Exhibit 10.10

CONFIDENTIAL TREATMENT REQUESTED

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

EXECUTION VERSION

 

 

$100,000,000

AMENDED AND RESTATED LOAN AGREEMENT

Dated as of December 31, 2014

By and Among

CAPELLA HEALTHCARE, INC.,

and

CERTAIN BORROWING SUBSIDIARIES,

as Borrowers,

CAPELLA HOLDINGS, INC.,

and

CERTAIN GUARANTYING SUBSIDIARIES,

as Guarantors,

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders,

BANK OF AMERICA, N.A.,

as Administrative Agent and Collateral Agent,

CITIBANK, N.A.,

as Syndication Agent,

and

GENERAL ELECTRIC CAPITAL CORPORATION

as Documentation Agent,

MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED

CITIGROUP GLOBAL MARKETS INC.

and

GE CAPITAL MARKETS, INC.

as Joint Lead Arrangers and Joint Bookrunners

 

 

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TABLE OF CONTENTS

 

              Page  

SECTION 1.

    

DEFINITIONS; RULES OF CONSTRUCTION

     1   

1.1.

 

Definitions

     1   

1.2.

 

Accounting Terms

     44   

1.3.

 

Uniform Commercial Code

     44   

1.4.

 

Certain Matters of Construction

     44   

SECTION 2.

    

CREDIT FACILITIES

     45   

2.1.

 

Revolver Commitment

     45   

2.2.

 

[Reserved]

     47   

2.3.

 

Letter of Credit Facility

     47   

SECTION 3.

    

INTEREST, FEES AND CHARGES

     50   

3.1.

 

Interest

     50   

3.2.

 

Fees

     52   

3.3.

 

Computation of Interest, Fees, Yield Protection

     52   

3.4.

 

Reimbursement Obligations

     52   

3.5.

 

Illegality

     53   

3.6.

 

Inability to Determine Rates

     53   

3.7.

 

Increased Costs; Capital Adequacy

     54   

3.8.

 

Mitigation

     55   

3.9.

 

Funding Losses

     55   

3.10.

 

Maximum Interest

     55   

SECTION 4.

    

LOAN ADMINISTRATION

     56   

4.1.

 

Manner of Borrowing and Funding Revolver Loans

     56   

4.2.

 

Defaulting Lender

     57   

4.3.

 

Number and Amount of LIBOR Loans; Determination of Rate

     58   

4.4.

 

Borrower Agent

     58   

4.5.

 

One Obligation

     58   

4.6.

 

Effect of Termination

     58   

SECTION 5.

    

PAYMENTS

     59   

5.1.

 

General Payment Provisions

     59   

5.2.

 

Repayment of Revolver Loans

     59   

5.3.

 

[Reserved]

     59   

5.4.

 

Payment of Other Obligations

     59   

 

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5.5.

Marshaling; Payments Set Aside

  59   

5.6.

Application and Allocation of Payments

  59   

5.7.

Application of Payments

  60   

5.8.

Loan Account; Account Stated

  61   

5.9.

Taxes

  61   

5.10.

Lender Tax Information

  62   

5.11.

Nature and Extent of Each Borrower’s Liability

  63   

SECTION 6.

CONDITIONS PRECEDENT

  65   

6.1.

Conditions Precedent to Initial Loans

  65   

6.2.

Conditions Precedent to All Credit Extensions

  67   

SECTION 7.

COLLATERAL

  67   

7.1.

Additional Security

  67   

7.2.

Further Assurances

  69   

SECTION 8.

COLLATERAL ADMINISTRATION

  70   

8.1.

Borrowing Base Certificates

  70   

8.2.

Cash Management System

  70   

8.3.

Deposit Accounts; Cash Collateral; Securities Accounts

  73   

8.4.

Administration of Accounts

  73   

8.5.

Administration of Inventory

  74   

8.6.

Maintenance of Properties

  74   

8.7.

Insurance of Collateral; Condemnation Proceeds

  74   

SECTION 9.

REPRESENTATIONS AND WARRANTIES

  75   

9.1.

General Representations and Warranties

  75   

9.2.

Complete Disclosure

  81   

9.3.

Healthcare Related Representations and Warranties

  81   

SECTION 10.

COVENANTS AND CONTINUING AGREEMENTS

  83   

10.1.

Affirmative Covenants

  83   

10.2.

Negative Covenants

  87   

10.3.

Financial Covenants

  94   

SECTION 11.

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

  94   

11.1.

Events of Default

  94   

11.2.

Remedies upon Default

  96   

11.3.

Setoff

  96   

11.4.

Remedies Cumulative; No Waiver

  97   

 

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SECTION 12.

AGENT

  97   

12.1.

Appointment, Authority and Duties of Agent

  97   

12.2.

Agreements Regarding Collateral and Field Examination Reports

  98   

12.3.

Reliance By Agent

  99   

12.4.

Action Upon Default

  99   

12.5.

Ratable Sharing

  99   

12.6.

Indemnification

  99   

12.7.

Limitation on Responsibilities of Agent

  100   

12.8.

Successor Agent and Co-Agents

  100   

12.9.

Due Diligence and Non-Reliance

  101   

12.10.

Replacement of Certain Lenders

  101   

12.11.

Remittance of Payments and Collections

  101   

12.12.

Agent in its Individual Capacity

  102   

12.13.

Agent Titles

  102   

12.14.

Bank Product Providers

  102   

12.15.

No Third Party Beneficiaries

  102   

SECTION 13.

BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

  102   

13.1.

Successors and Assigns

  102   

13.2.

Participations

  103   

13.3.

Assignments

  103   

SECTION 14.

MISCELLANEOUS

  104   

14.1.

Consents, Amendments and Waivers

  104   

14.2.

Indemnity

  105   

14.3.

Notices and Communications

  106   

14.4.

Performance of Credit Parties’ Obligations

  107   

14.5.

Credit Inquiries

  107   

14.6.

Severability

  107   

14.7.

Cumulative Effect; Conflict of Terms

  107   

14.8.

Counterparts; Execution

  107   

14.9.

Entire Agreement

  107   

14.10.

Relationship with Lenders

  108   

14.11.

No Advisory or Fiduciary Responsibility

  108   

14.12.

Confidentiality

  108   

14.13.

Certifications Regarding Indentures and Term Loans

  109   

14.14.

GOVERNING LAW

  109   

 

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14.15.

Consent to Forum

  109   

14.16.

Waivers by Credit Parties

  109   

14.17.

Patriot Act Notice

  110   

14.18.

NO ORAL AGREEMENT

  110   

SECTION 15.

GUARANTY OF OBLIGATIONS

  110   

15.1.

Guaranty; Limitation of Liability

  110   

15.2.

Guaranty Absolute

  111   

15.3.

Waivers and Acknowledgments

  112   

15.4.

Subrogation

  113   

15.5.

Intercreditor Agreement Governs

  113   

LIST OF EXHIBITS AND SCHEDULES

 

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

 

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

 

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AMENDED AND RESTATED LOAN AGREEMENT

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

R E C I T A L S:

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

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

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

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

 

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

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

ABL Priority Collateral: as defined in the Intercreditor Agreement.

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

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

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

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

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

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

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

Allocable Amount: as defined in Section 5.11.3.

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

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

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

 

Level

  

Fixed Charge Coverage Ratio

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

I

  

> 1.75 to 1:00

     1.50 %      0.50 % 

II

  

³ 1.25 to 1:00 but £ 1.75 to 1.00

     1.75 %      0.75 % 

III

  

< 1.25 to 1:00

     2.00 %      1.00 % 

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

 

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

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

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

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

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

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

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

Average Facility Usage: as defined in Section 3.2.1.

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

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

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

 

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

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

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

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

Bankruptcy Code: Title 11 of the United States Code.

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

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

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

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

Blocked Account Agreement: as defined in Section 8.2.2.

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

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

Borrower Agent: as defined in Section 4.4.

 

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

Cash Management System: as defined in Section 8.2.2.

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

Closing Date: December 31, 2014.

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

Code: the Internal Revenue Code of 1986.

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

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

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

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

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

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

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

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

 

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Concentration Account: as defined in Section 8.2.2.

Concentration Account Agreement: as defined in Section 8.2.2.

Confidential Healthcare Information: as defined in Section 10.1.1.

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

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

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

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

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

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

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

 

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

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

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

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

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

 

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

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

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

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

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

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

 

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

Dollars: lawful money of the United States.

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

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

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

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

(a) Consolidated Net Income for such period plus

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

(i) Consolidated Interest Charges;

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

(iii) the amount of depreciation and amortization expense;

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

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

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

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

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

 

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

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

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

minus

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

ERISA: the Employee Retirement Income Security Act of 1974.

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

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

Event of Default: as defined in Section 11.

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

Excluded Collateral: as defined in the Security Agreement.

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

 

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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FLSA: the Fair Labor Standards Act of 1938.

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

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

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

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

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

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

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

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

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

Government Receivables Bank: as defined in Section 8.2.2.

Government Receivables Deposit Account: as defined in Section 8.2.2.

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

Guarantor Payment: as defined in Section 5.11.3.

 

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

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

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

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

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

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

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

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

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

Indemnified Taxes: Taxes other than Excluded Taxes.

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

 

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

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

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

Intercompany Obligations: as defined in Section 15.4.1.

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

Interest Period: as defined in Section 3.1.3.

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

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

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

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

IRS: the United States Internal Revenue Service.

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

Loan: a Revolver Loan.

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

 

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OSHA: the Occupational Safety and Hazard Act of 1970.

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

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

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

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

Participant: as defined in Section 13.2.

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

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

PBGC: the Pension Benefit Guaranty Corporation.

Pension Act: the Pension Protection Act of 2006.

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

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

Permitted Acquisitions: each Acquisition with respect to which:

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

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

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

 

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

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

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

Permitted Asset Disposition: an Asset Disposition that is

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

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

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

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

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

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

(g) an Upstream Payment;

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

Permitted Debt: as defined in Section 10.2.1.

Permitted Distributions: Distributions consisting of the following:

(a) Upstream Payments;

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

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

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

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

 

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

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

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

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

Permitted Investment: an Investment consisting of any the following:

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

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

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

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

 

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

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

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

(h) guaranties constituting Permitted Debt;

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

(j) deposits with financial institutions permitted hereunder;

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

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

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

Permitted Lien: as defined in Section 10.2.2.

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

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

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

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

 

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

Platform: as defined in Section 14.3.3.

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

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

Pledgee: has the meaning provided in the Pledge Agreement.

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

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

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

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

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

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

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

 

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

Protective Advances: as defined in Section 2.1.6.

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

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

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

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

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

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

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

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

 

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

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

Reimbursement Date: as defined in Section 2.3.2.

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

Report: as defined in Section 12.2.3.

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

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

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

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

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

Reserves: the Availability Reserves and Borrowing Base Reserves.

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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TRICARE Account: means an Account payable pursuant to TRICARE.

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

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

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

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

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

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

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

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

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

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

 

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

 

SECTION 2. CREDIT FACILITIES

2.1. Revolver Commitment.

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

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

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

2.1.4. Voluntary Reduction or Termination of Revolver Commitments.

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

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

 

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2.1.5. [Reserved].

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

2.1.7. Increase in Revolver Commitments.

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

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

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

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

 

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

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

2.2. [Reserved].

2.3. Letter of Credit Facility.

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

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

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

 

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

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

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

 

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2.3.2. Reimbursement; Participations.

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

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

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

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

 

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

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

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

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

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

 

SECTION 3. INTEREST, FEES AND CHARGES

3.1. Interest.

3.1.1. Rates and Payment of Interest.

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

 

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

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

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

3.1.2. Application of LIBOR to Outstanding Loans.

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

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

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

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

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

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

 

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

3.2. Fees.

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

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

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

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

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

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

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

 

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

3.7. Increased Costs; Capital Adequacy.

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

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

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

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

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

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

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

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

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

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

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

 

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SECTION 4. LOAN ADMINISTRATION

4.1. Manner of Borrowing and Funding Revolver Loans.

4.1.1. Notice of Borrowing.

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

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

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

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

4.1.3. Swingline Loans; Settlement.

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

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

 

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

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

4.2. Defaulting Lender.

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

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

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

 

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

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

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

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

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

 

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SECTION 5. PAYMENTS

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

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

5.3. [Reserved].

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

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

5.6. Application and Allocation of Payments.

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

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

 

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

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

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

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

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

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

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

(g) seventh, to all Loans;

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

(i) last, to all remaining Obligations.

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

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

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

 

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

5.8. Loan Account; Account Stated.

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

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

5.9. Taxes.

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

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

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

5.10. Lender Tax Information.

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

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

 

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

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

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

5.11.2. Waivers.

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

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

 

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

5.11.3. Extent of Liability; Contribution.

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

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

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

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

 

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

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

 

SECTION 6. CONDITIONS PRECEDENT

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

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

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

(c) [Reserved].

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

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

SECTION 7. COLLATERAL

7.1. Additional Security.

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

 

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

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

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

 

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

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

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

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

7.2. Further Assurances.

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

 

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

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

 

SECTION 8. COLLATERAL ADMINISTRATION

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

8.2. Cash Management System.

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

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

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

 

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

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

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

 

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

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

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

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

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

8.2.5. Credit Card Charges.

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

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

 

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

8.3. Deposit Accounts; Cash Collateral; Securities Accounts.

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

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

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

8.4. Administration of Accounts.

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

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

 

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

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

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

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

 

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SECTION 9. REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

9.1.18. ERISA. Except as disclosed on Schedule 9.1.18:

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

 

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

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

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

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

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

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

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

 

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

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

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

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

9.1.24. USA Patriot Act; OFAC;FCPA.

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

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

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

 

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9.1.25. Security Documents.

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

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

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

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

 

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

9.3. Healthcare Related Representations and Warranties.

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

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

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

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

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

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

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

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

 

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

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

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

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

 

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

 

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

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

10.1.1. Inspections.

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

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

 

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

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

10.1.4. [Reserved].

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

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

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

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

 

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

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

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

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

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

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

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

(a) the Obligations;

(b) Debt evidenced by the Senior Notes;

(c) Permitted Purchase Money Debt;

 

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

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

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

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

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

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

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

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

(l) Permitted Contingent Obligations;

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

(n) Refinancing Debt;

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

(k) existing Liens shown on Schedule 10.2.2;

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

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

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

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

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

 

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

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

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

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

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

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

10.2.3. [Reserved].

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

10.2.5. Restricted Investments. Make any Restricted Investment.

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

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

 

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

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

(b) through the incurrence of Refinancing Debt;

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

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

 

SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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

(m) A Change of Control occurs.

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

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

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

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

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

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

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

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

 

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

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

11.4. Remedies Cumulative; No Waiver.

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

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

 

SECTION 12. AGENT

12.1. Appointment, Authority and Duties of Agent.

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

 

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

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

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

12.2. Agreements Regarding Collateral and Field Examination Reports.

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

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

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

 

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

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

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

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

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

 

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

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

12.8. Successor Agent and Co-Agents.

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

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

 

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

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

12.10. Replacement of Certain Lenders. If a Lender (other than the Agent) (a) is
a Defaulting Lender, (b) gives notice under Section 3.5 or requests payment or
compensation under Section 3.7 or 5.9 (and has not designated a different
Lending Office pursuant to and that satisfies the requirements of Section 3.8),
or (c) within the last 120 days, fails to give its consent to any amendment,
waiver or action for which consent of all Lenders was required and Required
Lenders consented, then, in addition to any other rights and remedies that any
Person may have, Borrower or Agent may, and upon request of the Required
Lenders, Agent shall upon written notice to such Lender, require such Lender to
assign all of its rights and obligations under the Loan Documents to Eligible
Assignee(s) or one or more other assignees reasonably acceptable to Agent,
pursuant to appropriate Assignment and Acceptance(s) within 20 days after
Borrower or Agent’s notice. Agent is irrevocably appointed as attorney-in-fact
to execute any such Assignment and Acceptance if the Lender fails to execute
same. Such Lender shall be entitled to receive, in cash, concurrently with such
assignment, all amounts owed to it under the Loan Documents, including all
principal, interest and fees through the date of assignment (but excluding any
prepayment charge).

12.11. Remittance of Payments and Collections.

12.11.1. Remittances Generally. All payments by any Lender to Agent shall be
made by the time and on the day set forth in this Agreement, in immediately
available funds. If no time for payment is specified or if payment is due on
demand by Agent and request for payment is made by Agent by 1:00 p.m. on a
Business Day, payment shall be made by Lender not later than 4:00 p.m. on such
day, and if request is made after 1:00 p.m., then payment shall be made by 11:00
a.m. on the next Business Day. Payment by Agent to any Secured Party shall be
made by wire transfer, in the type of funds received by Agent. Any such payment
shall be subject to Agent’s right of offset for any amounts due from such payee
under the Loan Documents.

 

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12.11.2. Failure to Pay. If any Secured Party fails to pay any amount when due
by it to Agent pursuant to the terms hereof, such amount shall bear interest
from the due date until paid in full, at the greater of the Federal Funds Rate
or at the rate determined by Agent as customary for interbank compensation for
two Business Days and thereafter at the Default Rate for Base Rate Revolver
Loans. In no event shall Borrowers be entitled to receive credit for any
interest paid by a Secured Party to Agent, nor shall any Defaulting Lender be
entitled to interest on any amounts held by Agent pursuant to Section 4.2.

12.11.3. Recovery of Payments. If Agent pays any amount to a Secured Party in
the expectation that a related payment will be received by Agent from a Credit
Party and such related payment is not received, then Agent may recover such
amount from each Secured Party that received it. If Agent determines at any time
that an amount received under any Loan Document must be returned to a Credit
Party or paid to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. If any amounts received and applied by
Agent to any Obligations held by a Secured Party are later required to be
returned by Agent pursuant to Applicable Law, such Secured Party shall pay to
Agent, on demand, such Lender’s Pro Rata share of the amounts required to be
returned.

