Commitment Letter, dated June 14, 2019, by and between NF Unicorn and Shanghai Pudong Development Bank Putuo Sub-Branch

(a)          The transaction agreement to be entered into by, among others, the Seller(s) (as defined therein), NFC, the Company, the General Partner, the Partnership and each Target (the Transaction Agreement);

(b)          the Partnership Disclosure Schedule (as defined in the Transaction Agreement).

(c)          Any other documents designated as such by the Company and the Arrangers.

RMB equivalent of US$300,000,000 senior term loan facility (the Facility and the loans thereunder, the Facility Loan).

No more than one Facility Loan may be outstanding.

The Facility Loan amount will be funded to the Company into a free trade non-resident account opened with the Account Bank (the transfer of funds in and out of which is not subject to PRC regulatory approval) or an account in Hong Kong or any other jurisdiction outside of the PRC which can receive funds in RMB.

Such prepayment shall be made on, in respect of a financial year, the Repayment Date immediately falling after the last day by which the annual financial statements is required to be delivered to the Agent, which annual financial statements are in respect of such financial year evidencing that an amount of Sweep Excess Cashflow (in respect of such financial year) is required to be applied in prepayment in accordance with this paragraph (a).

From the amount of Sweep Excess Cashflow to be applied in prepayment there shall be deducted, among others:

(i)          such amount as required to maintain a positive cash balance of not less than US$50,000,000 (or its equivalent) for the Group taken as a whole (after taking into account any trapped cash);

(ii)          the amount on a dollar for dollar basis equal to the amount of all voluntary prepayments of loans under the Facility Loan (including loans incurred pursuant to any Permitted Additional Debt Facility in the nature of a term loan under the Facility Agreement) made during such financial year (unless elected to reduce any Sweep Excess Cashflow mandatory prepayment in respect of the previous financial year and except for voluntary prepayments of loans funded by drawing of loans under the Facility or pursuant to any Permitted Additional Debt) or until the date of prepayment (without double counting and provided that no such prepayment may be deducted more than once);

(iii)        the cash cost of any permitted debt buy-backs (including any debt buybacks by the Group) made during such financial year (unless elected to reduce any Sweep Excess Cashflow mandatory prepayment in respect of the previous financial year) or until the date of prepayment (without double counting and provided that no such debt buy-back may be deducted more than once); and

(iv)        an amount constituting Completion Opening Cash in the Excess Cashflow from which that Sweep Excess Cashflow is derived,

in each case, after taking into account such portion of Excess Cashflow not required to be prepaid according to the grid above.

This paragraph (a) shall not apply in respect of any Sweep Excess Cashflow for any financial year in respect of which the amount of Sweep Excess Cashflow to be applied is less than US$10 million (or its equivalent) or in respect of any Sweep Excess Cashflow generated prior to or attributable to any period prior to the Closing Date.

The requirement to apply Sweep Excess Cashflow in prepayment will apply on a dollar-for-dollar and entity by entity basis (with no requirement to oversweep from a non-trapped jurisdiction).

(b)          Change of Control or Total Sale: If required by an individual Lender in respect of its commitments within 30 days following notification by the Company that a Change of Control or a disposal of all or substantially all of the business or assets of the Group has occurred, the Lender must be prepaid and/or cancelled in full at par on the date that is 30 days from that Lender’s request.

Change of Control means:

(i)          any person or group of persons acting in concert (other than New Frontier Public Holding Limited, its affiliates and group of persons acting in concert with it) gains direct or indirect control of NFC. For the purpose of this definition, control of NFC means:

A.           the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

a.        cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of NFC;

b.        appoint or remove all, or the majority, of the directors or other equivalent officers of NFC;

c.        give directions with respect to the operating and financial policies of NFC with which the directors or other equivalent officers of NFC; or

B.           the holding beneficially of more than 50% of the issued share capital of NFC (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and

(ii)          the Sponsors collectively ceases to control the Company. For the purpose of this definition, control of the Company means (i) the ownership directly or indirectly in aggregate of more than 50% of the issued share capital or voting interests in the Company and (ii) the power to appoint or remove directors or other equivalent officers of the Company which control the majority of votes which may be cast at a meeting of the board of directors of the Company.

acting in concert means, a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition directly or indirectly of shares in NFC by any of them, either directly or indirectly, to obtain or consolidate control of NFC.

(c)          Sale of assets: In the event that any assets are disposed of by a Group Member to a person who is not a Group Member in excess of US$5 million (or its equivalent) for each individual asset sale or disposition and US$15 million (or its equivalent) in aggregate for any financial year, the net cash proceeds of such disposal received by a Group Member shall be applied in prepayment. Agreed exceptions to include, among others:

(iii)        proceeds from permitted disposals (other than those referred to in paragraph (iii) and (vi) of paragraph (k) (Disposals) of Schedule 5 (Undertakings)); and

(iv)        proceeds which are elected to be reinvested by a Group Member in the business of the Group to fund purchase of other assets used in the business, and/or in financing or refinancing permitted acquisitions, permitted joint ventures, capital expenditure or any other working capital and/or general corporate purposes (other than (x) the payment of any Permitted Distribution or (y) any payment of Permitted Additional Debt, Refinancing Indebtedness or other permitted Financial Indebtedness) within 12 months of receipt of proceeds (or within 18 months of receipt of proceeds, if a Group Member enters into a binding commitment or the board of the relevant Group Member designates to so reinvest within 12 months of receipt of proceeds).

