Document:

Exhibit 10.1

 

EXECUTION VERSION

 

Additional Credit Extension Amendment

 

This Additional Credit Extension Amendment is dated as of March 4, 2016 (this “Amendment”) by and among each of the financial institutions set forth on Schedule II annexed hereto (each an “Additional Lender” and collectively the “Additional Lenders”), each Series F Converting Lender (as defined below), Select Medical Corporation, a Delaware corporation (the “Borrower”), Select Medical Holdings Corporation, a Delaware corporation (“Holdings’), the other Loan Parties party hereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent.

 

W I T N E S S E T H:

 

WHEREAS, reference is hereby made to that certain Credit Agreement, dated as of June 1, 2011 and as amended by Amendment No. 1 dated as of August 8, 2012, the Additional Credit Extension Amendment dated as of August 13, 2012, Amendment No. 2 dated as of November 6, 2012, Amendment No. 3 dated as of February 15, 2013, the Additional Credit Extension Amendment dated as of February 20, 2013, Amendment No. 4 dated as of June 3, 2013, Amendment No. 5 dated as of March 4, 2014, the Additional Credit Extension Amendment (Incremental Revolver) dated as of October 23, 2014, the Additional Credit Extension Amendment (Revolver Extension) dated as of October 23, 2014, the Additional Credit Extension Amendment dated as of May 20, 2015 and Amendment No. 6 dated as of December 11, 2015, as amended, supplemented and in effect from time to time (the “Credit Agreement”; capitalized terms used herein and not defined shall have the meanings set forth in the Credit Agreement), among SELECT MEDICAL HOLDINGS CORPORATION (“Holdings”), SELECT MEDICAL CORPORATION (the “Borrower”), JPMORGAN CHASE BANK, N.A., as Administrative Agent and Collateral Agent (the “Administrative Agent” and the “Collateral Agent,” respectively), MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and GOLDMAN SACHS BANK USA, as Co-Syndication Agents, MORGAN STANLEY SENIOR FUNDING, INC. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Documentation Agents, and the several banks and other financial institutions from time to time party thereto as lenders (the “Lenders”).

 

WHEREAS, subject to the terms and conditions of the Credit Agreement, Borrower may obtain Incremental Revolving Commitments and/or Incremental Term Loans by entering into one or more Additional Credit Extension Amendments with Additional Lenders.

 

WHEREAS, each Series D Tranche B Term Loan Lender that has executed a counterpart of this Amendment in its capacity as such (each, a “Series F Converting Lender” and, together with the Additional Lenders party to this Amendment, the “Series F Lenders”), hereby agrees to have up to the entire aggregate principal amount of its Series D Tranche B Term Loans (as to such Series F Converting Lender, its “Converted Series D Tranche B Term Loans”) converted to Series F Tranche B Term Loans, on the terms and subject to the conditions set forth below.

 

WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the Credit Agreement may, without the consent of any other Lenders, be amended as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provisions of Section 2.20 of the Credit Agreement.

 

WHEREAS, JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners LLC, Morgan Stanley Senior Funding, Inc. and RBC Capital Markets(1) have agreed to act as joint lead

 

(1)  RBC Capital Markets is a brand name for the capital markets activities of Royal Bank of Canada and its affiliates.

 

 

arrangers (in such capacities, the “Incremental Facility Lead Arrangers”) and as joint lead bookrunners in connection with the Incremental Term Loans made pursuant to this Amendment (the “Series F Tranche B Term Loans”).

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION ONE.  Agreements of Series F Lenders.

 

(a)                                 Each Series F Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or Agent 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 Credit Agreement; (iii) appoints and authorizes Administrative Agent and each other Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to Administrative Agent or such other Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

 

(b) Each (x) Additional Lender hereby commits to provide its respective Series F Tranche B Term Loans as set forth on Schedule II annexed hereto and (y) each Converted Series D Tranche B Term Loan of each Series F Converting Lender shall be converted into a Series F Tranche B Term Loan of such Lender effective as of the Amendment Effective Date in a principal amount equal to the principal amount of such Lender’s Converted Series D Tranche B Term Loan immediately prior to such conversion, in each case on the terms and subject to the conditions set forth below:

 

(i)                                     Applicable Rate.  The Applicable Rate for each Series F Tranche B Term Loan shall be, as of any date of determination, 5.00% per annum for Eurodollar Loans and 4.00% per annum for ABR Loans.  To the extent the LIBO Rate for any Interest Period for the Series F Tranche B Term Loans would be less than 1.00%, then the LIBO Rate for the Series F Tranche B Term Loans for such Interest Period shall instead be 1.00%.  For the avoidance of doubt, pursuant to Section 2.20(c) of the Credit Agreement, the Applicable Rate for the Series E Tranche B Term Loans shall be 5.00% per annum for Eurodollar Loans and 4.00% per annum for ABR Loans from and after the Amendment Effective Date.

 

(ii)                                  Maturity Date.  The maturity date for the Series F Tranche B Term Loans is March 3, 2021 (the “Series F Tranche B Maturity Date”).

 

(iii)                               Principal Payments.  Borrower shall make principal payments on the Series F Tranche B Term Loans in installments on the dates and in the amounts equal to the percentage set forth below of an amount equal to the aggregate principal amount of the Series F Tranche B Term Loans outstanding as of the date hereof:

 

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Amortization Date
    	
 
    	
Series F Tranche B Term
   Loan Installments
    
	
June 30, 2016
    	
 
    	
0.25%
    
	
September 30, 2016
    	
 
    	
0.25%
    
	
December 31, 2016
    	
 
    	
0.25%
    
	
March 31, 2017
    	
 
    	
0.25%
    
	
June 30, 2017
    	
 
    	
0.25%
    
	
September 30, 2017
    	
 
    	
0.25%
    
	
December 31, 2017
    	
 
    	
0.25%
    
	
March 31, 2018
    	
 
    	
0.25%
    
	
June 30, 2018
    	
 
    	
0.25%
    
	
September 30, 2018
    	
 
    	
0.25%
    
	
December 31, 2018
    	
 
    	
0.25%
    
	
March 31, 2019
    	
 
    	
0.25%
    
	
June 30, 2019
    	
 
    	
0.25%
    
	
September 30, 2019
    	
 
    	
0.25%
    
	
December 31, 2019
    	
 
    	
0.25%
    
	
March 31, 2020
    	
 
    	
0.25%
    
	
June 30, 2020
    	
 
    	
0.25%
    
	
September 30, 2020
    	
 
    	
0.25%
    
	
December 31, 2020
    	
 
    	
0.25%
    
	
Series F Tranche B Maturity Date
    	
 
    	
Remaining Balance
    

 

(iv)                              Voluntary and Mandatory Prepayments.  Any prepayment of a Series F Tranche B Term Loan Borrowing pursuant to clause (c) or (d) of Section 2.11 of the Credit Agreement shall be applied (i) first, to reduce, in the direct order of maturity, the scheduled repayments of the Series F Tranche B Term Loan Borrowings to be made pursuant to Section 2 of this Amendment on the four consecutive scheduled payment dates next following the date of such prepayment unless and until each such scheduled repayment has been eliminated as a result of reductions hereunder; and (ii) second, to reduce ratably the remaining scheduled repayments of the Series F Tranche B Term Loan Borrowings.  Any prepayment of a Series F Tranche B Term Loan Borrowing pursuant to Section 2.11(a) of the Credit Agreement shall be applied to reduce scheduled repayment amounts of the Series F Tranche B Term Loans as directed by the Borrower.

 

(v)                                 Closing Payment.  Pursuant to the Second Amended and Restated Fee Letter, dated February 17, 2016 (the “Fee Letter”) by and among the Borrower and the Incremental Facility Lead Arrangers and without duplication of any amounts owed by the Borrower therein, the Borrower agrees to pay on the date hereof to Administrative Agent, for the account of each Series F Lender, compensation (x) for the funding of such Series F Lender’s Series F Tranche B Term Loans and (y) in respect of such Series F Lender’s Converted Series D Tranche B Term Loans, a closing payment in an amount equal to 2.00% of the aggregate principal amount of such Series F Lender’s Series F Tranche B Term Loans funded as of the date hereof and such Series F Lender’s Converted Series D Tranche B Term Loans, respectively (collectively, the “Closing Payment”).

