Document:

Exhibit

Exhibit 10-1
EXECUTION VERSION

AMENDMENT NO. 1 TO CREDIT AGREEMENT AND WAIVER

AMENDMENT NO. 1 TO CREDIT AGREEMENT AND WAIVER (this “Agreement”),    dated
as of March 3, 2017, among NORTHSTAR HEALTHCARE ACQUISITIONS, L.L.C., a Delaware limited liability company (the “Borrower”), NOBILIS HEALTH CORP., a British Columbia corporation (the “Parent”), NORTHSTAR HEALTHCARE HOLDINGS, INC., a Delaware  corporation (“Holdings”), the other Loan Parties (as defined in the Credit Agreement (defined below)) party hereto, LEGACYTEXAS BANK in its capacity as LC Issuing Lender (“LegacyTexas”), COMPASS BANK (in its individual capacity, “Compass Bank”) in its capacity as Swingline Lender, LC Issuing Lender and administrative agent (the “Administrative Agent”) and the Lenders (defined below) party hereto. Unless otherwise indicated, all capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided to such terms in the Credit Agreement referred to below.

W I T N E S S E T H:

WHEREAS, the Borrower, the Parent, Holdings, the other Loan Parties party thereto, the lenders party thereto (the “Lenders”), the Administrative Agent and the other parties thereto have entered into that certain Credit Agreement, dated as of October 28, 2016 (as amended, supplemented or otherwise  modified prior to the date hereof, the “Credit Agreement”).

WHEREAS, the Borrower has informed the Administrative Agent that it has, or intends to, consummate the acquisition (the “Hamilton Acquisition”) pursuant to which the Borrower shall purchase from Hamilton Physician Services, LLC, a Texas limited liability company and Carlos R. Hamilton, III, M.D., P.A. a Texas Professional Association (collectively, the “Sellers”) substantially all of the assets, and certain specified liabilities, of the independent, vascular medical practice focused on the diagnosis and treatment of venous disease with eight clinic locations located in the Houston, Austin, and San Antonio, Texas.

WHEREAS, the Borrower has also informed the Administrative Agent that (a) an Event of Default has occurred and is continuing as a result of its failure to deliver the projections within the time required by Section 6.1(c) of the Credit Agreement (the “Existing Event of Default”), (b) it will not be able to demonstrate compliance on a Pro Forma Basis with the necessary Consolidated Leverage Ratio for the period of four consecutive fiscal quarters of Parent ended September 30, 2016 (the most recent fiscal quarter end for which financial statements have been delivered) as required for the Hamilton Acquisition (pursuant to clause (d)(i) of the definition of Permitted Acquisition) (the “Pro Forma Leverage Requirement”) and (c) it is requesting a waiver with respect to the Existing Event of Default and the Pro Forma Leverage Requirement, along with certain other amendments to the Credit Agreement as set forth herein.

WHEREAS, subject to the terms and conditions of this Agreement, the Administrative Agent and the Lenders party hereto are willing to (a) waive the Existing Event of Default, (b) waive the Pro Forma Leverage Requirement in connection with the Hamilton Acquisition and (c) amend the Credit Agreement as set forth below.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:

SECTION 1. Amendments to Credit Agreement. Effective as  of  the  First  Amendment  Effective Date (as defined in Section 5 below) and subject to the terms and conditions set forth herein and

in reliance upon representations and warranties set forth herein, the Credit Agreement is hereby amended as follows:

(a)The following definitions in Section 1.1 of the Credit Agreement are hereby amended by deleting each such definition in its entirety and replacing it with the following in lieu thereof:

“Applicable Margin” means (a) from the Closing Date to the first Business Day immediately following the date on which the Administrative  Agent  receives  a Compliance Certificate pursuant to Section 6.2(a) from Parent for  the  fiscal  quarter ending March 31, 2017, 3.00% per annum for Base Rate Loans, 4.00% per annum for Eurodollar Rate Loans, 4.00% for LC Fees, and 0.500% per annum for the Commitment Fee and (b) thereafter, the applicable percentage per annum set forth below determined    by reference to the Consolidated Leverage Ratio as set forth in the most recent  Compliance Certificate received by the Administrative Agent pursuant to Section 6.2(a):

	
					
	Level
	Consolidated Leverage Ratio
	Base Rate Margin
	LIBOR Margin
	Commitment Fee Rate

	1
	Less than 1.00 to 1.00
	2.00%
	3.00%
	0.375%

	

2
	Less than 1.75 to 1.00 but greater than or equal to 1.00 to 1.00
	

2.25%
	

3.25%
	

0.375%

	

3
	Less than 2.50 to 1.00 but greater than or equal to 1.75 to 1.00
	

2.50%
	

3.50%
	

0.450%

	

4
	Less than 3.00 to 1.00 but greater than or equal to 2.50 to 1.00
	

2.75%
	

3.75%
	

0.500%

	5
	Greater than or equal to 3.00 to 1.00
	3.00%
	4.00%
	0.500%

Any increase or decrease in the Applicable Margin resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.2(a); provided that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Revolving Lenders, Pricing Level 5 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered. Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Margin for any period shall be subject to the provisions of Section 1.8.

“Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a)(i) Consolidated EBITDAR for the most recently completed period of four consecutive fiscal quarters of Parent less (ii) the sum of (x) Capital Expenditures made during such period and (y) Federal, state, local and foreign income taxes paid in cash during such period (other than (A) any amount of such taxes paid on behalf of any third-party, to the extent that any Loan Party is reimbursed for any such amount  by  such  third-party  and  (B)  any  amount  of  such  taxes  that  are  returned or

refunded by any applicable Governmental Authority to any Loan Party) to (b) Consolidated Fixed Charges plus Consolidated Rental Expense, in each case of Parent and its Subsidiaries on a consolidated basis for such period.

“Consolidated Fixed Charges” means, for any period, for Parent and its Subsidiaries on a consolidated basis, without duplication, the sum of: (a) Consolidated Interest Charges paid or payable in cash, (b) scheduled principal payments with respect to Indebtedness (without giving effect to any reduction of such scheduled principal  payments due hereunder due to voluntary prepayments of the Term Loans pursuant to Section 2.5(a)), and (c) Restricted Payments (excluding Permitted Tax Distributions) made to owners of Equity Interests other than Restricted Payments made to the Borrower or a Subsidiary or payable solely in the common stock or other common Equity Interests of such Person.

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three, six months (and subject to availability to all applicable Lenders, twelve months or less) thereafter as selected by the Borrower in its Loan Notice; provided that:

(a)    any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case  of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(b)    any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c)    no Interest Period shall extend beyond the Maturity Date of the Facility under which such Loan was made.

(b)The definition of “Permitted Acquisition” in Section 1.1 of the Credit Agreement is hereby amended by (i) deleting “and” at the end of clause (g) of such definition; (ii) deleting the period at the end of clause (h) of such definition and replacing it with “; and” in lieu thereof; and (iii) adding a clause (i) at the end of such definition to read in its entirety as set forth below:

“(i)   with respect to any Acquisition which is closing during the 2017 fiscal   year, Required Lender approval and consent (such approval and consent not to be unreasonably withheld or delayed).”