12.12. Agent in its Individual Capacity. As a Lender, Bank of America shall have
the same rights and remedies under the Loan Documents as any other Lender, and
the terms “Lenders,” “Required Lenders” or any similar term shall include Bank
of America in its capacity as a Lender. Agent, Lenders and their respective
Affiliates may accept deposits from, lend money to, provide Bank Products to,
act as financial or other advisor to, and generally engage in any kind of
business with, Credit Parties and their Affiliates, as if they were not Agents
or Lenders hereunder, without any duty to account therefor (including any fees
or other consideration received in connection therewith) to the other Secured
Parties. In their individual capacities, Agent, Lenders and their respective
Affiliates may receive information regarding Credit Parties, their Affiliates
and their Account Debtors (including information subject to confidentiality
obligations), and shall have no obligation to provide such information to any
Secured Party.

12.13. Agent Titles. Each Lender, other than Bank of America, that is designated
(on the cover page of this Agreement or otherwise) by Bank of America as an
“Agent”, “Arranger” or “Bookrunner” of any type shall not have any right, power,
responsibility or duty under any Loan Documents other than those applicable to
all Lenders, and shall in no event be deemed to have any fiduciary relationship
with or duty to any Secured Party.

12.14. Bank Product Providers. Each Bank Product Provider, by delivery of a
notice to Agent of a Bank Product, agrees to be bound by the Loan Documents,
including Sections 5.6, 12 and 14.3.3. Each such Bank Product Provider shall
indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by
Credit Parties, against all Claims that may be incurred by or asserted against
any Agent Indemnitee in connection with such provider’s Bank Product Debt.

12.15. No Third Party Beneficiaries. This Section 12 is an agreement solely
among Secured Parties and Agent, and shall survive Full Payment of the
Obligations. This Section 12 does not confer any rights or benefits upon Credit
Parties or any other Person. As between Credit Parties and Agent, any action
that Agent may take under any Loan Documents or with respect to any Obligations
shall be conclusively presumed to have been authorized and directed by Lenders.

 

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

13.1. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Credit Parties, Agent, Lenders, other Secured Parties and their
respective successors and assigns, except that (a) no Credit Party shall have
the right to assign its rights or delegate its obligations under any Loan
Documents; and (b) any assignment by a Lender must be made in compliance with
Section 13.3.

 

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Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

13.2. Participations.

13.2.1. Permitted Participants; Effect. Subject to Section 13.3.3, any Lender
may, in the ordinary course of its business and in accordance with Applicable
Law, at any time sell to a financial institution (other than a Defaulting
Lender) (“Participant”) a participating interest in the rights and obligations
of such Lender under any Loan Documents. Despite any sale by a Lender of
participating interests to a Participant, such Lender’s obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for performance of such obligations,
such Lender shall remain the holder of its Loans and Commitments for all
purposes, all amounts payable by Borrowers shall be determined as if such Lender
had not sold such participating interests, and Borrowers and Agent shall
continue to deal solely and directly with such Lender in connection with the
Loan Documents. Each Lender shall be solely responsible for notifying its
Participants of any matters under the Loan Documents, and Agent and the other
Lenders shall not have any obligation or liability to any such Participant. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in
writing.

13.2.2. Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Commitment Termination Date or any date fixed for any regularly scheduled
payment of principal, interest or fees on such Loan or Commitment, or releases
all or substantially all of the value of the Guarantees or the Collateral.

13.2.3. Participant Register. Each Lender that sells a participation shall,
acting as a non-fiduciary agent of the Borrower (solely for tax purposes),
maintain a register in which it enters the Participant’s name, address and
principal amounts (and stated interest) in Commitments, Loans and LC
Obligations. Entries in the register shall be conclusive, absent manifest error,
and such Lender shall treat each Person recorded in the register as the owner of
the participation for all purposes, notwithstanding any notice to the contrary.
No Lender shall have an obligation to disclose any information in such register
except to the extent necessary to establish that a Participant’s interest is in
registered form under the Code and Section 5f.103-1(c) of the United States
Treasury Regulations. For the avoidance of doubt, the Agent (in its capacity as
Agent) shall have no responsibility for maintaining a Participant Register.

13.2.4. Benefit of Set-Off. Credit Parties agree that each Participant shall
have a right of set-off in respect of its participating interest to the same
extent as if such interest were owing directly to a Lender, and each Lender
shall also retain the right of set-off with respect to any participating
interests sold by it. By exercising any right of set-off, a Participant agrees
to share with Lenders all amounts received through its set-off, in accordance
with Section 12.5 as if such Participant were a Lender.

13.3. Assignments.

13.3.1. Permitted Assignments. A Lender may assign to an Eligible Assignee any
of its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $5,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$1,000,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the
Commitments retained by the transferor Lender is at least $5,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for

 

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its acceptance and recording, an Assignment and Acceptance. Nothing herein shall
limit the right of a Lender to pledge or assign any rights under the Loan
Documents to secure obligations of such Lender, including a pledge or assignment
to a Federal Reserve Bank; provided, however, that any payment by Credit Parties
to the assigning Lender in respect of any Obligations assigned as described in
this sentence shall satisfy Credit Parties’ obligations hereunder to the extent
of such payment and no such pledge or assignment shall release the Lender from
its obligations hereunder nor substitute the pledgee or assignee for such Lender
as a party hereto.

13.3.2. Effect; Effective Date. Upon delivery to Agent of an assignment notice
in the form of Exhibit D and a processing fee (payable by the assignor or
assignee) of $3,500 (unless otherwise agreed by Agent in its discretion), the
assignment shall become effective as specified in the notice, if it complies
with this Section 13.3. From such effective date, the Eligible Assignee shall
for all purposes be a Lender under the Loan Documents, and shall have all rights
and obligations of a Lender thereunder. Upon consummation of an assignment, the
transferor Lender, Agent and Borrowers shall make appropriate arrangements for
issuance of replacement and/or new Notes, as applicable. The transferee Lender
shall comply with Section 5.10 and deliver, upon request, an administrative
questionnaire satisfactory to Agent.

13.3.3. Certain Assignees. No assignment or participation may be made to a
Borrower, Sponsor, Affiliate of a Borrower or Sponsor, Defaulting Lender or
natural person. In connection with any assignment of rights and obligations of
any Defaulting Lender hereunder, no such assignment shall be effective unless
and until, in addition to the other conditions thereto set forth herein, the
parties to the assignment shall make such additional payments to Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may
be outright payment, purchases by the assignee of participations or
sub-participations, or other compensating actions, including funding, with the
consent of Borrowers and Agent, the applicable Pro Rata share of Loans
previously requested but not funded by the Defaulting Lender, to each of which
the applicable assignee and assignor hereby irrevocably consent), to (a) pay and
satisfy in full all payment liabilities then owed by such Defaulting Lender to
Agent or any Lender hereunder (and interest accrued thereon) and (b) acquire
(and fund as appropriate) its full Pro Rata share of all Loans and
participations in Letters of Credit and Swingline Loans. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under Applicable Law without
compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this
Agreement until such compliance occurs.

13.3.4. Register. Agent, acting as a non-fiduciary agent of Borrowers (solely
for tax purposes), shall maintain (a) a copy (or electronic equivalent) of each
Assignment and Acceptance delivered to it, and (b) a register for recordation of
the names, addresses and Commitments of, and the principal amounts (and stated
interest) in Loans and LC Obligations owing to, each Lender. Entries in the
register shall be conclusive, absent manifest error, and Borrowers, Agent and
Lenders shall treat each Person recorded in such register as a Lender for all
purposes under the Loan Documents, notwithstanding any notice to the contrary.
Agent may choose to show only one Borrower as the borrower in the register,
without any effect on the liability of any Credit Party with respect to the
Obligations. The register shall be available for inspection by Borrower Agent or
any Lender, from time to time upon reasonable notice.

 

SECTION 14. MISCELLANEOUS

14.1. Consents, Amendments and Waivers.

14.1.1. Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Required Lenders (or
Agent with the consent of Required Lenders) and each Credit Party party to such
Loan Document; provided, however, that

(a) without the prior written consent of Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of Agent;

 

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(b) without the prior written consent of Issuing Bank, no modification shall be
effective with respect to Section 2.3 or any other provision in a Loan Document
that relates to Letters of Credit or any rights, duties or discretion of Issuing
Bank;

(c) without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall be effective that would (i) increase or
extend the Commitment of such Lender; (ii) reduce the amount of, or waive or
delay payment of, any principal, interest or fees payable to such Lender
(provided, however, that any reduction or waiver of principal, interest or fees
that by its terms affects a Defaulting Lender more adversely than other affected
Lenders shall require the consent of such Defaulting Lender); (iii) extend the
Revolver Termination Date applicable to such Lender’s Obligations; or (iv) amend
this clause (c); and

(d) without the prior written consent of all Lenders (except a Defaulting Lender
as provided in Section 4.2), no modification shall be effective that would
(a) alter Section 5.6.2 of this Agreement or Section 1.1 of the Security
Agreement (except to add Collateral) or 14.1.1; (b) amend the definitions of Pro
Rata or Required Lenders; (c) modify (A) the definition of Borrowing Base (and
the defined terms used in such definition) or any component (other than
Reserves) of the Borrowing Base, including eligibility criteria and advance
rates, in any manner that would increase availability thereunder or (B) the
discretion of the Agent to change, establish or eliminate any Reserves;
(d) release all or substantially all Collateral; or (v) release any material
Credit Party from liability for any material Obligations or release any material
portion of the value of the Guaranties of the Obligations except as contemplated
by the Loan Documents.

(e) without the prior written consent of a Bank Product Provider, no
modification shall affect its relative payment priority under Section 5.6.2.

14.1.2. Limitations. The agreement of Credit Parties shall not be necessary to
the effectiveness of any modification of a Loan Document that deals solely with
the rights and duties of Lenders, Agent and/or Issuing Bank as among themselves.
Only the consent of the parties to any agreement relating to fees or a Bank
Product shall be required for any modification of such agreement, and no Bank
Product Provider (in such capacity) shall have a right to participate in any
manner in or consent to modification of any Loan Document other than its Bank
Product agreement. Any waiver or consent granted by Agent or Lenders hereunder
shall be effective only if in writing and only for the matter specified.

14.1.3. Payment for Consents. No Credit Party will, directly or indirectly, pay
any remuneration or other thing of value, whether by way of additional interest,
fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.2. Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS (AS DEFINED HEREIN) THAT MAY BE INCURRED BY OR ASSERTED
AGAINST ANY INDEMNITEE, INCLUDING CLAIMS (AS DEFINED HEREIN) ASSERTED BY ANY
CREDIT PARTY OR OTHER PERSON OR ARISING FROM THE NEGLIGENCE (AS OPPOSED TO THE
GROSS NEGLIGENCE) OF AN INDEMNITEE, WHETHER ANY SUCH CLAIM IS ASSERTED BY A
CREDIT PARTY, A HOLDER OF EQUITY INTERESTS, OR CREDITOR(S), OF A CREDIT PARTY,
AN INDEMNITEE OR ANY THIRD PARTY. In no event shall any party to a Loan Document
have any obligation thereunder to indemnify or hold harmless an Indemnitee with
respect to a Claim that is determined in a final, non-appealable judgment by a
court of competent jurisdiction to result from the gross negligence or willful
misconduct of such Indemnitee.

 

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14.3. Notices and Communications.

14.3.1. Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and, if to a Credit
Party, shall be given at Borrower Agent’s address shown on the signature pages
hereof, and, if to any other Person, at such Person’s address shown on the
signature pages hereof (or, in the case of a Person who becomes a Lender after
the Closing Date, at the address shown on its Assignment and Acceptance), or at
such other address as a party may hereafter specify by notice in accordance with
this Section 14.3. Each such notice or other communication shall be effective
only (a) if given by facsimile transmission, when transmitted to the applicable
facsimile number, if confirmation of receipt is received; (b) if given by mail,
three Business Days after deposit in the U.S. mail, with first-class postage
pre-paid, addressed to the applicable address; or (c) if given by personal
delivery, when duly delivered to the notice address with receipt acknowledged.
Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4,
2.3, 3.1.2 or 4.1.1 shall be effective until actually received by the individual
to whose attention at Agent such notice is required to be sent. Any written
notice or other communication that is not sent in conformity with the foregoing
provisions shall nevertheless be effective on the date actually received by the
noticed party. Any notice received by Borrower Agent shall be deemed received by
all Credit Parties.

14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates, other Borrower Materials and other
information required by Section 10.1.2, administrative matters, distribution of
Loan Documents, and matters permitted under Section 4.1.4. Agent and Lenders
make no assurances as to the privacy and security of electronic communications.
Electronic and voice mail may not be used as effective notice under the Loan
Documents.

14.3.3. Platform. Borrower Materials shall be delivered pursuant to procedures
approved by Agent, including electronic delivery (if possible) upon request by
Agent and Agent may deliver or post Borrower Materials to an electronic system
maintained by Agent (“Platform”). Borrower Materials and other information
relating to this credit facility may be made available to Secured Parties on the
Platform, and Credit Parties and Secured Parties acknowledge that “public”
information is not segregated from material non-public information on the
Platform. The Platform is provided “as is” and “as available.” Agent does not
warrant the accuracy or completeness of any information on the Platform nor the
adequacy or functioning of the Platform, and expressly disclaims liability for
any errors or omissions in the Borrower Materials or any issues involving the
Platform. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
AGENT WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. Secured Parties
acknowledge that Borrower Materials may include material non-public information
of Credit Parties and should not be made available to any personnel who do not
wish to receive such information or who may be engaged in investment or other
market-related activities with respect to any Credit Party’s securities. No
Agent Indemnitee shall have any liability to Borrowers, Secured Parties or any
other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) relating to use by any Person of the
Platform or delivery of Borrower Materials and other information through the
Platform or over the internet.

14.3.4. Non-Conforming Communications. Agent and Lenders may rely upon any
notices and other communications purportedly given by or on behalf of any Credit
Party even if such notices were not made in a manner specified herein, were
incomplete or were not confirmed, or if the terms thereof, as understood by the
recipient, varied from a later confirmation. Each Credit Party shall indemnify
and hold harmless each Indemnitee from any liabilities, losses, costs and
expenses arising from any electronic or telephonic communication purportedly
given by or on behalf of a Credit Party.

 

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14.4. Performance of Credit Parties’ Obligations. Agent may, in its discretion
at any time and from time to time, at Credit Parties’ expense, pay any amount or
do any act required of a Credit Party under any Loan Documents or otherwise
lawfully requested by Agent to (a) enforce any Loan Documents or collect any
Obligations; (b) protect, insure, maintain or realize upon any Collateral; or
(c) defend or maintain the validity or priority of Agent’s Liens in any
Collateral, including any payment of a judgment, insurance premium, warehouse
charge, finishing or processing charge, or landlord claim, or any discharge of a
Lien. All payments, costs and expenses (including Extraordinary Expenses) of
Agent under this Section shall be reimbursed to Agent by Credit Parties, on
demand, with interest from the date incurred to the date of payment thereof at
the Default Rate applicable to Base Rate Revolver Loans. Any payment made or
action taken by Agent under this Section shall be without prejudice to any right
to assert an Event of Default or to exercise any other rights or remedies under
the Loan Documents.

14.5. Credit Inquiries. Each Credit Party hereby authorizes Agent and Lenders
(but they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Credit Party or Subsidiary.

14.6. Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect. Without limiting the foregoing
provisions of this Section 14.6, if and to the extent that the enforceability of
any provisions in this Agreement relating to Defaulting Lenders shall be limited
by the Bankruptcy Code or any other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency reorganization or similar debtor relief laws, as
determined in good faith by Agent or Issuing Bank, as applicable, then such
provisions shall be deemed to be in effect only to the extent not so limited.

14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations, tests or measurements to regulate similar matters, and they agree
that these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision
herein shall govern and control.

14.8. Counterparts; Execution. Any Loan Document may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement shall become
effective when Agent has received counterparts bearing the signatures of all
parties hereto. Delivery of a signature page of any Loan Document by telecopy or
other electronic means shall be effective as delivery of a manually executed
counterpart of such agreement. Any electronic signature, contract formation on
an electronic platform and electronic record-keeping shall have the same legal
validity and enforceability as a manually executed signature or use of a
paper-based recordkeeping system to the fullest extent permitted by Applicable
Law, including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any similar
state law based on the Uniform Electronic Transactions Act.

14.9. Entire Agreement. Time is of the essence with respect to all Loan
Documents and Obligations. The Loan Documents constitute the entire contract
among the parties relating to the subject matter hereof, and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof.

 

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14.10. Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Loan Documents or otherwise shall be deemed to constitute
Agent and any Secured Party to be a partnership, association, joint venture or
any other kind of entity, nor to constitute control of any Credit Party.

14.11. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated by any Loan Document, Credit Parties
acknowledge and agree that (a) (i) this credit facility and any related
arranging or other services by Agent, any Lender, any of their Affiliates or any
arranger are arm’s-length commercial transactions between Credit Parties and
their Affiliates, on one hand, and Agent, any Lender, any of their Affiliates or
any arranger, on the other hand; (ii) Credit Parties have consulted their own
legal, accounting, regulatory and tax advisors to the extent they have deemed
appropriate; and (iii) Credit Parties are capable of evaluating and
understanding, and do understand and accept, the terms, risks and conditions of
the transactions contemplated by the Loan Documents; (b) each of Agent, Lenders,
their Affiliates and any arranger is and has been acting solely as a principal
in connection with this credit facility and any Bank Product and, except as
expressly agreed in writing by the relevant parties, has not been, is not, and
will not be acting as an advisor, agent or fiduciary for Credit Parties, any of
their Affiliates or any other Person, and has no obligation with respect to the
transactions contemplated by the Loan Documents except as expressly set forth
therein; and (c) Agent, Lenders, their Affiliates and any arranger may be
engaged in a broad range of transactions that involve interests that differ from
those of Credit Parties and their Affiliates, and have no obligation to disclose
any of such interests to Credit Parties or their Affiliates. To the fullest
extent permitted by Applicable Law, each Credit Party hereby waives and releases
any claims that it may have against Agent, Lenders, their Affiliates and any
arranger with respect to any breach or alleged breach of agency or fiduciary
duty in connection with any aspect of any transaction contemplated by a Loan
Document.