(d)          Claims:

(i)          Recovery Proceeds:

Following a claim against a Report provider or the seller under the Acquisition Documents in excess of US$5 million (or its equivalent) for each individual claim and US$15 million (or its equivalent) in aggregate for any financial year, the net cash proceeds of such claim shall be applied in prepayment.

Agreed exceptions to include (a) proceeds applied in replacing, reinstating or repairing assets or meeting liabilities (or reimbursing a Group Member who has discharged such liabilities) in respect of such claim or rectifying any deficiency (including, but not limited to, settling outstanding tax or costs, environmental claim, and/or working capital deficiency); and (b) proceeds which are elected to be reinvested by a Group Member to fund purchase of other assets used in the business, and/or in financing or refinancing permitted acquisitions, permitted joint ventures, capital expenditure or any other working capital and/or general corporate purposes (other than (x) the payment of any Permitted Distribution or (y) any payment of Permitted Additional Debt, Refinancing Indebtedness or other permitted Financial Indebtedness), in each case applied for the purposes described in (a) or (b) above within 12 months of receipt of proceeds (or within 18 months of receipt of proceeds, if a Group Member enters into a binding commitment or the board of the relevant Group Member designates to so reinvest within 12 months of receipt of proceeds).

(ii)          Insurance Proceeds:

Following a claim under an insurance policy relating to loss of or damage to assets (other than for third party liability, loss of earnings, or business interruption or similar insurance) of any Group Member, in excess of US$5 million (or its equivalent) for each individual claim and US$15 million (or its equivalent) in aggregate for any financial year, the net cash proceeds of such claim shall be applied in prepayment. Agreed exceptions to include, among others:

C.           proceeds in respect of business interruption, or which are applied to meet or cover any third party, public liability, personal injury, workers’ compensation, directors’ and officers’ liability or similar claims in respect of which the claim was made;

D.           proceeds applied in replacing, reinstating or repairing assets or meeting liabilities in respect of such insurance claim (including, but not limited to, settling outstanding tax or costs, environmental claim, and/or working capital deficiency or reimbursing a Group Member who has discharged such liability) within 12 months of receipt of proceeds (or within 18 months of receipt of proceeds, if a Group Member enters into a binding commitment or the board of the relevant Group Member designates to so reinvest within 12 months of receipt of proceeds); and

E.           proceeds which are elected to be reinvested by a Group Member to fund purchase of other assets used in the business, and/or in financing or refinancing permitted acquisitions, permitted joint ventures, capital expenditure or any other working capital and/or general corporate purposes (other than (x) the payment of any Permitted Distribution or (y) any payment of Permitted Additional Debt, Refinancing Indebtedness or other permitted Financial Indebtedness) within 12 months of receipt of proceeds (or within 18 months of receipt of proceeds, if a Group Member enters into a binding commitment or the board of the relevant Group Member designates to so reinvest within 12 months of receipt of proceeds).

(e)          Others: Other prepayment provisions (relating to illegality, tax gross-up and increased costs) to be included as per Documentation Principles (as defined below).

Prepayments (other than from any Excess Cashflow, or following a Change of Control or in accordance with paragraph (e) above) may be made on the first Interest Payment Date following the expiry of all the periods specified above for reinvestment, replacement, repaid, reinstatement, compensation or application.

Mandatory prepayments in relation to paragraphs (a) (Excess Cashflow), (c) (Sale of assets) and (d) (Claims) of the “Mandatory Prepayments” section above are subject to permissibility under applicable laws (e.g. financial assistance, corporate benefit, capital maintenance, exchange control rules) and will not be required where such prepayment or repatriation of cash from any applicable jurisdiction to a jurisdiction where the relevant Group Member is incorporated would breach applicable law or regulation, would breach fiduciary or statutory duty by any relevant officer or director or give rise to a material risk of personal liability or would result in any Group Member incurring a material (more than 2.50 % of the principal amount of the prepayment prepaid (or would be payable should the repayment of an intercompany loan by a given amount have constituted a dividend of the same amount) cost or expense (including any tax liability but excluding any amounts in respect of withholding tax in relation to dividends or intra-group loan repayments made by any Group Member at the rate in force (after giving effect to any applicable exemption, reduction or relief) or any interest, prepayment premium and any other amounts associated with intra-group loan repayments made by any Group Member) or would breach any contractual restriction (that were not entered into for the purpose of limiting such prepaying) and for so long as such illegality, breach of duty, or such risk of cost, expense or liability exists (including, but not limited to, any cost, expense or tax liability associated with repatriation of cash from PRC or other applicable jurisdictions). To the extent applying in respect of any Sweep Excess Cashflow, the applicable portion of such Sweep Excess Cashflow will be deducted on a dollar-for-dollar basis from the amount required to be applied in prepayment of the Facility Loan pursuant to the provision above relating to Excess Cashflow, and no “over-sweep” will be required in respect of cash located in jurisdictions not subject to such illegality, risk or material cost. Once such illegality or such risk ceases to exist or repatriation of such net cash proceeds or Excess Cashflow would not result in any Group Member incurring such material cost or expense, the Company shall ensure that an amount equal to such net cash proceeds or Excess Cashflow will be promptly applied (net of any taxes that would be payable or reserved against if such amounts were actually repatriated) in prepayment of the Facility Loan on the first Interest Payment Date ending not less than 10 business days after the date of such notification by the Company to the Agent or the removal of such restrictions or limitations provided that such portion of such net cash proceeds or Excess Cashflow (as the case may be) has not, in the intervening period, been used to prepay other facilities or loans.

