Document:

NJR EX 10.1 Dec2012

Exhibit 10.1

NEW JERSEY RESOURCES CORPORATION

Deferred Stock Retention Award Agreement

This Deferred Stock Retention Award Agreement (the "Agreement"), which includes the attached “Terms and Conditions of Deferred Stock,” confirms the grant on November 13, 2012 (the “Grant Date”), by New Jersey Resources Corporation, a New Jersey corporation ("NJR"), to ________________ ("Employee"), under Section 6(e) of the 2007 Stock Award and Incentive Plan (the "Plan"), of Deferred Stock as follows:   

Based upon his or her contribution to the success of NJR in fiscal year 2012, Employee is hereby awarded a deferred stock award and dividend equivalents (collectively, the “Retention Award”) of ____________ deferred stock units of NJR common stock issued under the Plan (“Deferred Stock”). Until the Deferred Stock is distributed to Employee or otherwise forfeited, dividend equivalents equal to the per share dividend paid on NJR common shares will be accumulated on behalf of Employee and paid as described herein.

The Retention Award will be paid to Employee on October 15, 2015 (“Award Date”), subject to the terms and conditions set forth herein.

Upon the Award Date, the payout of the Deferred Stock will be in the form of fully transferable shares of NJR common stock and the payout of the dividend equivalents will be in cash. subject to the terms and conditions set forth herein.  Prior to October 15, 2015, if not previously forfeited, the Retention Award will be paid in full upon a Change in Control, and will be immediately paid upon the occurrence of certain events relating to Employee's Disability and death to the extent provided in Section 3 of the Terms and Conditions attached hereto as Exhibit “A,” and subject to the terms and conditions set forth herein.

Conditions to Retention Award:  Employee is not required to continue his/her employment with NJR in order to receive distribution of the Retention Award. However, NJR's obligation to pay the Retention Award and Employee's right to distribution of the Retention Award will be forfeited immediately upon the occurrence of any one or more of the following events (defined terms are attached hereto as Exhibit “B”):
		
	(a)
	Competitive Employment.  In the event that Employee, during the Restricted Period and within the Restricted Territory, directly or indirectly, whether on Employee's own behalf or on behalf of any other person or entity, performs services of the type which are the same as or similar to those conducted, authorized, offered or provided by Employee to NJR within the 24 months prior to Employee's termination or resignation, and which support business activities which compete with the Business of NJR.

		
	(b)
	Recruitment of NJR Employees and Contractors.  In the event that Employee, during the Restricted Period, directly or indirectly, whether on Employee's own behalf or on behalf of any other person or entity, solicits or induces any employee or independent contractor of NJR with whom Employee had Material Contact to terminate or lessen such employment or contract with NJR. 

		
	(c)
	Solicitation of NJR Customers. In the event that Employee, during the Restricted Period, directly or indirectly, whether on Employee's own behalf or on behalf of any other person or entity, solicits any actual or prospective customers of NJR with whom Employee had Material Contact for the purpose of selling any products or services which compete with the Business of NJR.

		
	(d)
	Solicitation of NJR Vendors. In the event that Employee, during the Restricted Period, directly or indirectly, whether on Employee's own behalf or on behalf of any other person or entity, solicits any actual or prospective vendor of NJR with whom Employee had Material Contact for the purpose of purchasing products or services to support business activities which compete with the Business of NJR.

		
	(e)
	Breach of Confidentiality.  In the event that Employee, at any time, directly or indirectly, divulges or makes use of any Confidential Information of NJR other than in the performance of Employee's duties for NJR.  This provision does not limit the remedies available to NJR under common or statutory law as to trade secrets or other forms of confidential information, which may impose longer duties of non-disclosure and provide for injunctive relief and damages.

		
	(f)
	Return of Property and Information.  In the event that Employee fails to return all of NJR's property and information (whether confidential or not) within Employee's possession or control within seven (7) calendar days following the termination or resignation of Employee from employment with NJR.  Such property and information includes, but is not limited to, the original and any copy (regardless of the manner in which it is recorded) of all information provided by NJR to Employee or which Employee has developed or collected in the scope of Employee's employment with NJR, as well as all NJR-issued equipment, supplies, accessories, vehicles, keys, instruments, tools, devices, computers, cell phones, pagers, materials, documents, plans, records, notebooks, drawings, or papers.  Upon request by NJR, Employee shall certify in writing that Employee has complied with this provision, and has permanently deleted all NJR information from any computers or other electronic storage devices or media owned by Employee.  Employee may only retain information relating to the Employee's benefit plans and compensation to the extent needed to prepare Employee's tax returns.

