Document:

Limited Waiver Agreement Under Amended and Restated Credit Agreement

 Exhibit 10.19 

LIMITED WAIVER AGREEMENT UNDER 

AMENDED AND RESTATED CREDIT AGREEMENT 

THIS LIMITED WAIVER AGREEMENT UNDER AMENDED AND RESTATED CREDIT AGREEMENT (this “Waiver Agreement”) is entered into as
of the 27th day of September 2010 by and among SUNLINK HEALTH SYSTEMS, INC., a corporation organized under the laws of the State of Ohio, SUNLINK HEALTHCARE LLC, a limited liability company organized under the laws of the State of Georgia, DEXTER
HOSPITAL, LLC, a limited liability company organized under the laws of the State of Georgia, CLANTON HOSPITAL, LLC, a limited liability company organized under the laws of the State of Georgia, SOUTHERN HEALTH CORPORATION OF ELLIJAY, INC., a
corporation organized under the laws of the State of Georgia, SOUTHERN HEALTH CORPORATION OF DAHLONEGA, INC., a corporation organized under the laws of the State of Georgia, SOUTHERN HEALTH CORPORATION OF HOUSTON, INC., a corporation organized under
the laws of the State of Georgia, HEALTHMONT OF GEORGIA, INC., a corporation organized under the laws of the State of Tennessee, HEALTHMONT, LLC, a limited liability company organized under the laws of the State of Georgia, HEALTHMONT OF MISSOURI,
LLC, a limited liability company organized under the laws of the State of Georgia, SUNLINK SERVICES, INC., a corporation organized under the laws of the State of Georgia, SUNLINK SCRIPTSRX, LLC (f/k/a Sunlink Homecare Services, LLC), a limited
liability company organized under the laws of the State of Georgia, CENTRAL ALABAMA MEDICAL ASSOCIATES, LLC, a limited liability company organized under the laws of the State of Georgia, DAHLONEGA CLINIC, LLC, a limited liability company organized
under the laws of the State of Georgia, CARMICHAEL’S CASHWAY PHARMACY, INC., a corporation organized under the laws of Louisiana, CARMICHAEL’S NUTRITIONAL DISTRIBUTOR, INC., a corporation organized under the laws of Louisiana, and BREATH
OF LIFE HOME HEALTH EQUIPMENT, INC., a corporation organized under the laws of Louisiana (each individually, a “Borrower” and, collectively, the “Borrowers”), the other persons designated as “Credit
Parties” on the signature pages hereof, the financial institutions who are parties to this Waiver Agreement as Lenders (the “Lenders”), and CHATHAM CREDIT MANAGEMENT III, LLC, a Georgia limited liability company (in its
individual capacity “Chatham”), as Agent. 
 RECITALS 

WHEREAS, the Agent, Union Bank of California, N.A., as the funding agent (the “Funding Agent”), the financial
institutions that are party thereto as lenders, the Borrowers and the other Credit Parties are parties to that certain Amended and Restated Credit Agreement, dated as of August 1, 2008 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”; unless otherwise defined herein, capitalized terms used herein that are not otherwise defined herein shall have the respective meanings assigned to such terms in the
Credit Agreement); 
 WHEREAS, the Borrowers have notified the Agent that the Borrowers were not in compliance with the
financial covenants set forth in Sections 6.16, 6.17, 6.20 and 6.21 of the Credit Agreement (the “Specified Financial Covenants”) as of the Borrowers’ fiscal quarter ending June 30, 2010 and may not be in compliance
therewith in subsequent fiscal quarters ending on or prior to March 31, 2011 (such noncompliance collectively, “Non-Compliance with Specified Financial Covenants”); 

WHEREAS, the Borrowers have requested that the Agent and Required Lenders waive Non-Compliance with Specified Financial Covenants for the
four fiscal quarters ending respectively June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011; 

 WHEREAS, KRUG Properties, Inc. and SunLink Healthcare Investments, Inc. have been dissolved
as of June 9, 2010 (the “Dissolution”) and such Dissolution was not in compliance with Section 6.1 of the Credit Agreement (“Non-Compliance with Section 6.1 Resulting from the Dissolution”);

 WHEREAS, the Agent and Required Lenders are willing to waive the Non-Compliance with Specified Financial Covenants and
Non-Compliance with Section 6.1 Resulting from the Dissolution, on the terms and subject to the conditions described herein; and 

WHEREAS, on the terms and subject to the conditions described herein, the parties hereto wish to make certain other changes to the Credit
Agreement as set forth herein. 
 NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements and
covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows: 

Section 1. Limited Waiver. Subject to the satisfaction of the applicable conditions to effectiveness set forth in
Section 4 herein, the Agent and the Required Lenders hereby waive Non-Compliance with Specified Financial Covenants and Non-Compliance with Section 6.1 Resulting from the Dissolution. The waiver set forth above shall be limited
precisely as provided for herein and shall not be deemed to be a waiver of, consent to, or modification of any term or provision of the Loan Documents or any other document or instrument referred to therein or of any transaction or further or future
action on the part of the Borrowers or any other Credit Party requiring the consent of the Agent, the Funding Agent or the Lenders except to the extent specifically provided for herein. Except as expressly set forth herein, the Agent, the Funding
Agent and the Lenders have not and shall not be deemed to have waived any of their respective rights and remedies against the Borrowers or any other Credit Party for any existing or future Default or Event of Default. 

Section 2. Term of Waiver. The waiver of Non-Compliance with Specified Financial Covenants provided hereby
shall be applicable and effective for each of the fiscal quarters of the Borrowers ending respectively June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, provided that (i) the Borrowers shall
pay the Agent the waiver fee with respect to each applicable fiscal quarter set forth on Annex A attached hereto no later than the earlier to occur of (x) forty-fifth
(45th) day after the end of such fiscal quarter and
(y) the Termination Date, (ii) Credit Parties shall maintain compliance with the Alternate Minimum EBITDA Test (as described below) as of the end of such fiscal quarter and (iii)(a) the definitions of the Applicable Revolving Margin and
the Applicable Term Loan Margin shall be automatically amended to reflect the respective rates set forth for the applicable fiscal quarter on Annex A, with such amendments to be effective as of the “Pricing Effective Date” relating
to such corresponding fiscal quarter set forth on Annex A (the “Interest Rate Changes”) and (b) all calculations of interest, default interest, and other amounts to be paid under the Credit Agreement thereafter shall be
based on the amended Applicable Revolving Margin and Applicable Term Loan Margin, in each case as applicable and as such margins are deemed to be amended from time to time. Failure to pay any of the waiver fees described on Annex A as and
when due shall result in an immediate termination of the limited waiver of Non-Compliance with Specified Financial Covenants contained in this Waiver Agreement as of last day of the fiscal quarter to which such unpaid or delinquent waiver fee
relates. Without limiting the foregoing, the parties hereto acknowledge and agree the Interest Rate Changes shall occur automatically as set forth above in this Section 2 irrespective of whether the conditions for the continuation of the
waiver of Non-Compliance with Specified Financial Covenants remain satisfied or any other Event of Default shall occur and remain continuing after the Effective Date of this Waiver Agreement and shall be in addition to and not in lieu of the
imposition of any default rate interest arising under Section 2.4 of the Credit Agreement. The waiver of Non-Compliance with Section 6.1 Resulting from the Dissolution shall be effective for the term of the Credit Agreement.