All prepayments referred to in the “Mandatory Prepayments” section (other than any prepayment pursuant to paragraphs (b) and (e)) shall be reduced by the amount of taxes and costs incurred in effecting such prepayment and shall be deemed to include any applicable accrued interest and any associated hedge termination costs and such amounts of principal required to be prepaid shall be reduced accordingly to fund any applicable accrued interest which shall also fall due for payment (and any hedge termination costs relating to any termination of hedging arrangements in whole or in part) as a result of such prepayment of principal.

The Company shall use reasonable efforts (provided that such efforts would not themselves result in any illegality, breach of duty or result in any Group Member incurring any such cost or expense) to avoid any such illegality, breach of duty, cost, expense, liability or contractual restriction.

Subject to paragraph (bb) of Schedule 5 (General Undertakings), there shall be no requirement to charge or retain proceeds of any event triggering a mandatory prepayment in a blocked account or other specific accounts pending re-investment or prepayment (as applicable). Trapped amounts or other amounts are not required to be applied immediately in prepayment shall otherwise be available for general corporate purposes not prohibited by the Facility Agreement until such time as such amounts cease to be trapped or are required to be applied in prepayment (as applicable).)

Mandatory prepayments shall be applied first to the repayment of the Facility and any Permitted Additional Debt which is a term facility in nature (if any) on a pro rata basis until repaid in full and then to any Permitted Additional Debt which is revolving facility in nature (if any) (with the commitment thereunder cancelled in a corresponding amount).

Mandatory prepayments shall be applied against the repayment instalments of the Facility in the manner directed by the Company and mandatory prepayment in relation to Sweep Excess Cashflow shall be applied against the repayment instalments of the Facility in direct order of maturity.

Unless otherwise specified, prepayments shall be made at the the next Interest Payment Date (being, if applicable, the Interest Payment Date immediately after the date on which such proceeds are received).

The Facility Agreement will permit senior secured debt by way of increasing the amount of and/or adding one or more revolving and/or term loan facilities and/or borrowing new credit facilities and/or issuing debt securities (whether by way of notes or bonds or other debt instruments) in lieu, ranking pari passu with the Facility (each a Permitted Additional Debt Facility) subject to the following conditions (unless otherwise agreed by the Majority Lenders under the Facility):

(a)          the purposes of such Permitted Additional Debt shall be limited to Permitted Acquisitions, capital expenditure, working capital and/or general corporate purposes;

(b)          if the repayment profile of such financial indebtedness (other than any such Financial Indebtedness the purpose of which is to fund working capital) is a bullet repayment profile, the final maturity date of a Permitted Additional Debt Facility shall be no earlier than the Maturity Date of the Facility;

(c)          if a term facility with amortising repayment, (x) the final maturity date of a Permitted Additional Debt Facility shall be no earlier than the Maturity Date of the Facility and (y) the weighted average life of such Permitted Additional Debt Facility shall not be shorter than the remaining weighted average life of the Facility, or (z) the Lenders of the Facility are offered the same amortisation percentage per annum as the proposed amortising Permitted Additional Debt Facility (if shorter than the amortisation percentage per annum of the Facility);

(d)          a Permitted Additional Debt Facility shall rank pari passu with the Facility and shall be guaranteed and secured by the same security and guarantees as secure and guarantee the Facility;

(e)          a Permitted Additional Debt shall be on terms no more onerous for the Group than the Facility or otherwise on terms satisfactory to the Agent (acting on the instructions of the Majority Lenders (acting reasonably)); and

(f)          the Net Leverage Ratio of the Group would be complied with if recalculated on a pro forma basis, giving effect to the incurrence and full utilisation of and application of proceeds of such Permitted Additional Debt for the most recent Test Date as at the date on which such Permitted Additional Debt is incurred, provided that if such Financial Indebtedness is incurred prior to the First Test Date, the maximum Net Leverage Ratio for that most recent Relevant Period shall be deemed to be the maximum Net Leverage Ratio permitted under the section entitled “Financial covenants” as at the First Test Date; provided that the aggregate amount of outstanding indebtedness under a Permitted Additional Debt and the total amount of Permitted PRC Indebtedness shall not at any time exceed the applicable cap set out in paragraph (o)(v) (Financial Indebtedness) under Schedule 5 (Undertakings).

The Intercreditor Agreement will rank the Facility, any senior secured Permitted Additional Debt, Refinancing Debt and any Hedging Debt pari passu and without any preference between them (including in respect of the Transaction Security). The Instructing Group for the purposes of decision making under the Intercreditor Agreement is the majority senior secured creditors (being creditors in respect of the Facility, any senior secured Permitted Additional Debt, Refinancing Debt and any Hedging Debt) holding two thirds or more of all senior secured liabilities.

For the purpose of this paragraph, Hedging Debt means any liabilities or obligations owed by any Obligor to any hedge counterparty under or in connection with any Secured Hedging, which will rank pari passu with the Facility pursuant to this Term Sheet.

