Document:

qhc-ex104_2139.htm

Exhibit 10.4

 

 

Amendment NO. 1 dated as of April 11, 2017 (this “Amendment”), to the ABL Credit Agreement dated as of April 29, 2016 (the “Credit Agreement”), among QUORUM HEALTH CORPORATION, a Delaware corporation (the “Borrower”), the lenders party thereto (the “Lenders”) and UBS AG, STAMFORD BRANCH, as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent for the Lenders.

PRELIMINARY STATEMENT

A.  Pursuant to the Credit Agreement, the Lenders have extended, and have agreed to extend, credit to the Borrower.

B.  The Borrower has notified the Administrative Agent that an Event of Default has occurred and is continuing under the Credit Agreement for failure to deliver on or before March 31, 2017, audited financial statements and other information for the fiscal year ended December 31, 2016, as required under Section 5.05(a) of the Credit Agreement (the “Specified Event of Default”).

C. The Borrower and Lenders desire to waive the Specified Event of Default and that certain provisions of the Credit Agreement be amended as provided herein.

D.  The Borrower and the Subsidiary Guarantors are party to one or more of the Security Documents, pursuant to which, among other things, the Subsidiary Guarantors Guaranteed the Obligations of the Borrower under the Credit Agreement and provided security therefor.

Accordingly, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1.  Defined Terms. Capitalized terms used but not otherwise defined herein (including the preliminary statement hereto) shall have the meanings assigned thereto in the Credit Agreement.  The provisions of Section 1.02 of the Credit Agreement are hereby incorporated by reference herein, mutatis mutandis.

SECTION 2.  Limited Waiver. The Administrative Agent and the Required Lenders hereby waive the Specified Event of Default. The waiver contained in this Section 2 is a limited waiver and shall not constitute nor be deemed to constitute a waiver of any Default or Event of Default, other than the Specified Event of Default and, without limiting the generality of the foregoing, shall not constitute or be deemed to constitute a waiver of Section 5.05(a) as amended by this Amendment.

SECTION 3.  Amendments to the Credit Agreement.  Subject to the satisfaction of the conditions set forth in Section 5 hereof, the Credit Agreement is hereby amended as follows, effective as of the Amendment Effective Date (as defined below):

 

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(a)  Section 1.01 is hereby amended by adding the following defined terms in the appropriate alphabetical order: 

“Amendment No. 1” shall mean that certain Amendment, dated as of the Amendment No. 1 Effective Date among the Borrower, the Lenders party thereto and the Administrative Agent.

“Amendment No. 1 Disclosure Schedule” shall mean the Disclosure Schedule delivered to the Administrative Agent on the Amendment No. 1 Effective Date in connection with Amendment No. 1 to this Agreement. 

“Amendment No. 1 Effective Date” shall mean April 11, 2017.

“Average Monthly Cash Collections” means, for each fiscal quarter of the Loan Parties beginning with the fiscal quarter ending March 31, 2017, the average of the cash collections from Receivables of the Loan Parties for each of the three months during such fiscal quarter.

“Held for Sale” shall mean, with respect to any Hospital, that the Borrower intends to endeavor in good faith to close, sell, transfer, lease or otherwise dispose of such Hospital within 15 months.

“Springing Availability Block Amount” means, at all times during the continuance of a Springing Availability Block Period, an amount equal to ten percent (10%) of the lesser of (i) the Borrowing Base prior to any reduction thereof in respect of the Springing Availability Block Amount and (ii) the Revolving Credit Commitment.

“Springing Availability Block Period” means any period (i) beginning on the date which is two (2) Business Days after the date on which Borrower delivers (or if earlier, the date on which Borrower is required to deliver) a calculation of the Average Monthly Cash Collections for a fiscal quarter if the Average Monthly Cash Collections for such fiscal quarter are less than $75,000,000 and (ii) ending on such date thereafter, if any, on which Borrower delivers a calculation of the Average Monthly Cash Collections for a fiscal quarter if the Average Monthly Cash Collections for such fiscal quarter and for the immediately preceding fiscal quarter are greater than or equal to $75,000,000.

(b)  The definition of “Availability Reserve” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Availability Reserve” shall mean, on any date of determination and with respect to the Borrowing Base, the sum (without duplication) of (a) the Bank Product Reserve; (b) the aggregate amount of liabilities secured by Liens upon Eligible Receivables or Eligible Self-Pay Receivables that are senior to the Collateral Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); (c) reserves for excess dilution; (d) the Springing Availability Block Amount; and (e) such additional reserves, in such 

 

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amounts and with respect to such matters, as the Administrative Agent in its Reasonable Credit Judgment may elect to impose from time to time. The amount of any Availability Reserve established by the Administrative Agent shall, in the case of the Springing Availability Block Amount, be the amount determined pursuant to the definition of such term, and in all other instances, have a reasonable relationship as determined by the Administrative Agent in its Reasonable Credit Judgment to the event, condition or other matter that is the basis for the Availability Reserve.