  

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 To maintain compliance with the “Alternate Minimum EBITDA Test” for any applicable
fiscal quarter, Credit Parties shall cause the sum of (i) the Consolidated EBITDA plus (ii) to the extent deducted in computing Consolidated EBITDA, severance expenses incurred during the period commencing July 1, 2010 through
and including March 31, 2011 in an aggregate amount not exceeding $500,000 plus (iii) with respect to each Person and any of its Subsidiaries acquired in a Permitted Acquisition during the relevant period of determination, the
Consolidated Pro Forma EBITDA of such Person and any of its Subsidiaries for all times during such relevant period prior to the acquisition of such Person and any of its Subsidiaries, for the twelve (12) consecutive months ending on the last
day of each fiscal quarter set forth below to be equal to or greater than the minimum amount set forth opposite such fiscal quarter: 
  

				
	 FISCAL QUARTER ENDING
	  	MINIMUM CONSOLIDATED
EBITDA
	 September 30, 2010
	  	$	7,000,000
	 December 31, 2010
	  	$	7,000,000
	 March 31, 2011
	  	$	7,000,000

 Section 3. Changes to
Credit Agreement. Subject to the satisfaction of the applicable conditions to effectiveness set forth in Section 4 herein, the Borrowers, the other Credit Parties, the Agent and the Required Lenders hereby agree to the changes
set forth in this Section 3: 
 (1) Section 1.1 of the Credit Agreement is revised by adding the following new
definitions thereto in proper alphabetical order: 
 ““Applicable Multiple”: For all
periods prior to August 15, 2011, a multiple of 5.0 and for all periods on and after August 15, 2011, a multiple of 3.5.” 

““Waiver Agreement”: That certain Limited Waiver Agreement Under Amended and Restated Credit
Agreement dated as of September 27, 2010, by and among the Borrowers, the Agent, and the Required Lenders.” 
 (2)
Subclause (B) in the definition of “Borrowing Base” set forth in Section 1.1 of the Credit Agreement is hereby revised by deleting the number “3.5” in the last line thereof and substituting in lieu thereof the words
“Applicable Multiple”. 
 (3) Clause (a) in the definition of Prepayment Event set forth in Section 1.1 of
the Credit Agreement is hereby revised and restated in its entirety to read as follows: 
 ““(a) any sale, transfer or
other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of any Credit Party other than dispositions described in Section 6.2(a), Section 6.2(b), Section 6.2(c) and Section 6.2(d);
provided, however, that notwithstanding the foregoing, solely with respect to the period commencing on and after May 15, 2011, as long as no Default or Event of Default has occurred and is then continuing, no Prepayment Event
arising from the dispositions described in this clause (a) shall be deemed to have occurred during such period to the extent net proceeds of such dispositions during such period have been reinvested, or committed pursuant to a written

  

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agreement (including any purchase orders) to be reinvested, in productive assets (other than Inventory) of a kind then used or usable in the business of a Credit Party within 180 days after the
date of such disposition and subsequently such reinvestment is made; provided further that no such exception from treatment as a Prepayment Event shall apply for dispositions described in this clause (a) occurring prior to
May 15, 2011;” 
 (4) The following definitions contained in Section 1.1 of the Credit Agreement are hereby
revised and restated to read in their entirety as follows: 
 ““Applicable Revolving
Margin”: 6.50%.” 
 ““Applicable Term Loan Margin”: 8.07%” 

““Consolidated EBITDA”: With respect to the Borrowers and their Subsidiaries determined in
accordance with GAAP for any fiscal period, without duplication, an amount equal to: 
 (a) Consolidated Net
Income of the Borrowers and their Subsidiaries for such period determined in accordance with GAAP, minus 

(b) on a consolidated basis, the sum of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain (but not any aggregate net loss) during such period arising from the sale, exchange or other disposition of any assets by the Borrowers and their Subsidiaries (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities) other than inventory and services sold, exchanged, or disposed of in the ordinary course of business, (v) any
non-recurring gains for such period and (vi) any other non-cash gains that have been added in determining Consolidated Net Income, in each case to the extent included in the calculation of Consolidated Net Income of the Borrowers and their
Subsidiaries for such period in accordance with GAAP, but without duplication, plus 
 (c) on a
consolidated basis, the sum of (i) any provision for income taxes, (ii) Consolidated Interest Expense, (iii) loss from extraordinary items for such period, (iv) the amount of non-cash charges (including depreciation,
amortization, depletion, deferred tax expense, and non-cash interest expense but excluding any bad debt allowance or reserve), (v) the amount, if any, of non-recurring costs or expenses related to any refinancing, acquisition, or merger
transaction, including, without limitation, accounting, legal, consulting and other professional fees in connection therewith, for such period, (vi) amortized debt discount for such period, and (vii) the amount of any deduction to
Consolidated Net Income as the result of any grant to any members of the management of the Borrowers and their Subsidiaries of any Equity Interests (in each case, as determined in accordance with GAAP), in each case to the extent included in the
calculation of Consolidated Net Income of the Borrowers and their Subsidiaries for such period in accordance with GAAP, but without duplication.” 