14.12. Confidentiality. Each of Agent, Lenders and Issuing Bank agrees to
maintain the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested
by any governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding, or other exercise of rights or
remedies, relating to any Loan Documents or Obligations; (f) subject to an
agreement containing provisions substantially the same as this Section, to any
Transferee or any actual or prospective party (or its advisors) to any Bank
Product or to any swap, derivative or other transaction under which payments are
to be made by reference to a Credit Party or Credit Party’s obligations under
the Loan Documents; (g) with the consent of Borrower Agent; or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) is available to Agent, any Lender, Issuing Bank
or any of their Affiliates on a nonconfidential basis from a source other than
Credit Parties. Notwithstanding the foregoing, Agent and Lenders may publish or
disseminate general information describing this credit facility, including the
names and addresses of Credit Parties and a general description of Credit
Parties’ businesses, and may use Credit Parties’ logos, trademarks or product
photographs in advertising materials. As used herein, “Information” means all
information received from a Credit Party or Subsidiary relating to it or its
business that is identified as confidential when delivered. Any Person required
to maintain the confidentiality of Information pursuant to this Section shall be
deemed to have complied if it exercises the same degree of care that it accords
its own confidential information. Each of Agent, Lenders and Issuing Bank
acknowledges that i. Information may include material non-public information
concerning a Credit Party or Subsidiary; ii. it has developed compliance
procedures regarding the use of material non-public information; and iii. it
will handle such material non-public information in accordance with Applicable
Law, including federal and state securities laws.

 

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14.13. Certifications Regarding Indentures and Term Loans. Credit Parties
certify to Agent and Lenders that neither the execution or performance of the
Loan Documents nor the incurrence of any Obligations by Credit Parties violates
the Senior Note Indenture, including Section 4.09 thereof or the Term Loan
Documents. Credit Parties further certify that the Commitments and Obligations
constitute “Permitted Debt” under the Senior Notes Indenture and are permitted
under Section 10.04 of the Term Loan Credit Agreement. Agent may condition
Borrowings, Letters of Credit and other credit accommodations under the Loan
Documents from time to time upon Agent’s receipt of evidence that the
Commitments and Obligations continue to constitute “Permitted Debt” at such
time.

14.14. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ALL
CLAIMS, UNLESS EXPRESSLY OTHERWISE SPECIFIED IN THE RELEVANT LOAN DOCUMENT,
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO
NATIONAL BANKS).

14.15. Consent to Forum.

14.15.1. Forum. EACH CREDIT PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK, IN
ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY
LOAN DOCUMENTS, AND AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER
PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH CREDIT PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT
IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION,
VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE JURISDICTION OF SUCH COURT AND CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1. Nothing herein shall limit
the right of Agent or any Lender to bring proceedings against any Credit Party
in any other court, nor limit the right of any party to serve process in any
other manner permitted by Applicable Law. Nothing in this Agreement shall be
deemed to preclude enforcement by Agent of any judgment or order obtained in any
forum or jurisdiction.

14.16. Waivers by Credit Parties. To the fullest extent permitted by Applicable
Law, each Credit Party waives (a) the right to trial by jury (which Agent and
each Lender hereby also waives) in any proceeding or dispute of any kind
relating in any way to any Loan Documents, Obligations or Collateral;
(b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any
commercial paper, accounts, documents, instruments, chattel paper and guaranties
at any time held by Agent on which a Credit Party may in any way be liable, and
hereby ratifies anything Agent may do in this regard; (c) notice prior to taking
possession or control of any Collateral; (d) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies;
(e) the benefit of all valuation, appraisement and exemption laws; (f) any claim
against Agent, Issuing Bank or any Lender, on any theory of liability, for
special, indirect, consequential, exemplary or punitive damages (as opposed to
direct or actual damages) in any way relating to any Enforcement Action,
Obligations, Loan Documents or transactions relating thereto; and (g) notice of
acceptance hereof. Each Credit Party acknowledges that the foregoing waivers are
a material inducement to Agent, Issuing Bank and Lenders entering into this
Agreement and that Agent, Issuing Bank and Lenders are relying upon the
foregoing in their dealings with Credit Parties. Each Credit Party has reviewed
the foregoing waivers with its legal counsel and has knowingly and voluntarily
waived its jury trial and other rights following consultation with legal
counsel. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.

 

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14.17. Patriot Act Notice. Agent and Lenders hereby notify Credit Parties that
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Credit Party,
including its legal name, address, tax ID number and other information that will
allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent
and Lenders will also require information regarding each personal guarantor, if
any, and may require information regarding Credit Parties’ management and
owners, such as legal name, address, social security number and date of birth.
Borrowers shall, promptly upon request, provide all documentation and other
information as Agent, Issuing Bank or any Lender may request from time to time
in order to comply with any obligations under any “know your customer,”
anti-money laundering or other requirements of Applicable Law.

14.18. NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

 

SECTION 15. GUARANTY OF OBLIGATIONS

15.1. Guaranty; Limitation of Liability. In order to induce Agent, Issuing Bank
and Lenders to enter into this Agreement and to induce the Lenders to extend
credit hereunder and to induce the Lenders or their affiliates to provide Bank
Products, and in recognition of the direct benefit received by the Guarantors
from the extension of such credit and provision of such Bank Products, each
Guarantor hereby absolutely, unconditionally and irrevocably guarantees (the
undertaking by each Guarantor under this Section 15 being, as amended from time
to time, the “Facility Guaranty”) the punctual payment when due, whether at
scheduled maturity or on any date of a required prepayment or by acceleration,
demand or otherwise, of all Obligations of each other Credit Party now or
hereafter existing under or in respect of the Loan Documents (including, without
limitation, any extensions, modifications, substitutions, amendments or renewals
of any or all of the foregoing Obligations), whether direct or indirect,
absolute or contingent, and whether for principal, interest, premiums, fees,
indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the “Guaranteed Obligations”), and agrees to pay any and all
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by Agent or any other Secured Party in enforcing any rights
under this Facility Guaranty or any other Loan Document, subject to limitations
expressly set forth elsewhere herein. Without limiting the generality of the
foregoing, each Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Credit Party to any Secured Party under or in respect of the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of any Insolvency Proceeding involving such other Credit Party.

15.1.1. No Fraudulent Transfer. Each Guarantor, Agent and each other Secured
Party, hereby confirms that it is the intention of such Persons that this
Facility Guaranty and the obligations of each Guarantor hereunder not constitute
a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar foreign, federal or state law to the extent applicable to this Facility
Guaranty and the Obligations of each Guarantor hereunder. To effectuate the
foregoing intention, each Guarantor, Agent and each of the other Secured Parties
hereby irrevocably agree that such Guaranteed Obligations and other liabilities
shall be limited to the maximum amount as will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of each Guarantor
that are relevant under the laws referred to in the first sentence hereof, and
after giving effect to any collections from, any rights to receive contributions
from, or payments made by or on behalf of, any of the other Credit Parties in
respect of the Obligations under any Loan Document, result in the Guaranteed
Obligations and all other liabilities of each Guarantor under this Facility
Guaranty not constituting a fraudulent transfer or conveyance.

 

15.1.2. Contribution. Each Guarantor hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Facility Guaranty, any other Loan Document or any other
guaranty, each Guarantor will contribute, to the maximum extent permitted by
law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.

 

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15.2. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any Applicable Law, now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Secured Party with
respect thereto. The obligations of each Guarantor under or in respect of this
Facility Guaranty are independent of the Guaranteed Obligations or any other
Obligations of any other Credit Party under or in respect of the Loan Documents,
and a separate action or actions may be brought and prosecuted against each
Guarantor to enforce this Facility Guaranty, irrespective of whether any action
is brought against any Borrower or any other Credit Party or whether any
Borrower or any other Credit Party is joined in any such action or actions. The
liability of each Guarantor under this Facility Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and each Guarantor hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to, any or all of the following:

(a) any lack of validity or enforceability of any Loan Document or any agreement
or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term
of, including any increase in the amount of, all or any of the Guaranteed
Obligations or any other Obligations of any other Credit Party under or in
respect of the Loan Documents, or any other amendment or waiver of or any
consent to departure from any Loan Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Credit Party or otherwise;

(c) any taking, exchange, release or non-perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of, or consent
to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

(d) any manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral or any other collateral for all or any of
the Guaranteed Obligations or any other Obligations of any Credit Party under
the Loan Documents or any other assets of any Credit Party; the failure of
Agent, any other Secured Party or any other person to exercise diligence or
reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of such Collateral, property or
security;

(e) the fact that any Collateral, security, security interest or lien
contemplated or intended to be given, created or granted as security for the
repayment of the Guaranteed Obligations shall not be properly perfected or
created, or shall prove to be unenforceable or subordinate to any other security
interest or lien, it being recognized and agreed by each Guarantor that such
Guarantor is not entering into this Facility Guaranty in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectability
or value of any such Collateral;

(f) any change, restructuring or termination of the corporate structure or
existence of any Credit Party or any of its Subsidiaries;

(g) any failure of any Secured Party to disclose to any Credit Party any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Credit Party now
or hereafter known to such Secured Party (each Guarantor waiving any duty on the
part of the Secured Parties to disclose such information);

 

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(h) the failure of any other Person to execute or deliver any Loan Document or
any supplement thereto or any other guaranty or agreement or the release or
reduction of liability of any Guarantor or other guarantor or surety with
respect to the Guaranteed Obligations; or

(i) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Secured Party that might otherwise constitute a defense available to, or a
discharge of, any Credit Party or any other guarantor or surety, other than
payment in full of the Guaranteed Obligations (other than contingent
indemnification obligations).

15.2.2. Reinstatement. This Facility Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by Agent or
any Secured Party or any other Person upon the insolvency, bankruptcy or
reorganization of any Borrower or any other Credit Party or otherwise, all as
though such payment had not been made.

15.2.3. Guaranteed Obligations Due. Each Guarantor hereby further agrees that,
as between each Guarantor on the one hand, and Agent and the other Secured
Parties, on the other hand, (i) the Guaranteed Obligations of each Guarantor may
be declared to be forthwith due and payable as provided in Section 11.2 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Section 11.2) for purposes of Section 15.1,
notwithstanding any stay, injunction or other prohibition preventing such
declaration in respect of the Obligations of any of the Credit Parties
guaranteed hereunder (or preventing such Guaranteed Obligations from becoming
automatically due and payable) as against any other Person and (ii) in the event
of any declaration of acceleration of such Guaranteed Obligations (or such
Guaranteed Obligations being deemed to have become automatically due and
payable) as provided in Section 11.2, such Guaranteed Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by each Guarantor for all purposes of this Facility Guaranty.

15.3. Waivers and Acknowledgments. Each Guarantor hereby unconditionally and
irrevocably waives promptness, diligence, notice of acceptance, presentment,
demand for performance, notice of nonperformance, default, acceleration, protest
or dishonor and any other notice with respect to any of the Guaranteed
Obligations and this Facility Guaranty and any requirement that Agent or any
Secured Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.

15.3.1. Waiver of Right of Revocation. Each Guarantor hereby unconditionally and
irrevocably waives any right to revoke this Facility Guaranty and acknowledges
that this Facility Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

15.3.2. Waiver of Defenses. Each Guarantor hereby unconditionally and
irrevocably waives (i) any defense arising by reason of any claim or defense
based upon an election of remedies by Agent or any Secured Party that in any
manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of each Guarantor or other rights of each Guarantor to proceed against any of
the other Credit Parties, any other guarantor or any other Person or any
Collateral and (ii) any defense based on any right of set-off or counterclaim
against or in respect of the Obligations of each Guarantor hereunder.

15.3.3. Waiver of Duty to Disclose. Each Guarantor hereby unconditionally and
irrevocably waives any duty on the part of Agent or any Secured Party to
disclose to each Guarantor any matter, fact or thing relating to the business,
financial condition, operations, or performance of any other Credit Party or any
of its Subsidiaries now or hereafter known by Agent or such Secured Party.

15.3.4. Knowing Waivers. Each Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in
Section 15.2 and this Section 15.3 are knowingly made in contemplation of such
benefits.

 

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15.4. Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees
not to exercise any rights that it may now have or hereafter acquire against any
Borrower, any other Credit Party or any other insider guarantor that arise from
the existence, payment, performance or enforcement of each Guarantor’s
Obligations under or in respect of this Facility Guaranty or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of Agent or any Secured Party against any
Borrower, any other Credit Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Borrower, any other Credit Party or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until Full Payment of all of the Guaranteed Obligations (other than
contingent indemnification obligations) and all other amounts payable under this
Facility Guaranty shall have occurred, all Letters of Credit and all Bank
Product Debt shall have expired or been terminated or Cash Collateralized and
the Commitments shall have expired or been terminated. If any amount shall be
paid to each Guarantor in violation of the immediately preceding sentence at any
time prior to the Full Payment of the Guaranteed Obligations and all other
amounts payable under this Facility Guaranty, such amount shall be received and
held in trust for the benefit of the Secured Parties, shall be segregated from
other property and funds of each Guarantor and shall forthwith be paid or
delivered to Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Facility Guaranty, whether
matured or unmatured, in accordance with the terms of the Loan Documents, or to
be held as Collateral for any Guaranteed Obligations or other amounts payable
under this Facility Guaranty thereafter arising. If any Guarantor shall make
payment to any Secured Party of all or any part of the Guaranteed Obligations,
and Full Payment of the Guaranteed Obligations shall occur, then the Secured
Parties will, at such Guarantor’s request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment made by such Guarantor pursuant to this Facility Guaranty.

15.4.1. Subordination. Each Guarantor hereby subordinates any and all debts,
liabilities and other obligations in the nature of borrowed money owed to each
Guarantor by each other Credit Party (as used in this Section 15, the
“Intercompany Obligations”) to the Guaranteed Obligations to the extent and in
the manner hereinafter set forth in this Section 15.4:

15.4.2. Prohibited Payments, Etc. Except (a) during the continuance of any Event
of Default under Sections 11.1(a) or (i) or (b) after notice from Agent or any
Lender of any other Event of Default under this Agreement, each Guarantor may
receive regularly scheduled payments from any other Credit Party on account of
the Intercompany Obligations. During the continuance of any Event of Default
under Sections 11.1(a) or (i) or after notice from Agent or any Lender of any
other Event of Default under this Agreement, however, each Guarantor shall not
demand, accept or take any action to collect any payment on account of the
Intercompany Obligations unless the Required Lenders otherwise agree.

15.4.3. Prior Payment of Guaranteed Obligations. In any Insolvency Proceeding
relating to any other Credit Party, each Guarantor agrees that the Secured
Parties shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (other than contingent indemnification obligations, but including
all interest, expenses and fees (including legal fees) accruing after the
commencement of any Insolvency Proceeding, whether or not constituting an
allowed claim in such proceeding (as used in this Section 15, “Post Petition
Interest”)) before each Guarantor receives payment of any Intercompany
Obligations.

 

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15.4.4. Turn-Over. After the occurrence and during the continuance of any Event
of Default (including the commencement and continuation of any Insolvency
Proceeding relating to any other Credit Party), each Guarantor shall, if Agent
so requests, collect, enforce and receive payments on account of the
Intercompany Obligations as trustee for the Secured Parties and deliver such
payments to Agent on account of the Guaranteed Obligations (including all Post
Petition Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the
liability of each Guarantor under the other provisions of this Facility
Guaranty.

15.4.5. Agent Authorization. After the occurrence and during the continuance of
any Event of Default (including the commencement and continuation of any
Insolvency Proceeding relating to any other Credit Party), Agent is authorized
and empowered (but without any obligation to so do), in its discretion, (i) in
the name of each Guarantor, to collect and enforce, and to submit claims in
respect of, Intercompany Obligations and to apply any amounts received thereon
to the Guaranteed Obligations (including any and all Post Petition Interest),
and (ii) to require each Guarantor (A) to collect and enforce, and to submit
claims in respect of, Intercompany Obligations and (B) to pay any amounts
received on such obligations to Agent for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

15.4.6. Continuing Guaranty; Assignments. This Facility Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the Full Payment of
the Guaranty Obligations, (b) be binding upon each Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Secured
Parties and their successors, transferees and assigns. Without limiting the
generality of clause (c) of the immediately preceding sentence, any Secured
Party may assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Commitments, the Loans owing to it and the Note or Notes held by
it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Secured Party herein or
otherwise, in each case as and to the extent provided in Section 13.3. No
Guarantor shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Secured Parties.

15.5. Intercreditor Agreement Governs. Each Lender and the Agent (a) hereby
agrees that it will be bound by and will take no actions contrary to the
provisions of any intercreditor agreement entered into pursuant to the terms
hereof, (b) hereby authorizes and instructs the Agent to enter into each
intercreditor agreement and any other intercreditor agreement entered into
pursuant to the terms hereof and to subject the Liens securing the Obligations
to the provisions thereof and (c) hereby authorizes and instructs the Agent to
enter into any such intercreditor agreement (including any amendments,
amendments and restatements, restatements or waivers of or supplements to or
other modifications to, such intercreditor agreements in connection with the
incurrence by any Credit Party of any Permitted Debt or as otherwise provided
for by the terms of this Agreement that is permitted to be secured by the
Collateral pursuant to Sections 10.2.1 and 10.2.2 of this Agreement, in order to
permit such Debt to be secured by a valid, perfected Lien (with such priority as
may be designated by such Credit Party, to the extent such priority is permitted
by the Loan Documents)), and to subject the Liens on the Collateral securing the
Obligations to the provisions thereof.