(c)Section 2.2(a) of the Credit Agreement is hereby amended by deleting such section in its entirety and replacing it with the following in lieu thereof:

“(a) Each Term Loan Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans or Revolving Credit Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable written notice to the Administrative Agent in the form of a Loan Notice, which notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Except as otherwise agreed by the Administrative Agent and except in connection with any automatic conversion or continuation provided in this Section 2.2(a), each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof. Except as provided in Sections 2.3(c) and 2.4(c), except as otherwise agreed by the Administrative Agent and except in connection with any automatic conversion or continuation provided in this Section 2.2(a), each Borrowing of or conversion to Base Rate Loans shall be in  a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice shall specify (i) whether the Borrower is requesting a Term Loan  Borrowing, a Revolving Credit Borrowing, a conversion of Term Loans or Revolving Credit Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Term Loans or Revolving Credit Loans are to be converted and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice for Revolving Credit Loans or if the Borrower fails to give a timely notice requesting a conversion or continuation of Revolving Credit Loans, then the applicable Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. If the Borrower fails to give a timely notice requesting a conversion or continuation of a Term Loan that is a Eurodollar Rate Loan, then (x) if no Default has then occurred and is continuing, the applicable Term Loan shall be continued as a Eurodollar Rate Loan with an Interest Period of three months and (y) if a Default has then occurred and is  continuing, the applicable Term Loan shall be converted to a Base Rate Loan. Any such automatic conversion or continuation of Eurodollar Rate Loans referred to in either of the immediately two preceding sentences shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed  to have specified an Interest Period of three months. Notwithstanding anything to the contrary herein, a Swingline Loan may not 

be converted to a Eurodollar Rate Loan. Notwithstanding the foregoing, if the Borrower wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable Loan Notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the applicable Lenders of such request and determine whether the requested Interest Period is acceptable to all of them. Not later than 11:00 a.m., three Business Days before the requested date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders.”

(d)Section 6.1 of the Credit Agreement is hereby amended by (i) deleting “and” at the end of clause (b); (ii) deleting the period at the end of clause (c) and replacing it with “; and” in lieu thereof;  and
(iii) adding a clause (d) to read in its entirety as set forth below:

“(d)   as soon as available and in any event no later than forty-five (45) days   after the last day of each quarter end in the 2017 fiscal year, (i) a comparison, in reasonable  detail  satisfactory  to  Administrative  Agent,  of  the  consolidated  financial performance of Parent (and its Subsidiaries) for the then ended fiscal quarter to quarterly projections for the then ended fiscal quarter (based on the monthly projections delivered by Borrower pursuant to clause (c) above), together with a management discussion and analysis report, in reasonable detail, signed by the chief financial officer or chief accounting officer of Parent and (ii) revised projections of the Parent (and its Subsidiaries) consolidated for the 2017 fiscal year on a quarterly basis including the actual financial performance of Parent (and its Subsidiaries) to date, together with a management discussion and analysis report, in reasonable detail, signed by the chief financial officer or chief accounting officer of Parent, describing the projected operations and financial condition of the Parent and its Subsidiaries for such periods.”

(e)Section 7.11(a) of the Credit Agreement is hereby amended by deleting such section in its entirety and replacing it with the following in lieu thereof (it being understood that no independent reporting or testing of the Consolidated Leverage Ratio for the fiscal quarter ended September 30, 2016 shall be required pursuant to Section 7.11(a) of the Credit Agreement, but that any test or measurement that requires compliance with the Consolidated Leverage Ratio then in effect prior to the date of delivery of the financial statements for the fiscal year ended December 31, 2016 shall utilize the September 30, 2016 level set forth below):

“(a) Consolidated Leverage Ratio. The Loan Parties shall not permit the Consolidated Leverage Ratio as of the last day of any fiscal quarter (starting with the fiscal quarter ending on December 31, 2016) as set forth below to be greater than the maximum ratio set forth in the table below opposite such date:

	
		
	Measurement Period
	Maximum Consolidated Leverage Ratio

	September 30, 2016 through and including
September 30, 2017
	3.75 to 1.00

	December 31, 2017
	3.00 to 1.00

	March  31,  2018  through  and    including
September 30, 2018
	2.75 to 1.00

	December 31, 2018 through and  including
September 30, 2019
	2.50 to 1.00

	December 31, 2019 through and  including
September 30, 2020
	2.25 to 1.00

	December 31, 2020 and the last day of each fiscal quarter thereof
	2.00 to 1.00

Notwithstanding the covenant levels set forth in above, at the election of the Borrower given in writing to the Administrative Agent in connection with a Material Acquisition, commencing with the fiscal quarter during which such Material Acquisition is consummated, the Consolidated Leverage Ratio shall be subject to a covenant adjustment (“Covenant Holiday”). If so elected, (i) the maximum Consolidated Leverage  Ratio during the Covenant Holiday shall be equal to the applicable requirement set forth above plus 0.25, (ii) the period of each Covenant Holiday shall last no longer than three fiscal quarters (or such shorter period as Borrower may request), (iii) there shall be at least one fiscal quarter between Covenant Holidays, and (iv) there shall be no more than two Covenant Holidays during the term of this Agreement.  After the period of each Covenant

Holiday, the maximum permitted Consolidated Leverage Ratio shall be as set forth in the table above.”

(f)Section 7.11(b) of the Credit Agreement is hereby amended by deleting such section in  its entirety and replacing it with the following in lieu thereof (it being understood that no independent reporting or testing of the Consolidated Fixed Charge Coverage Ratio for the fiscal quarter ended September 30, 2016 shall be required pursuant to Section 7.11(b) of the Credit Agreement, but that any test or measurement that requires compliance with the Consolidated Fixed Charge Coverage Ratio then in effect prior to the date of delivery of the financial statements for the fiscal year ended December 31, 2016 shall utilize the September 30, 2016 level set forth below):

“(b) Consolidated Fixed Charge Coverage Ratio. The Loan Parties shall not permit the Consolidated Fixed Charge Coverage Ratio as of the last day of any fiscal quarter (starting with the fiscal quarter ending on December 31, 2016) as set forth below to be less than the minimum ratio set forth in the table below opposite such date:

	
		
	Measurement Period
	Minimum Consolidated Fixed Charge Coverage Ratio

	September  30,  2016  through  and    including
June 30, 2017
	1.15 to 1.00

	September 30, 2017
	1.25 to 1.00

	December 31, 2017
	1.50 to 1.00

	March 31, 2018 and the last day of each fiscal quarter thereof
	2.00 to 1.00

SECTION 2. Interest Payment Date of Term Loan. On the Closing  Date,  the  Borrower  borrowed the Term Loan at Base Rate. On or about January 19, 2017, Borrower converted the Term Loan to a Eurodollar Rate Loan with a three month Interest Period, with a termination date and an Interest Payment Date of April 19, 2017 (the “Existing Eurodollar Rate Term Loan”). Effective as of the First Amendment Effective Date and subject to the terms and conditions set forth herein, the Interest Period for the Existing Eurodollar Rate Term Loan shall be extended to terminate on June 30, 2017 with an Interest Payment Date of June 30, 2017.