In addition to the Initial Conditions Precedent above, borrowing of the Facility during the Certain Funds Period will be subject only to:

(a)          no Events of Default having occurred and continuing, limited to non-payment, breach of other obligations (to the extent relating to the financial indebtedness, restricted payments, negative pledge, disposals, loans or credit or guarantee, merger, acquisitions, joint ventures, holding companies and limb (i) of the acquisition documents covenants), misrepresentation (to the extent relating to status, binding obligations, no-conflict, power and authority, holding company, authorisations, legal and beneficial ownership, pari passu ranking and sanctions and anti-money laundering and anti-corruption), invalidity, unlawfulness and repudiation, insolvency proceedings, insolvency and creditors’ process in each case in relation to the Parent and the Company only (and without any application (including by way of procurement obligation) in respect of the Target or any member of the Target Group);

(b)          no Change of Control having occurred; and

(c)          in relation to a Lender, it has not become illegal for that Lender to lend the Facility after the date it has become a Lender (provided that this shall not affect the obligation of any other Lender) and any funding shortfall created as a result of such illegality is not met by the aggregate of new funding or commitment provided by one or more new lenders and the Group’s own funds (including the proceeds of any new equity and/or subordinated debt made available to the Company).

No Lender may exercise any right of cancellation, acceleration, enforcement, rescission, termination or set-off or any other right to affect or prevent the making of any utilisation of the Facility during the Certain Funds Period other than as provided above, provided that immediately upon the expiry of the Certain Funds Period all such rights, remedies and entitlements shall be available to the Finance Parties notwithstanding that they may not have been used or been available for use during the Certain Funds Period. There will be no market or business material adverse change, rating or financial covenant or any condition related directly or indirectly to the Target Group as a condition precedent to borrowing of the Facility during the Certain Funds Period.

Certain Funds Period means the period from the Signing Date until (and including) the last day of the Availability Period in respect of Facility;

First Test Date means the last day of the first financial year ending after 12 months from the Utilisation Date.

Net Leverage Ratio means, in respect of any Relevant Period, the ratio of (i) Total Net Debt on the last day of that Relevant Period to (ii) EBITDA for that Relevant Period.

Additional definitions and further details on the financial covenants are set out in Schedule 4 (Financial Covenants). EBITDA shall be adjusted by giving effect to any Pro Forma Adjustment (as defined in Schedule 4 (Financial Covenant)). Except as otherwise provided in this term sheet, the definitions and provisions relating to financial covenants shall be consistent with the Documentation Principles.

The Company has the ability to prevent and/or cure breaches of any financial covenant by the Parent making a new equity or subordinated debt investment in the Company in an amount at least sufficient to ensure that the relevant financial covenant(s) would be complied with if re-tested (an Equity Cure) no later than the date falling 20 business days after delivery of the compliance certificate for the Relevant Period in which a financial covenant is in breach.

The amount of any Equity Cure shall be added to EBITDA or, at the election of the Company, pro forma reduction of Total Net Debt as at the start of the applicable Relevant Period for the purposes of calculating the Net Leverage Ratio.

The amount of any Equity Cure shall be included in financial covenant calculations until the relevant financial half-year in respect of which it was made does not fall within a Relevant Period for the purposes of calculating the financial covenants above (including as “cash” for the purposes of calculating Net Leverage Ratio, except for the Relevant Period in respect of which the Equity Cure was made).

No more than five Equity Cures over the life of the Facility and Equity Cures may not be applied in consecutive test periods (provided that, the application of any cure amount towards the cure of more than one financial covenant in relation to the same Relevant Period or the same Test Date shall be deemed to constitute a single application). There is no limit on overcuring. Amount injected can be used for any working capital and operating expenditure of the Group, as an Acceptable Funding Source (except for the purpose of “Cashflow” to the extent in any Relevant Period such amount is already counted in Cashflow as a result of an Equity Cure), or any other purpose not prohibited by the Finance Documents (other than making any Permitted Distribution). There is no requirement to apply any Equity Cure in prepayment and no amount of any Equity Cure shall be counted towards Excess Cashflow.

Irrespective of any Equity Cure, if there is a breach of a financial covenant and on the next Test Date that financial covenant is satisfied, the previous breach (and any resulting actual or potential Events of Default) of a financial covenant will be deemed to have been automatically waived and remedied, provided that there is no Acceleration Event which is continuing on the next Test Date.

Any recalculation made hereunder will be solely for the purpose of curing a breach of the financial covenants and not for the purposes of calculation of applicable Margin or for determining the amount of Excess Cashflow to be applied in prepayment of the Facility for the Test Date on which a Financial Covenant is breached and shall not count towards any other permission or usage under the Finance Documents.

See Schedule 6 (Events of Default).

An Event of Default is continuing or outstanding unless it is remedied or waived.

