary,
references in the Plan to the Debtors or to the Reorganized Debtors mean the
Debtors and the Reorganized Debtors, as applicable, to the extent the context
requires.

 

G.

Restructuring Support Agreement Party Consent Rights and Controlling Documents

Notwithstanding anything herein to the contrary, any and all consent rights of
the parties to the Restructuring Support Agreement as set forth in the
Restructuring Support Agreement with respect to the form and substance of this
Plan, any Definitive Restructuring Document, all exhibits to the Plan, and the
Plan Supplement, including any amendments, restatements, supplements, or other
modifications to such agreements and documents, and any consents, waivers, or
other deviations under or from any such documents, shall be incorporated herein
by this reference (including to the applicable definitions in Article I.A
hereof) and be fully enforceable as if stated in full herein.

In the event of an inconsistency between the Plan and the Disclosure Statement,
the terms of the Plan shall control in all respects. In the event of an
inconsistency between the Plan and the Plan Supplement, the Plan Supplement
shall control. In the event of any inconsistency between the Plan or Plan
Supplement, on the one hand, and the Confirmation Order on the other hand, the
Confirmation Order shall control.

ARTICLE II.

ADMINISTRATIVE AND PRIORITY CLAIMS

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims and Priority Tax Claims have not been classified and thus are excluded
from the Classes of Claims set forth in Article III of the Plan.

 

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A.

DIP Claims

All DIP Claims shall be deemed Allowed as of the Effective Date in an amount
equal to (i) the principal amount outstanding under the DIP Facility on such
date, (ii) all interest accrued and unpaid thereon to the date of payment,
(iii) all accrued and unpaid fees, expenses, and non-contingent indemnification
obligations payable under the DIP Credit Agreement and the DIP Orders, and
(iv) all other DIP Obligations (as defined in the DIP Credit Agreement). Except
to the extent that a Holder of an Allowed DIP Claim agrees to less favorable
treatment, in full and final satisfaction, settlement, release, and discharge
of, and in exchange for, each Allowed DIP Claim, each Holder of an Allowed DIP
Claim shall receive payment in full, in Cash, of such Allowed DIP Claim on the
Effective Date. All reasonable and documented unpaid fees and expenses of the
DIP Agent, including reasonable and documented fees, expenses, and costs of its
advisors, shall be paid in Cash on the Effective Date. Contemporaneously with
the foregoing receipt of Cash, the DIP Facility, the DIP Credit Agreement, and
all related loan documents shall be deemed cancelled, all Liens on property of
the Debtors and the Reorganized Debtors arising out of or related to the DIP
Facility shall automatically terminate, and all collateral subject to such Liens
shall be automatically released, in each case without further action by the DIP
Agent or the DIP Lenders and all guarantees of the Debtors and Reorganized
Debtors arising out of or related to the DIP Claims shall be automatically
discharged and released, in each case without further action by the DIP Agent or
the DIP Lenders. The DIP Agent and the DIP Lenders shall take all actions to
effectuate and confirm such termination, release, and discharge as reasonably
requested by the Debtors or the Reorganized Debtors, as applicable.

 

B.

Administrative Claims

Pursuant to section 1129(a)(9) of the Bankruptcy Code, unless otherwise agreed
to by the Holders of an Allowed Administrative Claim and the Debtors, or the
Reorganized Debtors, or as otherwise set forth in an order of the Bankruptcy
Court (including pursuant to the procedures specified therein), as applicable,
each Holder of an Allowed Administrative Claim (other than Holders of
Professional Fee Claims and Claims for fees and expenses pursuant to section
1930 of chapter 123 of title 28 of the United States Code) will receive in full
and final satisfaction of its Administrative Claim an amount of Cash equal to
the amount of such Allowed Administrative Claim in accordance with the
following: (1) if an Administrative Claim is Allowed as of the Effective Date
(or, if not then due, when such Allowed Administrative Claim is due or as soon
as reasonably practicable thereafter); (2) if such Administrative Claim is not
Allowed as of the Effective Date, no later than 60 days after the date on which
an order Allowing such Administrative Claim becomes a Final Order, or as soon as
reasonably practicable thereafter; (3) if such Allowed Administrative Claim is
based on liabilities incurred by the Debtors in the ordinary course of their
business after the Petition Date, in accordance with the terms and conditions of
the particular transaction giving rise to such Allowed Administrative Claim
without any further action by the Holders of such Allowed Administrative Claim;
or (4) at such time and upon such terms as set forth in a Final Order of the
Bankruptcy Court.

 

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C.

Professional Fee Claims

 

  1.

Professional Fee Escrow Account

As soon as reasonably practicable after the Confirmation Date, and no later than
one Business Day prior to the Effective Date, the Debtors shall establish and
fund the Professional Fee Escrow Account with Cash equal to the Professional Fee
Escrow Amount. The Professional Fee Escrow Account shall be maintained in trust
solely for the Professionals and for no other Entities until all Professional
Fee Claims Allowed by the Bankruptcy Court have been irrevocably paid in full to
the Professionals pursuant to one or more Final Orders of the Bankruptcy Court.
No Liens, claims, or interests shall encumber the Professional Fee Escrow
Account or Cash held in the Professional Fee Escrow Account in any way. Such
funds shall not be considered property of the Estates, the Debtors, or the
Reorganized Debtors.

The amount of Professional Fee Claims owing to the Professionals shall be paid
in Cash to such Professionals from the funds held in the Professional Fee Escrow
Account as soon as reasonably practicable after such Professional Fee Claims are
Allowed by an order of the Bankruptcy Court; provided, however, that obligations
with respect to Allowed Professional Fee Claims shall not be limited nor be
deemed limited to funds held in the Professional Fee Escrow Account. When all
Professional Fee Claims Allowed by the Bankruptcy Court have been irrevocably
paid in full to the Professionals pursuant to one or more Final Orders of the
Bankruptcy Court, any remaining funds held in the Professional Fee Escrow
Account shall promptly be paid to the Reorganized Debtors without any further
notice to or action, order, or approval of the Bankruptcy Court or any other
Entity.

 

  2.

Final Fee Applications and Payment of Professional Fee Claims

All final requests for payment of Professional Fee Claims for services rendered
and reimbursement of expenses incurred prior to the Confirmation Date must be
filed no later than 45 days after the Effective Date. The Bankruptcy Court shall
determine the Allowed amounts of such Professional Fee Claims after notice and a
hearing in accordance with the procedures established by the Bankruptcy Code,
Bankruptcy Rules, and prior Bankruptcy Court orders. The amount of the Allowed
Professional Fee Claims owing to the Professionals shall be paid in Cash to such
Professionals, including from funds held in the Professional Fee Escrow Account
when such Professional Fee Claims are Allowed by entry of an order of the
Bankruptcy Court.

 

  3.

Professional Fee Escrow Amount

The Professionals shall provide a reasonable and good-faith estimate of their
fees and expenses incurred in rendering services to the Debtors before and as of
the Effective Date projected to be outstanding as of the Effective Date, and
shall deliver such estimate to the Debtors no later than five days before the
anticipated Effective Date; provided, however, that such estimate shall not be
considered an admission or limitation with respect to the fees and expenses of
such Professional and such Professionals are not bound to any extent by the
estimates. If a Professional does not provide an estimate, the Debtors may
estimate a reasonable amount of unbilled fees and expenses of such Professional,
taking into account any prior payments; provided, however, that such estimate
shall not be binding or considered an admission with respect to the fees and
expenses

 

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of such Professional. The total aggregate amount so estimated as of the
Effective Date shall be utilized by the Debtors to determine the amount to be
funded to the Professional Fee Escrow Account, provided that the Reorganized
Debtors shall use Cash on hand to increase the amount of the Professional Fee
Escrow Account to the extent fee applications are filed after the Effective Date
in excess of the amount held in the Professional Fee Escrow Account based on
such estimates.

 

  4.

Post-Confirmation Date Fees and Expenses.

From and after the Confirmation Date, the Debtors or Reorganized Debtors, as
applicable, shall, in the ordinary course of business and without any further
notice to or action, order, or approval of the Bankruptcy Court, pay in Cash the
reasonable and documented legal, professional, or other fees and expenses
related to implementation of the Plan and Consummation incurred by the Debtors
or the Reorganized Debtors, as applicable. Upon the Confirmation Date, any
requirement that Professionals comply with sections 327 through 331 and 1103 of
the Bankruptcy Code in seeking retention or compensation for services rendered
after such date shall terminate, and the Debtors may employ and pay any
Professional in the ordinary course of business without any further notice to or
action, order, or approval of the Bankruptcy Court.

The Debtors and Reorganized Debtors, as applicable, shall pay, within ten
business days after submission of a detailed invoice to the Debtors or
Reorganized Debtors, as applicable, such reasonable claims for compensation or
reimbursement of expenses incurred by the retained Professionals of the Debtors
or the Reorganized Debtors, as applicable. If the Debtors or Reorganized
Debtors, as applicable, dispute the reasonableness of any such invoice, the
Debtors or Reorganized Debtors, as applicable, or the affected professional may
submit such dispute to the Bankruptcy Court for a determination of the
reasonableness of any such invoice, and the disputed portion of such invoice
shall not be paid until the dispute is resolved.

 

D.

Priority Tax Claims

Pursuant to section 1129(a)(9)(C) of the Bankruptcy Code, unless otherwise
agreed by the Holder of an Allowed Priority Tax Claim and the applicable Debtor
or Reorganized Debtor, each holder of an Allowed Priority Tax Claim will
receive, at the option of the applicable Debtor or Reorganized Debtor, in full
satisfaction of its Allowed Priority Tax Claim that is due and payable on or
before the Effective Date, either (i) Cash equal to the amount of such Allowed
Priority Tax Claim on the Effective Date or (ii) otherwise treated in accordance
with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code. For
the avoidance of doubt, Holders of Allowed Priority Tax Claims will receive
interest on such Allowed Priority Tax Claims after the Effective Date in
accordance with sections 511 and 1129(a)(9)(C) of the Bankruptcy Code.

ARTICLE III.

CLASSIFICATION, TREATMENT, AND VOTING OF CLAIMS AND INTERESTS

 

A.

Classification of Claims and Interests

This Plan constitutes a separate Plan proposed by each Debtor. Except for the
Claims addressed in Article II of the Plan, all Claims and Interests are
classified in the Classes set forth below in accordance with section 1122 of the
Bankruptcy Code. A Claim or an Interest is classified in a particular Class only
to the extent that the Claim or Interest qualifies within the description of

 

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that Class and is classified in other Classes to the extent that any portion of
the Claim or Interest qualifies within the description of such other Classes. A
Claim or an Interest also is classified in a particular Class for the purpose of
receiving distributions under the Plan only to the extent that such Claim or
Interest is an Allowed Claim or Interest in that Class and has not been paid,
released, or otherwise satisfied prior to the Effective Date.

The following chart represents the classification of Claims and Interests for
each Debtor pursuant to the Plan:

 

Class

  

Claim or Interest

  

Status

  

Voting Rights

1    Other Secured Claims    Unimpaired   

Not Entitled to Vote

(Presumed to Accept)

2    Other Priority Claims    Unimpaired   

Not Entitled to Vote

(Presumed to Accept)

3    ABL Claims    Unimpaired   

Not Entitled to Vote

(Presumed to Accept)

4    First Lien Loan Claims    Impaired    Entitled to Vote 5    Senior Notes
Claims    Impaired    Entitled to Vote 6    General Unsecured Claims   
Unimpaired   

Not Entitled to Vote

(Presumed to Accept)

7    Debtor Intercompany Claims    Unimpaired / Impaired   

Not Entitled to Vote

(Presumed to Accept or Deemed to Reject)

8    Non-Debtor Intercompany Claims    Unimpaired / Impaired   

Not Entitled to Vote

(Presumed to Accept or Deemed to Reject)

9    Intercompany Interests    Unimpaired / Impaired   

Not Entitled to Vote

(Presumed to Accept or Deemed to Reject)

10    Quorum Interests    Impaired   

Not Entitled to Vote

(Deemed to Reject)

 

B.

Treatment of Classes of Claims and Interests

To the extent a Class contains Allowed Claims or Allowed Interests with respect
to any Debtor, the classification of Allowed Claims and Allowed Interests is
specified below.

 

  1.

Class 1 — Other Secured Claims

 

  (a)

Classification: Class 1 consists of any Other Secured Claims.

 

  (b)

Treatment: Except to the extent that a Holder of an Allowed Other Secured Claim
agrees to less favorable treatment of its Allowed Claim, in full and final
satisfaction, settlement, release, and discharge of and in exchange for each
Allowed Other Secured Claim, each such Holder shall receive, at the option of
the applicable Debtor(s), either:

 

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  (i)

payment in full in Cash;

 

  (ii)

delivery of collateral securing any such Claim and payment of any interest
required under section 506(b) of the Bankruptcy Code;

 

  (iii)

Reinstatement of such Allowed Other Secured Claim; or

 

  (iv)

such other treatment rendering its Allowed Other Secured Claim Unimpaired in
accordance with section 1124 of the Bankruptcy Code.

 

  (c)

Voting: Class 1 is Unimpaired under the Plan. Holders of Allowed Other Secured
Claims are conclusively presumed to have accepted the Plan under section 1126(f)
of the Bankruptcy Code. Holders of Allowed Other Secured Claims are not entitled
to vote to accept or reject the Plan.

 

  2.

Class 2 — Other Priority Claims

 

  (a)

Classification: Class 2 consists of any Other Priority Claims.

 

  (b)

Treatment: Except to the extent that a Holder of an Allowed Other Priority Claim
agrees to less favorable treatment of its Allowed Claim, in full and final
satisfaction, settlement, release, and discharge of and in exchange for each
Allowed Other Priority Claim, each such Holder shall receive, at the option of
the applicable Debtor(s), either:

 

  (i)

payment in full in Cash; or

 

  (ii)

such other treatment rendering its Allowed Other Priority Claim Unimpaired in
accordance with section 1124 of the Bankruptcy Code.

 

  (c)

Voting: Class 2 is Unimpaired under the Plan. Holders of Allowed Other Priority
Claims are conclusively presumed to have accepted the Plan under section 1126(f)
of the Bankruptcy Code. Holders of Allowed Other Priority Claims are not
entitled to vote to accept or reject the Plan.

 

  3.

Class 3 — ABL Claims

 

  (a)

Classification: Class 3 consists of any ABL Claims against any Debtor.

 

  (b)

Treatment: Except to the extent that a Holder of an ABL Claim agrees to less
favorable treatment of its Allowed Claim and in the Debtors’ sole discretion, in
full and final satisfaction, compromise, settlement, release, and discharge of
and in exchange for each ABL Claim, each Holder of an Allowed ABL Claim shall
receive indefeasible payment in full in Cash of its Allowed ABL Claim.

 

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  (c)

Voting: Class 3 is Unimpaired under the Plan. Holders of ABL Claims are
conclusively presumed to have accepted the Plan under section 1126(f) of the
Bankruptcy Code. Holders of ABL Claims are not entitled to vote to accept or
reject the Plan.

 

  4.

Class 4 — First Lien Loan Claims

 

  (a)

Classification: Class 4 consists of any First Lien Loan Claims against any
Debtor.

 

  (b)

Allowance: On the Effective Date, First Lien Loan Claims shall be Allowed in
their entirety for all purposes of the Plan in the aggregate principal amount of
no less than $785,000,000, plus any accrued but unpaid interest, fees, and other
expenses arising under or in connection with the First Lien Credit Agreement,
which shall not be subject to any avoidance, reductions, setoff, offset,
recharacterization, subordination, counterclaims, cross-claims, defenses,
disallowance, impairments or any other challenges under applicable law or
regulation by any entity.

 

  (c)

Treatment: Except to the extent that a Holder of an Allowed First Lien Loan
Claim agrees to less favorable treatment, on the Effective Date, in full and
final satisfaction, compromise, settlement, release, and discharge of and in
exchange for each Allowed First Lien Loan Claim, each Holder of an Allowed First
Lien Loan Claim shall receive such holder’s pro rata share of (i) the First Lien
Loan Claims Paydown Amount; and (ii) the Exit Facility. In the event that a
Holder of First Lien Term Claim declines to receive its pro rata share of the
First Lien Term Claims Paydown Amount, such Holder’s portion will be
re-allocated pro rata among accepting holders of First Lien Term Claims. In the
event that a Holder of a First Lien Revolver Claim declines to receive its pro
rata share of the First Lien Revolver Claims Paydown Amount, such Holder’s
portion will be re-allocated pro rata among accepting holders of First Lien
Revolver Claims.

 

  (d)

Voting: Class 4 is Impaired under the Plan. Holders of Allowed First Lien Loan
Claims are entitled to vote to accept or reject the Plan.

 

  5.

Class 5 — Senior Notes Claims

 

  (a)

Classification: Class 5 consists of any Senior Notes Claims against any Debtor.

 

  (b)

Allowance: On the Effective Date, Senior Notes Claims shall be Allowed in their
entirety for all purposes of the Plan in the aggregate principal amount of
$400,000,000, plus any accrued but unpaid interest, fees, and other expenses
arising under or in connection with the Senior Notes Indenture, which shall not
be subject to any avoidance, reductions, setoff, offset, recharacterization,
subordination, counterclaims, cross-claims, defenses, disallowance, impairments
or any other challenges under applicable law or regulation by any entity.

 

24

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  (c)

Treatment: Except to the extent that a Holder of an Allowed Senior Notes Claim
agrees to less favorable treatment of its Allowed Claim, on the Effective Date,
in full and final satisfaction, settlement, release, and discharge of and in
exchange for each Senior Notes Claim, each Holder of an Allowed Senior Notes
Claim shall receive its pro rata share of (i) 100% of the total New Common
Stock, subject to dilution by shares of New Common Stock issued pursuant to
(A) the New Common Equity Raise, (B) the Equity Investment Commitment Premium,
and (C) the MIP; and (ii) the QHC Litigation Trust Interests.

 

  (d)

Voting: Class 5 is Impaired under the Plan. Holders of Allowed Senior Notes
Claims are entitled to vote to accept or reject the Plan.

 

  6.

Class 6 — General Unsecured Claims

 

  (a)

Classification: Class 6 consists of any General Unsecured Claims against any
Debtor.

 

  (b)

Treatment: Except to the extent that a Holder of an Allowed General Unsecured
Claim agrees to less favorable treatment of its Allowed Claim, in full and final
satisfaction, settlement, release, and discharge of, and in exchange for, each
Allowed General Unsecured Claim, each Holder of an Allowed General Unsecured
Claim shall be Reinstated and paid in the ordinary course of business in
accordance with the terms and conditions of the particular transaction or
agreement giving rise to such Allowed General Unsecured Claim.

 

  (c)

Voting: Class 6 is Unimpaired and Holders of Allowed General Unsecured Claims
are conclusively presumed to have accepted the Plan pursuant to section 1126(f)
of the Bankruptcy Code. Therefore, Holders of Allowed General Unsecured Claims
are not entitled to vote to accept or reject the Plan.

 

  7.

Class 7 — Debtor Intercompany Claims

 

  (a)

Classification: Class 7 consists of any Debtor Intercompany Claims.

 

  (b)

Treatment: Except to the extent otherwise provided in the Restructuring Steps
Memorandum, each Allowed Debtor Intercompany Claim shall, at the option of the
applicable Debtors, either on or after the Effective Date, be:

 

  (i)

Reinstated; or

 

25

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  (ii)

extinguished, compromised, addressed, setoff, cancelled, or settled, potentially
without any distribution on account of such Claims.

 

  (c)

Voting: Holders of Allowed Debtor Intercompany Claims are conclusively presumed
to have accepted the Plan pursuant to section 1126(f) or deemed to have rejected
the Plan pursuant to section 1126(g) of the Bankruptcy Code. Holders of Allowed
Debtor Intercompany Claims are not entitled to vote to accept or reject the
Plan.

 

  8.

Class 8 — Non-Debtor Intercompany Claims

 

  (a)

Classification: Class 8 consists of any Non-Debtor Intercompany Claims.

 

  (b)

Treatment: Except to the extent otherwise provided in the Restructuring Steps
Memorandum, each Allowed Non-Debtor Intercompany Claim shall, at the option of
the applicable Debtors, be:

 

  (i)

Reinstated; or

 

  (ii)

extinguished, compromised, addressed, cancelled, or settled, without any
distribution on account of such Claims.

 

  (c)

Voting: Holders of Allowed Non-Debtor Intercompany Claims are conclusively
presumed to have accepted the Plan pursuant to section 1126(f) or deemed to have
rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Holders of
Allowed Non-Debtor Intercompany Claims are not entitled to vote to accept or
reject the Plan.

 

  9.

Class 9 — Intercompany Interests

 

  (a)

Classification: Class 9 consists of all Interests in the Debtors.

 

  (b)

Treatment: Except to the extent otherwise provided in the Restructuring Steps
Memorandum, on the Effective Date, Intercompany Interests shall be, at the
option of the Debtors, either be:

 

  (i)

Reinstated; or

 

  (ii)

discharged, cancelled, released, and extinguished and of no further force or
effect without any distribution on account of such Interests.

For the avoidance of doubt, any Interest in non-Debtor subsidiaries owned by a
Debtor shall continue to be owned by the applicable Reorganized Debtor unless
otherwise provided in the Restructuring Steps Memorandum.

 

  (c)

Voting: Holders of Allowed Intercompany Interests are conclusively presumed to
have accepted the Plan pursuant to section 1126(f) or deemed to have rejected
the Plan pursuant to section 1126(g) of the Bankruptcy Code. Holders of Allowed
Intercompany Interests are not entitled to vote to accept or reject the Plan.

 

26

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  10.

Class 10 — Quorum Interests

 

  (a)

Classification: Class 10 consists of all Interests in Quorum.

 

  (b)

Treatment: All Quorum Interests shall be discharged, cancelled, released, and
extinguished and of no further force or effect without any distribution on
account of such Interests.

 

  (c)

Voting: Holders of Quorum Interests are conclusively deemed to have rejected the
Plan pursuant to section 1126(g) of the Bankruptcy Code. Holders of Allowed
Intercompany Interests are not entitled to vote to accept or reject the Plan.

 

C.

Special Provision Governing Unimpaired Claims

Except as otherwise provided in the Plan, nothing under the Plan shall affect
the Debtors’ or the Reorganized Debtors’ rights regarding any Unimpaired Claim,
including all rights regarding legal and equitable defenses to or setoffs or
recoupments against any such Unimpaired Claim.

 

D.