 

(vi)                              Prepayment Premium.  All prepayments of the Series F Tranche B Term Loans effected on or prior to March 4, 2017 with the proceeds of a substantially concurrent issuance or incurrence of new Term Loans (including with the proceeds of Refinancing Term Loans or Replacement Term Loans and excluding a refinancing of all the facilities outstanding under the Credit Agreement in connection with another transaction not permitted by the Credit Agreement

 

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(as determined prior to giving effect to any amendment or waiver of the Credit Agreement being adopted in connection with such transaction)), shall be accompanied by a prepayment fee equal to 1.00% of the aggregate principal amount of such prepayments if the Yield applicable to such new term loans is less than the Yield applicable to the Series F Tranche B Term Loans on the Amendment Effective Date.

 

(vii)                           Proposed Borrowing. In accordance with Section 2.20 of the Credit Agreement, Borrower has previously delivered to Administrative Agent an executed Borrowing Request for Series F Tranche B Term Loans, requesting a proposed borrowing in the principal amount, which shall include an amount in respect of the aggregate principal amount of the Converted Series D Tranche B Term Loans, of $625,000,000 (the “Proposed Borrowing”) on the Amendment Effective Date.

 

(viii)                        Financial Covenants.

 

(A)                               Leverage Ratio. Same as set forth in Section 6.13 of the Credit Agreement, except that the Leverage Ratio shall be set at 5.75 to 1.00 for each fiscal quarter commencing on June 30, 2018 through the Series F Tranche B Term Loan Maturity Date.

 

(B)                               Maximum Capital Expenditures. Same as set forth in 6.14 of the Credit Agreement, except that the maximum Capital Expenditures level shall be set at $125.0 million per annum commencing in fiscal year 2019 through the Series F Tranche B Term Loan Maturity Date.

 

(ix)                              New Lenders.  Each Additional Lender (other than any Additional Lender that, immediately prior to the execution of this Amendment, is a “Lender” under the Credit Agreement) acknowledges and agrees that upon its execution of this Amendment that such Additional Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.

 

(x)                                 Credit Agreement Governs.  Except as specifically set forth in this Amendment, the terms and conditions of the Series F Tranche B Term Loans shall be identical to the terms of the outstanding Series E Term B Loans under the Credit Agreement and the other Loan Documents, as in effect on the Amendment Effective Date.  For the avoidance of doubt, the Series F Tranche B Term Loans shall constitute “Loans” for all purposes of the Credit Agreement and the other Loan Documents.  For the avoidance of doubt, Section 1(b)(vi) of this Amendment shall supersede Section 2.12(c) of the Credit Agreement with respect to Series F Tranche B Term Loans.

 

(xi)                              Application of Proceeds. The proceeds of the Series F Tranche B Term Loans will be used solely (i) to directly or indirectly acquire (the “PAH Acquisition”) Physiotherapy Associates Holdings Inc. (the “Target”) pursuant to that certain agreement and plan of merger, dated as of January 22, 2016, as amended by that certain First Amendment to the Agreement and Plan of Merger, dated as of March 4, 2016 (the “PAH Acquisition Agreement”), by and among the Borrower, the Target, Grip Merger Sub, Inc. and the holder representative party thereto, (ii) for the payment in full of substantially all third party indebtedness of the Target (excluding any indebtedness permitted to be incurred or outstanding under the PAH Acquisition Agreement, or as otherwise agreed between the Borrower and the Lead Arrangers) outstanding as of the Amendment Effective Date, including (a) that certain Credit Agreement, dated June 4, 2014, as amended, among Target, the other credit parties thereto, General Electric Capital Corporation, the lenders 

 

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party thereto and GE Capital Markets, Inc. and NXT Capital, LLC, (b) that Second Lien Credit Agreement, dated June 4, 2014, as amended, among Target, the other credit parties thereto, General Electric Capital Corporation, the lenders party thereto and GE Capital Markets, Inc., (c) that certain Letter Agreement, dated July 24, 2015, between HSBC Bank USA, National Association and Target and (d) that certain HSBC Terms of Business for Swaps, dated as of July 15, 2015, by and between HSBC Bank USA, National Association and Target (collectively, the “Existing Indebtedness”) (the actions described in this subclause (ii), the “PAH Refinancing”), (iii) to pay fees and expenses incurred in connection with the PAH Acquisition, the PAH Refinancing and this Amendment (collectively, the “PAH Transactions”) and (iv) to refinance in full the outstanding Series D Tranche B Term Loans (other than the Converted Series D Tranche B Term Loans) and to pay fees and expenses in connection with the foregoing.

 

SECTION TWO.      Conditions to Effectiveness.  This Amendment shall become effective on March 4, 2016 (the “Amendment Effective Date”) when, and only when, the following conditions have been satisfied (or waived), subject to the last paragraph of this Section 2:

 

(a)                                 this Amendment shall have been executed and delivered by the Borrower, Holdings, the other Loan Parties, each Additional Lender party hereto, each Series F Converting Lender party hereto and the Administrative Agent;

 

(b)                                 the Administrative Agent shall have received copies of the resolutions of the board of directors (or authorized committee thereof) of (x) Holdings, (y) the Borrower and (z) each Subsidiary Loan Party (including, for the avoidance of doubt, the Merger Sub and, immediately following the PAH Acquisition, any Subsidiary acquired in the PAH Acquisition that is required by the Loan Documents to become a Subsidiary Loan Party (collectively, the “PAH Loan Parties”)) approving and authorizing the execution, delivery and performance of this Amendment, certified as of the Amendment Effective Date by the corporate secretary or an assistant secretary thereof as being in full force and effect without modification or amendment;

 

(c)                                  the Administrative Agent shall have received legal opinions dated the Amendment Effective Date from Dechert LLP and Clark Hill PLC, each in form and substance reasonably satisfactory to the Arrangers and the Administrative Agent;

 

(d)                                 the representations and warranties set forth in Article III of the Credit Agreement and in each other Loan Document shall be true and correct in all material respects (except to the extent any such representation or warranty is qualified by “materially,” “Material Adverse Effect” or a similar term, in which case such representation and warranty shall be true and correct in all respects) on and as of the date hereof (both before and after giving effect to the effectiveness of this Amendment) with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date (provided that the solvency representation will be deemed to have been made on the Amendment Effective Date after giving effect to the effectiveness of this Amendment);

 

(e)                                  the representations and warranties made by or with respect to the Target and its subsidiaries, as are material to the interests of the Lenders, in the PAH Acquisition Agreement shall be true and correct in all material respects, except to the extent the failure of such representations and warranties to be true and correct in all material respects would not give the Borrower (or its applicable affiliate) the right, pursuant to the PAH Acquisition Agreement, to terminate its obligations under the PAH Acquisition Agreement to consummate the PAH Acquisition (or the right not to consummate the PAH Acquisition pursuant to the PAH Acquisition Agreement);

 

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(f)                                   to the extent not previously delivered, each Series F Lender and the Administrative Agent shall have received at least 3 business days prior to the date hereof all documentation and other information about the Borrower and the Subsidiary Loan Parties required under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act that has been requested in writing at least 10 business days prior to the date hereof;

 

(g)                                  immediately prior to and after giving effect to the effectiveness of this Amendment, no Default has occurred or is continuing or shall result from the effectiveness of this Amendment;

 

(h)                                 immediately prior to and on a Pro Forma Basis after giving effect to the effectiveness of this Amendment and the PAH Transactions, (A) the Borrower is in compliance with the Financial Performance Covenant recomputed as of the last day of the most recently ended fiscal quarter for which financial statements of the Borrower are available and (B) the Secured Leverage Ratio of the Borrower is less than or equal to 3.50 to 1.00 as of the last day of the most recent fiscal quarter of the Borrower for which financial statements have been delivered pursuant to Section 5.01(a) or (b) of the Credit Agreement;

 

(i)                                     to the extent not previously delivered, (i) the Administrative Agent shall have received a completed “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to each Mortgaged Property (together with a notice about special flood hazard area status and flood disaster assistance, if applicable, duly executed by the Borrower and each Loan Party relating thereto) and (ii) the Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.07 of the Credit Agreement including, without limitation, flood insurance policies (to the extent required in order to comply with applicable law) and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable or mortgagee endorsement (as applicable) and shall name the Collateral Agent, on behalf of the Secured Parties, as additional insured, in form and substance reasonably satisfactory to the Administrative Agent;