		
	(g)
	Disparagement.  In the event that Employee makes any statements, either verbally or in writing, that are disparaging with regard to NJR or any of its subsidiaries or their respective executives and Board members.

		
	(h)
	Termination for Cause.  In the event that Employee's employment with NJR and its subsidiaries is terminated for Cause. 

(i)  Failure to Provide Information.  In the event that Employee fails to promptly and fully respond to requests for information from NJR regarding Employee's compliance with any of the foregoing conditions. 

If it is determined by the Leadership Development and Compensation Committee of the NJR Board of Directors, in its sole discretion, that any of the foregoing events have occurred prior to full distribution of the Retention Award, any unpaid portion of the Retention Award will be forfeited without any compensation therefor.  

By signing below, Employee expressly agrees that the foregoing Conditions to Retention Award shall apply to any unpaid awards under any pre-existing Deferred Stock Retention Award Agreements between Employee and NJR.   To the extent that there is any conflict between the conditions contained in such pre-existing agreements and the Conditions to Retention Award contained in this Agreement, the Conditions to Retention Award in this Agreement shall control.    

The value of the Retention Award will not be taxable to Employee for income tax purposes until it is distributed and will, at that time, be equal to the aggregate value of the then current fair market value of the shares of NJR common stock and cash distributed to Employee.  Required income tax withholdings will be deducted first from the cash paid with respect to the accumulated dividend equivalents and then in the form of shares from the share payout as described in Section 7(c) of the attached Terms and Conditions, unless Employee has elected at least 90 days prior to payout to satisfy the tax obligations by other means.  Employee will be responsible for satisfying any employment tax withholdings attributable to the Deferred Stock and any related dividend equivalents, which Employee may satisfy by (i) delivering to the Company cash equal to the required withholdings or (ii) directing the Company to withhold such amounts from any other cash compensation the Company will pay Employee contemporaneously with the time the withholdings are required hereunder.  

The Retention Award will not be considered as compensation for purposes of any pension or retirement plan, or other plan that provides for benefits based on Employee's level of compensation.

The Retention Award and the granting thereof shall not constitute or be evidence of any agreement or understanding, express or implied, that Employee has a right to continue as an officer of employee of NJR or any of its subsidiaries for any period of time, or at any particular rate of compensation.

The validity, construction, and effect of this Agreement and the Retention Award shall be determined in accordance with the laws (including those governing contracts) of the state of New Jersey, without giving effect to principles of conflicts of laws, and applicable federal law.

If any provision in this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will in no way be affected or impaired thereby. In the event that any provision of this Agreement is not enforceable in accordance with its terms, such provision shall be reformed to make it enforceable in a manner which provides NJR and its subsidiaries the maximum rights permitted by law.

The terms of this Retention Award are governed by the Plan and this Agreement, including the attached Terms and Conditions.  Capitalized terms used in this Agreement but not defined herein shall have the same meanings as in the Plan.

Employee acknowledges and agrees that (i) receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof, (ii) the Deferred Stock is nontransferable, except as provided in Section 2 of the attached Terms and Conditions and Section 11(b) of the Plan, (iii) the Deferred Stock is subject to forfeiture as described above in certain limited circum-stances prior to payout, and (iv) sales of the shares following payout of the Deferred Stock will be subject to the Company's policy governing the purchase and sale of NJR securities.

IN WITNESS WHEREOF, NEW JERSEY RESOURCES CORPORATION has caused this Agreement to be executed by its officer thereunto duly authorized, and Employee has duly executed this Agreement, by which each has agreed to the terms of this Agreement. 