Elimination of Vacant Classes

Any Class of Claims or Interests that does not have a Holder of an Allowed Claim
or Allowed Interest or a Claim or Interest temporarily Allowed by the Bankruptcy
Court as of the date of the Confirmation Hearing shall be deemed eliminated from
the Plan for purposes of voting to accept or reject the Plan and for purposes of
determining acceptance or rejection of the Plan by such Class pursuant to
section 1129(a)(8) of the Bankruptcy Code.

 

E.

Voting Classes; Presumed Acceptance by Non-Voting Classes

If a Class contains Claims or Interests eligible to vote and no Holders of
Claims or Interests eligible to vote in such Class vote to accept or reject the
Plan, the Debtors shall request the Bankruptcy Court to deem the Plan accepted
by the Holders of such Claims or Interests in such Class.

 

F.

Subordinated Claims

The allowance, classification, and treatment of all Allowed Claims and Allowed
Interests and the respective distributions and treatments under the Plan take
into account and conform to the relative priority and rights of the Claims and
Interests in each Class in connection with any contractual, legal, and equitable
subordination rights relating thereto, whether arising under general principles
of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise.
Pursuant to section 510 of the Bankruptcy Code, the Reorganized Debtors reserve
the right to re-classify any Allowed Claim or Allowed Interest in accordance
with any contractual, legal, or equitable subordination relating thereto.

 

27

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G.

Intercompany Interests

To the extent Reinstated under the Plan, distributions on account of
Intercompany Interests are not being received by Holders of such Intercompany
Interests on account of their Intercompany Interests, but for the purposes of
administrative convenience and in exchange for the Debtors’ and Reorganized
Debtors’ agreement under the Plan to provide management services to certain
other Debtors and Reorganized Debtors and to use certain funds and assets as set
forth in the Plan to make certain distributions and satisfy certain obligations
of certain other Debtors and Reorganized Debtors to the Holders of certain
Allowed Claims. For the avoidance of doubt, any Interest in non-Debtor
subsidiaries owned by a Debtor shall continue to be owned by the applicable
Reorganized Debtor.

 

H.

Controversy Concerning Impairment

If a controversy arises as to whether any Claims or Interests, or any Class of
Claims or Interests, are Impaired, the Bankruptcy Court shall, after notice and
a hearing, determine such controversy on or before the Confirmation Date.

 

I.

Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code

Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of
Confirmation by acceptance of the Plan by one or more of the Classes entitled to
vote pursuant to Article III.B of the Plan. The Debtors shall seek Confirmation
of the Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to
any rejecting Class of Claims or Interests. The Debtors reserve the right to
alter, amend, or modify the Plan, or any document in the Plan Supplement in
accordance with Article X hereof to the extent, if any, that Confirmation
pursuant to section 1129(b) of the Bankruptcy Code requires modification,
including by modifying the treatment applicable to a Class of Claims to render
such Class of Claims Unimpaired to the extent permitted by the Bankruptcy Code
and the Bankruptcy Rules or to withdraw the Plan as to such Debtor, with the
consent of the Consenting Stakeholders in accordance with the Restructuring
Support Agreement and in accordance with the provisions of the Plan.

ARTICLE IV.

MEANS FOR IMPLEMENTATION OF THE PLAN

 

A.

General Settlement of Claims and Interests

Unless otherwise set forth in the Plan, pursuant to section 1123 of the
Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the
classification, distributions, releases, and other benefits provided under the
Plan, upon the Effective Date, the provisions of the Plan shall constitute a
good-faith compromise and settlement of all Claims and Interests and
controversies resolved pursuant to the Plan, including with respect to issues
related to the value of the Debtors’ unencumbered property.

 

28

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B.

Restructuring Transactions

On and after the Confirmation Date, the Debtors or Reorganized Debtors, as
applicable, shall take all actions set forth in the Restructuring Steps
Memorandum and may take all actions as may be necessary or appropriate to effect
any transaction described in, approved by, contemplated by, or necessary to
effectuate the Plan that are consistent with and pursuant to the terms and
conditions of the Plan, which transactions may include, as applicable: (a) the
execution and delivery of appropriate agreements or other documents of merger,
amalgamation, consolidation, restructuring, reorganization, conversion,
disposition, transfer, arrangement, continuance, dissolution, sale, purchase, or
liquidation containing terms that are consistent with the terms of the Plan;
(b) the execution and delivery of appropriate instruments of transfer,
assignment, assumption, or delegation of any asset, property, right, liability,
debt, or obligation on terms consistent with the terms of the Plan and having
other terms to which the applicable parties agree; (c) the filing of appropriate
certificates or articles of incorporation, reincorporation, formation, merger,
consolidation, conversion, amalgamation, arrangement, continuance, or
dissolution or other certificates or documentation for other transactions as
described in clause (a), pursuant to applicable state law; (d) the consummation
of the New Common Equity Raise, (e) the execution and delivery of the New
Shareholders Agreement and the New Quorum Constituent Documents, and any
certificates or articles of incorporation, bylaws, or such other applicable
formation documents (if any) of each Reorganized Debtor (including all actions
to be taken, undertakings to be made, and obligations to be incurred and fees
and expenses to be paid by the Debtors and/or the Reorganized Debtors, as
applicable); and the issuance, distribution, reservation, or dilution, as
applicable, of the New Common Stock, as set forth herein; (f) the execution and
delivery of the QHC Litigation Trust Agreement and the creation of the QHC
Litigation Trust; (g) the adoption of the MIP and the issuance and reservation
of the New Common Stock to the participants in the MIP on the terms and
conditions set by the Reorganized Quorum Board after the Effective Date; (h) the
sale or other disposition of Galesburg by Quorum or Reorganized Quorum, as
applicable, including, without limitation, by abandonment of Galesburg pursuant
to section 554 of the Bankruptcy Code; and (i) all other actions that the
applicable Entities determine to be necessary or appropriate, including making
filings or recordings that may be required by applicable law in connection with
the Restructuring Transactions.

 

C.

Sources of Consideration for Plan Distributions

The Debtors shall fund distributions under the Plan, as applicable, with:
(1) the New Common Stock; (2) the proceeds of the New Common Equity Raise;
(3) any proceeds resulting from the QHC Litigation Trust’s litigation,
arbitration, or settlement of any QHC Litigation Trust Assets; (4) the Exit ABL
Facility; and (5) the Debtors’ Cash on hand. Each distribution and issuance
referred to in Article VI of the Plan shall be governed by the terms and
conditions set forth in the Plan applicable to such distribution or issuance and
by the terms and conditions of the instruments or other documents evidencing or
relating to such distribution or issuance, which terms and conditions shall bind
each Entity receiving such distribution or issuance. The issuance, distribution,
or authorization, as applicable, of certain securities in connection with the
Plan, including the New Common Stock will be exempt from SEC registration, as
described more fully in Article IV.E below.

 

29

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  1.

Issuance and Distribution of the New Common Stock

On the Effective Date, the New Common Stock shall be issued and distributed as
provided for in the Restructuring Steps Memorandum to the Entities entitled to
receive the New Common Stock pursuant to, and in accordance with, the Plan, the
Equity Investment Commitment Agreement, and the Restructuring Support Agreement.
On the Effective Date, the issuance of New Common Stock shall be authorized
without the need for any further corporate action and without any action by the
Holders of Claims or other parties in interest. All of the New Common Stock
issued under the Plan shall be duly authorized, validly issued, fully paid, and
non-assessable consistent with the terms of the New Shareholders Agreement.

Each distribution and issuance of the New Common Stock as of the Effective Date
shall be governed by the terms and conditions set forth in the Plan applicable
to such distribution, issuance, and/or dilution, as applicable, and by the terms
and conditions of the instruments evidencing or relating to such distribution,
issuance, and/or dilution, as applicable, including the New Quorum Constituent
Documents and New Shareholders Agreement, the terms and conditions of which
shall bind each Entity receiving such distribution of the New Common Stock. Any
Entity’s acceptance of New Common Stock shall be deemed as its agreement to the
New Quorum Constituent Documents and the New Shareholders Agreement, as the same
may be amended or modified from time to time following the Effective Date in
accordance with their terms. The New Common Stock will not be registered on any
exchange as of the Effective Date and shall not meet the eligibility
requirements of DTC. For the avoidance of doubt, distributions to Holders of
Class 5-Senior Notes Claims shall be made on or as soon as practicable after the
Effective Date, and the Distribution Record Date shall not apply to such
distributions. Notwithstanding anything set forth herein, in the Disclosure
Statement, or in the Confirmation Order, distributions of New Common Stock to
the holders of Senior Notes shall be made to or at the direction of the
Indenture Trustee.

 

  2.

The New Common Equity Raise

On the Effective Date, the Debtors shall consummate the New Common Equity Raise,
subject to the terms and conditions set forth in the Plan, the Restructuring
Support Agreement, and the Equity Investment Commitment Agreement, through which
Reorganized Quorum shall issue, and the Equity Commitment Parties shall
purchase, shares of New Common Stock equal in number to the Equity Commitment
Aggregate Amount divided by the Equity Investment Price Per Share.

Subject to, and in accordance with the Equity Investment Commitment Agreement,
as consideration for their respective Equity Commitments, the Equity Commitment
Parties shall receive, on the Effective Date, the Equity Investment Commitment
Premium, which shall be payable in New Common Stock at the Equity Investment
Premium Price Per Share or in Cash if the New Common Equity Raise is not
consummated, and which shall have been fully accrued as of the Agreement
Effective Date.

 

  3.

QHC Litigation Trust

By the Effective Date, the Debtors shall (a) execute and deliver the QHC
Litigation Trust Agreement to the trustee(s) for the QHC Litigation Trust,
(b) establish the QHC Litigation Trust, and (c) contribute the QHC Litigation
Trust Assets to the QHC Litigation Trust, including by facilitating the
assignment of the Contributed Claims.

 

30

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Following the Effective Date, any proceeds from the QHC Litigation Trust’s
litigation, arbitration, or settlement of any QHC Litigation Trust Cause of
Action shall be distributed ratably to holders of QHC Litigation Trust Interests
pursuant to and in accordance with the Plan and the QHC Litigation Trust
Agreement. Additionally, prior to September 30, 2021, the QHC Litigation Trust’s
commencement of any QHC Litigation Trust Cause of Action shall be subject to the
consent of (i) the Reorganized Debtors, and (ii) the Required Consenting QHC
Litigation Trust Beneficiaries; provided that, following September 30, 2021, the
QHC Litigation Trust’s commencement of any QHC Litigation Trust Cause of Action
shall be subject to the QHC Litigation Trust’s sole and exclusive discretion,
consistent with the provisions of the QHC Litigation Trust Agreement.

 

  4.

Exit ABL Facility

The Plan contemplates the payment in full in Cash of all Allowed ABL Claims.
Such payment shall be accomplished through a refinancing of such ABL Claims by
the Exit ABL Facility which may, among other potential third parties, be
provided by any Holder of Allowed ABL Claims, which agrees to provide the Exit
ABL Facility.

 

  5.

Cash on Hand

The Debtors or Reorganized Debtors, as applicable, shall use Cash on hand to
fund distributions to certain Holders of Allowed Claims, consistent with the
terms of the Plan.

 

D.

New Shareholders Agreement

On the Effective Date, Reorganized Quorum shall enter into and deliver the New
Shareholders Agreement, in substantially the form included in the Plan
Supplement, to each Holder of New Common Stock and such parties shall be bound
thereby, in each case without the need for execution by any party thereto other
than Reorganized Quorum.

 

E.

Exemption from Registration Requirements

All shares of New Common Stock, issued and distributed pursuant to the Plan,
will be issued and distributed without registration under the Securities Act or
any similar federal, state, or local law in reliance upon (1) section 1145 of
the Bankruptcy Code; (2) section 4(a)(2) of the Securities Act or Regulation D
promulgated thereunder; or (3) such other exemption as may be available from any
applicable registration requirements.

All shares of New Common Stock issued to Holders of Allowed Senior Notes Claims
on account of such Claims will be issued without registration under the
Securities Act or any similar federal, state, or local law in reliance on
Section 1145(a) of the Bankruptcy Code. The offering, issuance, and distribution
of all shares of New Common Stock pursuant to the Plan in reliance upon section
1145 of the Bankruptcy Code is exempt from, among other things, the registration
requirements of Section 5 of the Securities Act and any other applicable U.S.
state or local law requiring registration prior to the offering, issuance,
distribution, or sale of securities. Such shares of New Common Stock to be
issued under the Plan (a) are not “restricted securities” as defined in Rule
144(a)(3) under the Securities Act, and (b) subject to the terms of the New
Shareholders Agreement, are freely tradable and transferable by any initial
recipient thereof that (i) is not an “affiliate” of the Debtors as defined in
Rule 144(a)(1) under the Securities Act, (ii) has not been such an “affiliate”
within 90 days of such transfer, and (iii) is not an entity that is an
“underwriter” as defined in subsection (b) of Section 1145 of the Bankruptcy
Code.

 

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All shares of New Common Stock issued pursuant to the New Common Equity Raise or
in respect of the Equity Investment Commitment Premium will be issued without
registration under the Securities Act or any similar federal, state, or local
law in reliance on section 4(a)(2) of the Securities Act or Regulation D
promulgated thereunder, or such other exemption as may be available from any
applicable registration requirements. All shares of New Common Stock issued
pursuant to the exemption from registration set forth in section 4(a)(2) of the
Securities Act or Regulation D promulgated thereunder will be considered
“restricted securities” and may not be transferred except pursuant to an
effective registration statement under the Securities Act or an available
exemption therefrom. The New Common Stock underlying the MIP will be issued
pursuant to a registration statement or an available exemption from registration
under the Securities Act and other applicable law.

The availability of the exemption under section 1145 of the Bankruptcy Code or
any other applicable securities laws shall not be a condition to the occurrence
of the Effective Date.

Should the Reorganized Debtors elect, on or after the Effective Date, to reflect
all or any portion of the ownership of Reorganized Quorum’s New Common Stock
through the facilities of DTC, the Reorganized Debtors shall not be required to
provide any further evidence other than the Plan or Final Order with respect to
the treatment of such applicable portion of Reorganized Quorum’s New Common
Stock, and such Plan or Final Order shall be deemed to be legal and binding
obligations of the Reorganized Debtors in all respects.

DTC shall be required to accept and conclusively rely upon the Plan and Final
Order in lieu of a legal opinion regarding whether Reorganized Quorum’s New
Common Stock is exempt from registration and/or eligible for DTC book-entry
delivery, settlement, and depository services.

Notwithstanding anything to the contrary in the Plan, no entity (including, for
the avoidance of doubt, DTC) may require a legal opinion regarding the validity
of any transaction contemplated by the Plan, including, for the avoidance of
doubt, whether Reorganized Quorum’s New Common Stock is exempt from
registration.

 

F.

Exit ABL Facility & Exit Facility

On the Effective Date, the Reorganized Debtors will enter into the Exit ABL
Facility Agreement and the Exit Facility Credit Agreement.

 

G.

Corporate Existence

Except as otherwise provided in the Plan or the Plan Supplement, each Debtor
shall continue to exist after the Effective Date as a separate corporate entity,
limited liability company, partnership, or other form, as the case may be, with
all the powers of a corporation, limited liability company, partnership, or
other form, as the case may be, pursuant to the applicable law in the
jurisdiction in which each applicable Debtor is incorporated or formed and
pursuant to the respective certificate of incorporation and bylaws (or other
formation documents) in effect prior to the Effective Date, except to the extent
such certificate of incorporation and bylaws (or other formation documents) are
amended under the Plan, the New Quorum Constituent Documents, or otherwise, and
to the extent such documents are amended, such documents are deemed to be
amended pursuant to the Plan and require no further action or approval (other
than any requisite filings required under applicable state, provincial, or
federal law).

 

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H.

Corporate Action

On or before the Effective Date, as applicable, all actions contemplated under
the Plan or the Plan Supplement shall be deemed authorized and approved in all
respects, including: (1) adoption or assumption, as applicable, of the
agreements with existing management; (2) selection of the directors, managers,
and officers for the Reorganized Debtors; (3) implementation of the
Restructuring Transactions; and (4) all other actions contemplated under the
Plan (whether to occur before, on, or after the Effective Date), including,
without limitation, any sale, wind-down or other disposition of Galesburg by
Quorum or Reorganized Quorum, as applicable. All matters provided for in the
Plan involving the corporate structure of the Debtors or the Reorganized
Debtors, as applicable, and any corporate action required by the Debtors or the
Reorganized Debtors in connection with the Plan shall be deemed to have occurred
and shall be in effect, without any requirement of further action by the
security holders, directors, managers, or officers of the Debtors or the
Reorganized Debtors, as applicable. On or (as applicable) prior to the Effective
Date, the appropriate officers of the Debtors or the Reorganized Debtors, as
applicable, shall be authorized to issue, execute, and deliver the agreements,
documents, securities, and instruments contemplated under the Plan (or necessary
or desirable to effect the transactions contemplated under the Plan) in the name
of and on behalf of the Reorganized Debtors, including the Equity Investment
Commitment Agreement, the New Shareholders Agreement, the QHC Litigation Trust
Agreement, and any and all other agreements, documents, securities, and
instruments relating to the foregoing. The authorizations and approvals
contemplated by this Article IV.H shall be effective notwithstanding any
requirements under non-bankruptcy law.

 

I.

Vesting of Assets in the Reorganized Debtors

Except as otherwise provided in the Plan or the Plan Supplement, or in any
agreement, instrument, or other document incorporated in the Plan, on the
Effective Date, all property in each Debtor’s Estate, all Causes of Action that
are not QHC Litigation Trust Assets, and any property acquired by any of the
Debtors under the Plan shall vest in each respective Reorganized Debtor, free
and clear of all Liens, Claims, charges, or other encumbrances (except for Liens
securing obligations on account of Other Secured Claims that are Reinstated
pursuant to the Plan, if any). On and after the Effective Date, except as
otherwise provided in the Plan, each Reorganized Debtor may operate its business
and may use, acquire, or dispose of property and compromise or settle any
Claims, Interests, or Causes of Action that are not QHC Litigation Trust Causes
of Action without supervision or approval by the Bankruptcy Court and free of
any restrictions of the Bankruptcy Code or Bankruptcy Rules.

 

J.

Cancellation of Facilities, Notes, Instruments, Certificates, and Other
Documents

On the Effective Date, except to the extent otherwise provided in the Plan, all
facilities, notes, instruments, certificates, shares, and other documents
evidencing Claims or Interests shall be cancelled, and the obligations of the
Debtors or the Reorganized Debtors thereunder or in any way related thereto
shall be discharged and deemed satisfied in full, and the ABL Facility Agent,
the First Lien Agent, DIP Agent, and Indenture Trustee shall be released from
all duties and

 

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obligations thereunder; provided, however, that notwithstanding Confirmation or
the occurrence of the Effective Date, any credit document or agreement that
governs the rights of the Holder of a Claim or Interest and any debt issued
thereunder shall continue in effect solely for purposes of (a) allowing Holders
of Allowed Claims to receive distributions under the Plan, (b) allowing and
preserving the rights of the ABL Facility Agent, the First Lien Agent, DIP
Agent, and Indenture Trustee to make distributions pursuant to the Plan,
(c) preserving the ABL Facility Agent’s, the First Lien Agent’s, the DIP
Agent’s, and the Indenture Trustee’s rights to compensation and indemnification
as against any money or property distributable to the Holders of ABL Claims,
Holders of First Lien Loan Claims, Holders of Senior Notes Claims, or Holders of
DIP Claims, including permitting the ABL Facility Agent, the First Lien Agent,
the DIP Agent, and the Indenture Trustee to maintain, enforce, and exercise
their charging liens, if any, against such distributions, (d) preserving all
rights, including rights of enforcement, of the ABL Facility Agent, the First
Lien Agent, the DIP Agent, and the Indenture Trustee against any person other
than a Released Party (including the Debtors), including with respect to
indemnification or contribution from the Holders of ABL Claims, Holders of First
Lien Loan Claims, Holders of Senior Notes Claims, and Holders of DIP Claims,
pursuant and subject to the terms of the ABL Credit Agreement, the First Lien
Credit Agreement, the Senior Notes Indenture, and the DIP Credit Agreement,
respectively, as in effect on the Effective Date, (e) permitting the ABL
Facility Agent, the First Lien Agent, the Indenture Trustee, and the DIP Agent
to enforce any obligation (if any) owed to the First Lien Agent, the Indenture
Trustee, or DIP Agent, respectively, under the Plan, (f) permitting the ABL
Facility Agent, the First Lien Agent, the Indenture Trustee, and the DIP Agent
to appear in the Chapter 11 Cases or in any proceeding in the Bankruptcy Court
or any other court, (g) permitting the ABL Facility Agent, the First Lien Agent,
the Indenture Trustee, and the DIP Agent to perform any functions that are
necessary to effectuate the foregoing, and (h) for the Senior Noteholders,
Indenture Trustee under the Senior Notes Indenture, or QHC Litigation Trust to
assert or prosecute Causes of Action relating to the Senior Notes and the debt
evidenced thereunder; provided, further, however, that (i) the preceding proviso
shall not affect the discharge of Claims or Interests pursuant to the Bankruptcy
Code, the Confirmation Order, or the Plan, or result in any expense or liability
to the Debtors or Reorganized Debtors, as applicable, except as expressly
provided for in the Plan and (ii) except as otherwise provided in the Plan, the
terms and provisions of the Plan shall not modify any existing contract or
agreement that would in any way be inconsistent with distributions under the
Plan. The ABl Facility Agent, the First Lien Agent, the Indenture Trustee, and
the DIP Agent shall be discharged and shall have no further obligation or
liability except as provided in the Plan and Confirmation Order, and after the
performance by the ABL Facility Agent, the First Lien Agent, the Indenture
Trustee, and the DIP Agent and their representatives and professionals of any
obligations and duties required under or related to the Plan or Confirmation
Order, the ABL Facility Agent, the First Lien Agent, the Indenture Trustee, and
the DIP Agent shall be relieved of and released from any obligations and duties
arising hereunder or thereunder. The fees, expenses, and costs of the ABL
Facility Agent, the First Lien Agent, the Indenture Trustee, and the DIP Agent,
including fees, expenses, and costs of its professionals incurred after the
Effective Date in connection with the ABL Credit Agreement, the First Lien
Credit Agreement, the Senior Notes Indenture, and the DIP Credit Agreement, as
applicable, and reasonable and documented costs and expenses associated with
effectuating distributions pursuant to the Plan will be paid by the Reorganized
Debtors in the ordinary course.

 

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K.