No guarantee other than the guarantee to be provided by Chindex US within 90 business days of the Closing Date, provided that if the proposed regulations (the Proposed Regulations) under Section 956 issued by the U.S. Department of the Treasury and the Internal Revenue Service (IRS) are finalised and passed (the Trigger Date) such that there is no negative tax implication on any member of the NFC Group in providing guarantees in relation to the Facility, subject to the agreed security principles (to be consistent with the Documentation Principles, the Agreed Security Principles) and the provisions of this section:

(a)          guarantees shall be granted by each other direct and indirect subsidiary of Chindex US as at the Trigger Date (the Initial non-PRC Guarantors) which is incorporated outside the PRC within 90 business days of the Trigger Date;

(b)          the Company shall ensure that each future direct and indirect subsidiary of Chindex US which is incorporated outside the PRC and which is or becomes a Material Subsidiary after the Trigger Date (together with the Initial non-PRC Guarantors, the non-PRC Guarantors) to become a guarantor within 60 business days of delivery of the compliance certificate demonstrating that such subsidiary is a Material Subsidiary; and

(c)          the Company shall ensure (x) each Group Member incorporated in PRC the equity interest in which are directly held and wholly-owned by an offshore Group Member (First Tier WFOE) as at the Trigger Date (each an Initial PRC Guarantor) becomes a guarantor within 60 business days of the Trigger Date, and (y) each future direct and indirect subsidiary of Chindex US which is incorporated in PRC and which is or becomes a Material Subsidiary after the Trigger Date (each an Subsequent PRC Guarantor, together with Initial PRC Guarantors, the PRC Guarantors) becomes a guarantor within 60 business days of delivery of the compliance certificate demonstrating that such subsidiary is a Material Subsidiary, and, in each case, register such guarantees with relevant PRC authority (including but not limited to SAFE and MOFCOM) within 180 business days after the Trigger Date, provided that if it is reasonably expected that any such PRC Guarantor’s obligation to grant guarantee or register its guarantee will not be completed within 60 business days or (as applicable) 180 business days after the Trigger Date (the initial deadline), the Company shall on or prior to the day falling 30 business days before the last day of such initial deadline, notify the Agent of such situation and there shall be an extension to grant such guarantee or complete such guarantee registration until the relevant guarantee is granted or the relevant guarantee registration is completed (as the case may be).

No ongoing guarantor coverage test.

Subject to the Agreed Security Principles and the provisions of this section, the Pre-Closing Transaction Security Documents (as defined below) will be required to be granted as a condition precedent to the Utilisation Date and the following Security will be required to be granted as a conditions subsequent after the Utilisation Date:

(a)          a US law governed first ranking all asset security to be entered into by Chindex US and the Security Agent in relation to the creation of security over all of the assets of Chindex (including assignment of rights under the intercompany loans granted to Chindex US’ offshore subsidiaries by Chindex US and bank accounts but excluding shares held by Chindex US in any Group Member);

(b)          a HK law governed first ranking share mortgage to be entered into by Chindex US and the Security Agent in relation to the creation of security over 65% of all the shares in (i) United Family Hospitals and Clinics Limited (HK) (HHK (HK)) and (ii) United Family Healthcare Holdings Limited (HK) (UFHK (HK));

(c)          a Mauritius law governed first ranking share mortgage to be entered into by Chindex US and CHM Mauritius and the Security Agent in relation to the creation of security over 65% of all the shares in (i) United Family Healthcare Holdings (Mauritius) (CHM (Mauritius)) and (ii) United Family American Hospital Ventures (Mauritius) (CAV (Mauritius)) respectively;

(d)          a BVI law governed first ranking share mortgage to be entered into by Chindex US and the Security Agent in relation to the creation of security over 65% of all the shares in Chindex Medical Holdings Ltd. (CMH (BVI));

(e)          PRC law governed first ranking equity pledges to be entered into by Chindex US and the Security Agent in relation to the creation of security over 65% of all the equity interests in (i) 北京和睦家医疗中心有限公司 (NH) and (ii) 上海和睦家医院有限公司(SHU);

(f)          PRC law governed first ranking equity pledges to be entered into by the HHK (HK) and the Security Agent in relation to the creation of security over 65% of all the equity interests in (i) 天津和睦家医院有限公司 (TJU) and (ii) 北京和睦家医院有限公司(BJU); (iii) 北京和睦家康复医院有限公司(Rehab) and (iv) 青岛和睦家医院有限公司(QDU);

(g)          PRC law governed first ranking equity pledges to be entered into by the Security Agent and (i) the CAV (Mauritius) in relation to the creation of security over 65% of all the equity interests in 和睦家医疗管理咨询 ( 北京 ) 有限公司 (UFH(WFOE)); (ii) UFH (WFOE) in relation to creation of security over 65% of all the equity interests in北京爱科汇医院管理有限公司 (Access) and (iii) Access in relation to the creation of security over 65% of all the equity interests in北京和睦家医院管理有限公司 (SHY) and北京优护佳健康管理有限公司(YHJ);

(h)          a BVI law governed first ranking share mortgage to be entered into by the HHH Inc. and the Security Agent in relation to the creation of security over all the shares in Healthy Harmony Limited (HH (BVI));

(i)          a HK law governed first ranking share mortgage to be entered into by HH (BVI) and the Security Agent in relation to the creation of security over all the shares in United Family Healthcare Limited (UFHL (HK)) and United Family Healthcare (Hong Kong) Limited (UFHHKL (HK)); and

(j)          PRC law governed first ranking equity pledges to be entered into by the Security Agent and UFHL (HK) in relation to the creation of security over all the equity interests held by UFHL (HK) in (i) 广州和睦家医院有限公司(GZU); (ii) 上海和睦家新城医院有限公司 (PDU) and (iii) 北京和睦家京北妇儿医院有限公司(DTU).

(items (a) to (j) are collectively referred to as the Post-Closing Transaction Security Documents).