    

_______________________________
LAURENCE M. DOWNES
Chairman and Chief Executive Officer

Acknowledged and Agreed:

________________________    _________________
EMPLOYEE            Date

EXHIBIT A - TERMS AND CONDITIONS OF DEFERRED STOCK RETENTION AWARD

The following Terms and Conditions apply to the Deferred Stock Retention Award granted to Employee by NEW JERSEY RESOURCES CORPORATION (either the "Company" or “NJR”), as specified in the Deferred Stock Retention Award Agreement (of which these Terms and Conditions form a part).  Certain terms and conditions of the Retention Award, including the number of shares granted and payment date(s), are set forth on the preceding pages, which are an integral part of this Agreement.  

1.    General.  The Retention Award is granted to Employee under the Company's 2007 Stock Award and Incentive Plan (the "Plan"), a copy of which has been previously delivered to Employee and/or is available upon request to the Human Resources Department.  All of the applicable terms, conditions and other provisions of the Plan are incorporated by reference herein.  Capitalized terms used in this Agreement but not defined herein shall have the same meanings as in the Plan.  If there is any conflict between the provisions of this document and mandatory provisions of the Plan, the provisions of the Plan govern.  Employee agrees to be bound by all of the terms and provisions of the Plan (as presently in effect or later amended), the rules and regula-tions under the Plan adopted from time to time, and the decisions and determinations of the Leadership Development and Compensation Committee of the Company's Board of Directors (the "Committee") made from time to time.  

2.    Nontransferability.  Until such time as the Retention Award has been distributed in accordance with the terms of this Agreement, Employee may not transfer either the Deferred Stock or any rights hereunder (including those with respect to the accumulated dividend equivalents) to any third party other than by will or the laws of descent and distribution except for transfers to a Beneficiary or as otherwise permitted and subject to the conditions under Section 11(b) of the Plan.  This restriction on transfer precludes any sale, assignment, pledge, or other encumbrance or disposition of the shares of Deferred Stock (or any rights thereunder, including those with respect to the accumulated dividend equivalents, except for forfeitures to the Company).  

3.    Early Payment Provisions. The following provisions will govern the payment of any Retention Award that is outstanding, and has not been forfeited previously, at the time of Employee's death or Disability:

(a)    Death.  In the event of Employee's death, the unpaid Retention Award will be paid as soon as administratively practicable (and no later than ninety (90) days) following Employee's death to the Employee's Beneficiary. 

(b)    Disability.  In the event of Employee's Disability (as defined below), the unpaid Retention Award will be paid to the Employee on the 31st day after Employee's Disability.  

"Disability" means Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.  The Company and Employee shall agree on the identity of a physician to resolve any question as to Employee's disability.  If the Company and Employee cannot agree on the physician to make such determination, then the Company and Employee shall each select a physician and those physicians shall jointly select a third physician, who shall make the determination.  The determination of any such physician shall be final and con-clusive for all purposes of this Agreement.  

4.    Dividends and Adjustments.  

(a)    Dividends. No dividends or distributions on NJR Common Stock will be paid with respect to the Deferred Stock at the time such dividends are paid to the shareholders generally.  However, dividend equivalents equal to any dividend or distribution with respect to NJR common stock will be accumulated and distributed in cash on the Award Date and on the same terms as the Deferred Stock to which the dividends or distributions relate as set forth above.

(b)    Adjustments.  The number and kind of shares of Deferred Stock, the number of such shares to be distributed and other terms and conditions of Deferred Stock or otherwise contained in this Agreement, other than the time and form of payment of the Deferred Stock, shall be appropriately adjusted, in order to prevent dilution or enlargement of Employee's rights hereunder, to reflect any changes in the number of outstanding shares of Common Stock resulting from any event referred to in Section 11(c) of the Plan, taking 

into account any Deferred Stock or other amounts paid or credited to Employee in connection with such event under Section 4(a) hereof, in the sole discretion of the Committee subject to the requirements of Code Section 409A.The Committee may determine how to treat or settle any fractional share resulting under this Agreement.  

5.    409A Award.  The Retention Award payable under the Agreement is a 409A Award and is subject to all applicable terms and conditions set forth in Section 11(k) of the Plan.  All provisions of the Agreement shall be interpreted in a manner as to comply with Section 11(k) of the Plan and Code Section 409A.

6.    Other Terms of Deferred Stock.   

(a)    Voting and Other Shareholder Rights.  Employee shall not be entitled to vote Deferred Stock on any matter submitted to a vote of holders of Common Stock, and shall not have all other rights of a shareholder of the Company, unless and until the Deferred Stock is distributed to Employee as described in the Agreement. 