““Consolidated Net Income”: For any period, the consolidated net after tax income of the Borrowers
and their Subsidiaries determined in accordance with GAAP; 
  

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provided that the following items shall be excluded in computing Consolidated Net Income (without duplication): (i) the net income (or loss) of any Person which is not a Subsidiary of
the Borrower, except to the extent of the amount of any dividends or other distributions actually paid to the Borrowers or any of their Subsidiaries during such period, (ii) except for determinations expressly required to be made on a pro forma
basis, the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or all or substantially all of the property or assets of such Person are acquired by a Subsidiary, (iii) the net income of any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary, (iv) all legal fees and legal expenses charged to expense by the Borrowers for the litigation between Piedmont Healthcare Inc. and Piedmont Mountainside Hospital Inc.
(Piedmont) and SunLink Health Systems, Inc. SunLink Healthcare LLC and Southern Health Corporation of Jasper, Inc. (SunLink) for breach of agreement in the asset sale agreement in June 2004 in which Piedmont purchased Mountainside Medical Center
from SunLink; (v) all legal fees and legal expenses charged to expense by the Borrowers for the settlement of the UK Obligations; and (iv) any income recognized as a result of any reduction or adjustment in any allowances or reserves
established by any Credit Party with respect to accounts receivable.” 
 ““Fixed Charge Coverage
Ratio”: For any period of determination, the ratio of 
  

	 	(a) (i)	Consolidated EBITDA less (ii) (A) Capital Expenditures other than Capital Expenditures to the extent financed through the incurrence of Capitalized Lease
Obligations or any other Indebtedness (other than Revolving Loans) unless such Capital Expenditures constitute a portion of the purchase price for a Permitted Acquisition and (B) taxes paid in cash (other than taxes with respect to
non-recurring capital gains), 

 to 

 

	 	(b)	the sum of (i) Consolidated Interest Expense and (ii) all scheduled or otherwise required principal payments (excluding mandatory prepayments of the Term Loan
under this Agreement) with respect to Total Liabilities (including but not limited to all payments with respect to Capitalized Lease Obligations of the Borrowers and the Subsidiaries), in each case determined for said period on a consolidated
basis; provided however, that any waiver fees due from Borrowers pursuant to the Waiver Agreement shall be excluded from the calculation hereof. 

““Loan Documents”: This Agreement, the Waiver Agreement, the Security Documents, the Notes and all
other amendments, documents, instruments and agreements, including lockbox agreements, control agreements, servicing agreements, financing statements, and deeds of trust or mortgages, executed in connection herewith or therewith.” 

““Revolving Commitment Amount”: (i) Prior to the effective date of the Waiver Agreement,
$12,000,000 and (ii) on and after the effective date of the Waiver Agreement, $9,000,000, as the same may be reduced from time to time, if at all, in accordance with this Agreement, including pursuant to Section 2.8.” 

 

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 ““Termination Date”: The earliest of
(a) September 30, 2011, (b) the date on which the Revolving Commitment is terminated pursuant to Section 7.2 hereof or (c) the date on which the Revolving Commitment Amount is reduced to zero pursuant to Section 2.8
hereof.” 
 (5) Section 5.15 of the Credit Agreement is revised by adding the following new subpart (e) after the
last sentence thereof: 
 “(e) Notwithstanding any of the terms of this Section 5.15 to the contrary,
the Local Bank Account with account number              at Peoples Southern Bank shall not be required to be subject to a Local Bank Account Agreement provided that the Credit
Parties cause ) all amounts in such account to be transmitted for deposit on a weekly basis to a Concentration Account.” 

(6) Article V of the Credit Agreement is hereby revised by adding the following new Section 5.17 immediately after Section 5.16
appearing at the end thereof: 
 “Section 5.17 Special Covenants. 

(a) On or prior to December 31, 2010, Borrowers shall cause to be delivered to Agent (i) one or more written
proposal letters from lenders participating in the Rural Development Advance program (the “RDA Program”) to provide one or more Borrowers with not less than $11 million of funded loans under the RDA Program on
terms and conditions reasonably satisfactory to the Required Lenders (the “RDA Loans”), (ii) one or more written proposal letters from other third party lenders reasonably satisfactory to the Required Lenders to provide one or
more Borrowers with not less than $11 million of funded loans on terms and conditions reasonably satisfactory to the Required Lenders (the “New Loans”), or (iii) one or more fully executed letters of intent with bona fide third
parties with respect to the disposition of certain assets of one or more of the Borrowers in one or a series of transactions at fair market value for net cash proceeds to Borrowers of not less than $11 million in the aggregate on terms, conditions,
and with parties reasonably satisfactory to the Required Lenders (the “Approved Sales”) (the foregoing alternate delivery requirements due by December 31, 2010, the “December Delivery Covenant”). On or prior to
February 15, 2011, the Borrowers shall cause the closing and funding of the RDA Loans, the New Loans or the Approved Sales to be consummated on terms and conditions consistent with the proposal letters and/or letters of intent (as applicable)
referenced above and on terms reasonably satisfactory to the Required Lenders with all proceeds thereof (net of all reasonable transaction costs and expenses not exceeding $500,000) being concurrently applied to permanently repay the Term Loan (the
foregoing closing and paydown requirements due by February 15, 2011, the “February Paydown Covenant”). The Borrowers, Agent and Lenders agree that notwithstanding anything to the contrary contained in this Agreement (including,
without limitation, the terms of Section 7.1 hereof), the sole consequence of any failure by Borrowers to satisfy any of the undertakings set forth in this Section 5.17(a) shall be the Special Pricing Increases (as defined
below) and that no Default or Event of Default shall be deemed to occur solely as a result of any failure by the Borrowers to timely comply with the terms of this Section 5.17(a). As used herein, “Special Pricing Increases”
shall mean (a) if Borrowers fail to satisfy the December Delivery Covenant on or prior to December 31, 2010, the Applicable Revolving Margin and the Applicable Term Loan Margin shall each be automatically increased (i) by 100 basis
points over the levels which would otherwise be applicable under this Agreement and the Waiver Agreement for the 
  

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period commencing January 1, 2011 through and including March 31, 2011 and (ii) by 200 basis points over the levels which would otherwise be applicable under this Agreement and the
Waiver Agreement for all periods from and after April 1, 2011 or (b) if Borrowers timely comply with the December Delivery Covenant by December 31, 2010 but fail to timely comply with the February Paydown Covenant on or prior to
February 15, 2011, the Applicable Revolving Margin and the Applicable Term Loan Margin shall each be automatically increased (i) by 100 basis points over the levels which would otherwise be applicable under this Agreement and the Waiver
Agreement for the period commencing February 15, 2011 through and including May 14, 2011 and (ii) by 200 basis points over the levels which would otherwise be applicable under this Agreement and the Waiver Agreement for all periods
from and after May 15, 2011. For avoidance of doubt, (i) the Special Pricing Increases shall be in addition to and not in lieu of the “Interest Rate Changes” referenced in Section 2 of the Waiver Agreement and (ii) if a
Special Pricing Increase occurs as a result of clause (a) of the definition thereof, no additional Special Pricing Increase shall occur under clause (b) of the definition thereof. 