Effectuating Documents; Further Transactions

On and after the Effective Date, the Reorganized Debtors, and the officers and
members of the boards of directors and managers thereof, are authorized to and
may issue, execute, deliver, file, or record such contracts, Securities,
instruments, releases, and other agreements or documents and take such actions
as may be necessary or appropriate to effectuate, implement, and further
evidence the terms and conditions of the Plan, the New Shareholders Agreement,
the New Quorum Constituent Documents, and the Securities issued pursuant to the
Plan in the name of and on behalf of the Reorganized Debtors, without the need
for any approvals, authorizations, or consents except for those expressly
required under the Plan.

 

L.

Exemptions from Certain Taxes and Fees

To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any
transfers (whether from a Debtor to a Reorganized Debtor or to any other Person)
of property under the Plan or pursuant to: (a) the issuance, distribution,
transfer, or exchange of any debt, equity security, or other interest in the
Debtors or the Reorganized Debtors, including the New Common Stock; (b) the
Restructuring Transactions; (c) the creation, modification, consolidation,
termination, refinancing, and/or recording of any mortgage, deed of trust, or
other security interest, or the securing of additional indebtedness by such or
other means; (d) the making, assignment, or recording of any lease or sublease;
or (e) the making, delivery, or recording of any deed or other instrument of
transfer under, in furtherance of, or in connection with, the Plan, including
any deeds, bills of sale, assignments, or other instrument of transfer executed
in connection with any transaction arising out of, contemplated by, or in any
way related to the Plan, shall not be subject to any document recording tax,
stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, real estate
transfer tax, mortgage recording tax, Uniform Commercial Code filing or
recording fee, regulatory filing or recording fee, or other similar tax or
governmental assessment, and upon entry of the Confirmation Order, the
appropriate state or local governmental officials or agents shall forego the
collection of any such tax or governmental assessment and accept for filing and
recordation any of the foregoing instruments or other documents without the
payment of any such tax, recordation fee, or governmental assessment. All filing
or recording officers (or any other Person with authority over any of the
foregoing), wherever located and by whomever appointed, shall comply with the
requirements of section 1146(c) of the Bankruptcy Code, shall forego the
collection of any such tax or governmental assessment, and shall accept for
filing and recordation any of the foregoing instruments or other documents
without the payment of any such tax or governmental assessment.

 

M.

New Quorum Constituent Documents

The New Quorum Constituent Documents shall, among other things: (1) contain
terms consistent with the documentation set forth in the Plan Supplement;
(2) authorize the issuance, distribution, and reservation of the New Common
Stock to the Entities entitled to receive such issuances, distributions and
reservations under the Plan; and (3) pursuant to and only to the extent required
by section 1123(a)(6) of the Bankruptcy Code, and limited as necessary to
facilitate compliance with non-bankruptcy federal laws, prohibit the issuance of
non-voting equity Securities.

 

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On or immediately before the Effective Date, Quorum or Reorganized Quorum, as
applicable, will file its New Quorum Constituent Documents with the applicable
Secretary of State and/or other applicable authorities in its state of
incorporation or formation in accordance with the applicable laws of its
respective state of incorporation or formation, to the extent required for such
New Quorum Constituent Documents to become effective. After the Effective Date,
Reorganized Quorum may amend and restate its formation, organizational, and
constituent documents as permitted by the laws of its jurisdiction of formation
and the terms of such documents.

 

N.

Directors and Officers

On the Effective Date, the Reorganized Quorum Board shall be determined and
selected consistent with the New Shareholders Agreement.

On the Effective Date, the terms of the current members of the Quorum board of
directors shall expire, and the Reorganized Quorum Board will include those
directors set forth in the list of directors of the Reorganized Debtors included
in the Plan Supplement. On the Effective Date, the officers and overall
management structure of Reorganized Quorum, and all officers and management
decisions with respect to Reorganized Quorum (and/or any of its direct or
indirect subsidiaries), compensation arrangements, and affiliate transactions
shall only be subject to the approval of the Reorganized Quorum Board.

From and after the Effective Date, each director, officer, or manager of the
Reorganized Debtors shall be appointed and serve pursuant to the terms of their
respective charters and bylaws or other formation and constituent documents, the
New Shareholders Agreement, and the New Quorum Constituent Documents, and
applicable laws of the respective Reorganized Debtor’s jurisdiction of
formation. To the extent that any such director or officer of the Reorganized
Debtors is an “insider” pursuant to section 101(31) of the Bankruptcy Code, the
Debtors will disclose the nature of any compensation to be paid to such director
or officer.

 

O.

MIP

On or after the Effective Date, the Reorganized Quorum Board shall institute the
MIP, enact and enter into related policies and agreements, and distribute New
Common Stock to participants based on the terms and conditions (including, if
applicable, anti-dilution protections) determined by the Reorganized Quorum
Board.

 

P.

Galesburg

On or after the Confirmation Date, Quorum or Reorganized Quorum, as applicable,
may, with the consent of the Required Equity Commitment Parties, (1) sell or
otherwise dispose of Galesburg, including, without limitation, by abandonment
pursuant to section 554 of the Bankruptcy Code; and (2) in connection with such
sale or other disposition, transfer a portion of its Cash on hand to Galesburg,
in an amount agreed by and between Quorum or Reorganized Quorum, as applicable,
and the Required Equity Commitment Parties.

 

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Q.

Preservation of Causes of Action

In accordance with section 1123(b) of the Bankruptcy Code, the Reorganized
Debtors shall retain and may enforce all rights to commence and pursue any and
all Causes of Action, whether arising before or after the Petition Date,
including any actions specifically enumerated in the Plan Supplement, and the
Reorganized Debtors’ rights to commence, prosecute, or settle such Causes of
Action shall be preserved notwithstanding the occurrence of the Effective Date,
other than (i) Causes of Action that are QHC Litigation Trust Assets, and (ii)
the Causes of Action released by the Debtors pursuant to the releases and
exculpations contained in the Plan, including in Article VIII of the Plan, which
shall be deemed released and waived by the Debtors and Reorganized Debtors as of
the Effective Date.

The Reorganized Debtors may pursue such Causes of Action, as appropriate, in
accordance with the best interests of the Reorganized Debtors. No Entity may
rely on the absence of a specific reference in the Plan, the Plan Supplement, or
the Disclosure Statement to any Cause of Action against it as any indication
that the Debtors or the Reorganized Debtors will not pursue any and all
available Causes of Action against it. The Debtors and the Reorganized Debtors
expressly reserve all rights to prosecute any and all Causes of Action against
any Entity. Unless any Cause of Action against an Entity is expressly waived,
relinquished, exculpated, released, compromised, or settled in the Plan or a
Final Order of the Bankruptcy Court, the Reorganized Debtors expressly reserve
all Causes of Action, for later adjudication, and, therefore no preclusion
doctrine, including the doctrines of res judicata, collateral estoppel, issue
preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or
laches, shall apply to such Causes of Action upon, after, or as a consequence of
the Confirmation or Consummation.

ARTICLE V.

TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

 

A.

Assumption of Executory Contracts and Unexpired Leases

On the Effective Date, except as otherwise provided in the Plan or in any
contract, instrument, release, indenture, or other agreement or document entered
into in connection with the Plan, all Executory Contracts and Unexpired Leases
shall be deemed assumed, including the Restructuring Support Agreement, without
the need for any further notice to or action, order, or approval of the
Bankruptcy Court, as of the Effective Date under section 365 of the Bankruptcy
Code, unless such Executory Contract and Unexpired Lease: (1) was assumed or
rejected previously by the Debtors; (2) previously expired or terminated
pursuant to its own terms; (3) is the subject of a motion to reject filed on or
before the Effective Date; or (4) is identified on the Rejected Executory
Contract and Unexpired Lease List.

Entry of the Confirmation Order shall constitute a Bankruptcy Court order
approving the assumptions or assumption and assignment, as applicable, of such
Executory Contracts or Unexpired Leases as provided for in the Plan, pursuant to
sections 365(a) and 1123 of the Bankruptcy Code effective as of the Effective
Date. Each Executory Contract or Unexpired Lease assumed pursuant to the Plan or
by Bankruptcy Court order but not assigned to a third party before the Effective
Date shall re-vest in and be fully enforceable by the applicable contracting
Reorganized Debtor in accordance with its terms, except as such terms may have
been modified by the provisions of the Plan or any order of the Bankruptcy Court
authorizing and providing for its assumption under applicable federal law. Any
motions to assume Executory Contracts or Unexpired Leases pending on the
Effective Date shall be subject to approval by the Bankruptcy Court on or after
the Effective Date by a Final Order.

 

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To the maximum extent permitted by law, to the extent that any provision in any
Executory Contract or Unexpired Lease assumed or assumed and assigned pursuant
to the Plan restricts or prevents, or purports to restrict or prevent, or is
breached or deemed breached by, the assumption or assumption and assignment of
such Executory Contract or Unexpired Lease (including any “change of control”
provision), then such provision shall be deemed modified such that the
transactions contemplated by the Plan shall not entitle the non-Debtor party
thereto to terminate such Executory Contract or Unexpired Lease or to exercise
any other default-related rights with respect thereto.

 

B.

Claims Based on Rejection of Executory Contracts or Unexpired Leases

Entry of the Confirmation Order shall constitute a Bankruptcy Court order
approving the rejections, if any, of any Executory Contracts or Unexpired Leases
as provided for in the Plan or the Rejected Executory Contract and Unexpired
Leases List, as applicable. Unless otherwise provided by a Final Order of the
Bankruptcy Court, all Proofs of Claim with respect to Claims arising from the
rejection of Executory Contracts or Unexpired Leases, pursuant to the Plan or
the Confirmation Order, if any, must be filed with the Solicitation Agent and
served on the Reorganized Debtors no later than thirty days after the effective
date of such rejection.

Any Claims arising from the rejection of an Executory Contract or Unexpired
Lease not filed with the Solicitation Agent within such time will be
automatically disallowed, forever barred from assertion, and shall not be
enforceable against the Debtors, the Reorganized Debtors, the Estates, or their
property, without the need for any objection by the Debtors or Reorganized
Debtors, or further notice to, action, order, or approval of the Bankruptcy
Court or any other Entity, and any Claim arising out of the rejection of the
Executory Contract or Unexpired Lease shall be deemed fully satisfied, released,
and discharged, and be subject to the permanent injunction set forth in Article
VIII.G of the Plan, notwithstanding anything in a Proof of Claim to the
contrary.

All Claims arising from the rejection by any Debtor of any Executory Contract or
Unexpired Lease pursuant to section 365 of the Bankruptcy Code shall be treated
as a General Unsecured Claim pursuant to Article III.B of the Plan and may be
objected to in accordance with the provisions of Article VII of the Plan and the
applicable provisions of the Bankruptcy Code and Bankruptcy Rules.

Notwithstanding anything to the contrary in the Plan, the Debtors, or the
Reorganized Debtors, as applicable, reserve the right to alter, amend, modify,
or supplement the Rejected Executory Contract and Unexpired Lease List at any
time through and including thirty days after the Effective Date.

 

C.

Cure of Defaults and Objections to Cure and Assumption

Any monetary defaults under each Executory Contract and Unexpired Lease to be
assumed pursuant to the Plan shall be satisfied, pursuant to section 365(b)(1)
of the Bankruptcy Code, by payment of the default amount (if any) in Cash on the
Effective Date or in the ordinary course of business or on such other terms as
the parties to such Executory Contracts or Unexpired Leases may otherwise agree.

 

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Unless otherwise agreed upon in writing by the parties to the applicable
Executory Contract or Unexpired Lease, any objection by a counterparty to an
Executory Contract or Unexpired Lease to a proposed assumption or related cure
amount must be filed, served, and actually received by the counsel to the
Debtors and the U.S. Trustee on the Confirmation Objection Deadline or other
deadline that may be set by the Bankruptcy Court. Any counterparty to an
Executory Contract or Unexpired Lease that fails to object timely to the
proposed assumption or cure amount will be deemed to have assented to such
assumption or cure amount.

The cure payments required by section 365(b)(1) of the Bankruptcy Code shall be
made following the entry of a Final Order or orders resolving the dispute and
approving the assumption in the event of a dispute regarding: (1) the amount of
any payments to cure such a default; (2) the ability of the Reorganized Debtors
or any assignee to provide adequate assurance of future performance under the
Executory Contract or Unexpired Lease to be assumed; or (3) any other matter
pertaining to assumption.

The Debtor or the Reorganized Debtor, as applicable, shall be authorized to
reject any executory contract or unexpired lease to the extent the Debtor or the
Reorganized Debtor, as applicable, in the exercise of its sound business
judgment, concludes that the amount of the cure obligation as determined by
Final Order or as otherwise finally resolved, renders assumption of such
contract or lease unfavorable to the applicable Debtor’s Estate or the
Reorganized Debtor. Such rejected contracts, if any, shall be deemed as listed
on the Rejected Executory Contract and Unexpired Lease List, if any.

Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or
otherwise shall result in the full release and satisfaction of any Claims or
defaults, whether monetary or nonmonetary, including defaults of provisions
restricting the change in control or ownership interest composition or other
bankruptcy-related defaults, arising under any assumed Executory Contract or
Unexpired Lease at any time prior to the effective date of assumption. Any Proof
of Claim filed with respect to an Executory Contract or Unexpired Lease that has
been assumed shall be deemed disallowed and expunged, without further notice to
or action, order, or approval of the Bankruptcy Court.

 

D.

Insurance Policies

Each of the Debtors’ insurance policies and any agreements, documents, or
instruments relating thereto, are treated as Executory Contracts under the Plan.
On the Effective Date, the Debtors shall be deemed to have assumed all insurance
policies and any agreements, documents, and instruments relating to coverage of
all insured Claims. Except as set forth in Article V.F of the Plan, nothing in
this Plan, the Plan Supplement, the Disclosure Statement, the Confirmation
Order, or any other order of the Bankruptcy Court (including any other provision
that purports to be preemptory or supervening), (1) alters, modifies, or
otherwise amends the terms and conditions of (or the coverage provided by) any
of such insurance policies or (2) alters or modifies the duty, if any, that the
insurers or third party administrators pay claims covered by such insurance
policies and their right to seek payment or reimbursement from the Debtors (or
after the Effective Date, the Reorganized Debtors) or draw on any collateral or
security therefor. For the avoidance of doubt, insurers and third party
administrators shall not need to nor be required to file or serve a cure
objection or a request, application, claim, Proof of Claim, or motion for
payment and shall not be subject to any claims bar date or similar deadline
governing cure amounts or Claims.

 

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E.

Indemnification Provisions

On and as of the Effective Date, the Indemnification Provisions will be assumed
and irrevocable and will survive the effectiveness of the Plan, and the
Reorganized Debtors’ New Quorum Constituent Documents will provide for the
indemnification, defense, reimbursement, exculpation, and/or limitation of
liability of, and advancement of fees and expenses to the Debtors’ and the
Reorganized Debtors’ current and former directors, officers, employees,
equityholders, and agents to the fullest extent permitted by law and at least to
the same extent as the organizational documents of each of the respective
Debtors on the Petition Date, against any claims or Causes of Action whether
direct or derivative, liquidated or unliquidated, fixed or contingent, disputed
or undisputed, matured or unmatured, known or unknown, foreseen or unforeseen,
asserted or unasserted. None of the Debtors, or the Reorganized Debtors, as
applicable, will amend and/or restate their respective governance documents
before or after the Effective Date to amend, augment, terminate, or adversely
affect any of the Debtors’ or the Reorganized Debtors’ obligations to provide
such indemnification rights or such directors’, officers’, employees’,
equityholders’ or agents’ indemnification rights.

On and as of the Effective Date, any of the Debtors’ indemnification obligations
with respect to any contract or agreement that is the subject of or related to
any litigation against the Debtors or Reorganized Debtors, as applicable, shall
be assumed by the Reorganized Debtors and otherwise remain unaffected by the
Chapter 11 Cases.

 

F.

Director, Officer, Manager, and Employee Liability Insurance

On the Effective Date, pursuant to section 365(a) of the Bankruptcy Code, the
Debtors shall be deemed to have assumed all of the D&O Liability Insurance
Policies (including, if applicable, any “tail policy”) and any agreements,
documents, or instruments relating thereto. Entry of the Confirmation Order will
constitute the Bankruptcy Court’s approval of the Reorganized Debtors’
assumption of all such policies (including, if applicable, any “tail policy”).

After the Effective Date, none of the Debtors or the Reorganized Debtors shall
terminate or otherwise reduce the coverage under any such policies (including,
if applicable, any “tail policy”) with respect to conduct occurring as of the
Effective Date, and all officers, directors, managers, and employees of the
Debtors who served in such capacity at any time before the Effective Date shall
be entitled to the full benefits of any such policies regardless of whether such
officers, directors, managers, or employees remain in such positions after the
Effective Date.

On and after the Effective Date, each of the Reorganized Debtors shall be
authorized to purchase a directors’ and officers’ liability insurance policy for
the benefit of their respective directors, members, trustees, officers, and
managers in the ordinary course of business.

 

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G.

Employee and Retiree Benefits

Except as otherwise provided in the Plan, on and after the Effective Date,
subject to any Final Order and, without limiting any authority provided to the
Reorganized Quorum Board under the Debtors’ respective formation and constituent
documents, the Reorganized Debtors shall: (1) honor in the ordinary course of
business any assumed contracts, agreements, policies, programs, and plans, in
accordance with their respective terms, for, among other things, compensation,
including any incentive plans, retention plans, health care benefits, disability
benefits, deferred compensation benefits, savings, severance benefits,
retirement benefits, SERP benefits, welfare benefits, workers’ compensation
insurance, and accidental death and dismemberment insurance for the directors,
officers, and employees of any of the Debtors who served in such capacity from
and after the Petition Date; and (2) honor, in the ordinary course of business,
Claims of employees employed as of the Effective Date for accrued vacation time
arising prior to the Petition Date and not otherwise paid pursuant to a
Bankruptcy Court order. Notwithstanding the foregoing, pursuant to section
1129(a)(13) of the Bankruptcy Code, from and after the Effective Date, all
retiree benefits (as such term is defined in section 1114 of the Bankruptcy
Code), if any, shall continue to be paid in accordance with applicable law.

 

H.

Modifications, Amendments, Supplements, Restatements, or Other Agreements

Unless otherwise provided in the Plan, each Executory Contract or Unexpired
Lease that is assumed shall include all modifications, amendments, supplements,
restatements, or other agreements that in any manner affect such Executory
Contract or Unexpired Lease, and Executory Contracts and Unexpired Leases
related thereto, if any, including easements, licenses, permits, rights,
privileges, immunities, options, rights of first refusal, and any other
interests, unless any of the foregoing agreements has been previously rejected
or repudiated or is rejected or repudiated under the Plan.

Modifications, amendments, supplements, and restatements to prepetition
Executory Contracts and Unexpired Leases that have been executed by the Debtors
during the Chapter 11 Cases shall not be deemed to alter the prepetition nature
of the Executory Contract or Unexpired Lease, or the validity, priority, or
amount of any Claims that may arise in connection therewith.

 

I.

Reservation of Rights

Neither the assumption of any Executory Contract or Unexpired Lease pursuant to
the Plan nor exclusion nor inclusion of any Executory Contract or Unexpired
Lease on the Rejected Executory Contract and Unexpired Lease List, if any, nor
anything contained in the Plan or Plan Supplement, shall constitute an admission
by the Debtors that any such contract or lease is in fact an Executory Contract
or Unexpired Lease or that any Reorganized Debtor has any liability thereunder.

If there is a dispute regarding whether a contract or lease is or was executory
or unexpired at the time of assumption, the Debtors or the Reorganized Debtors,
as applicable, shall have thirty calendar days following entry of a Final Order
resolving such dispute to alter their treatment of such contract or lease,
including by rejecting such contract or lease nunc pro tunc to the Confirmation
Date. The deemed assumption provided for herein shall not apply to any such
contract or lease, and any such contract or lease shall be assumed or rejected
only upon motion of the Debtor following the Bankruptcy Court’s determination
that the contract is executory or the lease is unexpired.

 

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J.

Nonoccurrence of Effective Date

In the event that the Effective Date does not occur, the Bankruptcy Court shall
retain jurisdiction with respect to any request to extend the deadline for
assuming or rejecting Unexpired Leases pursuant to section 365(d)(4) of the
Bankruptcy Code, unless such deadline(s) have expired.

 

K.

Contracts and Leases Entered Into After the Petition Date

Contracts and leases entered into after the Petition Date by any Debtor and any
Executory Contracts and Unexpired Leases assumed by any Debtor may be performed
by the applicable Reorganized Debtor in the ordinary course of business.

ARTICLE VI.

PROVISIONS GOVERNING DISTRIBUTIONS

 

A.

Timing and Calculation of Amounts to Be Distributed

Unless otherwise provided in the Plan, on the Effective Date, or as soon as
reasonably practicable thereafter (or if a Claim or Interest is not an Allowed
Claim or Interest on the Effective Date, on the date that such Claim becomes an
Allowed Claim or Interest), each Holder of an Allowed Claim and Interest shall
receive the full amount of the distributions that the Plan provides for Allowed
Claims and Interests in each applicable Class and in the manner provided in the
Plan. If any payment or act under the Plan is required to be made or performed
on a date that is not a Business Day, then the making of such payment or the
performance of such act may be completed on the next succeeding Business Day,
but shall be deemed to have been completed as of the required date. If and to
the extent that there are Disputed Claims or Interests, distributions on account
of any such Disputed Claims or Interests shall be made pursuant to the
provisions set forth in Article VII Except as otherwise provided in the Plan,
Holders of Claims and Interests shall not be entitled to interest, dividends, or
accruals on the distributions provided for in the Plan, regardless of whether
such distributions are delivered on or at any time after the Effective Date. The
Debtors shall have no obligation to recognize any transfer of Claims or
Interests occurring on or after the Distribution Record Date.

 

B.

Distributions on Account of Obligations of Multiple Debtors

For all purposes associated with distributions under the Plan, all guarantees by
any Debtor of the obligations of any other Debtor, as well as any joint and
several liability of any Debtor with respect to any other Debtor, shall be
deemed eliminated so that any obligation that could otherwise be asserted
against more than one Debtor shall result in a single distribution under the
Plan; provided that Claims held by a single Entity at different Debtors that are
not based on guarantees or joint and several liability shall be entitled to the
applicable distribution for such Claim at each applicable Debtor. Any such
Claims shall be released and discharged pursuant to Article VIII of the Plan and
shall be subject to all potential objections, defenses, and counterclaims, and
to estimation pursuant to section 502(c) of the Bankruptcy Code. For the
avoidance of doubt, this shall not affect the obligation of each and every
Debtor to pay U.S. Trustee fees until such time as a particular case is closed,
dismissed, or converted.

 

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C.