(c)  The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period plus (a) without duplication and (except in the case of clauses (a)(x), (a)(xiii), (a)(xiv), (a)(xv) and (a)(xvi)(B) below) to the extent deducted (and not added back) in determining such Consolidated Net Income, the sum of:

(i) interest expense (net of interest income), including amortization and write offs of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with (x) letters of credit, (y) obtaining or unwinding Hedging Agreements or (z) surety bonds for financing activities, in each case for such period,

(ii) provision for taxes based on income, profits or capital and franchise taxes and gross receipts taxes, including Federal, foreign, state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period, including any penalties and interest relating to any tax examinations for such period,

(iii) depreciation and amortization expenses including acceleration thereof and including the amortization of the increase in inventory resulting from the application of Statement of Financial Accounting Standards No. 141 (“FASB 141”) for transactions contemplated hereby, including Permitted Acquisitions, for such period,

(iv) non-cash compensation expenses arising from the sale of Equity Interests, the granting of options to purchase Equity Interests, the granting of appreciation rights in respect of Equity Interests and similar arrangements for such period,

(v) the excess of the expense in respect of post-retirement benefits and post-employment benefits accrued under Statement of Financial Accounting Standards No. 106 (“FASB 106”) and Statement of Financial Accounting Standards No. 112 (“FASB 112”) over the cash expense in respect of such post-retirement benefits and post-employment benefits for such period,

 

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(vi) minority interest (to the extent distributions are not required to be made and are not made in respect thereof),

(vii) [reserved],

(viii) fees and expenses for such period incurred or paid in connection with the Transactions,

(ix) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that such amount is reasonably likely to be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of the relevant event (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events,

(x) proceeds of received business interruption insurance,

(xi) any fees and expenses incurred during such period in connection with any acquisition, investment, recapitalization, asset disposition, issuance or repayment of debt, issuance of Equity Interests, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction undertaken but not completed),

(xii) any (w) severance costs, relocation costs, integration and facilities opening costs, signing costs, signing bonuses, retention or completion bonuses and transition costs incurred during such period, (x) cash restructuring related or nonrecurring cash merger costs and expenses incurred during such period as a result of any acquisition, investment, recapitalization, or asset disposition permitted hereunder; provided, that the aggregate amount added to or included in Consolidated EBITDA pursuant to this subclause (x) for any period of four consecutive fiscal quarters shall not exceed an amount equal to 20% of Consolidated EBITDA, calculated prior to giving effect to any amounts added to or included in Consolidated EBITDA pursuant to this subclause (x) and prior to giving effect to any additions to Consolidated EBITDA in respect of synergies for such period pursuant to Section 1.03(c), (y) other nonrecurring cash losses and charges for such period and (z) fees, expenses and charges incurred during such period in respect of litigation (including legal fees) against the Borrower or any of its Subsidiaries,

(xiii) solely with respect to the fiscal periods ending on September 30, 2017, December 31, 2017, March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, an amount equal to the cost savings and synergies (net of continuing associated expenses) that are reasonably identifiable, reasonably supportable, are expected to have a continuing 

 

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impact and have been realized or are reasonably expected to be realized during the applicable fiscal quarter as a result of the expected transition of services under the Billing and Collection Agreement dated as of the Closing Date among CHS and its subsidiaries and the Borrower and its Subsidiaries (which cost savings and synergies shall be calculated on a pro forma basis as if such Billing and Collection Agreement had been transitioned as of July 1, 2017); provided that all such adjustments shall be set forth in a reasonably detailed certificate of a Financial Officer of the Borrower; provided further that irrespective of the amount of such cost savings and synergies actually identified with respect to any fiscal quarter, such amount shall be deemed to be not be less than (i) for the fiscal quarter ending September 30, 2017, $459,000, (ii) for the fiscal quarter ending December 31, 2017, $2,324,000, (iii) for the fiscal quarter ending March 31, 2018, $3,136,000, (iv) for the fiscal quarter ending June 30, 2018, $3,393,000, (v) for the fiscal quarter ending September 30, 2018, $3,592,000 and (vi) for the fiscal quarter ending December 31, 2018, $3,524,000; provided further that, for the avoidance of doubt, (x) the applicable amount added to Consolidated EBITDA in respect of any fiscal quarter shall be included in the calculation of Consolidated EBITDA for each period in which such fiscal quarter is included (i.e., the amount added for the fiscal quarter ending September 30, 2017, shall be included in the determination of Consolidated EBITDA for the four quarter periods ending September 30, 2017, December 31, 2017, March 31, 2018, and June 30, 2018) and (y) no such amounts shall be included in the determination of Consolidated EBITDA for any period ending after December 31, 2018 (other than cost savings and synergies actually realized),

(xiv) for each fiscal quarter commencing with the fiscal quarter ending March 31, 2017 through the fiscal quarter ending December 31, 2018, an aggregate amount equal to $5,534,192 in respect of the California Hospital Quality Assurance Fee program (net of any amounts received or accrued and otherwise already reflected in the determination of Consolidated EBITDA in respect of the California Hospital Quality Assurance Fee program),

(xv) solely with respect to any four fiscal quarter period ending on or prior to December 31, 2018, with respect to each Hospital set forth on the Amendment No. 1 Disclosure Schedule that has been designated by the Borrower in good faith as Held for Sale and notified to the Administrative Agent, an amount equal to the amount set forth on such schedule for each such Hospital; provided that (A) no amount shall be added pursuant to this clause (xv) with respect to any Hospital that has actually been sold, closed or otherwise disposed of prior to the end of such period and (B) no amount shall be added pursuant to this clause (xv) with respect to any Hospital for more than five consecutive four fiscal quarter periods (i.e. if the amount for a specified Hospital is included for the four fiscal quarter period ended 