(b)    Consideration for Grant of Deferred Stock.  Employee shall not be required to pay cash consideration for the grant of the Deferred Stock and dividend equivalents, but Employee's performance of services to the Company prior to the payout of the Deferred Stock shall be deemed to be consideration for this grant of Deferred Stock and dividend equivalents.  

(c)    Insider Trading Policy Applicable.  Employee acknowledges that sales of shares resulting from Deferred Stock that have been distributed will be subject to the Company's policies governing the purchase and sale of Company securities.

(d)    Certificates Evidencing Deferred Stock.  On the date any Deferred Stock subject to the Retention Award becomes payable (the “Payment Date”), such Deferred Stock shall be paid by the Company delivering to the Employee, a number of shares of NJR common stock equal to the number of shares of Deferred Stock that become payable upon that Payment Date, subject to any applicable withholding requirements described above. The Company shall issue the shares either (i) in certificate form or (ii) in book entry form, registered in the name of the Employee. Delivery of any certificates will be made to the Employee's last address reflected on the books of the Company unless the Company is otherwise instructed in writing.  The Company shall pay the accumulated dividend equivalents in cash, subject to any applicable withholding requirements described above.  Neither the Employee nor any of the Employee's successors, heirs, assigns or personal representatives shall have any further rights or interests in any Deferred Stock and dividend equivalents that are so paid. 

(e)     Stock Powers.  Employee agrees to execute and deliver to the Company one or more stock powers, in such form as may be specified by the General Counsel, authorizing the transfer of the Deferred Stock to the Company, at the Grant Date or upon request at any time thereafter.  

7.    Employee Representations and Warranties and Release.  As a condition to any non-forfeiture of the Retention Award that would be distributed to Employee upon Disability, the Company may require Employee (i) to make any representation or warranty to the Company as may be required under any applicable law or regulation, and (ii) to execute a release from claims against the Company arising at or before the date of such release, in such form as may be specified by the Company, all within thirty (30) days of Employee's Disability.

8.    Miscellaneous.

(a)    Binding Agreement; Written Amendments.  This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties.  This Agreement constitutes the entire agreement between the parties with respect to the Retention Award, and supersedes any prior agreements (either verbal or written) or documents with respect to the Retention Award.  No amendment or alteration of this Agreement which may impose any additional obligation upon the Company shall be valid unless expressed in a written instrument duly executed in the name of the Company, and no amendment, alteration, suspension or termination of this Agreement which may materially impair the rights of Employee with respect to the Retention Award shall be valid unless expressed in a written instrument executed by Employee.  All amendments must comply with the requirements of Code Section 409A.

(b)    Governing Law.  The validity, construction, and effect of this Agreement shall be determined in accordance with the laws (including those governing contracts) of the state of New Jersey, without giving effect to principles of conflicts of laws, and applicable federal law. 

(c)    Mandatory Tax Withholding.  Unless otherwise determined by the Committee, or unless Employee has elected at least 90 days prior to payout to satisfy the tax obligations by other means, at the time of payment of the Retention Award to Employee, the Company will withhold first from any accumulated dividend equivalents any cash payable and then from any Shares deliverable, in accordance with Section 11(d)(i) of the Plan, the number of Shares having a value nearest to, but not exceeding, the amount of income and employment taxes required to be withheld under applicable local laws and regulations (after withholding of any cash payable with respect to the accumulated dividend equivalents), and pay the amount of such withholding taxes in cash to the appropriate taxing authorities.  Employee will be responsible for any withholding taxes not satisfied by means of such mandatory withholding and for all taxes in excess of such withholding taxes that may be due upon payment of the Retention Award. 

(e)    Notices.  Any notice to be given the Company under this Agreement shall be addressed to the Company at its principal executive offices, in care of the Vice President, Corporate Services, and any notice to Employee shall be addressed to Employee at Employee's address as then appearing in the records of the Company.

(f)    Shareholder Rights.  Employee and any Beneficiary shall not have any rights with respect to Deferred Shares (including voting rights) and accumulated dividend equivalents covered by this Agreement prior to the settlement and distribution of the Deferred Shares and the accumulated dividend equivalents as specified herein.