SECTION 3. Waivers. Effective as of the First Amendment Effective Date and subject to the terms and conditions set forth herein and in reliance upon representations and warranties set forth herein, the parties hereto agree to (a) waive the Existing Event of Default and (b) waive the Pro Forma Leverage Requirement in connection with the Hamilton Acquisition. Except as expressly set forth herein, (i) this Agreement shall not, by implication or otherwise, limit, impair, constitute a consent to, a waiver of, or otherwise affect the rights and remedies of the Administrative Agent, the Lenders and the other Secured Parties under the Credit Agreement or any of the other Loan Documents and (ii) nothing herein shall be deemed to entitle the Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, 

obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances.

SECTION 4.  Consent to Hamilton Acquisition. After giving effect to the waiver of the Pro  Forma Leverage Requirement set forth in Section 3 above, each Lender signatory hereto consents to the Hamilton Acquisition; provided, that: (a) the Hamilton Acquisition is consummated on or prior to May 1, 2017; (b) the aggregate consideration paid by the Borrower in connection with the Hamilton Acquisition is  not  greater  than  $13,400,000,  of  which  not  less  than  $5,000,000  shall  consist  of  unsecured

Subordinated Indebtedness (a copy of which is attached hereto as Annex 1) owing by one or more Loan Parties to the seller of the Hamilton Acquisition and not more than $8,400,000 may be paid in cash; (c) after giving effect to the waiver of the Pro Forma Leverage Requirement set forth in Section 3 above, the Borrower has satisfied all requirements for the Hamilton Acquisition to qualify as a Permitted Acquisition under the Credit Agreement; and (d) the Borrower shall have delivered to Administrative Agent updated Disclosure Schedules to the Credit Agreement and updated schedules to the Guaranty and Security Agreement, as applicable, each in form and substance reasonably acceptable to the Administrative Agent.

SECTION 5. Acknowledgement and Confirmation. Each of the  Loan  Parties  party  hereto hereby agrees that with respect to each Loan Document to which it is a party, after giving effect to this Agreement and the transactions contemplated hereunder:

(a)all of its obligations, liabilities and indebtedness under such Loan Document, including guarantee obligations, shall, except as expressly set forth herein or in the Credit Agreement, remain in full force and effect on a continuous basis; and

(b)all of the Liens and security interests created and arising under such Loan Document remain in full force and effect on a continuous basis, and the perfected status and priority to the extent provided for in the Loan Documents of each such Lien and security interest continues in full force and effect on a continuous basis, unimpaired, uninterrupted and undischarged as Collateral for the Obligations, to the extent provided in such Loan Documents.

SECTION 6. Conditions of Effectiveness of this Agreement. This Agreement shall become effective on the date when the following conditions shall have been satisfied or waived (such date, the “First Amendment Effective Date”):

(a)The Administrative Agent’s receipt of the following, each of which shall be originals or electronic copies (including “.pdf” or similar format and, to the extent required by the Administrative Agent followed promptly by originals) unless otherwise specified or otherwise not applicable, each properly executed by a Senior Officer of the signing Loan Party:

(i)    this Agreement, duly executed by Holdings, the Parent, the Borrower, the other Loan Parties existing as of the First Amendment Effective Date, the Administrative Agent, and the Lenders constituting the Required Lenders;

(ii)    a certificate of a Senior Officer of the Borrower certifying that (A) after giving effect to the amendments contained in Section 1 of this Agreement and the waivers contained in Section 3 of this Agreement, no Default exists immediately prior to, or will exist immediately after, giving effect to the transactions contemplated hereunder and (B) after giving effect to the amendments contained in Section 1 of this Agreement and the waivers contained in Section 3 of this Agreement, 

the representations and warranties of the Loan Parties contained in Section 8 of this Agreement, Article V of the Credit Agreement, and each other Loan Document, are true and correct in all material respects (or, in the case of any such representation and warranty that is subject to materiality or Material Adverse Effect qualifications, in all respects) on and as of the First Amendment Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or, in the case of any such representation and warranty that is subject to materiality or Material Adverse Effect qualifications, in all respects as of such earlier date); and

(iii)    the projections for the fiscal year of the Parent ending December 31, 2017 required by Section 6.1(c) of the Credit Agreement.

(b)Payment of a consent fee to each Lender that executes and returns a signature page to this Agreement at or prior to 5:00 p.m. Central Standard Time on March 3, 2017 equal to 0.25% of the Total Credit Exposure of such Lender after giving effect to this Agreement, in accordance with that certain first amendment fee letter dated as of February 14, 2017 by and between the Borrower and Compass Bank (the “Fee Letter”).

(c)Payment of (i) all reasonable and documented fees and expenses of the Administrative Agent and Compass Bank accrued through the date of this Agreement (including reasonable accrued legal fees and expenses, to the extent invoiced at least one Business Day prior to the First Amendment Effective Date, with respect to this Agreement and the Credit Agreement) and (ii) all fees due to Compass Bank to the extent required to be paid on the First Amendment Effective Date pursuant to the Fee Letter.

SECTION 7. Costs and Expenses. The Borrower hereby reconfirms its  obligations  under  Section 10.4 of the Credit Agreement to make payments and reimbursements in accordance with the  terms thereof (including with respect to this Agreement).

SECTION 8.   Representations and Warranties. To induce the Administrative Agent and the   other Lenders to enter into this Agreement, each Loan Party represents and warrants to the Administrative Agent and the other Lenders on and as of the First Amendment Effective Date (and after giving effect to the amendments contained in Section 1 of this Agreement and the waivers contained in Section 3 of this Agreement) that, in each case:

(a)the representations and warranties of the Loan Parties contained in Article V of the Credit Agreement and in each other Loan Document are true and correct in all material respects (or, in the case of any such representation and warranty that is subject to materiality or Material Adverse Effect qualifications, in all respects) on and as of the First Amendment Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or, in the case of any such representation and warranty that is subject to materiality or Material Adverse Effect qualifications, in all respects as of such earlier date); and

(b)no Default or Event of Default exists and is continuing immediately prior to or after giving effect to this Agreement.

SECTION 9.    Reference to and Effect on the Credit Agreement and the Loan Documents.

(a)On and after the First Amendment Effective Date, each reference in the Credit  Agreement to “this Agreement,” “herein,” “hereto”, “hereof” and “hereunder” or words of like import referring to 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 Agreement.

(b)The Credit Agreement and each of the other Loan Documents, as specifically amended  by this Agreement, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

(c)The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. Without limiting the generality of the foregoing, the Collateral Documents in effect immediately prior to the date hereof and all of the Collateral described therein in existence immediately prior to the date hereof do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, in each case, as amended by this Agreement.

SECTION 10. Governing Law. THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

SECTION 11.  Counterparts. This Agreement may be executed in any number of counterparts  and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery by facsimile or electronic transmission of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BORROWER:

NORTHSTAR HEALTHCARE  
ACQUISITIONS, L.L.C.

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

HOLDINGS:

NORTHSTAR HEALTHCARE HOLDINGS, INC.