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

BORROWERS: CAPELLA HEALTHCARE, INC., a Delaware corporation By:

/s/ Denise W. Warren

Name: Denise W. Warren

Title:

Executive Vice President, Chief Financial Officer and Treasurer

Address: c/o Capella Healthcare, Inc. 501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662 Attention:  Denise W. Warren CAPELLA HOLDINGS OF
OKLAHOMA, LLC CAPITAL MEDICAL CENTER HOLDINGS, LLC CAPITAL MEDICAL CENTER
PARTNER, LLC CAROLINA PINES HOLDINGS, LLC CMCH HOLDINGS, LLC COLUMBIA OLYMPIA
MANAGEMENT, INC. FARMINGTON CLINIC COMPANY, LLC FARMINGTON HEART & VASCULAR
CENTER, LLC FARMINGTON HOSPITAL CORPORATION FARMINGTON MISSOURI HOSPITAL
COMPANY, LLC HARTSVILLE MEDICAL GROUP, LLC LAWTON HOLDINGS, LLC LAWTON SURGERY
INVESTMENT COMPANY, LLC MUSKOGEE HOLDINGS, LLC MUSKOGEE MEDICAL AND SURGICAL
ASSOCIATES, LLC MUSKOGEE PHYSICIAN GROUP, LLC MUSKOGEE REGIONAL MEDICAL CENTER,
LLC NATIONAL PARK CARDIOLOGY SERVICES, LLC NATIONAL PARK FAMILY CARE, LLC
NATIONAL PARK PHYSICIAN SERVICES, LLC By:

/s/ Denise W. Warren

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

Address: c/o Capella Healthcare, Inc. 501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662 Attention:  Denise W. Warren

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

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

/s/ Denise W. Warren

Name: Denise W. Warren Title: Vice President and Treasurer

Address: c/o Capella Healthcare, Inc. 501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662 Attention:   Denise W. Warren

--------------------------------------------------------------------------------

GUARANTOR: CAPELLA HOLDINGS, INC., a Delaware corporation By:

/s/ Denise W. Warren

Name: Denise W. Warren Title: Executive Vice President, Chief Financial Officer
and Treasurer

Address: c/o Capella Healthcare, Inc. 501 Corporate Centre Drive, Suite 200
Franklin, Tennessee 37067-2662 Attention:   Denise W. Warren

--------------------------------------------------------------------------------

AGENT AND LENDERS: BANK OF AMERICA, N.A., as Agent and Lender By:

/s/ Seth Benefield

Name: Seth Benefield Title: Senior Vice President

Address: Bank of America, N.A. 300 Galleria Parkway, Suite 800 Atlanta, Georgia
30339 Facsimile:   404.607.3277

--------------------------------------------------------------------------------

CITIBANK, N.A., as Lender By:

/s/ Brendan Mackay

Name: Brendan Mackay Title: Vice President

Address: Citibank, N.A. 388 Greenwich St, 19th floor New York, New York 10013
Attention:   Brendan Mackay Facsimile:   646.328.3110

--------------------------------------------------------------------------------

GENERAL ELECTRIC CAPITAL CORPORATION, as Lender By:

/s/ Denis Cloud

Name: Dennis Cloud Title: Duly Authorized Signatory

Address: General Electric Capital Corporation 500 West Monroe, Suite 1400
Chicago, Illinois 60614 Attention:   Dennis Cloud Facsimile:   866.388.3572

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Schedule 1.1

COMMITMENTS OF LENDERS

 

Lender

   Commitment  

Bank of America, N.A.

   $ 40,000,000.00   

Citibank, N.A.

   $ 30,000,000.00   

General Electric Capital Corporation

   $ 18,000,000.00   

GE Asset Based Master Note LLC

   $ 12,000,000.00      

 

 

 

Total

$ 100,000,000.00      

 

 

 

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Schedule 1.2

IMMATERIAL SUBSIDIARIES

Capella Acquisition Subsidiary, LLC

Columbia Medical Group - South Pittsburg, Inc.

Cullman County Medical Clinic, Inc.

Cullman Hospital Corporation

Cullman Surgery Venture Corp.

Grandview Holding Company, Inc.

Grandview Physician Group, LLC

Hartselle Physicians, Inc.

Mineral Area Pharmacy and Durable Medical Equipment, LLC

National Healthcare of Cullman, Inc.

National Healthcare of Decatur, Inc.

National Healthcare of Hartselle, Inc.

Parkway Medical Clinic, Inc.

Providence MRI Associates, LLC

Providence Radiologic Services, LLC

River Park Hospitalists, LLC

Sequatchie Valley Urology, LLC

SP Acquisition Corp.

Western Washington Healthcare, LLC

--------------------------------------------------------------------------------

Schedule 1.3

MORTGAGE PROPERTIES

 

Grantor

  

Address/City/State/Zip Code

  

Applicable Mortgage Filing Office

Muskogee Regional Medical Center, LLC    2900 North Main St., Muskogee, OK 74401
   Muskogee Southwestern Medical Center, LLC    5602 SW Lee Blvd, Lawton, OK,
73505    Comanche Southwestern Medical Center, LLC    1602 SW 82nd St., Lawton,
OK, 73505    Comanche St. Mary’s Real Property, LLC    1808 West Main Street,
Russellville, AR 72801    Pope Willamette Valley Medical Center, LLC    2700 SE
Stratus Avenue, McMinnville, OR 97128    Yamhill Farmington Missouri Hospital
Company, LLC    1212 Weber Road, Farmington, MO 63640 (Mineral Area Regional
Medical Center)    St. Francois Farmington Clinic Company, LLC    1101 Weber
Road, Farmington, MO 63640 (Medical Office/Clinic)    St. Francois

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

Schedule 8.2.1

DEPOSIT ACCOUNTS

Borrowers and Guarantors

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Capella Healthcare, Inc.    Bank of America (“BofA”)    Concentration Account   
[***] Capella Healthcare, Inc.    BofA    Non-Medicare/
Medicaid    [***] Capella Healthcare, Inc.    BofA    Non-Medicare/
Medicaid    [***] Capella Healthcare, Inc.    BofA    Medicare/Medicaid
(Government
Receivables Deposit
Account)    [***] Capella Healthcare, Inc.    BofA    Medicare/Medicaid
(Government
Receivables Deposit
Account)    [***] Capella Healthcare, Inc.    BofA    Managed Care    [***]
Farmington Missouri Hospital Company, LLC    BofA    Direct Deposit Account
with Lockbox    [***] Farmington Missouri Hospital Company, LLC    BofA   
Direct Deposit Account    [***] Hartsville Medical Group, LLC    BofA    Direct
Deposit Account    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Russellville Holdings, LLC    BofA    Direct Deposit Account
with Lockbox    [***] Southwestern Physician Services, LLC    BofA    Direct
Deposit Account    [***] White County Community Hospital, LLC    BofA    Direct
Deposit Account
with Lockbox    [***] Willamette Valley Medical Center, LLC    BofA    Direct
Deposit Account
with Lockbox    [***]

Credit Support Parties

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

River Park Hospital, LLC    BofA    River Park Direct
Deposit Account
Lockbox    [***] Hot Springs National Park Hospital Holdings, LLC    BofA   
National Park Direct
Deposit Account
Lockbox    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Excluded Deposit Accounts

Borrowers and Guarantors

 

Grantor Name/ Account Name

  

Bank Name

  

Account Type

  

Account Number

Capella Healthcare, Inc.    BofA    Disbursement Account    [***] Capella
Healthcare, Inc.    BofA    Disbursement Account    [***] Farmington Missouri
Hospital Company, LLC    BofA    Disbursement Account    [***] Muskogee Regional
Medical Center, LLC    BofA    Disbursement Account    [***] Russellville
Holdings, LLC    BofA    Disbursement Account    [***] Southwestern Medical
Center, LLC    BofA    Disbursement Account    [***] Sparta Hospital Corporation
   BofA    Disbursement Account    [***] Willamette Valley Medical Center, LLC
   BofA    Disbursement Account    [***] Capella Healthcare, Inc.    BofA   
Consolidated SBA
Disbursement Account    [***] Capella Healthcare, Inc.    BofA    Payroll   
[***] Capella Healthcare, Inc.    BofA    Payroll Tax    [***] Capella
Healthcare, Inc.    BofA    Employee Benefits    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name/ Account Name

  

Bank Name

  

Account Type

  

Account Number

Muskogee Regional Medical Center, LLC    BofA    Workers Compensation
Disbursement Account    [***] Southwestern Medical Center, LLC    BofA   
Workers Compensation
Disbursement Account    [***]

Credit Support Parties

 

Grantor Name/ Account Name

  

Bank Name

  

Account Type

  

Account Number

Cannon County Hospital, LLC    BofA    Disbursement Account    [***] Cannon
County Hospital, LLC    BofA    Disbursement Account    [***] Columbia Capital
Medical Center Limited Partnership    BofA    Disbursement Account    [***]
Hartsville, LLC    BofA    Disbursement Account    [***] Hot Springs National
Park Hospital Holdings, LLC    BofA    Disbursement Account    [***] River Park
Hospital, LLC    BofA    Disbursement Account    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Borrowers and Guarantors (Excluded Facility Deposit Accounts)

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Muskogee Regional Medical Center, LLC    BofA    Direct Deposit Account    [***]
Southwestern Medical Center, LLC    BofA    Direct Deposit Account    [***]
Southwestern Physician Services, LLC    BofA    Direct Deposit Account    [***]
Farmington Missouri Hospital Company, LLC    US Bank    Direct Deposit Account
with Lockbox    [***] Hartsville Medical Group, LLC    US Bank    Direct Deposit
Account
with Lockbox    [***] Muskogee Medical and Surgical Associates LLC    US Bank   
Direct Deposit Account
with Lockbox    [***] National Park Cardiology Services, LLC    US Bank   
Direct Deposit Account
with Lockbox    [***] National Park Physician Services, LLC    US Bank    Direct
Deposit Account
with Lockbox    [***] National Park Family Care, LLC    US Bank    Direct
Deposit Account
with Lockbox    [***] Saint Mary’s Physician Services, LLC    US Bank    Direct
Deposit Account
with Lockbox    [***] Southwestern Surgical Affiliates LLC    US Bank    Direct
Deposit Account
with Lockbox    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Sparta Hospital Corporation    US Bank    Direct Deposit Account
with Lockbox    [***] Sparta Hospital Corporation    US Bank    Direct Deposit
Account
with Lockbox    [***] Willamette Valley Clinics, LLC    US Bank    Direct
Deposit Account
with Lockbox    [***] Farmington Missouri Hospital Company, LLC    First State
Community Bank    Direct Deposit Account    [***] Farmington Missouri Hospital
Company, LLC    KeyBank    Direct Deposit Account
with Lockbox    [***] Russellville Holdings, LLC    Simmons First Bank    Direct
Deposit Account    [***] Russellville Holdings, LLC    Bank of the Ozarks   
Direct Deposit Account
with Lockbox    [***] Willamette Valley Clinics, LLC    Wells Fargo    Direct
Deposit Account    [***] Willamette Valley Medical Center, LLC    Wells Fargo   
Direct Deposit Account    [***] Muskogee Regional Medical Center, LLC   
BancFirst    Direct Deposit Account    [***] Muskogee Medical and Surgical
Associates LLC    BancFirst    Direct Deposit Account    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Credit Support Parties (Excluded Facility Deposit Accounts)

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

Columbia Capital Medical Center Limited Partnership    BofA   
Direct Deposit Account
with Lockbox    [***] Hartsville, LLC    BofA    Direct Deposit Account
with Lockbox    [***] Cannon County Hospital, LLC    BofA    DeKalb Direct
Deposit
Account with Lockbox    [***] Cannon County Hospital, LLC    BofA    Stones
River Direct
Deposit Account with
Lockbox    [***] Capital Medical Center Specialty Physicians, LLC    US Bank   
Direct Deposit Account
with Lockbox    [***] Capital Medical Center Physicians, LLC    US Bank   
Direct Deposit Account
with Lockbox    [***] Columbia Capital Medical Center Limited Partnership    US
Bank    Direct Deposit Account
with Lockbox    [***] River Park Physician Group, LLC    US Bank    Direct
Deposit Account
with Lockbox    [***] Hartsville, LLC    Carolina Bank and Trust    Direct
Deposit Account    [***] Cannon County Hospital, LLC    Regions    Direct
Deposit Account    [***]

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Grantor Name / Account Name

  

Bank Name

  

Account Type

  

Account Number

River Park Hospital, LLC    Regions    Direct Deposit Account    [***]

--------------------------------------------------------------------------------

Schedule 8.2.2

CASH MANAGEMENT SYSTEM

See Schedule 8.2.1.

--------------------------------------------------------------------------------

Schedule 8.2.5

CREDIT CARD ARRANGEMENTS

 

1. Credit card deposits are sent to the applicable Direct Deposit Account for
each facility held at Bank of America and listed on Schedule 8.2.1.

 

2. US Buyer Initiated Payments Services Agreement between American Express
Travel Related Services Company Incorporated and Capella Healthcare, Inc. dated
December 30, 2009.

--------------------------------------------------------------------------------

Schedule 9.1.4

NAMES AND CAPITAL STRUCTURE

The legal names and jurisdictions of incorporation of each Credit Party and
Subsidiary are as follows:

 

Borrower

  

Jurisdiction of Organization & Type of Organization

Capella Healthcare, Inc.    Delaware Corporation Capella Holdings, Inc.   
Delaware Corporation Capella Holdings of Oklahoma, LLC    Delaware Limited
Liability Company Capital Medical Center Holdings, LLC    Delaware Limited
Liability Company Capital Medical Center Partner, LLC    Delaware Limited
Liability Company Carolina Pines Holdings, LLC    South Carolina Limited
Liability Company CMCH Holdings, LLC    Delaware Limited Liability Company
Columbia Olympia Management, Inc.    Delaware Corporation Farmington Clinic
Company, LLC    Missouri Limited Liability Company Farmington Hospital
Corporation    Missouri Corporation Farmington Heart & Vascular Center, LLC   
Delaware Limited Liability Company Farmington Missouri Hospital Company, LLC   
Missouri Limited Liability Company Hartsville Medical Group, LLC    South
Carolina Limited Liability Company Lawton Holdings, LLC    Delaware Limited
Liability Company

--------------------------------------------------------------------------------

Borrower

  

Jurisdiction of Organization & Type of Organization

Lawton Surgery Investment Company, LLC    Delaware Limited Liability Company
Muskogee Holdings, LLC    Delaware Limited Liability Company Muskogee Medical
and Surgical Associates, LLC    Delaware Limited Liability Company Muskogee
Physician Group, LLC    Delaware Limited Liability Company Muskogee Regional
Medical Center, LLC    Delaware Limited Liability Company National Park
Cardiology Services, LLC    Delaware Limited Liability Company National Park
Family Care, LLC    Delaware Limited Liability Company National Park Physician
Services, LLC    Delaware Limited Liability Company NPMC Holdings, LLC   
Delaware Limited Liability Company NPMC, LLC    Delaware Limited Liability
Company Oregon Healthcorp, LLC    Delaware Limited Liability Company
Russellville Holdings, LLC    Delaware Limited Liability Company Southwestern
Medical Center, LLC    Delaware Limited Liability Company Southwestern
Neurosurgery Physicians, LLC    Oklahoma Limited Liability Company Southwestern
Physician Services, LLC    Oklahoma Limited Liability Company Southwestern
Radiology Affiliates, LLC    Delaware Limited Liability Company

--------------------------------------------------------------------------------

Borrower

  

Jurisdiction of Organization & Type of Organization

Southwestern Surgical Affiliates LLC    Delaware Limited Liability Company
Sparta Hospital Corporation    Tennessee Corporation St. Mary’s Holdings, LLC   
Delaware Limited Liability Company St. Mary’s Physician Services, LLC   
Delaware Limited Liability Company St. Mary’s Real Property, LLC    Delaware
Limited Liability Company Willamette Valley Clinics, LLC    Delaware Limited
Liability Company Willamette Valley Health Solutions, LLC    Delaware Limited
Liability Company Willamette Valley Medical Center, LLC    Delaware Limited
Liability Company WPC Holdco, LLC    Delaware Limited Liability Company

 

Credit Support Party

  

Jurisdiction of Organization & Type of Organization

Capital Medical Center Physicians, LLC    Delaware Limited Liability Company
Capital Medical Center Specialty Physicians, LLC    Delaware Limited Liability
Company Columbia Capital Medical Center Limited Partnership    Washington
Limited Partnership Cannon County Hospital, LLC    Tennessee Limited Liability
Company Hartsville HMA, LLC    South Carolina Limited Liability Company

--------------------------------------------------------------------------------

Credit Support Party

  

Jurisdiction of Organization & Type of Organization

Hot Springs National Park Hospital Holdings, LLC    Delaware Limited Liability
Company National Park Real Property, LLC    Delaware Limited Liability Company
River Park Hospital, LLC    Tennessee Limited Liability Company River Park
Physician Group, LLC    Delaware Limited Liability Company Saint Thomas/Capella,
LLC    Delaware Limited Liability Company Stones River Clinic Services, LLC   
Tennessee Limited Liability Company White County Community Hospital, LLC   
Delaware Limited Liability Company White County Physician Services, LLC   
Tennessee Limited Liability Company White County Primary Care, LLC    Tennessee
Limited Liability Company

 

Immaterial Subsidiary

  

Jurisdiction of Organization & Type of Organization

Capella Acquisition Subsidiary, LLC    Delaware Limited Liability Company
Columbia Medical Group - South Pittsburg, Inc.    Tennessee Limited Liability
Company Cullman County Medical Clinic, Inc.    Alabama Corporation Cullman
Hospital Corporation    Alabama Corporation Cullman Surgery Venture Corp.   
Delaware Corporation

--------------------------------------------------------------------------------

Immaterial Subsidiary

  

Jurisdiction of Organization & Type of Organization

Grandview Holding Company, Inc.    Delaware Corporation Grandview Physician
Group, LLC    Tennessee Limited Liability Company Hartselle Physicians, Inc.   
Alabama Corporation Mineral Area Pharmacy and Durable Medical Equipment, LLC   
Missouri Limited Liability Company National Healthcare of Cullman, Inc.   
Delaware Corporation National Healthcare of Decatur, Inc.    Delaware
Corporation National Healthcare of Hartselle, Inc.    Delaware Corporation
Parkway Medical Clinic, Inc.    Alabama Corporation Providence MRI Associates,
LLC    Oklahoma Limited Liability Company Providence Radiologic Services, LLC   
Oklahoma Limited Liability Company River Park Hospitalists, LLC    Tennessee
Limited Liability Company Sequatchie Valley Urology, LLC    Tennessee Limited
Liability Company SP Acquisition Corp.    Tennessee Corporation Western
Washington Healthcare, LLC    Washington Limited Liability Company

--------------------------------------------------------------------------------

The Authorized and issued Equity Interests, and the record holders of Equity
Interests of each Credit Party and Subsidiary are as follows:

 

Owner

  

Issuer

  

Total
authorized
and issued
Equity
Interests

   % of Equity
Interests held
by Owner  

Capella Holdings, Inc.