EXHIBIT B - DEFINITIONS

		
	a. 
	“Business of NJR” means the following areas of its business which are selected below, which Employee acknowledges are areas of NJR's business in which Employee has responsibilities:

(check as applicable)

		
	___
	Natural Gas Distribution: Consists of New Jersey Natural Gas Company, a natural gas utility company that provides regulated retail natural gas service to residential and commercial customers in central and northern New Jersey and participates in the off-system sales and capacity release markets.

		
	___
	Energy Services:  Maintains and transacts around a portfolio of physical assets consisting of natural gas storage and transportation contracts and also provides wholesale energy management services to other energy companies and natural gas producers in market areas including states from the Gulf Coast and Mid-continent regions to the Appalachian and Northeast regions, the West Coast and Canada.

		
	___
	Clean Energy Ventures: Investor, owner, and operator in the renewable energy sector, including investments in wind and residential and commercial rooftop and ground mount solar systems.  

		
	___
	Midstream Assets:  Includes investments in natural gas transportation and storage assets and is comprised of an equity investment in Iroquois, which is a 416-mile natural gas pipeline from the New York-Canadian border to its terminus in Hunts Point in Bronx, New York and Steckman Ridge, which is a partnership that owns and operates a 17.7 Bcf natural gas storage facility, with up to 12 Bcf working capacity, in western Pennsylvania that is 50 percent owned by an NJR Subsidiary.

		
	___
	Home Services:  Consists of NJR Home Services Company, which provides Heating, Ventilating, and Air Conditioning (HVAC) service, sales and installation of appliances, as well as installation of solar equipment.

		
	b. 
	"Cause" has the same meaning as in any employment or similar agreement between NJR and the Employee or, if no such agreement or definition exists, then “Cause” means: (A) conviction of a felony or the entering by Employee of a plea of nolo contendere to a felony charge, (B) Employee's gross neglect, willful malfeasance or willful gross misconduct in connection with Employee's employment hereunder which has had a significant adverse effect on the business of NJR or any of its subsidiaries, unless Employee reasonably believed in good faith that such act or non-act was in or not opposed to the best interests of NJR or any of its subsidiaries, or (C) repeated material violations by Employee of his or her obligations under any applicable employment agreement or policy of NJR or any of its subsidiaries, which have continued after written notice thereof from NJR or any of its subsidiaries, which violations are demonstrably willful and deliberate on Employee's part and which result in material damage to NJR or any of its subsidiaries' business or reputation.

		
	c. 
	“Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to NJR, its customers and vendors, that is not generally known or publicly available, and which would be useful to competitors of NJR or otherwise damaging to NJR if disclosed.  Confidential Information may include, but is not necessarily limited to:  (i) the identity of NJR's customers or potential customers, their purchasing histories, and the terms or proposed terms upon which NJR offers or may offer its products and services to such customers, (ii) the identity of NJR's vendors or potential vendors, and the terms or proposed terms upon which NJR may purchase products and services from such vendors, (iii) technology used by NJR to provide its services, (iv) the terms and conditions upon which NJR employs its employees and independent contractors, (v) marketing and/or business plans and strategies, (vi) financial reports and analyses regarding the revenues, expenses, profitability and operations of NJR, and (vii) information provided to NJR by customers and other third parties under a duty to maintain the confidentiality of such information.  Notwithstanding the foregoing, Confidential Information does not include information that:  (i) has been voluntarily disclosed to the public by Company or Employer, except where such public disclosure has been made by Employee without authorization from Company or Employer; (ii) has been independently developed and disclosed by others, or (iii) which has otherwise entered the public domain through lawful means.  

		
	d. 
	“Material Contact” means contact in person, by telephone, or by paper or electronic correspondence, or the supervision of those who have such conduct, and which is done in furtherance of the business interests of NJR and within the last 36 months of Employee's employment with NJR.

		
	e. 
	“Restricted Period” means the period while Employee is employed by NJR and for 36 months following the termination or resignation of Employee from employment with NJR.

		
	f. 
	“Restricted Territory” consists of the following areas, to the extent such areas have been identified as applicable to the definition of the “Business of NJR” above:

    
Natural Gas Distribution: The State of New Jersey and for those employees engaged in or supervising off system sales, the States of New Jersey, New York and Pennsylvania.