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

PARENT:

NOBILIS HEALTH CORP.

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

LOAN PARTIES:

ATHAS ADMINISTRATIVE LLC

By:    Athas Health LLC, its sole member

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

ATHAS HEALTH LLC

		
	By:
	Northstar Healthcare Subco, L.L.C., its sole member

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

ATHAS HOLDINGS LLC

By:    Athas Health LLC, its sole member

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

BELLAIRE SURGICAL HOSPITAL
HOLDINGS, LLC

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

    
    

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

CENTRAL DALLAS MANAGEMENT, LLC

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

CENTRAL MEDICAL SOLUTIONS LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

CHANDLER SURGERY CENTER, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

CONCERTIS, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

FIRST NOBILIS HOSPITAL, LLC

By:     __________________________________

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

Name:    Harry Fleming
Title:     Chief Executive Officer

FIRST NOBILIS HOSPITAL MANAGEMENT, 
LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

FIRST NOBILIS, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

FIRST NOBILIS SURGICAL CENTER, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer
 
HERMANN DRIVE SURGICAL HOSPITAL, 
LP
By:    Northstar Healthcare General Partner,
L.L.C., its sole general partner

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

KUYKENDAHL ROAD SURGICAL 
HOSPITAL, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

MARSH LANE SURGICAL HOSPITAL, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

MPDSC, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

NOBILIS HEALTH MARKETING, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

NOBILIS SURGICAL ASSIST, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

NOBILIS VASCULAR HOLDING COMPANY, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

NOBILIS VASCULAR TEXAS, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

NORTHSTAR HEALTHCARE GENERAL PARTNER, L.L.C.

By:     __________________________________

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

Name:    Harry Fleming
Title:     Chief Executive Officer

NORTHSTAR HEALTHCARE LIMITED
PARTNER, L.L.C.

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

NORTHSTAR HEALTHCARE
MANAGEMENT COMPANY, LLC

By:    Northstar Healthcare Acquisitions, 
L.L.C., its sole member

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer
                    

NORTHSTAR HEALTHCARE SUBCO, L.L.C.

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

NORTHSTAR HEALTHCARE SURGERY
CENTER – HOUSTON, LLC

By:    Northstar Healthcare Acquisitions, L.L.C.,
its sole member

By:     ____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

NORTHSTAR HEALTHCARE SURGERY

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

CENTER – SCOTTSDALE, LLC

By:    Northstar Healthcare Acquisitions,
L.L.C., its sole manager

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

ORACLE SURGERY CENTER, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

Northstar Healthcare Acquisitions, L.L.C.
Amendment No. 1 to Credit Agreement and Waiver
Signature Pages
85667395

PEAK NEUROMONITORING ASSOCIATES – 
TEXAS II, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

PEAK SURGEON INNOVATIONS, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

PERIMETER ROAD SURGICAL HOSPITAL,
LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

PHOENIX SURGERY CENTER, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

PREMIER HEALTH SPECIALISTS, LLC

By:     __________________________________
Name:    Harry Fleming

Title:     Chief Executive Officer

SOUTHWEST FREEWAY SURGERY
CENTER, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

SOUTHWEST FREEWAY SURGERY
CENTER MANAGEMENT, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

SOUTHWEST HOUSTON SURGICAL
ASSIST, LLC

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

THE PALLADIUM FOR SURGERY – 
DALLAS, LTD.

By:    Northstar Healthcare General Partner,
L.L.C., its sole general partner

By:     _____________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

THE PALLADIUM FOR SURGERY – 
HOUSTON, LTD.

By:     __________________________________
Name:    Harry Fleming
Title:     Chief Executive Officer

COMPASS BANK
as Administrative Agent, LC Issuing Lender and Swingline Lender

By:     __________________________________
Name:    Latrice Tubbs
Title:     Its Duly Authorized Signatory

COMPASS BANK, as Lender

By:     __________________________________
Name:    Latrice Tubbs
Title:     Its Duly Authorized Signatory

LEGACYTEXAS BANK,
as a Lender and LC Issuing Lender

By:     __________________________________
Name:    Lindsey Burris
Title:     Assistant Vice President

LENDERS: 

BANK OF AMREICA, N.A., 
as a Lender

By:     __________________________________
Name:    Megan Cobb
Title:     Vice President

FRANKLIN SYNERGY BANK,
as a Lender

By:     __________________________________
Name:    Lisa Fletcher
Title:     SVP

BOKF, NA dba Bank of Texas
as a Lender

By:     __________________________________
Name:    Matt Robertson
Title:     Vice President

FIRST TENNESSEE BANK, 
as a Lender

By:     __________________________________
Name:    Grier Powers
Title:     SVP

Annex 1

Subordinated Indebtedness Note

 
-6-    

3717753.1
NOBILIS DRAFT 
3717753.1
THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 
CONVERTIBLE PROMISSORY NOTE
$5,000,000    January 23, 2017
Houston, Texas, United States 
For value received, Nobilis Vascular Texas, LLC, a Texas limited liability company (the “Maker”), promises to pay to Carlos R. Hamilton III, M.D. or other such designated payee (the “Holder”), the principal sum of Five Million Dollars ($5,000,000).  Interest shall accrue from the date of this Note on the unpaid principal amount at a simple rate equal to five percent (5%) per annum.  This Note is issued pursuant to that certain Asset Purchase Agreement dated January 6, 2017, by and among Buyer, NHC, Holder, and Sellers (the “Purchase Agreement”).  Capitalized terms not otherwise defined herein have the meaning given them in the Purchase Agreement.  This Note is subject to the following terms and conditions.
1.Installments.  Principal under this Note shall be payable in two (2) equal installments, each of which shall be Two Million Five Hundred Thousand Dollars ($2,500,000), the first of which shall be due and payable on the first anniversary of the date of this Note and the second of which shall be due and payable on the second anniversary of this Note (collectively, the “Installment Dates”).  Subject to Sections 3, 4, and 7 below, interest shall accrue on this Note and shall be due and payable on each Installment Date. 
2.Final Maturity Date.  The Final Maturity Date shall be the earlier of the second Installment Date specified above or the date upon which all remaining principal owing under this Note is paid in full.
3.Conversion Option. On the Installment Dates, the then outstanding principal (but excluding accrued and unpaid interest under this Note) (the “Conversion Amount”) may be converted, at the sole discretion of Maker, into such number of shares of NHC’s Common Stock, 

