This Contribution Agreement involves
Title: CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
Governing Law: New York Date: 4/26/2016
CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
This CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT (this “ Agreement ”), dated as of April 20, 2016, is by and between American Renal Associates LLC, a Delaware limited liability company (“ Assignor ”), and Term Loan Holdings LLC, a Delaware limited liability company (“ NewCo ”).
WHEREAS, Assignor has executed and delivered, with 40 majority-owned affiliates of Assignor listed as “Borrowers” in a computer file (marked as “NewCo Borrowers”) delivered to NewCo on the date hereof (each a “ Borrower ” and collectively the “ Borrowers ”), sets of loan documents, consisting of, with respect to each Borrower, a Loan and Security Agreement, a Revolving Note, a Term Loan Note (in some instances, referred to as a Term Note), and two (2) or more Guaranties (in some instances, referred to as Personal Guaranties), all as more fully described in the loan summaries (the “ Loan Summaries ”) set forth in a computer file (marked as “Loan Summaries”) delivered to NewCo on the date hereof (collectively, and as further defined below, the “ Loan Documents ”); and
WHEREAS, Assignor desires to contribute, assign, transfer, convey and deliver to NewCo, and NewCo desires to accept and assume from Assignor, all of Assignor’s right, title and interest in and to the indebtedness and obligations of the Borrowers arising pursuant to the Term Loan Notes and Term Notes (each a “ Term Loan ,” and, collectively, the “ Term Loans ”), along with all of Assignor’s right, title and interest in, to and under the other Loan Documents to the extent pertaining to the Term Loans, including, without limitation, all of Assignor’s right, title and interest in and to the security interest granted to Assignor by each of the Borrowers in the Collateral securing each Term Loan and all remedies, in each case on the terms and conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor and NewCo hereby agree as follows:
Section 1.1 Certain Definitions . Capitalized terms used herein shall either have the meanings assigned to them in the Loan Documents, assigned to them in other Sections of this Agreement or as assigned to them below:
“ Agreement ” has the meaning set forth in the preamble to this Contribution, Assignment and Assumption Agreement.
“ Assignor ” has the meaning set forth in the preamble to this Agreement.
“ Assignor’s Retained Rights ” means, subject to NewCo’s rights with respect to the Term Loans arising under this Agreement: (a) all of Assignor’s rights under the Loan Documents
pertaining to the Obligations arising thereunder with respect to the Revolving Loans; (b) the right to reimbursement from Obligors with respect to advances made by Assignor to pay Taxes or insurance premiums, provided that the same shall not be included in Assignor’s Retained Rights upon reimbursement of the same by NewCo; and (c) the right to the payment of indemnities and insurance proceeds and payments made pursuant to general liability claims, in each case which are now or hereafter payable to Assignor, in its capacity as lender or secured party under the Loan Documents, to the extent such payments or proceeds relate to events and periods prior to the Closing Date with respect to the Term Loans.
“ Borrower ” has the meaning set forth in the preamble to this Agreement.
“ Business Day ” means any day other than a Saturday, a Sunday or national holiday, or a day on which banking and savings and loan institutions in the State of New York are authorized or obligated by law or executive order to be closed.
“ Closing Date ” means the date on which the IPO is consummated.
“ Collateral ” with respect to a particular Borrower means such term as defined in the applicable Loan and Security Agreement.
“ Contribution and Assignment ” has the meaning set forth in Section 2.1 hereof.
“ Default ” means an Event of Default, an event of default or similar event (however designated or defined) under any Loan Document.
“ Guarantors ” means with respect to each Term Loan, the Guarantors named in the Loan Summary with respect to such Term Loan.
“ Insolvency ” means that there shall have occurred one or more of the following events with respect to a particular Borrower: dissolution; liquidation; termination of existence; “insolvency” within the meaning of the United States Bankruptcy Code or other applicable statute; or appointment of a receiver of any part of the property of, execution of a trust mortgage or any assignment for the benefit of creditors by, or the filing of a petition in bankruptcy or the commencement of any proceedings under any bankruptcy or insolvency laws or any laws relating to the relief of debtors, readjustment of indebtedness or reorganization of debtors by or against such Borrower, or the offering of a plan to creditors of such Borrower for composition or extension, except for any involuntary proceeding commenced against such Borrower which is dismissed within 60 days after the commencement thereof without the entry of an order for relief or the appointment of a trustee.