Distribution Agent

Except as otherwise provided in the Plan, all distributions under the Plan shall
be made by the Distribution Agent on the Effective Date or as soon as reasonably
practicable thereafter. The Distribution Agent shall not be required to give any
bond or surety or other security for the performance of its duties unless
otherwise ordered by the Bankruptcy Court.

 

D.

Rights and Powers of Distribution Agent

 

  1.

Powers of the Distribution Agent

The Distribution Agent shall be empowered to: (a) effect all actions and execute
all agreements, instruments, and other documents necessary to perform its duties
under the Plan; (b) make all distributions contemplated hereby; (c) employ
professionals to represent it with respect to its responsibilities; and
(d) exercise such other powers as may be vested in the Distribution Agent by
order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the
Distribution Agent to be necessary and proper to implement the provisions
hereof.

 

  2.

Expenses Incurred On or After the Effective Date

Except as otherwise ordered by the Bankruptcy Court, the amount of any
reasonable fees and out-of-pocket expenses incurred by the Distribution Agent on
or after the Effective Date (including taxes) and any reasonable compensation
and out-of-pocket expense reimbursement claims (including reasonable, actual,
and documented attorney and/or other professional fees and expenses) made by the
Distribution Agent shall be paid in Cash by the Reorganized Debtors.

 

E.

Delivery of Distributions

 

  1.

Delivery of Distributions in General

Except as otherwise provided in the Plan, distributions to Holders of Allowed
Claims shall be made to Holders of record as of the Distribution Record Date by
the Reorganized Debtors or the Distribution Agent, as appropriate: (a) to the
signatory set forth on any Proof of Claim or Proof of Interest filed by such
Holder or other representative identified therein (or at the last known
addresses of such Holder if no Proof of Claim or Proof of Interest is filed or
if the Debtors have not been notified in writing of a change of address); (b) at
the addresses set forth in any written notices of address changes delivered to
the Reorganized Debtors or the applicable Distribution Agent, as appropriate,
after the date of any related Proof of Claim or Proof of Interest; or (c) on any
counsel that has appeared in the Chapter 11 Cases on the Holder’s behalf.
Subject to this Article VI distributions under the Plan on account of Allowed
Claims shall not be subject to levy, garnishment, attachment, or like legal
process, so that each Holder of an Allowed Claim shall have and receive the
benefit of the distributions in the manner set forth in the Plan. The Debtors,
the Reorganized Debtors, and the Distribution Agent, as applicable, shall not
incur any liability whatsoever on account of any distributions under the Plan
except for fraud, gross negligence, or willful misconduct.

 

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  2.

Undeliverable Distributions and Unclaimed Property

In the event that any distribution to any Holder is returned as undeliverable,
no distribution to such Holder shall be made unless and until the Distribution
Agent has determined the then-current address of such Holder, at which time such
distribution shall be made to such Holder without interest; provided, however,
that such distributions shall be deemed unclaimed property under section 347(b)
of the Bankruptcy Code at the expiration of six months from the later of (a) the
Effective Date and (b) the date of the distribution. After such date, all
unclaimed property or interests in property shall revert to the Reorganized
Debtors automatically and without need for a further order by the Bankruptcy
Court (notwithstanding any applicable federal, provincial, or state escheat,
abandoned, or unclaimed property laws to the contrary), and the Claim of any
Holder to such property or interest in property shall be discharged of and
forever barred.

 

  3.

No Fractional Distributions

No fractional notes or shares, as applicable, of the New Common Stock shall be
distributed, and no Cash shall be distributed in lieu of such fractional
amounts. When any distribution pursuant to the Plan on account of an applicable
Allowed Claim would otherwise result in the issuance of a number of notes or
shares, as applicable, of the New Common Stock that is not a whole number, the
actual distribution of notes or shares, as applicable, of the New Common Stock
shall be rounded as follows: (a) fractions of one-half (1⁄2) or greater shall be
rounded to the next higher whole number and (b) fractions of less than one-half
(1⁄2) shall be rounded to the next lower whole number with no further payment
therefor. The total number of authorized notes and shares, as applicable, of the
New Common Stock shall be adjusted as necessary to account for the foregoing
rounding.

 

  4.

Minimum Distributions

Holders of Allowed Claims entitled to distributions of $50 or less shall not
receive distributions, and each Claim to which this limitation applies shall be
discharged pursuant to Article VIII of this Plan and its Holder shall be forever
barred pursuant to Article VII of this Plan from asserting that Claim against
the Reorganized Debtors or their property.

 

F.

Manner of Payment

At the option of the Distribution Agent, any Cash payment to be made under the
Plan may be made by check or wire transfer or as otherwise required or provided
in applicable agreements.

 

G.

Compliance Matters

In connection with the Plan, to the extent applicable, the Reorganized Debtors
and the Distribution Agent shall comply with all tax withholding and reporting
requirements imposed on them by any Governmental Unit, and all distributions
pursuant to the Plan shall be subject to such withholding and reporting
requirements. Notwithstanding any provision in the Plan to the contrary, the
Reorganized Debtors and the Distribution Agent shall be authorized to take all
actions necessary or appropriate to comply with such withholding and reporting
requirements, including liquidating a portion of the distribution to be made
under the Plan to generate sufficient funds to pay applicable withholding taxes,
withholding distributions pending receipt of information necessary to facilitate
such distributions, or establishing any other mechanisms they believe are
reasonable and appropriate. The Reorganized Debtors reserve the right to
allocate all distributions made under the Plan in compliance with all applicable
wage garnishments, alimony, child support, and other spousal awards, liens, and
encumbrances.

 

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H.

No Postpetition or Default Interest on Claims

Unless otherwise specifically provided for in the Plan, the DIP Orders, or the
Confirmation Order, and notwithstanding any documents that govern the Debtors’
prepetition indebtedness to the contrary, (1) postpetition and/or default
interest shall not accrue or be paid on any Claims and (2) no Holder of a Claim
shall be entitled to: (a) interest accruing on or after the Petition Date on any
such Claim; or (b) interest at the contract default rate, as applicable.

 

I.

Allocation Between Principal and Accrued Interest

Except as otherwise provided in the Plan, the aggregate consideration paid to
Holders with respect to their Allowed Claims shall be treated pursuant to the
Plan as allocated first to the principal amount of such Allowed Claims (to the
extent thereof) and, thereafter, to the interest, if any, on such Allowed Claim
accrued through the Petition Date.

 

J.

Setoffs and Recoupment

Unless otherwise provided in the Plan or the Confirmation Order, each Debtor and
each Reorganized Debtor, pursuant to the Bankruptcy Code (including section 553
of the Bankruptcy Code), applicable non-bankruptcy law, or as may be agreed to
by the Holder of a Claim, may set off against or recoup any Allowed Claim and
the distributions to be made pursuant to the Plan on account of such Allowed
Claim (before any distribution is made on account of such Allowed Claim), any
claims, rights, and Causes of Action of any nature that such Debtor or
Reorganized Debtor, as applicable, may hold against the Holder of such Allowed
Claim, to the extent such claims, rights, or Causes of Action against such
Holder have not been otherwise compromised or settled as of the Effective Date
(whether pursuant to the Plan or otherwise); provided, however, that neither the
failure to effect such a setoff or recoupment nor the allowance of any Claim
pursuant to the Plan shall constitute a waiver or release by such Debtor or
Reorganized Debtor of any such claims, rights, and Causes of Action that such
Reorganized Debtor may possess against such Holder. In no event shall any Holder
of Claims be entitled to set off or recoup any such Claim against any claim,
right, or Cause of Action of the Debtor or Reorganized Debtor (as applicable),
unless such Holder has filed a motion with the Bankruptcy Court requesting the
authority to perform such setoff or recoupment on or before the Confirmation
Date, and notwithstanding any indication in any Proof of Claim or otherwise that
such Holder asserts, has, or intends to preserve any right of setoff or
recoupment pursuant to section 553 of the Bankruptcy Code or otherwise.

 

K.

Claims Paid or Payable by Third Parties

 

  1.

Claims Paid by Third Parties

A Claim shall be reduced in full, and such Claim shall be disallowed without an
objection to such Claim having to be filed and without any further notice to or
action, order, or approval of the Bankruptcy Court, to the extent that the
Holder of such Claim receives payment in full on account of such Claim from a
party that is not a Debtor or Reorganized Debtor. To the extent that

 

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a Holder of a Claim receives a distribution on account of such Claim and
receives payment from a party that is not a Debtor or a Reorganized Debtor on
account of such Claim, such Holder shall repay, return, or deliver any
distribution held by or transferred to the Holder to the applicable Reorganized
Debtor to the extent the Holder’s total recovery on account of such Claim from
the third party and under the Plan exceeds the amount of such Claim as of the
date of any such distribution under the Plan.

 

  2.

Claims Payable by Third Parties

The availability, if any, of insurance policy proceeds for the satisfaction of
an Allowed Claim shall be determined by the terms of the insurance policies of
the Debtors or Reorganized Debtors, as applicable. To the extent that one or
more of the Debtors’ insurers agrees to satisfy in full a Claim (if and to the
extent adjudicated by a court of competent jurisdiction), then immediately upon
such insurers’ agreement, such Claim may be expunged to the extent of any agreed
upon satisfaction on the Claims Register by the Solicitation Agent without a
Claim objection having to be filed and without any further notice to or action,
order, or approval of the Bankruptcy Court.

 

  3.

Applicability of Insurance Policies

Except as otherwise provided in the Plan, distributions to Holders of Allowed
Claims shall be in accordance with the provisions of an applicable insurance
policy. Nothing contained in the Plan shall constitute or be deemed a waiver of
any Cause of Action that the Debtors or any Entity may hold against any other
Entity, including insurers under any policies of insurance, nor shall anything
contained in the Plan constitute or be deemed a waiver by such insurers of any
defenses, including coverage defenses, held by such insurers.

ARTICLE VII.

PROCEDURES FOR RESOLVING DISPUTED CLAIMS AND INTERESTS

 

A.

Disputed Claims Process

Holders of Claims and Interests need not file a Proof of Claim or Proof of
Interest, as applicable, with the Bankruptcy Court and shall be subject to the
Bankruptcy Court process only to the extent provided in the Plan, except to the
extent a Claim arises on account of rejection of an Executory Contract or
Unexpired Lease in accordance with Article V.B hereof. On and after the
Effective Date, except as otherwise provided in the Plan, all Allowed Claims
shall be paid pursuant to the Plan in the ordinary course of business of the
Reorganized Debtors and shall survive the Effective Date as if the Chapter 11
Cases had not been commenced. Other than Claims arising from the rejection of an
Executory Contract or Unexpired Lease, if the Debtors or the Reorganized Debtors
dispute any Claim or Interest, such dispute shall be determined, resolved, or
adjudicated, as the case may be, in a manner as if the Chapter 11 Cases had not
been commenced and shall survive the Effective Date as if the Chapter 11 Cases
had not been commenced. Solely to the extent that an Entity is required to file
a Proof of Claim and the Debtors or the Reorganized Debtors, as applicable, do
not determine, and without the need for notice to or action, order, or approval
of the Bankruptcy Court, that the Claim subject to such Proof of Claim is
Allowed, such Claim shall be Disputed unless Allowed or disallowed by a Final
Order or as otherwise set forth in this Article

 

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VII of the Plan. For the avoidance of doubt, there is no requirement to file a
Proof of Claim or Proof of Interest (or move the Bankruptcy Court for allowance)
to be an Allowed Claim or Allowed Interest, as applicable, under the Plan.
Notwithstanding the foregoing, Entities must file cure objections as set forth
in Article V.C hereof to the extent such Entity disputes the amount of the cure
proposed to be paid by the Debtors or the Reorganized Debtors, as applicable.
All Proofs of Claim required to be filed by the Plan that are filed after the
date that they are required to be filed pursuant to the Plan shall be disallowed
and forever barred, estopped, and enjoined from assertion, and shall not be
enforceable against any Reorganized Debtor, without the need for any objection
by the Reorganized Debtors or any further notice to or action, order, or
approval of the Bankruptcy Court.

B. Claims Administration Responsibilities.

Except as otherwise specifically provided in the Plan, after the Effective Date,
the Reorganized Debtors shall have the sole authority to: (1) file, withdraw, or
litigate to judgment, objections to Claims or Interests; (2) settle or
compromise any Disputed Claim or Interest without any further notice to or
action, order, or approval by the Bankruptcy Court; and (3) administer and
adjust the Claims Register to reflect any such settlements or compromises
without any further notice to or action, order, or approval by the Bankruptcy
Court. For the avoidance of doubt, except as otherwise provided in the Plan,
from and after the Effective Date, each Reorganized Debtor shall have and retain
any and all rights and defenses such Debtor had immediately prior to the
Effective Date with respect to any Disputed Claim or Interest, including the
Causes of Action retained pursuant to Article IV.Q of the Plan.

C. Estimation of Claims and Interests

Before or after the Effective Date, the Debtors or the Reorganized Debtors, as
applicable, may (but are not required to) at any time request that the
Bankruptcy Court estimate any Disputed Claim or Interest that is contingent or
unliquidated pursuant to section 502(c) of the Bankruptcy Code for any reason,
regardless of whether any party in interest previously has objected to such
Claim or Interest or whether the Bankruptcy Court has ruled on any such
objection, and the Bankruptcy Court shall retain jurisdiction to estimate any
such Claim or Interest, including during the litigation of any objection to any
Claim or Interest or during the appeal relating to such objection.
Notwithstanding any provision otherwise in the Plan, a Claim that has been
expunged from the Claims Register, but that either is subject to appeal or has
not been the subject of a Final Order, shall be deemed to be estimated at zero
dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the
Bankruptcy Court estimates any contingent or unliquidated Claim or Interest,
that estimated amount shall constitute a maximum limitation on such Claim or
Interest for all purposes under the Plan (including for purposes of
distributions), and the relevant Reorganized Debtor may elect to pursue any
supplemental proceedings to object to any ultimate distribution on such Claim or
Interest.

D. Adjustment to Claims Without Objection

Any duplicate Claim or Interest or any Claim or Interest that has been paid,
satisfied, amended, or superseded may be adjusted or expunged on the Claims
Register by the Reorganized Debtors without the Reorganized Debtors having to
file an application, motion, complaint, objection, or any other legal proceeding
seeking to object to such Claim or Interest and without any further notice to or
action, order, or approval of the Bankruptcy Court.

 

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E. No Distributions Pending Allowance

Notwithstanding any other provision hereof, if any portion of a Claim or
Interest is a Disputed Claim or Interest, as applicable, no payment or
distribution provided hereunder shall be made on account of such Claim or
Interest unless and until such Disputed Claim or Interest becomes an Allowed
Claim or Interest.

F. Distributions After Allowance

To the extent that a Disputed Claim or Interest ultimately becomes an Allowed
Claim or Interest, distributions (if any) shall be made to the Holder of such
Allowed Claim or Interest in accordance with the provisions of the Plan. As soon
as reasonably practicable after the date that the order or judgment of the
Bankruptcy Court allowing any Disputed Claim or Interest becomes a Final Order,
the Distribution Agent shall provide to the Holder of such Claim or Interest the
distribution (if any) to which such Holder is entitled under the Plan as of the
Effective Date, without any interest to be paid on account of such Claim or
Interest.

G. No Interest

Interest shall not accrue or be paid on any Disputed Claim with respect to the
period from the Effective Date to the date a final distribution is made on
account of such Disputed Claim, if and when such Disputed Claim becomes an
Allowed Claim.

ARTICLE VIII.

SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS

A. Compromise and Settlement of Claims, Interests, and Controversies

Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019 and in
consideration for the distributions and other benefits provided pursuant to the
Plan, the provisions of the Plan shall constitute a good-faith compromise and
settlement of all Claims, Interests, and controversies relating to the
contractual, legal, and subordination rights that a Holder of a Claim or
Interest may have with respect to any Allowed Claim or Interest, or any
distribution to be made on account of such Allowed Claim or Interest. The entry
of the Confirmation Order shall constitute the Bankruptcy Court’s approval of
the compromise or settlement of all such Claims, Interests, and controversies,
as well as a finding by the Bankruptcy Court that such compromise or settlement
is in the best interests of the Debtors, their Estates, and Holders of Claims
and Interests and is fair, equitable, and reasonable. In accordance with the
provisions of the Plan, pursuant to Bankruptcy Rule 9019, without any further
notice to or action, order, or approval of the Bankruptcy Court, after the
Effective Date, the Reorganized Debtors may compromise and settle Claims
against, and Interests in, the Debtors and their Estates and Causes of Action
against other Entities.

 

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B. Discharge of Claims

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise
specifically provided in the Plan, or in any contract, instrument, or other
agreement or document created pursuant to the Plan, the distributions, rights,
and treatment that are provided in the Plan shall be in complete satisfaction,
discharge, and release, effective as of the Effective Date, of Claims (including
any Debtor Intercompany Claims or Non-Debtor Intercompany Claims resolved or
compromised after the Effective Date by the Reorganized Debtors), Interests, and
Causes of Action of any nature whatsoever, including any interest accrued on
Claims or Interests from and after the Petition Date, whether known or unknown,
against, liabilities of, Liens on, obligations of, rights against, and Interests
in, the Debtors or any of their assets or properties, regardless of whether any
property shall have been distributed or retained pursuant to the Plan on account
of such Claims and Interests, including demands, liabilities, and Causes of
Action that arose before the Effective Date, any liability (including withdrawal
liability) to the extent such Claims or Interests relate to services performed
by employees of the Debtors prior to the Effective Date and that arise from a
termination of employment, any contingent or non-contingent liability on account
of representations or warranties issued on or before the Effective Date, and all
debts of the kind specified in sections 502(g), 502(h), or 502(i) of the
Bankruptcy Code, in each case whether or not: (1) a Proof of Claim based upon
such debt or right is filed or deemed filed pursuant to section 501 of the
Bankruptcy Code; (2) a Claim or Interest based upon such debt, right, or
Interest is Allowed pursuant to section 502 of the Bankruptcy Code; or (3) the
Holder of such a Claim or Interest has accepted the Plan or voted to reject the
Plan. The Confirmation Order shall be a judicial determination of the discharge
of all Claims and Interests subject to the occurrence of the Effective Date,
except as otherwise specifically provided in the Plan.

C. Release of Liens

Except (1) with respect to the Liens securing Other Secured Claims that are
Reinstated pursuant to the Plan, or (2) as otherwise provided in the Plan or in
any contract, instrument, release, or other agreement or document created
pursuant to the Plan, on the Effective Date, all mortgages, deeds of trust,
Liens, pledges, or other security interests against any property of the Estates
and, subject to the consummation of the applicable distributions contemplated in
the Plan, shall be fully released and discharged, at the sole cost of and
expense of the Reorganized Debtors, and the Holders of such mortgages, deeds of
trust, Liens, pledges, or other security interests shall execute such documents
as may be reasonably requested by the Debtors or the Reorganized Debtors, as
applicable, to reflect or effectuate such releases, and all of the right, title,
and interest of any Holders of such mortgages, deeds of trust, Liens, pledges,
or other security interests shall revert to the applicable Reorganized Debtor
and its successors and assigns.

D. Debtor Release

Effective as of the Effective Date, pursuant to section 1123(b) of the
Bankruptcy Code, for good and valuable consideration, the adequacy of which is
hereby confirmed, on and after the Effective Date, each Released Party is deemed
released and discharged by each and all of the Debtors, the Reorganized Debtors,
and their Estates, in each case on behalf of themselves and their respective
successors, assigns, and representatives, and any and all

 

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other entities who may purport to assert any Cause of Action, directly or
derivatively, by, through, for, or because of the foregoing entities, from any
and all Causes of Action, whether known or unknown, including any derivative
claims, asserted or assertable on behalf of any of the Debtors, that the
Debtors, the Reorganized Debtors, or their Estates would have been legally
entitled to assert in their own right (whether individually or collectively) or
on behalf of the Holder of any Claim against, or Interest in, a Debtor or other
Entity, based on or relating to, or in any manner arising from, in whole or in
part, the Debtors (including the management, ownership, or operation thereof),
the purchase, sale, or rescission of any security of the Debtors or the
Reorganized Debtors, the subject matter of, or the transactions or events giving
rise to, any Claim or Interest that is treated in the Plan, the business or
contractual arrangements between any Debtor and any Released Party, the Debtors’
in- or out-of-court restructuring efforts, intercompany transactions, the DIP
Facility, the DIP Orders, the ABL Credit Facility, the First Lien Credit
Facilities, the Senior Notes, the Chapter 11 Cases, the Restructuring Support
Agreement, the formulation, preparation, dissemination, negotiation, entry into,
or filing of, as applicable, the Restructuring Support Agreement and related
prepetition transactions, the Disclosure Statement, the New Quorum Constituent
Documents, the Plan, the Equity Investment Commitment Agreement, or any
Restructuring Transaction, contract, instrument, release, or other agreement or
document created or entered into in connection with the Restructuring Support
Agreement, Disclosure Statement, the New Quorum Constituent Documents, the New
Shareholders Agreement, the New Common Equity Raise, or the Plan, the filing of
the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation,
the administration and implementation of the Plan, including the issuance or
distribution of Securities pursuant to the Plan, or the distribution of property
under the Plan or any other related agreement, or upon any other act, or
omission, transaction, agreement, event, or other occurrence taking place on or
before the Effective Date other than in respect of the Claims or liabilities
arising out of or relating to any action taken or omitted to be taken by the
Released Parties that is determined by the final, non-appealable judgment of a
court of competent jurisdiction to have constituted gross negligence or willful
misconduct. Notwithstanding anything to the contrary in the foregoing, the
releases set forth above do not release (1) any post-Effective Date obligations
of any party or Entity under the Plan, any Restructuring Transaction, or any
document, instrument, or agreement (including those set forth in the Plan
Supplement) executed to implement the Plan, including the assumption of the
Indemnification Provisions as set forth in the Plan; (2) any retained Causes of
Action; or (3) any Cause of Action that is a QHC Litigation Trust Asset.