 

(j)                                    (i) since November 30, 2015, the Target has not suffered a Material Adverse Effect (as defined in, and interpreted pursuant to, the PAH Acquisition Agreement as in effect January 22, 2016) (a “Company Material Adverse Effect”) and (ii) since the date of the PAH Acquisition Agreement, there shall not have occurred a Company Material Adverse Effect, or any event, change, development, effect, condition, circumstance, matter, occurrence or state of facts that would reasonably be expected to have a Company Material Adverse Effect;

 

(k)                                 (i) the PAH Acquisition shall have been consummated, or shall be consummated substantially concurrently with the Proposed Borrowing in accordance with the PAH Acquisition Agreement and (ii) the PAH Acquisition Agreement shall not have been amended or waived, and no consents shall have been given with respect thereto, in any material respect by the Borrower or its subsidiaries in a manner materially adverse to the Incremental Facility Lead Arrangers (in their capacity as such) without the consent of the Incremental Facility Lead Arrangers (such consent not to be unreasonably withheld, conditioned or delayed based on the interests of the Incremental Facility Lead Arrangers (in their capacities as such); provided that (a) any amendment, waiver or consent that results in a reduction in the amount of consideration required to consummate the PAH Acquisition shall be deemed not to be materially adverse to the Incremental Facility Lead Arrangers to the extent that any such reduction is applied ratably to reduce the amount of commitments in respect of the Series F Tranche B Term Loans, (b) the granting of any consent under the PAH Acquisition Agreement that is not materially adverse to the interests of the Additional

 

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Lenders or the Additional Lenders shall not otherwise constitute an amendment or waiver and (c) any change to the definition of “Company Material Adverse Effect” in the PAH Acquisition Agreement shall be deemed materially adverse to the Incremental Facility Lead Arrangers;

 

(l)                                     the PAH Refinancing shall have been consummated, or shall be consummated substantially concurrently with the Proposed Borrowing and all liens, guarantees and security interests granted in respect of the Existing Indebtedness shall have been discharged, and the terms and conditions of such discharge shall be satisfactory to the Administrative Agent. The Administrative Agent shall have received payoff and release letters with respect to the Existing Indebtedness (other than such Existing Indebtedness referred to in clause (c) and (d) of the definition thereof) in form and substance reasonably satisfactory to the Administrative Agent;

 

(m)                             the Administrative Agent shall have received the (i) consolidated balance sheets and related statements of operations and comprehensive income, redeemable non-controlling interest and invested equity and cash flows of the Target and its consolidated subsidiaries for the fiscal years ended December 31, 2013 and December 31, 2014 and for each subsequent fiscal year ended at least 90 days prior to the Amendment Effective Date and (ii) (A) prior to February 14, 2016, the unaudited combined balance sheets and related consolidated statements of operations and cash flows of the Target and its consolidated subsidiaries for the eleven (11) month period ended November 30, 2015 and (B) the unaudited combined balance sheets and related consolidated statements of operations and cash flows of the Target and its consolidated subsidiaries for each fiscal quarter subsequent to the fiscal year ended December 31, 2015 and ended at least 60 days prior to the Amendment Effective Date (it being understood that the Administrative Agent acknowledges that it has received the financial statements for the fiscal years ended December 31, 2013 and December 31, 2014 required by clause (i) of the previous sentence and the unaudited combined balance sheets and related consolidated statements of operations and cash flows of the Target and its consolidated subsidiaries for the eleven (11) month period ended November 30, 2015 required by subclause (ii)(A) of the previous sentence);

 

(n)                                 the Administrative Agent shall have received a pro forma consolidated balance sheet and related pro forma consolidated statement of income of the Borrower as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days (or 90 days in case such four-fiscal quarter period is the end of the Borrower’s fiscal year) prior to the Amendment Effective Date, prepared after giving effect to this Amendment, the PAH Acquisition and the PAH Refinancing as if the PAH Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of the statement of income) (it being understood that the Administrative Agent acknowledges that it has received the pro forma financial information that is required by the previous sentence with respect to the financial information that has been provided as of February 17, 2016);

 

(o)                                 the Administrative Agent shall have received a Borrowing Request in respect of the Series F Tranche B Term Loans as required by Section 2.03 of the Credit Agreement;

 

(p)                                 (i) the Administrative Agent shall have received all fees payable thereto or to any Incremental Facility Lead Arranger on or prior to the Amendment Effective Date and, to the extent invoiced at least two (2) Business Days prior to the Amendment Effective Date, reimbursement or payment of all reasonable and documented out-of-pocket expenses (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP) required to be reimbursed or paid by the Loan Parties hereunder, in each case under the Fee Letter or under any Loan Document on or prior to the Amendment Effective Date and (ii) the Borrower shall have paid to the

 

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Administrative Agent for the account of each Incremental Facility Lead Arranger the Closing Payment;

 

(q)                                 the Administrative Agent shall have received the results of searches of the Uniform Commercial Code filings (or equivalent filings), United States Patent and Trademark Office and United States Copyright Office, and bankruptcy, judgment and tax lien searches, made with respect to the Target and any other PAH Loan Party in the states (or other jurisdictions) of formation of such Person, together with copies of the financing statements, lien notices (or similar documents) disclosed by such search;

 

(r)                                    the Collateral and Guarantee Requirement shall have been, or the Administrative Agent shall be reasonably satisfied shall be substantially concurrently, satisfied with respect to the Merger Sub and any PAH Loan Party; provided that all requirements with respect to real property encumbered by a Mortgage shall be delivered following the Amendment Effective Date pursuant to Section 3 of this Amendment;

 

(s)                                   the Administrative Agent shall have received a duly executed certificate of an appropriate officer of each of Merger Sub and, immediately following the PAH Acquisition, any PAH Loan Party, certifying (i) that the copies of such Loan Party’s organizational documents are in full force and effect as of the Amendment Effective Date without modification or amendment since such original delivery, (ii) that the copies of such Loan Party’s resolutions approving the PAH Transactions and authorizing the execution and delivery of all documents related thereto and (iii) as to incumbency certificates identifying the officers of such Loan Party that are authorized to execute the Amendment and to execute and act on such Loan Party in connection with the Amendment;

 

(t)                                    the Administrative Agent shall have received certificates of good standing or the equivalent (if any) for the Borrower, Holdings and the PAH Loan Parties from their respective jurisdiction of organization or formation, in each case certified as of a recent date by the appropriate Governmental Authority;

 

(u)                                 the Administrative Agent shall have received a solvency certificate from the chief financial officer of the Borrower with respect to the solvency of the Borrower and its Restricted Subsidiaries (on a consolidated basis) after giving effect to the PAH Transactions; and

 

(w)                               the Administrative Agent shall have received a certificate, dated the Amendment Effective Date, signed by an authorized officer of the Borrower and certifying compliance with (i) clauses (d), (g), (h) and (k) of this Section 2 of this Amendment and (ii) to the knowledge of such certifying authorized officer, clauses (e) and (j) of this Section 2 of this Amendment.

 

Notwithstanding anything to the contrary herein, the terms of this Amendment and the closing deliverables described above shall be in a form such that they do not impair the initial funding of the Series F Tranche B Term Loans on the Amendment Effective Date if the conditions expressly set forth above are satisfied (or waived) (it being understood that, to the extent any security interest in any Collateral is not or cannot be provided (other than a security interest that can be created by the execution and delivery of a security agreement) and/or perfected (other than (A) a lien on Collateral that may be perfected by the filing of a financing statement under the Uniform Commercial Code (“UCC”) or (B) a pledge of the equity interests of the Target and its material wholly owned U.S. restricted subsidiaries (solely to the extent required in the Credit Agreement) with respect to which a lien may be perfected upon closing by the delivery of a stock or equivalent certificate) to the extent required under the Credit Agreement on the Amendment Effective Date after the Borrower’s use of commercially reasonable efforts to do so without

 

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undue burden or expense, then the provision and/or perfection of security interests in such Collateral shall not constitute a condition precedent to the initial funding of the Series F Tranche B Term Loans on the Amendment Effective Date, but shall be required to be provided and/or perfected within 90 days after the Amendment Effective Date (subject to extensions by the Administrative Agent)).