traded on the NYSE, equal to the quotient obtained by dividing the Conversion Amount by the volume weighted average price of NHC’s Common Stock traded on the NYSE in the trailing ten (10) trading days prior to the applicable Installment Date. Notwithstanding the above, if NHC’s Common Stock is not at the time of conversion listed for trading on the NYSE, if NHC has received notice from the NYSE that NHC is not in compliance with one or more continuing listing standards for trading on the NYSE, or if NHC has taken any action to delist the Common Stock from the NYSE, then NHC’s right to convert under this Note shall terminate. Moreover, Maker’s above conversion option shall not be exercisable if an Event of Default occurs (as defined below).
4.Mechanics and Effect of Conversion.  Maker shall notify the Holder in writing at least five (5) Business Days prior to the Installment Dates as to whether Maker will exercise the Conversion Option in Section 3 above.  No fractional shares of NHC’s Common Stock will be issued upon conversion of this Note.  In lieu of any fractional share to which the Holder would otherwise be entitled, NHC will pay to the Holder in cash the amount of the unconverted principal balance of this Note that would otherwise be converted into such fractional share.  Upon conversion of this Note, the Holder shall surrender this Note, duly endorsed, at the principal offices of NHC or any transfer agent of NHC.  At its expense, NHC will, as soon as practicable thereafter, issue the number of shares to which such Holder is entitled upon such conversion, including a check payable to the Holder for any cash amounts payable as described herein, and shall deliver to such Holder, at such principal office, a certificate or certificates for the number of shares to which such Holder is entitled upon such conversion.  Upon full conversion of this Note, the Maker will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount being converted including without limitation the obligation to pay such portion of the principal amount.  Upon conversion of the principal amount of this Note into NHC’s Common Stock, any interest accrued on this Note shall be immediately paid to the Holder. 
5.Payment; Prepayment.  All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Maker.  Payment shall be credited first to the accrued interest then due and payable and the remainder shall be applied to principal.  Maker may prepay this Note at any time without penalty.
6.Stockholders, Officers and Directors Not Liable.  In no event shall any stockholder, officer or director of the Maker, Company, or NHC be liable for any amounts due or payable pursuant to this Note.
7.Default; Remedies.
(a)The occurrence of any one or more of the following events with respect the Maker shall constitute an event of default hereunder (“Event of Default”):
(i)If Maker shall fail to pay when due any payment of principal or interest on this Note.
(ii)If, pursuant to or within the meaning of the United States Bankruptcy Code, any other federal, state, or analogous Canadian law relating to insolvency or relief of debtors (a “Bankruptcy Law”), the Maker shall (A) commence a voluntary case or proceeding, (B) consent to the entry of an order for relief against it in an involuntary case, (C) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official, (D) make an assignment for the benefit of its creditors, or (E) admit in writing its inability to pay its debts as they become due.
(iii)If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Maker in an involuntary case, (B) appoints a trustee, receiver, assignee, liquidator or similar official for the Maker, or substantially all of 

their respective properties, or (C) orders the liquidation of the Maker, and in each case the order or decree is not dismissed within sixty (60) days.
(b)The Maker shall notify the Holder in writing no more than five (5) days after the occurrence of any Event of Default of which the Maker has actual knowledge.
(c)Upon the occurrence of an Event of Default hereunder, the Holder may, at its option, (i) by written notice to Maker, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon, immediately due and payable regardless of any prior forbearance and (ii) exercise any and all rights and remedies available to it under applicable law, including, without limitation, the right to collect from Maker all sums due under this Note, including, without limitation, reasonable attorneys’ fees.
8.Interest Rate Limitation.  Notwithstanding anything to the contrary contained in this Note or the Purchase Agreement, the interest paid or agreed to be paid under this Note shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”).  If the Holder shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal remaining owed under this Note or, if it exceeds such unpaid principal, refunded to the Maker.  In determining whether the interest contracted for, charged, or received by the Holder exceeds the Maximum Rate, the Holder may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of this Note.
9.Loss of Note.  Upon receipt by Maker of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to Maker (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), Maker will make and deliver in lieu of such Note a new Note of like tenor.
10.Subordination. 
(a)Definitions: For purposes of this Section 10:
(i)“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder.
(ii)“Payment in Full” shall mean with respect to Senior Indebtedness that: (a) all of such Senior Indebtedness (other than contingent indemnification or reimbursement obligations not yet due and payable or with respect to which a claim has not yet been asserted, (ii) obligations under any Secured Hedge Agreements (as defined in the Senior Financing Agreement) that (A) at the time of determination, are allowed by the Person to whom such obligations are owing to remain outstanding and are not required to be repaid or cash collateralized pursuant to the provisions of the Secured Hedge Agreement or any other document governing such obligation or (B) are intended to be rolled into a refinancing or replacement (in whole or in part) of the Senior Indebtedness (other than obligations under a Secured Hedge Agreement) and (iii) obligations not yet due and payable with respect to letters of credit issued pursuant to the Senior Financing Agreement and applicable Senior Debt Documents (it being understood that such obligations include interest, fees, charges, costs and expenses that accrue in respect of undrawn or drawn letters of credit)) has been paid in full in cash, (b) no Person has any further right to obtain any loans, letters of credit or other extensions of credit under the Senior Financing Agreement and any applicable Senior Debt Documents, and (c) any and all letters of credit issued under the Senior Financing Agreement and any applicable Senior Debt Documents have been cancelled and returned (or backed by standby letters of credit (issued by a bank, and in form and substance, acceptable to the administrative agent) or cash collateralized, in each case in the 

Minimum Cash Collateral Amount required by and in accordance with the terms of the Senior Financing Agreement and such applicable Senior Debt Documents).
(iii)“Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person.
(iv)“Senior Indebtedness” shall mean all Obligations under and as defined in the Senior Financing Agreement, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest or premium, if any, all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, and all other amounts at any time due or payable under the Senior Financing Agreement, and any renewal, extension or refinancing thereof, whether before or after the filing of a Proceeding under the Bankruptcy Code together with any interest, fees, costs and expenses accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest, fees, costs and expenses are an allowed claim in such Proceeding.
(v)“Senior Debt Documents” shall mean the Senior Financing Agreement and the other Loan Documents (as defined in the Senior Financing Agreement), as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
(vi)“Senior Lenders” means Compass Bank, each other lender party to the Senior Financing Agreement, and each of their respective successors and assigns.
(b)Subordination.  Each of the parties hereto hereby agrees, notwithstanding anything to the contrary contained herein or in any other documents related to this Note, that the payment of any and all of the indebtedness evidenced by this Note (including the principal hereof and interest hereon) shall be subordinated and junior in right and time of payment and exercise of remedies to the prior Payment in Full of the Senior Indebtedness of Northstar Healthcare Acquisitions, L.L.C. (hereinafter, the “Borrower”), and the other Loan Parties (as defined in the Senior Financing Agreement, defined below, including the Maker; collectively, the “Debtors”) in all respects. Each Holder acknowledges and agrees that payments under this Note may only be made by the Maker to the extent permitted under that certain Credit Agreement, dated as of October 28, 2016 (as may from time to time be amended, restated, supplemented or otherwise modified, the “Senior Financing Agreement”), by and among the Borrower, NHC, Northstar Healthcare Holdings, Inc., a Delaware corporation, the other Debtors from time to time party thereto, each lender from time to time party thereto, and Compass Bank in its individual capacity and as administrative agent. Notwithstanding anything to the contrary contained in this Note, (i) no payments may be made on this Note if, before or after giving effect thereto, any Event of Default (as such term is defined in the Senior Financing Agreement) exists under the Senior Financing Agreement and (ii) the parties acknowledge and agree that (1) Maker’s failure to make a payment of principal or interest when due under this Note at any time that such payment is prohibited under the terms of any Senior Indebtedness shall not constitute default or breach hereunder and (2) nothing herein shall be deemed to prohibit the exercise by a Holder of all powers, rights and remedies of such party hereunder. The parties hereby designate all Senior Lenders, from time to time, as intended third-party beneficiaries of this Note. Each holder of Senior Indebtedness, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Indebtedness in reliance upon the provisions contained in this Note. The parties hereto and the holders of each Note and Senior Indebtedness intend that the subordination provisions set forth herein be enforceable in any Proceeding as a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code or any other applicable law.