Energy Services: The Continental United States and within a 100 mile radius of the Dawn Storage Hub in Canada. 

Clean Energy Ventures: The State of New Jersey.
    
Midstream Assets: The States of New Jersey, New York, Connecticut and Pennsylvania.

Home Services: The State of New Jersey.ex10-1_020713.htm

Exhibit 10.1

FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED

REVOLVING CREDIT AND TERM LOAN AGREEMENT

THIS FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “Amendment”), is made and entered into as of February 5, 2013, by and among HEALTHWAYS, INC., a Delaware corporation (the “Borrower”) and SUNTRUST BANK, in its capacity as Administrative Agent for the Lenders (the “Administrative Agent”) and the Swingline Lender.

W I T N E S S E T H:

WHEREAS, the Borrower, the several banks and other financial institutions from time to time party thereto (collectively, the “Lenders”) and the Administrative Agent are parties to a certain Fifth Amended and Restated Revolving Credit and Term Loan Agreement, dated as of June 8, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement), pursuant to which the Lenders have made certain financial accommodations available to the Borrower;

WHEREAS, the Borrower has requested that the Lenders and the Administrative Agent amend certain provisions of the Credit Agreement, and subject to the terms and conditions hereof, the Lenders are willing to do so;

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of all of which are acknowledged, the Borrower and the Administrative Agent, for itself as Administrative Agent, Swingline Lender and Issuing Bank and on behalf of Lenders constituting Required Lenders, agree as follows:

1. Amendments.

(a) Section 1.1 of the Credit Agreement is hereby amended by adding the following sentence at the end of the definition of “Applicable Margin”:

“Notwithstanding the foregoing, Level I of the Pricing Grid for the Eurodollar Rate Margin and Base Rate Margin for the period commencing on February 5, 2013 through and including December 31, 2013 shall be deemed increased by 25 basis points to 3.25% for the Eurodollar Rate Margin and 2.25% for the Base Rate Margin.”

(b) Section 1.1 of the Credit Agreement is hereby amended by replacing the definitions of “Consolidated EBITDA”, “Permitted Subordinated Debt” and “Restricted Payment” in their entirety with the following definitions:

“Consolidated EBITDA” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (a) Consolidated Net Income for such period plus (b) to the extent deducted in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) all other non-cash charges (including non-cash expenses related to equity-based compensation, but excluding any such other non-cash charge to the extent that it represents an accrual of or reserve for future cash payments) and (v) cash 

 

 

  

  

  

restructuring charges (including severance and lease termination costs), in an aggregate amount not to exceed $5,000,000 in any four consecutive Fiscal Quarter period (which, for the avoidance of doubt, shall include cash restructuring charges (including severance and lease termination costs) related to the closing of a call center in Raleigh, North Carolina, in an amount not to exceed $2,000,000 in the aggregate, incurred during the Fiscal Quarter ended on December 31, 2012, in calculating Consolidated EBITDA for any period that includes such Fiscal Quarter), determined on a consolidated basis in accordance with GAAP in each case for such period.  To the extent that during such period any Loan Party shall have consummated an Acquisition, or any sale, transfer or other disposition of any Person, business, property or assets, Consolidated EBITDA shall be calculated on a Pro Forma Basis with respect to such Person, business, property or assets so acquired or disposed of.

“Permitted Subordinated Debt” shall mean any Indebtedness of the Borrower or any Domestic Subsidiary (i) that is expressly subordinated to the Obligations on terms reasonably satisfactory to the Administrative Agent, (ii) that matures by its terms no earlier than six months after the later of the Revolving Commitment Termination Date and the Maturity Date then in effect with no scheduled principal payments permitted prior to such maturity, (iii) that is evidenced by an indenture or other similar agreement that is in a form reasonably satisfactory to the Administrative Agent; and (iv) such Indebtedness on a pro forma basis would not violate the terms of this Agreement.

“Restricted Payment”  shall mean for any Person, any dividend or distribution on any class of its Capital Stock, or any payment on account of, or the setting apart of assets for a sinking or other analogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of or the payment of any principal of, premium, interest, fees or other similar payment with respect to, any shares of Capital Stock, any Indebtedness of such Person subordinated to the Obligations, or any options, warrants, or other rights to purchase such Capital Stock or Indebtedness, whether now or hereafter outstanding..