   Capella Healthcare, Inc.    100 Common      100 % 

Saint Thomas/Capella, LLC

   Cannon County Hospital, LLC    N/A      64.5 % 

Upper Cumberland Healthcare Initiatives, LLC (Physicians)

      N/A      35.5 % 

NPMC Holdings, LLC

   Capella Acquisition Subsidiary, LLC    N/A      100 % 

Muskogee Holdings, LLC

   Capella Holdings of Oklahoma, LLC    N/A      100 % 

CMCH Holdings, LLC

   Capital Medical Center Holdings, LLC    N/A      100 % 

Capital Medical Center Holdings, LLC

   Capital Medical Center Partner, LLC    N/A      100 % 

Columbia Capital Medical Center Limited Partnership

   Capital Medical Center Physicians, LLC    N/A      99 % 

Capital Medical Center Holdings, LLC

           1 % 

Columbia Capital Medical Center Limited Partnership

   Capital Medical Center Specialty Physicians, LLC    N/A      99 % 

Capital Medical Center Holdings, LLC

           1 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

Capella Healthcare, Inc.

   Carolina Pines Holdings, LLC    N/A      100 % 

Capella Healthcare, Inc.

   CMCH Holdings, LLC    N/A      100 % 

Capital Medical Center Holdings

   Columbia Capital Medical Center Limited Partnership    N/A      39.7 % 

Capital Medical Center Partner, LLC

      N/A      48.55 % 

Columbia Olympia Management, Inc.

      N/A      1.0 % 

WPC Holdco, LLC

      N/A      1.0 % 

Capital Medical Center Physicians

      N/A      9.75 % 

SP Acquisition Corp.

   Columbia Medical Group - South Pittsburgh, Inc.    1,000 Common      100 % 

Capital Medical Center Holdings, LLC

   Columbia Olympia Management, Inc.    1000 Common      100 % 

Capella Healthcare, Inc.

   Cullman County Medical Clinic, Inc.    1000 Common      100 % 

Capella Healthcare, Inc.

   Cullman Hospital Corporation    1 Common      100 % 

Cullman Hospital Corporation.

   Cullman Surgery Venture Corp.    1,000 Common      100 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

Farmington Hospital Corporation

   Farmington Clinic Company, LLC    N/A      100 % 

Farmington Hospital Corporation

   Farmington Heart & Vascular Center, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Farmington Hospital Corporation    1000 Common      100 % 

Farmington Hospital Corporation

   Farmington Missouri Hospital Company, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Grandview Holding Company, Inc.    1,000 Common      100 % 

Grandview Holding Company, Inc.

   Grandview Physician Group, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Hartselle Physicians, Inc.    1000 Common      100 % 

Carolina Pines Holdings, LLC

   Hartsville HMA, LLC    N/A      98.55 % 

Physicians/Physician Entities

      N/A      1.45 % 

Carolina Pines Holdings, LLC

   Hartsville Medical Group, LLC    N/A      100 % 

NPMC Holdings, LLC

   Hot Springs National Park Hospital Holdings, LLC    N/A      95.04 % 

Physicians/Physician Entities

      N/A      4.96 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

Capella Healthcare, Inc.

   Lawton Holdings, LLC    N/A      100 % 

Lawton Holdings, LLC

   Lawton Surgery Investment Company, LLC    N/A      100 % 

Farmington Hospital Corporation

   Mineral Area Pharmacy and Durable Medical Equipment, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Muskogee Holdings, LLC    N/A      100 % 

Capella Holdings of Oklahoma, Inc.

   Muskogee Medical and Surgical Associates, LLC    N/A      100 % 

Capella Holdings of Oklahoma, LLC

   Muskogee Physician Group, LLC    N/A      100 % 

Capella Holdings of Oklahoma, LLC

   Muskogee Regional Medical Center, LLC    N/A      100 % 

Cullman Hospital Corporation

   National Healthcare of Cullman, Inc.    1,000      100 % 

Capella Healthcare, Inc.

   National Healthcare of Decatur, Inc.    1,000 Common      100 % 

Capella Healthcare, Inc.

   National Healthcare of Hartselle, Inc.    1,000 Common      100 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

NPMC Holdings, LLC

   National Park Cardiology Services, LLC    N/A      100 % 

NPMC Holdings, LLC

   National Park Family Care, LLC    N/A      100 % 

NPMC Holdings, LLC

   National Park Physician Services, LLC    N/A      100 % 

Hot Springs National Park Hospital Holdings, LLC

   National Park Real Property, LLC    N/A      100 % 

Capella Healthcare, Inc.

   NPMC Holdings, LLC    N/A      100 % 

NPMC Holdings, LLC

   NPMC, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Oregon Healthcorp, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Parkway Medical Clinic, Inc.    1,000 Common      100 % 

Capella Holdings of Oklahoma, LLC

   Providence MRI Associates, LLC    N/A      100 % 

Capella Holdings of Oklahoma, LLC

   Providence Radiologic Services, L.C.    N/A      100 % 

Saint Thomas/Capella, LLC

   River Park Hospital, LLC    N/A      100 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

Saint Thomas/Capella, LLC

   River Park Hospitalists, LLC    N/A      100 % 

Saint Thomas/Capella, LLC

   River Park Physician Group, LLC    N/A      100 % 

St. Mary’s Holdings, LLC

   Russellville Holdings, LLC    N/A      100 % 

Capella Healthcare, Inc.

   Saint Thomas/Capella, LLC    N/A      57.85 % 

Sparta Hospital Corporation

      N/A      35.66 % 

Saint Thomas Health

      N/A      6.49 % 

Grandview Holding Company, Inc.

   Sequatchie Valley Urology, LLC    N/A      100 % 

Lawton Holdings, LLC

   Southwestern Medical Center, LLC    N/A      100 % 

Lawton Holdings, LLC

   Southwestern Neurosurgery Physicians, LLC    N/A      100 % 

Lawton Holdings, LLC

   Southwestern Physician Services, LLC    N/A      100 % 

Lawton Holdings, LLC

   Southwestern Radiology Affiliates, LLC    N/A      100 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

Lawton Holdings, LLC

   Southwestern Surgical Affiliates LLC    N/A      100 % 

Capella Healthcare, Inc.

   SP Acquisition Corp.    1,000 Common      100 % 

Capella Healthcare, Inc.

   Sparta Hospital Corporation    1,000 Common      100 % 

Capella Healthcare, Inc.

   St. Mary’s Holdings, LLC    N/A      100 % 

St. Mary’s Holdings, LLC

   St. Mary’s Physician Services, LLC    N/A      100 % 

Russellville Holdings, LLC

   St. Mary’s Real Property, LLC    N/A      100 % 

Cannon County Hospital, LLC

   Stones River Clinic Services, LLC    N/A      100 % 

Columbia Olympia Management, Inc.

   Western Washington Healthcare, LLC    N/A      99 % 

Columbia Capital Medical Center Limited Partnership

      N/A      1 % 

Saint Thomas/Capella, LLC

   White County Community Hospital, LLC    N/A      87.725 % 

Upper Cumberland Healthcare Initiatives, LLC (Physicians)

      N/A      12.275 % 

--------------------------------------------------------------------------------

Owner

  

Issuer

  

Total

authorized
and issued

Equity

Interests

   % of Equity
Interests held
by Owner  

White County Community Hospital, LLC

   White County Physician Services, LLC    N/A      99 % 

Saint Thomas/Capella, LLC

           1 % 

White County Physician Services, LLC

   White County Primary Care, LLC    N/A      100 % 

Oregon Healthcorp, LLC

   Willamette Valley Clinics, LLC    N/A      100 % 

Oregon Healthcorp, LLC

   Willamette Health Solutions, LLC    N/A      100 % 

Oregon Healthcorp, LLC

   Willamette Valley Medical Center, LLC    N/A      100 % 

Capital Medical Center Holdings, LLC

   WPC Holdco, LLC    N/A      100 % 

All agreements binding on holders of Equity Interests of Credit Parties and
Subsidiaries with respect to such interests:

None.

--------------------------------------------------------------------------------

In the five years preceding the Closing Date, no Credit Party or Subsidiary has
acquired any substantial assets from any other Person nor been the surviving
entity in a merger or combination, except:

 

Credit Party

  

Change in Identity or Corporate Structure

Carolina Pines Holdings, LLC    Consummation of the Hartsville Acquisition on
the Closing Date Lawton Surgery Investment Company, LLC    Acquired
substantially all the assets of Great Plains Ambulatory Surgery Center on June
30, 2011 Muskogee Regional Medical Center, LLC    Acquired substantially all the
assets of Muskogee RT Associates, LLC on March 16, 2012 Acquired certain assets
from Muskogee Community Hospital, LLC and entered into a long term lease for
certain assets on July 1, 2012 Exercised its option to purchase the assets
covered under the long-term lease from Muskogee Community Hospital, LLC on July
31, 2014 Sparta Hospital Corporation    Acquired membership interests in Cannon
County Hospital, LLC on June 30, 2011 Southwestern Medical Center, LLC   
Acquired substantially all the assets of Southwest Imaging Center, Inc. on
December 31, 2012    Acquired substantially all the assets of Raindancer, LLC
d/b/a Doctors MRI on December 31, 2012 National Park Family Care, LLC   
Acquired substantially all the assets of Hollywood Avenue Family Medicine
Clinic, P.A. on February 1, 2011

--------------------------------------------------------------------------------

Schedule 9.1.5

REAL ESTATE

 

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Muskogee Regional Medical Center, LLC    2900 North Main St. Muskogee, OK 74401
   Owned Muskogee Regional Medical Center, LLC    Eco Friendly Drive, Muskogee,
OK 74401 (part of hospital campus)    Owned Muskogee Medical Center Authority   
318 South 37th Street, Muskogee, OK 74401    Owned Muskogee Medical Center
Authority    109 South 36th Street, Muskogee, OK 74401    Owned Muskogee Medical
Center Authority    211 South 36th Street, Muskogee, OK 74401    Owned Muskogee
Medical Center Authority    251 South 37th Street, Muskogee, OK 74401    Owned
Muskogee Medical Center Authority    37th Street & Denver, Muskogee, OK 74401(5
tracts in vicinity)    Owned Muskogee Medical Center Authority    Highway 69,
1.5 miles south of Highway 51, Wagoner, OK (7.25 acres; no location information)
   Owned Southwestern Medical Center, LLC    412 SW Summit Ave, Lawton, OK,
73501    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Southwestern Medical Center, LLC    5602 SW Lee Blvd, Lawton, OK, 73505    Owned
Southwestern Medical Center, LLC    1602 SW 82nd St. Lawton, OK, 73505    Owned
St. Mary’s Real Property, LLC    1808 West Main Street Russellville, AR 72801   
Owned St. Mary’s Real Property, LLC    809 West Main Street Russellville, AR
72801    Owned St. Mary’s Real Property, LLC    1608 West Main Street
Russellville, AR 72801    Owned St. Mary’s Real Property, LLC    1800 West C
Street Russellville, AR 72801    Owned St. Mary’s Real Property, LLC    1714
State Hwy 22 West Dardanelle, AR 72834    Owned St. Mary’s Real Property, LLC   
Parking Lot, West “C” Place Russellville, AR 72801    Owned St. Mary’s Real
Property, LLC    Vacant Lot: West “C” Street and New Orleans Avenue
Russellville, AR 72801    Owned St. Mary’s Real Property, LLC    Two properties
(no location information)    Owned Willamette Valley Medical Center, LLC    2700
SE Stratus Avenue, McMinnville, OR 97128    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Farmington Missouri Hospital Company, LLC    1212 Weber Road, Farmington, MO
63640 (Mineral Area Regional Medical Center)    Owned Farmington Clinic Company,
LLC    1101 Weber Road, Farmington, MOS 63640 (Medical Office/Clinic)    Owned
Farmington Clinic Company, LLC    1101 Weber Road, Farmington, MO 63640 (Map
House)    Owned Farmington Clinic Company, LLC    1103 Weber Road, Farmington,
MO 63640 (Medical Building)    Owned Farmington Clinic Company, LLC    1102
Weber Road, Farmington, MO 63640 (unimproved parking lot)    Owned Farmington
Clinic Company, LLC    600 Purcell Drive, Potosi, MO 63664 (Potosi Clinic)   
Owned Farmington Clinic Company, LLC    751 Maple Valley Drive, Farmington, MO
63640 (Maple Valley Clinic)    Owned Farmington Clinic Company, LLC    764
Weber, Farmington, MO 63640 (Farmington Clinic)    Owned Farmington Clinic
Company, LLC    55 Nesbit, Bonne Terre, MO 63640 (Bonne Terre Clinic)    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Farmington Missouri Hospital Company, LLC    545 Wallace, Farmington, MO 63640
(Intern House)    Owned Farmington Clinic Company, LLC    1013 Weber Road,
Farmington, MO 63640 (Alexander House)    Owned Farmington Missouri Hospital
Company, LLC    601 Wallace Road, Farmington, MO (unimproved parking lot)   
Owned Farmington Clinic Company, LLC    Vacant property on Weber Road    Owned
Farmington Clinic Company, LLC    San Jewell Tract 1 Mineral Area Park
Farmington, MO (unimproved parking lot)    Owned Farmington Missouri Hospital
Company, LLC    Wallace Road, Pt. Lot 23, Farmington, MO (unimproved parking
lot)    Owned Farmington Missouri Hospital Company, LLC    Wallace Road, Murphy
Place, Farmington, MO (unimproved parking lot)    Owned Hartsville HMA, LLC   
1304 West Bobo Newsom Highway, Hartsville, SC 29550    Owned Muskogee Regional
Medical Center, LLC    300 Rockefeller Drive, Muskogee, OK 74401 (The Pavilion
(Mental Health); Wound Care; Cancer Center)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Muskogee Regional Medical Center, LLC    421 South 34th Street, Muskogee, OK
74401 (Day Care Center)    Leased Muskogee Regional Medical Center, LLC   
3520-24 Chandler Road, Muskogee, OK 74403 (Muskogee Immediate Care)    Leased
Muskogee Regional Medical Center, LLC    201 South York, Muskogee, OK 74403
(Comprehensive Rehab Services)    Leased Muskogee Regional Medical Center, LLC
   101 Rockefeller Drive, Muskogee, OK 74401 (MOB II)    Leased Muskogee
Regional Medical Center, LLC    333 South 36th Street, Muskogee, OK 74401
(Emergency Room; Regional Medical Lab)    Leased Muskogee Regional Medical
Center, LLC    209 South 36th Street, Muskogee, OK 74401 (Office Building)   
Leased Muskogee Regional Medical Center, LLC    3204 W. Okmulgee, Muskogee, OK
74401 (Office Building)    Leased Muskogee Regional Medical Center, LLC    3502
W. Okmulgee, Muskogee, OK 74401 (Office Building)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Muskogee Regional Medical Center, LLC    3504 W. Okmulgee, Muskogee, OK 74401
(Office Building)    Leased Muskogee Regional Medical Center, LLC    3506 W.
Okmulgee, Muskogee, OK 74401 (Office Building)    Leased Muskogee Regional
Medical Center, LLC    2900 No. Main Street, Muskogee, OK 74401 (Hospital)   
Leased Muskogee Regional Medical Center, LLC    4318/4300 AW. Okmulgee,
Muskogee, OK 74401 (Office Building)    Leased Muskogee Regional Medical Center,
LLC    333 South 38th, Suite D, Muskogee, OK 74401 (Office Building)    Leased
Muskogee Regional Medical Center, LLC    100 Community Health Dr., Ste 101,
Eufaula, OK 74432 (Office Building)    Leased Muskogee Regional Medical Center,
LLC    1200 West Cherokee, Wagoner, OK 74467    Leased Russellville Holdings,
LLC    Parking Lot: 309-317 North Seattle Street; 1903, 1904 and 1906 West C
Place; Russellville, AR 72801    Owned Russellville Holdings, LLC    1708 West C
Place, Russellville, AR 72801    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Russellville Holdings, LLC    3 properties (no location information)    Owned
Southwestern Medical Center, LLC    5604 SW Lee Boulevard, Lawton, OK 73505
(5604 Medical Office Building)    Leased Southwestern Medical Center, LLC   
5606 SW Lee Boulevard, Lawton, OK 73505 (5606 Medical Office Building)    Leased
Southwestern Medical Center, LLC    904 SW 38th Street, Lawton, OK 73505
(Premier Orthopedics)    Leased Southwestern Medical Center, LLC    Ste. 100,
5404 SW Lee Blvd., Lawton, OK 73505 (Great Plains Ambulatory)    Leased
Southwestern Medical Center, LLC    5116 W. Gore Blvd., Lawton, OK 73505 (The
Imaging Center)    Leased Southwestern Medical Center, LLC    5366 NW Cache Rd.,
Lawton, OK 73505 (Dr’s MRI)    Leased Southwestern Medical Center, LLC    402
North Broadway, Walters, OK 73572    Leased St. Mary’s Real Property, LLC   
1813 West Main Street, Russellville, AR 72801 (Heart Clinic Arkansas)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

St. Mary’s Real Property, LLC    2205 West Main Street, Russellville, AR 72801
(Saint Mary’s Outpatient Surgery Center)    Leased St. Mary’s Real Property, LLC
   11720 State Highway 27 North, Hector, AR 72843 (Valley Health Services of
Hector)    Leased St. Mary’s Real Property, LLC    3808 West Main, Russellville,
AR 72801 (Saint Mary’s Wellness Fitness Center)    Leased St. Mary’s Real
Property, LLC    101 Skyline Drive, Russellville, AR 72801 (Millard Henry Clinic
- Main Clinic)    Leased St. Mary’s Real Property, LLC    101 Skyline Drive,
Russellville, AR 72801 (Millard Henry Clinic - New MOB)    Leased St. Mary’s
Real Property, LLC    1601 North Church Street, Atkins AR 72823 (Millard Henry
Clinic - Atkins)    Leased St. Mary’s Real Property, LLC    8970 SR 7, Unit A#1,
Dover Centre, Dover, AR 72837 (Millard Henry Clinic - Dover)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