11.Miscellaneous.
(a)Governing Law.  The validity, interpretation, construction and performance of this Note, and all acts and transactions pursuant hereto and the rights and obligations of the Maker and Holder shall be governed, construed and interpreted in accordance with the laws of the state of Texas, without giving effect to principles of conflicts of law.
(b)Entire Agreement.  This Note, together with the Purchase Agreement and the documents referred to therein, constitutes the entire agreement and understanding between the Maker and the Holder relating to the subject matter herein and supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written between them relating to the subject matter hereof.
(c)Amendments and Waivers.  Any term of this Note may be amended only with the written consent of the Maker and the Holder.  
(d)Successors and Assigns.  The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the Maker and the Holder.  Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note without the prior written consent of Maker, which shall not be unreasonably withheld, except Holder may assign, pledge, or transfer this Note without the prior written consent of Company or NHC, to Holder’s spouse, parents or children (“Holder’s Family”) or an entity controlled by Holder or Holder’s Family.  Subject to the preceding sentence, this Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to Maker.  Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee.  Interest and principal are payable only to the registered holder of this Note.
(e)Notices.  Any notice, demand or request required or permitted to be given under this Note shall be in writing and shall be deemed sufficient when delivered in accordance with Section 9.2 of the Purchase Agreement.
(f)Counterparts.  This Note may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same instrument.
[Signature Page Follows]

3717753.1

IN WITNESS WHEREOF, Maker has executed this Convertible Promissory Note as of the date first set forth above.
THE Maker:
NoBILIS VASCULAR TEXAS, LLC
By:    
(Signature)
Name: Harry Fleming

Title: Chief Executive Officer

AGREED TO AND ACCEPTED:
The holder:
CARLOS R. HAMILTON III, M.D.

By:    
          (Signature)
Name: Carlos R. Hamilton, M.D.Exhibit

Exhibit 10.18

PIXELWORKS, INC.
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
This Change of Control and Severance Agreement (the “Agreement”) is made and entered into effective as of January 4, 2016 (the “Effective Date”), by and between Todd A. DeBonis (the “Executive”) and Pixelworks, Inc., an Oregon corporation (the “Company”).  Certain capitalized terms used in this Agreement are defined in Section 1 below.
R E C I T A L S
The Board believes that it is in the best interests of the Company and its shareholders to provide the Executive with an incentive to continue Executive’s employment following, and so to maximize the value of the Company upon, a Change of Control for the benefit of its shareholders and to provide the Executive with severance upon an involuntary termination.  To do so, the Board believes it appropriate to provide the Executive with certain severance benefits upon the Executive’s termination of employment following a Change of Control or in the case of an involuntary termination.
AGREEMENT
The parties therefore agree as follows:
1.Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:
(a)Cause.  “Cause” shall mean Executive engaged in any one or more of the following:  (i) a material act of dishonesty, fraud, misconduct, or willful violation of any material law, ethical rule or fiduciary duty that is in connection with Executive’s responsibilities as an executive of the Company; (ii) acts constituting a felony or moral turpitude which the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business; or (iii) repeated willful failure to perform Executive’s duties as an executive of the Company and the failure to effect such cure within 30 days after written notice of such violation or breach is given to Executive; or (iv) the willful violation of any material Company policy or procedure, or breach of any material provision of this Agreement or other agreement with the Company, and if such violation or breach is susceptible of cure, the failure to effect such cure within 30 days after written notice of such violation or breach is given to Executive.
(b)Change of Control.  “Change of Control” shall mean the occurrence of any of the following events: 
(i)the approval by shareholders of the Company of a merger or consolidation of the Company with any other corporation, or of a subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in effective voting control over the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
(ii)the approval by the shareholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; 
(iii)any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; or
(iv)a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors who are either identified in (A) or identified as their successors elected under this clause (B).
(c)Good Reason Event.  A “Good Reason Event” shall be any of the following:  (i) without the Executive’s express written consent, a material diminution of the Executive’s duties, authority or responsibilities; (ii) without the Executive’s express written consent, a reduction by the Company of the Executive’s base salary; (iii) without the Executive’s express written consent, the imposition of a requirement that Executive’s primary place of employment be at a 

facility or a location more than fifty (50) miles from the Executive’s current work location, provided that such requirement to relocate materially increases the Executive’s commute; or (iv) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 6 below.  The Executive must provide notice of intent to terminate for a Good Reason Event within thirty (30) days of occurrence of the event constituting a Good Reason Event, and the Executive may terminate for Good Reason Event only if the Company shall fail to cure such event within fourteen (14) days of receipt of such notice from the Executive.  
(d)Involuntary Termination.  “Involuntary Termination” shall mean (i) any termination of the Executive’s employment by the Company which is not effected for valid Cause; or (ii) any termination by the Executive for Good Reason. 
(e)Termination Date.  “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder.
2.Term of Agreement.  This Agreement shall terminate upon the earlier of two (2) years after a Change of Control, or (ii) the date that all obligations of the parties hereto under this Agreement have been satisfied. 
3.At-Will Employment.  The Company and the Executive acknowledge that the Executive’s employment is and shall continue to be at-will, as defined under applicable law.  If the Executive’s employment terminates for any reason, the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be established under the Company’s then existing employee benefit plans or policies at the time of termination.
4.Severance Benefits.
(a)Termination During Change of Control Window. 
(i)If Within Six Months Before a Change of Control.  If the Executive’s employment with the Company terminates as a result of an Involuntary Termination at any time within six (6) months before a Change of Control, and the Executive signs the release of claims pursuant to Section 7 hereto, Executive shall be entitled to the following severance benefits:
(1)Twelve (12) months of Executive’s base salary in effect as of, and annual target bonus in effect for the year of, the date of such termination, less applicable withholding, payable in a lump sum thirty-five  (35) days following such Involuntary Termination.
(2)All stock options granted by the Company to the Executive prior to the Change of Control shall accelerate and become 100% vested and exercisable to the extent such stock options are outstanding and un-exercisable at the time of such termination.  All restricted stock units granted by the Company to the Executive prior to the Change of Control which are outstanding and unvested as of the time of such termination shall accelerate and become 100% vested.  All stock subject to a right of repurchase by the Company (or its successor) that was purchased prior to the Change of Control shall have such right of repurchase lapse.
(3)The same level of Company-paid health (i.e., medical, vision and dental) coverage and benefits for such coverage as in effect for the Executive (and any eligible dependents) on the day immediately preceding the Executive’s Termination Date; provided, however, that (i) the Executive constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended; and (ii) Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA.  The Company shall continue to provide Executive with such Company-paid coverage until the earlier of (i) the date Executive (and Executive’s eligible dependents) is no longer eligible to receive continuation coverage pursuant to COBRA, or (ii) twelve (12) months from the Termination Date.  
(4)Rules For Uncertainty Period: During the six months following an Involuntary Termination that occurs at some time other than in the 24 months following a Change of Control, these further rules will apply. 
(1)As of the date of the Involuntary Termination, any options that have the potential to become vested if a Change of Control occurs in the following six months, but which have not yet vested, will be regarded as unexpired until the end of the six month period, at which time, if no Change of Control has occurred, the options will expire unvested.  As of the date of an Involuntary Termination, Executive may hold restricted stock units or other rights as to which, absent a Change of Control, would be forfeited or the the Company would have repurchase rights, but as to which such rights would expire if a Change of Control occurs within six months.  Until it is known whether the status of such shares or rights has changed, they shall not be forfeited or repurchased by the Company, and all periods for exercising repurchase 