 

SECTION THREE.                                        Post-Closing Covenant.  Subject to the provisions of the Collateral and Guarantee Requirement and any applicable limitations in any Loan Document, Borrower hereby agrees with the Administrative Agent to deliver, on or before the date that is 120 days after the Amendment Effective Date (or such longer period of time as may be agreed by the Administrative Agent in its sole discretion), with respect to each Mortgaged Property:

 

(a)                                 an amendment to each existing Mortgage (each, a “Mortgage Amendment”) duly executed and acknowledged by the applicable Loan Party and in form for recording in the recording office where such Mortgage was recorded, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof under applicable law, in each case in form and substance reasonably satisfactory to the Administrative Agent and otherwise approved by the applicable local counsel for filing in the appropriate jurisdiction;

 

(b)                                 with respect to each Mortgage Amendment (other than those Mortgage Amendments relating to Mortgaged Property located in New Jersey and Ohio), a datedown endorsement to each existing mortgage title policy (if such endorsement is not available in the jurisdiction, a title search and modification endorsement in lieu thereof) (each, a “Datedown Endorsement,” collectively, the “Datedown Endorsements”) relating to the Mortgaged Property subject to such Mortgage insuring the Administrative Agent that such Mortgage, as amended by such Mortgage Amendment is a valid and enforceable first priority lien on such Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties and that there are no Liens of record in violation of the provisions of the Loan Documents, and such Datedown Endorsement shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent; and

 

(c)                                  with respect to each Mortgage Amendment relating to Mortgaged Property located in New Jersey and Ohio, (i) title searches in form and substance reasonably acceptable to the Administrative Agent, conducted by a title insurance company reasonably acceptable to the Administrative Agent, which reflect that there are no Liens of record in violation of the provisions of the Loan Documents and (ii) opinions addressed to the Administrative Agent and the Collateral Agent for its benefit and for the benefit of the Secured Parties of (A) local counsel in each jurisdiction where the Mortgaged Property is located with respect to the enforceability and perfection of the Mortgages, as amended by such Mortgage Amendments, and other matters customarily included in such opinions and (ii) counsel for the Borrower regarding due authorization, execution and delivery of such Mortgage Amendments, in each case, in form and substance reasonably satisfactory to the Administrative Agent.

 

SECTION FOUR.  Representations and Warranties.  In order to induce each Series F Lender and the Administrative Agent to enter into this Amendment, the Borrower represents and warrants to each Series F Lender and the Administrative Agent that, after giving effect to this Amendment, and both before and after giving effect to the transactions contemplated by this Amendment:

 

(a)                                 no Default or Event of Default has occurred and is continuing;

 

(b)                                 the entry into this Amendment by (x) Holdings, (y) the Borrower and (z) each other Loan Party (including, for the avoidance of doubt, the Merger Sub and, immediately following

 

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the PAH Acquisition, any PAH Loan Party) has been duly authorized by all necessary corporate or other action of each such entity; and

 

(c)                                  each of the representations and warranties made by each of the Loan Parties in or pursuant to the Loan Documents is true and correct in all material respects (except to the extent any such representation or warranty is qualified by “materially,” “Material Adverse Effect” or a similar term, in which case such representation and warranty shall be true and correct in all respects) on and as of the date hereof as if made on the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, in all material respects as of such specific date).

 

SECTION FIVE.  Reference to and Effect on the Loan Documents.  On and after the Amendment Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement,” “thereunder,” “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment, and this Amendment shall constitute a “Loan Document” for all purposes under the Credit Agreement.  The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect.  The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

 

SECTION SIX.  Reaffirmation.  Each Loan Party (other than the PAH Loan Parties) (x) hereby expressly acknowledges the terms of this Amendment and reaffirms, as of the date hereof, the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated hereby, (y) by its signature below, hereby affirms and confirms (a) its obligations under each of the Loan Documents to which it is a party, and (b) the pledge of and/or grant of a security interest in its assets which are Collateral to secure such Obligations, all as provided in the Security Documents as originally executed, and acknowledges and agrees that such guarantee, pledge and/or grant shall continue in full force and effect in respect of, and to secure, such Obligations under the Credit Agreement and the other Loan Documents and (z) acknowledges and agrees that each of the Loan Documents in existence as of the date hereof shall be henceforth read and construed in accordance with and so as to give full force and effect to the ratifications, confirmations, acknowledgements and agreements made herein.

 

SECTION SEVEN.  Costs, Expenses and Taxes.  The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, if any (including, without limitation, the reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP, counsel to the Administrative Agent) in accordance with the terms of Section 9.03 of the Credit Agreement.

 

SECTION EIGHT.  Certain U.S. Federal Income Tax Matters.  The Borrower, the Administrative Agent and the Lenders agree that the Series F Tranche B Term Loans shall be treated in their entirety as one fungible tranche for U.S. federal income tax purposes (i.e., the Series F Tranche B Term Loans received upon conversion of the Converted Series D Tranche B Term Loans shall be fungible for U.S. federal income tax purposes with the Series F Tranche B Term Loans made by the Additional Lender pursuant to their commitments to provide their respective Series F Tranche B Term Loans as set forth on Schedule II annexed hereto).  For purposes of FATCA, from and after the effective date of this

 

10

 

Amendment, the Borrower and the Administrative Agent shall continue to treat (and the Series F Lenders hereby authorize the Administrative Agent to treat) the Credit Agreement and the Loans (including the Series F Tranche B Term Loans) as not qualifying as “grandfathered obligations” within the meaning of Treasury Regulations Section 1.1471-2(b)(2)(i).

 

SECTION NINE.  Execution in Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page to this Amendment by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION TEN.  Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

[Signature Pages Follow]

 

11

 

	
 
    	
SELECT MEDICAL CORPORATION,
    
	
 
    	
as the Borrower
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Scott A. Romberger
    
	
 
    	
 
    	
Name: Scott A. Romberger
    
	
 
    	
 
    	
Title: Senior Vice President, Chief   Accounting
   Officer and Controller
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SELECT MEDICAL HOLDINGS CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Scott A. Romberger
    
	
 
    	
 
    	
Name: Scott A. Romberger
    
	
 
    	
 
    	
Title: Senior Vice President, Chief   Accounting
   Officer and Controller
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EACH OF THE SUBSIDIARIES LISTED ON
   SCHEDULE I HERETO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Scott A. Romberger
    
	
 
    	
 
    	
Name: Scott A. Romberger
    
	
 
    	
 
    	
Title: Vice President   and Assistant Treasurer;
   President; and Senior Vice President, Chief
   Accounting Officer and Controller; as applicable
    

 

[Select - Additional Credit Extension Amendment]

 

 

	
 
    	
JPMORGAN CHASE BANK, N.A.,
    
	
 
    	
as Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dawn Lee Lum
    
	
 
    	
 
    	
Name: Dawn Lee Lum
    
	
 
    	
 
    	
Title: Executive Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
JPMORGAN CHASE BANK, N.A.,
    
	
 
    	
as Additional Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dawn Lee Lum
    
	
 
    	
 
    	
Name: Dawn Lee Lum
    
	
 
    	
 
    	
Title: Executive Director
    
	
 
    	
 
    	
 
    
				

[Select - Additional Credit Extension Amendment]

 

 

SCHEDULE I
 TO ADDITIONAL CREDIT EXTENSION AMENDMENT

 

SUBSIDIARY LOAN PARTIES

 