The Borrowers, Agent and Lenders acknowledge and agree that the inclusion of any language in this Section 5.17(a) which refers
to any matter being “reasonably satisfactory” to the Required Lenders shall be limited to determining whether Borrowers have satisfied their obligations under this Section 5.17(a). Without limiting any of the obligations of the
Borrowers described in this Section 5.17(a), nothing contained in this Section 5.17(a) shall be deemed to modify or limit the sole and absolute discretion of the Agent and Required Lenders to approve or withhold approval to
any proposed incurrence of Indebtedness, incurrence of Liens, release or subordination of any Liens in any Collateral, and/or any sale or disposition of any assets of any Credit Party which is not otherwise expressly permitted by the terms this
Agreement. 
 (b) On or prior to November 30, 2010, Borrowers shall retain, at a cost not exceeding $87,500,
a financial advisor selected by Borrowers and reasonably acceptable to the Agent (the “Financial Advisor”) to assess the business operations, financial performance and financial projections of the Borrowers (the
“Assessment”). The Financial Advisor shall be directed to complete the Assessment on or prior to January 15, 2011 (the “Consulting Period”). Borrowers and the other Credit Parties each irrevocably authorize,
and shall direct, the Financial Advisor during the Consulting Period to: (i) regularly consult with, and respond to reasonable inquiries of Agent and Lenders concerning matters relating to the affairs, finances and businesses of Borrowers or
any other Credit Party and/or Financial Advisor’s activities related thereto (including, without limitation, communications outside the presence of any representatives of Borrowers or any other Credit Party but for which Borrowers shall be
provided a summary), and (ii) provide Borrowers and Lenders and their respective advisors copies of such reports, analyses, materials related to the Assessment as Lenders and their respective advisors may reasonably request (including, without
limitation, such confidential memoranda or other work product as may be provided by Financial Advisor to any or all of Borrowers, Credit Parties and/or any of their respective advisors), provided that the Financial Advisor’s activities shall be
carried out during the normal business hours and shall not interfere with the business operations of the Borrowers and other Credit Parties.” 
  

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 (7) Section 6.11 of the Credit Agreement is revised and restated to read in its
entirety as follows: 
 “Section 6.11 Subordinated Debt. No Credit Party will, nor permit any
Subsidiary to, (a) make any scheduled payment of the principal of or interest on any Subordinated Debt which would be prohibited by the terms of such Subordinated Debt and any related subordination agreement, provided that, so long as no
Default or Event of Default shall have occurred and be continuing and Borrowers continue to comply with the terms of Section 2 of the Waiver Agreement, the Credit Parties may make scheduled payments of principal and interest on Subordinated
Debt due to the Sellers on or after October 22, 2010 (in a principal amount not to exceed $253,700) and April 22, 2011 (in a principal amount not to exceed $247,067); (b) directly or indirectly make any prepayment on or purchase,
redeem or defease any Subordinated Debt or offer to do so (whether such prepayment, purchase or redemption, or offer with respect thereto, is voluntary or mandatory, unless expressly permitted pursuant to an intercreditor or subordination agreement
entered into between the holder of any such Subordinated Debt and the Agent); (c) amend or cancel the subordination provisions applicable to any Subordinated Debt; (d) take or omit to take any action if as a result of such action or
omission the subordination of such Subordinated Debt, or any part thereof, to the Obligations might be terminated, impaired or adversely affected; or (e) omit to give the Agent prompt notice of any notice received from any holder of
Subordinated Debt, or any trustee therefor, or of any default under any agreement or instrument relating to any Subordinated Debt by reason whereof such Subordinated Debt might become or be declared to be due or payable.” 

(8) Section 7.1(c) of the Credit Agreement is revised and restated to read in its entirety as follows: 

“(c) Any Credit Party or any of its respective Subsidiaries shall fail to comply with Sections 2.14, 5.1(f), 5.2, 5.3, 5.5, 5.12,
5.15, 5.16 or 5.17(b) hereof or any Section of Article VI hereof.” 
 (9) Schedule 1.1(b) to the Credit Agreement is
revised by deleting such Schedule 1.1(b) in its entirety and replacing the same with Schedule 1.1(b) attached hereto. 

(10) Schedule 4.28 to the Credit Agreement is revised by deleting such Schedule 4.28 in its entirety and replacing the same
with Schedule 4.28 attached hereto. 
 Section 4. Conditions Precedent. This Waiver Agreement shall become
effective as of the date each of the following conditions precedent has been met (such date, the “Effective Date”): 

(1) The Agent shall have received on behalf of the Lenders: 

(a) counterparts to this Waiver Agreement, duly executed by Borrowers, each other Credit Party, and the Required Lenders;

 (b) a payment in immediately available funds of a waiver fee for the fiscal quarter ending June 30, 2010
of $787,968.11 for the ratable benefit of the Lenders; and 
 (c) a certificate of the Secretary or Assistant
Secretary (or other appropriate officer) of each Credit Party dated as of the date hereof certifying to true and accurate copy of the corporate (or other) resolutions of such Credit Party authorizing the execution, delivery and performance of this
Waiver Agreement and attaching a true and accurate copy of the certificate of merger issued by the Secretary of State of Georgia evidencing the merger of Southern Health Corporation of Jasper, Inc., with and into Southern Health Corporation of
Ellijay, Inc. 
  

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 (2) The Funding Agent shall have received on behalf of the Lenders: 

(a) a payment in immediately available funds of all accrued and unpaid default rate interest on the Revolving Loan and the
Term Loan for the period of July 1, 2010 through but excluding the Effective Date of this Waiver Agreement for the ratable benefit of the Lenders; 

(b) a payment in immediately available funds of a Prepayment Fee equal to $30,000 for the reduction in the Revolving
Commitment Amount as revised hereunder for the ratable benefit of the Revolving Lenders; and 
 (c) a prepayment
in immediately available funds of the Revolving Loan to the extent necessary to cause the outstanding balance thereof to be less than the Revolving Commitment Amount as revised pursuant to this Waiver Agreement. 

(3) All legal fees and out of pocket expenses of the Agent shall have been paid in full by Borrowers. 