rights, or related thereto, shall be tolled until such time as it can be known with certainty whether such repurchase rights have expired.  
(2)If a Change of Control occurs within those six months, the benefits due under this Agreement will accrue immediately, calculated as of the original Involuntary Termination Date.   In that event, any cash severance benefit will be paid thirty-five (35) days following the Change of Control, and the options, rights and shares that would have vested on the date of Executive’s Involuntary Termination if a Change of Control agreement had then occurred, will immediately vest.  Executive will then have a minimum of six months following the Change of Control to exercise the options (longer if a longer period would otherwise be applicable and in no event in excess of the maximum period of such option).  
(ii)If Within Twelve Months Following a Change of Control.  If the Executive’s employment with the Company terminates as a result of an Involuntary Termination at any time within twelve (12) months after a Change of Control, and the Executive signs the release of claims pursuant to Section 7 hereto, Executive shall be entitled to the following severance benefits:
(1)Twelve (12) months of Executive’s base salary in effect as of the date of, and annual target bonus in effect for the year of, the Involuntary Termination, or, if greater for each, as in effect immediately prior to the Change of Control, less applicable withholding, payable in a lump sum thirty-five (35) days following such Involuntary Termination.
(2)All stock options granted by the Company to the Executive prior to the Change of Control shall accelerate and become 100% vested and exercisable to the extent such stock options are outstanding and un-exercisable at the time of such termination.  All restricted stock units granted by the Company to the Executive prior to the Change of Control which are outstanding and unvested as of the time of such termination shall accelerate and become 100% vested.  All stock subject to a right of repurchase by the Company (or its successor) that was purchased prior to the Change of Control shall have such right of repurchase lapse.
(3)the same level of Company-paid health (i.e., medical, vision and dental) coverage and benefits for such coverage as in effect for the Executive (and any eligible dependents) on the day immediately preceding the Executive’s Termination Date; provided, however, that (i) the Executive constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended; and (ii) Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA.  The Company shall continue to provide Executive with such Company-paid coverage until the earlier of (i) the date Executive (and Executive’s eligible dependents) is no longer eligible to receive continuation coverage pursuant to COBRA, or (ii) twelve (12) months from the Termination Date.
(iii)If Between Twelve Months and Twenty-Four Months Following Change of Control.  If the Executive’s employment with the Company terminates as a result of an Involuntary Termination at any time during the period that is from twelve (12) months after a Change of Control to twenty-four (24) months after a Change of Control (such period being the “Second Year”), and the Executive signs the release of claims pursuant to Section 7 hereto, Executive shall be entitled to the following severance benefits:
(1)a lump sum cash amount payable in a lump sum thirty-five  (35) days following such Involuntary Termination calculated and payable as follows.  Determine the greater of (i) the base salary in effect as of, and the target bonus applicable to the calendar year of, the Involuntary Termination; or (ii) the base salary in effect as of, and the target bonus applicable to the calendar year of, the Change of Control, as in effect immediately prior to the Change of Control.  Multiply that amount by a fraction, the numerator of which is the number of months remaining in the Second Year, and the denominator of which is twelve.  Pay the resulting amount, less applicable withholding, within thirty days of the Involuntary Termination.  For purposes of this subsection (1), only entire months that remain in the Second Year shall be counted as “remaining,” and any fraction of a month that remains after the date of the termination shall not be counted hereunder;
(2)the health benefits set forth in Section 4(a)(i)(3) above, provided, however, that the twelve (12) month period shall be pro-rated to reflect that number of months remaining in the Second Year as of the date of termination.  For purposes of this subsection (2), only entire months that remain in the Second Year shall be counted as “remaining,” and any fraction of a month that remains after the date of the termination shall not be counted hereunder; and
(3)all stock options granted by the Company to the Executive prior to the Change of Control shall accelerate and become vested and exercisable as to the number of shares that would have otherwise vested during the twelve (12) months following such termination as if the Executive had remained employed by the Company (or its successor) through such date under the applicable option agreements to the extent such stock options are outstanding and un-

exercisable at the time of such termination; all restricted stock units granted by the Company to the Executive prior to the Change of Control shall accelerate and become vested as to the number of shares that would have otherwise vested during the twelve (12) months following such termination as if the Executive had remained employed by the Company (or its successor) to the extent such restricted stock options are outstanding at the time of such termination; and all stock subject to a right of repurchase by the Company (or its successor) that was purchased prior to the Change of Control shall have such right of repurchase lapse with respect to that number of shares which would have had such right of repurchase lapse under the applicable agreement within twelve (12) months of the date of the termination as if the Executive had remained employed through such date, provided, however, that the twelve (12) month period shall be pro-rated to reflect that number of months remaining in the Second Year as of the date of termination.  For purposes of this subsection (3), only entire months that remain in the Second Year shall be counted as “remaining,” and any fraction of a month that remains after the date of the termination shall not be counted hereunder. 
(b)Termination Apart from a Change of Control.  If the Executive’s employment with the Company terminates other than as a result of an Involuntary Termination within the twenty-four (24) months following a Change of Control, then the following provisions shall apply:
(i)Involuntary Termination.  If the termination is an Involuntary Termination, the Executive shall be entitled to the same benefits described in Section 4(a)(i), calculated as if the date of the Change of Control were immediately following the effective date of the Involuntary Termination, except that for this purpose Section 4(a)(i)(2) shall be revised to read as follows:
“(2)  All stock options granted by the Company to the Executive prior to the Change of Control shall accelerate and become vested and exercisable as to the number of shares that would have otherwise vested during the twelve (12) months following such termination as if the Executive had remained employed by the Company (or its successor) through such date under the applicable option agreements to the extent such stock options are outstanding and unexercisable at the time of such termination;  and all stock subject to a right of repurchase by the Company (or its successor) that was purchased prior to the Change of Control shall have such right of repurchase lapse with respect to that number of shares which would have had such right of repurchase lapse under the applicable agreement within twelve (12) months of the date of the termination as if the Executive had remained employed through such date.”
(ii)For Cause or Voluntary Termination.  If the termination is for Cause or is not otherwise an Involuntary Termination, then the Executive will not be entitled to receive severance or other benefits hereunder.
(iii)For avoidance of doubt, receipt of the benefits for an Involuntary Termination under Section 4(b)(i) shall not preclude the Executive’s receipt of any additional benefit which is provided under Section 4(b)(v) if such Involuntary Termination occurs at any time within six (6) months before a Change of Control. 
(c)Accrued Wages and Vacation; Expenses.  Without regard to the reason for, or the timing of, Executive’s termination of employment:  (i) the Company shall pay the Executive any unpaid base salary due for periods prior to the Termination Date; (ii) the Company shall pay the Executive all of the Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by the Executive, the Company shall reimburse the Executive for all expenses reasonably and necessarily incurred by the Executive in connection with the business of the Company prior to the Termination Date.  These payments shall be made promptly upon termination and within the period of time mandated by law.
5.Limitation on Payments.  In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Executive (i) constitute “parachute payments” within the meaning of Section 280G of the United States Internal Revenue Code (the “Code”), and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either
(a)delivered in full, or
(b)delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, 
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