 

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March 31, 2017, it may not be included for any four fiscal quarter period ended after March 31, 2018); provided, further, however, that with respect to any Hospital for which an amount is included in Consolidated EBITDA pursuant to this clause (xv) for five consecutive fiscal quarters, if such Hospital is closed, sold, transferred, leased or otherwise disposed of after the end of the immediately subsequent fiscal quarter but prior to the date on which a compliance certificate for such fiscal quarter is delivered pursuant to Section 5.04(c), then such Hospital shall be deemed to have been closed, sold, transferred, leased or otherwise disposed of as of the last day of such fiscal quarter for purposes of Section 1.03 (i.e., if an amount is included in Consolidated EBITDA pursuant to this clause (xv) for five fiscal quarters ending March 31, 2018, and such Hospital is closed, sold, transferred, leased or otherwise disposed of between June 30, 2018 and the date on which the compliance certificate is delivered for the fiscal quarter ended June 30, 2018, such Hospital will be deemed to have been closed, sold, transferred, leased or otherwise disposed of as of June 30, 2018), and

(xvi) (x) other non-cash charges for such period (other than the write down of current assets, unless such assets are acquired pursuant to a Permitted Acquisition, in which case any such write down shall (A) occur on or before the first anniversary of the date on which the applicable Permitted Acquisition was consummated and (B) result from (1) a change in accounting policies or (2) a revision in the estimated value of such assets) and (y) the $22,799,000 charge to patient accounts receivable recorded in the fiscal quarter ended December 31, 2016, which, for the avoidance of doubt, shall only be included in periods that include the fiscal quarter ended December 31, 2016, and minus

(b) without duplication, (i) non-recurring gains (including any non-cash gains as a result of the consummation of any Offer) and (ii) all cash payments made during such period on account of reserves, restructuring charges and other non-cash charges added to Consolidated Net Income pursuant to clause (a)(xvi) (other than any such non-cash charges that if originally paid in cash and so not taken as non-cash charges would have been added to Consolidated Net Income above pursuant to clause (a)(xii)) in a previous period.

(d)  The definition of “Significant Asset Sale” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Significant Asset Sale” shall mean the sale, transfer, lease or other disposition by the Borrower or any Subsidiary to any person other than the Borrower or a Subsidiary Guarantor of any Hospital or all or substantially all of the assets of, or a majority of the Equity Interests in, a person, or a division or line of business or other business unit of a person or the closing of a Hospital.

 

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(e)  The third proviso in Section 1.03(c) of the Credit Agreement is hereby amended and restated in its entirety as follows: 

; provided, further, that the aggregate amount added to or included in Consolidated EBITDA above in respect of synergies for any period of four consecutive fiscal quarters shall not exceed an amount equal to 20% of Consolidated EBITDA, calculated on a pro forma basis in accordance with this Section 1.03, but prior to giving effect to such additions and any other such prior additions in respect of synergies for such period pursuant to this Section 1.03.

(f)  Section 5.04(a) of the Credit Agreement is hereby amended to add “(or with respect to the fiscal year ended December 31, 2016, within 107 days following the end of such fiscal year)” after the words “within 90 days after the end of each fiscal year”.

(g)  Section 5.04(d)(iii) of the Credit Agreement is hereby amended and restated in its entirety as follows: “together with each delivery of a Borrowing Base Certificate pursuant to this clause (d), such supporting documentation, agings and additional reports with respect to the Borrowing Base as the Administrative Agent shall reasonably request and, in the case of each Borrowing Base Certificate delivered as of the last day of a month that corresponds with the end of a fiscal quarter (beginning with the fiscal quarter ending March 31, 2017), the calculation of Average Monthly Cash Collections for such fiscal quarter;”.

(h)  Section 5.07(b) of the Credit Agreement is hereby amended by inserting the phrase “, up to three times during the first year following the Amendment No. 1 Effective Date,” immediately after the phrase “up to three times during the first year following the Closing Date”

(i)  Sections 6.01(f) of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof:

“provided, further, that the net cash proceeds of any such Indebtedness incurred prior to January 1, 2019, shall be applied substantially concurrently with such incurrence to prepay then-outstanding Term Loans pursuant to Section 2.12 of the Term Loan Agreement;” 

(j)  Sections 6.01(k) of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof:

“provided that the net cash proceeds of any such Indebtedness incurred prior to January 1, 2019, shall be applied substantially concurrently with such incurrence to prepay then-outstanding Term Loans pursuant to Section 2.12 of the Term Loan Agreement;”

(k)   Section 6.01(u) of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof:

“provided that prior to January 1, 2019, if any Indebtedness that is debt for 

 

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borrowed money is incurred pursuant to this clause (u) in excess of $25,000,000 in the aggregate, the net cash proceeds of any such excess shall be applied substantially concurrently with such incurrence to prepay then-outstanding Term Loans pursuant to Section 2.12 of the Term Loan Agreement;”

(l)  Section 6.02(x) of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof:

“provided that, prior to January 1, 2019, such Liens shall not secure any Indebtedness that is debt for borrowed money;”

(m)  Sections 6.04(a) is hereby amended by inserting the following proviso at after “such investments;” and prior to “for purposes of the foregoing”:

“provided, however, that no such investments shall be made by the Borrower or any Subsidiary in any Unrestricted Subsidiary prior to January 1, 2019;”

(n)  Section 6.06(a)(v) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“in addition to Restricted Payments permitted by clauses (i) through (iii) above, so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may, from and after January 1, 2020, make other Restricted Payments in an aggregate amount not to exceed $30,000,000 less the amount of payments made from and after the Closing Date pursuant to Section 6.09(b)(i);”.