1.                                      Advantage Rehabilitation Clinics, Inc.

2.                                      Argosy Health, LLC

3.                                      Baseline Rehabilitation, Inc.

4.                                      C.E.R. - West, Inc.

5.                                      Community Rehab Centers of Massachusetts, Inc.

6.                                      CRI ES, Inc.

7.                                      Crowley Physical Therapy Clinic, Inc.

8.                                      Dade Prosthetics & Orthotics, Inc.

9.                                      Douglas Avery & Associates, Ltd.

10.                               Eagle Rehab Corporation

11.                               Fine, Bryant & Wah, Inc.

12.                               Georgia Physical Therapy, Inc.

13.                               GH General - San Antonio, LLC

14.                               GP Therapy, L.L.C.

15.                               GR General - Scottsdale, LLC

16.                               Great Lakes Specialty Hospital — Hackley, LLC

17.                               Great Lakes Specialty Hospital — Oak, LLC

18.                               GRSH ES, Inc.

19.                               Gulf Breeze Physical Therapy, Inc.

20.                               Hospital Holdings Corporation

21.                               Indianapolis Physical Therapy and Sports Medicine, Inc.

22.                               Intensiva HealthCare Corporation

23.                               Intensiva Hospital of Greater St. Louis, Inc.

24.                               Johnson Physical Therapy, Inc.

25.                               Joyner Sportsmedicine Institute, Inc.

26.                               Kentucky Rehabilitation Services, Inc.

27.                               Kessler Institute for Rehabilitation, Inc.

28.                               Kessler Orthotic & Prosthetic Services, Inc.

29.                               Kessler Professional Services, LLC

30.                               Kessler Rehab Centers, Inc.

31.                               Kessler Rehabilitation Corporation

32.                               Kessler Rehabilitation Services, Inc.

33.                               Madison Rehabilitation Center, Inc.

34.                               Metro Rehabilitation Services, Inc.

35.                               Metro Therapy, Inc.

36.                               New England Rehabilitation Center of Southern New Hampshire, Inc.

37.                               NovaCare Occupational Health Services, Inc.

38.                               NovaCare Outpatient Rehabilitation East, Inc.

39.                               NovaCare Outpatient Rehabilitation, Inc.

40.                               NovaCare Rehabilitation of Ohio, Inc.

 

S-I-1

 

41.                               NovaCare Rehabilitation, Inc.

42.                               OHRH ES, Inc.

43.                               Pacific Rehabilitation & Sports Medicine, Inc.

44.                               PR Acquisition Corporation

45.                               Pro Active Therapy of North Carolina, Inc.

46.                               Pro Active Therapy of South Carolina, Inc.

47.                               Pro Active Therapy of Virginia, Inc.

48.                               Pro Active Therapy, Inc.

49.                               Professional Sports Care Management, Inc.

50.                               Professional Therapeutic Services, Inc.

51.                               Professional Therapy Systems, Inc.

52.                               PTSMA, Inc.

53.                               RCI (Michigan), Inc.

54.                               RCI (WRS), Inc.

55.                               Regency Hospital Company of Macon, LLC

56.                               Regency Hospital Company of Meridian, L.L.C.

57.                               Regency Hospital Company of South Atlanta, L.L.C.

58.                               Regency Hospital Company of South Carolina, L.L.C.

59.                               Regency Hospital Company, L.L.C.

60.                               Regency Hospital of Cincinnati, LLC

61.                               Regency Hospital of Columbus, LLC

62.                               Regency Hospital of Fort Worth Holdings, LLC

63.                               Regency Hospital of Greenville, LLC

64.                               Regency Hospital of Jackson, LLC

65.                               Regency Hospital of Minneapolis, LLC

66.                               Regency Hospital of North Central Ohio, LLC

67.                               Regency Hospital of Northwest Arkansas, LLC

68.                               Regency Hospital of Northwest Indiana, LLC

69.                               Regency Hospital of Odessa Limited Partner, LLC

70.                               Regency Hospital of Odessa, LLLP

71.                               Regency Hospital of Southern Mississippi, LLC

72.                               Regency Hospital of Toledo, LLC

73.                               Regency Hospitals, LLC

74.                               Regency Management Company, Inc.

75.                               Rehab Provider Network - East I, Inc.

76.                               Rehab Provider Network - East II, Inc.

77.                               Rehab Provider Network - Indiana, Inc.

78.                               Rehab Provider Network - New Jersey, Inc.

79.                               Rehab Provider Network - Pennsylvania, Inc.

80.                               Rehab Provider Network of Colorado, Inc.

81.                               Rehab Provider Network of Florida, Inc.

82.                               Rehab Provider Network of New Mexico, Inc.

83.                               Rehab Provider Network of North Carolina, Inc.

84.                               Rehab Provider Network of South Carolina, Inc.

85.                               Rehab Provider Network of Texas, Inc.

86.                               Rehab Provider Network of Virginia, Inc.

 

S-I-2

 

87.                               Rehab Provider Network-Michigan, Inc.

88.                               Rehab Provider Network-Ohio, Inc.

89.                               RehabClinics (GALAXY), Inc.

90.                               RehabClinics (PTA), Inc.

91.                               RehabClinics (SPT), Inc.

92.                               RehabClinics, Inc.

93.                               Rehabilitation Center of Washington, D.C., Inc.

94.                               RPN of NC, Inc.

95.                               S.T.A.R.T., Inc.

96.                               Select Employment Services, Inc.

97.                               Select Hospital Investors, Inc.

98.                               Select LifeCare Western Michigan, LLC

99.                               Select Medical of Kentucky, Inc.

100.                        Select Medical of Maryland, Inc.

101.                        Select Medical of New York, Inc.

102.                        Select Medical Property Ventures, LLC

103.                        Select Medical Rehabilitation Clinics, Inc.

104.                        Select Medical Rehabilitation Services, Inc.

105.                        Select NovaCare - KOP, Inc.

106.                        Select NovaCare - PBG, Inc.

107.                        Select NovaCare - PIT, Inc.

108.                        Select Physical Therapy Holdings, Inc.

109.                        Select Physical Therapy Limited Partnership for Better Living

110.                        Select Physical Therapy Network Services, Inc.

111.                        Select Physical Therapy of Albuquerque, Ltd.

112.                        Select Physical Therapy of Birmingham, Ltd.

113.                        Select Physical Therapy of Blue Springs Limited Partnership

114.                        Select Physical Therapy of Cave Springs Limited Partnership

115.                        Select Physical Therapy of Chicago, Inc.

116.                        Select Physical Therapy of Colorado Springs Limited Partnership

117.                        Select Physical Therapy of Connecticut Limited Partnership

118.                        Select Physical Therapy of Denver, Ltd.

119.                        Select Physical Therapy of Green Bay Limited Partnership

120.                        Select Physical Therapy of Illinois Limited Partnership

121.                        Select Physical Therapy of Kendall, Ltd.

122.                        Select Physical Therapy of Knoxville Limited Partnership

123.                        Select Physical Therapy of Lorain Limited Partnership

124.                        Select Physical Therapy of Louisville, Ltd.

125.                        Select Physical Therapy of Ohio Limited Partnership

126.                        Select Physical Therapy of Portola Valley Limited Partnership

127.                        Select Physical Therapy of Scottsdale Limited Partnership

128.                        Select Physical Therapy of St. Louis Limited Partnership

129.                        Select Physical Therapy of West Denver Limited Partnership

130.                        Select Physical Therapy Orthopedic Services, Inc.

131.                        Select Physical Therapy Texas Limited Partnership

132.                        Select Provider Networks, Inc.

 

S-I-3

 