If the proposed regulations (the Proposed Regulations) under Section 956 issued by the U.S. Department of the Treasury and the Internal Revenue Service (IRS) are finalised and passed (the Trigger Date) such that there is no substantive negative tax implication on any member of the NFC Group in granting share mortgage over 100% of all of the shares held in a Group Member in relation to the Facility, subject to the agreed security principles (to be consistent with the Documentation Principles, the Agreed Security Principles) and the provisions of this section, the Post-Closing Transaction Security Documents under paragraphs (b) to (g) above will be in respect of 100% of all of the shares held by the relevant chargor in relevant charged companies.

Subject to the Agreed Security Principles and the provisions of this section, (A) the transaction security to be provided under paragraphs (a) to (d), (h) and (i) above shall be put in place within 60 business days of the Utilisation Date; (B) the transaction security to be provided under paragraphs (f)(iv) and (g)(i) above shall be put in place within 120 business days of the Utilisation Date and (C) the transaction security to be provided under paragraphs (e), (f)(i) to (iii), (g)(ii) to (iii) and (j) above shall be put in place within 180 business days of the Utilisation Date).

Subject to the Agreed Security Principles, permissibility under applicable law and full cooperation by the Lenders and the Security Agent and the provisions of this section, in respect of the transaction security under paragraphs (e), (f), (g) and (j), if it is reasonably expected that (x) the requirement to obtain minority shareholder’s consent to provide such transaction security will not be completed within 180 business days of the Utilisation Date or (y) relevant pledgor’s obligation to grant and/or register such PRC law governed equity pledges with relevant PRC authority (including but not limited to SAFE and MOFCOM) will not be completed within 120 business days or, as applicable, 180 business days of the Utilisation Date (the initial deadline), the relevant Obligors shall, on or prior to the day falling 30 business days before the last day of such initial deadline, notify the Agent of such situation and there shall be an extension to complete security registration timeline until the relevant security registration is completed. The timeline in this paragraph shall also apply to any amendment of the PRC law governed equity pledges as a result of the occurrence of the Trigger Date and the increase of the equity interest such to such pledge as contemplated by the second immediate preceding paragraph.

All asset security limited to security over shares / non-PRC bank accounts / intercompany receivables / rights under the Transaction Agreement / insurance policies / material fixed assets and inventory subject to Agreed Security Principles consistent with the Documentation Principles. No security over any other asset (including real estate) will be provided.

No guarantee or security from the Targets or any of its subsidiaries is required as a condition precedent to the Utilisation Date.

A Material Subsidiary is (a) each Obligor and any Group Member (whether a direct or indirect Subsidiary) whose earnings before interest, tax, depreciation and amortisation (in each case calculated on the same basis as EBITDA but excluding intra-group items and investments in Subsidiaries) represents more than 5% of the consolidated EBITDA of the Group (which shall, in each case, be tested annually by reference to the Group’s annual audited accounts) or (b) the direct or indirect holding company of a Material Subsidiary determined in accordance with paragraph (a) above.

Until and including the date falling 120 days after the Closing Date (the Clean Up Period), events or circumstances relating to the Target Group which would otherwise breach the representations or undertakings or cause an actual or potential Event of Default (other than an Event of Default resulting from non-payment, insolvency, insolvency proceedings, creditors’ process, unlawfulness, non-compliance with security or guarantee undertakings, invalidity or repudiation) shall not constitute a breach or be an actual or potential Event of Default or act as a drawstop, unless such event or circumstance:

(a)           has a Material Adverse Effect;

(b)           was procured or approved by the Company; or

(c)           is unremedied at the end of the Clean Up Period,

provided that such breach is capable of remedy and reasonable steps are taken to remedy such breach if Company is aware of the relevant circumstances at the time.

In addition, in the case of any acquisition permitted by the Facility Agreement, there will be a 120 days “clean-up” period commencing on the date of completion of such acquisition in respect of circumstances relating only to the acquired entity or business.

A material adverse effect (after taking into account all resources, insurance, indemnity and assurance available to the Group and the timing and likelihood of recovery) on:

(a)          the consolidated business, assets or financial condition of the Group (taken as a whole);

(b)          the ability of the Obligors (taken as a whole) to perform their payment obligations under any Finance Document; or

(c)          subject to legal reservations and any perfection requirements, the validity or enforceability of any Finance Document in accordance with their terms or the effectiveness of any Transaction Security granted pursuant to any of the Finance Documents in any way which is:

(i)          materially adverse to the interests of the Lenders taken as a whole under the Finance Documents (taken as a whole); and

(ii)          if capable of remedy, not remedied within 30 business days of the Company becoming aware of the relevant event or circumstance or being given notice of the same by the Agent.

The Finance Documents may be amended or waived with the consent of the Company and the Majority Lenders.

Matters requiring Super Majority Lenders’ approval will be limited amendments or waivers to (other than expressly permitted by the provisions of any Finance Document) the nature or scope of the Transaction Security and the guarantees provided by the Guarantors (including any release thereof).