E. Third-Party Release

Effective as of the Effective Date, each Releasing Party, in each case on behalf
of itself and its respective successors, assigns, and representatives, and any
and all other entities who may purport to assert any Cause of Action, directly
or derivatively, by, through, for, or because of the foregoing entities, is
deemed to have released and discharged each Debtor, Reorganized Debtor, and
Released Party from any and all Causes of Action, whether known or unknown,
including any derivative claims, asserted or assertable on behalf of any of the
Debtors, that such Entity would have been legally entitled to assert (whether
individually or collectively), based on or relating to, or in any manner arising
from, in whole or in part, the Debtors (including the management, ownership or
operation thereof), the purchase, sale, or

 

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rescission of any security of the Debtors or the Reorganized Debtors, the
subject matter of, or the transactions or events giving rise to, any Claim or
Interest that is treated in the Plan, the business or contractual arrangements
between any Debtor and any Released Party, the Debtors’ in- or out-of-court
restructuring efforts, intercompany transactions, the DIP Facility, the DIP
Orders, the ABL Credit Facility, the First Lien Credit Facilities, the Senior
Notes, the Chapter 11 Cases, the Restructuring Support Agreement, the
formulation, preparation, dissemination, negotiation, entry into, or filing of,
as applicable, the Restructuring Support Agreement and related prepetition
transactions, the Disclosure Statement, the New Quorum Constituent Documents,
the Plan, the Equity Investment Commitment Agreement, or any Restructuring
Transaction, contract, instrument, release, or other agreement or document
created or entered into in connection with the Restructuring Support Agreement,
the Disclosure Statement, the New Quorum Constituent Documents, the New
Shareholders Agreement, the Plan, the New Common Equity Raise (including, for
the avoidance of doubt, providing any legal opinion requested by any Entity
regarding any transaction, contract, instrument, document, or other agreement
contemplated by the Plan or the reliance by any Released Party on the Plan or
the Confirmation Order in lieu of such legal opinion), the filing of the Chapter
11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the
administration and implementation of the Plan, including the issuance or
distribution of Securities pursuant to the Plan, or the distribution of property
under the Plan or any other related agreement, or upon any other related act, or
omission, transaction, agreement, event, or other occurrence taking place on or
before the Effective Date other than in respect to Claims or liabilities arising
out of or relating to any action taken or omitted to be taken by a Released
Party that is determined by the final, non-appealable judgment of a court of
competent jurisdiction to have constituted gross negligence or willful
misconduct. Notwithstanding anything to the contrary in the foregoing, the
releases set forth above do not release any post-Effective Date obligations of
any party or Entity under the Plan, any Restructuring Transaction, any document,
instrument, or agreement (including those set forth in the Plan Supplement)
executed to implement the Plan, including the assumption of the Indemnification
Provisions as set forth in the Plan, or any Cause of Action that is a QHC
Litigation Trust Asset.

F. Exculpation

Effective as of the Effective Date, to the fullest extent permissible under
applicable law and without affecting or limiting either the Debtor Release or
the Third-Party Release, and except as otherwise specifically provided in the
Plan, no Exculpated Party shall have or incur, and each Exculpated Party is
released and exculpated from any Cause of Action for any claim related to any
act or omission in connection with, relating to, or arising out of, the
formulation, preparation, dissemination, negotiation, entry into, or filing of,
as applicable, the Restructuring Support Agreement and related prepetition
transactions, the Chapter 11 Cases, the Disclosure Statement, the Plan, the
Equity Investment Commitment Agreement, or any Restructuring Transaction,
contract, instrument, release, or other agreement or document created or entered
into in connection with the Disclosure Statement or the Plan, the New Common
Equity Raise, the filing of the Chapter 11 Cases, the pursuit of Confirmation,
the pursuit of Consummation, the administration and implementation of the Plan,
including the issuance of Securities pursuant to the Plan, or the distribution
of property under the Plan or any other related agreement (including, for the
avoidance of doubt,

 

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providing any legal opinion requested by any Entity regarding any transaction,
contract, instrument, document, or other agreement contemplated by the Plan or
the reliance by any Exculpated Party on the Plan or the Confirmation Order in
lieu of such legal opinion), except for claims related to any act or omission
that is determined in a Final Order of a court of competent jurisdiction to have
constituted actual fraud, willful misconduct, or gross negligence, but in all
respects such Entities shall be entitled to reasonably rely upon the advice of
counsel with respect to their duties and responsibilities pursuant to the Plan.
The Exculpated Parties have, and upon completion of the Plan shall be deemed to
have, participated in good faith and in compliance with the applicable laws with
regard to the solicitation of votes and distribution of consideration pursuant
to the Plan and, therefore, are not, and on account of such distributions shall
not be, liable at any time for the violation of any applicable law, rule, or
regulation governing the solicitation of acceptances or rejections of the Plan
or such distributions made pursuant to the Plan.

G. Injunction

Effective as of the Effective Date, pursuant to section 524(a) of the Bankruptcy
Code, to the fullest extent permissible under applicable law, and except as
otherwise expressly provided in the Plan or for obligations issued or required
to be paid pursuant to the Plan or the Confirmation Order, all Entities that
have held, hold, or may hold Claims or Interests that have been released,
discharged, or are subject to exculpation are permanently enjoined, from and
after the Effective Date, from taking any of the following actions against, as
applicable, the Debtors, the Reorganized Debtors, the Exculpated Parties, or the
Released Parties: (1) commencing or continuing in any manner any action or other
proceeding of any kind on account of or in connection with or with respect to
any such claims or interests; (2) enforcing, attaching, collecting, or
recovering by any manner or means any judgment, award, decree, or order against
such Entities on account of or in connection with or with respect to any such
claims or interests; (3) creating, perfecting, or enforcing any encumbrance of
any kind against such Entities or the property or the estates of such Entities
on account of or in connection with or with respect to any such claims or
interests; (4) asserting any right of setoff, subrogation, or recoupment of any
kind against any obligation due from such Entities or against the property of
such Entities on account of or in connection with or with respect to any such
Claims or Interests unless such Holder has filed a motion requesting the right
to perform such setoff on or before the Effective Date, and notwithstanding an
indication of a claim or interest or otherwise that such Holder asserts, has, or
intends to preserve any right of setoff pursuant to applicable law or otherwise;
and (5) commencing or continuing in any manner any action or other proceeding of
any kind on account of or in connection with or with respect to any such Claims
or Interests released or settled pursuant to the Plan.

H. Protection Against Discriminatory Treatment

In accordance with section 525 of the Bankruptcy Code, and consistent with
paragraph 2 of Article VI of the United States Constitution, no Governmental
Unit shall discriminate against any Reorganized Debtor, or any Entity with which
a Reorganized Debtor has been or is associated, or deny, revoke, suspend, or
refuse to renew a license, permit, charter, franchise, or other similar grant
to, condition such a grant to, discriminate with respect to such a grant
against, the

 

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Reorganized Debtors, or another Entity with whom the Reorganized Debtors have
been associated, solely because such Reorganized Debtor was a Debtor under
chapter 11, may have been insolvent before the commencement of the Chapter 11
Cases (or during the Chapter 11 Cases but before such Debtor was granted or
denied a discharge), or has not paid a debt that is dischargeable in the Chapter
11 Cases.

I. Recoupment

In no event shall any Holder of Claims or Interests be entitled to recoup any
Claim or Interest against any claim, right, or Cause of Action of the Debtors or
the Reorganized Debtors, as applicable, unless such Holder actually has
performed such recoupment and provided notice thereof in writing to the Debtors
on or before the Confirmation Date, notwithstanding any indication in any Proof
of Claim or Interest or otherwise that such Holder asserts, has, or intends to
preserve any right of recoupment.

J. Reimbursement or Contribution

If the Bankruptcy Court disallows a Claim for reimbursement or contribution of
an Entity pursuant to section 502(e)(1)(B) of the Bankruptcy Code, then to the
extent that such Claim is contingent as of the Effective Date, such Claim shall
be forever disallowed notwithstanding section 502(j) of the Bankruptcy Code,
unless prior to the Effective Date (1) such Claim has been adjudicated as
noncontingent, or (2) the relevant Holder of a Claim has filed a noncontingent
Proof of Claim on account of such Claim and a Final Order has been entered
determining such Claim as no longer contingent.

K. Term of Injunctions or Stays

Unless otherwise provided in the Plan or in the Confirmation Order, all
injunctions or stays in effect in the Chapter 11 Cases (pursuant to sections 105
or 362 of the Bankruptcy Code or any order of the Bankruptcy Court) and existing
on the Confirmation Date (excluding any injunctions or stays contained in the
Plan or the Confirmation Order) shall remain in full force and effect until the
Effective Date. All injunctions or stays contained in the Plan or the
Confirmation Order shall remain in full force and effect in accordance with
their terms.

L. Document Retention

On and after the Effective Date, the Reorganized Debtors may maintain documents
in accordance with their standard document retention policy, as may be altered,
amended, modified, or supplemented by the Reorganized Debtors.

ARTICLE IX.

CONDITIONS TO CONFIRMATION OF THE PLAN AND THE EFFECTIVE DATE

A. Conditions Precedent to Confirmation

The following are conditions to the entry of the Confirmation Order unless such
conditions, or any of them, have been satisfied or waived pursuant to Article
IX.C:

 

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1. neither the Equity Investment Commitment Agreement nor the Restructuring
Support Agreement shall have been terminated; and

2. the Plan Supplement and all of the schedules, documents, and exhibits
contained therein, and all other schedules, documents, supplements and exhibits
to the Plan, shall have been filed, and shall be in form and substance
consistent with the DIP Documents and the Equity Investment Commitment
Agreement.

B. Conditions Precedent to the Effective Date

It shall be a condition to the Effective Date that the following conditions
shall have been satisfied or waived pursuant to Article IX.C:

1. the Bankruptcy Court shall have entered the Confirmation Order in form and
substance reasonably acceptable to the Debtors and the Required Consenting
Stakeholders;

2. the Confirmation Order shall have become a Final Order;

3. the Debtors shall have obtained all authorizations, consents, regulatory
approvals, rulings, or documents that are necessary to implement and effectuate
the Plan;

4. all Definitive Restructuring Documents shall, where applicable, have been
executed and remain in full force and effect in form and substance;

5. the Restructuring Support Agreement shall not have been terminated;

6. the final version of the Plan Supplement and all of the schedules, documents,
and exhibits contained therein, and all other schedules, documents, supplements
and exhibits to the Plan, shall have been filed;

7. the Plan shall not have been materially amended, altered or modified from the
Plan as confirmed by the Confirmation Order, unless such material amendment,
alteration or modification has been made in accordance with Article X.A of the
Plan;

8. all fees and expenses provided for in the Restructuring Support Agreement,
including pursuant to section 8(a)(v) and 8(a)(vi) of the Restructuring Support
Agreement, shall have been paid in full by the Debtors;

9. the New Quorum Constituent Documents and the New Shareholders Agreement shall
be in full force and effect (with all conditions precedent thereto having been
satisfied or waived), subject to any applicable post-closing execution and
delivery requirements;

10. to the extent not already paid and/or provided for in Article IX.B.8 hereof,
the payment in Cash of all Restructuring Expenses; and

11. all Professional Fee Claims and expenses of retained professionals required
to be approved by the Bankruptcy Court shall have been paid in full or amounts
sufficient to pay such fees and expenses after the Effective Date have been
placed in the Professional Fee Escrow Account pending approval by the Bankruptcy
Court.

 

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C. Waiver of Conditions to Confirmation or the Effective Date

1. Except as set forth in Article IX.C.2, and subject to Stakeholder Approval
Rights, each condition to Confirmation set forth in Article IX.A and each
condition to the Effective Date set forth in Article IX.B may be waived in whole
or in part at any time by the Debtors without an order of the Bankruptcy Court.

2. The conditions to the Effective Date set forth in Article IX.B.8 and Article
IX.B.10, respectively, may not be waived without the prior written consent of
each Consenting Noteholder.

D. Substantial Consummation

“Substantial Consummation” of the Plan, as defined in section 1101(2) of the
Bankruptcy Code, with respect to any of the Debtors, shall be deemed to occur on
the Effective Date with respect to such Debtor.

E. Effect of Non-Occurrence of Conditions to Consummation

If the Effective Date does not occur with respect to any of the Debtors, the
Plan shall be null and void in all respects with respect to such Debtor, and
nothing contained in the Plan or the Disclosure Statement shall: (1) constitute
a waiver or release of any Claims by or Claims against or Interests in such
Debtors; (2) prejudice in any manner the rights of such Debtors, any Holders of
a Claim or Interest, or any other Entity; or (3) constitute an admission,
acknowledgment, offer, or undertaking by such Debtors, any Holders, or any other
Entity in any respect.

ARTICLE X.

MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN

A. Modification of Plan

Subject to Stakeholder Approval Rights, the Debtors reserve the right to modify
the Plan prior to Confirmation and seek Confirmation consistent with the
Bankruptcy Code and, as appropriate, not resolicit votes on such modified Plan.
Subject to certain restrictions and requirements set forth in section 1127 of
the Bankruptcy Code and Bankruptcy Rule 3019 and those restrictions on
modifications set forth in the Plan, the Debtors expressly reserve their rights
to alter, amend, or modify materially the Plan, one or more times, after
Confirmation, and, to the extent necessary, may initiate proceedings in the
Bankruptcy Court to so alter, amend, or modify the Plan, or remedy any defect or
omission, or reconcile any inconsistencies in the Plan, the Disclosure
Statement, or the Confirmation Order, in such matters as may be necessary to
carry out the purposes and intent of the Plan.

B. Effect of Confirmation on Modifications

Entry of the Confirmation Order shall constitute approval of all modifications
to the Plan occurring after the solicitation thereof pursuant to section 1127(a)
of the Bankruptcy Code and a finding that such modifications to the Plan do not
require additional disclosure or resolicitation under Bankruptcy Rule 3019.

 

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C. Revocation or Withdrawal of Plan

The Debtors reserve the right, subject to the terms of the Restructuring Support
Agreement, to revoke or withdraw the Plan before the Confirmation Date and to
file subsequent chapter 11 plans. If the Debtors revoke or withdraw the Plan, or
if the Confirmation Date or the Effective Date does not occur, then: (1) the
Plan will be null and void in all respects; (2) any settlement or compromise
embodied in the Plan, assumption of Executory Contracts or Unexpired Leases
effected by the Plan, and any document or agreement executed pursuant hereto
will be null and void in all respects; and (3) nothing contained in the Plan
shall (a) constitute a waiver or release of any Claims, Interests, or Causes of
Action, (b) prejudice in any manner the rights of any Debtor or any other
Entity, or (c) constitute an admission, acknowledgement, offer, or undertaking
of any sort by any Debtor or any other Entity.

ARTICLE XI.

RETENTION OF JURISDICTION

Notwithstanding the entry of the Confirmation Order and the occurrence of the
Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction over
all matters arising out of, or related to, the Chapter 11 Cases and the Plan
pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including
jurisdiction to:

1. allow, disallow, determine, liquidate, classify, estimate, or establish the
priority, secured or unsecured status, or amount of any Claim or Interest,
including the resolution of any request for payment of any Claim or Interest and
the resolution of any and all objections to the secured or unsecured status,
priority, amount, or allowance of Claims or Interests;

2. decide and resolve all matters related to the granting and denying, in whole
or in part, any applications for allowance of compensation or reimbursement of
expenses to Professionals authorized pursuant to the Bankruptcy Code or the
Plan;

3. resolve any matters related to Executory Contracts or Unexpired Leases,
including: (a) the assumption, assumption and assignment, or rejection of any
Executory Contract or Unexpired Lease to which a Debtor is party or with respect
to which a Debtor may be liable and to hear, determine, and, if necessary,
liquidate, any Cure Claims arising therefrom, including pursuant to section 365
of the Bankruptcy Code; (b) any potential contractual obligation under any
Executory Contract or Unexpired Lease that is assumed; and (c) any dispute
regarding whether a contract or lease is or was executory or expired;

4. ensure that distributions to Holders of Allowed Claims and Interests (as
applicable) are accomplished pursuant to the provisions of the Plan and
adjudicate any and all disputes arising from or relating to distributions under
the Plan;

5. adjudicate, decide, or resolve any motions, adversary proceedings, contested
or litigated matters, and any other matters, and grant or deny any applications
involving a Debtor that may be pending on the Effective Date;

 

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6. enter and implement such orders as may be necessary or appropriate to
execute, implement, or consummate the provisions of (a) contracts, instruments,
releases, indentures, and other agreements or documents approved by Final Order
in the Chapter 11 Cases and (b) the Plan, the Confirmation Order, and contracts,
instruments, releases, indentures, and other agreements or documents created in
connection with the Plan;

7. enforce any order for the sale of property pursuant to sections 363, 1123, or
1146(a) of the Bankruptcy Code;

8. grant any consensual request to extend the deadline for assuming or rejecting
Unexpired Leases pursuant to section 365(d)(4) of the Bankruptcy Code;

9. adjudicate, decide, or resolve any and all matters related to the
Restructuring Transactions;

10. issue injunctions, enter and implement other orders, or take such other
actions as may be necessary or appropriate to restrain interference by any
Entity with Consummation or enforcement of the Plan;

11. resolve any cases, controversies, suits, disputes, Causes of Action, or any
other matters that may arise in connection with the Consummation,
interpretation, or enforcement of the Plan, the Disclosure Statement, the
Confirmation Order, or the Restructuring Transactions, or any Entity’s
obligations incurred in connection with the foregoing, including disputes
arising under agreements, documents, or instruments executed in connection with
the Plan, the Disclosure Statement, the Confirmation Order, or the Restructuring
Transactions;

12. hear, determine, and resolve any cases, matters, controversies, suits,
disputes, or Causes of Action in connection with or in any way related to the
Chapter 11 Cases, including: (a) with respect to the repayment or return of
distributions and the recovery of additional amounts owed by the Holder of a
Claim or an Interest for amounts not timely repaid pursuant to Article VI.K.1 of
the Plan; (b) with respect to the releases, injunctions, and other provisions
contained in Article VIII of the Plan, including entry of such orders as may be
necessary or appropriate to implement such releases, injunctions, and other
provisions; (c) that may arise in connection with the Consummation,
interpretation, implementation, or enforcement of the Plan, the Confirmation
Order, and, subject to any applicable forum selection clauses, contracts,
instruments, releases, indentures, and other agreements or documents created in
connection with the Plan; or (d) related to section 1141 of the Bankruptcy Code;

13. enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked, or
vacated;

14. consider any modifications to the Plan before or after the Effective Date
pursuant to section 1127 of the Bankruptcy Code, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release or other agreement or
document entered into or delivered in connection with the Plan, the Disclosure
Statement or the Confirmation Order; or remedy any defect or omission or
reconcile or clarify any inconsistency in any Bankruptcy Court order, the Plan,
the Disclosure Statement, the Confirmation Order or any contract, instrument,
release or other agreement or document entered into, delivered or created in
connection with the Plan, the Disclosure Statement or the Confirmation Order, in
such manner as may be necessary or appropriate to consummate the Plan;

 

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15. hear and determine matters concerning state, local, and federal taxes in
accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

16. enter an order or Final Decree concluding or closing the Chapter 11 Cases;

17. enforce all orders previously entered by the Bankruptcy Court; and

18. hear any other matter not inconsistent with the Bankruptcy Code;

Provided, however, that the Bankruptcy Court shall not retain jurisdiction over
disputes concerning documents contained in the Plan Supplement that have a
jurisdictional, forum selection or dispute resolution clause that refers
disputes to a different court, and any disputes concerning documents contained
in the Plan Supplement that contain such clauses shall be governed in accordance
with the provisions of such documents.

To the extent that it is legally impermissible for the Bankruptcy Court to have
exclusive jurisdiction over any of the foregoing matters, the Bankruptcy Court
will have non-exclusive jurisdiction over such matters to the extent legally
permissible. The Plan shall not modify the jurisdictional provisions of Equity
Investment Commitment Agreement. Notwithstanding anything herein to the
contrary, on and after the Effective Date, the Bankruptcy Court’s retention of
jurisdiction pursuant to the Plan shall not govern the enforcement or
adjudication of any rights or remedies with respect to or as provided in any
Equity Investment Commitment Agreement, and the jurisdictional provisions of
such documents shall control.

If the Bankruptcy Court abstains from exercising, or declines to exercise,
jurisdiction or is otherwise without jurisdiction over any matter, including the
matters set forth in this Article XI, the provisions of this Article XI shall
have no effect upon and shall not control, prohibit or limit the exercise of
jurisdiction by any other court having jurisdiction with respect to such matter.

ARTICLE XII.

MISCELLANEOUS PROVISIONS

A. Immediate Binding Effect

Subject to Article IX.A hereof and notwithstanding Bankruptcy Rules 3020(e),
6004(h), or 7062 or otherwise, upon the occurrence of the Effective Date, the
terms of the Plan and the Plan Supplement shall be immediately effective and
enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and
any and all Holders of Claims or Interests (irrespective of whether such Claims
or Interests are deemed to have accepted the Plan), all Entities that are
parties to or are subject to the settlements, compromises, releases, discharges,
and injunctions described in the Plan, each Entity acquiring property under the
Plan, and any and all non-Debtor parties to Executory Contracts and Unexpired
Leases with the Debtors.

 

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B. Additional Documents

Subject to and in accordance with the Debtors’ obligations under the
Restructuring Support Agreement, on or before the Effective Date, the Debtors
may file with the Bankruptcy Court such agreements and other documents as may be
necessary or appropriate to effectuate and further evidence the terms and
conditions of the Plan. Subject to their respective obligations under the
Restructuring Support Agreement as a party thereto, the Debtors or the
Reorganized Debtors, as applicable, and all Holders of Claims and Interests
receiving distributions pursuant to the Plan and all other parties in interest
shall, from time to time, prepare, execute, and deliver any agreements or
documents and take any other actions as may be necessary or advisable to
effectuate the provisions and intent of the Plan.

C. Statutory Fees

All fees payable pursuant to section 1930(a) of the Judicial Code, including
fees and expenses payable to the U.S. Trustee, as determined by the Bankruptcy
Court at a hearing pursuant to section 1128 of the Bankruptcy Code, will be paid
by each of the applicable Reorganized Debtors for each quarter (including any
fraction thereof) until the applicable Chapter 11 Case of such Reorganized
Debtor is converted, dismissed, or closed, whichever occurs first.

D. Payment of Certain Fees and Expenses

Without any further notice to or action, order, or approval of the Bankruptcy
Court, the Debtors or Reorganized Debtors, as applicable, shall pay on the
Effective Date all then-outstanding reasonable and documented unpaid fees and
expenses incurred on or before the Effective Date by all of the attorneys,
advisors, and other professionals payable under the Plan and the Restructuring
Support Agreement. In addition, the Debtors or Reorganized Debtors, as
applicable, shall pay on the Effective Date: (i) all then-outstanding reasonable
and documented unpaid fees and expenses as set forth in Shearman & Sterling
LLP’s January 30, 2020 invoice for services rendered as counsel to the First
Lien Lenders and (ii) all then outstanding reasonable and documented unpaid fees
and expenses incurred on before or before the Effective Date by Cravath,
Swaine & Moore LLP as counsel to the First Lien Agent. Any such costs and
expenses that are attorneys’ fees and expenses shall be submitted to the Debtors
or the Reorganized Debtors in the form of summary invoices of the relevant law
firms.