133.                        Select Rehabilitation Hospital - Hershey, Inc.

134.                        Select Specialty Hospital - Ann Arbor, Inc.

135.                        Select Specialty Hospital - Arizona, Inc.

136.                        Select Specialty Hospital - Augusta, Inc.

137.                        Select Specialty Hospital - Beech Grove, Inc.

138.                        Select Specialty Hospital - Charleston, Inc.

139.                        Select Specialty Hospital - Cincinnati, Inc.

140.                        Select Specialty Hospital - Colorado Springs, Inc.

141.                        Select Specialty Hospital - Columbus, Inc.

142.                        Select Specialty Hospital - Conroe, Inc.

143.                        Select Specialty Hospital - Dallas, Inc.

144.                        Select Specialty Hospital - Danville, Inc.

145.                        Select Specialty Hospital — Daytona Beach, Inc.

146.                        Select Specialty Hospital - Denver, Inc.

147.                        Select Specialty Hospital - Durham, Inc.

148.                        Select Specialty Hospital - Erie, Inc.

149.                        Select Specialty Hospital - Evansville, Inc.

150.                        Select Specialty Hospital - Flint, Inc.

151.                        Select Specialty Hospital - Fort Smith, Inc.

152.                        Select Specialty Hospital - Fort Wayne, Inc.

153.                        Select Specialty Hospital - Gainesville, Inc.

154.                        Select Specialty Hospital - Greensboro, Inc.

155.                        Select Specialty Hospital - Grosse Pointe, Inc.

156.                        Select Specialty Hospital - Jackson, Inc.

157.                        Select Specialty Hospital - Johnstown, Inc.

158.                        Select Specialty Hospital - Kalamazoo, Inc.

159.                        Select Specialty Hospital - Kansas City, Inc.

160.                        Select Specialty Hospital - Knoxville, Inc.

161.                        Select Specialty Hospital - Laurel Highlands, Inc.

162.                        Select Specialty Hospital - Lexington, Inc.

163.                        Select Specialty Hospital - Lincoln, Inc.

164.                        Select Specialty Hospital - Little Rock, Inc.

165.                        Select Specialty Hospital - Longview, Inc.

166.                        Select Specialty Hospital - Macomb County, Inc.

167.                        Select Specialty Hospital - Madison, Inc.

168.                        Select Specialty Hospital - McKeesport, Inc.

169.                        Select Specialty Hospital - Memphis, Inc.

170.                        Select Specialty Hospital - Milwaukee, Inc.

171.                        Select Specialty Hospital - Nashville, Inc.

172.                        Select Specialty Hospital - North Knoxville, Inc.

173.                        Select Specialty Hospital - Northeast New Jersey, Inc.

174.                        Select Specialty Hospital - Northeast Ohio, Inc.

175.                        Select Specialty Hospital - Northern Kentucky, LLC

176.                        Select Specialty Hospital - Northwest Detroit, Inc.

177.                        Select Specialty Hospital - Oklahoma City, Inc.

178.                        Select Specialty Hospital - Omaha, Inc.

 

S-I-4

 

179.                        Select Specialty Hospital - Orlando, Inc.

180.                        Select Specialty Hospital - Palm Beach, Inc.

181.                        Select Specialty Hospital - Panama City, Inc.

182.                        Select Specialty Hospital - Pensacola, Inc.

183.                        Select Specialty Hospital - Phoenix, Inc.

184.                        Select Specialty Hospital - Pittsburgh/UPMC, Inc.

185.                        Select Specialty Hospital - Pontiac, Inc.

186.                        Select Specialty Hospital - Quad Cities, Inc.

187.                        Select Specialty Hospital - Saginaw, Inc.

188.                        Select Specialty Hospital - San Antonio, Inc.

189.                        Select Specialty Hospital - Savannah, Inc.

190.                        Select Specialty Hospital - Sioux Falls, Inc.

191.                        Select Specialty Hospital - South Dallas, Inc.

192.                        Select Specialty Hospital - Springfield, Inc.

193.                        Select Specialty Hospital - Tallahassee, Inc.

194.                        Select Specialty Hospital - Topeka, Inc.

195.                        Select Specialty Hospital - TriCities, Inc.

196.                        Select Specialty Hospital - Tulsa, Inc.

197.                        Select Specialty Hospital - Tulsa/Midtown, LLC

198.                        Select Specialty Hospital - Western Michigan, Inc.

199.                        Select Specialty Hospital - Western Missouri, Inc.

200.                        Select Specialty Hospital - Wichita, Inc.

201.                        Select Specialty Hospital - Wilmington, Inc.

202.                        Select Specialty Hospital — Winston - Salem, Inc.

203.                        Select Specialty Hospital - Youngstown, Inc.

204.                        Select Specialty Hospital - Zanesville, Inc.

205.                        Select Specialty Hospitals, Inc.

206.                        Select Subsidiaries, Inc.

207.                        Select Synergos, Inc.

208.                        Select Transport, Inc.

209.                        Select Unit Management, Inc.

210.                        SelectMark, Inc.

211.                        SemperCare, Inc.

212.                        SLMC Finance Corporation

213.                        Sports & Orthopedic Rehabilitation Services, Inc.

214.                        The Rehab Group, Inc.

215.                        The Rehab Group-Murfreesboro, LLC

216.                        Theraworks, Inc.

217.                        Victoria Healthcare, Inc.

218.                        West Gables Rehabilitation Hospital, L.L.C.

 

S-I-5

 

SCHEDULE II
 TO ADDITIONAL CREDIT EXTENSION AMENDMENT

 

	
Name of Lender
    	
 
    	
Type of Commitment
    	
 
    	
Amount
    	
 
    
	
J.P. Morgan   Chase Bank N.A.
    	
 
    	
Series F Tranche B Term Loan Commitment
    	
 
    	
$
    	
625,000,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
625,000,000.00
    	
 
    

 

S-II-1Exhibit 10.1

 

An
Agreement

 

Made
and entered in 4th on this day of March, 2016

 

	By
    and between:	 	My Size,
    Inc. (Corp id #510394637)
	 	 	 
	 	 	A company
    incorporated in Delaware US,
	 	 	 
	 	 	Having its
    principal offices at 3 Arava St., Airport City, Israel 
	 	 	 
	 	 	(Hereinafter
    referred to as “The Company / Mysize”)

 

	 	 	On
    one side

 

And:

 

	 	LSY
    International, Inc. (EIN 61-1220393) DBA Yudovsky Fur and Leather
	 	
	 	Having
    its principal offices at 4175 Westport Road STE 204 Louisville, Ky 40207 (Hereinafter referred to as “The Client
    / Commissioning”)

 

	 	 	On
    the other side

 

	WHEREAS	Mysize
    developed a platform which enables to collect and adjust physical human measurements and sizes in order to match them with
    different types of clothing items (Hereinafter referred to as “The Technology”), created and / or marketed
    via retail clothing stores and / or electronic online shopping sites;

 

    	 	1	 

     

    

 

	WHEREAS	Mysize
    is the sole owner of The Technology including exclusive rights of use and benefit of the intellectual and industrial property
    rights of Mysize Platform, as detailed in the amended form 10 attached to Mysize reports filed with the American SEC concerning
    the nature of the Technology and its characteristics as well as the form and location of registering Mysize' rights of the
    Technology

 

	WHEREAS	The
    Client specializes in marketing, sales and distribution of various industries and products. Among other things, Client is
    the beneficial owner and distributer of Yudovsky Fur and Leather which markets luxury hand-made outerwear made of fur, sheerings,
    alpaca cashmere and Leather, mostly via an electronic online shopping site, named "www.YFUR.com";

 

	WHEREAS	The
    Client has contacted Mysize in order to get a limited and designated license to use The Technology in order to sell the clothing
    items to its customers, and Mysize has agreed to provide the above license as mentioned, all subject to the terms and conditions
    of this Agreement;

 

    	 	2	 

     

    

 

NOW,
THEREFORE, it was agreed, declared and stipulated by the parties as follows:

 

	1.	The introduction of this agreement
    and its appendices are an integral part thereof.

 

	2.	Terms of engagement:

 

	 	2.1.	Mysize
    will provide the Client with a limited and unique license for use and implementation of the Technology in its marketing, distribution
    and sale systems including the sale system of The Client’s online websites on the Internet.

 

	 	2.2.	Implementation
    and integration of the Technology in the Client’s marketing and sales systems will be made by Mysize and for that purpose,
    the Client will provide Mysize with the entire knowledge, full data and information the Client holds regarding the clothing
    items it is marketing, including any type of catalogues, marketing and sale methods of these items, instructions regarding
    products sizes provided to each one of the clothing manufacturers providing the products to the Client, details of designers
    providing services to the Client and the different ways to contact each one, full details regarding the Client’s customers
    characterization, customers segmentation based on parameters defined by Mysize, data regarding sales volumes and its characterization
    by categories defined by Mysize, the number of products recall and their characterization, data regarding purchasing habits
    of the Client’s customers as well as feedbacks and opinions related to purchasing of products marketed by the Client,
    and any other information and / or data and / or additional details required by Mysize.

 

    	 	3	 

     

    

 

	 	2.3.	The
    Client hereby acknowledges that the conditions for optimal and accurate implementation and operation of the Technology as
    such which meets the Client’s demand, is providing all required data to Mysize as detailed above, therefore the client
    commits to providing Mysize with all data detailed in section 2.2 above fully, as well as any other given data or information
    required by Mysize at any given point of the Technology installation and implementation in the Client’s marketing and
    sale systems.

 

	 	2.4.	It
    is hereby clarified that any delay in providing of the foregoing data and / or other detail necessary for Mysize to carry
    out the installation and implementation process of the Technology would lead to a delay in process completing and the end
    date will be postponed according to the timeframe of the delay in providing data and information by the Client.

