Contract analysis

ARTICLE I DEFINITIONS AND INTERPRETATION

Section 1.01. Definitions. As used in this Agreement, the following terms have the meanings set forth below: “Adjusted EBITDA” means, for any period, the net income of Borrower and its Subsidiaries on a consolidated basis for such period, determined in accordance with GAAP, plus, to the extent deducted in determining such net income and without duplication: (a) Interest Expense, (b) income tax expense, (c) depreciati

Section 1.02. Rules of Interpretation. Unless the context otherwise requires: (a) references to Articles, Sections, Exhibits, and Schedules are references to articles, sections, exhibits, and schedules of this Agreement; (b) the words “include,” “includes,” and “including” shall be deemed to be followed by the phrase “without limitation”; (c) words in the singular include the plural, and words in the plural include t

Section 1.03. SOFR Rate Provisions. If Lender determines that Term SOFR is unavailable, no longer representative, no longer published, or cannot be determined for an applicable Interest Period, Lender may, after consultation with Borrower, establish a replacement benchmark rate giving due consideration to any evolving or then-prevailing market convention for U.S. dollar-denominated syndicated or bilateral credit faci

Section 2.01. Bridge Loan Commitment. Subject to the terms and conditions of this Agreement, Lender agrees to make a single term loan to Borrower on the Closing Date in the aggregate principal amount of $25,000,000. The facility established under this Agreement is a single-draw bridge term loan facility. Amounts repaid or prepaid may not be reborrowed. The Commitment shall terminate automatically and without further

Section 2.02. Funding. On the Closing Date, upon satisfaction or waiver by Lender of the conditions precedent set forth in Article V, Lender shall disburse the proceeds of the Bridge Loan in immediately available funds to the Funding Account. Funding shall occur no later than 2:00 p.m. New York City time on the Closing Date, provided that all conditions precedent have been satisfied or waived prior to such time.

Section 2.03. Use of Proceeds. Borrower shall use the proceeds of the Bridge Loan solely for the following purposes: (a) working capital and general corporate purposes of Borrower and its Subsidiaries; (b) integration costs related to the acquisitions of MedBridge Workflow Solutions LLC and Cortland Surgical Systems, Inc.; (c) earnout payments in connection with prior acquisitions; and (d) payment of fees and expense

Section 2.04. Evidence of Debt. Borrower’s obligation to repay the Bridge Loan shall be evidenced by this Agreement and by the records maintained by Lender in the ordinary course of business. No promissory note shall be required unless requested by Lender. If Lender requests a promissory note, Borrower shall execute and deliver to Lender, within five (5) Business Days after such request, a promissory note in form and

Section 3.01. Interest Rate. The outstanding principal balance of the Bridge Loan shall bear interest at a rate per annum equal to the Applicable Rate. The Applicable Rate is Adjusted Term SOFR plus the Applicable Margin of 4.75% per annum. As of the Closing Date, one-month Term SOFR is 5.34% per annum. After giving effect to the SOFR Adjustment of 0.10% per annum, Adjusted Term SOFR is 5.44% per annum. Accordingly,

Section 3.02. Default Interest. Upon the occurrence and during the continuance of any Event of Default, the outstanding principal balance of the Bridge Loan and, to the extent permitted by law, overdue interest, fees, and other amounts shall bear interest at the Default Rate. The Default Rate equals the Applicable Rate plus 2.00% per annum. Default interest shall accrue from the date of the applicable Event of Defaul

Section 3.03. Interest Payment Dates. Interest on the Bridge Loan shall be payable quarterly in arrears on the last Business Day of each fiscal quarter, including September 30, December 31, March 31, and June 30 of each year, and on the Maturity Date. Interest shall also be payable on the date of any prepayment with respect to the principal amount prepaid. The first interest payment date shall be September 30, 2024.

Section 3.04. Computation of Interest. Interest shall be computed on the basis of a 360-day year and the actual number of days elapsed.

Section 3.05. Origination Fee. Borrower shall pay to Lender on the Closing Date a non-refundable origination fee in the amount of $125,000, representing 0.50% of the Commitment. The origination fee shall be fully earned upon the Closing Date and shall not be refunded under any circumstances, including early repayment, prepayment, acceleration, or termination of this Agreement.