E. Reservation of Rights

Except as expressly set forth in the Plan, the Plan shall have no force or
effect unless the Bankruptcy Court has entered the Confirmation Order. None of
the filing of the Plan, any statement or provision contained in the Plan, or the
taking of any action by any Debtor with respect to the Plan, the Disclosure
Statement, or the Plan Supplement shall be or shall be deemed to be an admission
or waiver of any rights of any Debtor with respect to the Holders of Claims or
Interests prior to the Effective Date.

F. Successors and Assigns

The rights, benefits, and obligations of any Entity named or referred to in the
Plan shall be binding on, and shall inure to the benefit of any heir, executor,
administrator, successor or assign, Affiliate, officer, director, agent,
representative, attorney, beneficiary, or guardian, if any, of each Entity.

 

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G. Service of Documents

All notices, requests, and demands to or upon the Debtors to be effective shall
be in writing (including by facsimile transmission) and, unless otherwise
expressly provided in the Plan, shall be deemed to have been duly given or made
when actually delivered or, in the case of notice by facsimile transmission,
when received and telephonically confirmed, addressed as follows:

If to the Debtors:

Hal McCard

Senior Vice President, General Counsel, and Secretary

Quorum Health Corporation

1573 Mallory Lane Suite 100

Brentwood, TN 37027

Email: hal_mccard@quorumhealth.com

With copies to:

McDermott Will & Emery LLP

444 West Lake Street, Suite 4000,

Chicago, IL 60606,

Attention: Felicia Gerber Perlman

                 Bradley Thomas Giordano

                 Megan Preusker

E-mail: fperlman@mwe.com

             bgiordano@mwe.com

             mpreusker@mwe.com

and

McDermott Will & Emery LLP

1007 North Orange Street, 4th Floor

Wilmington, DE 19801

Telephone: (302) 485-3930

Facsimile: (302) 691-4573

Attention: David R. Hurst

E-mail: dhurst@mwe.com

If to the First Lien Lenders:

Milbank LLP

55 Hudson Yards

New York, NY 10001

Attention: Dennis F. Dunne

                 Tyson Lomazow

Email: ddunne@milbank.com

            tlomazow@milbank.com

 

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If to the Senior Noteholders represented by the Senior Notes Representatives:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention: Nicole Greenblatt, P.C.

                 Steven N. Serajeddini, P.C.

Email: nicole.greenblatt@kirkland.com

            steven.serajeddini@kirkland.com

After the Effective Date, the Reorganized Debtors shall have the authority to
send a notice to Entities that continue to receive documents pursuant to
Bankruptcy Rule 2002 requiring such Entity to file a renewed request to receive
documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the
Reorganized Debtors are authorized to limit the list of Entities receiving
documents pursuant to Bankruptcy Rule 2002 to those Entities who have filed such
renewed requests.

H. Entire Agreement

Except as otherwise indicated, and without limiting the effectiveness of the
Restructuring Support Agreement, the Plan (including, for the avoidance of
doubt, the Plan Supplement) supersedes all previous and contemporaneous
negotiations, promises, covenants, agreements, understandings, and
representations on such subjects, all of which have become merged and integrated
into the Plan.

I. Plan Supplement Exhibits

All exhibits and documents included in the Plan Supplement are incorporated into
and are a part of the Plan as if set forth in full in the Plan. After the
exhibits and documents are filed, copies of such exhibits and documents shall be
made available upon written request to the Debtors’ counsel at the address above
or by downloading such exhibits and documents from https://dm.epiq11.com/Quorum
or the Bankruptcy Court’s website at www.del.uscourts.gov/bankruptcy. Unless
otherwise ordered by the Bankruptcy Court, to the extent any exhibit or document
in the Plan Supplement is inconsistent with the terms of any part of the Plan
that does not constitute the Plan Supplement, the Plan Supplement shall control.
The documents considered in the Plan Supplement are an integral part of the Plan
and shall be deemed approved by the Bankruptcy Court pursuant to the
Confirmation Order.

J. Non-Severability

Except as set forth in Article VIII of the Plan, the provisions of the Plan,
including its release, injunction, exculpation and compromise provisions, and
the Definitive Documents, are mutually dependent and non-severable. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of the Plan and the Definitive Documents are:
(1) valid and enforceable pursuant to their terms; (2) integral to the Plan and
may not be deleted or modified without the consent of the Debtors; and
(3) non-severable and mutually dependent.

 

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K. Votes Solicited in Good Faith

Upon entry of the Confirmation Order, the Debtors will be deemed to have
solicited votes on the Plan in good faith and in compliance with the Bankruptcy
Code, and pursuant to section 1125(e) of the Bankruptcy Code, the Debtors and
each of their respective Affiliates, agents, representatives, members,
principals, shareholders, officers, directors, employees, advisors, and
attorneys will be deemed to have participated in good faith and in compliance
with the Bankruptcy Code in the offer, issuance, sale, and purchase of
Securities offered and sold under the Plan and any previous plan, and,
therefore, no such parties, individuals, or the Reorganized Debtors will have
any liability for the violation of any applicable law, rule, or regulation
governing the solicitation of votes on the Plan or the offer, issuance, sale, or
purchase of the Securities offered and sold under the Plan and any previous
plan.

L. Waiver or Estoppel

Each Holder of a Claim or an Interest shall be deemed to have waived any right
to assert any argument, including the right to argue that its Claim or Interest
should be Allowed in a certain amount, in a certain priority, Secured or not
subordinated by virtue of an agreement made with the Debtors or their counsel,
or any other Entity, if such agreement was not disclosed in the Plan, the
Disclosure Statement, or papers filed with the Bankruptcy Court prior to the
Confirmation Date.

M. Closing of Chapter 11 Cases

The Reorganized Debtors shall, promptly after the full administration of the
Chapter 11 Cases, file with the Bankruptcy Court all documents required by
Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close
the Chapter 11 Cases; provided that any order of the Bankruptcy Court closing
the Chapter 11 Cases shall provide that the Chapter 11 Case of Quorum Health
Corporation shall remain open through the pendency of any litigation commenced
by the QHC Litigation Trust or an earlier date determined by the QHC Litigation
Trust, and that for purposes of sections 546 and 550 of the Bankruptcy Code, the
QHC Litigation Trust may proceed in the Quorum Health Corporation, Inc. case as
if the other cases had not been closed; and provided further that the automatic
stay imposed by section 362 of the Bankruptcy Code shall remain in full force
and effect in each of the Chapter 11 Cases until thirty days after September 30,
2021; and provided further that the QHC Litigation Trust shall bear the cost of
the Chapter 11 Case of Quorum Health Corporation following the entry of an order
of the Bankruptcy Court closing the Chapter 11 Cases of the other Debtors.

 

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Dated: April 6, 2020       Respectfully submitted,                    By:
                                         
                                                       Name: Alfred Lumsdaine   
  

Title: Executive Vice President and Chief Financial Officer

QUORUM HEALTH CORPORATION, on behalf of itself and all other Debtors

     

Prepared by:

 

David R. Hurst (I.D. No. 3743)

      MCDERMOTT WILL & EMERY LLP      

The Nemours Building

1007 North Orange Street, 4th Floor

      Wilmington, Delaware 19801       Telephone:      (302) 485-3900      

Facsimile:       (302) 351-8711

Email:             dhurst@mwe.com

 

                        - and -

     

Felicia Gerber Perlman (pro hac vice admission pending)

Bradley Thomas Giordano (pro hac vice admission pending)

Megan Preusker (pro hac vice admission pending)

      MCDERMOTT WILL & EMERY LLP       444 West Lake Street       Chicago,
Illinois 60606-0029       Telephone:      (312) 372-2000      
Facsimile:       (312) 984-7700      

Email:             fperlman@mwe.com

                         bgiordano@mwe.com

                         mpreusker@mwe.com

 

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EXHIBIT B

Transfer Agreement

TRANSFER AGREEMENT

The undersigned (“Transferee”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of April 6, 2020
(together with all annexes, exhibits and schedules attached thereto, in each
case, as may be amended, modified or supplemented from time to time only in
accordance with Section 26 thereof, the “Agreement”), by and among (x) Quorum
Health Corporation, a Delaware corporation, and each of its subsidiaries party
thereto, (y) [TRANSFEROR’S NAME] (“Transferor”) and (z) certain other Consenting
Stakeholders (as defined in the Agreement) party thereto, and (i) agrees to be
bound by the terms and conditions of the Agreement to the extent Transferor was
thereby bound, (ii) hereby makes as of the date hereof all representations and
warranties made therein by all other Consenting Stakeholders, and (iii) shall be
deemed a Consenting Stakeholder under the terms of the Agreement, in each case,
solely with respect to the Transferred Claims. The Transferee is acquiring
Senior Notes Claims, Term Loan Claims and/or Revolver Claims, as the case may
be, from Transferor in the amounts set forth on Schedule 1 hereof (the
“Transferred Claims”). All notices and other communications given or made
pursuant to the Agreement shall be sent to the Transferee at the address set
forth below in the Transferee’s signature below.

Date Executed:                     

 

[TRANSFEREE] By:  

                                              

Name:   Title:  

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SCHEDULE 1 TO TRANSFER AGREEMENT

 

Transferor

   Transferee    Term Loan
Claims    Revolving Loan
Claims    Senior Notes
Claims

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EXHIBIT C

DIP Facility Term Sheet

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

The following is intended to summarize certain basic terms of the proposed DIP
Facility and related accommodations. It is not intended as a definitive list of
all our requirements or conditions in connection with the proposed arrangements.

TERM SHEET

SUPERPRIORITY DEBTOR-IN-POSSESSION CREDIT FACILITY

 

 

Upon Quorum Health Corporation (“QHC”) and certain of its direct and indirect
U.S. subsidiaries filing a petition for relief under Chapter 11 of the United
States Bankruptcy Code (the “Bankruptcy Code”) for the purpose of effectuating
the Restructuring contemplated by the Restructuring Support Agreement to which
this term sheet is attached (the “RSA”), the Initial DIP Lenders intend to
provide, subject to the terms and conditions set forth herein and in the RSA, a
debtor-in-possession financing to be used to fund QHC’s working capital during
the pendency of the Chapter 11 cases (collectively, the “Cases”) under title 11
of the United States Code in the United States Bankruptcy Court for the District
of Delaware (the “Bankruptcy Court”) until the Termination Date (as defined
below).1

 

Borrower:    QHC (the “Borrower”), to become a debtor and a debtor-in-possession
in the Cases. Guarantors:    All subsidiaries of the Borrower that have provided
guarantees under the Prepetition CF Credit Agreement (as defined below)
(collectively, the “Loan Guarantors” and, together with the Borrower, the “Loan
Parties”), in each case to the extent a debtor and a debtor-in-possession in any
Cases (the “Debtors”). Administrative Agent and Collateral Agent:    GLAS USA
LLC shall act as the administrative agent for the DIP Facility and GLAS Americas
LLC, shall act as collateral agent for the DIP Facility (collectively, the “DIP
Agent”). Lenders:    Initially, certain of the Consenting Noteholders (as
defined in the RSA) identified to the Borrower (collectively, the “Initial DIP
Lenders”, and the Initial DIP Lenders together with any permitted assignees and
successors, each a “DIP Lender”, and collectively the “DIP Lenders”). Existing
Cash Flow Facility:    That certain Credit Agreement dated as of April 29, 2016
(as amended, restated, modified, supplemented or replaced from time to time, the
“Prepetition CF Credit Agreement”) by and among the Borrower, the lenders party
thereto from time to time and Credit Suisse AG, as the administrative agent and
collateral agent. Existing ABL Facility:    That certain ABL Credit Agreement
dated as of April 29, 2016 (as amended, restated, modified, supplemented or
replaced from time to time, the “Prepetition ABL Credit Agreement” and, together
with the Prepetition CF Credit Agreement, the “Prepetition Credit Agreements”)
by and among the Borrower, the lenders party thereto from time to time and UBS
AG, Stamford Branch, as the administrative agent and collateral agent.

 

1 

Capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the RSA.

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

Adequate Protection:   

The agent under the Prepetition CF Credit Agreement (the “Prepetition CF Agent”)
for the benefit of itself, the lenders thereunder (the “Prepetition CF Lenders”)
and the holders of all other secured obligations thereunder (the “Prepetition CF
Obligations”), shall be granted the following protection, pursuant to sections
361, 507, 363(e) and 364(d)(1) of the Bankruptcy Code or otherwise, of its
pre-petition security interests for the diminution in the value (each such
diminution, a “Diminution in Value”) of the pre-petition security interests of
such party, whether or not such Diminution in Value results from the sale, lease
or use by the Debtors of the collateral securing the Prepetition CF Obligations
(including, without limitation, Cash Collateral), and for the stay of
enforcement of any pre-petition security interest arising from section 362 of
the Bankruptcy Code, or otherwise:

 

(i) Adequate Protection Lien. Effective and perfected as of the date of the
Bankruptcy Court’s entry of the Interim Order and without the necessity of the
execution of mortgages, security agreements, pledge agreements, financing
statements or other agreements, a security interest on all assets of the Debtors
(except as specified in the proviso below) (the “Adequate Protection Liens”),
subject and subordinate, if applicable, only to (x) Liens on the DIP Priority
Collateral securing the obligations under the DIP Facility, (y) the “Carve-Out”
set forth in the DIP Orders and (z) with respect to the assets constituting “ABL
Facility First Priority Collateral”, liens securing the obligations under the
Prepetition ABL Credit Agreement; provided that the Adequate Protection Liens
shall not encumber any claims and causes of action that may be brought under the
Bankruptcy Code (nor any proceeds thereof).

 

(ii)  Super-Priority Claim. Entitled to joint and several superpriority claim
status in the Cases (the “Adequate Protection Claim”).

 

(iii)  Fees and Expenses. Current cash payments payable under the Prepetition CF
Credit Agreement shall be made to the Prepetition CF Agent (for the benefit of
the Prepetition CF Lenders) of all professional fees and expenses payable to any
agent under the Prepetition CF Credit Agreement, including, but not limited to,
the prepetition and postpetition fees and disbursements of Milbank LLP, local
Delaware counsel and Houlihan Lokey Capital, Inc., in each case, (a) in
connection with professional services on behalf of certain Prepetition CF
Lenders in connection with the Prepetition CF Credit Agreement and related loan
documents and (b) promptly upon receipt of summary form invoices (where
applicable) which may be redacted for privileged information.

 

(iv) Financial Reporting. The Loan Parties shall continue to provide the
Prepetition CF Agent and Houlihan Lokey with financial and other reporting
substantially in compliance with the Prepetition CF Credit Agreement and shall
provide Houlihan Lokey with the Initial DIP Budget, the most recent Updated DIP
Budget, the DIP Variance Report and the DIP Financial Reporting
contemporaneously with delivery thereof to the DIP Agent (each, on a
confidential basis).

 

2

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   As additional adequate protection, the Prepetition CF Agent, on behalf of
itself and the Prepetition CF Lenders under the Prepetition CF Credit Agreement,
will be entitled to current cash payment of all accrued but unpaid interest at
the non-default contract rate applicable during the Cases, including on the
dates such payments are due and payable under the Prepetition CF Credit
Agreement, with the first such interest payment date being April 30, 2020, and
thereafter, the last Business Day of every calendar month. Carve Out:    The
liens on and security interest in the Collateral (as defined below) and the
superpriority administrative expense claims shall be subject to the Carve Out.
For purposes hereof, “Carve Out” shall have the meaning assigned to such term in
the Interim Order (as defined below). Type and Amount of the DIP Facility:   

Superpriority debtor-in-possession credit facility in the aggregate principal
amount of $100,000,000 (the “DIP Facility”), of which:

 

(i) a maximum principal amount of $30.0 million shall be available upon entry of
an order (in form and substance consistent with the RSA), entered by the
Bankruptcy Court approving the DIP Facility on an interim basis (the “Interim
Order”);

 

(ii) a maximum principal amount of $60.0 million, less the aggregate principal
amount of any DIP Loans funded upon the entry of the Interim Order, shall be
available following entry of an order (in form and substance consistent with the
RSA), entered by the Bankruptcy Court approving the DIP Facility on a final
basis (the “Final Order” and, together with the Interim Order, the “DIP
Orders”); and

 

(iii) a maximum principal amount of $100.0 million, less the aggregate principal
amount of any DIP Loans previously funded, shall be available upon conditions to
be set forth in the DIP Credit Agreement.

 

Proceeds from borrowings under the DIP Facility shall be funded into a
segregated account of the Borrower’s (the “Segregated DIP Account”). The use of
the proceeds of the DIP Facility shall be consistent with the then Approved DIP
Budget (as defined below), subject to the Budget Compliance Covenant (as defined
below).

Closing Date:    The date of the initial funding of the DIP Facility after entry
of the Interim Order (the “Closing Date”). Maturity and Termination Date;
Conversion:    Upon the earlier to occur of (i) six (6) months from the Closing
Date, (ii) the acceleration of the loans (the “DIP Loans”) and commitments under
the DIP Facility in accordance with the DIP Credit Agreement (as defined below)
after an event of default thereunder and (iii) the Plan Effective Date (such
date, the “Termination Date”), the outstanding obligations under the DIP
Facility shall be repaid in full in cash and the commitments thereunder
terminated. Amortization:    None.

 

3

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Fees and Interest Rates:    As set forth on Annex I attached hereto. Mandatory
Prepayments:    The DIP Credit Agreement will contain mandatory prepayment
provisions that will require a prepayment of amounts outstanding under the DIP
Facility substantially consistent with the mandatory prepayment provisions in
the Prepetition CF Credit Agreement (other than for excess cash flow) and
subject to exceptions and thresholds to be mutually agreed; provided that there
shall be no mandatory prepayments of the DIP Loans required from the proceeds of
realizations on Collateral until the Prepetition CF Credit Agreement, or any
other debt for borrowed money with a senior lien on such Collateral is paid in
full. Voluntary Prepayments:    Permitted in whole or in part, with prior
written notice to the DIP Agent but without premium or penalty, subject to
limitations as to minimum amounts of prepayments. Collateral and Priority:   
The DIP Facility (and all guarantees of the DIP Facility by the Loan Guarantors)
shall at all times, subject to the Carve Out, (a) be entitled to joint and
several superpriority claim status in the Cases junior only to the Adequate
Protection Claim, (b) be secured by a perfected court-ordered first priority
lien on (x) the Segregated DIP Account and proceeds thereof and (y) liens on
avoidance actions and proceeds of avoidance actions that are available to be
brought under the Bankruptcy Code and that, in the case of this clause (y), are
not collateral securing the Prepetition Credit Agreements or otherwise subject
to valid, perfected and non-avoidable pre-petition liens (this clause (b), the
“DIP Priority Collateral”); and (c) be secured by a perfected junior lien on all
of the Collateral (as defined in the Prepetition Credit Agreements) to the
extent such Collateral is subject to a valid, perfected and non-avoidable lien
securing the Prepetition Credit Agreements (the assets described in clauses
(b) and (c) above, the “Collateral”). Guarantees:    Each Loan Guarantor shall
unconditionally guarantee all of the indebtedness, obligations and liabilities
of the Borrower arising under or in connection with the DIP Facility, subject to
the priority of claims and liens as outlined herein. Certain Milestones:    The
Loan Parties shall achieve the following transaction milestones (the
“Milestones”), each of which may be extended at any time with the written
approval of the Initial DIP Lenders:   

a)  no later than 3 Business Days after the Petition Date, the Bankruptcy Court
shall have entered the Interim DIP Order;

 

b)  no later than 35 calendar days after the Petition Date, the Bankruptcy Court
shall have entered the Final DIP Order;

 

c)  no later than 60 calendar days after the Petition Date, the Bankruptcy Court
shall have approved the Disclosure Statement and entered the Confirmation Order;
and

 

4

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d)  no later than 75 calendar days after the Petition Date, the Plan Effective
Date shall have occurred; provided, that if any Required Regulatory Approval has
not been obtained or if the condition set forth in Section 7.01(f) of the Equity
Investment Commitment Agreement has not been satisfied (or waived in accordance
with its terms) on or prior to such 75th calendar date but all other conditions
to the Plan Effective Date have been satisfied (other than those that by their
nature are to be satisfied on the Plan Effective Date), such Milestone shall be
extended automatically to 95 calendar days after the Petition Date

Documentation:    The DIP Facility (including the terms and conditions
applicable thereto) will be documented pursuant to and evidenced by (a) a credit
agreement, negotiated in good faith, in form and substance substantially similar
to the Prepetition CF Credit Agreement, with such modifications as are (i) set
forth herein, (ii) necessary to reflect the terms of the Interim Order or the
Final Order, as applicable, (iii) usual and customary for debtor-in-possession
financings of this kind and/or otherwise necessary or desirable to effectuate
the financing contemplated hereby (including customary representations and
warranties, covenants and events of default for debtor-in-possession financings
of this kind, including a customary covenant to maintain cash proceeds from
borrowings under the DIP Facility in the Segregated DIP Account pending use
thereof in accordance with the DIP Credit Agreement) and/or (iv) mutually agreed
among the Borrower and the Initial DIP Lenders (the “DIP Credit Agreement”), (b)
the Interim Order, (c) the Final Order and (d) as applicable, the related notes,
security agreements, collateral agreements, pledge agreements, control
agreements, guarantees, mortgages and other legal documentation or instruments
as are, in each case, usual and customary for debtor-in-possession financings of
this type and/or reasonably necessary or desirable to effectuate the financing
contemplated hereby, as determined by the DIP Lenders (collectively, the “DIP
Loan Documents”). Notwithstanding the foregoing or any other provision hereof,
thresholds, grace periods, cure periods, materiality qualifiers and definitions
of “Material Adverse Effect” shall be removed or otherwise modified in the
manner customary for debtor-in-possession facilities of this kind and reasonably
acceptable to the Borrower and the Initial DIP Lenders. For the avoidance of
doubt, there shall be legal opinions given with respect to the DIP Loan
Documents. Budget Compliance Covenant; Additional Reporting:    The Debtors will
prepare and deliver a cash flow forecast, in form and substance acceptable to,
and consented to by, the Initial DIP Lenders (the “Initial DIP Budget”), setting
forth all line-item and cumulative receipts and operating disbursements on a
weekly basis for the period beginning as of the week of the Closing Date through
and including the thirteenth (13th) week after such week. Once so consented to
by the DIP Lenders, the Initial DIP Budget shall be deemed the “Approved DIP
Budget” for all purposes of the DIP Loan Documents until superseded by any
Updated DIP Budget (as defined below) that subsequently is consented to by the
DIP Lenders as set forth below.