Matters requiring all Lenders’ approval will be limited to amendments or waivers to:

(a)          the definition of Majority Lenders, Super Majority Lenders or Structural Adjustment;

(b)          provisions that expressly require the consent of all Lenders;

(c)          the rights of Lenders to assign or transfer their rights or obligations under the Finance Documents;

(d)          provisions governing the several rights and obligations of Lenders;

(e)          (other than expressly permitted by the provisions of any Finance Document) provisions governing the sharing of recoveries among the Lenders and partial payments;

(f)          (other than expressly permitted by the provisions of any Finance Document) the manner in which the proceeds of enforcement of the Transaction Security are distributed;

(g)          any requirement that a cancellation of commitments (in respect of the Facility) reduces the commitments of the Lenders (in respect of such Facility) rateably;

(h)          any change to a Borrower or an Obligor (in each case without prejudice to the provisions in this term sheet regarding release of guarantees and Transaction Security) other than in accordance with the Facility Agreement;

(i)          any amendment to the order of priority or subordination under the Intercreditor Agreement;

(j)          any amendments to the sections below entitled “Excluded Commitments” and “Replacement Lender”; and

(k)          the governing law provision.

Only affected Lenders’ consent required provided that Majority Lender consent is obtained for an amendment or waiver that:

(a)          makes an increase in or addition to any commitment or any extension of the availability of any commitment (other than by way of a Permitted Additional Debt Facility);

(b)          makes an extension to the date of payment of any principal, interest, fees, commission or other amount payable under the Finance Documents;

(c)          makes a reduction in the principal, interest rate, fees, commission or other amount payable under the Finance Documents or redenomination of the currency of any amount payable thereunder;

(d)          introduces any additional loan, commitment or facility under the Finance Documents (provided that any such additional loan, commitment or facility shall rank pari passu with, or junior to, the Facility);

(e)          makes a reduction of any mandatory prepayment (or makes an extension of its payment date); or

(f)          makes any changes to the Finance Documents (including changes to, the taking of, or the release coupled with the retaking of, any guarantee or security) consequential on or required to implement or reflect any of the foregoing.

The ability to implement a Structural Adjustment is without prejudice to the right to raise any Permitted Additional Debt, Permitted PRC Indebtedness or Refinancing Indebtedness.

If a Lender:

(a)          does not accept or reject, in writing, a request from any Group Member for any consent, amendment, release or waiver under the Finance Documents within 15 business days (or, if the Company agrees to a longer time period in relation to that request or the Company specifies a longer period in that request during which a Lender may respond, on or prior to the expiry of such longer period so agreed or specified by the Company) of the date of such request being made or notifies the Agent in writing that it is abstaining from responding to such request (such Lender being a Non-Responding Lender); or

(b)          becomes a Defaulting Lender,

such Non-Responding Lender and any Defaulting Lender’s participations and commitments shall be excluded from the calculation and shall not be required in order to achieve the required level or approvals.

In the event that a Lender:

(a)          seeks to charge or claim any amount pursuant to any illegality, tax gross up, tax indemnity, increased cost or market disruption provisions of the Finance Documents (an Increased Costs Lender);

(b)          does not consent to any amendment, consent or waiver that requires more than Majority Lender consent and to which the Majority Lenders have consented (a Non-Consenting Lender);

(c)          has failed to participate in a utilisation it is obliged to make under the Finance Documents;

(d)          has given notice to a Group Member or the Agent that it will not make, or that it has disaffirmed or repudiated any obligation to participate in, a utilisation in breach of the Facility Agreement;

(e)          has otherwise rescinded or repudiated a Finance Document or any term of a Finance Document;

(f)           is one with respect to which an insolvency event has occurred (a Lender under paragraph (c), (d), (e) or (f) is a Defaulting Lender);

(g)         which is or is acting on behalf of any person (other than a Group Member of a Sponsor Affiliate) that is principally engaged in a business that is in commercial competition with the core business of the Group (together with each Affiliate of such person or entity engaged in such activities), provided that for the avoidance of doubt this shall not include any person or entity (or any of its Affiliates) which is a bank, financial institution or trust, funds or other entity whose principal business is investing in debt or who is regularly engaged in making, purchasing or investing in loans, securities or other financial assets (and who has been incorporated or established for not less than 6 months) (such person, a Competitor), an investor or equity holder that has control over a Competitor or any advisor to any such person referred to above, subject to exceptions to be agreed (Conflicted Lender); and/or;

(h)         is a Non-Responding Lender,

the Company shall be entitled (but not obliged) to (i) require the transfer of all of such Lender’s participation at par plus accrued interest and fees to one or more persons selected by the Company, who is willing to take such transfer, (ii) prepay (or to procure that another Group Member prepays) all of such Lender’s participation at par plus accrued interest and fees and/or (iii) cancel all undrawn commitments of that Lender.

No Transfer permitted until following the Utilisation Date. Transfer means a transfer, assignment, novation (or any such arrangement having a similar effect, whether it conveys voting rights or otherwise) or a sub-participation or sub-contract (which involves a transfer of any voting right, direct or indirectly, under or in relation to the Finance Document (including as a result of being able to direct the way that another person exercises its voting rights)).

Each Lender will be free to Transfer its commitments in the Facility at any time after the Utilisation Date in whole or in part to any bank, financial institution, fund, trust or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets or any other person provided that unless (x) made to another Lender in the same Facility, an affiliate of a Lender (with no less than 10 business days’ prior written notice to the Company), (y) to a person on an agreed whitelist, or (z) while a non-payment, insolvency, insolvency proceeding or creditors’ process Event of Default is continuing, any such Transfer shall require the prior written consent of the Company (in the absolute discretion of the Company). Other transfer provisions to be consistent with the Documentation Principles. Absolute prohibition (both prior to or post an Event of Default) on Transfers to Defaulting Lenders, non-commercial lenders (hedge fund, loan-to-own fund, private equity fund, debt restructuring fund or activist fund but does not include a Sponsor Affiliate) and Competitors. Purported transfers in breach of transfer provisions are void.

