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INTERMEDIX HOLDINGS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2010 LIBOR rate or 1.25 %. In addition, the excess cash flow mandatory prepayment feature of the Senior Credit Facility was eliminated. Based on the guidance provided in ASC Topic 470 -50, Debt Modifications and Extinguishinents, the Company is not required to record a loss on extinguishment of debt related to the write -off of financing fees deferred in connection with the Senior Credit Facility, but rather will amortize such fees as an adjustment of interest expense over the remaining term of the 2011 Credit Facility. Approximately $0.7 million of incremental fees were incurred with respect to the execution of the 2011 Credit Facility. Subordinated Loan Agreement On the Merger date, the Company borrowed $85.0 million (Subordinated Loans) pursuant to the Subordinated Loan Agreement to repay certain existing indebtedness of the Predecessor, to finance a portion of the Merger and to pay fees and expenses in connection with the transactions (as noted above). The Subordinated Loans mature August 23, 2017. Interest accrues at 13.0% and is paid in arrears on the last business day of each fiscal quarter. The agreement provides for prepayment penalties up until August 23, 2015, the fifth anniversary of the agreement. As of December 31, 2010, no prepayments have been made. Mandatory prepayments are required for specific events such as issuance of equity securities, receipt of major casualty proceeds and proceeds from any asset disposition. In addition, upon the occurrence of a change of control of the Company, the Company is required to make an offer to pay each lender under the Subordinated Loan Agreement to pay in cash an amount equal to 101% of the unpaid principal amount of the Subordinated Loans. The borrowings are guaranteed by the Company and its subsidiaries. Borrowings are secured by substantially all of the Company's assets and outstanding capital stock. The Subordinated Debt Facility limits the Company's ability to dispose of assets, incur additional indebtedness or contingent obligations, engage in mergers or consolidations, suffer additional liens or engage in certain transactions with affiliates. In addition, the Subordinated Loan Agreement contains various customary covenants and requires that the Company comply with certain specified financial ratios and tests. The Company was in compliance with all covenants at December 31, 2010. Capitalized Lease Obligations Capitalized lease obligations that extend through December 2011 relate to equipment with an aggregate cost of $0.5 million and accumulated depreciation of $0.1 million at December 31, 2010. The interest rates range primarily from 3.95% to 7.84 % and the obligations are collateralized by the underlying equipment. See note 15. 23 (Continued)