Section 3.06. Lender’s Counsel Fees. Borrower shall reimburse Lender for the reasonable and documented fees and disbursements of Lender’s counsel, Whitfield Gage & Associates LLP, incurred in connection with the negotiation, preparation, execution, and closing of this Agreement and the other Loan Documents. Such reimbursement shall not exceed $125,000 in the aggregate for pre-closing and closing legal fees and disbur

Section 3.07. Other Fees and Expenses. Borrower shall pay all reasonable and documented out-of-pocket costs and expenses incurred by Lender in connection with the administration, enforcement, and protection of Lender’s rights under the Loan Documents, including UCC filing fees, lien search fees, recording fees, collateral perfection costs, and similar expenses. After the occurrence and during the continuance of an Ev

ARTICLE IV PAYMENTS AND PREPAYMENTS

Section 4.01. Repayment at Maturity. Borrower shall repay the entire outstanding principal balance of the Bridge Loan, together with all accrued and unpaid interest and all other Obligations then owing, on the Maturity Date. The Bridge Loan has a bullet maturity structure and is not subject to scheduled amortization prior to the Maturity Date.

Section 4.02. Voluntary Prepayment. Borrower may prepay the Bridge Loan in whole or in part at any time without premium or penalty, subject to Borrower’s obligation to indemnify Lender for customary SOFR breakage costs and any loss or expense incurred by Lender arising from prepayment on a date other than the last day of an Interest Period. Borrower shall provide Lender with not less than three (3) Business Days’ pri

Section 4.03. Mandatory Prepayment. (a) Permanent Facility. On the closing date of any Permanent Facility, Borrower shall prepay the Bridge Loan in full using one hundred percent (100%) of the net cash proceeds of such Permanent Facility. The parties acknowledge that repayment from a Permanent Facility is the primary intended exit mechanism for the Bridge Loan. (b) Asset Sales. Upon consummation of any Asset Sale res

Section 4.04. Application of Prepayments. All voluntary and mandatory prepayments shall be applied first to accrued and unpaid interest and fees, and thereafter to the outstanding principal balance of the Bridge Loan. No prepaid amount may be reborrowed.

Section 4.05. Payments Generally. All payments under this Agreement shall be made in immediately available funds in U.S. dollars, without setoff, counterclaim, deduction, or withholding, except as required by applicable law. Payments received by Lender after 2:00 p.m. New York City time shall be deemed received on the next Business Day. If any payment date falls on a day that is not a Business Day, such payment shall

ARTICLE V CONDITIONS PRECEDENT

Section 5.01. Conditions to Closing and Funding. The obligation of Lender to make the Bridge Loan on the Closing Date is subject to the satisfaction or waiver by Lender of each of the following conditions: (a) Loan Documents. Lender shall have received executed counterparts of this Agreement, the Guaranty Agreement, and the Security Agreement, each duly executed by all parties thereto. (b) Legal Opinion. Lender shall

ARTICLE VI REPRESENTATIONS AND WARRANTIES

Section 6.01. Representations and Warranties. Borrower represents and warrants to Lender as of the Closing Date and as of each date on which such representations and warranties are deemed repeated, including each date a Compliance Certificate is delivered and each interest payment date, as follows: (a) Organization and Good Standing. Borrower is a corporation duly organized, validly existing, and in good standing und

ARTICLE VII AFFIRMATIVE COVENANTS Borrower covenants and agrees that, from the Closing Date until the Bridge Loan has been repaid in full and the Commitment has been terminated, Borrower shall comply with the covenants set forth in this Article VII.

Section 7.01. Financial Reporting and Deliverables. (a) Annual Financial Statements. Within ninety (90) days after the end of each fiscal year, Borrower shall deliver to Lender audited consolidated financial statements of Borrower and its Subsidiaries, prepared in accordance with GAAP, together with an unqualified audit report from Greystone Audit Group LLP or another independent registered public accounting firm of

Section 7.02. Insurance. Borrower shall maintain, and shall cause its Subsidiaries to maintain, insurance with financially sound and reputable carriers in amounts and covering risks customary for companies of similar size and in similar industries, including general liability, property, directors and officers liability, cyber and data breach, errors and omissions, and workers’ compensation coverage. Lender shall be n

Section 7.03. Maintenance of Properties. Borrower shall maintain, and shall cause each Subsidiary to maintain, all material properties and equipment necessary to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

Section 7.04. Compliance with Laws. Borrower shall comply, and shall cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations, and governmental requirements, including HIPAA, the HITECH Act, state healthcare privacy laws, and applicable healthcare licensing requirements.