(o)  Section 6.09(b) of the Credit Agreement is hereby amended as follows:

(i) by inserting the phrase “from and after January 1, 2020,” immediately after the phrase “provided, however, that” and

(ii) by inserting the phrase “; provided further, however, that for purposes of this Section 6.09(b), until January 1, 2020, the Senior Notes shall be deemed to constitute subordinated Indebtedness, except that notwithstanding anything to the contrary herein, the Senior Notes may be extended, renewed, refinanced or replaced with the proceeds of Indebtedness permitted to be incurred pursuant to Section 6.01” immediately prior to the period at the end thereof.

SECTION 4.  Representations and Warranties.  To induce the other parties hereto to enter into this Amendment, the Borrower and each Subsidiary Guarantor represents and warrants to the Administrative Agent and each of the Lenders that: 

(a)  The representations and warranties set forth in Article III of the Credit Agreement and in each other Loan Document are true and correct (A) in the case of the representations and warranties qualified as to materiality, in all respects and (B) otherwise, in all material respects, in each case on and as of the Amendment Effective Date as though 

 

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made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date.

(b)  No Default or Event of Default has occurred and is continuing after giving effect to this Amendment.

(c)  None of the Security Documents in effect on the Amendment Effective Date will be rendered invalid, non-binding or unenforceable against any Loan Party as a result of this Amendment.  The Guarantees created under such Security Documents will continue to guarantee the Obligations to the same extent as they guaranteed the Obligations immediately prior to the Amendment Effective Date.  The Liens created under such Security Documents will continue to secure the Obligations, and will continue to be perfected, in each case, to the same extent as they secured the Obligations or were perfected immediately prior to the Amendment Effective Date.

SECTION 5.  Effectiveness.  This Amendment shall become effective on and as of the date on which each of the following conditions precedent is satisfied (such date, the “Amendment Effective Date”):

(a)  The Administrative Agent shall have received duly executed and delivered counterparts of this Amendment that, when taken together, bear the signatures of the Borrower, each Subsidiary Guarantor and the Required Lenders.

(b)  The Administrative Agent shall have received payment from the Borrower, for the account of each Lender that shall have unconditionally and irrevocably delivered to the Administrative Agent (or its counsel) its executed signature page to this Amendment at or prior to 5:00 p.m., New York City time, on April 11, 2017 (each, a “Consenting Lender”), an amendment fee in an amount equal to 0.10% of the aggregate amount of such Consenting Lender’s Revolving Credit Commitments (whether drawn or undrawn), as of the Amendment Effective Date.  Such fees shall be payable in immediately available funds and, once paid, shall not be refundable in whole or in part.

(c)  The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Amendment Effective Date, including, to the extent invoiced at least two Business Days prior to the Amendment Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower in connection with the transactions contemplated hereby or under any other Loan Document.

The Administrative Agent shall notify the Borrower and the Lenders of the Amendment Effective Date and such notice shall be conclusive and binding.

SECTION 6.  Effect of this Amendment.  (a)    Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent, the Lenders or any other Secured Party under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are 

 

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ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Loan Party 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.  This Amendment shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein.

(b)  From and after the Amendment Effective Date, any reference to the Credit Agreement shall mean the Credit Agreement as modified by this Amendment.

(c)  This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

(d)  Each of the parties hereto acknowledge and agree, for the avoidance of doubt, that, from and after the Amendment Effective Date, the Applicable Percentage for all purposes of the Credit Agreement shall be determined in accordance with the provisions of the Credit Agreement as amended hereby and that for any day prior to the Amendment Effective Date the Applicable Percentage shall be determined in accordance with the Credit Agreement prior to giving effect to this Amendment.

SECTION 7.  Reaffirmation; Further Assurances.  Each of the Borrower and each of the Subsidiary Guarantors identified on the signature pages hereto (collectively, the Borrower and such Subsidiary Guarantors, the “Reaffirming Loan Parties”) hereby acknowledges that it expects to receive substantial direct and indirect benefits as a result of this Amendment and the transactions contemplated hereby.  Each Reaffirming Loan Party hereby consents to this Amendment and the transactions contemplated hereby, and hereby confirms its respective guarantees, pledges and grants of security interests, as applicable, under each of the Loan Documents to which it is party, and agrees that, notwithstanding the effectiveness of this Amendment and the transactions contemplated hereby, such guarantees, pledges and grants of security interests shall continue to be in full force and effect and shall accrue to the benefit of the Secured Parties.

SECTION 8.  Expenses.  The Borrower agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with the Loan Documents (including the preparation of this Amendment), including the reasonable fees, charges and disbursements of Winston & Strawn LLP.