Section 5. Representations and Warranties. Each of the Credit Parties hereby represents and warrants to the Agent and Lenders,
which representations and warranties shall survive the execution and delivery of this Waiver Agreement, that: 
 (1) All of the
representations and warranties contained in Article IV of the Credit Agreement shall be true and correct in all material respects (except with respect to those representations and warranties which are qualified as to materiality in which case such
specific materiality qualifiers shall apply) on the Effective Date, with the same force and effect as if made on such date, unless such representation and warranty expressly applies to an earlier date, in which case such representation and warranty
shall be deemed made as of such earlier date. 
 (2) The execution, delivery and performance by each Credit Party of this Waiver
Agreement have been duly authorized by all necessary corporate action by such Credit Party. This Waiver Agreement constitutes the legal, valid and binding obligations of each Credit Party executing the same, enforceable against each Credit Party in
accordance with its terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of
equitable remedies. 
 (3) The execution, delivery and performance by each Credit Party of this Waiver Agreement will not
(a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to such Credit
Party, (b) violate or contravene any provision of the Articles or Certificates of Incorporation or Formation, bylaws, operating agreement or partnership agreement of such Credit Party, or (c) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or instrument to which such Credit Party is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder. 

(4) Except as specifically waived hereunder, no Default or Event of Default has occurred and is continuing. 

 

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 (5) No order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body or authority is required on the part of any Credit Party to authorize, or is required in connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, this Waiver Agreement. 
 Section 6. Acknowledgment; Release. The
Borrowers and the other Credit Parties acknowledge and agree that their obligations to the Agent and the Lenders under the Credit Agreement as revised hereby are owing without offset, defense or counterclaim assertable by the Borrowers and such
other Credit Parties against the Agent or any Lender. The Borrowers and the other Credit Parties further acknowledge and agree that the Security Documents continue to secure the obligations of the Borrowers under the Credit Agreement as revised
hereby. Each of the Credit Parties hereby waives, releases and discharges Agent, the Funding Agent and Lenders from any and all claims, demands, actions or causes of action arising out of or in any way relating to the Loans, the other Obligations,
the Loan Documents and/or any documents, agreements, dealings or other matters connected with any of the foregoing including, without limitation, all known and unknown matters, claims, transactions, or things occurring prior to the date of this
Waiver Agreement related to the Loans, the other Obligations, the Loan Documents and/or any documents, agreements, dealings or other matters connected with any of the foregoing. 

Section 7. General Provisions. 

(1) Except as specifically revised or waived set forth above, the Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed. Each of the Credit Parties hereby confirms its respective guarantees, pledges, grants of security interests and mortgages and other obligations, as applicable, under and subject to the terms of
each of the other Loan Documents to which it is party, and agrees that, notwithstanding the effectiveness of this Waiver Agreement, such guarantees, pledges, grants of security interests and mortgages and other obligations, and the terms of each of
the other Loan Documents to which it is a party, are not impaired or affected in any manner whatsoever and shall continue to be in full force and effect after giving effect to this Waiver Agreement. 

(2) The execution, delivery and effectiveness of this Waiver Agreement shall not operate as a waiver of any right, power or remedy of the
Agent or any Lender under the Credit Agreement or any other Loan Document, nor constitute amendment of any provision of the Credit Agreement or any other Loan Document, except as specifically set forth herein. Upon the effectiveness of this Waiver
Agreement, each reference in the Credit Agreement to “this Waiver Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Credit Agreement as revised hereby.

 (3) Each Credit Party acknowledges and agrees that the revisions and waivers set forth herein are effective solely for the
purposes set forth herein and shall not be deemed (i) except as expressly provided in this Waiver Agreement, to be a consent by the Agent or any Lender to any amendment, waiver or modification of any term or condition of the Credit Agreement or
of any other Loan Document, (ii) to create a course of dealing or otherwise obligate the Agent or Lenders to forbear, waive, consent or execute similar revisions or waivers under the same or similar circumstances in the future, or (iii) to
amend, prejudice, relinquish or impair any right of the Agent or Lenders to receive any indemnity or similar payment from any Person or entity as a result of any matter arising from or relating to this Waiver Agreement. 

 

 10 

 (4) This Waiver Agreement may be executed in any number of counterparts, each such
counterpart constituting an original but all together one and the same instrument. Any party delivering an executed counterpart of this Waiver Agreement by fax shall also deliver an original executed counterpart, but the failure to do so shall not
affect the validity, enforceability or binding effect of this Waiver Agreement. 
 (5) In case any provision in or obligation
under this Waiver Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby. 
 (6) This Waiver Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. 
 (7) Without limiting the general applicability of
Section 8.2 of the Credit Agreement, the Credit Parties agree to reimburse the Agent for the reasonable fees, costs and expenses of counsel in connection with the preparation, negotiation, execution, delivery and administration of this Waiver
Agreement. 
 (8) This Waiver Agreement shall constitute a Loan Document. 

(9) Section headings in this Waiver Agreement are included herein for convenience of reference only and shall not constitute a part of
this Waiver Agreement for any other purposes. 
 (10) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS WAIVER AGREEMENT
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. 

(11) Borrowers hereby authorize and request that the Funding Agent and Lenders cause a Revolving Loan to be funded on the Effective Date
in an amount equal to the sum of payments due under Section 4 of this Waiver Agreement and direct that the Funding Agent disburse the proceeds of such Revolving Loan to fund the payments contemplated by Section 4 of this Waiver Agreement
on behalf of the Borrowers. 
 <Signatures Appear on the Following Pages> 

 

 11 

 IN WITNESS WHEREOF, the parties hereto have executed this Limited Waiver Agreement
Under Amended and Restated Credit Agreement as of the date first written above. 
  

							
	BORROWERS:
	
	 SUNLINK HEALTH SYSTEMS, INC.,

as a Borrower and Borrowers’ Agent

		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	 SUNLINK HEALTHCARE, LLC,

as a Borrower
 By its Sole Member SunLink Health
Systems, Inc.

		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	 DEXTER HOSPITAL, LLC,

as a Borrower
 By its Sole Member SunLink
Healthcare, LLC

		
		 	By its Sole Member SunLink Health Systems, Inc.
				
		 		 	By:	 	 
		 		 	Name: 	 	 
		 		 	Title:	 	 
	
	 CLANTON HOSPITAL, LLC,

as a Borrower
 By its Sole Manager Central
Alabama Medical
 Associates, LLC

		
		 	By its sole member, SunLink Healthcare, LLC
		 		 	By its Sole Member SunLink Health Systems, Inc.
				