“ IPO ” means the initial public offering of shares of common stock of American Renal Associates Holdings, Inc.
“ Lien ” means any security interest, pledge, lien, charge, disposition of title, encumbrance, lease, mortgage sublease, right of others of any kind, including any thereof arising under any conditional sales or other title retention agreement.
“ Loan and Security Agreement ” means the Loan and Security Agreements listed among the Loan Documents on the Loan Summaries.
“ Loan Documents ” means those Loan Documents listed in the first “Whereas” clause above, along with certificates of Borrowers and the guarantors party thereto, and any other agreements, documents, certificates or instruments evidencing a payment obligation under or providing security for a particular Term Loan or Revolving Loan or otherwise relating to such Term Loan or Revolving Loan (and all exhibits, addenda, schedules and amendments thereto), whether in paper form or stored in an electronic medium, including, without limitation, those documents listed on the Loan Summaries.
“ Loan Servicing Agreement ” means that certain Loan Servicing Agreement, to be entered into in connection with the Contribution and Assignment (as the same may be amended, supplemented or modified) by and among Assignor and NewCo.
“ Loan Summaries ” has the meaning set forth in the preamble to this Agreement.
“ NewCo ” has the meaning set forth in the preamble of this Agreement.
“ Obligations ” means, with respect to any Borrower, “Obligations” as such term is defined in the applicable Loan and Security Agreement.
“ Obligor ” means any Borrower, Guarantor or other party named as an obligor in any Loan Document.
“ Permitted Liens ” means (a) rights of Assignor under the Loan Documents, including, without limitation, Liens in favor of Assignor in Collateral securing Assignor’s Retained Rights; (b) Liens for Taxes not yet due and payable; (c) Liens for Taxes being contested in good faith by appropriate proceedings for which adequate reserves have been taken; (d) Liens with respect to obligations not yet due and payable arising in the ordinary course of Borrower’s business created or deemed to exist by the establishment of trusts for the purpose of satisfying government reimbursement program costs and other actions or claims pertaining to the same or related matters or other medical reimbursement programs; (e) any other Lien with respect to which an Obligor is contesting such Lien in good faith by appropriate proceedings and such Lien does not subject the Collateral subject thereto to imminent risk of foreclosure or seizure; and (f) other Liens consisting of purchase money security interests for office furniture and equipment arising in the ordinary course of Borrower’s business.
“ Person ” means any individual, corporation, estate, partnership, limited liability company, joint venture, association, joint-stock company, trust (including any beneficiary thereof), unincorporated organization, or government or any agency or political subdivision thereof.
“ Revolving Loans ” means indebtedness and obligations of the Borrowers arising pursuant to the Revolving Notes listed in the Loan Summaries.
“ Secured Parties ” means each of Assignor and Newco and their permitted successors, assigns and transferees.
“ Taxes ” means any and all federal, state and local taxes, fees, charges or assessments of any nature upon or pertaining to a Term Loan or a Revolving Loan (and Loan Documents and Collateral relating thereto) levied or assessed at any time.
Section 1.2 Interpretations . In this Agreement (a) any reference to the “best knowledge” of either party shall be deemed to be after due inquiry of such party with respect to the matter in question, (b) any reference to either party’s “knowledge” shall be deemed to be actual knowledge of such party of particular facts or events, which knowledge is acquired in the ordinary course of the business of such party, without special inquiry and (c) all references to the singular shall include the plural, and vice versa.
CONTRIBUTION AND ASSIGNMENT
Section 2.1 Contribution and Assignment . On the Closing Date and immediately prior to the consummation of the IPO, without any further action, Assignor shall contribute, assign, transfer, convey and deliver to NewCo, and NewCo shall accept and assume from the Assignor, all of Assignor’s rights, title, and interest with respect to all of the Term Loans, and the Loan Documents and the Collateral as they pertain to such Term Loans, together with all of the obligations of Assignor in its capacity as lender under the applicable Loan Documents to the extent such obligations pertain to such Term Loans (the “ Contribution and Assignment ”). For the avoidance of doubt, NewCo and Assignor acknowledge and agree that the Contribution and Assignment shall not include any assignment of Assignor’s Retained Rights or assumption of Assignor’s obligations with respect to or arising under any of the Loan Documents to the extent they pertain to the Revolving Loans.