Section 7.05. Notices of Material Events. Borrower shall promptly, and in any event within five (5) Business Days, notify Lender in writing of: (i) any Default or Event of Default; (ii) any Material Adverse Effect; (iii) any material litigation, investigation, or proceeding commenced or threatened against Borrower or any Subsidiary; (iv) any ERISA Event; (v) any Change of Control; and (vi) any material change in acco

Section 7.06. Books and Records; Inspection. Borrower shall maintain, and shall cause each Subsidiary to maintain, accurate books and records in accordance with GAAP. Borrower shall permit Lender and its representatives, upon reasonable prior notice, to examine Borrower’s books, records, and properties during normal business hours. Unless an Event of Default exists, such inspections shall not occur more than twice pe

Section 7.07. Maintenance of Existence and Rights. Borrower shall maintain, and shall cause each Subsidiary to maintain, its legal existence and good standing in its jurisdiction of organization and its qualification to do business in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.

Section 7.08. Further Assurances. Borrower shall execute and deliver, and shall cause each Loan Party to execute and deliver, all documents, instruments, and agreements and take all actions reasonably requested by Lender to perfect and maintain Lender’s first-priority security interest in the Collateral, subject only to Permitted Liens. Such actions may include additional UCC filings, intellectual property security a

Section 7.09. Post-Closing Obligations. Within fourteen (14) days after the Closing Date, and therefore no later than August 30, 2024, Borrower shall deliver to Lender: (i) deposit account control agreements with respect to all deposit accounts, other than excluded payroll and tax accounts, maintained at institutions other than Pinnacle Trust Bank, N.A., including accounts maintained at Ridgefield National Bank; (ii)

Section 7.10. Payment of Taxes and Claims. Borrower shall pay and discharge, and shall cause each Subsidiary to pay and discharge, all taxes, assessments, governmental charges, and material claims before the same become delinquent, except to the extent contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.

Section 7.11. Environmental Compliance. Borrower shall comply, and shall cause each Subsidiary to comply, in all material respects with applicable environmental laws.

Section 7.12. Use of Proceeds. Borrower shall use the proceeds of the Bridge Loan solely for the purposes set forth in Section 2.03.

ARTICLE VIII NEGATIVE COVENANTS Borrower covenants and agrees that, from the Closing Date until the Bridge Loan has been repaid in full, Borrower shall comply with the covenants set forth in this Article VIII.

Section 8.01. Indebtedness. Borrower shall not, and shall not permit any Subsidiary to, incur, create, assume, or permit to exist Funded Debt in excess of $2,000,000 in the aggregate, except: (i) the Bridge Loan; (ii) a Permanent Facility; (iii) purchase money indebtedness and capital lease obligations not exceeding $5,000,000 in the aggregate; (iv) intercompany indebtedness among Borrower and the Guarantors, provide

Section 8.02. Liens. Borrower shall not, and shall not permit any Subsidiary to, create, incur, assume, or permit to exist any Lien on any property or asset, other than Permitted Liens.

Section 8.03. Investments and Acquisitions. Borrower shall not, and shall not permit any Subsidiary to, make or permit any Investment or acquisition in excess of $7,500,000 individually or $15,000,000 in the aggregate without Lender’s prior written consent. Permitted Investments include cash equivalents and short-term marketable securities, intercompany loans to Guarantors, Investments existing on the Closing Date, a

Section 8.04. Restricted Payments. Borrower shall not declare or pay any dividend or distribution on its equity interests, or purchase, redeem, retire, or otherwise acquire any equity interests, except: (i) dividends and distributions by Subsidiaries to Borrower or another Subsidiary; (ii) share repurchases pursuant to employee equity compensation plans not to exceed $3,000,000 per fiscal year; and (iii) so long as n

