Item
1.01. Entry Into A Material Definitive Agreement.
On
February 1, 2021, AdaptHealth Corp., a Delaware corporation (the “Company”), completed the previously announced acquisition
of AeroCare Holdings, Inc., a Delaware corporation (“AeroCare”), pursuant to the terms of that certain Agreement and
Plan of Merger, dated as of December 1, 2020, by and among the Company, AeroCare, AH Apollo Merger Sub Inc., a Delaware corporation
and wholly-owned subsidiary of the Company (“Merger Sub I”), AH Apollo Merger Sub II LLC, a Delaware corporation and
wholly-owned subsidiary of the Company (formerly known as AH Apollo Merger Sub II Inc., a Delaware corporation) (“Merger
Sub II”), and Peloton Equity, LLC, a Delaware limited liability company, solely in its capacity as the representative, agent
and attorney-in-fact of the AeroCare equityholders (the “Merger Agreement”) through (a) the merger of Merger Sub I
with and into AeroCare, with AeroCare continuing as the surviving corporation of such merger (the “First Merger”) and
(b) the merger of AeroCare with and into Merger Sub II, with Merger Sub II continuing as the surviving limited liability company
of such merger (the “Second Merger” and, collectively with the First Merger, the “Acquisition”).
In connection with the Second Merger, the surviving limited liability company changed its name to AeroCare Holdings LLC.
Certificate of Designations
On January 29, 2021 in connection with the
Acquisition, the Company filed a Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock, par
value $0.0001 per share, of the Company (the “Certificate of Designations”) with the Secretary of State of the State
of Delaware.
The terms of the Series C Preferred Stock
have been previously disclosed in Item 1.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission (the “SEC”) on December 7, 2020, which description is incorporated herein by reference. Such description
is qualified in its entirety by the full text of the Series C Certificate of Designations, which was filed as Annex B to the Schedule
14A filed with the SEC on January 20, 2021 and is incorporated herein by reference.
Joinders to Amended and Restated Registration Rights
Agreement
On
February 1, 2021, in connection with the Acquisition and pursuant to the terms of the Merger Agreement, the Company entered into
joinders to that certain Amended and Restated Registration Rights Agreement, dated as of July 1, 2020 (as amended, the “Registration
Rights Agreement”), by and among the Company, AdaptHealth Holdings LLC, a Delaware limited liability company and direct
subsidiary of the Company, and certain other holders of the Company’s capital stock, which joinders, among other things,
provide stockholders of AeroCare receiving Class A Common Stock and Series C Preferred Stock pursuant to the Merger Agreement with certain registration rights with respect
to the shares of Class A Common Stock and the shares of Class A Common Stock issuable upon conversion (subject to the terms and
conditions of the Certificate of Designations) of the Series C Preferred Stock.
The foregoing summary of the Registration
Rights Agreement is qualified in its entirety by the full text thereof, which was filed as Exhibit 4.1 to the Form 8-K filed with
the SEC on July 2, 2020, including an amendment thereto filed as Exhibit 4.1 to the Form 8-K filed with the SEC on December 7,
2020 and is incorporated herein by reference.
Credit Agreement
On January 20, 2021, AdaptHealth LLC (the
“Borrower”), a subsidiary of the Company, entered into a credit agreement (the “Credit Agreement”) with
the lenders party thereto and Regions Bank, as administrative agent, that provides for $250 million in commitments for revolving
loans, with a $55 million letter of credit sublimit, and $700 million in term loans. The obligation of the lenders to fund under
the Credit Agreement, and the effectiveness of the affirmative and negative covenants thereunder, were subject to, among other
conditions, the closing of the Acquisition (the date of the initial funding under the Credit Agreement, the “Funding Date”).