SECTION 9.  Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Delivery by electronic transmission (e.g., “pdf”) of an executed counterpart of a signature page to this Amendment shall be effective as delivery of an original executed counterpart of this Amendment, and, once delivered, may not be withdrawn or revoked unless this Amendment fails to become effective in accordance with its terms on or prior to May 30, 2017.

SECTION 10.  No Novation.  This Amendment shall not extinguish the obligations for the payment of money outstanding under the Credit Agreement or discharge or 

 

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release the Lien or priority of any Loan Document or any other security therefor or any guarantee thereof.  Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Credit Agreement or instruments guaranteeing or securing the same, which shall remain in full force and effect, except as modified hereby or by instruments executed concurrently herewith.  Nothing expressed or implied in this Amendment or any other document contemplated hereby shall be construed as a release or other discharge of the Borrower under the Credit Agreement or any Loan Party under any other Loan Document from any of its obligations and liabilities thereunder.  The Credit Agreement and each of the other Loan Documents shall remain in full force and effect, until and except as modified hereby or thereby in connection herewith or therewith.

SECTION 11.  Governing Law.  (a)    THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

(b)  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 12.  Headings.  Section headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the construction of, or be taken into consideration in interpreting, this Amendment.

[Remainder of page intentionally left blank]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first above written.

 

		
	
UBS AG, STAMFORD BRANCH,            as Administrative Agent and as a Lender,

	
by

	
 
	
/s/ Craig Pearson

	
 
	
Name: Craig Pearson

	
 
	
Title: Associate Director, Banking Product Services, US

 

 

		
	
by

	
 
	
/s/ Darlene Arias

	
 
	
Name: Darlene Arias

	
 
	
Title: Director

 

 

 

[Signature Page to Amendment No. 1 to
ABL Credit Agreement of Quorum Health Corporation]

 

		
		
	
QUORUM HEALTH CORPORATION,

	
by

	
 
	
/s/ Lee C. Fleck

	
 
	
Name: Lee C. Fleck

	
 
	
Title: Vice President Finance and Treasurer

 

[Signature Page to Amendment No. 1 to
abl Credit Agreement of Quorum Health Corporation]

 

		
		
	
EACH SUBSIDIARY GUARANTOR LISTED ON SCHEDULE A HERETO

	
by 

	
 
	
/s/ Lee C. Fleck

	
 
	
Name: Lee C. Fleck

	
 
	
Title: Vice President Finance and Treasurer

 

[Signature Page to Amendment No. 1 to
abl Credit Agreement of Quorum Health Corporation]

 

 

	
 
	
Name of Lender: Bank of America, N.A.
	
                                          

 

		
	
 

	
by 

	
 
	
/s/ Steven L. Hipsman

	
 
	
Name: Steven L. Hipsman

	
 
	
Title: Senior Vice President

 

 

[Signature Page to Amendment No. 1 to
ABL Credit Agreement of Quorum Health Corporation]

 

 

	
 
	
Name of Lender: Citibank, N.A.                                     
	

 

		
	
 

	
by 

	
 
	
/s/ Christopher Marino

	
 
	
Name: Christopher Marino

	
 
	
Title: Vice President and Director

 

 

 

 

[Signature Page to Amendment No. 1 to
abl Credit Agreement of Quorum Health Corporation]

 

 

	
 
	
Name of Lender: SunTrust Bank                                  
	

 

		
	
 

	
by 

	
 
	
/s/ B. Earl Garris

	
 
	
Name: B. Earl Garris

	
 
	
Title: Director

 

For any Lender requiring a second signature line:

 

		
	
 

	
by 

	
 
	
 

	
 
	
Name:

	
 
	
Title:

 

 

[Signature Page to Amendment No. 1 to
ABL Credit Agreement of Quorum Health Corporation]

 

 

Schedule A to Amendment No. 1 to ABL Credit Agreement

List of Guarantors

 

	
 
	
•
	
ANNA HOSPITAL CORPORATION

	
 
	
•
	
BIG BEND HOSPITAL CORPORATION

	
 
	
•
	
BIG SPRING HOSPITAL CORPORATION

	
 
	
•
	
BLUE ISLAND HOSPITAL COMPANY, LLC

	
 
	
•
	
BLUE ISLAND ILLINOIS HOLDINGS, LLC

	
 
	
•
	
BLUE RIDGE GEORGIA HOLDINGS, LLC

	
 
	
•
	
CLINTON HOSPITAL CORPORATION

	
 
	
•
	
CSRA HOLDINGS, LLC

	
 
	
•
	
DEMING HOSPITAL CORPORATION

	
 
	
•
	
DHSC, LLC

	
 
	
•
	
EVANSTON HOSPITAL CORPORATION

	
 
	
•
	
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC

	
 
	
•
	
FORREST CITY HOSPITAL CORPORATION

	
 
	
•
	
FORT PAYNE HOSPITAL CORPORATION

	
 
	
•
	
GALESBURG HOSPITAL CORPORATION

	
 
	
•
	
GRANITE CITY HOSPITAL CORPORATION

	
 
	
•
	
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC

	
 
	
•
	
GREENVILLE HOSPITAL CORPORATION

	
 
	
•
	
HOSPITAL OF BARSTOW, INC.