(c) Section 6.1 of the Credit Agreement is hereby amended by replacing such Section in its entirety with the following:

Section 6.1                      Leverage Ratio. The Borrower and its Subsidiaries shall maintain, as of the last day of any Fiscal Quarter, a Leverage Ratio that is not greater than:

Fiscal Quarter                                                                           Leverage Ratio

 

Each Fiscal Quarter ending after                 4.00:1.00

March 31, 2012 and on or prior to

September 30, 2013

 

The Fiscal Quarter ending on              3.75:1.00

December 31, 2013

 

Each Fiscal Quarter ending on or after           3.50:1.00

March 30, 2014

 

  

2

  

(d)           Section 7.5 of the Credit Agreement is hereby amended by replacing the first sentence of such Section in its entirety with the following:

 

The Borrower will not, and will not permit its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except for (i) dividends payable by the Borrower solely in shares of any class of its Capital Stock, (ii) Restricted Payments made by any Subsidiary ratably to the Borrower, any other Subsidiaries of the Borrower and any other minority shareholders of a Subsidiary of Borrower, (iii) Restricted Payments paid in cash in an aggregate amount not to exceed $200,000,000 in the aggregate subsequent to the Fifth Restatement Date so long as no Default or Event of Default has occurred and is continuing at the time such Restricted Payment is paid or made and (iv) interest payments on Permitted Subordinated Debt to the extent such payments are expressly permitted by the subordination provisions of the applicable Subordinated Debt Documents.

 

2. Conditions to Effectiveness of this Amendment. Notwithstanding any other provision of this Amendment and without affecting in any manner the rights of the Lenders hereunder, it is understood and agreed that this Amendment shall not become effective, and the Borrower shall have no rights under this Amendment, until the Administrative Agent shall have received (a) the fees referred to in Section 9 and, to the extent invoiced and payable as of the date this Amendment otherwise becomes effective, the costs and expenses referred to in Section 8, (b) such other fees as the Borrower has previously agreed to pay to the Administrative Agent or its affiliates in connection with this Amendment (c) executed counterparts to this Amendment from the Borrower and the Guarantors and (d) written authorization from the Required Lenders to execute this Amendment.

3. Representations and Warranties.  To induce the Lenders and the Administrative Agent to enter into this Amendment, each Loan Party hereby represents and warrants to the Lenders and the Administrative Agent:

(a)           The Borrower and each of its Subsidiaries (i) is duly orga­nized, validly existing and in good standing as a corporation or limited liability company, as applicable, under the laws of the jurisdiction of its organization, (ii) ­has all requisite power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where such qualification is required, except where a failure to be so qualified would not reasonably be expected to result in a Material Adverse Effect;

(b)    The execution, delivery and performance of this Amendment by each Loan Party are within such Loan Party’s organizational powers and have been duly authorized by all necessary organizational action;

(c)           The execution, delivery and performance of this Amendment by each Loan Party (i) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect or where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (ii) will not violate any applicable judgment, law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (iii) will not violate or result in a default under any indenture, Material Agreement or other material instrument binding on the Borrower or any of its Subsidiaries or any of its material assets or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries 

 

  

3

  

and (iv) will not result in the creation or imposition of any Lien on any material asset of the Borrower or any of its Subsidiaries, except Liens (if any) created under the Loan Documents;

(d)           This Amendment has been duly executed and delivered by or on behalf of each Loan Party and constitutes a legal, valid and binding obligation of each Loan Party, enforceable against such Loan Party in accordance with its terms except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity; and

(e)           After giving effect to this Amendment and any changes in facts and circumstances that are not prohibited by the terms of the Credit Agreement, the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects (subject to the limitation that representations and warranties effective as of a specified date are true and correct as of such specified date), and no Default or Event of Default exists as of the date hereof.

	
4.  

	
Reaffirmations and Acknowledgments.