		 		 	By:	 	 
		 		 	Name:	 	 
		 		 	Title:	 	 
	
	 SOUTHERN HEALTH CORPORATION OF ELLIJAY, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

											
	 SOUTHERN HEALTH CORPORATION OF DAHLONEGA, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	 SOUTHERN HEALTH CORPORATION OF HOUSTON, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	HEALTHMONT OF GEORGIA, INC.,
as a Borrower
		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	HEALTHMONT, LLC,
as a Borrower
	By its Sole Member SunLink Health Systems, Inc.
		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	 HEALTHMONT OF MISSOURI, LLC,
as a Borrower

By its Sole Member HealthMont, LLC

		
		 	By its Sole Member SunLink Health Systems, Inc.
				
		 		 	By:	 	 
		 		 	Name:	 	 
		 		 	Title:	 	 
	
	 SUNLINK SERVICES, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 

  

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

							
	
	 SUNLINK SCRIPTSRX, LLC

(f/k/a Sunlink Homecare Services, LLC),
as a Borrower

By its sole member SunLink Health Systems, Inc.

		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	 CENTRAL ALABAMA MEDICAL ASSOCIATES, LLC, as a Borrower

By its Sole Member SunLink Healthcare, LLC

		
		 	By its Sole Member SunLink Health Systems, Inc.
				
		 		 	By:	 	 
		 		 	Name:	 	 
		 		 	Title:	 	 
	
	 DAHLONEGA CLINIC, LLC,

as a Borrower
 By its Sole Member Southern Health
Corporation of Dahlonega, Inc.

				
		 		 	By:	 	 
		 		 	Name:	 	 
		 		 	Title:	 	 
	
	 CARMICHAEL’S CASHWAY PHARMACY, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 
	
	 CARMICHAEL’S NUTRITIONAL DISTRIBUTOR, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

			
	 BREATH OF LIFE HOME HEALTH EQUIPMENT, INC.,

as a Borrower

		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

			
	AGENT:
	
	 CHATHAM CREDIT MANAGEMENT III, LLC,

as Agent

		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

			
	FUNDING AGENT:
	
	 UNION BANK OF CALIFORNIA, N.A.,

as Funding Agent

		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

			
	LENDERS:
	
	 CHATHAM CREDIT MANAGEMENT III, LLC, not individually, but as agent for

CHATHAM INVESTMENT FUND QP III, LLC, as a Lender and CHATHAM INVESTMENT FUND III, LLC, as a Lender

		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

			
	LENDERS:
	
	UNION BANK OF CALIFORNIA, N.A.,
as a Lender
		
	By:	 	 
	Name:	 	 
	Title:	 	 

[SIGNATURE PAGE TO THE LIMITED WAIVER
AGREEMENT UNDER 
 AMENDED AND RESTATED
CREDIT AGREEMENT] 

 Annex A 

 

							
	 Calculation Date
	  	 Period ending as of 9/30/2010
	  	 Period ending as of 12/31/2010
	  	 Period ending as of
3/31/20111

				
	 Pricing Effective Date
	  	November 15, 2010	  	February 15, 2011	  	May 15, 2011
				
	 Waiver Fees
	  	0.50% of the sum of the outstanding principal balance of the Term Loan and the Revolving Commitment Amount	  	0.50% of the sum of the outstanding principal balance of the Term Loan and the Revolving Commitment Amount	  	0.50% of the sum of the outstanding principal balance of the Term Loan and the Revolving Commitment Amount
				
	 Applicable Revolving Margin
	  	7.50%	  	8.50%	  	9.50%
				
	 Applicable Term Loan Margin
	  	9.07%	  	10.07%	  	11.07%

  

	1
	 To the extent that (i) Borrowers are in compliance with all Specified Financial Covenants other than Section 6.21 for the period ending
3/31/11 (or an amendment to the Credit Agreement retroactively amending Section 6.21 to avoid noncompliance for such period shall have been executed by all applicable parties and become effective) and (ii) the Alternate Minimum EBITDA Test
in Section 2 of this Amendment to the continuation of the limited waiver of Non-Compliance with Specified Financial Covenants have been satisfied for the period ending 3/31/11, no waiver fee or increase in the Applicable Revolving Margin or
Applicable Term Loan Margin described under the heading “Period ending as of 3/31/11” shall occur or become due and owing and the Applicable Revolving Margin shall remain at 8.50% and the Applicable Term Loan Margin shall remain at 10.07%.CAMAC Energy Inc.: Exhibit 10.1- Filed by newsfilecorp.com

Exhibit 10.1

EXECUTION COPY

HEADS OF AGREEMENT

These Heads of Agreement (this “Heads of Agreement”), dated October 11, 2010 (the “Effective Date”), is entered into by and among CAMAC Energy Inc, a Delaware corporation (“CEI”), CAMAC
Energy Holdings Limited, a Cayman Islands company (“CEHL”), Allied Energy Resources Nigeria Limited (“Allied”), and CAMAC International (Nigeria) Limited (“CINL,” and together with CEHL and Allied,
“CAMAC”). CEI, CEHL, Allied and CINL are sometimes referred to herein collectively as the “Parties” or individually as a “Party.”
 

RECITALS

 WHEREAS,  on August 6, 2010, CEI and CAMAC entered into a Memorandum of Understanding (the “MOU”), regarding CEI’s intention to enter into a proposed transaction (the “Transaction”) pursuant to which CEI
would acquire from CEHL of (i) all of the interest currently held by CEHL’s two wholly-owned subsidiaries, Allied and CINL, in that certain Production Sharing Contract (the “PSC”), dated July 22, 2005, by and between Allied,
CINL, and Nigerian AGIP Exploration Limited (“NAE”), which PSC relates to those certain Oil Mining Leases 120 and 121 granted to Allied by the Federal Republic of Nigeria, commencing on February 27, 2001, and of which CAMAC
currently holds a sixty percent (60%) participating interest (“OML 120/121”); and (ii) the joint and several obligations of CINL and Allied to NAE under the PSC, subject to those rights and obligations that are, by law, required to
remain with Allied (the foregoing interests and obligations shall be referred to herein as the “Contract Rights”);
 

 WHEREAS,  in consideration for the transfer of the Contract Rights to CAMAC Petroleum Limited, a wholly-owned Nigerian subsidiary of CEI (“CPL”), the Parties agreed that CEHL (or its assignee) would receive such consideration
to be agreed by the Parties;  

 WHEREAS, pursuant to the MOU, the Parties agreed that CINL, Allied and NAE would enter into a Novation Agreement (the “Novation Agreement”) pursuant to which (i) CINL and Allied shall novate to CPL their respective
participating interests in and all rights and obligations under the PSC (other than in relation to the Oyo Asset previously acquired by CEI from CAMAC on April 7, 2010, and those rights and obligations that are, by law, required to remain with
Allied), and (ii) CPL shall assume the joint and several obligations of CINL and Allied under the PSC, other than those obligations that are, by law, required to remain with Allied); and

 WHEREAS, following further evaluation of the Contract Rights, CEI has offered, and CAMAC has agreed upon, the definitive and binding essential terms of the Transaction as set forth herein.
 