	
 
	
•
	
HOSPITAL OF LOUISA, INC.

	
 
	
•
	
JACKSON HOSPITAL CORPORATION

 

 

	
 
	
•
	
LEXINGTON HOSPITAL CORPORATION

	
 
	
•
	
MARION HOSPITAL CORPORATION

	
 
	
•
	
MASSILLON COMMUNITY HEALTH SYSTEM, LLC

	
 
	
•
	
MASSILLON HEALTH SYSTEM LLC

	
 
	
•
	
MASSILLON HOLDINGS, LLC

	
 
	
•
	
MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC

	
 
	
•
	
MMC OF NEVADA, LLC

	
 
	
•
	
MONROE HMA, LLC

	
 
	
•
	
MWMC HOLDINGS, LLC

	
 
	
•
	
NATIONAL HEALTHCARE OF MT. VERNON, INC.

	
 
	
•
	
PHILLIPS HOSPITAL CORPORATION

	
 
	
•
	
QHC CALIFORNIA HOLDINGS, LLC

	
 
	
•
	
QHCCS, LLC

	
 
	
•
	
QHG OF MASSILLON, INC.

	
 
	
•
	
QUORUM HEALTH INVESTMENT COMPANY, LLC

	
 
	
•
	
QUORUM HEALTH RESOURCES, LLC

	
 
	
•
	
RED BUD HOSPITAL CORPORATION

	
 
	
•
	
RED BUD ILLINOIS HOSPITAL COMPANY, LLC

	
 
	
•
	
SAN MIGUEL HOSPITAL CORPORATION

	
 
	
•
	
SUNBURY HOSPITAL COMPANY, LLC

	
 
	
•
	
TOOELE HOSPITAL CORPORATION

	
 
	
•
	
TRIAD OF OREGON, LLC

	
 
	
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WATSONVILLE HOSPITAL CORPORATION

 

 

	
 
	
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WAUKEGAN HOSPITAL CORPORATION

	
 
	
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WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC

	
 
	
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WILLIAMSTON HOSPITAL CORPORATIONINTERNATIONAL TRADE CENTER SERVICE PROVIDER
AGREEMENT

 

This International Service
Provider Agreement (this “Agreement”) is made and effective as of

March 27, 2017 (the “Effective Date”), by and between AmericaTowne, Inc., a Delaware corporation and reporting
company under the rules promulgated by the United States Securities and Exchange Commission, with a mailing address for notice
purposes of 4700 Homewood Court, Suite 100 in Raleigh, North Carolina 27609 (“AmericaTowne”) and Mr. Mabiala
Phuati Josue with an address for notice purposes of 34 Banku Avenue Mombele - Commune of Limete, Kinshasa - Democratic Republic
of Congo, (the “Service Provider”). AmericaTowne and the Service Provider may be defined singularly as a “Party”
or collectively as the “Parties.”

 

WITNESSETH

 

WHEREAS, the Parties have
determined that the transaction contemplated by this Agreement would be advantageous and beneficial to them.

 

WHEREAS, the Service Provider
and its management have distinct experience working with potential individuals and businesses
who may be candidates for AmericaTowne’s operations and business, including but not limited to, experience assisting businesses
and entrepreneurs who may be candidates for occupancy, or facilitating the acquisition of goods and performing services to AmericaTowne,
securing funding (credit lines, loans and loan guarantees), insurance, supplier and export contracts and other related services
that could assist candidates in conducting business with AmericaTowne. These services are collectively referred to herein as “Support
Services”

 

WHEREAS,
in consideration for the Service Provider having an agreement with AmericaTowne in providing Support Services, and the Service
Provider in agreeing not to provide similar services to other parties similarly situated as AmericaTowne, the Parties agree to
the terms and conditions of this Agreement.

 

WHEREAS,
the Parties agree that the parties shall form a Limited Liability Company (LLC) whose name will include the word AmericaTowne.
AmericaTowne, Inc. shall determine the LLC’s composition and ownership. The Service Provider shall own no less than 25% of
the LLC. 

 

WHEREAS,
the Parties agree that the location of the Service Provider’s business operations will be in the Country of the Guinea, and
located in the city of Conakry or another location as designated by AmericaTowne.

 

WHEREAS,
the Parties agree that the LLC will operate from a designated location approved by AmericaTowne and that is commensurate with AmericaTowne’s
office in Raleigh, North Carolina, USA. The Service Provider will manage this office. It is agreed that the Service Provider’s
initial office and physical location will be 34 Banku Avenue Mombele - Commune of Limete, Kinshasa - Democratic Republic of Congo.

 

WHEREAS,
the Parties agree that the LLC’s ownership may change as directed by AmericaTowne to accommodate other investors, and at
all times the Service Provider’s ownership shall remain at a minimum of 25%.

 

WHEREAS, the Recitals stated
herein are not mere statements, but representations and warranties of the parties, and material terms in which each party has relied
upon in executing this Agreement.