The Lenders will bear all fees, costs and expenses in connection with a Transfer and the Group will not be required to pay any fees, costs, expenses, taxes, indemnity payment, gross-up payment, increased cost payment or other payment to a new Lender (or a Lender lending through a new facility office) in excess of what it would have been required to pay immediately prior to the Transfer being effected.

No restriction on members of the Group acquiring loans provided that such purchase is (a) per the LMA solicitation or open order process and (b) is funded from paragraphs (i), (ii), (iii) or (iv) of the definition of Acceptable Funding Sources. 

None of the steps, transactions, reorganisations or events set out in or expressly contemplated by the Structure Memorandum (as defined below) or, in each case, the actions or intermediate steps necessary to implement any of those steps, actions or events shall constitute a breach of any representation and warranty or undertaking in the Facility Agreement or any of the other Finance Documents or result in the occurrence of an actual or potential Event of Default or a Certain Funds Default and shall be expressly permitted under the terms of the Facility Agreement and the other Finance Documents.

Prior to the Closing Date (and subject at all times to the certain funds provisions), no breach of any representation, warranty, undertaking or other term of (or actual or potential Event of Default (however so described) under) any document relating to the existing financing arrangements of any member of the Target Group shall constitute a breach of any representation and warranty or undertaking in the Facility Agreement or any of the other Finance Documents or result in the occurrence of an actual or potential Event of Default.

(a)         Any Sponsor, each of their respective affiliates, any trust of which any Sponsor or any of their respective affiliates is a trustee, any partnership of which any Sponsor or any of their respective affiliates is a partner and any trust, fund or other entity which is managed or is advised by, or is under the control of, the Advisor, any Sponsor or any of their respective affiliates; and

(b)         any person acting in concert with any party listed in paragraph (a) above,

provided that any such trust, fund or other entity which has been established for the purpose of making, purchasing or investing in loans or debt securities and which is managed or controlled independently from all other trusts, funds or other entities managed or controlled by the Advisor, any Sponsor or any of their respective affiliates which have been established for the primary purpose or main purpose of investing in the share capital of companies, in each case, shall not constitute a Sponsor Affiliate.

For the purposes of this definition:

A person is acting in concert with another person if: (i) they are a shareholder in the Advisor, any Sponsor or any of their respective affiliates; and (ii) in relation to such shareholding, they, whether pursuant to any agreement or understanding, formal or informal or otherwise, actively co-operate to obtain, maintain, consolidate or exercise control over that company or control of the voting rights attaching to their holding of shares in that company to a greater extent than would be possible by reason of their individual shareholdings alone.

When applying baskets, thresholds and other exceptions to the Representations, Undertakings and Events of Default, the equivalent amount of a currency shall be calculated as at the date of the relevant Group Member incurring, committing to or making the relevant disposal, acquisition, investment, payment, debt or other relevant action. No actual or potential Event of Default or breach of Representation or Undertaking shall arise merely as a result of a subsequent change in the currency equivalent of any relevant amount due to fluctuations in exchange rates.

In the event that any amount or transaction meets the criteria of more than one of the baskets or exceptions set out in the Finance Documents, the Company, in its sole discretion, may classify and may from time to time reclassify that amount or transaction to a particular basket or exception and will only be required to include that amount or transaction in one of those baskets or exceptions (and, for the avoidance of doubt, an amount or transaction may at the option of the Company be split between different baskets or exceptions).

For the purpose of calculating Cash and Cash Equivalent Investments, it shall be included in the calculation such amount of Cash and Cash Equivalent Investments used for cash collateralizing and/or supporting borrowings.

(a)         A Default or an Event of Default or a Certain Funds Default will be remedied (and cease to be continuing) where the underlying circumstances giving rise to the Default or Event of Default or Certain Funds Default (as the case may be) cease to exist or where actions have been taken which have addressed the underlying circumstances in each case with the effect that those underlying circumstances (after giving effect to the taking of such actions) no longer constitute a Default or an Event of Default or a Certain Funds Default (as the case may be), provided that if an Acceleration Event has occurred, then such Event of Default is no longer capable of being remedied and will be continuing unless it has been waived.

(b)         An Acceleration Event is continuing if the relevant Acceleration Event has occurred and the underlying notice of acceleration has not been withdrawn by the Agent.

(c)         In addition to paragraph (a) above and subject to paragraph (b) above, if a Default (including an Event of Default and a Certain Funds Default) occurs for a failure to deliver a required certificate, notice or other document in connection with another default (an Initial Default) then at the time such Initial Default is remedied or waived, such Default (including an Event of Default and a Certain funds Default) for a failure to report or deliver a required certificate, notice or other document in connection with the Initial Default will also be cured without any further action further action. Any Default (including an Event of Default and a Certain funds Default) for the failure to comply with the time periods prescribed in Schedule 3 (Information Undertakings), or otherwise to deliver any notice, certificate or other document, as applicable, even though such delivery is not within the prescribed period specified in the Facility Agreement or any other Finance Document, shall be deemed to be cured upon the delivery of any such report required by such covenant or notice, certificate or other document, as applicable, even though such delivery is not within the prescribed period specified in the Facility Agreement or any other Finance Document.