1

EXECUTION COPY

 NOW, THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, the Parties agree as follows:
  

	
 	
1.  		
 Transaction Structure. The Transaction shall be structured as an acquisition
of the Contract Rights assets of CAMAC by CEI through its wholly-owned Nigerian subsidiary, CAMAC Petroleum Limited (“CPL”), in exchange for cash and/or Common Stock of CEI (“Shares”) upon the achievement of certain
milestones and at CEI’s election as follows: 

	

	
 	
 	
 	
 
	
 	
 	
a. 		
Closing of Transaction: Within 15 days of the closing of the Transaction, CEI shall pay to Allied $5 million (the “Closing Cash Consideration”);

	
	 	 	 	 
	
 	
 	
b. 		
First Milestone: Upon commencement of drilling of the first well outside of the Oyo Field (as defined in the Purchase and Sale Agreement, dated November 18, 2009, as amended, by and between the Parties (the
“PSA”), and hereinafter referred to as the “Oyo Field”) under the PSC, CEI may elect to retain the Contract Rights (the “First Milestone Option”) upon payment to Allied of $5 million (either in
cash, or at Allied’s option, in Shares) (the “First Milestone Consideration”);

	
	 	 	 	 
	
 	
 	
c. 		
Second Milestone: Upon discovery of hydrocarbons outside of the Oyo Field under the PSC in sufficient quantities to warrant the commercial development thereof, CEI may elect to retain the Contract Rights (the
“Second Milestone Option”) upon payment to Allied of $5 million (either in cash, or at Allied’s option, in Shares) (the “Second Milestone Consideration”);

	
	 	 	 	 
	
 	
 	
d. 		
Third Milestone: Upon the approval by the Management Committee (as defined in the PSC) of a Field Development Plan with respect to the development of non-Oyo Field areas under the PSC, as approved by CEI, CEI may elect to
retain the Contract Rights (the “Third Milestone Option”) upon payment to Allied of $20 million (either in cash, or at Allied’s option, in Shares) (the “Third Milestone Consideration”); and

	
	 	 	 	 
	
 	
 	
e. 		
Fourth Milestone: Upon commencement of commercial hydrocarbon production outside of the Oyo Field under the PSC, CEI may elect to retain the Contract Rights (with no additional milestones or consideration required
thereafter following payment in full of the Fourth Milestone Consideration, as defined below) (the “Fourth Milestone Option,” and together with the First Milestone Option, the Second Milestone Option, and the Third Milestone Option,
the “Milestone Options”) upon payment to Allied, at Allied’s option of (i) $25 million in Shares, or (ii) $25 million in cash through payment of up to 50% of CEI’s net cash flows received from non-Oyo Field
production under the PSC (the “Fourth Milestone Consideration,” and together with the Closing Cash Consideration, First Milestone Consideration, Second Milestone Consideration, and Third Milestone Consideration, the
“Consideration”).

	

2

EXECUTION COPY

 Notwithstanding anything to the contrary herein, if, at any time that an opportunity for CEI to exercise a Milestone Option occurs, CEI elects not to exercise such Milestone Option, then all the Contract Rights will automatically revert back to
CAMAC without any compensation due to CEI and with Allied retaining all Consideration paid by CEI to date.
  

 Notwithstanding the above, CEI shall not assign or transfer any of its interest in the PSC without first obtaining the consent of Allied and paying all remaining amounts that would have been due to Allied had CEI exercised all options set forth
above.  

 For purposes of the Agreement, the purchase price per Share shall be calculated as the 30 day weighted average closing sale price per share of CEI’s Common Stock, as quoted by NYSE Amex (or other national exchange that CEI may be listed upon
at such time), measured back from the first business day prior to the occurrence of the applicable Milestone Option event.

 In the event that the PSC is terminated by any party after the Effective Date, Allied shall be obligated to fulfill the obligations of NAE under the PSC or secure a third party acceptable to CEI to do the same, and shall obtain such instruments,
assignments, certificates, notices, statements, consents, agreements, deeds, papers and documents, as necessary to give CEI the same rights and obligations with respect to the Contract Rights as provided under these Heads of Agreement.
  

The Parties agree that Section 8.8 and Article X of the PSA (as defined below) are incorporated by reference herein as if they were included herein.
 

	
 	
2.  		
 Purchase and Sale Agreement.  The parties hereto shall prepare and enter into a purchase and sale agreement (the “Agreement”) to reflect the terms of these Heads of Agreement in further detail and shall
endeavour to sign such Agreement as soon as possible but in any event on or before November 30, 2010.

	

	
 	
 	
 
	
 	
3.	
 Terms of the Transaction.  The Parties hereto make the following representation and warranties with respect to the Transaction, and the proposed Agreement will contain representations and warranties usual and customary for
transactions of this nature, including the following: 

	

	
 	
 	
 	
 
	
 	
 	
A. 		
CEHL represents and warrants that:

	
	 	 	 	 
	 	 		
(1) it has the power and authority to enter into these Heads of Agreement, the Agreement, and consummate the Transaction detailed herein;  

(2) the Transaction will not violate or conflict with any agreement to which CAMAC is a
party or result in a default by any party thereunder;  

(3) there are no legal or regulatory actions outstanding or, to its knowledge, pending against CAMAC or any other parties to the PSC or OML 120/121;  

(4) no consent is needed for the Novation of
the PSC by CAMAC to CPL;  

(5) CAMAC has, and upon the novation, CPL will have, good and valid title to
the interest in OML 120/121 that is being transferred under the Novation Agreement, and at closing of the Transaction this interest shall be free and clear of any liens, except for certain permitted liens to be set forth in the Agreement;

(6) CAMAC’s rights and obligations under the PSC and OML 120/121 constitute all the material contracts and asset rights used by CAMAC with respect to OML 120/121;

(7) the PSC and the OML 120/121 are each in full force and effect;

(8) there are no
contracts, agreements or other instruments regarding the interests to be transferred by which CAMAC is bound, except for the PSC and OML 120/121 themselves and as specifically set forth in the Agreement;

(9) except as provided in the PSC or the OML
120/121, there are no outstanding commitments to make capital expenditures with respect to the assets that will be transferred that are binding on CAMAC, and there are no bonds, letters of credit, guarantees, deposits or other security furnished by
CAMAC or any affiliate of CAMAC relating to OML 120/121 that will require expenditures in excess of $100,000; and

(10) CAMAC’s and interests in the PSC and OML 120/121 are not subject to any preferential rights to purchase, rights of first
opportunity or similar rights, or any required third party consents to assignment that may be applicable to the Transaction other than as may be specified in the PSC or OML 120/121 and as may be provided in the Right of First Refusal Agreement,
dated April 7, 2010 by and between CEI and CAMAC. 