The Credit Agreement is guaranteed by the
Borrower’s direct parent, AdaptHealth Intermediate Holdco LLC, and certain wholly owned subsidiaries of the Borrower (together
with the Borrower, the “Loan Parties”) and is supported by a security interest in substantially all of the Loan Parties’
personal property and assets. The term loans under the Credit Agreement are payable in quarterly installments equal to 0.625% of
the initial principal amount of term loans beginning on the last business day of the first full fiscal quarter ending after the
Funding Date, increasing to 1.250% per quarter on the ninth fiscal quarter ending after the Funding Date. In addition, the Credit
Agreement provides for the ability of the Borrower to request increases in the revolving commitments and additional term loan facilities,
in a minimum amount of $10 million for each facility. Borrowings under the initial term loan facility were used in part to finance
the Acquisition and to repay the existing indebtedness of the Borrower outstanding under the Credit Agreement, dated as of July
29, 2020, among the Borrower, the other loan parties party thereto, the lenders party thereto and Regions Bank, as administrative
agent. Borrowings of revolving loans may be used for working capital and other general corporate purposes, including for capital
expenditures and acquisitions permitted under the Credit Agreement.
Borrowings and revolving commitments under
the Credit Agreement are scheduled to mature and terminate, respectively, on January 20, 2026. The Credit Agreement contains certain
customary events of default, which include failure to make payments when due thereunder, the material inaccuracy of representations
or warranties, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, certain
judgments, certain ERISA-related events, or a Change of Control (as defined in the Credit Agreement). The Credit Agreement also
contains certain events of default related to compliance with healthcare laws.
The Credit Agreement contains certain customary
representations and warranties and affirmative and negative covenants, including certain restrictions on the ability of the Loan
Parties and their Subsidiaries (as defined in the Credit Agreement) to incur any additional indebtedness or guarantee indebtedness
of others, to create liens on properties or assets, and to enter into certain asset and stock-based transactions. In addition,
the Credit Agreement includes certain financial maintenance covenants, including that (x) the Consolidated Total Leverage Ratio
(as defined in the Credit Agreement) shall not be more than 4.25 to 1.00 as of the end of any fiscal quarter ending on March 31,
2021 through and including September 30, 2021, stepping down to (i) 4.00 to 1.00 as of the end of any fiscal quarter ending on
December 31, 2021 through and including September 30, 2022, (ii) 3.75 to 1.00 as of the end of any fiscal quarter ending on December
31, 2022 through and including September 30, 2023 and (iii) 3.50 to 1.00 as of the end of any fiscal quarter ending on or after
December 31, 2023 and (y) the Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) shall not be less than
3.00 to 1.00.
The interest rates applicable to revolving
loans and term loans under the Credit Agreement are, at the Borrower’s option, either (i) a base rate, which is equal to
the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.5% and (c) the LIBOR Index Rate (subject to a floor)
for a one month Interest Period (each term as defined in the Credit Agreement) plus 1%, or (ii) the Adjusted LIBOR Rate (subject
to a floor) equal to the LIBOR (as defined in the Credit Agreement) for the applicable Interest Period multiplied by the statutory
reserve rate, plus in the case of each of clauses (i) and (ii), the Applicable Margin (as defined in the Credit Agreement). The
Applicable Margin (i) for base rate loans ranges from 0.50% to 2.25% per annum and (ii) for LIBOR loans ranges from 1.50% to 3.25%
per annum, in each case, based on the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement). The Borrower
will pay a commitment fee during the term of the Credit Agreement ranging from 0.25% to 0.50% per annum of the average daily undrawn
portion of the revolving commitments based on the Consolidated Senior Secured Leverage Ratio.
Any borrowing under the Credit Agreement
may be repaid, in whole or in part, at any time and from time to time without premium or penalty other than customary breakage
costs, and any amounts repaid under the revolving credit facility may be reborrowed. Mandatory prepayments are required under the
revolving loans when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders. Mandatory
prepayments are also required in connection with the disposition of assets to the extent not reinvested, unpermitted debt transactions,
and excess cash flow if certain leverage tests are not met.
The foregoing description of the Credit
Agreement is qualified in its entirety by reference to the full text of the Credit Agreement, which is attached as Exhibit 10.1
hereto and incorporated by reference herein.