Any determination required under this section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon the Executive and the Company for all purposes.  For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section.
6.Successors.
(a)Company’s Successors.  Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.
(b)Executive’s Successors.  Without the written consent of the Company, Executive may not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity.  Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
7.Execution of Release Agreement upon Termination.  As a condition of receiving the benefits under Section 4 of this Agreement, the Executive shall within twenty five days after the Executive’s Termination Date, execute and not revoke a general release of claims against the Company in form satisfactory to the Company.
8.Litigation/Audit Cooperation.  Following the termination of Executive’s employment for any reason, Executive shall reasonably cooperate with the Company or any of its subsidiaries or affiliates (the “Company Group”) in connection with (a) any internal or governmental investigation or administrative, regulatory, arbitral or judicial proceeding involving any member of the Company Group with respect to matters relating to Executive’s employment with or service as a member of the board of directors of any member of the Company Group other than a third party proceeding in which Executive is a named party and Executive and the Company (or the applicable member(s) of the Company Group) have not entered into a mutually acceptable joint defense agreement (collectively, “Litigation") or (b) for a two year period following the Termination Date, any audit of the financial statements of any member of the Company Group with respect to the period of time when Executive was employed by any member of the Company Group (“Audit”).  Executive acknowledges that such cooperation may include, but shall not be limited to, Executive making himself available to the Company or any other member of the Company Group (or their respective attorneys or auditors) upon reasonable notice for:  (i) interviews, factual investigations, and providing declarations or affidavits that provide truthful information in connection with any Litigation or Audit; (ii) appearing at the request of the Company or any member of the Company Group to give testimony without requiring service of a subpoena or other legal process; (iii) volunteering to the Company or any member of the Company Group pertinent information related to any Litigation or Audit; (iv) providing information and legal representations to the auditors of the Company or any member or any member of the Company Group, in a form and within a timeframe requested by the Board, with respect to the Company’s or any member of the Company Group’s opening balance sheet valuation of intangibles and financial statements for the period in which Executive was employed by the Company or any member of the Company Group; and (v) turning over to the Company or any member of the Company Group any documents relevant to any Litigation or Audit that are or may come into Executive’s possession.  The Company shall reimburse Executive for reasonable travel expenses incurred in connection with providing the services under this Section 8, including lodging and meals, upon Executive’s submission of receipts.  The Company shall also compensate Executive for each hour that Executive provides cooperation in connection with this Section 8 at an hourly rate equal to Executive’s base salary as of the Termination Date divided by 2080.  Executive shall submit invoices for any month in which Executive performs services pursuant to this Section 8 that details the amount of time and a description of the services rendered for each separate day that Executive performed such services.  The Company shall reimburse Executive for such services rendered within fifteen (15) days of receiving an invoice from Executive.  
9.409A Savings Clause.  If Executive is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended by the rules and regulations issued thereunder by the Department of Treasury and the Internal Revenue Service (“409A”) as of the date of the Executive’s “separation from service” within the meaning of Section 409A, Executive shall not be entitled to any payment or benefit pursuant to Section 4 until the earlier of (i) the date which is six (6) months after his separation from service for any reason other than death, or (ii) the date of Executive’s death.  

The provisions of this Section 10 shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A.  Any amounts otherwise payable to Executive upon or in the six (6) month period following the Executive’s separation from service that are not so paid by reason of this Section 10 shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Executive’s separation from service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Executive’s death).  To the extent that any benefits pursuant to Section 4 or reimbursements pursuant to Section 5 are taxable to the Executive, any reimbursement payment due to the Executive pursuant to any such provision shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  The benefits and reimbursements pursuant to Section 4 are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that the Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Executive receives in any other taxable year.  For purposes of this Agreement, a termination of employment shall mean a “separation from service” under Section 409A. 
10.Notices.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of the Executive, mailed notices shall be addressed to Executive at the home address which Executive most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.
11.  Arbitration.
(a)Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Santa Clara, California in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”).  The arbitrator may grant injunctions or other relief in such dispute or controversy.  The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration.  Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.
(b)The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules.  The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law.  Executive hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.
(c)Executive understands that nothing in this Section modifies Executive’s at-will employment status.  Either Executive or the Company can terminate the employment relationship at any time, with or without Cause.
(d)EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.  EXECUTIVE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(i)ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii)ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL CONSTITUTION OR STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND THE CALIFORNIA LABOR CODE (except for claims for underlying workers’ compensation benefits); and
(iii)ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

12.Proprietary Information and Inventions Assignment Agreement.  Executive shall  execute and comply with the terms of the Company’s standard  Proprietary Information and Inventions Assignment Agreement.  
13.Miscellaneous Provisions.
(a)Effect of Any Statutory Benefits.  If any severance benefits are required to be paid to the Executive upon termination of employment with the Company as a result of any requirement of law or any governmental entity in any applicable jurisdiction, the aggregate amount payable pursuant to Section 4 hereof shall be reduced by such amount. 
(b)Effect of Standard Company Policy or Other Agreements.  To the extent that any severance benefits or payments are required to be paid to the Executive upon termination of employment with the Company as a result of any standard Company policy or other existing agreement(s), Executive shall be entitled to the most favorable of any given benefit (e.g., cash, option vesting, health benefits) available under any one such source, but shall not be entitled also to cumulate the same kind of benefit from multiple agreements or policies. 
(c)No Duty to Mitigate.  The Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Executive may receive from any other source.
(d)Waiver.  No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(e)Integration.  This Agreement and any agreements referenced herein represent the entire agreement and understanding between the parties as to the subject matter herein and collectively supersede all prior or contemporaneous agreements, whether written or oral, with respect to the same subject matter, provided that, for clarification purposes, this Agreement shall not affect any agreements between the Company and Executive regarding intellectual property matters or confidential information of the Company.
(f)Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.
(g)Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.
(h)Employment Taxes.  All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.
(i)Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

	
				
	Pixelworks, Inc.

	 
	Executive

Todd DeBonis

	By:
	/s/ Steven Moore
	 
	/s/ Todd A. DeBonis

	For:
	Bruce Walicek, CEO

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