 

 

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NOW, THEREFORE, in consideration the representations,
warranties and agreements herein contained, the Parties agree as follows:

 

1.       Term
of Agreement. This Agreement shall become effective upon the Effective Date and, absent gross negligence, or willful and material
breach of this Agreement or intentional violation of any law by the Service Provider that cannot be reasonably cured by the Service
Provider within thirty (30) days of receipt of written notice by AmericaTowne of the alleged action or omission, this Agreement
shall not be terminated absent mutual written agreement between the Parties prior to December 31, 2021 (the “Term”).
The Parties agree that in the event of termination under this Section 1, any and all corresponding rights, duties and obligations
intended to survive post-termination shall remain in full force and effect. Upon termination under this Section 1, AmericaTowne
shall reimburse the Service Provider for any approved compensation and expenses incurred related to fulfilling its duties under
this Agreement. In the event the Parties do not organize the LLC as contemplated herein, within 45 days of the effective date this
Agreement is null and void.

 

2.       Option
and Conditions to Extension of Term. AmericaTowne retains the option to extend the Term under its sole discretion until December
7, 2025 subject to the terms of this Section 2 (the “Option Term”). The Option Term shall become effective provided
AmericaTowne provides written notice to the Service Provider by 10/31/2021 of its intent to exercise the option right herein. AmericaTowne
may terminate this Agreement at any time during the Option Term subject to AmericaTowne providing written notice to the Service
Provider fifteen (15) days prior to the termination. The Parties agree that in the event of termination under this Section 2, any
and all corresponding rights, duties and obligations intended to survive post-termination shall remain in full force and effect.
Upon termination under this Section 2, AmericaTowne shall reimburse the Service Provider for any approved compensation and expenses
incurred related to fulfilling its duties under this Agreement.

 

3.       Scope
of Services. The Service Provider shall provide Support Services for the benefit of AmericaTowne
in a manner deemed commercially acceptable by AmericaTowne. The Service Provider’s role is to support AmericaTowne’s
export activities. 

 

4.       Compensation.
In consideration of the Service Provider providing the Support Services to AmericaTowne, the Parties have agreed to the “Compensation
Schedule” attached hereto as Exhibit A. 

 

5.       Exclusive
Independent Contractor. The Service Provider is an independent contractor, and for the consideration agreed upon
herein, agrees to provide the services identified in Section 3, above, on an exclusive basis to AmericaTowne. AmericaTowne shall
cooperate with the Service Provider in providing the Service Provider with sufficient and confidential information and knowledge
of AmericaTowne’s business in order for the Service Provider to perform under this Agreement. AmericaTowne agrees to be responsible
for all costs necessary in providing this information and knowledge to the Service Provider. The Service Provider has the sole
right to control and direct the means, manner, and method by which the services required by this Agreement will be performed. The
Service Provider has the right to perform the services required by this Agreement at any place or location and at such times as
the Service Provider may determine. The Service Provider has the right to hire assistants as subcontractors or to use employees
to provide the services required by this Agreement provided that such individuals have no less than six months of experience in
providing services contemplated under this Agreement.

 

 

    	-2- 

    	 

    

 

The Service Provider represents that those
subcontractors or employees performing services under this Agreement on behalf of the Service Provider meet The Service Provider’s
conditions of employment. The Service Provider, or the Service Provider’s employees or contract personnel shall perform the
services required by this Agreement, and AmericaTowne shall not hire, supervise, or pay any assistants to help the Service Provider.
Neither the Service Provider nor the Service Provider’s employees or contract personnel shall receive any training from the
AmericaTowne in the professional skills necessary to perform the services required by this Agreement, unless otherwise agreed upon
by the Parties.

 

6.       Waiver
and Assumption of Liability. The Service Provider assumes all liability for personal injuries of any kind or death directly
related the recklessness or willful misconduct of its performance under this Agreement. The Service Provider assumes all liability
and responsibility for its personal property while acting under this Agreement.

 

7.       Confidential
Information.  The Service Provider will not disclose or use, either during or after the term of this Agreement, any
proprietary or confidential information of AmericaTowne without AmericaTowne’s prior written consent except to the extent
necessary to perform services on AmericaTowne’s behalf. Proprietary or confidential information includes the written, printed,
graphic, or electronically recorded materials furnished by the AmericaTowne for the Service Provider to use; information belonging
to AmericaTowne about whom the Service Provider gained knowledge as a result of the Service Provider’s services to AmericaTowne.
AmericaTowne agrees it will not provide the Service Provider with false written or verbal information. The Service Provider shall
not be restricted in using any material that is publicly available, already in the Service Provider’s possession, or known
to the Service Provider without restriction, or the Service Provider from sources other than AmericaTowne rightfully obtains that.
On termination of this Agreement, the Service Provider shall deliver to AmericaTowne all materials in the Service Provider’s
possession relating to AmericaTowne’s business.

 

8.       Agreement
Not To Circumvent. The Parties agree that the AmericaTowne has a legitimate business purpose in seeking a restrictive covenant
from the Service Provider not to directly or indirectly circumvent confidential information in order to either benefit directly
or indirectly from the opportunities presented by and paid for by AmericaTowne. The Parties agree that the restrictions in this
section are fair and reasonable in all respects. If any provision of this section are ever held by a court to be unreasonable,
the Parties agree that this section shall be enforced to the extent it is deemed to be reasonable. This section survives any termination
of this Agreement.