Section 2.2 Issuance of NewCo Interests . As consideration and in exchange for the Contribution and Assignment, without any further action, on the Closing Date and immediately prior to the consummation of the IPO, NewCo shall issue and deliver to Assignor 22,219,803 membership interests of NewCo (the “ NewCo Interests ”), free and clear of any and all Liens. The NewCo Interests, together with the membership interests of NewCo held by Assignor prior to the Closing Date, shall constitute one hundred percent (100%) of the membership interests of NewCo as of the Closing Date.
Section 2.3 Cutoff Date . The parties acknowledge that the Loan Summaries were prepared as of the close of business on the Closing Date. Accordingly, the parties agree that, subject to the provisions of Article V hereto, all payments and transactions involving the Term Loans occurring after the Closing Date are for the account of NewCo.
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations of Assignor . Assignor represents and warrants to NewCo that, as of the Closing Date, with respect to each Term Loan contributed hereunder:
(a) Principal of Term Loans . The outstanding principal amount of each Term Loan is set forth in the amortization schedule delivered to NewCo on or prior to the Closing Date.
(b) Ownership; Security Interest . Assignor is the sole legal, record and beneficial owner of each Term Loan, free and clear of all Liens in favor of third parties, other than Permitted Liens. Subject to Permitted Liens, Assignor’s Lien on the Collateral securing each Term Loan is a first priority Lien which has been properly perfected, and by the execution and delivery hereof Assignor has assigned to NewCo all of its rights and title to, and interest in, its security interest in the Collateral with respect to the Term Loans. Subject to the terms contained herein, Assignor hereby affirmatively authorizes NewCo to take any actions NewCo reasonably believes to be necessary or appropriate to evidence NewCo’s rights acquired pursuant to and as contemplated by this Agreement.
Section 3.2 No Other Representations and Warranties .
(a) No Other Warranties . THE REPRESENTATIONS AND WARRANTIES OF ASSIGNOR IN SECTIONS 3.1 ABOVE ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY. THERE ARE NO REPRESENTATIONS OR WARRANTIES REGARDING THE TERM LOANS OR REVOLVING LOANS, THE OBLIGORS, THE COLLATERAL OR ASSIGNOR EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT .
(b) NewCo Acknowledgments . Notwithstanding anything to the contrary contained herein or otherwise, NewCo acknowledges and agrees that Assignor, in its capacity as the lender under any of the Loan Documents (as distinguished from Assignor in its capacity as a Guarantor) shall have no obligation to NewCo with respect to, and makes no warranties or representations regarding, express or implied, the creditworthiness, financial condition or solvency of any Obligor or the value of Collateral. Except as otherwise expressly provided in this Agreement, Assignor, in its capacity as Assignor (as distinguished from its capacity as Guarantor), shall have no obligations to NewCo by reason of any breach or default by any Obligor under the Loan Documents or in the event that any Term Loan shall prove to be uncollectible. NewCo hereby acknowledges further and agrees for the benefit of Assignor, in its capacity as Assignor, that Assignor, in its capacity as Assignor (as distinguished from its capacity as Guarantor), has not made any representations or warranties to NewCo, except as expressly set forth in this Agreement.
Section 4.1 Covenants of Assignor . Assignor covenants with NewCo as follows:
(a) Non Interference; Turnover of Funds . Assignor shall not make any demands for any payments payable on the Term Loans (or any other Obligations expressly
relating thereto) on or after the Closing Date and shall not take any action with respect to the Term Loans under any of the Loan Documents or otherwise at any time after the Closing Date, in each case except to the extent permitted pursuant to this Agreement and Article II of the Loan Servicing Agreement. In the event Assignor receives any payment which NewCo is entitled to receive on account of any of the Term Loans then, subject to the provisions of Article V of this Agreement and any applicable provision of the Loan Servicing Agreement, Assignor shall deliver the amount of such payment to NewCo promptly upon receipt, with clear and appropriate detail thereof. Assignor acknowledges that its receipt of any such payments is as fiscal agent for the benefit of NewCo.
(b) Further Assurances . Subject to the provisions of Article V hereto, Assignor shall execute and deliver all such instruments or cause such instruments to be executed and de