 

	 	2.5.	As
    part of the installation and implementation process Mysize will establish a system for reception, control and monitoring of
    all people using and / or assisted by and / or analyzing the usage methods and implementation of the Technology, and this
    system will receive and collect data regarding the identity of users and / or applicants, their characterization, sizes and
    / or any other details given by them. This database will be within a mutual possession and ownership of Mysize and the Client,
    and both Mysize and the Client can use it as it sees fit for any purpose, as long as database will not be exposed and / or
    partially and / or fully transferred to entities competing with the Client, dealing exclusively and specifically in sales
    and marketing of upper luxury clothing products made of the raw materials specified in section 3.4 below.

 

    	 	4	 

     

    

 

Mysize
will be the sole responsible for operating the above database and make sure, however necessary, to receive any permit and / or
license required for operation and / or existence of this database, and is hereby dismissing the Client from any responsibility
or liability regarding this database and / or its operation.

 

	 	2.6.	During
    installation and implementation process Mysize will do its best to provide the Client with all of its professional knowledge
    and experience in order to improve, optimize and promote the Client’s electronic sales website and offer the Client
    with possible ways and solutions to implement them in order to make the website more accessible, more usable, user friendly
    and more attractive.

 

In
addition, Mysize will develop means and mechanisms designed to attract the Client’s customers’ attention and convince
them to purchase additional items and products from the Client’s manufacture, in order to increase the Client’s sales
volume through its online sales websites.

 

These
services will be given to the Client without any additional consideration on his part.

 

	 	2.7.	The Technology installation
    and implementation process in the Client’s systems will be done within 4 months
    starting the agreement signature date, and as agreed and conditioned in section 2.4 above.

 

    	 	5	 

     

    

 

	 	2.8.	Installation
    and implementation process will be executed by Mysize employees only and at its own expenses, during which Mysize will be
    provided with the required data and information as specified above, in form and manner prescribed by Mysize and, when necessary,
    the Client’s employees and temporary service providers shall be available to answer questions and provide details and
    data as required by Mysize as well as meet with Mysize representatives if needed for providing of details and data as specified.

 

	 	2.9.	During
    installation and implementation process, tests and trials will be made for analysis and examination of installation process,
    implementation progress and results, and the Client shall cooperate with Mysize and provide Mysize with all means and infrastructures
    required for execution, monitoring, follow-up and control of these tests and their results.

 

	 	2.10.	Mysize
    will inform the Client regarding the completion date of the Technology implementation and installation process, where a 60-days
    period of system trial period will begin, during which training and detailed demonstrations will be given to the Client and
    / or its service providers regarding usage and implementation of the Technology, presenting and publishing the Technology
    to the Client’s customers and making it available to them, data processing and syncing of the Technology with the Client’s
    data and information.

 

    	 	6	 

     

    

 

During
the trial period, mutual monitoring and control will be made by both Mysize and the Client regarding the Technology implementation,
its functioning and the received results, and the Client may provide any comments and / or point out any required correction and
/ or improvement while Mysize, in accordance with limitations of the Technology itself and subjected to the limitations of the
system in which it operates within and to which it is linked, will handle, improve and optimize the system’s functionality
following the Client’s comments, as far as it is possible as stated.

 

The
trial period will be finished once confirmation is received by both sides, that the implementation of the Technology in the Client's
systems is meeting the indications and criteria detailed in appendix A of this Agreement, and after the completion of the implementation
and installation process and by the end of the trial period as stated, the Technology usage license period will begin as detailed
in section 3.1 below.

 

The
date when the trial period will be successfully completed will be deemed the effective date of this agreement (the “Effective
Date”)

 

	3.	Engagement and agreement
    period 

 

	 	3.1.	Mysize
    will provide the Client with a limited and unique license for usage of the Technology and its implementation in the Client’s
    marketing, distribution and sales systems including the Client’s online sales systems, starting after the completion
    of the Technology implementation and installation process completion inside the Client’s systems as detailed in section
    2.2 above, and after the completion of the 60-days trial system as detailed in section 2.10 above, as long as this Agreement
    remains valid and will not be canceled by either party as set out in section below.

 

    	 	7	 

     

    

 

	 	3.2.	During
    license period the Client is entitled to use the Technology in accordance with the guidelines and training provided, and to
    provide its customers the required access for purchasing and adjusting products offered by the Client in sale locations including
    electronic stores managed by the Client on the internet.

 

	 	3.3.	Detailed
    instructions will be delivered to the Client regarding the conditions to be set for customers prior to the Technology usage
    and the Client commits to inform the customers that the customers commit to fulfilling and maintaining these conditions, and
    prevent any potential violations thereof and / or bypassing.

 

	 	3.4.	It
    is hereby agreed that Mysize will provide the Client with exclusive use of the Technology, (hereinafter the “Exclusivity”).The
    Exclusivity will only apply to the use of the Technology specifically for luxury outerwear clothing products made of these
    raw materials, and these materials only: Furs, Sheerings, Alpaca, Cashmere, and Leather (“Luxury Outerwear”).
    The Exclusivity will only apply to entities which market solely and exclusively Luxury Outerwear products.

 

    	 	8	 

     

    

 

For
the avoidance, It is hereby clarified, that during the entire period of Exclusivity, Mysize will not sell the Technology nor will
grant a Technology usage license to any entity which exclusively and solely markets Luxury Outerwear. However, the Exclusivity
will NOT apply to any entity which markets other fashion apparel along with Luxury Outerwear, whereby Mysize will reserve the
right to sell them their Technology.

 

Exclusivity
will also apply to Luxury Outerwear which is uniquely and is custom tailored specifically for a designed match for the client
by prestigious designers.

 

	 	3.5.	The
    Exclusivity will be granted to the Client in exchange for the agreed consideration set forth in this section.

 

The
Exclusivity will be granted to Client only if the following targets are met: (1) For a period of 24 month commencing
from the Effective Date (as defined in section 2.10 above) the consideration paid to Mysize, pursuant to section 4.1.2 below,
will produce Mysize with a minimum income of $1,000,000; and, (2) a minimum income of $5,000,000 which will be paid to Mysize
for every consecutive year thereafter (collectively the “Mysize Minimum Income”). Mysize will continue providing
Client with the Exclusivity for as long as, and provided that, the Mysize Minimum Income is met.

 

In
order to maintain the Exclusivity, the Client will be permitted to complete the Mysize Minimum Income with his own capital in
order to maintain the Exclusivity.

 

    	 	9	 

     

    

 

	 	3.6.	It is hereby declared and agreed
    upon by both parties that provided that the Client’s activity will not yield Mysize with the Revenue Target values as
    specified above by the end of each annual engagement, the exclusivity provided to the Client according to this Agreement will
    be immediately terminated, and Mysize shall be entitled to market and distribute the Technology to any person and any entity
    including designated entities exclusively dealing with selling clothing items similar to those sold and / or marketed by the
    Client, including such made of the raw materials made specified above.

 

For
the avoidance of any doubt, it is hereby clarified that has the exclusivity been canceled as stated in this section, the client's
right to keep using the Technology according to the conditions of this Agreement and based on the payments to Mysize due to this
agreement, will not be harmed and / or diminished.

 

	 	3.7.	It
    is hereby declared and agreed upon by both parties that the exclusivity provided to the Client in accordance with the conditions
    specified above is limited only to designated entities exclusively engaged in marketing and distribution of upper luxury clothing
    products and solely regarding products made of the four raw materials specified above.

 

The
exclusivity shall not apply to any entity or a person which is not exclusively designated to marketing, distribution and sales
of upper luxury items including all apparel chains engaged with marketing, distribution and sales of general clothing and in addition
it shall not apply to any entity or person engaged in the marketing and distribution of non-luxurious upper clothing and / or
which is not majeure does not made of the four raw materials mentioned above.

 

    	 	10	 

     

    

 

	 	3.8.	The
    Client hereby commits to include all Technology’s characteristics, performances, advantages and the added value it provides
    to customers involved in purchasing Mysize products in any campaign taking place in any media that the customer will conduct
    and / or purchase for the business and / or products it is selling, marketing and distributing. The Technology’s characteristics,
    performances and advantages of its usage and implementation will be mentioned in every publication as specified to increase
    customers’ recognition and awareness of the Technology and its usage possibilities, advantages and benefits. The Client
    hereby declares that the exclusivity provided to it as stated in this Agreement, is based on the commitment to conduct advertisement
    campaigns periodically and continuously, where publication of the Technology and its performances will be included as specified.