Section 8.05. Asset Sales. Borrower shall not, and shall not permit any Subsidiary to, sell, transfer, lease, or dispose of assets with a fair market value in excess of $5,000,000 individually or $10,000,000 in the aggregate, other than sales of inventory and obsolete equipment in the ordinary course of business. Net cash proceeds from permitted Asset Sales exceeding the applicable thresholds shall be subject to mand

Section 8.06. Fundamental Changes. Borrower shall not, and shall not permit any Subsidiary to, merge with or into, consolidate with, dissolve, liquidate, or wind up with or into any other Person, except: (i) mergers of wholly-owned Subsidiaries into Borrower or another Guarantor, provided Borrower or such Guarantor is the surviving entity; and (ii) liquidations or dissolutions of Subsidiaries into Borrower or a Guara

Section 8.07. Transactions with Affiliates. Borrower shall not, and shall not permit any Subsidiary to, enter into any transaction with any Affiliate on terms less favorable to Borrower or such Subsidiary than those obtainable in an arm’s-length transaction with a non-Affiliate. This Section shall not prohibit customary intercompany transactions, compensation arrangements approved by Borrower’s board of directors or

Section 8.08. Amendments to Organizational Documents. Borrower shall not amend its Certificate of Incorporation or Bylaws in any manner materially adverse to Lender without Lender’s prior written consent.

Section 8.09. Changes in Business. Borrower shall not, and shall not permit any Subsidiary to, engage in any line of business materially different from the healthcare services and SaaS platform businesses conducted as of the Closing Date.

Section 8.10. Accounting Changes. Borrower shall not change its fiscal year or method of accounting, other than as required by GAAP, without prior written notice to Lender.

Section 8.11. Restrictive Agreements. Borrower shall not, and shall not permit any Subsidiary to, enter into any agreement that restricts the ability of any Subsidiary to make dividends or distributions to Borrower or to transfer assets to Borrower, other than customary restrictions contained in the Loan Documents, leases, and permitted indebtedness documents.

ARTICLE IX FINANCIAL COVENANTS

Section 9.01. Minimum Liquidity. Borrower shall maintain at all times unrestricted cash and cash equivalents of not less than $15,000,000. Compliance with this covenant shall be tested monthly based on Borrower’s internal financial records and reported to Lender within fifteen (15) days after each month-end. As of the Closing Date, after giving effect to the Bridge Loan, Borrower expects to have approximately $72,000

Section 9.02. Maximum Net Leverage Ratio. As of the last day of each fiscal quarter, commencing with the fiscal quarter ending September 30, 2024, Borrower shall not permit the Net Leverage Ratio to exceed 3.50 to 1.00. For illustrative purposes, as of the Closing Date: Funded Debt equals $25,000,000; unrestricted cash and cash equivalents, capped at $20,000,000, equals $20,000,000; Net Funded Debt equals $5,000,000;

Section 9.03. Minimum Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter, commencing with the fiscal quarter ending September 30, 2024, Borrower shall not permit the Fixed Charge Coverage Ratio to be less than 1.25 to 1.00. For illustrative purposes, as of the Closing Date, using trailing twelve-month Adjusted EBITDA of $28,400,000, Unfinanced CapEx of $12,600,000, and Fixed Charges of $4,200,000,

Section 9.04. Equity Cure Right. Borrower shall have no equity cure right with respect to any breach of the financial covenants set forth in this Article IX. Any breach of a financial covenant shall constitute an immediate Event of Default under Section 10.01(d), without any grace or cure period.

Section 10.01. Events of Default. Each of the following shall constitute an Event of Default: (a) Payment of Principal. Borrower fails to pay any principal amount when due, whether at stated maturity, upon acceleration, as a mandatory prepayment, or otherwise. (b) Payment of Interest and Fees. Borrower fails to pay any interest, fee, or other amount within three (3) Business Days after the date when due. (c) Misrepre

Section 10.02. Remedies Upon Event of Default. Upon the occurrence and during the continuance of any Event of Default other than an Event of Default under Section 10.01(h), Lender may, by written notice to Borrower: (a) declare the outstanding principal amount of the Bridge Loan, all accrued and unpaid interest, and all other Obligations immediately due and payable; (b) exercise any and all rights and remedies under