St. Mary’s Real Property, LLC    105 Skyline Drive, Russellville, AR 72801
(Millard Henry Clinic - OBGYN and General Surgery Clinic)    Leased St. Mary’s
Real Property, LLC    101 Skyline Drive, Russellville, AR 72801 (Millard Henry
Clinic Transcription Building)    Leased St. Mary’s Real Property, LLC    10
Hospital Drive, Morrilton, AR 72110 (Morrilton Medical Clinic)    Leased St.
Mary’s Real Property, LLC    1902 West C. Place, Russellville, AR 72801
(Storage/Warehouse)    Leased St. Mary’s Real Property, LLC    106 South
Inglewood, Russellville, AR 72801 (Family Practice 2)    Leased Willamette
Valley Medical Center, LLC    375 SE Norton Lane #A, McMinnville, OR 97128
(McMinnville Internal Medicine)    Leased Willamette Valley Medical Center, LLC
   222 SE Jefferson, Sheridan, OR 97378 (Sheridan Medical Center)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Willamette Valley Medical Center, LLC    392 NE Norton Lane, McMinnville, OR
97128 (Williamette Valley Medical Center Wound Care and Hyperbaric Medicine and
McMinnville Surgical Associates)    Leased Willamette Valley Medical Center, LLC
   1010 SAW Bay Street, Newport, OR 97365 (David Bice MD)    Leased Columbia
Capital Medical Center Limited Partnership    3900 Capitol Mall Drive Southwest,
Olympia, WA 98502 (Capital Medical Center and Women’s Center)    Owned Columbia
Capital Medical Center Limited Partnership    502 McPhee Road Southwest,
Olympia, WA 98502 (McPhee Storage Warehouse)    Owned Columbia Capital Medical
Center Limited Partnership    403 Black Hills Lane Southwest Suite B, Olympia,
WA 98502 (Black Hills Medical Office Park)    Owned Capital Medical Center   
405 Black Hills Lane Southwest Suite G&H, Olympia, WA 98502 (Black Hills Medical
Office Park)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Capital Medical Center    404 Black Hills Lane Southwest Suite B, Olympia, WA
98502 (Black Hills Medical Office Park)    Leased Capital Medical Center    412
A&B Black Hills Lane Southwest, Olympia, WA 98502 (Black Hills Medical Office
Park)    Leased Capital Medical Center Limited Partnership    3920 Capitol Mall
Drive Southwest, Olympia, WA 98502 (Medical Office Building)    Owned Capital
Medical Center    534 McPhee Road Southwest Olympia, WA 98502 (Residence)   
Owned Columbia Capital Medical Center Limited    3525 Ensign Road Northeast
Suite B, Olympia, WA 98502 (Olympia Radiology)    Owned Capital Medical Center
   601 McPhee Road Southwest Bldgs 1 and 2, Olympia, WA 98502    Leased Columbia
Capital Medical Center Limited Partnership    413 Black Hills Lane Southwest,
Olympia, WA 98502 (land around the Hospital, Physicians Pavilion, and Black
Hills Medical Park)    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Columbia Capital Medical Center Limited Partnership    3435 Ensign Road NE,
Olympia, WA 98502    Owned Columbia Capital Medical Center Limited Partnership
   527 McPhee Road SW, Olympia, WA 98502    Owned Columbia Capital Medical
Center Limited Partnership    605 McPhee Road SW, Olympia, WA 98502    Owned
Capital Medical Center    2960 Limited Lane NW, Olympia, WA 98502    Leased
Columbia Capital Medical Center Limited Partnership    403 Black Hills Lane
Southwest Suite D, Olympia, WA 98502 (Black Hills Medical Office Park)    Owned
Capital Medical Center    412C Black Hills Lane Southwest, Olympia, WA 98502
(Black Hills Medical Office Park)    Leased Cannon County Hospital, LLC    520
West Main Street, Smithville, TN 37166 (Hospital/Plant Operations Shop/Onsite
Storage/Hazmat Building)    Owned DeKalb Community Hospital    518 West Main
Street, Smithville, TN 37166 (Medical Office Building)    Owned Cannon County
Hospital, LLC    527 West Main Street, Smithville, TN 37166 (527 Office
Building)    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Cannon County Hospital, LLC    324 Doolittle Road, Woodbury, TN 37190 (Main
Hospital/Metal Building/Plant Ops Building)    Owned Stones River Hospital   
370 Doolittle Road, Woodbury, TN 37190 (Medical Office Building)    Owned White
County Community Hospital, LLC    401 Sewell Road, Sparta, TN 38583 (Sparta
Hospital Corporation)    Owned White County Community Hospital, LLC    401
Sewell Road (Suites 411,413,415,419), Sparta, TN 38583 (Medical Arts
Professional Building #1)    Owned Highlands Medical Center (fka White County
Community Hospital)    421, 423 Sewell Road, Sparta, TN 38583 (Medical Arts
Professional Building #2)    Owned White County Community Hospital, LLC    401
Sewell Road (Suites 431, 433, 435, 439, 441), Sparta, TN 38583 (Medical Arts
Professional Building #3)    Owned Highlands Medical Center (fka White County
Community Hospital)    399 Sewell Road, Sparta, TN 38583 (Modular Annex)   
Leased Highlands Medical Center (fka White County Community Hospital)    336
North Spring, Sparta, TN 38583 (off-site storage)    Leased

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Highlands Medical Center (fka White County Community Hospital)    401 North
Spring Street #2, Sparta, TN 38583 (off-site storage)    Leased Highlands
Medical Center (fka White County Community Hospital)    494 North Spring,
Sparta, TN 38583 (Marsha Brown Drake Building)    Leased White County Community
Hospital, LLC    401 Sewell Road, Sparta, TN 38583 (Communications Building)   
Owned White County Community Hospital, LLC    401 Sewell Road, Sparta, TN 38583
(Storage Building #1 & #2)    Owned White County Community Hospital, LLC    401
Sewell Road, Sparta, TN 38583 (Storage Building #3)    Owned National Park
Medical Center    1910 Malvern Avenue, Garland, AR 71901 (Hot Springs National
Park Hospital Holdings, LLC)    Owned National Park Medical Center    3610
Central Avenue, Garland, AR 71901 (Central Ambulance Building)    Owned National
Park Medical Center    1900 Malvern Ave, Suite 302, Garland, AR 71901 (OPB - MOB
Condo - Surgery Clinic)    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

National Park Medical Center    1900 Malvern Ave, Suite 205, Garland, AR 71901
(OPB - MOB Condo - Home Health)    Owned National Park Medical Center    1900
Malvern Ave, Suite 303, Garland, AR 71901 (OPB - MOB Condo - Home Health)   
Owned National Park Medical Center    1900 Malvern Ave, Suite 304, Garland, AR
71901 (OPB - MOB Condo - Ortho)    Owned National Park Medical Center    1900
Malvern Ave, Suite 403, Garland, AR 71901 (OPB - MOB Condo - Warren)    Leased
National Park Medical Center    1900 Malvern Ave, Suite 402, Garland, AR 71901
(OPB - MOB Condo - PFW)    Leased National Park Medical Center    1900 Malvern
Ave, Suite 101, Garland, AR 71901 (OPB - MOB Condo - Fordyce )    Leased
National Park Medical Center    1900 Malvern Ave, Suite 105, Garland, AR 71901
(OPB - MOB Condo - Mammo)    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

National Park Medical Center    121 Cordoba Center, #400, Garland, AR 71901 (Hot
Springs Village Clinic)    Leased National Park Medical Center    124 Hollywood
Avenue, Garland, AR 71901 (Hollywood Clinic)    Leased National Park Medical
Center    FMC - 1st Floor    Leased National Park Medical Center    130 Medical
Park St., Garland, AR 71901 (FMC Old Building)    Leased River Park Hospital,
Inc.    1559 Sparta Street, McMinnville, TN 37110    Owned River Park Hospital,
Inc.    1589 Sparta Street, McMinnville, TN 37110 (River Park Rental Properties
- Offices)    Owned River Park Hospital, Inc.    Vo-Tech Drive, McMinnville, TN
37110 (Physician’s Offices POB2)    Owned River Park Hospital, Inc.    145
Health Way, McMinnville, TN 37110 (Middle Tennessee Surgical Care at River Park
Hospital)    Owned River Park Hospital, Inc.    1589 Sparta St Suite 306,
McMinnville, TN 37110 (River Park Physicians Group)    Owned

--------------------------------------------------------------------------------

Borrower / Restricted Subsidiary / Facility

  

Address/City/State/ Zip Code

  

Owned/
Leased

Hartsville Medical Group, LLC    110 Doctors Drive, Suite A-1, Cheraw, SC   
Leased Hartsville Medical Group, LLC    700 Medical Park Drive, Hartsville, SC
   Leased Hartsville Medical Group, LLC    696 Medical Park Drive, Hartsville,
SC    Leased Hartsville, LLC    223 Pearl Street, Darlington, SC    Leased
Hartsville, LLC    Storage Bldg, 2521 Kellytown Road, Hartsville, SC    Leased

--------------------------------------------------------------------------------

Schedule 9.1.11

PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

None.

--------------------------------------------------------------------------------

Schedule 9.1.14

ENVIRONMENTAL MATTERS

None.

--------------------------------------------------------------------------------

Schedule 9.1.15

RESTRICTIVE AGREEMENTS

Restrictive Agreements in the notes evidencing Intercompany Obligations in
effect on the Closing Date.

--------------------------------------------------------------------------------

Schedule 9.1.16

LITIGATION

None.

--------------------------------------------------------------------------------

Schedule 9.1.18

PENSION PLANS

None.

--------------------------------------------------------------------------------

Schedule 9.1.20

LABOR CONTRACTS

 

Parties

  

Type of Agreement    

    

Term of
Agreement

Capital Medical Center and United Staff Nurses Union Local 141 UFCW   
Collective Bargaining Agreement          2013-2016 Capital Medical Center and
United Service Works Union Local 21    Collective Bargaining Agreement         
2013-2015

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Schedule 9.3

HEALTHCARE-RELATED MATTERS

[***]

--------------------------------------------------------------------------------

Schedule 10.1.12

POST-CLOSING MATTERS

 

1. Within 90 days of the Closing Date, Parent and the Borrowers will, and will
cause each other Guarantor to, take the actions set forth in Sections 7.1.1
through 7.1.3 of the Amended and Restated Loan Agreement, including, without
limitation, to grant to the Collateral Agent for the benefit of the Secured
Parties security interests in and Mortgages on the assets and Real Estate set
forth below.

 

Guarantor

  

Address/City/State/Zip Code

Muskogee Regional Medical Center, LLC    2900 North Main St., Muskogee, OK 74401
Southwestern Medical Center, LLC    5602 SW Lee Blvd, Lawton, OK, 73505
Southwestern Medical Center, LLC    1602 SW 82nd St. Lawton, OK, 73505 St.
Mary’s Real Property, LLC    1808 West Main Street, Russellville, AR 72801
Willamette Valley Medical Center, LLC    2700 SE Stratus Avenue, McMinnville, OR
97128 Farmington Missouri Hospital Company, LLC    1212 Weber Road, Farmington,
MO 63640 (Mineral Area Regional Medical Center) Farmington Clinic Company, LLC
   1101 Weber Road, Farmington, MO 63640 (Medical Office/Clinic)

 

2. Within 90 days of the Closing Date, Parent and the Borrowers will, and will
cause each other Credit Party to, take the actions relating to deposit account
control agreements set forth in Sections 8.2.2(a) and (b) of the Amended and
Restated Loan Agreement.

 

3.

Within 30 days of the Closing Date, Parent and the Borrowers will take, and will
cause Muskogee Medical and Surgical Associates, LLC to take, all actions
necessary to terminate (i) the Lien granted by Muskogee Medical and Surgical
Associates, LLC in favor of ASD Specialty Healthcare Inc. and described on
Schedule 10.2.2 hereof and (ii)

--------------------------------------------------------------------------------

  the UCC-1 financing statement (Initial Filing # 2012 3571918) naming ASD
Specialty Healthcare Inc. DBA Oncology Supply as secured party and Muskogee
Medical and Surgical Associates, LLC as debtor.

 

4. Within 10 Business Days of the Closing Date, the Borrowers will, and, as
necessary, will cause each other applicable Credit Party to, deliver to the
Collateral Agent Schedule 13 to the Perfection Certificate and Schedule 8.2.1 to
the Loan Agreement, which in each case shall be complete and correct as of the
date of delivery; provided that each Schedule delivered pursuant hereto shall be
subject to the approval of the Collateral Agent (such approval not to be
unreasonably withheld).

--------------------------------------------------------------------------------

Schedule 10.2.1

EXISTING DEBT

 

1. Indebtedness with respect to the Liens in favor of ASD Specialty Healthcare
described on Schedule 10.2.2 below.

 

2. Guaranty by Muskogee Regional Medical Center, LLC of approximately $140,000
in loans provided to Muskogee Surgical Investors, LLC by HealthSouth
Corporation.

 

3. To the extent constituting debt of a Subsidiary, see Schedule 10.2.5.

--------------------------------------------------------------------------------

Schedule 10.2.2

EXISTING LIENS

Liens evidenced by the filings listed below:

 

Debtor

  

Secured Party

  

Brief Description of

Collateral

Muskogee Medical and Surgical Associates, LLC    ASD Specialty Healthcare Inc.*
   Personal Property

 

* To be terminated in accordance with Schedule 10.1.12

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Schedule 10.2.5

PERMITTED INVESTMENTS

 

1. Investments in Auriga Insurance Group by Capella Holdings, Inc.

 

2. Ownership of 49% of the Equity Interests of Muskogee Surgical Investors, LLC
(which owns 65% of Healthsouth Surgery Center of Muskogee, LLC) by Muskogee
Regional Medical Center, LLC

 

3. Ownership of 25% of the Equity Interests of Surgery Center of Cullman, LLC by
Cullman Surgery Venture Corp., which in turn is 100% owned by Cullman Hospital
Corporation, which in turn is 100% owned by Capella Healthcare, Inc.

 

Creditor

  

Debtor

  

Principal Amount

Outstanding

  

Date of Note

Capella Healthcare, Inc.    Cannon County Hospital, LLC    $[***] (Revolver,
maximum commitment amount)    December 31, 2014 Capella Healthcare, Inc.   
Cannon County Hospital, LLC    $[***]    December 31, 2014 Capella Healthcare,
Inc.    Columbia Capital Medical Center Limited Partnership    $[***]   
December 31, 2014 Capella Healthcare, Inc.    Columbia Capital Medical Center
Limited Partnership    $[***] (Revolver, maximum commitment amount)   
December 31, 2014 Capella Healthcare, Inc    Farmington Hospital Corporation   
$[***]    December 31, 2014 Capella Healthcare, Inc.    Muskogee Holdings, LLC
   $[***]    December 31, 2014

--------------------------------------------------------------------------------

CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN REDACTED ARE MARKED WITH
BRACKETS (“[***]”). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

Creditor

  

Debtor

  

Principal Amount

Outstanding

  

Date of Note

Capella Healthcare, Inc    NPMC Holdings, LLC    $[***]    December 31, 2014
Capella Healthcare, Inc.    Oregon Healthcorp, LLC    $[***]    December 31,
2014 Capella Healthcare, Inc.    River Park Hospital, LLC    $[***]   
December 31, 2014 Capella Healthcare, Inc.    SP Acquisition Corp.    Principal
amount not to exceed $[***]    December 31, 2014 Capella Healthcare, Inc.    St.
Mary’s Holdings, LLC    $[***]    December 31, 2014 Capella Healthcare, Inc.   
White County Community Hospital, LLC    $[***] (Revolver, maximum commitment
amount)    December 31, 2014 Capella Healthcare, Inc.    White County Community
Hospital, LLC    $[***]    December 31, 2014 Capella Healthcare, Inc.   
National Healthcare of Decatur, Inc.    Principal amount not to exceed $[***]   
December 31, 2014 Capella Healthcare, Inc.    National Healthcare of Hartselle,
Inc.    Principal amount not to exceed $[***]    December 31, 2014

--------------------------------------------------------------------------------

Schedule 10.2.17

EXISTING AFFILIATE TRANSACTIONS

 

1. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Daniel S. Slipkovich, dated as of May 4, 2005

 

2. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., Daniel S. Slipkovich, and GTCR Fund VIII, L.P.,
dated as of May 12, 2006

 

3. Amendment No. 2 to Senior Management Agreement, by and among Capella
Holdings, Inc., Capella Healthcare, Inc., Daniel S. Slipkovich, and GTCR Fund
VIII, L.P., dated as of September 15, 2014

 

4. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Michael Wiechart, dated as of May 26, 2009

 

5. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., Michael Wiechart, and GTCR Fund VIII, L.P.,
dated as of August 24, 2011

 

6. Senior Management Agreement by and among Capella Holdings, Inc., Capella
Healthcare, Inc., and Denise Wilder Warren, dated as of October 17, 2005

 

7. Amendment No. 1 to Senior Management Agreement by and among Capella Holdings,
Inc., Capella Healthcare, Inc., Denise Wilder Warren, and GTCR Fund VIII, L.P.,
dated as of May 12, 2006

 

8. Professional Services Agreement, between GTCR Golder Rauner II, LLC and
Capella Healthcare, Inc., dated as of May 4, 2005

 

9. Amendment No. 1 to Professional Services Agreement, between GTCR Golder
Rauner II, LLC and Capella Healthcare, Inc., dated as of November 30, 2005

--------------------------------------------------------------------------------

EXHIBIT A

to

Amended and Restated Loan Agreement

FORM OF AMENDED AND RESTATED REVOLVER NOTE

 

            , 20     $         New York, New York

Each of the undersigned (individually, a “Borrower” and, collectively, the
“Borrowers”), jointly and severally promise to pay to the order of
                     (“Lender”), the principal sum of                     
DOLLARS ($        ), or such lesser amount as may be advanced by Lender as
Revolver Loans and owing as LC Obligations from time to time under the Loan
Agreement described below, together with all accrued and unpaid interest
thereon. Terms are used herein as defined in the Amended and Restated Loan
Agreement dated as of December 31, 2014, among Capella Healthcare, Inc., a
Delaware corporation, the other Borrowers party thereto, the Guarantors party
thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent,
Lender, and certain other financial institutions, as such agreement may be
amended, modified, renewed or extended from time to time (as amended, amended
and restated, supplemented or otherwise modified and in effect from time to
time, the “Loan Agreement”).