 

9.       Covenant
Not To Compete. The Service Provider agrees that in consideration of the compensation set forth herein and in consideration
of the AmericaTowne sharing confidential and proprietary information with the Service Provider, the Service Provider agrees that
during the Term herein and for six (6) months after termination of this Agreement, the Service Provider shall not actively compete
against AmericaTowne in the United States of America or in any other country in which the AmericaTowne now or during the Term or,
if applicable, the Option Term of this Agreement does business. By executing this Agreement, the Service Provider agrees that the
AmericaTowne has a legitimate business interest in seeking the restrictive covenant herein.

 

10.       Intellectual
Property. All materials developed by the Service Provider for AmericaTowne, if any, will belong exclusively to AmericaTowne,
and will be deemed to have been developed and created by the Service Provider for AmericaTowne as “work for hire.”

 

11.       Mutual
Indemnification/Hold Harmless. The Service Provider, as an independent contractor, agrees to indemnify, defend, and hold harmless
AmericaTowne from any and all liability resulting from intentional or reckless acts or the acts of the employees or agents of the
Service Provider. Likewise, AmericaTowne agrees to indemnify, defend, and hold harmless the Service Provider from any and all liability
resulting from intentional or reckless acts or the acts of the employees, agents, franchisees, licensees, directors or officers
of AmericaTowne.

 

    	-3- 

    	 

    

 

 

The party entitled to indemnification is
defined in this Section 10 as the “Indemnified Party,” and the party providing the indemnity is the “Indemnifying
Party.” In the event of a lawsuit, investigation, or claim, the Indemnifying Party will, at its sole discretion,
cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Party from losses arising out of or resulting
from any inaccuracy, misrepresentation or breach or non-fulfillment of any covenant or agreement by the Indemnifying Party in connection
with: (i) any and all claims, liabilities, losses or damages related solely and exclusively to statements prepared by, or made
by, the Indemnified Party that were either approved in advance by the Indemnifying Party or entirely based on information provided
by the Indemnifying Party to the Indemnified Party expressly for use in connection with the services under this Agreement, and
(ii) all claims, actions, Suits, proceedings, demands, assessments, judgments, costs and expenses, including, without limitation,
any legal fees and expenses, incident to any of the foregoing, except in case of the   Indemnified Party’s gross negligence,
bad faith or willful misconduct with respect thereto.

 

12.       Permits
and Licenses. The Service Provider declares that it has complied with all federal, state, and local laws requiring business
permits, certificates, and licenses required to carry out the services to be performed under this Agreement.

 

13.       Assignment.
Neither party shall assign its rights or duties under this Agreement unless it receives the prior written approval of the other
party, which approval may be withheld in such party’s sole discretion.

 

14.       Amendment.
This Agreement may be amended by a writing signed by the Parties.

 

15.       Severability.
If any term, provision, covenant or restriction contained in this Agreement is held by any court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions, covenants or restrictions contained in this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and if a covenant or provision is determined
to be unenforceable by reason of its extent, duration, scope or otherwise, then the Parties intend and hereby request that the
court or other authority making that determination shall only modify such extent, duration, scope or other provision to the extent
necessary to make it enforceable and enforce it in its modified form for all purposes of this Agreement.

 

16.       Complete
Agreement. This Agreement, and the Compensation Schedule, contains the entire agreement between the Parties with respect to
the matters covered herein. The Service Provider acknowledges that this Agreement is entered into solely on the basis of the written
representations contained herein.

 

17.       Applicable
Law. The laws of North Carolina shall govern this Agreement. The Parties agree that, should any dispute arise out of, in connection
with, or relating to this Agreement, that they shall cooperate in good faith to resolve any such disputes, and if unsuccessful,
the Parties agree to binding arbitration under the procedural rules of the American Arbitration Association. The Parties agree
that such arbitration shall be final and binding, and that by agreeing to arbitration, are waiving their right to seek legal remedies
in Court and agree to waive the right to a trial by jury; however, the Parties agree that they have the right to seek equitable
relief from a Court of competent jurisdiction for any alleged breach of Sections 7 through 10 of this Agreement.

 

18.       Counterparts;
Electronic or Facsimile Signature. This Agreement may be executed in one or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the same instrument. Signatures on this Agreement may be communicated
by facsimile and or other electronic transmission and shall be binding upon the parties hereto so transmitting their signatures.
Counterparts with original signatures shall be provided to the other parties hereto following the applicable transmission; provided
that the failure to provide the original counterpart shall have no effect on the validity or the binding nature of this Agreement.

 

    	-4- 

    	 

    

 

 

19.       Joint
Drafting, Negotiation and Conflict Waiver. Each Party agrees that they have had an opportunity to participate in the drafting,
preparation and negotiation of this Agreement. Each of the Parties expressly acknowledges such participation and negotiation in
order to avoid the application of any rule construing contractual language against the drafter thereof and agrees that the provisions
of this Agreement shall be construed without prejudice to the Party who actually memorialized this Agreement in final form.

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and delivered as of the date set forth above.

 

	
        AMERICATOWNE, INC.

         

        By:/s/Alton Perkins

        Alton Perkins

        Chairman of the Board

        Authorized by Board of Directors

         
	Date 3/27/2017
	
        THE SERVICE PROVIDER

         

         

        By:/s/ Mr. Mabiala Phuati Josue

        Mr. Mabiala Phuati Josue 
	Date 3/27/2017

 

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