 

5

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On or before 12:00 p.m. New York City time on the Wednesday of each fourth (4th)
calendar week following the week in which the petition date occurs, the Debtors
shall deliver a supplement to the Approved DIP Budget covering the subsequent
13-week period that commences with the beginning of such week in which the
supplemental budget is delivered, consistent with the form and level of detail
set forth in the Initial DIP Budget and otherwise in form and substance
reasonably acceptable to, and consented to by, the Required DIP Lenders in their
reasonable discretion (each such supplemental budget, an “Updated DIP Budget”).
Upon (and subject to) the approval of any such Updated DIP Budget by the
Required DIP Lenders in their reasonable discretion, such Updated DIP Budget
shall constitute the then-approved Approved DIP Budget effective as of the
beginning of the week in which it was delivered.

 

By no later than 12:00 p.m. New York City time on the Thursday of each calendar
week following the first complete week after the petition date occurs, the
Debtors shall deliver to the advisors to the Initial DIP Lenders a line-item by
line-item report setting forth, in reasonable detail, the actual receipts and
operating disbursements (including any professional fees) for each such line
item for the prior week (or, in the case of the first such report, for the prior
two weeks).

 

By no later than 12:00 p.m. New York City time on the Thursday of each fourth
(4th) calendar week following the week in which the petition date occurs (each
such Thursday, a “Variance Report Date”), the Debtors shall deliver to the DIP
Agent and the DIP Lenders (and their advisors) a line-item by line-item variance
report (each, a “DIP Variance Report”) setting forth, in reasonable detail,
(x) any differences between actual receipts and operating disbursements (for the
avoidance of doubt, excluding any professional fees) for each such line item for
the Testing Period versus projected receipts and operating disbursements set
forth in the Approved DIP Budget (as in effect at the beginning of such Test
Period) for each such line item for such Testing Period and on a cumulative
basis for the period from the beginning of the week in which the petition date
occurs through the end of such Testing Period (such cumulative report to be
prepared by aggregating the variances set forth in each DIP Variance Report) and
(y) the computations necessary to determine compliance with the Budget
Compliance Covenant, together with a statement from the Borrower’s chief
financial officer certifying the information contained in the report. The DIP
Variance Report shall also provide a reasonably detailed explanation for any
variance in such DIP Variance Report in excess of 10.0% in receipts or operating
disbursements for each such line item during the Testing Period as compared to
projections for such Testing Period in the Approved DIP Budget (as in effect at
the beginning of such Test Period). The term “Testing Period” means, as of any
Variance Report Date, the four-week calendar period most recently ended.

 

The Debtors shall not permit, as of any Variance Report Date, (x) the actual
aggregate operating disbursements (for the avoidance of doubt, excluding any
professional fees) for the Testing Period to exceed 115% of the projected
aggregate operating disbursements for such period set forth in the Approved DIP
Budget (as in effect at the beginning of such Testing Period) or (y) the actual
aggregate receipts for the Testing Period to be less than 85% of the projected
aggregate receipts for such period set forth in the Approved DIP Budget (as in
effect at the beginning of such Testing Period) (the “Budget Compliance
Covenant”).

 

 

6

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On or before 12:00 p.m. New York City time on the Thursday of each second (2nd)
calendar week following the week in which the petition date occurs, the Debtors
shall deliver a report on (i) adjusted admissions (with a comparison to the
prior year), (ii) surgeries (with a comparison to the prior year) and (iii) cash
collections per day (with a comparison to the prior year and prior month) (the
“Weekly Operating Reporting”).

 

Within 21 days after the end of each calendar month, the Debtors shall deliver
to the DIP Agent and the DIP Lenders a report setting forth, for the most
recently ended calendar month (commencing with the month ending March 31, 2020),
(a) a computation of Same-Facility Adjusted EBITDA of the Debtors determined in
a manner consistent with past practice, (b) a profit and loss statement and
(c) key performance indicators relating to QHC’s revenue cycle management, and
in the case of each of clauses (a), (b) and (c), in comparative form to the
prior period (the “Monthly Reporting” and, together with the Weekly Operating
Reporting, the “DIP Financial Reporting”).

 

The Debtors shall (i) require their financial advisors to have a weekly call
with the financial advisors to the DIP Lenders, at a time to be mutually agreed
and (ii) provide for a bi-weekly update call with senior management of the
Debtors, with the DIP Lenders (and/or their respective advisors and attorneys)
at a time to be mutually agreed, in each case of clauses (i) and (ii), to
discuss the then Approved DIP Budget and the DIP Variance Report and any other
matters reasonably requested by the advisors to the DIP Lenders.

Chief Restructuring Officer    At all times on and after the Closing Date,
Borrower shall retain a chief restructuring officer (for the Borrower and its
subsidiaries) that is reasonably satisfactory to the Required DIP Lenders (the
“Chief Restructuring Officer”), and provide the Required DIP Lenders and their
respective advisors, including their financial advisor, with reasonable access
to the Chief Restructuring Officer; provided that, such Chief Restructuring
Officer shall have requisite authority to monitor the operations and finances of
the Borrower and its subsidiaries in compliance with the provisions of the DIP
Loan Documents. Expenses and Indemnification:    Usual and customary for
facilities of this type, including all reasonable and documented fees and
out-of-pocket expenses of any advisors and professionals engaged by the DIP
Lenders. Amendments:   

Required DIP Lenders, except for amendments customarily requiring approval by
affected DIP Lenders under such facility.

 

“Required DIP Lenders” shall mean DIP Lenders holding greater than 50% of the
outstanding commitments and/or exposure under the DIP Facility.

Governing Law:    This Term Sheet is and the DIP Loan Documents will be governed
by the Bankruptcy Code, and the laws of the State of New York.

 

7

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Annex I

Interest and Certain Fees

 

Interest Rate:    The loans comprising each borrowing shall bear interest at a
rate per annum equal to the Adjusted LIBO Rate (as defined in the Prepetition CF
Credit Agreement)2 + 10.00%. Interest Payment Dates:    Interest shall be
payable in cash in arrears on the first day of each month, upon any prepayment
due to acceleration and at final maturity. Commitment Fee:    A non-refundable
commitment fee equal to 3.00% of the aggregate commitments under the DIP
Facility, earned, due and payable in cash in full on (and subject to the
occurrence of) the Closing Date. Such commitment fee shall be shared ratably
among the DIP Lenders based on their pro rata share of the commitments under the
DIP Facility as of the Closing Date (and shall be netted from the proceeds of
the Closing Date draw). Agent Fees:    A fee per annum to be agreed payable to
the DIP Agent, which shall be earned in full upon entry of the Interim Order and
payable in advance on the Closing Date (without any pro-ration or rebate).
Default Rate:    After any event of default and (other than with respect to
overdue amounts) delivery of notice by the DIP Agent, the applicable interest
rate for all DIP Loans will be increased to, and overdue interest, fees and
other amounts (other than overdue principal) shall bear interest at 2.00% per
annum above the rate otherwise applicable to such obligations. Rate and Fee
Basis:    All per annum rates shall be calculated on the basis of a year of 360
days. All amounts payable under this Term Sheet will be made in Dollars and, in
any case, shall not be subject to counterclaim or set-off for, or otherwise be
affected by, any claim or dispute relating to any other matter.

*     *     *     *     *

 

2 

But in any case, to have a floor of 1.00%.

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EXHIBIT D

Exit Facility Term Sheet

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Quorum Health Corporation

Take-Back First Lien Facility Term Sheet

This term sheet (and the annex attached hereto) summarizes the principal terms
of the Take-Back First Lien Facility.1

 

Borrower    Reorganized Quorum (“Quorum” or the “Borrower”) Administrative Agent
and Collateral Agent    To be agreed Take-Back First Lien Term Facility   

A senior secured term loan facility in an aggregate principal amount of
approximately $785 million (comprised of (a) approximately $738 million of term
loan obligations outstanding under the Existing First Lien Facility (the
“Existing Term Loans”) and (b) approximately $47 million of revolving loan
obligations outstanding under the Existing First Lien Facility (the “Existing
Revolving Loans”) minus the aggregate amount of the Paydown (the “Take-Back
First Lien Facility” and the term loans thereunder, the “Take-Back First Lien
Term Loans”). The aggregate amount applied on the Plan Effective Date to repay
in cash the obligations outstanding under the Existing First Lien Facility shall
be the sum of (i) with respect to the Existing Term Loans, an amount no less
than $50 million and no more than $100 million and (ii) with respect to the
Existing Revolving Loans, an amount of principal equal to the same proportion of
principal of the Existing Term Loans that is repaid (such amounts repaid
pursuant to the foregoing clauses (i) and (ii) together, the “Paydown”).

Take-Back First Lien Term Loans Maturity Date    April 29, 2025 Amortization   
0.25% of the principal amount of the Take-Back First Lien Facility as of the
Plan Effective Date (as defined below), and commencing with the first full
fiscal quarter after the Plan Effective Date, payable as of the last day of each
fiscal quarter of the Borrower, with the remainder payable at maturity. Interest
   2Interest on the Take-Back First Lien Term Loans will accrue at a rate
per annum equal to the sum of (i) the London interbank offered rate (“LIBOR”);3
and (ii) a margin. Prior to the Covenant Effective Date, the margin will be
equal to the applicable rate set forth in pricing level 8 prior, and on and
after the Covenant Effective Date, will be based on the Borrower’s Secured Net
Leverage Ratio (as calculated on a consolidated basis, with its restricted
subsidiaries, the “SNLR”), as set forth in the below chart and determined for
the most recent fiscal quarter for which financial statements are available
immediately prior to such date:

 

     SNLR    Applicable
Margin
($100M
Paydown)      Applicable
Margin (at
least $75M
Paydown)      Applicable
Margin (at
least $50M
Paydown)  

1

   £ 4.25x      600 bps        625 bps        650 bps  

2

   > 4.25x and £ 4.50x      625 bps        650 bps        675 bps  

3

   > 4.50x and £ 4.75x      650 bps        675 bps        700 bps  

4

   > 4.75x and £ 5.00x      675 bps        700 bps        725 bps  

5

   > 5.00x and £ 5.25x      700 bps        725 bps        750 bps  

6

   > 5.25x and £ 5.50x      725 bps        750 bps        775 bps  

7

   > 5.50x and £ 5.75x      750 bps        775 bps        800 bps  

8

   > 5.75x      775 bps        800 bps        825 bps  

 

1 

Capitalized terms used but not defined herein shall have the meaning ascribed to
them in applicable Existing First Lien Facility Document (as defined herein). As
used in this term sheet, the following terms shall have the following meanings:
“Existing First Lien Facility Documents” means, collectively, (i) that certain
credit agreement, dated as of April 29, 2016, as amended, supplemented, or
modified from time to time, by and among the Company Parties as borrowers or
guarantors, the lenders party thereto, and the administrative agent and
collateral agent thereunder; and (ii) any agreements or documents related
thereto or entered into or executed in connection therewith, in each case as
amended, supplemented, or modified from time to time (and the principal amounts
outstanding thereunder, the “Existing First Lien Facility”). “Take-Back First
Lien Facility Agreement” means the credit agreement providing for the Take-Back
First Lien Facility.

2 

Accrued but unpaid interest on the loans outstanding under the Existing First
Lien Facility shall be payable at the non-default contract rate applicable
during the Chapter 11 Cases including on the dates such payments are due and
payable thereunder (the next such payment being on April 30, 2020).

3 

LIBOR calculation method to be consistent with Existing First Lien Facility
Documents, with a 1.00% floor.

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The interest on the Take-Back First Lien Term Loans will be payable at the end
of the relevant Interest Period on terms consistent with the Existing First Lien
Facility Documents.

After any event of default, with respect to any accrued and unpaid amounts that
are past due (including accrued and unpaid interest that is past due), the
applicable interest rate plus 2.00% per annum, which shall be payable on demand.

Security    Substantially consistent with the Existing First Lien Facility
Documents, but (a) with thresholds to be revised as set forth in Annex I,
(b) the equity interests of Non-Significant Subsidiaries and Permitted
Syndication Subsidiaries to be pledged (subject to any restrictions in the
relevant governing documents, after giving effect to any applicable
anti-assignment provisions of the UCC), (c) to have the further assurances
requirements subject to a deadline of 60 days (or such later date as reasonably
agreed by the Administrative Agent), and (d) with control agreements required
(i) only to the extent required under the Exit ABL Facility or (ii) after the
Exit ABL Facility is paid in full and commitments terminated, at all times,
subject to the same exclusions. Guarantees    Substantially consistent with the
Existing First Lien Facility Documents, but with thresholds to be revised as set
forth in Annex I Priority/Ranking    Substantially consistent with the Existing
First Lien Facility Documents Fees    150 basis points, based on the aggregate
principal amount of the term loans of consenting lenders under the Existing
First Lien Facility (after giving effect to the Paydown), to be paid in cash to
the consenting term lenders party to the Take-Back First Lien Facility Agreement
on the effective date of the plan of reorganization (the “Plan Effective Date”).
Optional Prepayments    The Take Back First Lien Term Facility may be prepaid,
without any premium or penalty, other than set forth under “Call Protection”
below. Call Protection   

Payable only on optional prepayments and mandatory prepayments from debt that is
not permitted (with a separate premium on asset sales set forth separately
below):

 

•  3.5% for optional prepayments made prior to October 1, 2021

 

•  1.5% for optional prepayments made on and after October 1, 2021, but prior to
October 1, 2022

 

•  1% for optional prepayments made on and after October 1, 2022, but prior to
October 1, 2023

 

Par for all prepayments made on and after October 1, 2023. There will be no call
protection applicable to mandatory prepayments nor any amortization, except as
expressly set forth below with respect to mandatory prepayments from the net
cash proceeds of asset sales.

 

2

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Excess Cash Flow Sweep

   75%, with step-downs to 50%, 25%, and 0% at SNLR levels set at 5.00x, 4.50x
and 4.00x, respectively, with the excess cash flow sweep commencing with the
first full fiscal year after the Plan Effective Date, five (5) business days
after delivery of the compliance certificate for such year.

Asset Sale Sweep

  

100%, with reinvestment rights in assets useful to the business (including
capital expenditures, permitted acquisitions and other investments) so long as
(i) Borrower has a SNLR of no greater than 4.75x at the time of the applicable
sale (calculated on a pro forma basis for any specified transactions, based on
the most recent four fiscal quarter period for which financials are required to
be delivered) and (ii) any reinvestment is made within 12 months of the sale,
with an additional 120 days after such 12 month period to the extent a
commitment for such reinvestment is made within such 12 month period

 

Mandatory prepayments for assets sales (other than the asset sales specified as
“Galesburg Cottage Hospital”, “Fannin Regional Hospital” and “Henderson County
Community Hospital” to the consenting lenders under the Existing First Lien
Facility) shall be subject to a premium of 1.0% on the amount of the net cash
proceeds so applied, to the extent so applied (and not declined or reinvested)
prior to July 1, 2021.

Conditions Precedent

   The extensions of credit under the Take-Back First Lien Facility on the Plan
Effective Date will be limited to customary conditions for facilities and
transactions of this type; provided, such conditions will not include any
conditions tied to any financial metric.

Documentation Principles

   The definitive documentation for the Take-Back First Lien Facility (the
“Facilities Documentation”) shall (i) be consistent with this term sheet and
shall contain only those payments, conditions to borrowing, mandatory
prepayments, representations, warranties, covenants and events of default
expressly set forth in this term sheet (or annex thereto) applicable to the
Borrower and its restricted subsidiaries, and be usual and customary for
facilities of such kind and shall be based on (and give due regard to) the
Existing First Lien Facility Documents, (ii) reflect the operational and
strategic requirements of the Borrower and its subsidiaries, (iii) be subject to
materiality qualifications and other exceptions that give effect to and/or
permit the Cases, the Plan and the transactions contemplated thereby (and the
payment of related fees and expenses) and (iv) be negotiated in good faith to
finalize the Facilities Documentation as promptly as reasonably practicable
(collectively, the “Documentation Principles”). Standards, qualifications,
thresholds, exceptions, “baskets” and grace and cure periods shall be consistent
with the Documentation Principles; provided that, the definition of a “Material
Adverse Effect” shall include a carve-out for any effects directly resulting
from COVID-19. Counsel for the Borrower shall initially draft the Facilities
Documentation consistent with the Documentation Principles.

Representations and Warranties

   Substantially consistent with the representations and warranties in the
Existing First Lien Facility Documents and drafted in a manner consistent with
the Documentation Principles, and to be satisfactory to the Borrower and the
Required Lenders (but with solvency to be tested as of the Plan Effective Date).

 

3

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Financial Definitions:

  

As used in this term sheet, “Same Facility Adjusted EBITDA” means EBITDA
adjusted to exclude the effect on EBITDA of hospitals sold or closed by the
Reorganized Company as of the last day of the period for which the Reorganized
Company’s Same Facility Adjusted EBITDA is calculated (or to be calculated) and
further adjusted for the following add-backs:

 

(a)(i) unusual or non-recurring and/or one-time costs, expenses or losses (it
being agreed costs and expenses from transition of transition services
agreements shall be deemed to constitute costs and expenses under this clause
(i)), (ii) restructuring costs, business optimization costs, and costs from
implementation of cost saving initiatives and (iii) run-rate cost savings and
synergies from a Permitted Acquisition or significant Asset Sale that have been
realized or are reasonably expected to be realized in the 18 months following
such acquisition or asset sale, including run rate cost savings adjusted in
accordance with Reg S-X; provided that the aggregate amount added to Same
Facility Adjusted EBITDA pursuant to (i) through (iii) of this clause (a), shall
not exceed an aggregate cap of 20% of Same Facility Adjusted EBITDA in any
period (it being agreed that such cap shall not apply to non-cash expenses),

 

(b) any expenses or costs (i) directly resulting from COVID-19 (excluding, for
the avoidance of doubt, any lost revenue or other pro-forma adjustments) and/or
(ii) costs and expenses (including legal and professional costs) related to the
transactions contemplated by the Plan and costs related to the Cases (solely to
the extent accrued on or prior to Plan Effective Date),

 

(c) settlement costs, the impairment of long lived assets and goodwill, net gain
(or loss) on sale of hospitals, net loss on closure of hospitals, change in
actuarial estimates, severance costs for certain headcount reductions, and
executive severance,

 

(d) business interruption insurance that is received or amounts subject to
reimbursement or indemnification, in each case, that are actually received and
without double counting of all or any portion of the insured, reimbursed or
indemnified amount which has already been added back in current or prior
periods, and

 

(e) any other non-cash charges, write-downs, expenses, losses or items
(including, but not limited to, medical malpractice and workers compensation
reserves and similar reserves) reducing Consolidated Net Income during such
period including any impairment charges or the impact of purchase accounting and
including, for avoidance of any doubt, all non-cash charges (including charges
to write down accounts receivable to net realizable value) associated with
hospitals that have been sold, closed or otherwise disposed of; provided that
(1) if any non- cash charge or other item referred to in this clause
(e) represents an accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future period shall be
subtracted from Same Facility Adjusted EBITDA in such future period to such
extent paid and (2) such non- cash charges, write- downs, expenses, losses or
items may only be added back pursuant to this clause (e) to the extent reflected
as a cost or expense on the Borrower’s statements of income (loss), and minus,
without duplication, any (i) non-recurring gains added to the Borrower’s
statement of income (loss) during such period and (ii) all cash payments made
during such period on account of reserves or other non-cash charges added back
pursuant this clause (e) in any previous period.

 

4

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Covenants   

Limited to negative and affirmative covenants under the Existing First Lien
Facility Documents and drafted in a manner consistent with the Documentation
Principles, and to be satisfactory to the Borrower and the Required Lenders, but
which will include the following changes (and with exceptions for transactions
with affiliates to be agreed):

 

Financial Reporting

 

•   To provide for (a) delivery of annual audited financial statements within 90
days after the end of each fiscal year (120 days for the first fiscal year
ending after Plan Effective Date) without qualification as to “going concern”
(but which may include a “going concern” explanatory paragraph or a “going
concern” qualification resulting solely from (i) an actual or potential covenant
breach and (ii) any current debt maturity, in each case, under the Take-Back
Exit Facility), (b) delivery of quarterly financials for the first three fiscal
quarters of a fiscal year within 60 days (or 75 days for the first three
applicable fiscal quarters ending after the Plan Effective Date), and in each
case, accompanied by a management discussion and analysis, and (c) quarterly
lender calls.

 

Financial Covenants

 

•Limited to a SNLR covenant, which shall not be applicable until July 1, 2021
(the “Covenant Effective Date”). Commencing on September 30, 2021, the
Borrower’s SNLR shall not exceed the applicable maximum level set forth in the
below chart:

 

Applicable Period

  

Maximum SNLR

Q3 2021 and Q4 2021    6.50x Q1 2022    6.25x Q2 2022    6.00x Q3 2022    5.75x
Q4 2022    5.50x Q1 2023    5.25x Q2 2023 and thereafter    5.00x

 

  

•   The Borrower’s SNLR shall be tested quarterly as of the last day of each
fiscal quarter of the Borrower ending on or after the fiscal quarter in which
the Covenant Effective Date occurs and determined at the time of delivery of the
compliance certificate for the applicable fiscal quarter.

 

•   The financial covenant will be subject to a customary equity cure (which
shall be in the form of a cash contribution to common equity or issuance of cash
common equity), which may be made during such fiscal quarter or after such
fiscal quarter ends, but no later than ten (10) business days after the date the
compliance certificates are required to be delivered for such fiscal quarter.
There shall be no more than 5 equity cures over the life of the Take Back First
Lien Facility, and no more than two equity cures in any four fiscal quarter
period (which may be consecutive), and with no mandatory prepayment required
with the proceeds of such equity cure (with the amount of such cure not
exceeding the amount necessary to cause the financial covenant to be in
compliance). Credit will not be given to any prepayment of debt with cure
proceeds for subsequent fiscal quarters after the fiscal quarter in which the
cure was made.

 

5

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Debt Incurrence

 

•   Incremental Amount. Incremental Amount to include (i) a ratio prong to incur
first lien indebtedness set at 4.50x SNLR plus (ii) on and after the Covenant
Effective Date, a free-and-clear basket equal to the greater of (x) 25% of the
Borrower’s consolidated Same-Facility Adjusted EBITDA for the four fiscal
quarter period immediately preceding the date of determination, as determined on
a pro forma basis and (y) 25% of the Borrower’s consolidated Same-Facility
Adjusted EBITDA as of the Plan Effective Date. Incremental Amount capacity shall
be limited to indebtedness that is pari passu the Take-Back First Lien Term
Loans and shall be subject to a customary 50 bps “MFN” provision to be agreed,
with OID and upfront fees determined based on a four (4) year average life to
maturity.