Principal of and interest on this Note from time to time outstanding shall be
due and payable as provided in the Loan Agreement. This Note is issued pursuant
to and evidences Revolver Loans and LC Obligations under the Loan Agreement, to
which reference is made for a statement of the rights and obligations of Lender
and the duties and obligations of Borrowers. The Loan Agreement contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events, and for the borrowing, prepayment and reborrowing of
amounts upon specified terms and conditions.

The holder of this Note is hereby authorized by Borrowers to record on a
schedule annexed to this Note (or on a supplemental schedule) the amounts owing
with respect to Revolver Loans and LC Obligations, and the payment thereof.
Failure to make any notation, however, shall not affect the rights of the holder
of this Note or any obligations of Borrowers hereunder or under any other Loan
Documents.

Time is of the essence of this Note. Each Borrower and all endorsers, sureties
and guarantors of this Note hereby severally waive demand, presentment for
payment, protest, notice of protest, notice of intention to accelerate the
maturity of this Note, diligence in collecting, the bringing of any suit against
any party, and any notice of or defense on account of any extensions, renewals,
partial payments, or changes in any manner of or in this Note or in any of its
terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity. Borrowers jointly and severally agree
to pay, and to save the holder of this Note harmless against, any liability for
the payment of all reasonable documented out-of-pocket costs and expenses
(including without limitation reasonable attorneys’ fees) if this Note is
collected by or through an attorney-at-law in accordance with Section 3.4 of the
Loan Agreement.

 

A-1

--------------------------------------------------------------------------------

In no contingency or event whatsoever shall the amount paid or agreed to be paid
to the holder of this Note for the use, forbearance or detention of money
advanced hereunder exceed the highest lawful rate permitted under Applicable
Law. If any such excess amount is inadvertently paid by Borrowers or
inadvertently received by the holder of this Note, such excess shall be returned
to Borrowers or credited as a payment of principal, in accordance with the Loan
Agreement. It is the intent hereof that Borrowers not pay or contract to pay,
and that holder of this Note not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by Borrowers under Applicable Law.

This Note shall be governed by the laws of the State of New York, without giving
effect to any conflict of law principles (but giving effect to federal laws
relating to national banks).

[Remainder of page intentionally blank; signature pages follow]

 

A-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Amended and Restated Revolver Note is executed as of
the date set forth above.

 

BORROWER AGENT: CAPELLA HEALTHCARE, INC., a Delaware corporation By:

 

Name: Denise W. Warren Title: Executive Vice President, Chief Financial Officer
and Treasurer BORROWERS: CAPELLA HOLDINGS OF OKLAHOMA, LLC CAPITAL MEDICAL
CENTER HOLDINGS, LLC CAPITAL MEDICAL CENTER PARTNER, LLC CAROLINA PINES
HOLDINGS, LLC CMCH HOLDINGS, LLC COLUMBIA OLYMPIA MANAGEMENT, INC. FARMINGTON
CLINIC COMPANY, LLC FARMINGTON HEART & VASCULAR CENTER, LLC FARMINGTON HOSPITAL
CORPORATION FARMINGTON MISSOURI HOSPITAL COMPANY, LLC HARTSVILLE MEDICAL GROUP,
LLC LAWTON HOLDINGS, LLC LAWTON SURGERY INVESTMENT COMPANY, LLC MUSKOGEE
HOLDINGS, LLC MUSKOGEE MEDICAL AND SURGICAL ASSOCIATES, LLC MUSKOGEE PHYSICIAN
GROUP, LLC MUSKOGEE REGIONAL MEDICAL CENTER, LLC NATIONAL PARK CARDIOLOGY
SERVICES, LLC NATIONAL PARK FAMILY CARE, LLC NATIONAL PARK PHYSICIAN SERVICES,
LLC NPMC HOLDINGS, LLC NPMC, LLC OREGON HEALTHCORP, LLC RUSSELLVILLE HOLDINGS,
LLC By:

 

Name: Denise W. Warren Title: Vice President and Treasurer

 

A-3

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SOUTHWESTERN MEDICAL CENTER, LLC SOUTHWESTERN NEUROSURGERY PHYSICIANS, LLC
SOUTHWESTERN PHYSICIAN SERVICES, LLC SOUTHWESTERN RADIOLOGY AFFILIATES, LLC
SOUTHWESTERN SURGICAL AFFILIATES LLC SPARTA HOSPITAL CORPORATION ST. MARY’S
HOLDINGS, LLC ST. MARY’S PHYSICIAN SERVICES, LLC ST. MARY’S REAL PROPERTY, LLC
WILLAMETTE VALLEY CLINICS, LLC WILLAMETTE VALLEY HEALTH SOLUTIONS, LLC
WILLAMETTE VALLEY MEDICAL CENTER, LLC WPC HOLDCO, LLC By:

 

Name: Denise W. Warren Title: Vice President and Treasurer

 

A-4

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EXHIBIT B

to

Amended and Restated Loan Agreement

FORM OF NOTICE OF BORROWING

NOTICE OF BORROWING

Date:             , 20    

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Loan and Security
Agreement, dated as of December 31, 2014 (as amended, amended and restated,
restated, supplemented or otherwise modified and in effect from time to time,
the “Loan Agreement”) by, among others, (i) Capella Healthcare, Inc., a Delaware
corporation, as the borrower agent (in such capacity, the “Borrower Agent”),
(ii) the other Borrowers from time to time party thereto, (iii) the Guarantors
from time to time party thereto, (iv) Bank of America, N.A., as Administrative
Agent and Collateral Agent, and (v) the Lenders from time to time party thereto.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Loan Agreement.

The Borrower Agent hereby requests a Borrowing:

 

  1. On (a Business Day)1

 

  2. In the principal amount of $        2

 

  3. Comprised of (Type of Loan)3

 

  4. For LIBOR Loans: With an Interest Period of4

The Borrower Agent hereby represents and warrants that the conditions specified
in Section 6.2 of the Loan Agreement have been satisfied on and as of the date
of such Borrowing.

 

1  Each notice of a Borrowing must be received by the Administrative Agent not
later than 12:00 p.m. (i) three (3) Business Days prior to the requested date of
any Borrowing of LIBOR Loans and (ii) on the requested date of any Borrowing of
Base Rate Loans.

2  Each Borrowing of LIBOR Loans shall be in
a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.

3  If the Borrower Agent fails to specify a Type of Loan then
the applicable Loans will be made as Base Rate Loans.

4  Pursuant to the definition of “Interest Period” in the Loan Agreement, the
Borrower Agent may request a Borrowing of LIBOR Loans with an Interest Period of
one, two, three, or six months (if available from all Lenders). If the Borrower
Agent requests a Borrowing of LIBOR Loans, but fails to specify an Interest
Period, then it will be deemed to have specified an Interest Period of one
month.

 

B-1

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CAPELLA HEALTHCARE, INC., a Delaware corporation, as Borrower Agent By:

 

Name:

 

Title:

 

 

B-2

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EXHIBIT C

to

Amended and Restated Loan Agreement

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the Amended and Restated Loan Agreement dated as of
December 31, 2014, (as amended, amended and restated, supplemented or otherwise
modified and in effect from time to time, the “Loan Agreement”), among CAPELLA
HEALTHCARE, INC., a Delaware corporation, as the borrower agent (in such
capacity, the “Borrower Agent”), the other Borrowers from time to time party
thereto, the Guarantors from time to time party thereto, BANK OF AMERICA, N.A.,
as administrative agent and collateral agent (in such capacities, the “Agent”)
for the financial institutions from time to time party to the Loan Agreement
(“Lenders”), and such Lenders. Terms are used herein as defined in the Loan
Agreement.

                                          (“Assignor”) and                     
(“Assignee”) agree as follows:

1. Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes
from Assignor (a) a principal amount of $         of Assignor’s outstanding
Revolver Loans and $         of Assignor’s participations in LC Obligations and
(b) the amount of $         of Assignor’s Commitment (which represents     % of
the total Commitments) (the foregoing items being, collectively, the “Assigned
Interest”), together with an interest in the Loan Documents corresponding to the
Assigned Interest. This Agreement shall be effective as of the date (“Effective
Date”) indicated in the corresponding Assignment Notice delivered to the Agent,
provided such Assignment Notice is executed by Assignor, Assignee, the Agent and
Borrower Agent, if applicable. From and after the Effective Date, Assignee
hereby expressly assumes, and undertakes to perform, all of Assignor’s
obligations in respect of the Assigned Interest, and all principal, interest,
fees and other amounts which would otherwise be payable to or for Assignor’s
account in respect of the Assigned Interest shall be payable to or for
Assignee’s account, to the extent such amounts accrue on or after the Effective
Date.

2. Assignor (a) represents that as of the date hereof, prior to giving effect to
this assignment, its Commitment is $        , the outstanding balance of its
Revolver Loans and participations in LC Obligations is $        ; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto, other than that Assignor is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; and (c) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance by Borrowers of their obligations under the Loan
Documents. [Assignor is attaching the Note[s] held by it and requests that the
Agent exchange such Note[s] for new Notes payable to Assignee [and Assignor].]

 

C-1

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3. Assignee (a) represents and warrants that it is legally authorized to enter
into this Assignment and Acceptance; (b) confirms that it has received copies of
the Loan Agreement and such other Loan Documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (c) agrees that it shall, independently and
without reliance upon Assignor and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents; (d) confirms that it is an
Eligible Assignee; (e) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Agreement and the
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are incidental thereto; (f) agrees that it will observe and
perform all obligations that are required to be performed by it as a “Lender”
under the Loan Documents; and (g) represents and warrants that the assignment
evidenced hereby will not result in a non-exempt “prohibited transaction” under
Section 406 of ERISA.

4. This Agreement shall be governed by the laws of the State of New York. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of this
Agreement shall remain in full force and effect.

5. Each notice or other communication hereunder shall be in writing, shall be
sent by messenger, by telecopy or facsimile transmission, or by first-class
mail, shall be deemed given when sent and shall be sent as follows:

 

(a) If to Assignee, to the following address (or to such other address as
Assignee may designate from time to time):

 

 

 

(b) If to Assignor, to the following address (or to such other address as
Assignor may designate from time to time):

 

 

 

 

Payments hereunder shall be made by wire transfer of immediately available
Dollars as follows:

If to Assignee, to the following account (or to such other account as Assignee
may designate from time to time):

 

 

 

ABA No.

 

 

Account No.

 

Reference:

 

 

C-2

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If to Assignor, to the following account (or to such other account as Assignor
may designate from time to time):

 

 

 

ABA No.

 

 

Account No.

 

Reference:

 

IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of
                    .

 

 

(“Assignee”) By

 

Title:

 

(“Assignor”) By

 

Title:

 

C-3

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EXHIBIT D

to

Amended and Restated Loan Agreement

FORM OF ASSIGNMENT NOTICE

Reference is made to (1) the Amended and Restated Loan Agreement dated as of
December 31, 2014, (as amended, amended and restated, supplemented or otherwise
modified and in effect from time to time, the “Loan Agreement”), among CAPELLA
HEALTHCARE, INC., a Delaware corporation, as the borrower agent (in such
capacity, the “Borrower Agent”), the other Borrowers from time to time party
thereto, the Guarantors from time to time party thereto, BANK OF AMERICA, N.A.,
as administrative agent and collateral agent (in such capacities, the “Agent”)
for the financial institutions from time to time party to the Loan Agreement
(“Lenders”), and such Lenders; and (2) the Assignment and Acceptance dated as of
            , 20     (“Assignment Agreement”), between                     
(“Assignor”) and                      (“Assignee”). Terms are used herein as
defined in the Loan Agreement.

Assignor hereby notifies Borrowers and the Agent of Assignor’s intent to assign
to Assignee pursuant to the Assignment Agreement (a) a principal amount of
$         of Assignor’s outstanding Revolver Loans and $         of Assignor’s
participations in LC Obligations, and (b) the amount of $         of Assignor’s
Commitment (which represents % of the total Commitments) (the foregoing items
being, collectively, the “Assigned Interest”), together with an interest in the
Loan Documents corresponding to the Assigned Interest. This Agreement shall be
effective as of the date (“Effective Date”) indicated below, provided this
Assignment Notice is executed by Assignor, Assignee, the Agent and Borrower
Agent, if applicable. Pursuant to the Assignment Agreement, Assignee has
expressly assumed all of Assignor’s obligations under the Loan Agreement to the
extent of the Assigned Interest, as of the Effective Date.

For purposes of the Loan Agreement, the Agent shall deem Assignor’s Commitment
to be reduced by $        , and Assignee’s Commitment to be increased by
$        .

The address of Assignee to which notices and information are to be sent under
the terms of the Loan Agreement is:

The address of Assignee to which payments are to be sent under the terms of the
Loan Agreement is shown in the Assignment Agreement.

This Notice is being delivered to Borrowers and the Agent pursuant to
Section 13.3 of the Loan Agreement. Please acknowledge your acceptance of this
Notice by executing and returning to Assignee and Assignor a copy of this
Notice.

 

D-1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Assignment Notice is executed as of
                    .

 

 

(“Assignee”) By

 

Name: Title:

 

(“Assignor”) By

 

Name: Title:

 

ACKNOWLEDGED AND AGREED, AS OF THE DATE SET FORTH ABOVE: BORROWER AGENT:*
CAPELLA HEALTHCARE, INC., a Delaware corporation By

 

Name: Title:

 

* No signature required if Assignee is a Lender, U.S.-based Affiliate of a
Lender or Approved Fund, or if an Event of Default exists.

 

BANK OF AMERICA, N.A., as Agent By

 

Name: Title:

 

D-2

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EXHIBIT E

to

Amended and Restated Loan Agreement

AMENDED AND RESTATED BUSINESS ASSOCIATE ADDENDUM

1. Definitions. As used in this Exhibit E, the following capitalized terms shall
have the following meanings. Capitalized terms contained herein and not
otherwise defined herein shall have the meanings attributed to them under HIPAA
(as defined below).

“Business Associate” shall generally have the same meaning as the term “business
associate” at 45 C.F.R. 160.103, and in reference to this Exhibit E means each
of the Lenders and/or Agent that, on behalf of the Covered Entity, performs or
assists in the performance of a function or activity involving the use or
disclosure of Protected Health Information.

“Covered Entity” means any Credit Party as defined in the Loan Agreement.

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996,
Pub. L. No. 104-191 (the “Act”), the privacy standards adopted by the U.S.
Department of Health and Human Services (“HHS”) as they may be amended from time
to time, 45 C.F.R. parts 160 and 164, subparts A and E (the “Privacy Rule”), the
security standards adopted by HHS as they may be amended from time to time, 45
C.F.R., parts 160, 162 and 164, subpart C (the “Security Rule”), and the privacy
provisions (Subtitle D) of the Health Information Technology for Economic
Clinical Health Act, Division A, Title XIII of Pub. L. 111-5, and its
implementing regulations as they may be amended from time to time (the “HITECH
Act”). The Act, the Privacy Rule, the Security Rule, and the HITECH Act are
collectively referred to as “HIPAA” for the purposes of this Exhibit E.

“Loan Agreement” means the Amended and Restated Loan Agreement to which this
Exhibit E is attached.

“Protected Health Information” (“PHI”) means individually identifiable health
information and has the same meaning as the term “protected health information”
as defined in 45 C.F.R. § 160.103.

“Required by Law” shall have the same meaning as the term “required by law” as
defined in 45 C.F.R. § 164.103.

“Security Incident” means the attempted or successful unauthorized access, use,
disclosure, modification, or destruction of information or interference with
system operations in an information system and has the same meaning as the term
“security incident” as defined in 45 C.F.R. § 164.304.

2. Use and Disclosure of Protected Health Information. The Business Associate
agrees that it and its employees, officers, and directors (collectively, its
“Employees”) will not use or disclose the Protected Health Information provided
to it by the Covered Entity under the Loan Agreement except as permitted or
required by the Loan Agreement, provided such use or disclosure would not
violate HIPAA if done by the Covered Entity, or as otherwise Required by Law,
and will require that each of its agents, including subcontractors
(collectively, its

 

E-3

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“Agents”), to whom it provides Protected Health Information received from, or
created or received by the Business Associate on behalf of, the Covered Entity
agrees in writing to the same restrictions and conditions that apply to the
Business Associate throughout this Exhibit E with respect to such information.
Further, the Business Associate may:

a. Use the Protected Health Information received by the Business Associate in
its capacity as the Business Associate if necessary for the proper management
and administration of the Business Associate’s business or to carry out its
legal responsibilities; or,

b. Disclose the Protected Health Information received by the Business Associate
in its capacity as the Business Associate if:

(i) the disclosure is Required by Law; or,

(ii) the Business Associate obtains reasonable assurances from the person to
whom the Protected Health Information is disclosed that it will be held
confidentially and used or further disclosed only as Required by Law or for the
purpose for which it was disclosed to the person, and the person agrees in
writing to notify the Business Associate of any instances of which it is aware
in which the confidentiality of the Protected Health Information has been
breached; or,

c. De-identify Protected Health Information and may aggregate, manipulate, use,
disclose, sell, publish and distribute such de-identified information and data
provided that such de-identification is in accordance with HIPAA; or

d. Except as otherwise limited in this Exhibit E, use or disclose the Protected
Health Information for the purpose of exercising any of its rights or
obligations under the Loan Documents, provided that such use or disclosure would
not violate the Privacy Rule or the Security Rule if done by the Covered Entity.

3. Business Associate Records. The Business Associate agrees that it shall keep
records of all disclosures of Protected Health Information as would be required
by the Covered Entity to respond to a request by an Individual for an accounting
of disclosures of Protected Health Information under HIPAA in accordance with 45
C.F.R. § 164.528.