	

3

EXECUTION COPY

	
 	
 	
B. 		
CEI represents and warrants that:

	
	 	 	 	 
	 	 		
(1) it has the power and authority to enter into these Heads of Agreement, the
Agreement, and consummate the Transaction as detailed herein;  	
	 	 	 	 
	 	 	 	(2) the Transaction will not violate or conflict with any
  agreement to which it or any of its subsidiaries is a party or result in a
  default by any party thereunder; and
	 	 	 	 
	 	 		
(3) there are no legal or regulatory actions outstanding or, to its knowledge, pending against it, its subsidiaries or any other parties to the production sharing contracts, joint venture agreements, licenses, leases, and other ventures of which CEI or its subsidiaries are participants or other material
agreements to which CEI or its subsidiaries are legally bound (the “CEI Contracts”).
	 	 	 	 
	 	 		
 

	

	
 	
 	
 
	
 	
4.  		
 Condition to Closing. The closing of the Transaction shall be contingent upon the satisfaction of the following conditions, and the Agreement will contain these conditions to closing and such other conditions as usual and
customary for transactions of this nature, including those conditions that CAMAC would require of CEI, and those conditions CEI would require of CAMAC:

	

	
Payment of the Closing Cash Consideration to Allied.

	
Receipt of all necessary approvals, if any, from third parties and governmental authorities having jurisdiction over the matter or matters
in question, including the U.S. Securities and Exchange Commission, and any other foreign and domestic required parties and government entities.

4

EXECUTION COPY

	
Entry by CPL, CINL, Allied and NAE into a Novation Agreement in a form satisfactory to CEHL and CEI, which agreement shall include a waiver by NAE of the enforcement of Section 8.1(e) of the PSC and its agreement that, notwithstanding anything to
the contrary contained in the PSC, the profit sharing allocation set forth in the PSC shall be maintained after the consummation of the Transaction.

	
Entry by CEI and Allied into a registration rights agreement with respect to the Shares in a form satisfactory to CEI and Allied.

	
The revision of the Oyo Field Agreement, dated April 7, 2010, by and among CPL, CEHL and Allied, in order to remove certain indemnities with respect to Non-Oyo Operating Costs (as defined therein), provided, however, that the indemnities set forth
in Sections 3.1(b) and (d) thereunder shall remain in full force and effect.

	
There shall be no effective injunction, writ or preliminary restraining order or any order of any nature issued by a governmental authority of competent jurisdiction prohibiting the Transaction, and no proceeding or lawsuit shall have been commenced
by any governmental authority that is reasonably likely to result in any such injunction, writ or preliminary restraining order or to otherwise prohibit or make illegal the consummation of the Transaction.

	
Accuracy of the representations and warranties made by the parties in the Agreement, performance of and compliance with all covenants of the parties in the Agreement, and the execution and delivery of certificates of the parties certifying these
matters as of the date of closing of the Transaction.

	
Such other closing conditions as the parties reasonably require.

	
Execution and delivery of all other agreements and instruments reasonably necessary to consummate the Transaction.

	
Delivery by CAMAC to CEI of copies of all documents, computer files, records, data and other materials in CAMAC’s possession, including, but not limited to, such materials necessary or otherwise reasonably requested by CEI in order for CEI to
undertake field development planning, all such material to be in “as-is” condition (collectively, “Data”).

	
Delivery by CAMAC to CEI of two (2) SMT geophysical workstations located in Houston, Texas, and two (2) SMT geophysical workstations located in Lagos, Nigeria, including corresponding Micro Seismic Technology Geophysical software (SMT) and Petrel
software and licenses, to the extent such software licenses are assignable or
transferrable by CAMAC to CEI, and all in “as-is” condition (the “G&G Workstations”).

5

EXECUTION COPY

	
Delivery by CAMAC to CEI of one (1) engineering workstation located in Lagos, Nigeria, including corresponding engineering software and licenses, to the extent such software licenses are assignable or transferrable by CAMAC to CEI, and all in
“as-is” condition (the “Engineering Workstation,” and together with the Data and G&G Workstations, the “Deliverables”). In the event the Contract Rights revert back to CAMAC as described in Section 1
above, CEI shall return all Deliverables to CAMAC in “as-is” condition as of such time.

	
 	
5.  		
 Governing Law.  These Heads of Agreement will be governed by and construed under the laws of the State of Texas without regard to conflicts of law principles.

	

	
 	
 	
 
	
 	
6.  		
 Binding Agreement. These Heads of Agreement are intended by the Parties to create a binding agreement between the Parties with respect to the subject matter hereof, and the Parties agree to endeavor to prepare and enter into
the Agreement to reflect the terms of these Heads of Agreement in further detail and shall endeavour to sign such Agreement as soon as possible but in any event on or before November 30, 2010.

	

These Heads of Agreement supersedes in its entirety the MOU and any previous discussions between the parties, which previous discussions shall have no further force and effect.
 

These Heads of Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument, but all of which together shall constitute but one and the same Heads of Agreement.
 

 

[SIGNATURE PAGE FOLLOWS]

6

EXECUTION COPY

The Parties hereby execute these Heads of Agreement as of the Effective Date first written above.
 

CAMAC ENERGY INC.

By: /s/ Byron Dunn____________________
                Byron Dunn

             President and Chief Executive Officer

CAMAC ENERGY HOLDINGS LIMITED

By:_/s/ Dr. T. Fahm__________________ 

 Name: Dr. T. Fahm                                              

Title: Director                                                      
     

CAMAC INTERNATIONAL (NIGERIA) LIMITED

By:_/s/ Kamoru Lawal_________________          

  Name: Kamoru Lawal                                         

Title: Director                                                      
     

ALLIED ENERGY RESOURCES NIGERIA LIMITED

By:_/s/ Kamoru Lawal________________ 

  Name: Kamoru Lawal                                        

Title: Director                                                     
     

7

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