(a)           Reaffirmation of Guaranty.  Each Subsidiary Loan Party consents to the execution and delivery by the Borrower of this Amendment and jointly and severally ratifies and confirms the terms of the Subsidiary Guarantee Agreement with respect to the indebtedness now or hereafter outstanding under the Credit Agreement as amended hereby and all promissory notes issued thereunder. Each Subsidiary Loan Party acknowledges that, notwithstanding anything to the contrary contained herein or in any other document evidencing any indebtedness of the Borrower to the Lenders or any other obligation of the Borrower, or any actions now or hereafter taken by the Lenders with respect to any obligation of the Borrower, the Subsidiary Guarantee Agreement (i) is and shall continue to be a primary obligation of the Subsidiary Loan Parties, (ii) is and shall continue to be an absolute, unconditional, joint and several, continuing and irrevocable guaranty of payment, and (iii) is and shall continue to be in full force and effect in accordance with its terms.  Nothing contained herein to the contrary shall release, discharge, modify, change or affect the original liability of the Subsidiary Loan Parties under the Subsidiary Guarantee Agreement.

(b)           Acknowledgment of Perfection of Security Interest. Each Loan Party hereby acknowledges that, as of the date hereof, the security interests and liens granted to the Administrative Agent and the Lenders under the Credit Agreement and the other Loan Documents are in full force and effect, are properly perfected and are enforceable in accordance with the terms of the Credit Agreement and the other Loan Documents.

5. Effect of Amendment.  Except as set forth expressly herein, all terms of the Credit Agreement, as amended hereby, and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Borrower to the Lenders and the Administrative Agent.  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 the Lenders under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement.  This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement.

6. Governing Law.   This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York and all applicable federal laws of the United States of America.

7. No Novation.  This Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Credit Agreement or an accord and satisfaction in regard thereto.

  

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8. Costs and Expenses.  The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for the Administrative Agent with respect thereto.

9. Amendment Fee.  Each of the Lenders consenting to this Amendment and submitting to the Administrative Agent an executed consent hereto on or prior to 5:00 p.m. New York time on February 4, 2013 shall receive, on or prior to the date hereof, an amendment fee equal to 0.15% of the aggregate amount of the Revolving Commitment and outstanding Term Loan held by such Lender on the date this Amendment becomes effective.

10. Counterparts.  This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of this Amendment by facsimile transmission or by electronic mail in pdf form shall be as effective as delivery of a manually executed counterpart hereof.

11. Binding Nature.  This Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective successors, successors-in-titles, and assigns.

12. Entire Understanding.  This Amendment sets forth the entire understanding of the parties with respect to the matters set forth herein, and shall supersede any prior negotia­tions or agreements, whether written or oral, with respect thereto.

[Signature Pages Follow]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, under seal in the case of the Borrower and the Guarantors, by their respective authorized officers as of the day and year first above written.

BORROWER:

HEALTHWAYS, INC.

By:/s/ Alfred Lumsdaine                                                                        

Name:  Alfred Lumsdaine

Title:  Chief Financial Officer and Secretary

SUBSIDIARY LOAN PARTIES:

AMERICAN HEALTHWAYS SERVICES, LLC

CARESTEPS.COM, INC.

POPULATION HEALTH SUPPORT, LLC

HEALTHWAYS INTERNATIONAL, INC.

HEALTHWAYS HEALTH SUPPORT, LLC

HEALTHWAYS WHOLEHEALTH NETWORKS, INC.

HEALTHWAYS QUITNET, LLC

HEALTHWAYS HEALTHTRENDS, LLC

CLINICAL DECISION SUPPORT, LLC

MEYOU HEALTH, LLC

HEALTHHONORS, LLC

THE STRATEGY GROUP, LLC

NAVVIS HEALTHCARE, LLC

NAVVIS CONSULTING, LLC

HEALTHWAYS HAWAII, LLC

ASCENTIA HEALTH CARE SOLUTIONS L.L.C.

By:/s/ Alfred Lumsdaine                                                                        

Name:  Alfred Lumsdaine

Title:  Chief Financial Officer and Secretary

[SIGNATURE PAGE TO FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT]

  

  

  

ADMINISTRATIVE AGENT:

SUNTRUST BANK, as Administrative Agent

By:/s/ Mary E. Coke                                                                        

Name:           Mary E. Coke

Title:           Vice President

 

[SIGNATURE PAGE TO FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT]

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