 

	 	3.9.	This
    Agreement remains valid unless one of the parties informs its desire to terminate the engagement according to this Agreement
    in a prior notice, delivered to the other party 90 days in advance prior to the designated engagement termination date.

 

Notwithstanding
the provisions above, it is hereby clarified that as long as the Client is meeting the revenue goals set forth in Section 3.5
above, Mysize will not be entitled to cancel this agreement unless it was violated by the Client.

 

    	 	11	 

     

    

 

	 	3.10.	Upon
    legally completion of the Agreement period once cancelled as detailed above, Mysize is allowed to disconnect, remove and /
    or freeze the Technology implementation and activity in the Client’s systems and the Client will not take upon any action
    and / or cause any prevention designed to delay and / or damage the Technology disconnection and removal process from the
    Client’s systems and servers.

 

In
addition and / or for the avoidance of any doubt, upon completion of the Agreement period once cancelled legally as specified,
the Client will hold no privilege regarding the Technology and / or any system or application derived from it and / or branching
from it as well.

 

	4.	Consideration

 

	 	4.1.	In
    exchange of the provided privilege for use of Technology as specified in this

 

Agreement,
the Client will forward Mysize with the following payments:

 

	 	4.1.1.	A fixed payment for the Technology
    implementation and installation projects in the Clients marketing and sales systems as specified in section 2 above for a
    total of $100,000 to be paid on the following dates and rates: $10,000 upon signing this Agreement;

 

$30,000
upon actual beginning of installation and implementation project;

 

$20,000
upon completion of Technology installation and implementation project;

 

$40,000
upon completion of Technology trial period as specified in section 2.10 above.

 

    	 	12	 

     

    

 

	 	4.1.2.	On
    top of the above mentioned amount Mysize will be paid 7.5% of transactions value of any product and item of any kind that
    is marketed and sold by the Client in any method throughout the entire engagement period as specified in this Agreement.

 

	 	4.2.	Mysize
    will establish a reception and control systems for all executed transactions, and once a month Mysize will send to the Client
    a transactions report regarding this month. Based on the report issued to the Client, the agreed payment will be provided
    to Mysize as specified in section 4.1.2 above within 10 days from the day that report was issued to the Client.

 

The
Client hereby consents that the data received by the control system, will bind both parties regarding any account settling they
may have referring to the exchange decided upon in this Agreement, and these data will form the sole base for the exchange Mysize
is entitled to according to this Agreement.

 

	5.	Support and Maintenance
    Services 

 

	 	5.1.	Mysize
    will provide the Client with support and maintenance services for the Technology, its activity and its modification to the
    Client’s marketing and sales systems throughout the entire Agreement period.

 

    	 	13	 

     

    

 

	 	5.2.	As
    part of support and maintenance services Mysize will handle any report regarding a malfunction and / or an error in the Technology
    implementation and / or activation, and will provide a response to any necessity raised by the customer regarding the technology
    and its implementation.

 

In
addition Mysize will be responsible for the Technology update as it may be necessary, according to Mysize’ sole discretion.

 

Support
and maintenance services will be provided from Mysize offices via Mysize servers and upon requirement by phone and / or email
services.

 

	 	5.3.	In
    respect of maintenance and support services, the Client will pay a fixed amount by the rate of 2,500$ per month, starting
    the completion of the system trial period as set forth in Section 2.10 above (equals to 1/4 of a full-time job). Support and
    maintenance services are based on allocation of one Mysize employee whose designated position will be specified as providing
    support and maintenance as mentioned above. As it may be needed, allocation of additional employees for support and maintenance
    services will increase payment for these services based on the rate of 2,500$ per employee (equals to 1/4 of a full-time job).

 

	6.	Intellectual Property
    and Confidentiality

 

	 	6.1.	All
    technology rights and everything branching out of it including its content, database, activation codes and any other details
    as well as any document and/or hardware implemented in the systems and/or servers of the Client (hereinafter “Mysize
    Intellectual Property”) is the sole property of Mysize and considered a protected Trade secret.

 

    	 	14	 

     

    

 

In
addition it is hereby agreed that all data received by Mysize as a result of Technology use and/or implementation, including details
referring to Technology users’ identity and details provided by them are the sole, mutual property and proprietary of Mysize
and the Client as detailed in section 2.5 above. The database will be given to the Client through magnetic media or any other
method by the Client's choice.

 

	 	6.2.	The
    Client hereby commits not to copy and / or photograph and / or use Mysize Intellectual Property as well as not to change and
    / or hack and / or broadcast Mysize Intellectual Property and / or use it to create derivatives and / or grant a license and
    / or provide access and / or transfer any right to any third party in Mysize Intellectual Property.

 

	 	6.3.	The
    Client hereby declares it was informed that its signature on this confidentiality section is a basic prerequisite condition
    for Mysize’ agreement of engagement via this Agreement and that violation of this section by the Client will result
    in the immediate termination and that is without derogating from any other right Mysize may have against the customer for
    such violation.

 

    	 	15	 

     

    

 

	7.	Mysize’ Responsibility

 

	 	7.1.	It
    is hereby clarified that some of the services provided via the Technology includes third parties involvements among other
    things and Mysize holds no liability for any action or omission made by these third parties and will not stand responsible
    for any damage and / or loss and / or violation and / or expense caused as a result and / or related to any action or omission
    as mentioned.

 

	 	7.2.	Mysize
    holds no liability in any form to the hardware used by the Client upon which the Technology will be implements and it is the
    Client’s responsibility to take care of the appropriate service agreements and warranties for any case of failure and
    / or malfunction and / or a problem related to the hardware used by the Client upon which the Technology will be implemented.

 

	 	7.3.	Mysize
    will be responsible to any damage and / or loss and / or expense caused directly by a discovered and / or incurred defect
    and / or deficiency in the Technology itself and is committed to indemnify the Client for any payment and / or expense the
    Client need to pay and / or carry due to damage as stated.

 

	8.	Miscellaneous

 

	 	8.1.	The
    Client may not transfer and / or assign its rights and / or obligations of this Agreement to any person and / or entity, unless
    received Mysize’ consent. In the event thatClient transfers his rights under this Agreement to a third party, all or
    part of these rights, Mysize’s rights for revenues under the terms of this Agreement will be preserved. Also, in the
    event thatMysize shall transfer its rights under this Agreement to a third party, the Client's rights to use and apply the
    Technology and the exclusivity right under the terms of this Agreement will be preserved.

 

    	 	16	 

     

    

 

	 	8.2.	It
    is hereby clarified that relations between the Agreement parties are an Independent Contractor – Client relations and
    there are nor will be any employee-employer relations between Mysize and the Client and/or Client employees.

 

	 	8.3.	This
    agreement reflects full and all agreements between the parties thereto, including all parties’ representatives and /
    or respective agents, and is eliminating any other agreement, display or understanding made, if at all, prior to its signature.

 

	 	8.4.	In
    case any of the parties failed to enforce, or delayed to enforce any of the rights provided by this Agreement and/or by law,
    whether in a specific incident or a series of incidents, this shall not be considered a waiver of this right or any other
    rights.

 

	 	8.5.	Jurisdiction
    authority in any dispute arising from this agreement, its existence, its violation or interpretation, shall be subjected to
    the relevant competent court in the Tel Aviv –Jaffa district under Israeli law.

 

    	 	17	 

     

    

 

	 	8.6.	In
    the event that one or more of the Agreement provisions shall be interpreted as illegal or null by a court of law or by any
    other judicial tribunal, such decision shall not prejudice the binding validity of the remaining provisions of this Agreement.
    However, this provision does not release any of this Agreement's parties from liability for violating representations under
    this Agreement.

  

	 	8.7.	This
    Agreement's parties' addresses are as detailed in first page of this Agreement. Any notification according to this agreement
    will be delivered in person or via registered mail or by fax. A notice sent via registered mail to the registered addresses
    above will be deemed to have reached its destination after 72 hours from launch from the relevant Israeli post office. A notice
    given in person or by fax will be deemed as received on the same date it was delivered to the parties' addresses.

 

IN
WITNESS HEREOF, the Parties hereto have signed today: March 4, 2016

 

 

18

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