 

•   General Debt Basket: Limited to junior lien and unsecured debt, in an
aggregate amount not to exceed the sum of (x) an unlimited amount subject to
compliance with the Borrower’s Total Net Leverage Ratio (as calculated on a
consolidated basis, with its restricted subsidiaries, the “TNLR”) as of the Plan
Effective Date and (y) an amount of up to $100.0 million; provided that (1) such
indebtedness, if secured, shall only be secured by the Collateral and if
guaranteed, shall only be guaranteed by the Guarantors, (2) the rate of cash
interest on such indebtedness shall not exceed the cash interest rate on the
Take-Back First Lien Facility at the time such indebtedness is incurred and
(3) to the extent such indebtedness has terms (other than margin, pricing, call
protection, maturity (which shall be at least 6 months outside the Take-Back
First Lien Facility maturity), fees and other economics and prepayment and
redemption terms) that are more restrictive than those set forth in the
Take-Back First Lien Facility (as reasonably determined by the Borrower), then
such covenants must be added for the benefit of the Take-Back First Lien
Facility to the extent such indebtedness is outstanding (which covenants may be
in the form of a supplement to the Take-Back First Lien Facility signed by the
Borrower and delivered to the Administrative Agent, and will not require the
consent of the Administrative Agent or any Lender);

 

•   HUD Loans. Loans from the U.S. Department of Housing and Urban Development
(and Liens securing such loans) shall be permitted (such loans, the “HUD
Loans”); provided that, (u) the borrower of such HUD Loans (the “HUD Loan
Borrower”) shall not have or incur any other indebtedness for borrowed money
(other than Government Loans and Ordinary Course Loans), (v) all proceeds of
such HUD Loans shall be subject to a mandatory prepayment of the Take-Back First
Lien Term Loans, (w) the Lenders agree to promptly release any liens on assets
of, and guarantees (and other obligations) of, the HUD Loan Borrower, (x) any
such loan shall be subject to a minimum LTV ratio of 67.5% utilizing the
valuation methodology from the appraisal, in each case, actually utilized by
HUD, to set the “value” for LTV calculation purposes, (y) the Borrower shall
deliver such HUD utilized appraisal and such other information reasonably
requested by the Lenders and (z) the equity interests of the HUD Loan Borrower
shall continue to be pledged to the Take-Back First Lien Facility to the extent
required to be pledged by the holder of such equity interests.

 

6

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•   Permitted Real Estate Indebtedness. Other single-asset real estate debt
provided by non-affiliates, with incurrence (other than HUD Loans and Sale
Leasebacks) subject to a minimum LTV ratio of 75% and an aggregate maximum cap
of $50.0 million, each based on appraised property value; provided that, (w) all
proceeds of such loans shall be subject to a mandatory prepayment of the
Take-Back First Lien Term Loans, (x) the Lenders agree to promptly release any
liens on such real estate asset, (y) the borrower of such loans shall not have
or incur any other indebtedness for borrowed money (other than Government Loans
and Ordinary Course Loans) and (z) the equity interests of such borrower shall
continue to be pledged to the Take-Back First Lien Facility to the extent
required to be pledged by the holder of such equity interests.

 

•   Government Loans. Indebtedness and liens in the form of government backed
loans (including through government backed programs administered by third party
lenders) specific to epidemics and pandemics (“Government Loans”); provided
that, the proceeds thereof must be used solely for working capital purposes,
including the payment of operating expenses (and the borrower thereof shall
provide supporting financial information upon reasonable request, no more
frequently than once per quarter).

 

•   ABL Facility. Indebtedness for any asset based facility in an aggregate
amount not to exceed $162.5 million (plus over-advances or protective advances);
provided that any use of the Permitted Receivables Transaction Basket set forth
in Annex I shall reduce this ABL Facility basket on a dollar-for-dollar basis.

 

Ratings Covenant

 

•   With respect of the Borrower, use commercially reasonable efforts to
maintain a public rating (but not a specific rating) in respect of the Take-Back
First Lien Facility from each of S&P and Moody’s.4

 

Other

 

•   Other Baskets, in accordance with the Documentation Principles, but amended
as set forth in Annex I

Performance Metric for Leverage Threshold Determinations    In each instance
where the Existing First Lien Facility Documents refer to “Consolidated EBITDA,”
the Take-Back First Lien Facility Documents shall refer to “Same-Facility
Adjusted EBITDA.” Thresholds to remain unchanged, but “Same-Facility Adjusted
EBITDA” to be calculated as set forth above.

 

7

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Events of Default    Limited to those in the Existing First Lien Facility
Documents, but to include a cross-default (after giving effect to any applicable
grace periods) to any existing ABL Facility (other than with respect to any
financial covenant contained in such ABL Facility) and drafted in a manner
consistent with the Documentation Principles, and to be satisfactory to the
Borrower and the Required Lenders, with thresholds as specified in Annex I.
Amendment/Modification/Waiver Consent Thresholds    Based on (and giving due
regard to) the Existing First Lien Facility Documents and drafted in a manner
consistent with the Documentation Principles, and to be satisfactory to the
Borrower and the Required Lenders. Cost and Yield Protection    Based on (and
giving due regard to) the Existing First Lien Facility Documents and drafted in
a manner consistent with the Documentation Principles, and to be satisfactory to
the Borrower and the Required Lenders. Assignments and Participations; Buybacks
   Based on (and giving due regard to) the Existing First Lien Facility
Documents and drafted in a manner consistent with the Documentation Principles,
and to be satisfactory to the Borrower and the Required Lenders, but in any
case, to require the consent of the Borrower for any assignment prior to a
payment or bankruptcy (of the Borrower) event of default (and with ten business
day deemed assignment provisions), and the Take-Back First Lien Facility
Documents to include Disqualified Institutions list provisions, and customary
remedies for Disqualified Persons. There shall be no consent of the Borrower
required for assignments to existing lenders, their affiliates or any approved
funds thereof.      To allow for Dutch auctions (but not non-pro rata open
market purchase), and customary
affiliated lender / debt fund affiliate provisions. Debt fund affiliates will
not be subject to a
cap (other than a 49.9% cap when determining Required Lenders). There will be an
aggregate
cap to be agreed on Take-Back First Lien Term Loans that may be acquired by
Affiliates of
the Borrower (other than debt fund affiliates) from third-party lenders
(exclusive of loans held
by such Affiliates as of the Plan Effective Date). Defaulting Lenders    Usual
and customary for facilities and transactions of this type Expenses and
Indemnification    Usual and customary for facilities and transactions of this
type Governing Law and Forum    New York

 

8

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Annex I to Take Back First Lien Facility Term Sheet

Baskets and Thresholds

 

    

Issue

  

Agreed Terms

  

A. Definitions/Timing/ Mechanics/ Specific Provisions

   1.   

Tort Claim Threshold

   $1,000,000 2.   

Material Fee-Owned Real Property

   $5,000,000 3.   

Non-Significant Subsidiary Threshold

  

$10,000,000 for any Subsidiary

Total assets of all Non-Significant Subsidiaries must not exceed 5.0% of the
total assets of the Borrower and the Subsidiaries at any time

4.   

Material Indebtedness Threshold (Change of Control, Cross-Default, Invalid
Subordination, Pari Passu Debt with final maturity within 91 days and
judgment/unperfected security interest EoD)

   $27,500,000 5.   

Available Amount

  

•   Available Amount building from first year for which Excess Cash Flow sweep
applies (FY 21) (based on retained Excess Cash Flow);

 

•   SNLR governors set at 4.25x for dividends on, and repurchases of, the
Borrower’s equity (“Restricted Payments”) and 4.75x for prepayment of junior
lien or unsecured debt with required outside maturity dates (“Restricted Debt
Payments”);

 

•   No leverage test for use of Available Amount for investments, but in the
case of investments in non-Loan Parties, subject to the Non-Loan Party
Conditions; and

 

•   Declined proceeds from asset sales only build Available Amount on and after
Covenant Effective Date

6.   

Pro Forma Calculations (§1.03)

   $37,500,000 7.   

Borrowing Minimum (§2.02(a))

   $10,000,000/$1,000,000 for Incremental Term Loans 8.   

Affirmative Covenants—Compliance Certificate (§5.04(c))

  

Provide reasonable detail with respect to any Permitted Acquisition consummated
during the preceding quarter for total consideration in excess of $25,000,000

Provide identity and value of any Hospital acquired in fee during the preceding
quarter if FMV is in excess of $5,000,000

9.   

Affirmative Covenants—ERISA Event (§5.09)

   Remove $10,000,000 threshold and add Material Adverse Effect qualifier for
ERISA Events   

B. Debt (not otherwise specified in the term sheet)

   10.    Debt to finance the improvement of fixed or capital assets and Capital
Lease/Synthetic Lease Obligations (§6.01(d) and (e))    $37,500,000 11.   
Foreign Subsidiary Debt (§6.01(k))    $20,000,000 12.    Letters of Credit
(§6.01(p))    $15,000,000

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

    

Issue

  

Agreed Terms

  

C. Liens

  

13.

  

General Basket (§6.02(x))

   To match general debt basket

14.

  

Secure debt to finance Permitted Acquisitions (§6.02(aa))

   To match proposed secured ratio debt baskets in the term sheet   

D. Investments

  

15.

  

Non-Loan Parties

   $25,000,000, but subject to the Non-Loan Party Conditions

16.

  

Permitted Acquisitions (§6.04(h))

   Capacity to do permitted acquisitions uncapped; provided that (1) if
consideration exceeds $50,000,000, requires compliance with the then applicable
financial covenant and (2) consideration paid for foreign subsidiaries cannot
exceed $10,000,000 and (3) but in the case of a Permitted Acquisition of
non-Loan Parties, subject to the Non-Loan Party Conditions

17.

  

Permitted Joint Ventures (§6.04(i) and definition of “Permitted Joint Venture”)

   (i) currently existing Permitted Joint Ventures and (ii) $100,000,000 for
Permitted Joint Ventures after the Plan Effective Date, provided that any
Investment in a Permitted Joint Venture in excess of $30,000,000 shall be
subject to compliance with SNLR of 6.50:1.00.

18.

  

Captive Insurance Subsidiaries (§6.04(q))

   Retain

19.

  

Ratio-based basket for Investments

   Subject to achieving a SNLR of 4.00x, but in the case of investments in
non-Loan Parties, subject to the Non-Loan Party Conditions

20.

  

General Basket (§6.04(z))

   $37,500,000, but in the case of investments in non-Loan Parties, subject to
the Non-Loan Party Conditions

21.

  

Non-Loan Party Conditions

  

Following the Plan Effective Date, the following conditions (the “Non-Loan Party
Conditions”) shall also apply to a Permitted Joint Venture Subsidiary, Permitted
Syndication Subsidiary and any Investment in, or Disposition involving, non-Loan
Parties in each case, by Loan Parties) including a Permitted Syndication
Transaction or Permitted Interest Transfer and/or an investment in a Permitted
Joint Venture Subsidiary or Permitted Syndication Subsidiary:

 

•   No Permitted Joint Venture (to the extent the Borrower maintains control
thereof) or Permitted Syndication Subsidiary shall be permitted to incur debt
for borrowed money (other than (i) ordinary course working capital facilities or
local lines up to $10,000,000 per entity (“Ordinary Course Loans”) and
(ii) subject to the restrictions set forth in this term sheet, Real Estate
Indebtedness, HUD Loans and Government Loans)

 

•   No Investment shall be permitted unless made for legitimate purposes and
each Permitted Joint Venture must be a bona fide joint venture with a
non-Affiliate

 

•   The aggregate amount of investments made by Loan Parties in non-Loan Parties
(other than investments made in the ordinary course for cash management
purposes) pursuant to each of the Non-Loan Parties Basket, the general
investments basket and the ratio-based basket for investments, and investments
using the Available Amount, together with an acquisition by Loan Parties of
Acquired Entities that do not become Loan Parties, shall not at any time exceed
$25,000,000.

 

Notwithstanding anything to the contrary in the foregoing, Dispositions to a
non-Loan Party pursuant to the general asset sales basket shall be permitted.

 

2

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

    

Issue

  

Agreed Terms

  

E. Asset Sales

   22.   

General Basket (§6.05(b)(i))

  

•   Provides for Asset Sale basket (including unlimited sale-lease backs with
non-affiliates and other non-ordinary course dispositions), (x) with 100% of
such proceeds (including from sale-lease backs) subject to the mandatory
prepayment provisions and (y) requiring at least 75% cash or cash equivalent
consideration (which shall be deemed to include any debt obligations of the
borrower and its restricted subsidiaries that are cancelled, released or
forgiven)

 

•   Borrower only retains and builds Available Amount from declined asset sale
mandatory prepayments after the Covenant Effective Date; otherwise, declined
proceeds to be retained by the Borrower

 

•   The carve-outs for non-cash consideration from the Existing First Lien
Facility Documents shall be retained in the Take-Back First Lien Facility but
with Designated Non-Cash Consideration reduced as set forth below

23.   

Other Baskets:

   “Asset Sales” to retain carve-outs for receivables facilities, Permitted
Interest Transfers, donations to Governmental Authorities or charities and the
de-minimis basket subject to such caps listed in lines 29-31 below. 24.   

Permitted Receivables Transaction (§6.05(b)(ii))

   To match basket for ABL Facility 25.   

Permitted Syndication Transaction (§6.05(b)(iii))

   $30,000,000 26.   

Permitted Interest Transfer (§6.05(b)(iv) and definition of “Permitted Interest
Transfer”)

   $75,000,000 27.   

Dispositions in connection with Hospital closures (§6.05(x))

   $10,000,000 in any fiscal year 28.   

Donations (clause (ii) of definition of “Asset Sale”)

   $7,500,000 29.   

Receivables (clause (iv) of definition of “Asset Sale”)

   $25,000,000 30.   

De Minimis Amount (clause (xii) of definition of “Asset Sale”)

   $15,000,000 31.   

Designated Non-Cash Consideration (§6.05 last paragraph, clause (v))

   $20,000,000 32.   

Sale Leasebacks

   Permitted and uncapped so long as with non-affiliates and the proceeds are
applied to prepay the loans.   

F.  Restricted Payments

   33.   

Restricted Payment Leverage Requirement

   Any discretionary Restricted Payments (but not reimbursement of expenses,
ordinary course tax or general expense reimbursement related distributions and
indemnification payments) shall be subject to achieving a SNLR of 4.50x 34.   

Repurchase of Equity (§6.06(a)(iii))

   $10,000,000 35.   

Ratio-based basket for Restricted Payments

   Subject to achieving a SNLR of 3.00x   

G.   Payments of Subordinated Debt

   36.   

General Basket (§6.09(b)(i))

   $15,000,000 37.   

Ratio-based basket for Restricted Debt Payments

   Subject to achieving a SNLR of 3.50x   

H.   Other

   38.   

Practice Guarantees (§6.10)

   $37,500,000

 

3

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EXHIBIT E

QHC Litigation Trust Term Sheet

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

The following is intended to summarize certain basic terms of the proposed QHC
Litigation Trust Agreement. The terms set forth herein are subject in all
respects to the negotiation, execution, and delivery by all necessary parties of
legally binding definitive documentation.

TERM SHEET

QHC LITIGATION TRUST

 

 

On the Effective Date, a litigation trust (the “QHC Litigation Trust” or
“Trust”) will be established for the benefit of Holders of Senior Notes Claims
(the “Noteholders”) in connection with the Debtors’ Joint Prepackaged Chapter 11
Plan of Reorganization (the “Plan”).1 The Trust will be governed by a litigation
trust agreement (the “QHC Litigation Trust Agreement”). The following term sheet
(“Term Sheet”) contains the proposed, material terms relating to the QHC
Litigation Trust Agreement. This Term Sheet is not legally binding, is not a
complete list of all terms and conditions relating to the QHC Litigation Trust
Agreement and is subject to change.

 

Trust Purpose    The primary purpose of the Trust is to maximize the QHC
Litigation Trust Assets to the greatest extent possible for the benefit of the
Trust beneficiaries. Financing   

All funding for the trust shall be borne by Contributing Noteholders. There
shall be no funding provided by the Debtors or Reorganized Debtors.

 

The initial trust funding amount (the “Initial Funding”) shall be determined by
the Trust Board (as defined herein).

 

Each Noteholder shall have the opportunity to fund its pro rata portion of the
Initial Funding (the “Initial Pro Rata Allocation”).

 

If any Noteholder declines to fund its Initial Pro Rata Allocation, the other
Noteholders shall be entitled to fund the unfunded portion on terms to be
determined by the Trust in an amount equal to their pro rata interest in the
unfunded amount, which shall be calculated based only on the holdings of the
Noteholders that fund their Initial Pro Rata Allocation and elect to fund the
unfunded amount.

 

The amounts funded by the Initial Pro Rata Allocations shall be paid back in
full by the Trust before any other Trust distributions may be made to
Noteholders; provided that the Initial Funding shall be entitled to preferred
return on terms approved by the Trust Board and noticed to all Noteholders in
connection with the Initial Funding requests.

 

The Trust Board Members (as defined herein) shall be authorized to seek
supplemental or alternative funding for the Trust in the event that the
Noteholders do not fund their respective Initial Pro Rata Allocation, or if the
Trust Board Members determine at any time that additional funding is necessary.

 

The Initial Funding shall occur no later than September 30, 2020, at which time
the Trust shall begin its investigation of, and prepare to pursue, if determined
by the Trust Board to be appropriate, the QHC Litigation Trust Causes of Action;
provided that the Trust shall not commence any litigation with respect to such
investigation until on or after September 30, 2021.

 

1 

Capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the Plan.

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

Governance   

The Trust shall be governed by a board of directors (or other applicable
governing body) (the “Trust Board”) consisting of: (i) one board member
appointed by KKR Credit Advisors (US) LLC (“KKR”), (ii) one board member
appointed by Davidson Kempner Capital Management LP (“DK”), and (iii) one board
member jointly appointed by a majority of GoldenTree Asset Management LP
(“GoldenTree”), York Capital Management Global Advisors, LLC (“York”), Oakhill
Advisors LP (“Oakhill”), and the Goldman Sachs Group Inc. (“Goldman”)
(collectively, the “Trust Board Members”).

 

In the event that KKR or DK no longer hold at least 25 percent of the aggregate
beneficial interests in the Trust, then KKR or DK (as applicable) shall resign
from the Trust Board, and any party that holds at least 25 percent of the
aggregate interests in the Trust shall be permitted to appoint a Trust Board
Member to the Trust Board; provided that the same restriction shall apply to any
Trust Board Member appointed pursuant to this provision; provided, further, that
if the resignation or appointment of any such Trust Board Member pursuant to
this provision results in an even number of Trust Board Members on the Trust
Board, then the remaining Trust Board Members shall jointly appoint another
Trust Board Member.

 

Decisions by the Trust Board shall not require approval by the Bankruptcy Court;
provided that the Bankruptcy Court shall retain jurisdiction to resolve any
disputes concerning governance of the Trust or liquidation of the QHC Litigation
Trust Assets.

 

All decisions by the Trust Board shall be made by a simple majority vote.

The Trust Board shall appoint a trustee (the “Trustee”) to manage the day-to-day
activities of the Trust, subject to the oversight of the Trust Board.

Liability of Board Members   

The Trust Board Members shall be exculpated and indemnified by the Trust to the
fullest extent permitted under applicable law.

 

The Trust Board shall be authorized to purchase any insurance policies for the
protection of the Trust Board Members, the Trustees, or any professionals
employed by the Trust that the Trust Board deems necessary or advisable.

Contribution of Creditor Claims   

All Consenting Noteholders (as defined in the Restructuring Support Agreement)
shall assign to the Trust any prepetition Cause of Action relating to their
respective Senior Notes and arising under or based on state, federal, or common
law (including but not limited to fraudulent transfer, fraudulent conveyance,
voidable transaction law, any statute limiting or prohibiting transfers to
shareholders, and alter ego) to the fullest extent permitted by applicable law
(each, a “Contributed Claim”).

 

The Trust shall notify the Consenting Noteholders of the Contributed Claims, if
any, that it intends to pursue no later than August 30, 2021. Such information
shall be subject to a common interest privilege, and the Consenting Noteholders
shall be obligated to keep the information confidential until the Trust
commences litigation.

 

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   Following August 30, 2021, a Consenting Noteholder may request that the Trust
assign a Contributed Claim identified by such Consenting Noteholder that the
Trust has determined not to pursue back to the Consenting Noteholder, and the
Trust shall effectuate such assignment no later than ten (10) calendar days
after the request is made. Distributions    The Trust shall distribute any
proceeds from the liquidation of the QHC Litigation Trust Assets to Noteholders
as expeditiously as practicable; provided that (i) the amounts funded by the
Initial Pro Rata Allocation shall be repaid in full by the Trust before any
other distributions may be made to Noteholders and shall be entitled to a
preferred return determined by the Trust Board, and (ii) for so long as material
QHC Litigation Trust Assets are held by the Trust, the Trust shall at all times
maintain a reserve to fund Trust expenses in an amount to be determined (the
“Trust Reserve”), or such other amount as may be agreed upon by the Trust Board.
Privilege    As of the Effective Date, all work product, attorney-client, or
other privilege (collectively, the “Privileges”) held by the Debtors (including
by the Debtors’ board of directors or any committee appointed by the Debtors’
board of directors) and applies to any information relating to a QHC Litigation
Trust Asset shall transfer to and be held exclusively by the Trust, and the
decision to waive any such Privilege shall belong exclusively to the Trust.
Transfer of Information and Cooperation   

The Debtors and Reorganized Debtors shall preserve all information relating to
QHC Litigation Trust Assets in their possession, custody, or control.

 

Following the Effective Date, the Trust shall be entitled to copies of any
information relating to QHC Litigation Trust Assets in the possession, custody,
or control of the Reorganized Debtors, and the Reorganized Debtors shall
cooperate with the Trust to ensure that the Trust is provided with full access
to such information, including by arranging for the Trust to have access to and
be permitted to interview Reorganized Debtor employees who have such
information.

Sale/Assignment Restrictions    Absent unanimous consent of the Trust Board, no
trust beneficiary may sell or assign (including via participation or TRS) its
beneficial interest to an entity or individual (including such entity’s or
person’s affiliates) in the same industry as the Debtors, that owns a 10 percent
or greater interest in an entity in the same industry as the Debtors, or is
likely to be a defendant in any action commenced by the Trust.

 

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