4. Appropriate Safeguards for Privacy of Information. The Business Associate
agrees that it will use appropriate safeguards to prevent use or disclosure of
Protected Health Information other than as are permitted by the Loan Agreement
and this Exhibit E. Without limiting the generality of the foregoing sentence,
the Business Associate will:

a. Implement administrative, physical, and technical safeguards that reasonably
and appropriately protect the confidentiality, integrity, and availability of
Protected Health Information as required by HIPAA, including implementation of
the requirements of the Security Rule with regard to Electronic Protected Health
Information;

b. Ensure that any Agents to whom the Business Associate provides Protected
Health Information agree to implement reasonable and appropriate safeguards to
protect Protected Health Information; and

c. Promptly report to the Company any Security Incident of which the Business
Associate becomes aware.

 

E-4

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5. Reporting Inappropriate Use or Disclosure of Information. Business Associate
shall notify the Company of any use or disclosure of PHI not provided or allowed
by the Loan Agreement, including any Breach of Unsecured PHI and any Successful
Security Incident, promptly after Business Associate becomes aware of the
impropriety of such use or disclosure. Business Associate represents that the
significant number of meaningless attempts to, without authorization, access,
use, disclose, modify or destroy electronic versions of any of Covered Entity’s
PHI or interfere with systems operations in an Information System containing
Covered Entity’s PHI (“Unsuccessful Security Incidents”) will make a real-time
reporting requirement formidable for Business Associate. Therefore, Business
Associate and Covered Entity agree that this Section 5 constitutes notice of
such Unsuccessful Security Incidents. By way of example, the following are
considered to be illustrative of Unsuccessful Security Incidents when they do
not result in actual unauthorized access, use, disclosure, modification or
destruction of electronic PHI or interference with an Information System
containing PHI: (a) pings on Business Associate’s firewall, (b) port scans,
(c) attempts to log on to a system or enter a database with an invalid password
or username, (d) denial-of-service attacks that do not result in a server being
taken off-line and (e) Malware (worms, viruses, etc.). If the definition of
“Security Incident” is amended under HIPAA to remove the requirement for
reporting “unsuccessful” attempts to use, disclose, modify or destroy PHI, this
Section 5 shall no longer apply as of the effective date of such information.

6. Access to Information. To the extent the Business Associate possesses or
maintains Protected Health Information in a Designated Record Set, the Business
Associate shall, within a reasonable time period following the written request
of the Covered Entity, provide the Covered Entity with access to Protected
Health Information about an Individual contained in a Designated Record Set in
order for the Covered Entity to meet the requirements under 45 C.F.R. § 164.524.

7. Amendment of Protected Health Information. To the extent the Business
Associate possesses or maintains Protected Health Information in a Designated
Record Set, the Business Associate agrees that it will, within a reasonable time
period of such written request by the Covered Entity, make available Protected
Health Information for amendment and incorporate any amendments to Protected
Health Information in a Designated Record Set that the Covered Entity directs or
agrees to under 45 C.F.R.§ 164.526. For purposes of this Exhibit E, the term
“Designated Record Set” shall not include any information in Business
Associate’s possession that is the same as information in Covered Entity’s
possession (information shall be considered the same information even if the
information is held in a different format, medium or presentation or it has been
standardized).

8. Accounting of Disclosures. The Business Associate agrees to provide to the
Company, within a reasonable time period after being notified, information
collected in accordance with Section 3 of this Exhibit E in order to permit the
Covered Entity to respond to a request by an Individual for an accounting of
disclosures of Protected Health Information in accordance with 45 C.F.R. §
164.528.

9. Information to be Available to the Secretary. The Business Associate agrees
that it will make its internal practices, books, and records relating to the use
and disclosure of Protected

 

E-5

--------------------------------------------------------------------------------

Health Information received from, or created or received by the Business
Associate on behalf of, the Covered Entity available to the Secretary of the
Department of Health and Human Services solely for purposes of determining the
Covered Entity’s compliance with the Privacy Rule.

10. Obligations of Covered Entity. Covered Entity shall provide written notice
to Business Associate of any restriction on the use or disclosure of PHI to
which Covered Entity has agreed in accordance with the relevant provisions of
HIPAA, to the extent that such restriction may affect Business Associate’s use
or disclosure of PHI. Covered Entity agrees (a) to use appropriate safeguards to
maintain and ensure the confidentiality, privacy and security of PHI transmitted
to Business Associate pursuant to this Exhibit E, in accordance with the
standards and requirements of HIPAA; (b) to inform Business Associate of any
consent or authorization, including any changes in or withdrawal of any such
consent or authorization, provided to the Covered Entity by an individual
pursuant to 45 C.F.R. § 164.506 or § 164.508; (c) that Business Associate may
make any use or disclosure of Covered Entity’s PHI permitted under 45 C.F.R. §
164.512; and (d) not to request Business Associate to use or disclose PHI in any
manner that would not be permissible under HIPAA if done by Covered Entity. If
Covered Entity and any other Person have elected “affiliated covered entity”
status under 45 CFR 164.105(b), Covered Entity agrees that this Exhibit E shall
be binding upon and shall govern the use and disclosure of PHI received by
Business Associate from any such Person.

11. Term and Termination.

a. Term. This Exhibit E shall be effective as of the effective date of the Loan
Agreement and shall continue in effect until terminated in accordance with
Section 11.b.

b. Termination for Cause. Upon reasonable determination by the Covered Entity of
a material breach by the Business Associate hereunder, the Covered Entity shall
provide an opportunity for the Business Associate to cure the breach or end the
violation. If the Business Associate does not cure the breach or end the
violation within a reasonable time period after receiving written notice of the
exact nature of the breach and the proposed cure, the Covered Entity shall, if
feasible, terminate: (a) this Exhibit E and (b) all of the provisions of the
Loan Documents that involve the use or disclosure of Protected Health
Information; provided, however, that such termination shall be deemed to be
infeasible unless and until the Loan Agreement is likewise terminated in
accordance with its terms or the Business Associate otherwise agrees in writing
to such termination.

c. Effect of Termination.

i. Except as set forth in clause c(ii) below, upon termination of the Loan
Agreement or other termination of this Exhibit E, for any reason, the Business
Associate, at Covered Entity’s expense, shall return or destroy all Protected
Health Information received from the Covered Entity, or created or received by
the Business Associate on behalf of the Covered Entity. This provision shall
apply to Protected Health Information that is in the possession of Agents of the
Business Associate. The Business Associate shall retain no copies of the
Protected Health Information.

 

E-6

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ii. In the event that the Business Associate determines that returning or
destroying the Protected Health Information is infeasible, conflicts with any
Applicable Law or will, in Business Associate’s reasonable opinion, hamper
Business Associate in the investigation or defense or any claim or dispute, the
Business Associate shall provide to the Company notification of the conditions
that make return or destruction infeasible. Upon such determination by the
Business Associate that return or destruction of Protected Health Information is
infeasible, the Business Associate shall extend the protections of this Exhibit
E to such Protected Health Information and limit further uses and disclosures of
such Protected Health Information to those purposes that make the return or
destruction infeasible, for so long as the Business Associate maintains such
Protected Health Information.

12. Subpoenas. Business Associate and the Company will provide written notice to
the other party of any subpoena or other legal process seeking PHI received from
or created on behalf of Covered Entity. Such written notice shall be provided
within 48 hours of receipt of a subpoena or other legal process.

13. Changes to Regulations. If HIPAA is amended, including regulations
promulgated and provided under the HITECH Act, in a manner that would materially
alter the obligations of Business Associate as set forth in this Exhibit E, then
the parties agree in good faith to negotiate mutually acceptable changes to the
terms set forth in this Exhibit E.

14. Construction. This Exhibit E shall be construed as broadly as necessary to
implement and comply with HIPAA. Any ambiguity in the Loan Agreement shall be
resolved in favor of a meaning that complies with HIPAA. The obligations
contained in this Exhibit E shall only be binding upon Business Associate to the
extent Business Associate has actually received any Protected Health Information
and is deemed to be a “Business Associate” for the purposes of HIPAA.

15. Breach of Unsecured PHI. In the event that Business Associate discovers, as
determined in accordance with 45 C.F.R. § 164.410, that a Breach of Unsecured
Protected Health Information of Covered Entity has occurred, Business Associate
shall promptly notify the Company of the identification of each individual who
has been or is reasonably believed to have been affected by the Breach, along
with any other information that the Covered Entity will be required to include
in its notification of the individual under the HITECH Act, including, without
limitation, a description of the breach, the date of the breach and its
discovery, types of Unsecured PHI involved and description of the Business
Associate’s investigation, and mitigation and prevention efforts, to the extent
such information is known by the Business Associate at the time of notification
or promptly thereafter as information becomes available. Notwithstanding any
indemnity provision that may be contained in the Loan Agreement or any other
Loan Document (as defined therein), no Covered Entity shall have any obligation
to indemnify any Business Associate for Claims (as defined in the Loan
Agreement) arising out of a Breach by such Business Associate. In any litigation
between the Covered Entities and any Business Associate relating to a Breach,
the prevailing party in such litigation shall be entitled to be reimbursed by
the non-prevailing party for its reasonable costs, fees and expenses (including
reasonable attorney’s fees) incurred in connection with such litigation.

 

E-7

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16. State Privacy Laws. Business Associate shall comply with applicable state
privacy or state information security laws to the extent that such state privacy
or information security laws are not preempted by HIPAA.

17. HITECH Act. To the extent required by the HITECH Act and in the manner
required by the HITECH Act, Business Associate shall implement safeguards and
policy, procedure, and documentation requirements consistent with the
requirements of 45 C.F.R. §§ 164.308, 164.310, 164.312, and 164.316. Business
Associate shall not directly or indirectly receive remuneration in exchange for
any Individual’s Protected Health Information. In performing services for the
Covered Entity, Business Associate will use or disclose only the Minimum
Necessary Protected Health Information, in accordance with the HITECH Act, and
any regulations issued thereunder. Business Associate agrees to comply with the
requirements of the HITECH Act regarding requests for restriction on the
disclosure of Protected Health Information to health plans for payment and
health care operations purposes. Business Associate agrees not use or disclose
Protected Health Information for marketing purposes without first receiving
prior written approval from the Covered Entity and obtaining the necessary
Authorization from the Individual.

18. Performance of Obligation of Covered Entity. To the extent the Business
Associate is to carry out an obligation of the Covered Entity under the Privacy
Rule, the Business Associate shall comply with the requirements of the Privacy
Rule that apply to the Covered Entity in performance of such obligation.

 

E-8

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EXHIBIT F

to

Amended and Restated Loan Agreement

FORM OF BORROWING BASE CERTIFICATE

On file with the Agent.

 

F-1

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EXHIBIT G

to

Amended and Restated Loan Agreement

FORM OF COMPLIANCE CERTIFICATE

COMPLIANCE CERTIFICATE

Financial Statement Date:                    

 

To: Bank of America, N.A., as Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Loan Agreement, dated as
of December 31, 2014 (as amended, amended and restated, restated, supplemented
or otherwise modified and in effect from time to time, the “Loan Agreement”) by,
among others, (i) Capella Healthcare, Inc., a Delaware corporation, as the
borrower agent (in such capacity, the “Borrower Agent”), (ii) the other
Borrowers from time to time party thereto, (iii) the Guarantors from time to
time party thereto, (iv) Bank of America, N.A., as Administrative Agent and
Collateral Agent (in such capacities, the “Agent”), and (v) the Lenders from
time to time party thereto. Capitalized terms used but not defined herein shall
have the meanings set forth in the Loan Agreement.

The undersigned Senior Officer hereby certifies as of the date hereof that
he/she is the of the Borrower Agent, and that, as such, he/she is authorized to
execute and deliver this Certificate to the Agent on the behalf of the
Borrowers, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. Attached hereto as Schedule 1 are the year-end audited financial statements
of Parent and its Subsidiaries required by Section 10.1.2(a) of the Loan
Agreement for the Fiscal Year of the Borrower Agent ended as of the above date,
together with the report and opinion of an independent certified public
accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 10.1.2(b) of the Loan Agreement for the Fiscal Quarter of the
Borrower Agent ended as of the above date. Such financial statements fairly
present the financial condition and results of operations of Parent and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject to normal year-end audit adjustments and the absence of footnotes.

2. The undersigned (i) has reviewed and is familiar with the terms of the Loan
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and financial condition of the Credit
Parties during the accounting period covered by the attached financial
statements and (ii) hereby certifies as follows:

[select one:]

[to the knowledge of the undersigned during such accounting period no Default
has occurred and is continuing.]

 

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—or—

[the following is a list of each Default that has occurred during the accounting
period and its nature and status:]

4. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this Certificate.

5. Supplemental Schedule 8.5.1 attached hereto sets forth all of the Deposit
Accounts that have been opened by the Credit Parties during the Fiscal Quarter
of the Borrower Agent ended as of the above date.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
            ,         .

 

CAPELLA HEALTHCARE, INC., a Delaware corporation, as Borrower Agent By:

 

Name:

 

Title:

 

 

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SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

FINANCIAL COVENANT COMPLIANCE

For the Quarter/Year ended             , 20     (“Statement Date”) and
calculated as of the period of four Fiscal Quarters most recently ended
(“Subject Period”)

Section 10.3 — Fixed Charge Coverage Ratio.

 

  A. EBITDA for Subject Period:

 

1.

Consolidated Net Income for Subject Period:

$                      

 

 

  2.

Consolidated Interest Charges for Subject Period:

$           

 

 

  3.

Provision for income taxes for Subject Period:

$           

 

 

  4.

Depreciation expenses for Subject Period:

$           

 

 

  5.

Amortization expenses for Subject Period:

$           

 

 

  6.

Non-cash extraordinary, unusual or non-recurring non-cash expenses or losses for
Subject Period:

$           

 

 

  7.

One-time costs, fees, expenses and charges incurred in connection with Permitted
Acquisitions, whether or not fully consummated in an aggregate amount of up to
$10,000,000 during such period

$           

 

 

  8.

Losses from discontinued operations to the extent such losses were deducted in
computing Consolidated Net Income in an aggregate amount of up to $7,500,000
during such period:

$           

 

 

 

 

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9.

Non-controlling interest expense consisting of income of Subsidiaries
attributable to minority Equity Interests of third parties in such Subsidiaries,
net of Distributions declared or paid on Equity Interests held by third parties

$                      

 

 

  10.

One-time costs, fees, expenses and charges in an aggregate amount of up to
$45,000,000 incurred in connection with the financing transactions (including
the exercise of the Master Lease Purchase Option and any refinancing of the
Senior Notes) contemplated by the Loan Agreement

$           

 

 

  11.

one-time costs, fees, expenses, and charges in an aggregate amount of up to (A)
$5,000,000 incurred in connection with the incurrence of the Term Loan
Obligations and (B) $2,000,000 incurred in connection with the Hartville
Acquisition:

$           

 

 

  12.

Management Fees paid during such period, in an aggregate amount in each period
not to exceed $150,000: Non-cash losses with respect to Hedging Agreements for
Subject Period:

$           

 

 

  13.

Non-cash losses with respect to Hedging Agreements for Subject Period:

$           

 

 

  14.

Non-cash expenses from the grant of stock and stock options and other
compensation for Subject Period:

$           

 

 

  15.

Non-cash losses recognized and non-cash expenses incurred in connection with the
effect of currency and exchange rate fluctuations:

$           

 

 

  16.

Charges attributable to any post-employment benefits offered to former employees
for Subject Period:

$           

 

 

 

 

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17.

Non-cash subtractions from Consolidated Net Income for Subject Period:

$                      

 

 

  18.

Non-cash additions to Consolidated Net Income for Subject Period:

$           

 

 

  19.

Gains related to pensions and other post-employment benefits

$           

 

 

  20.

Income tax credits for Subject Period:

$           

 

 

  21.

Sum of Lines I.A.1 through 17:

$           

 

 

  22.

Sum of Lines I.A.18, 19 and 20:

$           

 

 

  23.

EBITDA (Line 1.A.21 minus Line I.A.22):

$           

 

 

 

 

* Subject to adjustment for Material Events.

 

B. Fixed Charges for Subject Period:

 

1.

Consolidated Interest Charges paid or required to be paid in cash (other than
payment-in-kind):

$                      

 

 

  2.

Mandatory and voluntary principal payments made on Borrowed Money (other than in
connection with the consummation of the Master Lease Purchase Option or with
respect to the Loans):

$           

 

 

  3.

Distributions made in cash (other than cash Distributions by Subsidiaries that
are not wholly-owned to holders of Equity Interests therein who are not Credit
Parties):

$           

 

 

  4.

Fixed Charges (Lines LB.1 + 2 + 3)

$           

 

 

 

 

G-6

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C. Capital Expenditures for Subject Period (other than Excluded Capital
Expenditures):

 

1.

All liabilities incurred, expenditures made or payments due (whether or not
made) for the acquisition of any fixed assets, or any improvements,
replacements, substitutions or additions thereto that would be classified as
capital expenditures in accordance with GAAP, including the principal portion of
Capital Leases:

$                      

 

 

  2.

Such expenditures financed directly with proceeds of a substantially
contemporaneous issuance of Equity Interests by the Parent (other than to a
Credit Party |or Subsidiary):

$           

 

 

  3.

Such expenditures financed with Borrowed Money permitted under the Loan
Agreement other than Revolver Loans

$           

 

 

  4.

Such additions and expenditures to the extent made with Net Proceeds from any
Permitted Asset Distribution |or proceeds of insurance from any casualty or
other insured damage or condemnation or similar awards with respect to any
property or asset:

$           

 

 

  5.

Sum of Line I.C.2 + 3 + 4:

$           

 

 

  6.

Capital Expenditures (Line I.C.1 — Line I.C.5):

$           

 

 

 

 

D. Cash taxes paid during Subject Period:                      $        

 

E. Fixed Coverage Ratio ((Line I.A.23. — Line I.C.6. — Line I.D.) ÷ (Line
I.B.4.)):          to 1.00

Minimum required (during a Fixed Charge Coverage Trigger Period): 1.10 to 1.00

 

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SUPPLEMENTAL SCHEDULE 8.5.1

to the Compliance Certificate

 

G-8